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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report (Date of earliest event reported):
April 13, 1999
ATLAS AIR, INC.
(Exact name of registrant as specified in its charter)
Delaware [0-0] 84-1207329
(State or other jurisdiction (Commission File Number) (IRS Employer
of incorporation) Identification No.)
538 Commons Drive, Golden, Colorado 80401
(Address of principal executive offices) (Zip Code)
(303) 526-5050
(Registrant's telephone number, including area code)
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Item 7. Financial Statements and Exhibits.
(c) Exhibits. The Exhibit Index is hereby incorporated by reference. The
documents listed on the Exhibit Index are filed as Exhibits with reference to
the Registration Statement on Form S-3 (Registration No. 333-71833) of Atlas
Air, Inc. The Registration Statement and the Prospectus Supplement, dated
April 5, 1999, to the Prospectus, dated February 16, 1999, relate to the
offering of Atlas Air, Inc.'s Pass Through Certificates, Series 1999-1.
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, Atlas Air,
Inc. has duly caused this report to be signed on its behalf by the undersigned
hereunto duly authorized.
ATLAS AIR, INC.
By: /S/ RICHARD H. SHUYLER
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Richard H. Shuyler
Executive Vice President -- Strategic
Planning, Treasurer and Director
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EXHIBIT INDEX
Exhibit
Reference
Number Document Description
1.1 Underwriting Agreement, dated April 5, 1999, among Atlas Air, Inc.,
Morgan Stanley & Co. Incorporated, BT Alex. Brown Incorporated, ING
Baring Furman Selz LLC and CIBC Oppenheimer Corp.
4.1 Revolving Credit Agreement (1999-1A-1), dated as of April 13, 1999,
between Wilmington Trust Company, as Subordination Agent, and ABN AMRO
Bank N.V., Chicago Branch, as Liquidity Provider.
4.2 Revolving Credit Agreement (1999-1A-2), dated as of April 13, 1999,
between Wilmington Trust Company, as Subordination Agent, and ABN AMRO
Bank N.V., Chicago Branch, as Liquidity Provider.
4.3 Revolving Credit Agreement (1999-1B), dated as of April 13, 1999,
between Wilmington Trust Company, as Subordination Agent, and Morgan
Stanley Capital Services, Inc., as Liquidity Provider.
4.4 Revolving Credit Agreement (1999-1C), dated as of April 13, 1999,
between Wilmington Trust Company, as Subordination Agent, and Morgan
Stanley Capital Services, Inc., as Liquidity Provider.
4.5 Guarantee, dated April 13, 1999, by Morgan Stanley Dean Witter & Co.
relating to Revolving Credit Agreement (1999-1B).
4.6 Guarantee, dated April 13, 1999, by Morgan Stanley Dean Witter & Co.
relating to Revolving Credit Agreement (1999-1C).
4.7 Pass Through Trust Agreement, dated as of April 1, 1999, between
Wilmington Trust Company, as Trustee, and Atlas Air, Inc.
4.8 Trust Supplement No. 1999-1A-1, dated April 13, 1999, between
Wilmington Trust Company, as Trustee, and Atlas Air, Inc. to Pass
Through Trust Agreement, dated as of April 1, 1999.
4.9 Trust Supplement No. 1999-1A-2, dated April 13, 1999, between
Wilmington Trust Company, as Trustee, and Atlas Air, Inc. to Pass
Through Trust Agreement, dated as of April 1, 1999.
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4.10 Trust Supplement No. 1999-1B, dated April 13, 1999, between Wilmington
Trust Company, as Trustee, and Atlas Air, Inc. to Pass Through Trust
Agreement, dated as of April 1, 1999.
4.11 Trust Supplement No. 1999-1C, dated April 13, 1999, between Wilmington
Trust Company, as Trustee, and Atlas Air, Inc. to Pass Through Trust
Agreement, dated as of April 1, 1999.
4.12 Intercreditor Agreement, dated as of April 13, 1999, among Wilmington
Trust Company, as Trustee, ABN AMRO Bank N.V, Chicago Branch, as Class
A-1 Liquidity Provider and Class A-2 Liquidity Provider, Morgan
Stanley Capital Services, Inc., as Class B Liquidity Provider and
Class C Liquidity Provider, and Wilmington Trust Company, as
Subordination Agent and Trustee.
4.13 Deposit Agreement (Class A-1), dated as of April 13, 1999, between
First Security Bank, National Association, as Escrow Agent, and Credit
Suisse First Boston, New York Branch, as Depositary.
4.14 Deposit Agreement (Class A-2), dated as of April 13, 1999, between
First Security Bank, National Association, as Escrow Agent, and Credit
Suisse First Boston, New York Branch, as Depositary.
4.15 Deposit Agreement (Class B), dated as of April 13, 1999, between First
Security Bank, National Association, as Escrow Agent, and Credit
Suisse First Boston, New York Branch, as Depositary.
4.16 Deposit Agreement (Class C), dated as of April 13, 1999, between First
Security Bank, National Association, as Escrow Agent, and Credit
Suisse First Boston, New York Branch, as Depositary.
4.17 Escrow and Paying Agent Agreement (Class A-1), dated as of April 13,
1999, among First Security Bank, National Association, as Escrow
Agent, Morgan Stanley & Co. Incorporated, BT Alex. Brown Incorporated,
ING Baring Furman Selz LLC and CIBC Oppenheimer Corp., as
Underwriters, Wilmington Trust Company, as Trustee, and Wilmington
Trust Company, as Paying Agent.
4.18 Escrow and Paying Agent Agreement (Class A-2), dated as of April 13,
1999, among First Security Bank, National Association, as Escrow
Agent, Morgan Stanley & Co. Incorporated, BT Alex. Brown Incorporated,
ING Baring Furman Selz LLC and CIBC Oppenheimer Corp., as
Underwriters, Wilmington Trust Company, as Trustee, and Wilmington
Trust Company, as Paying Agent.
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4.19 Escrow and Paying Agent Agreement (Class B), dated as of April 13,
1999, among First Security Bank, National Association, as Escrow
Agent, Morgan Stanley & Co. Incorporated, BT Alex. Brown Incorporated,
ING Baring Furman Selz LLC and CIBC Oppenheimer Corp., as
Underwriters, Wilmington Trust Company, as Trustee, and Wilmington
Trust Company, as Paying Agent.
4.20 Escrow and Paying Agent Agreement (Class C), dated as of April 13,
1999, among First Security Bank, National Association, as Escrow
Agent, Morgan Stanley & Co. Incorporated, BT Alex. Brown Incorporated,
ING Baring Furman Selz LLC and CIBC Oppenheimer Corp., as
Underwriters, Wilmington Trust Company, as Trustee, and Wilmington
Trust Company, as Paying Agent.
4.21 Note Purchase Agreement, dated as of April 13, 1999, among Atlas
Air Inc., Wilmington Trust Company, as Trustee, Wilmington Trust
company, as Subordination Agent, First Security Bank, National
Association, as Escrow Agent, and Wilmington Trust Company, as Paying
Agent.
4.22 Form of Leased Aircraft Participation Agreement (Participation
Agreement among Atlas Air, Inc., Lessee, ______________, Owner
Participant, First Security Bank, National Association, Owner Trustee,
and Wilmington Trust Company, Mortgagee and Loan Participant) (Exhibit
A-1 to Note Purchase Agreement).
4.23 Form of Lease (Lease Agreement between First Security Bank, National
Association, Lessor, and Atlas Air, Inc., Lessee) (Exhibit A-2 to Note
Purchase Agreement).
4.24 Form of Leased Aircraft Indenture (Trust Indenture and Mortgage
between First Security Bank, National Association, Owner Trustee, and
Wilmington Trust Company, Mortgagee) (Exhibit A-3 to Note Purchase
Agreement).
4.25 Form of Leased Aircraft Trust Agreement (Trust Agreement between
___________ and First Security Bank, National Association) (Exhibit
A-5 to Note Purchase Agreement).
4.26 Form of Owned Aircraft Participation Agreement (Participation
Agreement between Atlas Air, Inc., Owner, and Wilmington Trust
Company, as Mortgagee, Subordination Agent and Trustee) (Exhibit C-1
to Note Purchase Agreement).
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4.27 Form of Owned Aircraft Indenture (Trust Indenture and Mortgage between
Atlas Air, Inc., Owner, and Wilmington Trust Company, Mortgagee)
(Exhibit C-2 to Note Purchase Agreement).
4.28 7.20% Atlas Air Pass Through Certificate 1999-1A-1, Certificate No.
A-1-1.
4.29 7.20% Atlas Air Pass Through Certificate 1999-1A-1, Certificate No.
A-1-2.
4.30 6.88% Atlas Air Pass Through Certificate 1999-1A-2, Certificate No.
A-2-1.
4.31 7.63% Atlas Air Pass Through Certificate 1999-1B-1, Certificate No.
B-1.
4.32 8.77% Atlas Air Pass Through Certificate 1999-1C-1, Certificate No.
C-1.
23.1 Consent of AvSOLUTIONS, Inc., dated March 25, 1999.
23.2 Consent of Morten Beyer and Agnew, Inc., dated March 25, 1999.
23.3 Consent of Simat Helliesen & Eichner, Inc., dated March 25, 1999.
23.4 Consent of AvSOLUTIONS, Inc., dated April 5, 1999.
23.5 Consent of Morten Beyer and Agnew, Inc., dated April 5, 1999.
23.6 Consent of Simat Helliesen & Eichner, Inc., dated April 5, 1999.
[EXECUTION VERSION]
ATLAS AIR, INC., ISSUER
Pass Through Certificates
Series 1999-1
UNDERWRITING AGREEMENT
Dated: April 5, 1999
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ATLAS AIR, INC., ISSUER
Pass Through Certificates, Series 1999-1
UNDERWRITING AGREEMENT
April 5, 1999
Morgan Stanley & Co. Incorporated
BT Alex. Brown Incorporated
ING Baring Furman Selz LLC
CIBC Oppenheimer Corp.
Morgan Stanley & Co. Incorporated
1585 Broadway
New York, New York 10036
Dear Sirs:
Atlas Air, Inc., a Delaware corporation (the "Company"), proposes that
Wilmington Trust Company, as pass through trustee (the "Trustee") under each of
the Trusts (as defined below), issue and sell to the underwriters named in
Schedule II hereto its pass through certificates in the aggregate principal
amounts and with the interest rates and final distribution dates set forth on
Schedule I hereto (the "Offered Certificates") on the terms and conditions
stated herein. As used herein, unless the context otherwise requires, the term
"Underwriters" shall mean the firms named as Underwriters in Schedule II, and
the term "you" shall mean Morgan Stanley & Co. Incorporated ("Morgan Stanley").
The Offered Certificates will be issued pursuant to a Pass Through Trust
Agreement dated as of April 1, 1999 (the "Basic Agreement") as supplemented by
four Pass Through Trust Supplements (individually, a "Series Supplement"), each
to be dated as of the Closing Date (as defined below) between the Company and
the Trustee (the Basic Agreement as supplemented by each Series Supplement being
referred to herein individually as a "Pass Through Trust Agreement"). The Series
Supplements are related to the creation and administration of Atlas Air Pass
Through Trust, Series 1999-1A-1 (the "Class A-1 Trust"), Atlas Air Pass Through
Trust, Series 1999-1A-2 (the "Class A-2 Trust"), Atlas Air Pass Through Trust,
Series 1999-1B (the "Class B Trust") and Atlas Air Pass Through Trust, Series
1999-1C (the "Class C Trust"; and together with the Class A-1 Trust, the Class
A-2 Trust and the Class B Trust, the "Trusts").
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The cash proceeds of the offering of Offered Certificates by each Trust
will be paid to First Security Bank, National Association, as escrow agent (the
"Escrow Agent"), under an Escrow and Paying Agent Agreement among the Escrow
Agent, the Underwriters, the Trustee of such Trust and Wilmington Trust Company,
as paying agent (the "Paying Agent"), for the benefit of the holders of Offered
Certificates issued by such Trust (each, an "Escrow Agreement"). The Escrow
Agent will deposit such cash proceeds (each, a "Deposit") with Credit Suisse
First Boston, New York Branch (the "Depositary"), in accordance with a Deposit
Agreement relating to such Trust (each, a "Deposit Agreement"), and will
withdraw Deposits upon request to allow the Trustee to purchase Equipment Notes
(as defined in the Note Purchase Agreement referred to herein) referred to
herein from time to time pursuant to a Note Purchase Agreement to be dated as of
the Closing Date (the "Note Purchase Agreement") among the Company, Wilmington
Trust Company, as Trustee of each of the Trusts, as Subordination Agent (as
hereinafter defined) and as Paying Agent, and the Escrow Agent. Each Escrow
Agent will issue receipts to be attached to each related Offered Certificate
("Escrow Receipts") representing each holder's fractional undivided interest in
amounts deposited with such Escrow Agent and will pay to such holders through
the related Paying Agent interest accrued on the Deposits and received by such
Paying Agent pursuant to the related Deposit Agreement at a rate per annum equal
to the interest rate applicable to the corresponding Offered Certificates.
Certain amounts of interest payable on the Offered Certificates will be
entitled to the benefits of separate liquidity facilities. ABN AMRO Bank N.V.,
acting through its Chicago branch, in the case of the Class A-1 Trust and the
Class A-2 Trust (in such capacity, the "Class A-1 and A-2 Liquidity Provider")
and Morgan Stanley Capital Services, Inc., in the case of the Class B Trust and
the Class C Trust (in such capacity, the "Class B and C Liquidity Provider" and,
together with the Class A-1 and A-2 Liquidity Provider, the "Liquidity
Providers") will enter into separate revolving credit agreements with respect to
each Trust (each, a "Liquidity Facility") to be dated as of the Closing Date for
the benefit of the holders of the Offered Certificates. The Liquidity Providers
and the holders of the Offered Certificates will be entitled to the benefits of
an Intercreditor Agreement to be dated as of the Closing Date (the
"Intercreditor Agreement") among the Trustees, Wilmington Trust Company, as
subordination agent and trustee thereunder (the "Subordination Agent"), and the
Liquidity Providers.
The Company has filed with the Securities and Exchange Commission (the
"Commission") a shelf registration statement on Form S-3 (File No. 333-71833)
relating to certain classes of securities (such registration statement,
including the exhibits thereto and the documents filed by the Company with the
Commission pursuant to the Securities Exchange Act of 1934, as amended, and the
rules and regulations of the Commission thereunder (collectively, the
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"Exchange Act") that are incorporated by reference therein, as amended at the
date hereof, being herein referred to as the "Registration Statement") and the
offering thereof from time to time in accordance with Rule 415 of the Securities
Act of 1933, as amended, and the rules and regulations of the Commission
thereunder (collectively, the "Securities Act"). A prospectus supplement
reflecting the terms of the Offered Certificates, the terms of the offering
thereof and the other matters set forth therein, as further specified in Section
4(c) hereof, will be prepared and filed together with the base prospectus
referred to below pursuant to Rule 424 under the Securities Act (such prospectus
supplement, in the form first filed on or after the date hereof pursuant to Rule
424, being herein referred to as the "Prospectus Supplement" and any prospectus
supplement relating to the Offered Certificates filed prior to the filing of the
Prospectus Supplement being herein referred to as a "Preliminary Prospectus
Supplement"). The base prospectus, dated February 16, 1999, included in the
Registration Statement relating to offerings of pass through certificates
generally, as supplemented by the Prospectus Supplement, and including the
documents incorporated by reference therein, is herein called the "Prospectus",
except that, if such base prospectus is amended or supplemented on or prior to
the date on which the Prospectus Supplement is first filed pursuant to Rule 424,
the term "Prospectus" shall refer to such base prospectus as so amended or
supplemented and as supplemented by the Prospectus Supplement, in either case
including the documents incorporated by reference therein. Any reference herein
to the terms "amendment" or "supplement" with respect to the Registration
Statement, the Prospectus, any Preliminary Prospectus Supplement or any
preliminary prospectus shall be deemed to refer to and include any documents
filed with the Commission under the Exchange Act after the date hereof, the date
the Prospectus is filed with the Commission, or the date of such Preliminary
Prospectus Supplement or preliminary prospectus, as the case may be, and
incorporated therein by reference pursuant to Item 12 of Form S-3 under the
Securities Act.
Capitalized terms not otherwise defined in this Agreement shall have the
meanings specified therefor in the Pass Through Trust Agreements or in the Note
Purchase Agreement or the Intercreditor Agreement referred to in the Pass
Through Trust Agreements; provided that, as used in this Agreement, the term
"Operative Agreements" shall mean the Deposit Agreements, the Escrow Agreements,
the Intercreditor Agreement, the Liquidity Facilities, the Pass Through Trust
Agreements and the Financing Agreements (as defined in the Intercreditor
Agreement).
1. Representations and Warranties. (a) The Company represents and warrants
to, and agrees with each Underwriter that:
(i) The Company meets the requirements for use of Form S-3 under the
Securities Act; the Registration Statement has become effective; on the
original effective date of the Registration Statement, on the effective
date of the most recent post-effective amendment thereto, if any, and on
the date of the filing by the Company of its annual report on Form 10-K for
the fiscal year ended December 31, 1998, the Registration Statement, and
any amendments and supplements thereto, complied in all material respects
with the requirements of the Securities Act and the Registration Statement
did not contain an untrue statement of a material fact or omit to state a
material fact required to be stated therein or necessary to make the
statements therein not misleading; on the date hereof and on the Closing
Date (as defined below), neither
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the Prospectus nor any amendments thereof and supplements thereto, includes
or will include an untrue statement of a material fact or omits or will
omit to state a material fact necessary in order to make the statements
therein, in the light of the circumstances under which they were made, not
misleading; provided, however, that this representation and warranty shall
not apply to any statements or omissions based upon information relating to
any Underwriter furnished in writing to the Company by or on behalf of any
Underwriter through Morgan Stanley & Co. Incorporated expressly for use in
the Prospectus or to statements or omissions in that part of the
Registration Statement which shall constitute the Statement of Eligibility
of the Trustee under the Trust Indenture Act of 1939, as amended (the
"Trust Indenture Act"), on Form T-1.
(ii) The documents incorporated by reference in the Prospectus
pursuant to Item 12 of Form S-3 under the Securities Act, at the time they
were or, at any time prior to the completion of the distribution of the
Offered Certificates by the Underwriters, they are filed with the
Commission, complied and will comply in all material respects with the
requirements of the Exchange Act and when read together with the other
information in the Prospectus, did not as of the date hereof contain an
untrue statement of a material fact or omit to state a material fact
necessary in order to make the statements therein, in light of the
circumstances under which they were made, not misleading.
(iii) The Company has been duly incorporated, is validly existing as a
corporation in good standing under the laws of the jurisdiction of its
incorporation, has the corporate power and authority to own its property
and to conduct its business as described in the Prospectus and to perform
its obligations under this Agreement and the Operative Documents to which
it is, or is to be, a party; the Company is duly qualified to transact
business and is in good standing in each jurisdiction in which the conduct
of its business or its ownership or leasing of property requires such
qualification, except to the extent that the failure to be so qualified or
be in good standing would not have a material adverse effect on the Company
and its subsidiaries, taken as a whole (an "Atlas Material Adverse
Effect").
(iv) The Company's only subsidiaries are Atlas One, Inc., Atlas
Freighter Leasing, Inc., Atlas Freighter Leasing II, Inc., Atlas Air
Services Limited, LHC Properties, Inc., Atlas Flightlease, Inc., Genessee
Insurance Company, Ltd., Atlas Air Worldwide Holdings, Inc. and Atlas Air
Services and Products, Inc. (collectively, the "Subsidiaries"). Each
Subsidiary is a corporation duly organized, validly existing and in good
standing under the laws of the jurisdiction of its incorporation with
corporate power and authority under such laws to own, lease and operate its
properties and conduct its business; and each Subsidiary is duly qualified
to transact business as a foreign corporation and is in good standing in
each other jurisdiction in which it owns or leases property of a nature, or
transacts business of a type, that would make such qualification necessary,
except to the extent that the failure to so qualify or be in good
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standing would not have an Atlas Material Adverse Effect. All of the
outstanding shares of capital stock of each Subsidiary have been duly
authorized and validly issued and are fully paid and non-assessable and are
owned by the Company free and clear of any pledge, lien, security interest,
charge, claim, equity or encumbrance of any kind.
(v) This Agreement has been duly authorized, executed and delivered by
the Company.
(vi) The Operative Agreements to which the Company is, or is to be, a
party, have each been duly authorized by the Company, are or will be
substantially in the form heretofore supplied to you and, assuming that
such Operative Agreements have been duly authorized, executed and delivered
by, and constitute the legal, valid and binding obligations of, each other
party thereto, when duly executed and delivered by the Company will
constitute valid and binding obligations of the Company, except (x) as
enforcement thereof may be limited by bankruptcy, insolvency, fraudulent
conveyance, reorganization, moratorium and other similar laws relating to
or affecting creditors' rights generally and (y) as enforcement thereof may
be limited by general equitable principles (regardless of whether
enforcement is considered in a proceeding in equity or at law). The Offered
Certificates, the Equipment Notes, the Indentures, the Leases and other
Operative Agreements to which the Company is, or is to be, a party will
conform in all material respects to the descriptions thereof in the
Prospectus. The Basic Agreement as executed is substantially in the form
filed as an Exhibit to the Registration Statement and has been duly
qualified under the Trust Indenture Act.
(vii) The Company is a "citizen of the United States" (as defined in
Section 40102(a)(15) of Title 49 of the United States Code, as amended) and
is an air carrier operating under a certificate issued by the Secretary of
Transportation pursuant to Chapter 447 of Title 49, United States Code, for
aircraft capable of carrying 10 or more individuals or 6,000 pounds or more
of cargo. There is in force with respect to the Company an air carrier
operating certificate issued pursuant to Part 121 of the regulations under
the sections of Title 49, United States Code, relating to aviation (the
"Federal Aviation Act"). All of the outstanding shares of capital stock of
the Company have been duly authorized and validly issued and are fully paid
and non-assessable.
(viii) Assuming the due authorization of the Offered Certificates by
the Trustee, when executed, authenticated, issued and delivered in the
manner provided for in the related Pass Through Trust Agreement and sold
and paid for as provided in this Agreement, each of the Offered
Certificates will be valid and binding obligations of the Trustee entitled
to the benefits of the related Pass Through Trust Agreement, enforceable
against the Trustee in accordance with its terms, except as limited by
bankruptcy, insolvency, fraudulent conveyance, reorganization, moratorium
and other similar laws relating to or affecting creditors' rights generally
and general equitable
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principles (whether considered in a proceeding in equity or at law). When
executed, authenticated, issued and delivered in the manner provided for in
the Escrow Agreements, the Escrow Receipts will be legally and validly
issued and will be entitled to the benefits of the related Escrow
Agreements.
(ix) The execution and delivery by the Company of this Agreement and
the Operative Documents to which the Company is, or is to be, a party, the
consummation by the Company of the transactions contemplated in this
Agreement and such Operative Documents, and compliance by the Company with
the terms of this Agreement and such Operative Documents will not
contravene (i) the certificate of incorporation or by-laws of the Company,
(ii) any provision of applicable law or any agreement or other instrument
binding upon the Company or any of the Subsidiaries, except for such
contraventions as would not, singly or in the aggregate, have an Atlas
Material Adverse Effect, or (iii) any judgment, order or decree of any
governmental body, agency or court having jurisdiction
over the Company or any Subsidiary, and no consent, approval, authorization
or order of, or qualification with, any governmental body or agency is
required for the valid authorization, execution, delivery and performance
by the Company of this Agreement and the Operative Documents to which the
Company is, or is to be, a party, or the consummation by the Company of the
transactions contemplated by this Agreement and such Operative Documents,
except (x) such as may be required by the securities or Blue Sky laws of
the various states in connection with the offer and sale of the Offered
Certificates, (y) filings or recordings with the Federal Aviation
Administration (the "FAA") and under the Uniform Commercial Code as in
effect in Colorado and Utah, which filings or recordings referred to in
this clause (y), with respect to any particular set of Financing
Agreements, shall have been made, or duly presented for filing or
recordation, on or prior to the applicable Funding Date for the Aircraft
related to such Financing Agreements and (z) such as may be required under
the rules of the National Association of Securities Dealers.
(x) There has not occurred any material adverse change, or any
development involving a prospective material adverse change, in the
condition, financial or otherwise, or in the earnings, business or
operations of the Company and the Subsidiaries, taken as a whole, from that
set forth in the Prospectus.
(xi) Except as accurately described in all material respects in the
Prospectus and except as would not have an Atlas Material Adverse Effect
and would not materially and adversely affect the ability of the Company to
perform its obligations under this Agreement or any Operative Documents, to
which it is, or is to be, a party, or to consummate the transactions
contemplated by the Prospectus there are no legal or governmental
proceedings pending or, to the best knowledge of the Company, threatened to
which the Company or any of the Subsidiaries is or may be a party or to
which any of the properties of the Company or any of the Subsidiaries is or
may be subject.
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(xii) Except as described in the Prospectus, the Company is not in
default in the performance or observance of any obligation, agreement,
covenant or condition contained in any contract, indenture, mortgage, loan
agreement, note, lease or other agreement or instrument to which it is a
party or by which it may be bound or to which any of its properties may be
subject, except for such defaults that would not have an Atlas Material
Adverse Effect.
(xiii) The Company and the Subsidiaries each has good and marketable
title to all properties and assets described in the Prospectus as owned by
it, free and clear of all liens, charges, encumbrances or restrictions,
except (A) as described in the Prospectus or (B) as would not have an Atlas
Material Adverse Effect.
(xiv) Except as described in the Prospectus, no labor problem exists
with the Company's employees or with employees of any Subsidiary or, to the
best knowledge of the Company, is imminent that could reasonably be
expected to have an Atlas Material Adverse Effect, and the Company is not
aware of any existing or imminent labor
disturbance by the employees of any of its or any subsidiary's principal
contractors or customers that could reasonably be expected to have an Atlas
Material Adverse Effect.
(xv) The Company and the Subsidiaries (i) are in compliance with any
and all applicable foreign, federal, state and local laws and regulations
relating to the protection of human health and safety, the environment or
hazardous or toxic substances or wastes, pollutants or contaminants
("Environmental Laws"), (ii) have received all permits, licenses or other
approvals required of them under applicable Environmental Laws to conduct
their respective businesses and (iii) are in compliance with all terms and
conditions of any such permit, license or approval, except where such
noncompliance with Environmental Laws, failure to receive required permits,
licenses or other approvals or failure to comply with the terms and
conditions of such permits, licenses or approvals would not, singly or in
the aggregate, have an Atlas Material Adverse Effect.
(xvi) Neither the Company nor any of the Trusts is an "investment
company" within the meaning of the Investment Company Act of 1940, as
amended (the "Investment Company Act"); and after giving effect to the
offering and sale of the Offered Certificates and the application of the
proceeds thereof as described in the Prospectus, none of the Trusts will be
an "investment company" as defined in the Investment Company Act, nor will
the escrow arrangements contemplated by the Escrow Agreements result in the
creation of, an "investment company" as defined in the Investment Company
Act.
(xvii) The accountants that examined and issued an auditors report
with respect to the consolidated financial statements of the Company and
its consolidated
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subsidiaries included or incorporated by reference in the Prospectus are
independent public accountants within the meaning of the Securities Act.
(xviii) The consolidated financial statements included in the
Prospectus present fairly the consolidated financial position of the
Company and its consolidated subsidiaries as of the dates indicated and the
consolidated results of operations and cash flows or changes in financial
position of the Company and its consolidated subsidiaries for the periods
specified. Such financial statements have been prepared in conformity with
generally accepted accounting principles applied on a consistent basis
throughout the periods involved. The financial statement schedules, if any,
included in the Prospectus present fairly the information required to be
stated therein.
(xix) The Company and the Subsidiaries possess adequate certificates,
authorities and permits issued by appropriate governmental agencies or
bodies necessary to conduct, in all material respects, the business now
operated by them and have not received any notice of proceedings relating
to the revocation or modification of any such certificate, authority or
permit that would, individually or in the aggregate, have an Atlas Material
Adverse Effect.
(xx) No Appraiser is an affiliate of the Company or has a substantial
interest, direct or indirect, in the Company. None of the officers and
directors of any of such Appraisers is connected with the Company or any of
its affiliates as an officer, employee, promoter, underwriter, trustee,
partner, director or person performing similar functions.
(xxi) There are no contracts or documents of a character required to
be described in the Registration Statement or the Prospectus or to be filed
as exhibits to the Registration Statement that are not described and filed
as required.
(xxii) The Company's disclosure in the Prospectus regarding Year 2000
compliance satisfies in all material respects the requirements of the
Securities Act.
(b) The parties agree that any certificate signed by a duly authorized
officer of the Company and delivered to an Underwriter, or to counsel for the
Underwriters, on the Closing Date and in connection with this Agreement or the
offering of the Offered Certificates, shall be deemed a representation and
warranty by (and only by) the Company to the Underwriters as to the matters
covered thereby.
The representations and warranties contained in this Agreement shall be
true and correct as of the date of this Agreement and as of the Closing Date.
2. Purchase, Sale and Delivery of Offered Certificates. (a) On the basis of
the representations, warranties and agreements herein contained, but subject to
the terms and
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the conditions herein set forth, the Company agrees to cause the Trustees to
sell to each Underwriter, and each Underwriter agrees, severally and not
jointly, to purchase from the Trustees, at a purchase price of 100% of the
principal amount thereof, the aggregate principal amount of Offered Certificates
of each Pass Through Certificate Designation set forth opposite the name of such
Underwriter in Schedule II. Concurrently with the issuance of the Offered
Certificates, the Escrow Agents shall issue and deliver to the Trustees the
Escrow Receipts in accordance with the terms of the Escrow Agreements, which
Escrow Receipts shall be attached to the related Offered Certificates.
(b) The Company is advised by you that the Underwriters propose to make a
public offering of the Offered Certificates purchased by the Underwriters
hereunder on the terms to be set forth in the Prospectus as soon as practicable
after this Agreement has been entered into as in your judgment is advisable.
(c) As compensation to the Underwriters for their respective commitments
and obligations hereunder in respect of the Offered Certificates, including
their respective undertakings to distribute the Offered Certificates, the
Company will pay to each Underwriter an amount equal to that percentage of the
aggregate principal amount of Offered Certificates purchased by such Underwriter
(as set forth in Schedule II). Such payment will be made on the Closing Date
simultaneously with the issuance and sale of the Offered Certificates (with
attached Escrow Receipts) to the Underwriters. Payment of such compensation
shall be made by Federal funds check or other immediately available funds.
(d) Delivery of and payment for the Offered Certificates (with attached
Escrow Receipts) shall be made at the offices of Shearman & Sterling at 599
Lexington Avenue, New York, New York 10022-6069 at 10:00 A.M. on April 13, 1999
or such other date, time and place as may be agreed upon by the Company and you
(such date and time of delivery and payment for the Offered Certificates (with
attached Escrow Receipts) being herein called the "Closing Date"). Delivery of
the Offered Certificates (with attached Escrow Receipts) issued by each Trust
shall be made to your account at The Depository Trust Company ("DTC") for the
respective accounts of the several Underwriters against payment by the
Underwriters of the purchase price thereof. Payment for the Offered Certificates
issued by each Trust and the related Escrow Receipts attached thereto shall be
made by the Underwriters by wire transfer of immediately available funds to the
accounts and in the manner specified in the related Escrow Agreements. The
Offered Certificates (with attached Escrow Receipts) issued by each Trust shall
be in the form of one or more fully registered global certificates, and shall be
deposited with the related Trustee as custodian for DTC and registered in the
name of Cede & Co.
(e) The Company agrees to have global certificates representing the Offered
Certificates (with attached Escrow Receipts) available for inspection and
checking by you in New York, New York not later than 1:00 P.M. on the business
day prior to the Closing Date.
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(f) It is understood that each Underwriter has authorized you for its
account, to accept delivery of, receipt for, and make payment of the purchase
price for, the Offered Certificates (with attached Escrow Receipts) that it has
agreed to purchase. You, individually and not as a representative, may (but
shall not be obligated to) make payment of the purchase price for the Offered
Certificates to be purchased by any Underwriter whose check or checks shall not
have been received by the Closing Date.
3. Conditions to Closing. The obligations of the Underwriters under this
Agreement to purchase the Offered Certificates will be subject to the following
conditions:
(a) On the Closing Date, no stop order suspending the effectiveness of the
Registration Statement shall have been issued under the Securities Act and no
proceedings therefor shall have been instituted or threatened by the Commission.
(b) Subsequent to the date of this Agreement and prior to the Closing Date,
there shall not have occurred any downgrading, nor shall any notice have been
given of any intended or potential downgrading or of any review for a possible
change that does not indicate the direction of the possible change, in the
rating accorded any of the Company's securities, including the Offered
Certificates, by any "nationally recognized statistical rating organization", as
such term is defined for purposes of Rule 436(g)(2) under the Securities Act;
provided that, in the case of Standard & Poor's Rating Services only, so long as
the Offered Certificates shall have received the ratings indicated in paragraph
(o) of this Section 3, this condition precedent to closing shall not be breached
if, prior to the Closing Date, Standard & Poor's Rating Services shall give
notice of any review for possible change of the ratings for the Offered
Certificates and
such notice shall be communicated in language which is substantially identical
to that used in recent press releases regarding securities of the Company
similar to the Offered Certificates; and
(c) On the Closing Date, (i) (A) the Registration Statement, as it may then
be amended or supplemented, shall not contain an untrue statement of a material
fact or omit to state a material fact required to be stated therein or necessary
to make the statements therein not misleading, (B) the Prospectus, as it may
then be amended or supplemented, shall not contain an untrue statement of a
material fact or omit to state a material fact required to be stated therein or
necessary to make the statements therein not misleading in light of the
circumstances under which they were made, (C) the Company shall have complied
with all agreements and satisfied all conditions on its part to be performed or
satisfied at or prior to the Closing Date, and (D) the other representations and
warranties of the Company set forth in this Agreement and each of the Operative
Documents shall be accurate in all material respects as though expressly made at
and as of the Closing Date (except to the extent that such representations and
warranties refer to an earlier or later date, in which case they shall be
accurate in all material respects as of such dates) and (ii) subsequent to the
execution and delivery of this Agreement, there shall not have occurred any
change, or any development involving a prospective change, in the condition,
financial or otherwise, or in the earnings, business or operations of the
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Company and its subsidiaries, taken as a whole, from that set forth in the
Prospectus (exclusive of any amendments or supplements thereto subsequent to the
date of this agreement) that, in your judgment, is material and adverse and that
makes it, in your judgment, impracticable to market the Offered Certificates on
the terms and in the manner contemplated in the Prospectus. At the Closing Date,
you shall have received a certificate of either the Chief Financial Officer or
the Executive Vice President of the Company, dated as of the Closing Date, to
the effect set forth in Sections 3(a) and 3(b) above and to the effect that the
representations and warranties of the Company contained in this Agreement are
true and correct as of the Closing Date and that the Company has complied with
all of the agreements and satisfied all of the conditions on its part to be
performed or satisfied hereunder on or before the Closing Date.
The officer signing and delivering such certificate may rely upon the best
of his knowledge as to proceedings threatened.
(d) On the Closing Date, you shall have received an opinion of Cahill
Gordon & Reindel, as counsel for the Company, dated the Closing Date, to the
effect set forth in Exhibit B hereto.
(e) On the Closing Date, you shall have received an opinion of David
Brictson, in-house legal counsel of the Company, dated the Closing Date, to the
effect set forth in Exhibit C hereto.
(f) On the Closing Date, you shall have received an opinion of Morris,
James, Hitchens & Williams, counsel for Wilmington Trust Company, individually
and as Trustee, Subordination Agent and Paying Agent, dated the Closing Date, to
the effect set forth in Exhibit D hereto.
(g) On the Closing Date, you shall have received an opinion of Ray, Quinney
& Nebeker, counsel for the Escrow Agent, dated the Closing Date, to the effect
set forth in Exhibit E hereto.
(h) On the Closing Date, you shall have received (i) an opinion of Vedder,
Price, Kaufmann & Kammholz, counsel for the Class A-1 and A-2 Liquidity
Provider, dated the Closing Date, to the effect set forth in Exhibit F hereto;
and (ii) an opinion of Shearman & Sterling, counsel for the Class B and C
Liquidity Provider, dated the Closing Date, to the effect set forth in Exhibit
F-2 hereto.
(i) On the Closing Date, you shall have received (i) an opinion of Shearman
& Sterling, counsel for the Depositary, dated the Closing Date, to the effect
set forth in Exhibit G-1 hereto and (ii) an opinion of in-house legal counsel to
the Depositary, dated as of the Closing Date, to the effect set forth in Exhibit
G-2 hereto.
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(j) On the Closing Date, you shall have received an opinion of Shearman &
Sterling, counsel for the Underwriters, dated the Closing Date, in form and
substance satisfactory to you.
(k) You shall have received on each of the date hereof and the Closing Date
a letter, dated the date hereof or the Closing Date, as the case may be, in form
and substance satisfactory to you, from the Company's independent public
accountants, containing statements and information of the type ordinarily
included in accountants' "comfort letters" to underwriters with respect to the
financial statements and certain financial information contained in the
Prospectus; provided that the letter delivered on the Closing Date shall use a
"cut-off date" not earlier than the date hereof.
(l) The Company shall have furnished to you and to counsel for the
Underwriters, in form and substance satisfactory to you, such other documents,
certificates and opinions as such counsel may reasonably request in order to
pass upon the matters referred to in Section 3(c) and in order to evidence the
accuracy and completeness of any of the representations, warranties or
statements, the performance of any covenant by the Company theretofore to be
performed, or the compliance with any of the conditions herein contained.
(m) Each of the Appraisers shall have furnished to the Underwriters a
letter from such Appraiser, addressed to the Company and dated the Closing Date,
confirming that such Appraiser and each of its directors and officers (i) is not
an affiliate of the Company or any of its affiliates, (ii) does not have any
substantial interest, direct or indirect, in the Company or any of its
affiliates and (iii) is not connected with the Company or any of its affiliates
as an officer, employee, promoter, underwriter, trustee, partner, director or
person performing similar functions.
(n) At the Closing Date, each of the Operative Agreements (other than the
Indentures, Leases and Participation Agreements) shall have been duly executed
and delivered by each of the parties thereto; the representations and warranties
of the Company contained in each
of such executed Operative Agreements shall be true and correct as of the
Closing Date (except to the extent that they relate solely to an earlier date,
in which case they shall be true and correct as of such earlier date) and the
Underwriters shall have received a certificate of the President or a Vice
President of the Company, dated as of the Closing Date, to such effect.
(o) On the Closing Date, the Offered Certificates shall be rated "A3" in
the case of the Offered Certificates of the Class A-1 Trust, "A3" in the case of
the Offered Certificates of the Class A-2 Trust, "Baa3" in the case of the
Offered Certificates of the Class B Trust, and "Ba3" in the case of the Offered
Certificates of the Class C Trust by Moody's Investors Service, Inc.; "AA-" in
the case of the Offered Certificates of the Class A-1 Trust, "AA-" in the case
of the Offered Certificates of the Class A-2 Trust, "A-" in the case of the
Offered Certificates of the Class B Trust, and "BBB-" in the case of the Offered
Certificates of the Class C Trust by Standard & Poor's Ratings Services; "AA-"
in the case of the Offered
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Certificates of the Class A-1 Trust, "AA-" in the case of the Offered
Certificates of the Class A-2 Trust, "A-" in the case of the Offered
Certificates of the Class B Trust, and "BBB-" in the case of the Offered
Certificates of the Class C Trust by Fitch IBCA, Inc.; and "AA-" in the case of
the Offered Certificates of the Class A-1 Trust, "AA-" in the case of the
Offered Certificates of the Class A-2 Trust, "A-" in the case of the Offered
Certificates of the Class B Trust, and "BBB-" in the case of the Offered
Certificates of the Class C Trust by Duff & Phelps Credit Rating Company;
If any of the conditions specified in this Section 3 shall not have been
fulfilled when and as required by this Agreement to be fulfilled, this Agreement
may be terminated by you on notice to the Company at any time prior to the
Closing Date and such termination shall be without liability of any party to any
other party, except as provided in paragraph (i) of Section 4. Notwithstanding
any such termination, the provisions of Section 5 shall remain in effect.
4. Covenants of the Company. In further consideration of the agreements of
the Underwriters contained in this Agreement, the Company covenants as follows:
(a) To furnish you, without charge, such number of copies of the
Prospectus in New York City as you may reasonably request, on or prior to
the second business day next succeeding the date of this Agreement, and
thereafter from time to time as requested during the period mentioned in
paragraph (e) below, such number of copies of the Prospectus (as
supplemented or amended) as you may reasonably request.
(b) To furnish to you as many conformed copies of the Registration
Statement (as originally filed) and of all amendments thereto, whether
filed before or after such Registration Statement became effective, as many
copies of all exhibits and documents filed therewith or incorporated by
reference therein (through the end of the period mentioned in paragraph (e)
below) and one signed and as many conformed copies of all consents and
certificates of experts as you may reasonably request and, if requested by
you, to furnish to you, for each of the Underwriters, one signed copy of
the Registration Statement (as originally filed) and of each amendment
thereto (including documents incorporated by reference into the Prospectus
but without exhibits).
(c) Promptly following the execution of this Agreement, to prepare a
Prospectus Supplement that complies with the Securities Act and that sets
forth the principal amount of the Offered Certificates and their terms and
conditions (to the extent not otherwise specified in the Preliminary
Prospectus Supplement or the Base Prospectus), the name of each Underwriter
participating in the offering and the principal amount of the Offered
Certificates that each severally has agreed to purchase, the name of each
Underwriter, if any, acting as a representative of the Underwriters in
connection with the offering, the price at which the Offered Certificates
are to be purchased by the Underwriters from the Company, any initial
public offering price, any selling
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concession and reallowance and any delayed delivery arrangements, and such
other information as you, the Company deems appropriate in connection with
the offering of the Offered Certificates. The Company will timely transmit
copies of the Prospectus Supplement to the Commission for filing pursuant
to Rule 424 under the Securities Act.
(d) Before amending the Registration Statement or supplementing the
Prospectus in respect of Offered Certificates during the period mentioned
in paragraph (e) below, to furnish to you a copy of each such proposed
amendment or supplement and not to use any such proposed amendment or
supplement to which you reasonably object; provided that the requirements
of this paragraph (d) shall not apply to any amendment of the Registration
Statement concerning the provisions of the Registration Statement relating
to securities of a type other than the Offered Certificates.
(e) If, during such period after the first date of the public offering
of the Offered Certificates and prior to the date on which all of the
Offered Certificates shall have been sold by the Underwriters any event
shall occur or condition exist as a result of which it is necessary in your
judgement to amend or supplement the Prospectus in order to make the
statements therein, in the light of the circumstances when the Prospectus
is delivered to a purchaser, not misleading, or if, in the opinion of
counsel for the Underwriters, it is necessary to amend or supplement the
Prospectus to comply with applicable law, forthwith to prepare, file with
the Commission and furnish, at its own expense, to the Underwriters and to
the dealers (whose names and addresses you will furnish to the Company) to
which the Offered Certificates may have been sold by you on behalf of the
Underwriters and to any other dealers upon request, either amendments or
supplements to the Prospectus so that the statements in the Prospectus as
so amended or supplemented will not, in the light of the circumstances when
the Prospectus is delivered to a purchaser, be misleading or so that the
Prospectus, as amended or supplemented, will comply with law; provided that
with respect to any amendment or supplement which you or your counsel
shall, on any date after the end of the period concluding nine calendar
months after the date hereof, require to be made or produced by the
Company, all such costs and expenses incurred as a result of such amendment
or supplement shall be for the account of the Underwriters.
(f) During the period mentioned in paragraph (e) above, to notify you
immediately (i) of the effectiveness of any amendment to the Registration
Statement, (ii) of the transmittal to the Commission for filing of any
supplement to the Prospectus or any document that would as a result thereof
be incorporated by reference in the Prospectus, (iii) of the receipt of any
comments from the Commission with respect to the Registration Statement,
the Prospectus or the Prospectus Supplement, (iv) of any request by the
Commission for any amendment to the Registration Statement or any
supplement to the Prospectus or for additional information relating thereto
or to any document incorporated by reference in the Prospectus and (v) of
the issuance by the Commission of any stop order suspending the
effectiveness of the Registration Statement, of the
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<PAGE>
suspension of the qualification of the Offered Certificates for offering or
sale in any jurisdiction, or of the institution or threatening of any
proceeding for any of such purposes; and to use every reasonable effort to
prevent the issuance of any such stop order or of any order suspending such
qualification and, if any such order is issued, to obtain the lifting
thereof at the earliest possible moment.
(g) To use its reasonable efforts, in cooperation with the
Underwriters, to qualify the Offered Certificates for offer and sale under
the securities laws of such states and other jurisdictions as you may
reasonably request to complete the initial distribution of the Offered
Certificates; provided, however, that the Company shall not be obligated to
file any general consent to service of process or to qualify as a foreign
corporation or as a dealer in securities in any jurisdiction in which it is
not so qualified or to subject itself to taxation in respect of doing
business in any jurisdiction in which it is not otherwise so subject. The
Company will also supply you with such information as is necessary for the
determination of legality of the Offered Certificates for investment under
the laws of such jurisdictions as you may reasonably request.
(h) To make generally available to the Company's security holders as
soon as practicable, but not later than 45 days after the close of the
period covered thereby, an earnings statement of the Company (in form
complying with the provisions of Rule 158 of the Securities Act), covering
(i) a period of 12 months beginning after the effective date of the
Registration Statement and any post-effective amendment thereof but not
later than the first day of the Company's fiscal quarter next following
such effective date and (ii) a period of 12 months beginning after the date
of this Agreement but not later than the first day of the Company's fiscal
quarter next following the date of this Agreement.
(i) Whether or not the transactions contemplated in this Agreement are
consummated or this Agreement is terminated, to pay or cause to be paid all
expenses incident to the performance of its obligations under this
Agreement, including: (i) the fees, disbursements and expenses of the
Company's counsel and the Company's accountants in connection with the
issuance and sale of the Offered Certificates and all other fees or
expenses in connection with the preparation of the Prospectus and all
amendments and supplements thereto, including all printing costs associated
therewith, and the delivering of copies thereof to the Underwriters, in the
quantities herein above specified, (ii) all costs and expenses related to
the transfer and delivery of the Offered
Certificates to the Underwriters, including any transfer or other taxes
payable thereon, (iii) the costs of printing or producing any Blue Sky or
legal investment memorandum in connection with the offer and sale of the
Offered Certificates under state securities laws as provided in Section
4(g) hereof, including filing fees and the reasonable fees and
disbursements of counsel for the Underwriters in connection with such
qualification and in connection with the Blue Sky or legal investment
memorandum, (iv) any fees charged by ratings agencies for the rating of the
Offered Certificates, (v) the reasonable fees and disbursements of the
Indenture Trustee, the Subordination Agent, the Trustees and their
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counsel, (vi) the cost of the preparation, issuance and delivery of the
Offered Certificates, (vii) the reasonable fees and disbursements of
Shearman & Sterling as counsel for the Underwriters (other than those
provided for in Clause (iii) of this Section 4(i)) and (viii) all other
costs and expenses incident to the performance of the obligations of the
Company hereunder for which provision is not otherwise made in this
Section. It is understood, however, that except as provided in this Section
4(i), Section 5 and the last paragraph of Section 8, the Underwriters will
pay all of their costs and expenses, including fees and disbursements of
their counsel, transfer taxes payable on resale of any of the Offered
Certificates by them and any advertising expenses connected with any offers
they may make.
(j) For a period of three years after the Closing Date, to make
available to the Underwriters, copies of all annual reports, quarterly
reports and current reports filed by the Company with the Securities and
Exchange Commission (the "Commission") on Forms 10-K, 10-Q and 8-K, or such
other similar forms as may be designated by the Commission, and such other
documents, reports and information as shall be furnished by the Company to
the holders of Offered Certificates or to its security holders generally;
provided that at such time the Company has securities registered under
Section 12(b) or 12(g) of the Exchange Act.
(k) In connection with the offering, until you shall have notified the
Company of the completion of the resale of the Offered Certificates,
neither the Company nor any of its Affiliates has bid for or purchased or
will bid for or purchase, either alone or with one or more other persons,
for any account in which it or any of its affiliates has a beneficial
interest any Offered Certificates; and neither it nor any of its affiliates
will make bids or purchases for the purpose of creating actual, or
apparent, active trading in, or of raising the price of, the Offered
Certificates.
(l) Between the date of this Agreement and the Closing Date, not to
offer, sell or enter into any agreement to sell, directly or indirectly,
any equipment notes, pass through certificates, equipment trust
certificates or equipment purchase certificates secured by aircraft owned
or leased by the Company (or rights relating thereto) other than the
Offered Certificates or Equipment Notes relating thereto, without your
prior written consent.
(m) During the period when a prospectus relating to the Offered
Certificates is required to be delivered under Section 5(c) of the
Securities Act, to file promptly all documents required to be filed with
the Commission pursuant to Section 13, 14 or 15(d) of the Exchange Act.
(n) To comply to the best of its abilities with the Securities Act,
the Exchange Act and the Trust Indenture Act so as to permit the completion
of the distribution of the Offered Certificates as contemplated in this
Agreement and in the Prospectus.
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5. Indemnification and Contribution. (a) The Company agrees to indemnify
and hold harmless each Underwriter, and each person, if any, who controls such
Underwriter within the meaning of either Section 15 of the Securities Act or
Section 20 of the Exchange Act, or is under common control with, or is
controlled by, such Underwriter, from and against any and all losses, claims,
damages and liabilities (including, without limitation, any legal or other
expenses reasonably incurred by such Underwriter 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 the 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 incurred by any Underwriter are caused by any such untrue statement
or omission or alleged untrue statement or omission based upon information
relating to such Underwriter (and, in the case of such losses, claims, damages
or liabilities incurred by Morgan Stanley, by any such untrue statement or
omission or alleged untrue statement or omission based upon information relating
to the Class B and C Liquidity Provider or to Morgan Stanley, Dean Witter & Co.)
furnished to the Company in writing by such Underwriters through you expressly
for use therein; provided, however, that the foregoing indemnity agreement with
respect to the Preliminary Prospectus Supplement shall not inure to the benefit
of any Underwriter from whom the person asserting any such losses, claims,
damages or liabilities purchased Offered Certificates, or any person controlling
such Underwriter, if a copy of the Prospectus Supplement (as then amended or
supplemented if the Company shall have furnished any amendments thereto) was not
sent or given by or on behalf of such Underwriter to such person, if required by
law so to have been delivered, at or prior to the written confirmation of the
sale of the Offered Certificates to such persons, and the Prospectus Supplement
(as so amended or supplemented) would have cured the defect giving rise to such
losses, claims, damages or liabilities, unless such failure is the result of
noncompliance by the Company with Section 4(a) hereof.
(b) Each Underwriter agrees, severally and not jointly, to indemnify and
hold harmless the Company, each of its directors, its officers and each person,
if any, who controls the Company within the meaning of either Section 15 of the
Securities Act or Section 20 of the Exchange Act to the same extent as the
foregoing indemnity from the Company to the Underwriters, but only with
reference to information relating to such Underwriter furnished to the Company
in writing by such Underwriter through you expressly for use in the Registration
Statement, any Preliminary Prospectus Supplement, the Prospectus, or any
amendments or supplements 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 any of paragraph (a) or (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, upon
request of the indemnified party, shall retain counsel reasonably
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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
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 the fees and expenses of more than one separate firm
(in addition to any local counsel) for all such indemnified parties and that all
such fees and expenses shall be reimbursed as they are incurred. Such firm shall
be designated in writing by Morgan Stanley & Co. Incorporated in the case of
parties indemnified pursuant to paragraph (a) above and by the Company in the
case of parties indemnified pursuant to paragraph (b) above. 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 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 60 days after
receipt by such indemnifying party of the aforesaid request and (ii) such
indemnifying party shall not have reimbursed the indemnified party 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 or threatened proceeding in respect of which any
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) To the extent the indemnification provided for in paragraph (a) or (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 (i) in such
proportion as is appropriate to reflect the relative benefits received by the
Company on the one hand and the Underwriters on the other hand from the offering
of such Offered Certificates or (ii) if the allocation provided by clause (i)
above is not permitted by applicable law, in such proportion as is appropriate
to reflect not only the relative benefits referred to in clause (i) above
but also the relative fault of the Company on the one hand and the Underwriters
on the other hand in connection with the statements or omissions that resulted
in such losses, claims,
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damages or liabilities, as well as any other relevant equitable considerations.
The relative benefits received by the Company on the one hand and the
Underwriters on the other hand in connection with the offering of such Offered
Certificates shall be deemed to be in the same respective proportions as (in the
case of the Company) the net proceeds from the offering of such Offered
Certificates (before deducting expenses) received by the Trusts and (in the case
of the Underwriters) the total commissions received by the Underwriters in
respect of the Offered Certificates, in each case as set forth in the table on
the cover of the Prospectus Supplement, bear to the aggregate offering price of
such Offered Certificates. The relative fault of the Company, on the one hand,
and the Underwriters, on the other hand, 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 Underwriters and the parties'
relative intent, knowledge, access to information and opportunity to correct or
prevent such statement or omission. The Underwriters' respective obligations to
contribute pursuant to this Section 5 are several in proportion to the
respective principal amount of Offered Certificates they have purchased
hereunder, and not joint.
(e) The Company and the Underwriters agree that it would not be just or
equitable if contribution pursuant to this Section 5 were determined by pro rata
allocation (even if the Underwriters were treated as one entity for such
purpose) 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 Underwriter shall be required to contribute any amount in excess
of the amount by which the total price at which the Offered Certificates
underwritten by it and distributed to the public were offered to the public
exceeds the amount of any damages that the Underwriter 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 Securities Act) shall be entitled to
contribution from any person who was not guilty of such fraudulent
misrepresentation. The indemnity and contribution provisions contained in this
Section 5 and the representations and warranties of the Company contained in
this Agreement 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 Underwriters or any person controlling any Underwriter, by or on
behalf of the Company, its officers or directors or any person controlling the
Company and (iii) acceptance of and payment for any of the Offered Certificates.
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.
6. Termination. (a) This Agreement shall be subject to termination by
notice given by you to the Company, if (i) after the execution and delivery of
this Agreement
19
<PAGE>
and prior to the Closing Date (A) trading generally shall have been suspended or
materially limited on or by, as the case may be, any of the New York Stock
Exchange, the American Stock Exchange, the National Association of Securities
Dealers, Inc., the Chicago Board of Options Exchange, the Chicago Mercantile
Exchange or the Chicago Board of Trade, (B) trading of any securities of the
Company shall have been suspended on any exchange or in any over-the-counter
market, (C) a general moratorium on commercial banking activities in New York
shall have been declared by either Federal or New York State authorities or (D)
there shall have occurred any outbreak or escalation of hostilities or any
change in financial markets or any calamity or crisis that, in your judgment, is
material and adverse and (ii) in the case of any of the events specified in
clauses (i)(A) through (D), such event singly or together with any other such
event makes it, in your judgment, impracticable to market the Offered
Certificates on the terms and in the manner contemplated in the Prospectus.
(b) If this Agreement is terminated pursuant to this Section 6, such
termination shall be without liability of any party to any other party, except
to the extent provided in Section 4(i). Notwithstanding any such termination,
the provisions of Section 5 shall remain in effect.
(c) This Agreement may also terminate pursuant to the provisions of Section
3, with the effect stated in such Section.
7. Notices. All notices and other communications under this Agreement shall
be in writing, and, if sent to the Underwriters, shall be mailed, delivered or
sent by facsimile transmission to:
Morgan Stanley & Co. Incorporated
1585 Broadway
New York, New York 10036
Attention: Tom Cahill
Facsimile number: (212) 761-0786
or, if sent to the Company, shall be mailed, delivered or sent by facsimile
transmission to it at:
Atlas Air, Inc.
538 Commons Drive
Golden, Colorado 80401
Attention: Chief Financial Officer
Facsimile number: (303) 526-5051
20
<PAGE>
with a copy to:
Cahill Gordon & Reindel
80 Pine Street
New York, New York 10005
Attention: Stephen A. Greene, Esq.
Facsimile number: (212) 269-5420
8. Effect of Default. This Agreement shall become effective upon the
execution and delivery hereof by the parties hereto.
If, on the Closing Date, any one or more of the Underwriters shall fail or
refuse to purchase the Offered Certificates that it or they have agreed to
purchase hereunder on such date, and the aggregate principal amount of Offered
Certificates which such defaulting Underwriter or Underwriters agreed but failed
or refused to purchase is not more than one-tenth of the aggregate principal
amount of Offered Certificates to be purchased on such date, the other
Underwriters shall be obligated severally in the proportions that the principal
amount of Offered Certificates set forth opposite their respective names in
Schedule I bears to the aggregate principal amount of Offered Certificates set
forth opposite the names of all such non-defaulting Underwriters, or in such
other proportions as Underwriter may specify, to purchase the Offered
Certificates which such defaulting Underwriter or Underwriters agreed but failed
or refused to purchase on such date; provided that in no event shall the
principal amount of Offered Certificates that any Underwriter has agreed to
purchase pursuant to this Agreement be increased pursuant to this Section 8 by
an amount in excess of one-ninth of such principal amount of Offered
Certificates without the written consent of such Underwriter. If on the Closing
Date any Underwriter or Underwriters shall fail or refuse to purchase Offered
Certificates which it or they have agreed to purchase on such date and the
aggregate principal amount of Offered Certificates with respect to which such
default occurs is more than one-tenth of the aggregate principal amount of
Offered Certificates to be purchased on such date, and arrangements satisfactory
to you and the Company for the purchase of such Offered Certificates are not
made within 36 hours after such default, this Agreement shall terminate without
liability on the part of any non-defaulting Underwriter or of the Company,
except that the Company will continue to be liable for the payment of expenses
for any non-defaulting Underwriter to the extent set forth in paragraph (i) of
Section 4. In any such case either you or the Company shall have the right to
postpone the Closing Date, but in no event for longer than seven days, in order
that the required changes, if any, in the Prospectus or in any other documents
or arrangements may be effected. Any action taken under this paragraph shall not
relieve any defaulting Underwriter from liability in respect of any default of
such Underwriter under this Agreement.
If this Agreement shall be terminated by the Underwriters, or any of them,
because of any failure or refusal on the part of the Company to comply with the
terms or to fulfill any of the conditions of this Agreement, or if for any
reason the Company shall be unable to perform its obligations under this
Agreement, the Company will reimburse the Underwriters
21
<PAGE>
or such Underwriters as have so terminated this Agreement with respect to
themselves, severally, for all out-of-pocket expenses (including the fees and
disbursements of their counsel) reasonably incurred by such Underwriters in
connection with this Agreement or the offering contemplated hereunder.
9. Miscellaneous. This Agreement may be signed in any number of
counterparts, each of which shall be an original, with the same effect as if the
signatures thereto and hereto were upon the same instrument.
This Agreement shall be governed by and construed in accordance with the
internal laws of the State of New York.
The headings of the sections of this Agreement have been inserted for
convenience of reference only and shall not be deemed a part of this Agreement.
22
<PAGE>
Please confirm your agreement to the foregoing by signing in the space
provided below for that purpose and returning to us a copy hereof, whereupon
this Agreement shall constitute a binding agreement between us.
Very truly yours,
ATLAS AIR, INC.
By: /s/ Michael Chowdry
-----------------------------------
Name: Michael Chowdry
Title: Chairman, CEO and President
Accepted as of the date first above written:
Morgan Stanley & Co. Incorporated
BT Alex. Brown Incorporated
ING Baring Furman Selz LLC
CIBC Oppenheimer Corp.
By: MORGAN STANLEY & CO. INCORPORATED
Acting on behalf of itself and other named Underwriters
By: /s/ Christopher Chaput
------------------------------------
Name: Christopher Chaput
Title: Vice President
<PAGE>
SCHEDULE I
(Pass Through Certificates, Series 1999-1)
ATLAS AIR, INC.
<PAGE>
<TABLE>
<CAPTION>
Pass Through Aggregate Final Expected
Certificate Principal Interest Distribution
Designation Amounts Rate Date
<S> <C> <C> <C> <C>
1999-1A-1 $268,208,000.00 7.20% January 2, 2019
1999-1A-2 $43,544,000.00 6.88% July 2, 2009
1999-1B $111,910,000.00 7.63% January 2, 2015
1999-1C $119,904,000.00 8.77% January 2, 2011
</TABLE>
<PAGE>
SCHEDULE II
(Pass Through Certificates, Series 1999-1)
ATLAS AIR, INC.
<TABLE>
<CAPTION>
Underwriter 1999-1A-1 1999-1A-2 1999-1B 1999-1C
----------- --------- --------- ------- -------
<S> <C> <C> <C> <C>
Morgan Stanley & Co. $134,104,000 $21,772,000 $55,955,000 $59,952,000
Incorporated
BT Alex. Brown Incorporated $107,283,200 $17,417,600 $44,764,000 $47,961,600
ING Baring Furman Selz LLC $13,410,400 $2,177,200 $5,595,500 $5,995,200
CIBC Oppenheimer Corp. $13,410,400 $2,177,200 $5,595,500 $5,995,200
--------------------------------------------------------------------------------
Total: $268,208,000 $43,544,000 $111,910,000 $119,904,000
================================================================================
</TABLE>
Underwriting fees, discounts, commissions or other compensation:$4,892,094. This
sum represents 0.90% of the aggregate principal amount of the Offered
Certificates.
REVOLVING CREDIT AGREEMENT
(1999-lA-1)
Dated as of April 13, 1999
between
WILMINGTON TRUST COMPANY,
not in its individual capacity but solely
as Subordination Agent,
as agent and trustee for the
Atlas Air Pass Through Trust 1999-lA-1,
as Borrower
and
ABN AMRO BANK N.V., CHICAGO BRANCH,
as Liquidity Provider
Relating to
Atlas Air Pass Through Trust 1999-lA-1
7.20% Atlas Air Pass Through Certificates,
Series 1999-lA-1
<PAGE>
TABLE OF CONTENTS
Page
ARTICLE I
DEFINITIONS
Section 1.01. Certain Defined Terms ..........................................1
ARTICLE II
AMOUNT AND TERMS OF THE COMMITMENT
Section 2.01. The Advances ..................................................8
Section 2.02. Making the 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 Liquidity Provider Under the
Intercreditor Agreement ....................................12
Section 2.08. Book Entries .................................................13
Section 2.09. Payments from Available Funds Only ...........................13
Section 2.10. Extension of the Expiry Date; Non-Extension Advance .........13
ARTICLE III
OBLIGATIONS OF THE BORROWER
Section 3.01. Increased Costs ..............................................14
Section 3.02. Capital Adequacy .............................................15
Section 3.03. Payments Free of Deductions ..................................15
Section 3.04. Payments .....................................................16
Section 3.05. Computations .................................................16
Section 3.06. Payment on Non-Business Days .................................16
Section 3.07. Interest .....................................................17
Section 3.08. Replacement of Borrower ......................................18
Section 3.09. Funding Loss Indemnification .................................18
Section 3.10. Illegality ...................................................19
i
<PAGE>
ARTICLE IV
CONDITIONS PRECEDENT
Section 4.01. Conditions Precedent to Effectiveness of Section 2.01 ........19
Section 4.02. Conditions Precedent to Borrowing ..........................21
ARTICLE V
COVENANTS
Section 5.01. Affirmative Covenants of the Borrower ........................21
Section 5.02. Negative Covenants of the Borrower ...........................22
ARTICLE VI
LIQUIDITY EVENTS OF DEFAULT
Section 6.01. Liquidity Events of Default ..................................22
ARTICLE VII
MISCELLANEOUS
Section 7.01. Amendments, Etc. .............................................23
Section 7.02. Notices, Etc. ................................................23
Section 7.03. No Waiver; Remedies ..........................................24
Section 7.04. Further Assurances ...........................................24
Section 7.05. Indemnification; Survival of Certain Provisions ..............24
Section 7.06. Liability of the Liquidity Provider ..........................25
Section 7.07. Costs, Expenses and Taxes ....................................25
Section 7.08. Binding Effect; Participations ...............................26
Section 7.09. Severability .................................................27
Section 7.10. GOVERNING LAW ................................................28
Section 7.11. Submission to Jurisdiction; Waiver of Jury Trial;
Waiver of Immunity .........................................28
Section 7.12. Execution in Counterparts ....................................29
Section 7.13. Entirety .....................................................29
Section 7.14. Headings .....................................................29
Section 7.15. LIQUIDITY PROVIDER'S OBLIGATION TO
MAKE ADVANCES ..............................................29
ii
<PAGE>
ANNEX I Interest Advance Notice of Borrowing
ANNEX II Non-Extension Advance Notice of Borrowing
ANNEX III Downgrade Advance Notice of Borrowing
ANNEX IV Final Advance Notice of Borrowing
ANNEX V Notice of Termination
ANNEX VI Notice of Replacement Subordination Agent
iii
<PAGE>
REVOLVING CREDIT AGREEMENT
This REVOLVING CREDIT AGREEMENT dated as of April 13, 1999, between
WILMINGTON TRUST COMPANY, a Delaware banking corporation, not in its individual
capacity but solely as Subordination Agent under the Intercreditor Agreement
(each as defined below), as agent and trustee for the Class A-1 Trust (as
defined below) (the "Borrower"), and ABN AMRO BANK N.V., a bank organized under
the laws of the Netherlands, acting through its Chicago Branch ("ABN AMRO" or
the "Liquidity Provider").
W I T N E S S E T H:
WHEREAS, pursuant to the Class A-1 Trust Agreement (such term and all other
capitalized terms used in these recitals having the meanings set forth or
referred to in Section 1.01), the Class A-1 Trust is issuing the Class A-1
Certificates; and
WHEREAS, the Borrower, in order to support the timely payment of a portion
of the interest on the Class A-1 Certificates in accordance with their terms,
has requested the 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 premises, the parties hereto agree
as follows:
ARTICLE I
DEFINITIONS
Section 1.01. Certain Defined Terms. (a) Definitions. As used in this
Agreement and unless otherwise expressly indicated, or unless the context
clearly requires otherwise, the following capitalized terms shall have the
following respective meanings for all purposes of this Agreement:
"Additional Cost" has the meaning assigned to such term in Section 3.01.
"Advance" means an Interest Advance, a Final Advance or a Provider Advance,
as the case may be.
"Applicable Liquidity Rate" has the meaning assigned to such term in
Section 3.07(f).
<PAGE>
2
"Applicable Margin" means, (x) with respect to any Unpaid Advance or
Applied Provider Advance, 2.25%, (y) with respect to any Unapplied Downgrade
Advance, 0.60% for the first year after the date of such Advance and 1.00%
thereafter and (z) with respect to any Unapplied Non-Extension Advance 0.60%.
"Applied Downgrade Advance" has the meaning assigned to such term in
Section 2.06(a).
"Applied Non-Extension Advance" has the meaning assigned to such term in
Section 2.06(a).
"Applied Provider Advance" has the meaning assigned to such term in Section
2.06(a).
"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 (a) the weighted
average of the rates on overnight Federal funds transactions with members of the
Federal Reserve System arranged by Federal funds brokers, as published for such
day (or, if such day is not a Business Day, for the next preceding Business Day)
by the Federal Reserve Bank of New York, or if such rate is not so published for
any day that is a Business Day, the average of the quotations for such day for
such transactions received by the Liquidity Provider from three Federal funds
brokers of recognized standing selected by it, plus (b) one-quarter of one
percent (1/4 of 1%).
"Base Rate Advance" means an Advance that bears interest at a rate based
upon the Base Rate.
"Borrower" has the meaning assigned to such term in the recital of parties
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 or Sunday or a day on
which commercial banks are required or authorized to close in Denver, Colorado,
Chicago, Illinois, New York, New York or, so long as any Class A-1 Certificate
is outstanding, the city and state in which the Class A-1 Trustee, the Borrower
or any Loan Trustee maintains its Corporate Trust Office or receives or
disburses funds, and, if the applicable Business Day relates to any Advance or
other amount bearing interest based on the LIBOR Rate, on which dealings are
carried on in the London interbank market.
<PAGE>
3
"Certificates of Deposit" has the meaning assigned to such term in the
Deposit Agreement.
"Deposits" has the meaning assigned to such terms in the Deposit Agreement.
"Depositary" has the meaning assigned to such term in the Deposit
Agreement.
"Deposit Agreement" means the Deposit Agreement dated the date hereof
between First Security Bank, National Association, as Escrow Agent, and Credit
Suisse First Boston, acting through its New York Branch, as Depositary,
pertaining to the Class A-1 Certificates, as the same may be amended, modified
or supplemented from time to time in accordance with the terms thereof.
"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 Liquidity Provider contemplated by Section 4.01(e) shall
be conclusive evidence that the Effective Date has occurred.
"Excluded Taxes" means (i) taxes imposed on the overall net income of the
Liquidity Provider or of its Lending Office by the jurisdiction where such
Liquidity Provider's principal office or such Lending Office is located, and
(ii) Excluded Withholding Taxes.
"Excluded Withholding Taxes" means (i) withholding Taxes imposed by the
United States except to the extent that such United States withholding Taxes are
imposed as a result of any change in applicable law after the date hereof
(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), or in the case of a successor Liquidity Provider (including a
transferee of an Advance) or Lending Office, after the date on which such
successor Liquidity Provider obtains its interest or on which the Lending Office
is changed, and (ii) any withholding Taxes imposed by the United States which
are imposed or increased as a result of the Liquidity Provider failing to
deliver to the Borrower any certificate or document (which certificate or
document in the good faith judgment of the 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.
"Expenses" means liabilities, obligations, damages, settlements, penalties,
claims, actions, suits, costs, expenses, and disbursements (including, without
<PAGE>
4
limitation, reasonable fees and disbursements of legal counsel and costs of
investigation), provided that Expenses shall not include any Taxes.
"Expiry Date" means April 11, 2000, initially, or any date to which the
Expiry Date is extended pursuant to Section 2.10.
"Final Advance" means an Advance made pursuant to Section 2.02(d).
"Intercreditor Agreement" means the Intercreditor Agreement dated the date
hereof, among the Trustees, the Liquidity Provider, the liquidity provider under
each Liquidity Facility (other than this Agreement) 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).
"Interest Period" means, with respect to any LIBOR Advance, each of the
following periods:
(i) the period beginning either (x) on the third Business Day following
the Liquidity Provider s receipt of the Notice of Borrowing for such
LIBOR Advance or (y) on the date of the withdrawal of funds from the
Class A-1 Cash Collateral Account for the purpose of paying interest
on the Class A-1 Certificates as contemplated by Section 2.06(a)
hereof and, in either case, ending on the next Regular Distribution
Date (or ending, in the case of an Interest Period applicable to any
Unapplied Provider Advance, on the numerically corresponding day in
the first or sixth calendar month after the first day of the
applicable Interest Period and/or on the next Regular Distribution
Date, as Atlas may select by providing notice thereof to the Borrower
and the Liquidity Provider no later than three Business Days prior to
the commencement of such Interest Period, provided that if Atlas shall
not provide such a notice at least three Business Days prior to the
commencement of such Interest Period, then Atlas shall be deemed to
have selected an Interest Period 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 (or ending, in the case of an Interest Period applicable to any
Unapplied Provider Advance, on the numerically corresponding day in
the first or sixth calendar month after the first day of the
applicable
<PAGE>
5
Interest Period and/or on the next Regular Distribution Date, as Atlas
may select by providing notice thereof to the Borrower and the
Liquidity Provider no later than three Business Days prior to the
commencement of such Interest Period, provided that if Atlas shall not
provide such a notice at least three Business Days prior to the
commencement of such Interest Period, then Atlas shall be deemed to
have selected an Interest Period ending on the next Regular
Distribution Date);
provided, however, that (I) if an Unapplied Provider Advance which is a LIBOR
Advance becomes an Applied Provider Advance, the Interest Period then applicable
to such Unapplied Provider Advance shall be applicable to such Applied Provider
Advance and (II) if (x) the Final Advance shall have been made, or (y) other
outstanding Advances shall have been converted into the Final Advance, then the
Interest Periods shall be successive periods of one month beginning on the third
Business Day following the Liquidity Provider's receipt of the Notice of
Borrowing for such Final Advance (in the case of clause (x) above) or the
Regular Distribution Date following such conversion (in the case of clause (y)
above).
"Leased Aircraft Participation Agreement" means a participation agreement
substantially in the form of Exhibit A-1 to the Note Purchase Agreement.
"Lending Office" means the lending office of the Liquidity Provider
presently located at Chicago, Illinois, or such other lending office as the
Liquidity Provider from time to time shall notify the Borrower as its lending
office hereunder; provided that the Liquidity Provider shall not change its
Lending Office to a Lending Office outside the United States of America except
in accordance with Section 3.01, 3.02 or 3.03 hereof.
"LIBOR Advance" means an Advance bearing interest at a rate based upon the
LIBOR Rate.
"LIBOR Rate" means, with respect to any Interest Period, (i) the rate per
annum appearing on display page 3750 (British Bankers Association-LIBOR) of the
Dow Jones Markets Service (or any successor or substitute therefor) at
approximately 11:00 A.M. (London time) two Business Days before the first day of
such Interest Period, as the rate for dollar deposits with a maturity comparable
to such Interest Period, or (ii) if the rate calculated pursuant to clause (i)
above is not available, the average (rounded upwards, if necessary, to the next
1/16 of 1%) of the rates per annum at which deposits in dollars are offered for
the relevant Interest Period by three banks of recognized standing selected by
the Liquidity Provider in the London interbank market at approximately 11:00
A.M. (London time) two Business Days before the first day of such Interest
Period in an amount approximately equal to the principal amount of the
<PAGE>
6
LIBOR Advance to which such Interest Period is to apply and for a period
comparable to such Interest Period.
"Liquidity Event of Default" means the occurrence of either (a) the
acceleration of all of the Equipment Notes or (b) an Atlas Bankruptcy Event.
"Liquidity Indemnitee" means (i) the Liquidity Provider, (ii) the
directors, officers, employees and agents of the Liquidity Provider, and (iii)
the successors and permitted assigns of the persons described in clauses (i) and
(ii), inclusive.
"Liquidity Provider" has the meaning assigned to such term in the recital
of parties to this Agreement.
"Maximum Commitment" shall mean, subject to the proviso contained in the
third sentence of Section 2.02(a), at any time of determination, (a) the
Required Amount 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 Commitment shall be zero.
"Non-Extension Advance" means an Advance made pursuant to Section 2.02(b).
"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.
"Owned Aircraft Participation Agreement" means a participation agreement
substantially in the form of Exhibit C-1 to the Note Purchase Agreement.
"Participation Agreements" means, collectively, the Leased Aircraft
Participation Agreement and the Owned Aircraft Participation Agreement.
"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.
"Prospectus Supplement" means the Prospectus Supplement dated April 5, 1999
relating to the Certificates, as such Prospectus Supplement may be amended or
supplemented.
"Provider Advance" means a Downgrade Advance or a Non-Extension Advance.
<PAGE>
7
"Regulatory Change" has the meaning assigned to such term in section 3.01.
"Replenishment Amount" has the meaning assigned to such term 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 Stated Interest Rate for
the Class A-1 Certificates, that would be payable on the Class A-1 Certificates
on each of the three successive semiannual Regular Distribution Dates
immediately following such day or, if such day is a Regular Distribution Date,
on such day and the succeeding two semiannual Regular Distribution Dates, in
each case calculated on the basis of the Pool Balance of the Class A-1
Certificates on such day and without regard to expected future payments of
principal on the Class A-1 Certificates.
"Tax Letter" means the letter dated the date hereof between the Liquidity
Provider and Atlas pertaining to this Agreement.
"Termination Date" means the earliest to occur of the following: (i) the
Expiry Date; (ii) the date on which the Borrower delivers to the Liquidity
Provider a certificate, signed by a Responsible Officer of the Borrower,
certifying that all of the Class A-1 Certificates have been paid in full (or
provision has been made for such payment in accordance with the Intercreditor
Agreement and the Trust Agreements) or are otherwise no longer entitled to the
benefits of this Agreement; (iii) the date on which the Borrower delivers to the
Liquidity Provider a certificate, signed by a Responsible Officer of the
Borrower, certifying that a Replacement Liquidity Facility has been substituted
for this Agreement in full pursuant to Section 3.6(e) of the Intercreditor
Agreement; (iv) the fifth Business Day following the receipt by the Borrower of
a Termination Notice from the Liquidity Provider pursuant to Section 6.01
hereof; 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 V to this Agreement.
"Transferee" has the meaning assigned to such term in Section 7.08(b).
"Unapplied Downgrade Advance" means any Downgrade Advance other than an
Applied Downgrade Advance.
"Unapplied Provider Advance" means any Provider Advance other than an
Applied Provider Advance.
<PAGE>
8
"Unpaid Advance" has the meaning assigned to such term in Section 2.05.
(b) Terms Defined in the Intercreditor Agreement. For all purposes of this
Agreement, the following terms shall have the respective meanings assigned to
such terms in the Intercreditor Agreement:
"ABN AMRO Fee Letter", "Atlas", "Atlas Bankruptcy Event",
"Certificates", "Class A-1 Cash Collateral Account", "Class A-1
Certificates", "Class A-1 Certificateholders", "Class A-1 Trust",
"Class A-1 Trust Agreement", "Class A-1 Trustee", "Class A-2
Certificates", "Class B Certificates", "Class C Certificates", "Closing
Date", "Controlling Party", "Corporate Trust Office", "Distribution
Date", "Downgraded Facility", "Equipment Notes", "Final Maturity Date",
"Financing Agreement", "Indenture", "Interest Payment Date",
"Investment Earnings", "Liquidity Facility", "Liquidity Obligations",
"Loan Trustee", "Non-Extended Facility", "Note Purchase Agreement",
"Operative Agreements", "Performing Equipment Note", "Person",
"Placement Agents", "Placement Agreement", "Pool Balance", "Rating
Agency", "Ratings Confirmation", "Regular Distribution Date",
"Replacement Liquidity Facility", "Responsible Officer", "Scheduled
Payment", "Special Payment", "Stated Interest Rate", "Subordination
Agent", "Taxes", "Threshold Rating", "Transfer", "Trust Agreements",
"Trustee", "Underwriters", "Underwriting Agreement" and "Written
Notice".
ARTICLE II
AMOUNT AND TERMS OF THE COMMITMENT
Section 2.01. The Advances. The 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 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 the Advances. (a) Interest Advances shall be made in
one or more Borrowings by delivery to the Liquidity Provider of one or more
written and completed Notices of Borrowing in substantially the form of Annex I
attached hereto, signed by a Responsible Officer of the Borrower, in an amount
not exceeding the Maximum Commitment at such time and shall be used solely for
the payment when due of the interest on the Class A-1 Certificates at the Stated
Interest Rate therefor in accordance with Section 3.6(a) of the Intercreditor
Agreement. Each Interest Advance made hereunder shall automatically reduce the
Maximum Commitment and the amount available to be borrowed hereunder by
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9
subsequent Advances by the amount of such Interest Advance (subject to
reinstatement as provided in the next sentence). Upon repayment to the Liquidity
Provider in full 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 Commitment shall be reinstated by the amount of such repaid Interest
Advance; provided, however, that the Maximum Commitment shall not be so
reinstated at any time if (i) a Liquidity Event of Default shall have occurred
and be continuing and (ii) there is a Performing Note Deficiency.
(b) A Non-Extension Advance shall be made in a single Borrowing if this
Agreement is not extended in accordance with Section 3.6(d) of the Intercreditor
Agreement (unless a Replacement Liquidity Facility to replace this Agreement
shall have been delivered to the Borrower as contemplated by said Section 3.6(d)
within the time period specified in such Section by delivery to the Liquidity
Provider of a written and completed Notice of Borrowing in substantially the
form of Annex II attached hereto, signed by a Responsible Officer of the
Borrower, in an amount equal to the Maximum Commitment at such time, and shall
be used to fund the Class A-1 Cash Collateral Account in accordance with said
Section 3.6(d) and Section 3.6(f) of the Intercreditor Agreement.
(c) A Downgrade Advance shall be made in a single Borrowing upon a
downgrading of the Liquidity Provider's short-term unsecured debt rating issued
by either Rating Agency below the applicable Threshold Rating (as provided for
in Section 3.6(c) of the Intercreditor Agreement) unless a Replacement Liquidity
Facility to replace this Agreement shall have been previously delivered to the
Borrower in accordance with said Section 3.6(c), by delivery to the Liquidity
Provider of a written and completed Notice of Borrowing in substantially the
form of Annex III attached hereto, signed by a Responsible Officer of the
Borrower, in an amount equal to the Maximum Commitment at such time, and shall
be used to fund the Class A-1 Cash Collateral Account in accordance with said
Section 3.6(c) and Section 3.6(f) of the Intercreditor Agreement.
(d) A Final Advance shall be made in a single Borrowing upon the receipt by
the Borrower of a Termination Notice from the Liquidity Provider pursuant to
Section 6.01 hereof by delivery to the Liquidity Provider of a written and
completed Notice of Borrowing in substantially the form of Annex IV attached
hereto, signed by a Responsible Officer of the Borrower, in an amount equal to
the Maximum Commitment at such time, and shall be used to fund the Class A-1
Cash Collateral Account (in accordance with Section 3.6(i) of the Intercreditor
Agreement) and Section 3.6(f) 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(b),
2.02(c) or 2.02(d), as the case may be, given by the Borrower to the Liquidity
Provider. If a Notice of Borrowing is delivered by the Borrower in respect of
any Borrowing no later than 1:00 PM (New York
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10
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 Liquidity
Provider shall make available to the Borrower, in accordance with its payment
instructions, the amount of such Borrowing in U.S. dollars and immediately
available funds, before 4:00 PM (New York City time) on such Business Day or 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 PM
(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
Liquidity Provider shall make available to the Borrower, in accordance with its
payment instructions, the amount of such Borrowing in U.S. dollars and
immediately available funds, before 12:00 Noon (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
Liquidity Provider for such purpose. Each Notice of Borrowing shall be
irrevocable and binding on the Borrower.
(f) Upon the making of any Advance requested pursuant to a Notice of
Borrowing, in accordance with the Borrower's payment instructions, the Liquidity
Provider shall be fully discharged of its obligation hereunder with respect to
such Notice of Borrowing, and the 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. Following the making of any
Advance pursuant to Section 2.02(b), (c) or (d) hereof to fund the Class A-1
Cash Collateral Account, the Liquidity Provider shall have no interest in or
rights to the Class A-1 Cash Collateral Account, such Advance or any other
amounts from time to time on deposit in the Class A-1 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 3.6(e) or
(f) 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 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 Liquidity Provider
the fees set forth in the ABN AMRO 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 Pool Balance of the Class A-1
Certificates 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
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11
notice of any such automatic reduction of the Maximum Commitment to the
Liquidity Provider 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.
(b) Termination. Upon the making of any Provider Advance or Final Advance
hereunder or the occurrence of the Termination Date, the obligation of the
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 Liquidity Provider (which
notice and demand are hereby waived by the Borrower), to pay, or to cause to be
paid, to the Liquidity Provider on each date on which the 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 as provided in Section 3.07 hereof; provided that if (i) the 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 Liquidity Facility shall become a Downgraded Facility
or Non-Extended Facility at any time when unreimbursed Interest Advances have
reduced the Maximum 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 or an Applied Non-Extension Advance, as the case may
be, 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 Liquidity Provider in accordance with Section 2.06 and for the purposes of
Section 2.06(b)). The Borrower and the 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 Liquidity Provider.
Section 2.06. Repayments of Provider Advances. (a) Amounts advanced
hereunder in respect of a Provider Advance shall be deposited in the Class A-1
Cash Collateral Account, invested and withdrawn from the Class A-1 Cash
Collateral Account as set forth in Sections 3.6(c), (d) and (f) of the
Intercreditor Agreement. The Borrower agrees to pay to the 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 as provided in Section 3.07; provided, however, that
amounts in respect of a Provider Advance withdrawn from the Class A-1 Cash
Collateral Account for the purpose of paying interest on the Class A-1
Certificates in accordance with Section 3.6(f) of the Intercreditor Agreement
(the amount of any such withdrawal being (y) in the case of a Downgrade Advance,
an "Applied Downgrade Advance" and (z) in the case of a Non-
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12
Extension Advance, an "Applied Non-Extension Advance" and, together with an
Applied Downgrade Advance, 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; provided further, however, that if, following the making of a
Provider Advance, the Liquidity Provider delivers a Termination Notice to the
Borrower pursuant to Section 6.01 hereof, 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 thereon. Subject to Sections
2.07 and 2.09 hereof, immediately upon the withdrawal of any amounts from the
Class A-1 Cash Collateral Account on account of a reduction in the Required
Amount, the Borrower shall repay to the 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 hereof.
(b) At any time when an Applied Provider Advance (or any portion thereof)
is outstanding, upon the deposit in the Class A-1 Cash Collateral Account of any
amount pursuant to clause "third" of Section 2.4(b) of the Intercreditor
Agreement, clause "third" of Section 3.2 of the Intercreditor Agreement or
clause "fourth" of Section 3.3 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 each
Provider Advance 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 Liquidity Facility in replacement
of this Agreement in accordance with Section 3.6(e) of the Intercreditor
Agreement, amounts remaining on deposit in the Class A-1 Cash Collateral Account
after giving effect to any Applied Provider Advance on the date of such
replacement shall be reimbursed to the Liquidity Provider, but only to the
extent such amounts are necessary to repay in full to the Liquidity Provider all
amounts owing to it hereunder.
Section 2.07. Payments to the Liquidity Provider Under the Intercreditor
Agreement. In order to provide for payment or repayment to the 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 Liquidity Provider pursuant to the terms
of the Intercreditor Agreement (including, without limitation, Section 3.6(f) of
the Intercreditor Agreement), shall be paid to the Liquidity Provider in
accordance with the
<PAGE>
13
terms thereof. Amounts so paid to the Liquidity Provider shall be applied by the
Liquidity Provider to Liquidity Obligations then due and payable in accordance
with the Intercreditor Agreement or, if not provided for in the Intercreditor
Agreement, then in such manner as the Liquidity Provider shall deem appropriate.
Section 2.08. Book Entries. The 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 Liquidity
Provider to maintain such account or accounts shall not affect the obligations
of the Borrower in respect of Advances.
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 or payments under Section 8.1 or
9.1, as the case may be, of the Participation Agreements and Section 6 of the
Note Purchase Agreement 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 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 Class A-1 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 3.6(f)
of the Intercreditor Agreement.
Section 2.10. Extension of the Expiry Date: Non-Extension Advance. No
earlier than the 60th day and no later than the 40th day prior to the then
effective Expiry Date (unless such Expiry Date is on or after the date that is
15 days after the Final Maturity Date for the Class A-1 Certificates), the
Borrower shall request that the Liquidity Provider extend the Expiry Date for a
period of 364 days after the then effective Expiry Date (unless the obligations
of the Liquidity Provider are earlier terminated in accordance with the terms
hereof). The Liquidity Provider shall advise the Borrower, no earlier than 40
days and no later than 25 days prior to the then effective Expiry Date, whether,
in its sole discretion, it agrees to so extend the Expiry Date. If the Liquidity
Provider advises the Borrower on or before the 25th day prior to the Expiry Date
then in effect that such Expiry Date shall not be so extended, or fails to
irrevocably and unconditionally advise the Borrower on or before the 25th day
prior to the Expiry Date then in effect that such Expiry Date shall be so
extended (and, in each case, if the Liquidity Provider shall not have been
replaced in accordance with Section 3.6(e) of the Intercreditor Agreement), the
Borrower shall be entitled on and after such 25th day (but prior to the then
effective Expiry Date) to request a Non-Extension Advance in accordance with
Section 2.02(b) hereof and Section 3.6(d) of the Intercreditor Agreement.
ARTICLE III
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14
OBLIGATIONS OF THE BORROWER
Section 3.01. Increased Costs. The Borrower shall pay to the Liquidity
Provider from time to time such amounts as may be necessary to compensate the
Liquidity Provider for any increased costs incurred by the Liquidity Provider
which are attributable to its making or maintaining any LIBOR Advances hereunder
or its obligation to make any such Advances hereunder, or any reduction in any
amount receivable by the Liquidity Provider under this Agreement or the
Intercreditor Agreement in respect of any such Advances or such obligation (such
increases in costs and reductions in amounts receivable being herein called
"Additional Costs"), resulting from any change after the date of this Agreement
in U.S. federal, state, municipal, or foreign laws or regulations (including
Regulation D of the Board of Governors of the Federal Reserve System), or the
adoption or making after the date of this Agreement of any interpretations,
directives, or requirements applying to a class of banks including the Liquidity
Provider under any U.S. federal, state, municipal, or any foreign laws or
regulations (whether or not having the force of law) by any court, central bank
or monetary authority charged with the interpretation or administration thereof
(a "Regulatory Change"), which: (1) changes the basis of taxation of any amounts
payable to the Liquidity Provider under this Agreement in respect of any such
Advances (other than Excluded Taxes); or (2) imposes or modifies any reserve,
special deposit, compulsory loan or similar requirements relating to any
extensions of credit or other assets of, or any deposits with other liabilities
of, the Liquidity Provider (including any such Advances or any deposits referred
to in the definition of LIBOR Rate or related definitions). The 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 amount
payable under this Section that may thereafter accrue and would not, in the
reasonable judgment of the Liquidity Provider, be otherwise disadvantageous to
the Liquidity Provider.
The Liquidity Provider will notify the Borrower of any event occurring
after the date of this Agreement that will entitle the Liquidity Provider to
compensation pursuant to this Section 3.01 as promptly as practicable after it
obtains knowledge thereof and determines to request such compensation, which
notice shall describe in reasonable detail the calculation of the amounts owed
under this Section. Determinations by the Liquidity Provider for purposes of
this Section 3.01 of the effect of any Regulatory Change on its costs of making
or maintaining Advances or on amounts receivable by it in respect of Advances,
and of the additional amounts required to compensate the Liquidity Provider in
respect of any Additional Costs, shall be prima facie evidence of the amount
owed under this Section.
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15
Section 3.02. Capital Adequacy. If (1) the adoption, after the date hereof,
of any applicable governmental law, rule or regulation regarding capital
adequacy, (2) any change, after the date hereof, in the interpretation or
administration of any such law, rule or regulation by any central bank or other
governmental authority charged with the interpretation or administration thereof
or (3) compliance by the Liquidity Provider or any corporation controlling the
Liquidity Provider with any applicable guideline or request of general
applicability, issued after the date hereof, by any central bank or other
governmental authority (whether or not having the force of law) that constitutes
a change of the nature described in clause (2), has the effect of requiring an
increase in the amount of capital required to be maintained by the Liquidity
Provider or any corporation controlling the Liquidity Provider, and such
increase is based upon the Liquidity Provider's obligations hereunder and other
similar obligations, the Borrower shall pay to the Liquidity Provider from time
to time such additional amount or amounts as are necessary to compensate the
Liquidity Provider for such portion of such increase as shall be reasonably
allocable to the Liquidity Provider's obligations to the Borrower hereunder. The
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 amount payable under this Section that may thereafter accrue and would not,
in the reasonable judgment of the Liquidity Provider, be otherwise materially
disadvantageous to the Liquidity Provider.
The Liquidity Provider will notify the Borrower of any event occurring
after the date of this Agreement that will entitle the Liquidity Provider to
compensation pursuant to this Section 3.02 as promptly as practicable after it
obtains knowledge thereof and determines to request such compensation, which
notice shall describe in reasonable detail the calculation of the amounts owed
under this Section. Determinations by the Liquidity Provider for purposes of
this Section 3.02 of the effect of any increase in the amount of capital
required to be maintained by the bank and of the amount allocable to the
Liquidity Provider's obligations to the Borrower hereunder shall be prima facie
evidence of the amounts owed under this Section.
Section 3.03. Payments Free of Deductions. All payments made by the
Borrower under this Agreement shall be made free and clear of, and without
reduction for or on account of, any present or future stamp or other taxes,
levies, imposts, duties, charges, fees, deductions, withholdings, restrictions
or conditions of any nature whatsoever now or hereafter imposed, levied,
collected, withheld or assessed, excluding Excluded Taxes (such non-excluded
taxes being referred to herein, collectively, as "Non-Excluded Taxes" and,
individually, as a "Non-Excluded Tax"). If any Non-Excluded Taxes are required
to be withheld from any amounts payable to the Liquidity Provider under this
Agreement, the amounts so payable to the Liquidity Provider shall be increased
to the extent necessary to yield to the Liquidity Provider (after payment of all
Non-Excluded Taxes) interest or any other such amounts payable under this
Agreement at the rates or in the amounts specified in this
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16
Agreement. The Liquidity Provider agrees to use reasonable efforts (consistent
with its internal policy and 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 Liquidity Provider, be
otherwise disadvantageous to the Liquidity Provider. From time to time upon the
reasonable request of the Borrower, the Liquidity Provider agrees to provide to
the Borrower two original Internal Revenue Service Forms W-8 BEN or W-8 ECI, as
appropriate, or any successor or other form prescribed by the Internal Revenue
Service, certifying that the Liquidity Provider is exempt from or entitled to a
reduced rate of United States withholding tax on payments pursuant to this
Agreement.
(b) All payments (including, without limitation, Advances) made by the
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 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
payment required 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 hereunder,
the 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.
Section 3.04. Payments. The Borrower shall make or cause to be made each
payment to the Liquidity Provider under this Agreement so as to cause the same
to be received by the 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 lawful
money of the United States of America, to the Liquidity Provider in immediately
available funds, by wire transfer to ABN AMRO Bank New York, NY, ABA #
026009580, Account Name: ABN AMRO Bank N.V., Chicago Branch, Account #
650-001-1789-41, Reference: Atlas Air, Inc., 1999-1A-1.
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
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17
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 Section 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 Class A-1 Cash Collateral
Account to pay interest on the Class A-1 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 Class A-1 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) which 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 a fluctuating interest rate
per annum for each day equal to the Applicable Liquidity Rate (as defined below)
for such Advance or such other amount 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 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 amount of interest that would have accrued if such otherwise
applicable interest rate as set forth in this Section 3.07 had at all times been
in effect.
(b) Each Advance will be either a Base Rate Advance or a LIBOR Advance as
provided in this Section. Each initial Advance will be a Base Rate Advance for
the period from the date of its borrowing to (but excluding) the third Business
Day following the Liquidity Provider's receipt of the Notice of Borrowing for
such Advance. Thereafter, such Advance shall be a LIBOR Advance. Each Applied
Provider Advance and a Final Advance that is deemed to have been made without
delivery of a Notice of Borrowing pursuant to Section 2.06 shall be a LIBOR
Advance from the day such Advance is made; provided that the Borrower (at the
direction of the Controlling Party, so long as the Liquidity Provider is not the
Controlling Party) may (x) convert an Unapplied Provider Advance or the Final
Advance into a Base Rate Advance on the last day of an Interest Period for such
Advance by giving the Liquidity Provider no less than four Business Days' prior
written notice of such election or (y) elect to maintain an Unapplied Provider
Advance or the Final Advance as a Base Rate Advance by not requesting a
conversion of
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an Unapplied Provider Advance or the Final Advance to a LIBOR Advance under
Clause (5) of the applicable Notice of Borrowing (or, if such Final Advance is
deemed to have been made without delivery of a Notice of Borrowing pursuant to
Section 2.06, by requesting, prior to 11:00 AM on the first Business Day
immediately following the Borrower's receipt of the applicable Termination
Notice, that such Final Advance not be converted from a Base Rate Advance to 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 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 3.00% until paid.
(f) 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. From time to time and subject to the
successor Borrower's meeting the eligibility requirements set forth in Section
6.9 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 VI attached
hereto (a "Notice of Replacement Subordination Agent") delivered to the
Liquidity Provider by the then Borrower, the successor Borrower designated
therein shall be substituted for as the Borrower for all purposes hereunder.
Section 3.09. Funding Loss Indemnification. The Borrower shall pay to the
Liquidity Provider, upon the request of the Liquidity Provider, such amount or
amounts as shall be sufficient (in the reasonable opinion of the Liquidity
Provider) to compensate it for any loss, cost, or expense incurred by reason of
the liquidation or redeployment of deposits or other funds
<PAGE>
19
acquired by the Liquidity Provider to fund or maintain any LIBOR Advance (but
excluding loss of anticipated profits) incurred as a result of:
(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 applicable law, rule or regulation, 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 Liquidity Provider (or its Lending
Office) 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 Liquidity Provider (or its Lending Office) to maintain or
fund its LIBOR Advances, then upon notice to the Borrower by the Liquidity
Provider, the outstanding principal amount of the LIBOR Advances shall be
converted to Base Rate Advances (a) immediately upon demand of the Liquidity
Provider, if such change or compliance with such request, in the judgment of the
Liquidity Provider, requires immediate repayment; or (b) at the expiration of
the last Interest Period to expire before the effective date of any such change
or request.
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:
(a) The 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 Liquidity Provider:
(i) This Agreement duly executed on behalf of the Borrower;
(ii) The Intercreditor Agreement duly executed on behalf of each of
the parties thereto;
<PAGE>
20
(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) A copy of the Prospectus Supplement, together with the related
Prospectus dated February 16, 1999, and specimen copies of the Class A-1
Certificates;
(v) An executed copy of each document, instrument, certificate and
opinion delivered on or before the Closing Date pursuant to the Class A-1
Trust Agreement, the Intercreditor Agreement and the other Operative
Agreements (in the case of each such opinion, other than the opinion of
counsel for the Underwriters, either addressed to the Liquidity Provider or
accompanied by a letter from the counsel rendering such opinion to the
effect that the Liquidity Provider is entitled to rely on such opinion as
of its date as if it were addressed to the Liquidity Provider);
(vi) Evidence that there shall have been made and shall be in full
force and effect, all filings, recordings and/or registrations, and there
shall have been given or taken any notice or other similar action as may be
reasonably necessary or, to the extent reasonably requested by the
Liquidity Provider, reasonably advisable, in order to establish, perfect,
protect and preserve the right, title and interest, remedies, powers,
privileges, liens and security interests of, or for the benefit of, the
Trustees, the Borrower and the Liquidity Provider created by the Operative
Agreements executed and delivered on or prior to the Closing Date;
(vii) An agreement from Atlas, pursuant to which (i) Atlas agrees to
provide copies of quarterly financial statements and audited annual
financial statements to the Liquidity Provider, and such other information
as the Liquidity Provider shall reasonably request with respect to the
transactions contemplated by the Operative Agreements, in each case, only
to the extent that Atlas is obligated to provide such information pursuant
to Section 8.2.1 of the Leases (related to Leased Aircraft) or the
corresponding section of the Indentures (related to Owned Aircraft) to the
parties thereto and (ii) Atlas agrees to allow the Liquidity Provider to
inspect Atlas's books and records regarding such transactions, and to
discuss such transactions with officers and employees of Atlas; and
(viii) Such other documents, instruments, opinions and approvals
pertaining to the transactions contemplated hereby or by the other
Operative Agreements as the Liquidity Provider shall have reasonably
requested.
(b) The following statement shall be true on and as of the Effective Date:
No event has occurred and is continuing, or would result from the entering into
of this Agreement or the making of any Advance, which constitutes a Liquidity
Event of Default.
<PAGE>
21
(c) The Liquidity Provider shall have received payment in full of all fees
and other sums required to be paid to or for the account of the Liquidity
Provider on or prior to the Effective Date.
(d) All conditions precedent to the issuance of the Certificates under the
Trust Agreements shall have been satisfied or waived, all conditions precedent
to the effectiveness of the other Liquidity Facilities shall have been satisfied
or waived, and all conditions precedent to the purchase of the Certificates by
the Underwriters under the Underwriting Agreement shall have been satisfied
(unless any of such conditions precedent shall have been waived by the
Underwriters) .
(e) The Borrower shall have received a certificate, dated the date hereof,
signed by a duly authorized representative of the Liquidity Provider, certifying
that all conditions precedent to the effectiveness of Section 2.01 have been
satisfied or waived.
Section 4.02. Conditions Precedent to Borrowing. The obligation of the
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 date of such Borrowing, the Borrower shall have delivered a
Notice of Borrowing which conforms to the terms and conditions of this Agreement
and has been completed as may be required by the relevant form of the Notice of
Borrowing for the type of Advances requested.
ARTICLE V
COVENANTS
Section 5.01. Affirmative Covenants of the Borrower. So long as any Advance
shall remain unpaid or the Liquidity Provider shall have any Maximum Commitment
hereunder or the Borrower shall have any obligation to pay any amount to the
Liquidity Provider hereunder, the Borrower will, unless the 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 and the other
Operative Agreements and observe and perform in all material respects the
conditions, covenants and requirements applicable to it contained in this
Agreement and the other Operative Agreements.
(b) Reporting Requirements. Furnish to the 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
<PAGE>
22
requested by the Liquidity Provider; and permit the 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 Liquidity Provider
with reasonable promptness, such Operative Agreements entered into after
the date hereof as from time to time may be reasonably requested by the
Liquidity Provider.
Section 5.02. Negative Covenants of the Borrower. So long as any Advance
shall remain unpaid or the Liquidity Provider shall have any Maximum Commitment
hereunder or the Borrower shall have any obligation to pay any amount to the
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
Liquidity Provider, which consent shall not be unreasonably withheld or delayed.
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 Liquidity Provider may, in its discretion, deliver to the
Borrower a Termination Notice, the effect of which shall be to cause (i) this
Agreement to expire on the fifth Business Day after the date on which such
Termination Notice is received by the Borrower, (ii) the Borrower to promptly
request, and the Liquidity Provider to promptly make, a Final Advance in
accordance with Section 2.02(d) hereof and Section 3.6(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 hereof,
all Advances (including, without limitation, any Provider Advance and Applied
Provider Advance), any accrued interest thereon and any other amounts
outstanding hereunder to become immediately due and payable to the Liquidity
Provider.
<PAGE>
23
ARTICLE VII
MISCELLANEOUS
Section 7.01. Amendments, Etc., No amendment or waiver of any provision of
this Agreement, nor consent to any departure by the Borrower therefrom, shall in
any event be effective unless the same shall be in writing and signed by the
Liquidity Provider, and, in the case of an amendment or of a waiver by the
Borrower, the Borrower, and then such waiver or consent shall be effective only
in the specific instance and for the specific purpose for which given.
Section 7.02. Notices, Etc. Except as otherwise expressly provided herein,
all notices and other communications provided for hereunder shall be in writing
(including telecopier and mailed or delivered or sent by telecopier):
Borrower: WILMINGTON TRUST COMPANY
One Rodney Square
1100 North Market Street
Wilmington, DE 19890-0001
Attention: Corporate Trust Administration
Telephone: (302) 651-1000
Telecopy: (302) 651-8882
Liquidity
Provider: ABN AMRO BANK N.V.
Aerospace Department
135 South LaSalle Street, #660
Chicago, IL 60674-9135
Attention: Claudia Heldring
Telephone: (312) 904-5031
Telecopy: (312) 606-8428
with a copy to:
ABN AMRO Bank N.V.
135 South LaSalle Street, #625
Chicago, IL 60674-9135
Attention: Loan Administration
<PAGE>
24
Telephone: (312) 904-2961
Telecopy: (312) 904-1288
or, as to each of the foregoing, at such other address as shall be designated by
such Person in a written notice to the others. All such notices and
communications shall be effective (i) if given by telecopier, when transmitted
to the telecopier number specified above, (ii) if given by mail, when deposited
in the mails addressed as specified above, and (iii) if given by other means,
when delivered at the address specified above, except that written notices to
the Liquidity Provider pursuant to the provisions of Articles II and III hereof
shall not be effective until received by the Liquidity Provider. A copy of all
notices delivered hereunder to either party shall in addition be delivered to
each of the parties to the Participation Agreements at their respective
addresses set forth therein.
Section 7.03. No Waiver: Remedies. No failure on the part of the 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 Liquidity Provider such
additional assignments, agreements, powers and instruments as the Liquidity
Provider may reasonably require or deem advisable to carry into effect the
purposes of this Agreement and the other Operative Agreements or to better
assure and confirm unto the Liquidity Provider its rights, powers and remedies
hereunder and under the other Operative Agreements.
Section 7.05. Indemnification; Survival of Certain Provisions. The
Liquidity Provider shall be indemnified hereunder to the extent and in the
manner described in Section 9.1 of the Leased Aircraft Participation Agreement,
Section 8.1 of the Owned Aircraft Participation Agreement and Section 6 of the
Note Purchase Agreement. In addition, the Borrower agrees to indemnify, protect,
defend and hold harmless the Liquidity Provider from, against and in respect of,
and shall pay on demand, all Expenses of any kind or nature whatsoever (other
than any Expenses of the nature described in Sections 3.01, 3.02 or 7.07 hereof
or in the ABN AMRO Fee Letter (regardless of whether indemnified against
pursuant to said Sections or in such ABN AMRO Fee Letter)), that may be imposed,
incurred by or asserted against any 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 ABN AMRO Fee Letter, the Intercreditor Agreement or any
Financing 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 gross negligence or willful
<PAGE>
25
misconduct of such Liquidity Indemnitee or any other Liquidity Indemnitee, (ii)
ordinary and usual operating overhead expense, or (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 ABN
AMRO Fee Letter, the Tax Letter or any other Operative Agreement to which it is
a party. The indemnities contained in Section 9.1 or 8.1, as the case may be, of
the Participation Agreements, and the provisions of Sections 3.01, 3.02, 3.03,
3.09, 7.05 and 7.07 hereof, shall survive the termination of this Agreement.
Section 7.06. Liability of the Liquidity Provider. (a) Neither the
Liquidity Provider nor any of its officers, employees, directors or affiliates
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 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 Liquidity Provider, and the Liquidity Provider shall be liable to
the Borrower, to the extent of any damages suffered by the Borrower which were
the result of (A) the Liquidity Provider's willful misconduct or negligence in
determining whether documents presented hereunder comply with the terms hereof,
or (B) any breach by the Liquidity Provider of any of the terms of this
Agreement, including, but not limited to, the Liquidity Provider's failure to
make lawful payment hereunder after the delivery to it by the Borrower of a
Notice of Borrowing strictly complying with the terms and conditions hereof.
(b) Neither the Liquidity Provider nor any of its officers, employees,
director 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 misconduct or
negligence (in which event the extent of the 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. Costs, Expenses and Taxes. The Borrower agrees to pay, or
cause to be paid (A) on the Effective Date and on such later date or dates on
which the Liquidity Provider shall make demand, all reasonable out-of-pocket
costs and expenses (including, without limitation, the reasonable fees and
expenses of outside counsel for the Liquidity Provider) of the Liquidity
Provider in connection with the preparation, negotiation, execution, delivery,
filing and recording of this Agreement, any other Operative Agreement and any
other documents which may be delivered in connection with this Agreement and (B)
on demand, all reasonable
<PAGE>
26
costs and expenses (including reasonable counsel fees and expenses) of the
Liquidity Provider in connection with (i) the enforcement of this Agreement or
any other Operative Agreement, (ii) the modification or amendment of, or
supplement to, this Agreement or any other Operative Agreement or such other
documents which may be delivered in connection herewith or therewith (whether or
not the same shall become effective) or (iii) any action or proceeding relating
to any order, injunction, or other process or decree restraining or seeking to
restrain the Liquidity Provider from paying any amount under this Agreement, the
Intercreditor Agreement or any other Operative Agreement or otherwise affecting
the application of funds in the Class A-1 Cash Collateral Account. In addition,
the Borrower shall pay any and all recording, stamp and other similar taxes and
fees payable or determined to be payable 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 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 Liquidity Provider and their respective successors and assigns,
except that neither the 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 its rights or obligations hereunder or any interest
herein without the prior written consent of the other party, subject to the
requirements of Section 7.08(b). The Liquidity Provider may grant participations
herein or in any of its rights hereunder (including, without limitation, funded
participations and participations in rights to receive interest payments
hereunder) and under the other Operative Agreements to such Persons as the
Liquidity Provider may in its sole discretion select, subject to the
requirements of Section 7.08(b). No such participation by the Liquidity
Provider, however, will relieve the Liquidity Provider of its obligations
hereunder. In connection with any participation or any proposed participation,
the Liquidity Provider may disclose to the participant or the proposed
participant any information that the Borrower is required to deliver or to
disclose to the Liquidity Provider pursuant to this Agreement. The Borrower
acknowledges and agrees that the Liquidity Provider's source of funds may derive
in part from its participants (other than Atlas). Accordingly, references in
this Agreement and the other Operative Agreements to determinations, reserve and
capital adequacy requirements, increased costs, reduced receipts, additional
amounts due pursuant to Section 3.03(a) and the like as they pertain to the
Liquidity Provider shall be deemed also to include those of each of its
participants (subject, in each case, to the maximum amount that would have been
incurred by or attributable to the Liquidity Provider directly if the Liquidity
Provider, rather than the participant, had held the interest participated).
<PAGE>
27
(b) If, pursuant to subsection (a) above, the Liquidity Provider sells any
participation in this Agreement to any bank or other entity (each, a
"Transferee"), then, concurrently with the effectiveness of such participation,
the Transferee shall (i) represent to the Liquidity Provider (for the benefit of
the Liquidity Provider and the Borrower) either (A) that it is incorporated
under the laws of the United States or a state thereof or (B) that under
applicable law and treaties, no taxes will be required to be withheld with
respect to any payments to be made to such Transferee in respect of this
Agreement, (ii) furnish to the Liquidity Provider and the Borrower either (x) a
statement that it is incorporated under the laws of the United States or a state
thereof or (y) if it is not so incorporated, two copies of a properly completed
United States Internal Revenue Service Form W-8 ECI or Form W-8 BEN, as
appropriate, or other applicable form, certificate or document prescribed by the
Internal Revenue Service certifying, in each case, such Transferee's entitlement
to a complete exemption from United States federal withholding tax in respect to
any and all payments to be made hereunder, and (iii) agree (for the benefit of
the Liquidity Provider and the Borrower) to provide the Liquidity Provider and
the Borrower a new Form W-8 ECI or Form W-8 BEN, as appropriate, (A) on or
before the date that any such form expires or becomes obsolete or (B) after the
occurrence of any event requiring a change in the most recent form previously
delivered by it and prior to the immediately following due date of any payment
by the Borrower hereunder, certifying in the case of a Form W-8 BEN or Form W-8
ECI that such Transferee is entitled to a complete exemption from United States
federal withholding tax on payments under this Agreement. Unless the Borrower
has received forms or other documents reasonably satisfactory to it (and
required by applicable law) indicating that payments hereunder are not subject
to United States federal withholding tax, the Borrower will withhold taxes as
required by law from such payments at the applicable statutory rate.
(c) Notwithstanding the other provisions of this Section 7.08, the
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 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 Liquidity Provider from its obligations hereunder.
Section 7.09. Severability. Any provision of this Agreement which is
prohibited, unenforceable or not authorized in any jurisdiction shall, as to
such jurisdiction, be ineffective to the extent of such prohibition,
unenforceability or nonauthorization without invalidating the remaining
provisions hereof or affecting the validity, enforceability or legality of such
provision in any other jurisdiction.
<PAGE>
28
Section 7.10. GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY, AND
CONSTRUED IN ACCORDANCE WITH, THE LAW OF THE STATE OF NEW YORK.
Section 7.11. Submission to Jurisdiction; Waiver of Jury Trial; Waiver of
Immunity. (a) Each of the parties hereto hereby irrevocably and unconditionally:
(i) submits for itself and its property in any legal action or
proceeding relating to this Agreement or any other Operative
Agreement, or for recognition and enforcement of any judgment
in respect hereof or thereof, to the nonexclusive general
jurisdiction of the courts of the State of New York, the
courts of the United States of America for the Southern
District of New York, and the appellate courts from any
thereof;
(ii) consents that any such action or proceeding may be brought in
such courts, and waives any objection that it may now or
hereafter have to the venue of any such action or proceeding
in any such court or that such action or proceeding was
brought in an inconvenient court and agrees not to plead or
claim the same;
(iii) agrees that service of process in any such action or
proceeding may be effected by mailing a copy thereof by
registered or certified mail (or any substantially similar
form and mail), postage prepaid, to each party hereto at its
address set forth in Section 7.02 hereof, or at such other
address of which the Liquidity Provider shall have been
notified pursuant thereto; and
(iv) agrees that nothing herein shall affect the right to effect
service of process in any other manner permitted by law or shall
limit the right to sue in any other jurisdiction.
(b) THE BORROWER AND THE 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 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
<PAGE>
29
AMENDMENTS, RENEWALS, SUPPLEMENTS OR MODIFICATIONS TO THIS AGREEMENT.
(c) The Liquidity Provider hereby waives any immunity it may have from the
jurisdiction of the courts of the United States or of any State and waives any
immunity any of its properties located in the United States may have from
attachment or execution upon a judgement entered by any such court under the
United States Foreign Sovereign Immunities Act of 1976 or any similar successor
legislation.
Section 7.12. Execution in Counterparts. This Agreement may be executed in
any number of counterparts and by different parties 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 Agreement.
Section 7.13. Entirety. This Agreement, the Intercreditor Agreement and the
other Operative Agreements to which the Liquidity Provider is a party constitute
the entire agreement of the parties hereto with respect to the subject matter
hereof and supersedes all prior understandings and agreements of such parties.
Section 7.14. Headings. Section headings in this Agreement are included
herein for convenience of reference only and shall not constitute a part of this
Agreement for any other purpose.
Section 7.15. LIQUIDITY PROVIDER'S OBLIGATION TO MAKE ADVANCES. EXCEPT AS
EXPRESSLY SET FORTH IN THIS AGREEMENT, THE OBLIGATIONS OF THE LIQUIDITY PROVIDER
TO MAKE ADVANCES HEREUNDER, AND THE BORROWER'S RIGHTS TO DELIVER NOTICES OF
BORROWING REQUESTING THE MAKING OF ADVANCES HEREUNDER, SHALL BE UNCONDITIONAL
AND IRREVOCABLE, AND SHALL BE PAID OR PERFORMED, IN EACH CASE STRICTLY IN
ACCORDANCE WITH THE TERMS OF THIS AGREEMENT.
<PAGE>
30
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.
WILMINGTON TRUST COMPANY, not in its
individual capacity but solely as
Subordination Agent, as agent and trustee for
the Class A-1 Trust, as Borrower
By: /s/ James P. Lawler
------------------------------
Name: James P. Lawler
Title: Vice President
ABN AMRO BANK N.V., Chicago Branch,
as Liquidity Provider
By: /s/ Claudia C. Heldring
------------------------------
Name: Claudia C. Heldring
Title: Vice President
By: /s/ Carla S. Waggoner
------------------------------
Name: Carla S. Waggoner
Title: Assistant vice President
<PAGE>
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 ABN AMRO Bank N.V., Chicago Branch (the
"Liquidity Provider"), with reference to the Revolving Credit Agreement
(1999-lA-1) dated as of April 13, 1999, between the Borrower and the 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 Liquidity Provider to be used, subject to
clause (3)(v) below, for the payment of the interest on the Class A-1
Certificates which was payable on (the "Distribution Date") in accordance
with the terms and provisions of the Class A-1 Trust Agreement and the
Class A-1 Certificates which Advance is requested to be made on __________,
____.
(3) The amount of the Interest Advance requested hereby (i) is $
_______, to be applied in respect of the payment of the interest which was
due and payable on the Class A-1 Certificates on the Distribution Date,
(ii) does not include any amount with respect to the payment of principal
of, or premium on, the Class A-1 Certificates, the Class A-2 Certificates,
the Class B Certificates or the Class C Certificates, or interest on the
Class A-2 Certificates, the Class B Certificates, or the Class C
Certificates, (iii) was computed in accordance with the provisions of the
Class A-1 Certificates, the Class A-1 Trust Agreement and the Intercreditor
Agreement (a copy of which computation is attached hereto as Schedule I),
(iv) does not exceed the Maximum Commitment on the date hereof, (v) does
not include any amount of interest which was due and payable on the Class
A-1 Certificates on such Distribution Date but which remains unpaid due to
the failure of the Depositary to pay any amount of accrued interest on the
Certificates of Deposit on such Distribution Date 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 3.6(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.
<PAGE>
I-2
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 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 Certificate 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 ___________, ____.
WILMINGTON TRUST COMPANY, not in its
individual capacity but solely as
Subordination Agent, as Borrower
By:
--------------------------------
Name:
Title:
<PAGE>
SCHEDULE I TO INTEREST ADVANCE NOTICE OF BORROWING
[Insert Copy of Computations in accordance with
Interest Advance Notice of Borrowing]
<PAGE>
Annex II to
Revolving Credit Agreement
NON-EXTENSION ADVANCE NOTICE OF BORROWING
The undersigned, a duly authorized signatory of the
undersigned subordination agent (the "Borrower"), hereby certifies to ABN AMRO
BANK N.V., Chicago Branch (the "Liquidity Provider"), with reference to the
Revolving Credit Agreement (1999-lA-1) dated as of April 13, 1999, between the
Borrower and the 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 Non-Extension Advance by the Liquidity Provider to be
used for the funding of the Class A-1 Cash Collateral Account in
accordance with Section 3.6(d) of the Intercreditor Agreement, which
Advance is requested to be made on _______________, ____.
(3) The amount of the Non-Extension Advance requested hereby (i)
is $______________________.__ which equals the Maximum Commitment on
the date hereof and is to be applied in respect of the funding of the
Class A-1 Cash Collateral Account in accordance with Section 3.6(d) of
the Intercreditor Agreement, (ii) does not include any amount with
respect to the payment of the principal of, or premium on, the Class
A-1 Certificates, or principal of, or interest or premium on, the
Class A-2 Certificates, the Class B Certificates or the Class C
Certificates, (iii) was computed in accordance with the provisions of
the Class A-1 Certificates, the Class A-1 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
Class A-1 Cash Collateral Account and apply the same in accordance
with the terms of Section 3.6(d) 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.
<PAGE>
II-2
(5) The Borrower hereby requests that the Advance requested
hereby be a Base Rate Advance [and that such Base Rate Advance be
converted into a LIBOR Advance on the third Business Day following
your receipt of this notice].1
The Borrower hereby acknowledges that, pursuant to the Liquidity Agreement,
(A) the making of the Non-Extension Advance as requested by this Notice of
Borrowing shall automatically and irrevocably terminate the obligation of the
Liquidity Provider to make further Advances under the Liquidity Agreement; and
(B) following the making by the Liquidity Provider of the NonExtension 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 __________, ____.
WILMINGTON TRUST COMPANY, not in its
individual capacity but solely as
Subordination Agent, as Borrower
By:
--------------------------------
Name:
Title:
- ----------
1 Bracketed language may be included at Borrower's opiton.
<PAGE>
SCHEDULE I TO NON-EXTENSION ADVANCE NOTICE OF BORROWING
[Insert Copy of computations in accordance
with Non-Extension Advance Notice of Borrowing]
<PAGE>
Annex III to
Revolving Credit Agreement
DOWNGRADE ADVANCE NOTICE OF BORROWING
The undersigned, a duly authorized signatory of the undersigned
subordination agent (the "Borrower"), hereby certifies to ABN AMRO BANK N.V.,
Chicago Branch (the "Liquidity Provider"), with reference to the Revolving
Credit Agreement (1999-lA-1) dated as of April 13, 1999, between the Borrower
and the 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 Liquidity Provider to be used
for the funding of the Class A-1 Cash Collateral Account in accordance
with Section 3.6(c) of the Intercreditor Agreement by reason of the
downgrading of the short-term unsecured debt rating of the Liquidity
Provider issued by either Rating Agency below the Threshold Rating,
which Advance is requested to be made on __________, ____.
(3) The amount of the Downgrade Advance requested hereby (i) is
$________.____, which equals the Maximum Commitment on the date hereof
and is to be applied in respect of the funding of the Class A-1 Cash
Collateral Account in accordance with Section 3.6(c) of the
Intercreditor Agreement, (ii) does not include any amount with respect
to the payment of the principal of, or premium on, the Class A-1
Certificates, or principal of, or interest or premium on, the Class
A-2 Certificates, the Class B Certificates or the Class C
Certificates, (iii) was computed in accordance with the provisions of
the Class A-1 Certificates, the Class A-1 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
Class A-1 Cash Collateral Account and apply the same in accordance
with the terms of Section 3.6(c) 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.
<PAGE>
III-3
(5) The Borrower hereby requests that the Advance requested
hereby be a Base Rate Advance [and that such Base Rate Advance be
converted into a LIBOR Advance on
<PAGE>
the third Business Day following your receipt of this notice].(1)
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 Liquidity
Provider to make further Advances under the Liquidity Agreement; and (B)
following the making by the 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 ________, ____.
WILMINGTON TRUST COMPANY, not in its
individual capacity but solely as
Subordination Agent, as Borrower
By:
--------------------------------
Name:
Title:
- ----------
1 Bracketed language may be included at Borrower's option.
<PAGE>
SCHEDULE I TO DOWNGRADE ADVANCE NOTICE OF BORROWING
[Insert Copy of computations in accordance with
Downgrade Advance Notice of Borrowing]
<PAGE>
Annex IV to
Revolving Credit Agreement
FINAL ADVANCE NOTICE OF BORROWING
The undersigned, a duly authorized signatory of the undersigned borrower
(the "Borrower"), hereby certifies to ABN AMRO BANK N.V., Chicago Branch (the
"Liquidity Provider"), with reference to the Revolving Credit Agreement
(1999-lA-1) dated as of April 13, 1999, between the Borrower and the 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 Liquidity Provider to be used for
the funding of the Class A-1 Cash Collateral Account in accordance
with Section 3.6(i) of the Intercreditor Agreement by reason of the
receipt by the Borrower of a Termination Notice from the Liquidity
Provider with respect to the Liquidity Agreement, which Advance is
requested to be made on
(3) The amount of the Final Advance requested hereby (i) is
$__________.__, which equals the Maximum Commitment on the date hereof
and is to be applied in respect of the funding of the Class A-1 Cash
Collateral Account in accordance with Section 3.6(i) of the
Intercreditor Agreement, (ii) does not include any amount with respect
to the payment of principal of, or premium on, the Class A-1
Certificates, or principal of, or interest or premium on, the Class
A-2 Certificates, the Class B Certificates or the Class C
Certificates, (iii) was computed in accordance with the provisions of
the Class A-1 Certificates, the Class A-1 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
Class A-1 Cash Collateral Account and apply the same in accordance
with the terms of Section 3.6(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.
<PAGE>
IV-2
(5) The Borrower hereby requests that the Advance requested
hereby be a Base Rate Advance [and that such Base Rate Advance be
converted into a LIBOR Advance on the third Business Day following
your receipt of this notice](2).
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 Liquidity
Provider to make further Advances under the Liquidity Agreement; and (B)
following the making by the 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 ________, ____/
WILMINGTON TRUST COMPANY, not in its
individual capacity but solely as
Subordination Agent, as Borrower
By:
--------------------------------
Name:
Title:
- ----------
1 Bracketed language may be included at Borrower's option.
<PAGE>
SCHEDULE I TO FINAL ADVANCE NOTICE OF BORROWING
[Insert Copy of Computations in accordance with
Final Advance Notice of Borrowing]
<PAGE>
Annex V to
Revolving Credit Agreement
NOTICE OF TERMINATION
[Date]
Wilmington Trust Company,
as Subordination Agent, as Borrower
One Rodney Square
1100 North Market Street
Wilmington, DE 19890-0001
Attention: Corporate Trust Administration
Revolving Credit Agreement dated as of April 13, 1999, between Wilmington
Trust Company, as Subordination Agent, as agent and trustee for the Atlas Air,
Inc. Pass Through Trust, 1999-lA-1, as Borrower, and ABN AMRO BANK N.V., Chicago
Branch (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 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 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 3.6(i)
of the Intercreditor Agreement (as defined in the Liquidity Agreement) as a
consequence of your receipt of this notice.
<PAGE>
V-2
THIS NOTICE IS THE "NOTICE OF TERMINATION" PROVIDED FOR UNDER THE LIQUIDITY
AGREEMENT. OUR OBLIGATIONS TO MAKE ADVANCES UNDER THE LIQUIDITY AGREEMENT WILL
TERMINATE ON THE FIFTH BUSINESS DAY AFTER THE DATE ON WHICH YOU RECEIVE THIS
NOTICE.
Very truly yours,
ABN AMRO BANK N.V., Chicago Branch,
as Liquidity Provider
By:
--------------------------------
Name:
Title:
By:
--------------------------------
Name:
Title:
cc: Wilmington Trust Company, as Class A-1 Trustee
<PAGE>
Annex VI to
Revolving Credit Agreement
NOTICE OF REPLACEMENT SUBORDINATION AGENT
[Date]
Attention:
Revolving Credit Agreement dated as of April 13, 1999, between Wilmington
Trust Company, as Subordination Agent, as agent and trustee for the Atlas Air
Pass Through Trust, 1999-lA-1, as Borrower, and ABN AMRO BANK N.V., Chicago
Branch (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 8.1 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.
<PAGE>
VI-2
We ask that this transfer be effective as of _______________, ____.
WILMINGTON TRUST COMPANY, not in its individual
capacity but solely as Subordination
Agent, as Borrower
By:
--------------------------------
Name:
Title:
EXECUTION COPY
REVOLVING CREDIT AGREEMENT
(1999-lA-2)
Dated as of April 13, 1999
between
WILMINGTON TRUST COMPANY,
not in its individual capacity but solely
as Subordination Agent,
as agent and trustee for the
Atlas Air Pass Through Trust 1999-lA-2,
as Borrower
and
ABN AMRO BANK N.V., CHICAGO BRANCH,
as Liquidity Provider
Relating to
Atlas Air Pass Through Trust 1999-lA-2
6.88% Atlas Air Pass Through Certificates,
Series 1999-lA-2
<PAGE>
TABLE OF CONTENTS
ARTICLE I
DEFINITIONS
Section 1.01. Certain Defined Terms ....................................1
ARTICLE II
AMOUNT AND TERMS OF THE COMMITMENT
Section 2.01. The Advances ............................................8
Section 2.02. Making the 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 Liquidity Provider Under the
Intercreditor Agreement .............................12
Section 2.08. Book Entries ...........................................13
Section 2.09. Payments from Available Funds Only .....................13
Section 2.10. Extension of the Expiry Date; Non-Extension Advance ...13
ARTICLE III
OBLIGATIONS OF THE BORROWER
Section 3.01. Increased Costs ........................................14
Section 3.02. Capital Adequacy .......................................15
Section 3.03. Payments Free of Deductions ............................15
Section 3.04. Payments ...............................................16
Section 3.05. Computations ...........................................16
Section 3.06. Payment on Non-Business Days ...........................16
Section 3.07. Interest ...............................................17
Section 3.08. Replacement of Borrower ................................18
Section 3.09. Funding Loss Indemnification ...........................18
Section 3.10. Illegality .............................................19
i
<PAGE>
ARTICLE IV
CONDITIONS PRECEDENT
Section 4.01. Conditions Precedent to Effectiveness of Section 2.01 ..19
Section 4.02. Conditions Precedent to Borrowing ....................21
ARTICLE V
COVENANTS
Section 5.01. Affirmative Covenants of the Borrower ..................21
Section 5.02. Negative Covenants of the Borrower .....................22
ARTICLE VI
LIQUIDITY EVENTS OF DEFAULT
Section 6.01. Liquidity Events of Default ............................22
ARTICLE VII
MISCELLANEOUS
Section 7.01. Amendments, Etc. .......................................23
Section 7.02. Notices, Etc. ..........................................23
Section 7.03. No Waiver; Remedies ....................................24
Section 7.04. Further Assurances .....................................24
Section 7.05. Indemnification; Survival of Certain Provisions ........24
Section 7.06. Liability of the Liquidity Provider ....................25
Section 7.07. Costs, Expenses and Taxes ..............................25
Section 7.08. Binding Effect; Participations .........................26
Section 7.09. Severability ...........................................27
Section 7.10. GOVERNING LAW ..........................................28
Section 7.11. Submission to Jurisdiction; Waiver of Jury Trial;
Waiver of Immunity ..................................28
Section 7.12. Execution in Counterparts ..............................29
Section 7.13. Entirety ...............................................29
Section 7.14. Headings ...............................................29
Section 7.15. LIQUIDITY PROVIDER'S OBLIGATION TO
MAKE ADVANCES .......................................29
ii
<PAGE>
ANNEX I Interest Advance Notice of Borrowing
ANNEX II Non-Extension Advance Notice of Borrowing
ANNEX III Downgrade Advance Notice of Borrowing
ANNEX IV Final Advance Notice of Borrowing
ANNEX V Notice of Termination
ANNEX VI Notice of Replacement Subordination Agent
iii
<PAGE>
REVOLVING CREDIT AGREEMENT
This REVOLVING CREDIT AGREEMENT dated as of April 13, 1999, between
WILMINGTON TRUST COMPANY, a Delaware banking corporation, not in its individual
capacity but solely as Subordination Agent under the Intercreditor Agreement
(each as defined below), as agent and trustee for the Class A-2 Trust (as
defined below) (the "Borrower"), and ABN AMRO BANK N.V., a bank organized under
the laws of the Netherlands, acting through its Chicago Branch ("ABN AMRO" or
the "Liquidity Provider").
W I T N E S S E T H:
WHEREAS, pursuant to the Class A-2 Trust Agreement (such term and all other
capitalized terms used in these recitals having the meanings set forth or
referred to in Section 1.01), the Class A-2 Trust is issuing the Class A-2
Certificates; and
WHEREAS, the Borrower, in order to support the timely payment of a portion
of the interest on the Class A-2 Certificates in accordance with their terms,
has requested the 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 premises, the parties hereto agree
as follows:
ARTICLE I
DEFINITIONS
Section 1.01. Certain Defined Terms. (a) Definitions. As used in this
Agreement and unless otherwise expressly indicated, or unless the context
clearly requires otherwise, the following capitalized terms shall have the
following respective meanings for all purposes of this Agreement:
"Additional Cost" has the meaning assigned to such term in Section 3.01.
"Advance" means an Interest Advance, a Final Advance or a Provider Advance,
as the case may be.
"Applicable Liquidity Rate" has the meaning assigned to such term in
Section 3.07(f).
<PAGE>
2
"Applicable Margin" means, (x) with respect to any Unpaid Advance or
Applied Provider Advance, 2.25%, (y) with respect to any Unapplied Downgrade
Advance, 0.60% for the first year after the date of such Advance and 1.00%
thereafter and (z) with respect to any Unapplied Non-Extension Advance 0.60%.
"Applied Downgrade Advance" has the meaning assigned to such term in
Section 2.06(a).
"Applied Non-Extension Advance" has the meaning assigned to such term in
Section 2.06(a).
"Applied Provider Advance" has the meaning assigned to such term in Section
2.06(a).
"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 (a) the weighted
average of the rates on overnight Federal funds transactions with members of the
Federal Reserve System arranged by Federal funds brokers, as published for such
day (or, if such day is not a Business Day, for the next preceding Business Day)
by the Federal Reserve Bank of New York, or if such rate is not so published for
any day that is a Business Day, the average of the quotations for such day for
such transactions received by the Liquidity Provider from three Federal funds
brokers of recognized standing selected by it, plus (b) one-quarter of one
percent (1/4 of 1%).
"Base Rate Advance" means an Advance that bears interest at a rate based
upon the Base Rate.
"Borrower" has the meaning assigned to such term in the recital of parties
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 or Sunday or a day on
which commercial banks are required or authorized to close in Denver, Colorado,
Chicago, Illinois, New York, New York or, so long as any Class A-2 Certificate
is outstanding, the city and state in which the Class A-2 Trustee, the Borrower
or any Loan Trustee maintains its Corporate Trust Office or receives or
disburses funds, and, if the applicable Business Day relates to any Advance or
other amount bearing interest based on the LIBOR Rate, on which dealings are
carried on in the London interbank market.
<PAGE>
3
"Certificates of Deposit" has the meaning assigned to such term in the
Deposit Agreement.
"Deposits" has the meaning assigned to such terms in the Deposit Agreement.
"Depositary" has the meaning assigned to such term in the Deposit
Agreement.
"Deposit Agreement" means the Deposit Agreement dated the date hereof
between First Security Bank, National Association, as Escrow Agent, and Credit
Suisse First Boston, acting through its New York Branch, as Depositary,
pertaining to the Class A-2 Certificates, as the same may be amended, modified
or supplemented from time to time in accordance with the terms thereof.
"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 Liquidity Provider contemplated by Section 4.01(e) shall
be conclusive evidence that the Effective Date has occurred.
"Excluded Taxes" means (i) taxes imposed on the overall net income of the
Liquidity Provider or of its Lending Office by the jurisdiction where such
Liquidity Provider's principal office or such Lending Office is located, and
(ii) Excluded Withholding Taxes.
"Excluded Withholding Taxes" means (i) withholding Taxes imposed by the
United States except to the extent that such United States withholding Taxes are
imposed as a result of any change in applicable law after the date hereof
(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), or in the case of a successor Liquidity Provider (including a
transferee of an Advance) or Lending Office, after the date on which such
successor Liquidity Provider obtains its interest or on which the Lending Office
is changed, and (ii) any withholding Taxes imposed by the United States which
are imposed or increased as a result of the Liquidity Provider failing to
deliver to the Borrower any certificate or document (which certificate or
document in the good faith judgment of the 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.
"Expenses" means liabilities, obligations, damages, settlements, penalties,
claims, actions, suits, costs, expenses, and disbursements (including, without
<PAGE>
4
limitation, reasonable fees and disbursements of legal counsel and costs of
investigation), provided that Expenses shall not include any Taxes.
"Expiry Date" means April 11, 2000, initially, or any date to which the
Expiry Date is extended pursuant to Section 2.10.
"Final Advance" means an Advance made pursuant to Section 2.02(d).
"Intercreditor Agreement" means the Intercreditor Agreement dated the date
hereof, among the Trustees, the Liquidity Provider, the liquidity provider under
each Liquidity Facility (other than this Agreement) 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).
"Interest Period" means, with respect to any LIBOR Advance, each of the
following periods:
(i) the period beginning either (x) on the third Business Day following
the Liquidity Provider's receipt of the Notice of Borrowing for such
LIBOR Advance or (y) on the date of the withdrawal of funds from the
Class A-2 Cash Collateral Account for the purpose of paying interest
on the Class A-2 Certificates as contemplated by
Section 2.06(a) hereof and, in either case, ending on the next Regular
Distribution Date (or ending, in the case of an Interest Period
applicable to any Unapplied Provider Advance, on the numerically
corresponding day in the first or sixth calendar month after the first
day of the applicable Interest Period and/or on the next Regular
Distribution Date, as Atlas may select by providing notice thereof to
the Borrower and the Liquidity Provider no later than three Business
Days prior to the commencement of such Interest Period, provided that
if Atlas shall not provide such a notice at least three Business Days
prior to the commencement of such Interest Period, then Atlas shall be
deemed to have selected an Interest Period 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 (or ending, in the case of an Interest Period applicable to any
Unapplied Provider Advance, on the numerically corresponding day in
the first or sixth calendar month after the first day of the
applicable
<PAGE>
5
Interest Period and/or on the next Regular Distribution Date, as Atlas
may select by providing notice thereof to the Borrower and the
Liquidity Provider no later than three Business Days prior to the
commencement of such Interest Period, provided that if Atlas shall not
provide such a notice at least three Business Days prior to the
commencement of such Interest Period, then Atlas shall be deemed to
have selected an Interest Period ending on the next Regular
Distribution Date);
provided, however, that (I) if an Unapplied Provider Advance which is a LIBOR
Advance becomes an Applied Provider Advance, the Interest Period then applicable
to such Unapplied Provider Advance shall be applicable to such Applied Provider
Advance and (II) if (x) the Final Advance shall have been made, or (y) other
outstanding Advances shall have been converted into the Final Advance, then the
Interest Periods shall be successive periods of one month beginning on the third
Business Day following the Liquidity Provider's receipt of the Notice of
Borrowing for such Final Advance (in the case of clause (x) above) or the
Regular Distribution Date following such conversion (in the case of clause (y)
above).
"Leased Aircraft Participation Agreement" means a participation agreement
substantially in the form of Exhibit A-1 to the Note Purchase Agreement.
"Lending Office" means the lending office of the Liquidity Provider
presently located at Chicago, Illinois, or such other lending office as the
Liquidity Provider from time to time shall notify the Borrower as its lending
office hereunder; provided that the Liquidity Provider shall not change its
Lending Office to a Lending Office outside the United States of America except
in accordance with Section 3.01, 3.02 or 3.03 hereof.
"LIBOR Advance" means an Advance bearing interest at a rate based upon the
LIBOR Rate.
"LIBOR Rate" means, with respect to any Interest Period, (i) the rate per
annum appearing on display page 3750 (British Bankers Association-LIBOR) of the
Dow Jones Markets Service (or any successor or substitute therefor) at
approximately 11:00 A.M. (London time) two Business Days before the first day of
such Interest Period, as the rate for dollar deposits with a maturity comparable
to such Interest Period, or (ii) if the rate calculated pursuant to clause (i)
above is not available, the average (rounded upwards, if necessary, to the next
1/16 of 1%) of the rates per annum at which deposits in dollars are offered for
the relevant Interest Period by three banks of recognized standing selected by
the Liquidity Provider in the London interbank market at approximately 11:00
A.M. (London time) two Business Days before the first day of such Interest
Period in an amount approximately equal to the principal amount of the
<PAGE>
6
LIBOR Advance to which such Interest Period is to apply and for a period
comparable to such Interest Period.
"Liquidity Event of Default" means the occurrence of either (a) the
acceleration of all of the Equipment Notes or (b) an Atlas Bankruptcy Event.
"Liquidity Indemnitee" means (i) the Liquidity Provider, (ii) the
directors, officers, employees and agents of the Liquidity Provider, and (iii)
the successors and permitted assigns of the persons described in clauses (i) and
(ii), inclusive.
"Liquidity Provider" has the meaning assigned to such term in the recital
of parties to this Agreement.
"Maximum Commitment" shall mean, subject to the proviso contained in the
third sentence of Section 2.02(a), at any time of determination, (a) the
Required Amount 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 Commitment shall be zero.
"Non-Extension Advance" means an Advance made pursuant to Section 2.02(b).
"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.
"Owned Aircraft Participation Agreement" means a participation agreement
substantially in the form of Exhibit C-1 to the Note Purchase Agreement.
"Participation Agreements" means, collectively, the Leased Aircraft
Participation Agreement and the Owned Aircraft Participation Agreement.
"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.
"Prospectus Supplement" means the Prospectus Supplement dated April 5, 1999
relating to the Certificates, as such Prospectus Supplement may be amended or
supplemented.
"Provider Advance" means a Downgrade Advance or a Non-Extension Advance.
<PAGE>
7
"Regulatory Change" has the meaning assigned to such term in section 3.01.
"Replenishment Amount" has the meaning assigned to such term 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 Stated Interest Rate for
the Class A-2 Certificates, that would be payable on the Class A-2 Certificates
on each of the three successive semiannual Regular Distribution Dates
immediately following such day or, if such day is a Regular Distribution Date,
on such day and the succeeding two semiannual Regular Distribution Dates, in
each case calculated on the basis of the Pool Balance of the Class A-2
Certificates on such day and without regard to expected future payments of
principal on the Class A-2 Certificates.
"Tax Letter" means the letter dated the date hereof between the Liquidity
Provider and Atlas pertaining to this Agreement.
"Termination Date" means the earliest to occur of the following: (i) the
Expiry Date; (ii) the date on which the Borrower delivers to the Liquidity
Provider a certificate, signed by a Responsible Officer of the Borrower,
certifying that all of the Class A-2 Certificates have been paid in full (or
provision has been made for such payment in accordance with the Intercreditor
Agreement and the Trust Agreements) or are otherwise no longer entitled to the
benefits of this Agreement; (iii) the date on which the Borrower delivers to the
Liquidity Provider a certificate, signed by a Responsible Officer of the
Borrower, certifying that a Replacement Liquidity Facility has been substituted
for this Agreement in full pursuant to Section 3.6(e) of the Intercreditor
Agreement; (iv) the fifth Business Day following the receipt by the Borrower of
a Termination Notice from the Liquidity Provider pursuant to Section 6.01
hereof; 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 V to this Agreement.
"Transferee" has the meaning assigned to such term in Section 7.08(b).
"Unapplied Downgrade Advance" means any Downgrade Advance other than an
Applied Downgrade Advance.
"Unapplied Provider Advance" means any Provider Advance other than an
Applied Provider Advance.
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8
"Unpaid Advance" has the meaning assigned to such term in Section 2.05.
(b) Terms Defined in the Intercreditor Agreement. For all purposes of this
Agreement, the following terms shall have the respective meanings assigned to
such terms in the Intercreditor Agreement:
"ABN AMRO Fee Letter", "Atlas", "Atlas Bankruptcy Event",
"Certificates", "Class A- 2 Cash Collateral Account", "Class A-1
Certificates", "Class A-2 Certificateholders", "Class A-2 Trust",
"Class A-2 Trust Agreement", "Class A-2 Trustee", "Class A-2
Certificates", "Class B Certificates", "Class C Certificates",
"Closing Date", "Controlling Party", "Corporate Trust Office",
"Distribution Date", "Downgraded Facility", "Equipment Notes", "Final
Maturity Date", "Financing Agreement", "Indenture", "Interest Payment
Date", "Investment Earnings", "Liquidity Facility", "Liquidity
Obligations", "Loan Trustee", "Non-Extended Facility", "Note Purchase
Agreement", "Operative Agreements", "Performing Equipment Note",
"Person", "Placement Agents", "Placement Agreement", "Pool Balance",
"Rating Agency", "Ratings Confirmation", "Regular Distribution Date",
"Replacement Liquidity Facility", "Responsible Officer", "Scheduled
Payment", "Special Payment", "Stated Interest Rate", "Subordination
Agent", "Taxes", "Threshold Rating", "Transfer", "Trust Agreements",
"Trustee", "Underwriters", "Underwriting Agreement" and "Written
Notice".
ARTICLE II
AMOUNT AND TERMS OF THE COMMITMENT
Section 2.01. The Advances. The 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 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 the Advances. (a) Interest Advances shall be made in
one or more Borrowings by delivery to the Liquidity Provider of one or more
written and completed Notices of Borrowing in substantially the form of Annex I
attached hereto, signed by a Responsible Officer of the Borrower, in an amount
not exceeding the Maximum Commitment at such time and shall be used solely for
the payment when due of the interest on the Class A-2 Certificates at the Stated
Interest Rate therefor in accordance with Section 3.6(a) of the Intercreditor
Agreement. Each Interest Advance made hereunder shall automatically reduce the
Maximum Commitment and the amount available to be borrowed hereunder by
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9
subsequent Advances by the amount of such Interest Advance (subject to
reinstatement as provided in the next sentence). Upon repayment to the Liquidity
Provider in full 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 Commitment shall be reinstated by the amount of such repaid Interest
Advance; provided, however, that the Maximum Commitment shall not be so
reinstated at any time if (i) a Liquidity Event of Default shall have occurred
and be continuing and (ii) there is a Performing Note Deficiency.
(b) A Non-Extension Advance shall be made in a single Borrowing if this
Agreement is not extended in accordance with Section 3.6(d) of the Intercreditor
Agreement (unless a Replacement Liquidity Facility to replace this Agreement
shall have been delivered to the Borrower as contemplated by said Section 3.6(d)
within the time period specified in such Section by delivery to the Liquidity
Provider of a written and completed Notice of Borrowing in substantially the
form of Annex II attached hereto, signed by a Responsible Officer of the
Borrower, in an amount equal to the Maximum Commitment at such time, and shall
be used to fund the Class A-2 Cash Collateral Account in accordance with said
Section 3.6(d) and Section 3.6(f) of the Intercreditor Agreement.
(c) A Downgrade Advance shall be made in a single Borrowing upon a
downgrading of the Liquidity Provider's short-term unsecured debt rating issued
by either Rating Agency below the applicable Threshold Rating (as provided for
in Section 3.6(c) of the Intercreditor Agreement) unless a Replacement Liquidity
Facility to replace this Agreement shall have been previously delivered to the
Borrower in accordance with said Section 3.6(c), by delivery to the Liquidity
Provider of a written and completed Notice of Borrowing in substantially the
form of Annex III attached hereto, signed by a Responsible Officer of the
Borrower, in an amount equal to the Maximum Commitment at such time, and shall
be used to fund the Class A-2 Cash Collateral Account in accordance with said
Section 3.6(c) and Section 3.6(f) of the Intercreditor Agreement.
(d) A Final Advance shall be made in a single Borrowing upon the receipt by
the Borrower of a Termination Notice from the Liquidity Provider pursuant to
Section 6.01 hereof by delivery to the Liquidity Provider of a written and
completed Notice of Borrowing in substantially the form of Annex IV attached
hereto, signed by a Responsible Officer of the Borrower, in an amount equal to
the Maximum Commitment at such time, and shall be used to fund the Class A-2
Cash Collateral Account (in accordance with Section 3.6(i) of the Intercreditor
Agreement) and Section 3.6(f) 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(b),
2.02(c) or 2.02(d), as the case may be, given by the Borrower to the Liquidity
Provider. If a Notice of Borrowing is delivered by the Borrower in respect of
any Borrowing no later than 1:00 PM (New York
<PAGE>
10
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 Liquidity
Provider shall make available to the Borrower, in accordance with its payment
instructions, the amount of such Borrowing in U.S. dollars and immediately
available funds, before 4:00 PM (New York City time) on such Business Day or 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 PM
(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
Liquidity Provider shall make available to the Borrower, in accordance with its
payment instructions, the amount of such Borrowing in U.S. dollars and
immediately available funds, before 12:00 Noon (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
Liquidity Provider for such purpose. Each Notice of Borrowing shall be
irrevocable and binding on the Borrower.
(f) Upon the making of any Advance requested pursuant to a Notice of
Borrowing, in accordance with the Borrower's payment instructions, the Liquidity
Provider shall be fully discharged of its obligation hereunder with respect to
such Notice of Borrowing, and the 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. Following the making of any
Advance pursuant to Section 2.02(b), (c) or (d) hereof to fund the Class A-2
Cash Collateral Account, the Liquidity Provider shall have no interest in or
rights to the Class A-2 Cash Collateral Account, such Advance or any other
amounts from time to time on deposit in the Class A-2 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 3.6(e) or
(f) 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 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 Liquidity Provider
the fees set forth in the ABN AMRO 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 Pool Balance of the Class A-2
Certificates 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
<PAGE>
11
notice of any such automatic reduction of the Maximum Commitment to the
Liquidity Provider 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.
(b) Termination. Upon the making of any Provider Advance or Final Advance
hereunder or the occurrence of the Termination Date, the obligation of the
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 Liquidity Provider (which
notice and demand are hereby waived by the Borrower), to pay, or to cause to be
paid, to the Liquidity Provider on each date on which the 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 as provided in Section 3.07 hereof; provided that if (i) the 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 Liquidity Facility shall become a Downgraded Facility
or Non-Extended Facility at any time when unreimbursed Interest Advances have
reduced the Maximum 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 or an Applied Non-Extension Advance, as the case may
be, 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 Liquidity Provider in accordance with Section 2.06 and for the purposes of
Section 2.06(b)). The Borrower and the 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 Liquidity Provider.
Section 2.06. Repayments of Provider Advances. (a) Amounts advanced
hereunder in respect of a Provider Advance shall be deposited in the Class A-2
Cash Collateral Account, invested and withdrawn from the Class A-2 Cash
Collateral Account as set forth in Sections 3.6(c), (d) and (f) of the
Intercreditor Agreement. The Borrower agrees to pay to the 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 as provided in Section 3.07; provided, however, that
amounts in respect of a Provider Advance withdrawn from the Class A-2 Cash
Collateral Account for the purpose of paying interest on the Class A-2
Certificates in accordance with Section 3.6(f) of the Intercreditor Agreement
(the amount of any such withdrawal being (y) in the case of a Downgrade Advance,
an "Applied Downgrade Advance" and (z) in the case of a Non-
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12
Extension Advance, an "Applied Non-Extension Advance" and, together with an
Applied Downgrade Advance, 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; provided further, however, that if, following the making of a
Provider Advance, the Liquidity Provider delivers a Termination Notice to the
Borrower pursuant to Section 6.01 hereof, 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 thereon. Subject to Sections
2.07 and 2.09 hereof, immediately upon the withdrawal of any amounts from the
Class A-2 Cash Collateral Account on account of a reduction in the Required
Amount, the Borrower shall repay to the 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 hereof.
(b) At any time when an Applied Provider Advance (or any portion thereof)
is outstanding, upon the deposit in the Class A-2 Cash Collateral Account of any
amount pursuant to clause "third" of Section 2.4(b) of the Intercreditor
Agreement, clause "third" of Section 3.2 of the Intercreditor Agreement or
clause "fourth" of Section 3.3 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 each
Provider Advance 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 Liquidity Facility in replacement
of this Agreement in accordance with Section 3.6(e) of the Intercreditor
Agreement, amounts remaining on deposit in the Class A-2 Cash Collateral Account
after giving effect to any Applied Provider Advance on the date of such
replacement shall be reimbursed to the Liquidity Provider, but only to the
extent such amounts are necessary to repay in full to the Liquidity Provider all
amounts owing to it hereunder.
Section 2.07. Payments to the Liquidity Provider Under the Intercreditor
Agreement. In order to provide for payment or repayment to the 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 Liquidity Provider pursuant to the terms
of the Intercreditor Agreement (including, without limitation, Section 3.6(f) of
the Intercreditor Agreement), shall be paid to the Liquidity Provider in
accordance with the terms thereof. Amounts so paid to the Liquidity Provider
shall be applied by the Liquidity Provider to Liquidity Obligations then due and
payable in accordance with the
<PAGE>
13
Intercreditor Agreement or, if not provided for in the Intercreditor
Agreement, then in such manner as the Liquidity Provider shall deem appropriate.
Section 2.08. Book Entries. The 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 Liquidity
Provider to maintain such account or accounts shall not affect the obligations
of the Borrower in respect of Advances.
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 or payments under Section 8.1 or
9.1, as the case may be, of the Participation Agreements and Section 6 of the
Note Purchase Agreement 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 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 Class A-2 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 3.6(f)
of the Intercreditor Agreement.
Section 2.10. Extension of the Expiry Date: Non-Extension Advance. No
earlier than the 60th day and no later than the 40th day prior to the then
effective Expiry Date (unless such Expiry Date is on or after the date that is
15 days after the Final Maturity Date for the Class A-2 Certificates), the
Borrower shall request that the Liquidity Provider extend the Expiry Date for a
period of 364 days after the then effective Expiry Date (unless the obligations
of the Liquidity Provider are earlier terminated in accordance with the terms
hereof). The Liquidity Provider shall advise the Borrower, no earlier than 40
days and no later than 25 days prior to the then effective Expiry Date, whether,
in its sole discretion, it agrees to so extend the Expiry Date. If the Liquidity
Provider advises the Borrower on or before the 25th day prior to the Expiry Date
then in effect that such Expiry Date shall not be so extended, or fails to
irrevocably and unconditionally advise the Borrower on or before the 25th day
prior to the Expiry Date then in effect that such Expiry Date shall be so
extended (and, in each case, if the Liquidity Provider shall not have been
replaced in accordance with Section 3.6(e) of the Intercreditor Agreement), the
Borrower shall be entitled on and after such 25th day (but prior to the then
effective Expiry Date) to request a Non-Extension Advance in accordance with
Section 2.02(b) hereof and Section 3.6(d) of the Intercreditor Agreement.
<PAGE>
14
ARTICLE III
OBLIGATIONS OF THE BORROWER
Section 3.01. Increased Costs. The Borrower shall pay to the Liquidity
Provider from time to time such amounts as may be necessary to compensate the
Liquidity Provider for any increased costs incurred by the Liquidity Provider
which are attributable to its making or maintaining any LIBOR Advances hereunder
or its obligation to make any such Advances hereunder, or any reduction in any
amount receivable by the Liquidity Provider under this Agreement or the
Intercreditor Agreement in respect of any such Advances or such obligation (such
increases in costs and reductions in amounts receivable being herein called
"Additional Costs"), resulting from any change after the date of this Agreement
in U.S. federal, state, municipal, or foreign laws or regulations (including
Regulation D of the Board of Governors of the Federal Reserve System), or the
adoption or making after the date of this Agreement of any interpretations,
directives, or requirements applying to a class of banks including the Liquidity
Provider under any U.S. federal, state, municipal, or any foreign laws or
regulations (whether or not having the force of law) by any court, central bank
or monetary authority charged with the interpretation or administration thereof
(a "Regulatory Change"), which: (1) changes the basis of taxation of any amounts
payable to the Liquidity Provider under this Agreement in respect of any such
Advances (other than Excluded Taxes); or (2) imposes or modifies any reserve,
special deposit, compulsory loan or similar requirements relating to any
extensions of credit or other assets of, or any deposits with other liabilities
of, the Liquidity Provider (including any such Advances or any deposits referred
to in the definition of LIBOR Rate or related definitions). The 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 amount
payable under this Section that may thereafter accrue and would not, in the
reasonable judgment of the Liquidity Provider, be otherwise disadvantageous to
the Liquidity Provider.
The Liquidity Provider will notify the Borrower of any event occurring
after the date of this Agreement that will entitle the Liquidity Provider to
compensation pursuant to this Section 3.01 as promptly as practicable after it
obtains knowledge thereof and determines to request such compensation, which
notice shall describe in reasonable detail the calculation of the amounts owed
under this Section. Determinations by the Liquidity Provider for purposes of
this Section 3.01 of the effect of any Regulatory Change on its costs of making
or maintaining Advances or on amounts receivable by it in respect of Advances,
and of the additional amounts required to compensate the Liquidity Provider in
respect of any Additional Costs, shall be prima facie evidence of the amount
owed under this Section.
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15
Section 3.02. Capital Adequacy. If (1) the adoption, after the date hereof,
of any applicable governmental law, rule or regulation regarding capital
adequacy, (2) any change, after the date hereof, in the interpretation or
administration of any such law, rule or regulation by any central bank or other
governmental authority charged with the interpretation or administration thereof
or (3) compliance by the Liquidity Provider or any corporation controlling the
Liquidity Provider with any applicable guideline or request of general
applicability, issued after the date hereof, by any central bank or other
governmental authority (whether or not having the force of law) that constitutes
a change of the nature described in clause (2), has the effect of requiring an
increase in the amount of capital required to be maintained by the Liquidity
Provider or any corporation controlling the Liquidity Provider, and such
increase is based upon the Liquidity Provider's obligations hereunder and other
similar obligations, the Borrower shall pay to the Liquidity Provider from time
to time such additional amount or amounts as are necessary to compensate the
Liquidity Provider for such portion of such increase as shall be reasonably
allocable to the Liquidity Provider's obligations to the Borrower hereunder. The
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 amount payable under this Section that may thereafter accrue and would not,
in the reasonable judgment of the Liquidity Provider, be otherwise materially
disadvantageous to the Liquidity Provider.
The Liquidity Provider will notify the Borrower of any event occurring
after the date of this Agreement that will entitle the Liquidity Provider to
compensation pursuant to this Section 3.02 as promptly as practicable after it
obtains knowledge thereof and determines to request such compensation, which
notice shall describe in reasonable detail the calculation of the amounts owed
under this Section. Determinations by the Liquidity Provider for purposes of
this Section 3.02 of the effect of any increase in the amount of capital
required to be maintained by the bank and of the amount allocable to the
Liquidity Provider's obligations to the Borrower hereunder shall be prima facie
evidence of the amounts owed under this Section.
Section 3.03. Payments Free of Deductions. All payments made by the
Borrower under this Agreement shall be made free and clear of, and without
reduction for or on account of, any present or future stamp or other taxes,
levies, imposts, duties, charges, fees, deductions, withholdings, restrictions
or conditions of any nature whatsoever now or hereafter imposed, levied,
collected, withheld or assessed, excluding Excluded Taxes (such non-excluded
taxes being referred to herein, collectively, as "Non-Excluded Taxes" and,
individually, as a "Non-Excluded Tax"). If any Non-Excluded Taxes are required
to be withheld from any amounts payable to the Liquidity Provider under this
Agreement, the amounts so payable to the Liquidity Provider shall be increased
to the extent necessary to yield to the Liquidity Provider (after payment of all
Non-Excluded Taxes) interest or any other such amounts payable under this
Agreement at the rates or in the amounts specified in this
<PAGE>
16
Agreement. The Liquidity Provider agrees to use reasonable efforts (consistent
with its internal policy and 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 Liquidity Provider, be
otherwise disadvantageous to the Liquidity Provider. From time to time upon the
reasonable request of the Borrower, the Liquidity Provider agrees to provide to
the Borrower two original Internal Revenue Service Forms W-8 BEN or W-8 ECI, as
appropriate, or any successor or other form prescribed by the Internal Revenue
Service, certifying that the Liquidity Provider is exempt from or entitled to a
reduced rate of United States withholding tax on payments pursuant to this
Agreement.
(b) All payments (including, without limitation, Advances) made by the
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 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
payment required 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 hereunder,
the 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.
Section 3.04. Payments. The Borrower shall make or cause to be made each
payment to the Liquidity Provider under this Agreement so as to cause the same
to be received by the 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 lawful
money of the United States of America, to the Liquidity Provider in immediately
available funds, by wire transfer to ABN AMRO Bank New York, NY, ABA #
026009580, Account Name: ABN AMRO Bank N.V., Chicago Branch, Account #
650-001-1789-41, Reference: Atlas Air, Inc., 1999-1A-2.
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
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17
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 Section 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 Class A-2 Cash Collateral
Account to pay interest on the Class A-2 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 Class A-2 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) which 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 a fluctuating interest rate
per annum for each day equal to the Applicable Liquidity Rate (as defined below)
for such Advance or such other amount 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 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 amount of interest that would have accrued if such otherwise
applicable interest rate as set forth in this Section 3.07 had at all times been
in effect.
(b) Each Advance will be either a Base Rate Advance or a LIBOR Advance as
provided in this Section. Each initial Advance will be a Base Rate Advance for
the period from the date of its borrowing to (but excluding) the third Business
Day following the Liquidity Provider's receipt of the Notice of Borrowing for
such Advance. Thereafter, such Advance shall be a LIBOR Advance. Each Applied
Provider Advance and a Final Advance that is deemed to have been made without
delivery of a Notice of Borrowing pursuant to Section 2.06 shall be a LIBOR
Advance from the day such Advance is made; provided that the Borrower (at the
direction of the Controlling Party, so long as the Liquidity Provider is not the
Controlling Party) may (x) convert an Unapplied Provider Advance or the Final
Advance into a Base Rate Advance on the last day of an Interest Period for such
Advance by giving the Liquidity Provider no less than four Business Days' prior
written notice of such election or (y) elect to maintain an Unapplied Provider
Advance or the Final Advance as a Base Rate Advance by not requesting a
conversion of
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18
an Unapplied Provider Advance or the Final Advance to a LIBOR Advance under
Clause (5) of the applicable Notice of Borrowing (or, if such Final Advance is
deemed to have been made without delivery of a Notice of Borrowing pursuant to
Section 2.06, by requesting, prior to 11:00 AM on the first Business Day
immediately following the Borrower's receipt of the applicable Termination
Notice, that such Final Advance not be converted from a Base Rate Advance to 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 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 3.00% until paid.
(f) 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. From time to time and subject to the
successor Borrower's meeting the eligibility requirements set forth in Section
6.9 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 VI attached
hereto (a "Notice of Replacement Subordination Agent") delivered to the
Liquidity Provider by the then Borrower, the successor Borrower designated
therein shall be substituted for as the Borrower for all purposes hereunder.
Section 3.09. Funding Loss Indemnification. The Borrower shall pay to the
Liquidity Provider, upon the request of the Liquidity Provider, such amount or
amounts as shall be sufficient (in the reasonable opinion of the Liquidity
Provider) to compensate it for any loss, cost, or expense incurred by reason of
the liquidation or redeployment of deposits or other funds
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19
acquired by the Liquidity Provider to fund or maintain any LIBOR Advance (but
excluding loss of anticipated profits) incurred as a result of:
(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 applicable law, rule or regulation, 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 Liquidity Provider (or its Lending
Office) 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 Liquidity Provider (or its Lending Office) to maintain or
fund its LIBOR Advances, then upon notice to the Borrower by the Liquidity
Provider, the outstanding principal amount of the LIBOR Advances shall be
converted to Base Rate Advances (a) immediately upon demand of the Liquidity
Provider, if such change or compliance with such request, in the judgment of the
Liquidity Provider, requires immediate repayment; or (b) at the expiration of
the last Interest Period to expire before the effective date of any such change
or request.
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:
(a) The 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 Liquidity Provider:
(i) This Agreement duly executed on behalf of the Borrower;
(ii) The Intercreditor Agreement duly executed on behalf of each of
the parties thereto;
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20
(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) A copy of the Prospectus Supplement, together with the related
Prospectus dated February 16, 1999, and specimen copies of the Class A-2
Certificates;
(v) An executed copy of each document, instrument, certificate and
opinion delivered on or before the Closing Date pursuant to the Class A-2
Trust Agreement, the Intercreditor Agreement and the other Operative
Agreements (in the case of each such opinion, other than the opinion of
counsel for the Underwriters, either addressed to the Liquidity Provider or
accompanied by a letter from the counsel rendering such opinion to the
effect that the Liquidity Provider is entitled to rely on such opinion as
of its date as if it were addressed to the Liquidity Provider);
(vi) Evidence that there shall have been made and shall be in full
force and effect, all filings, recordings and/or registrations, and there
shall have been given or taken any notice or other similar action as may be
reasonably necessary or, to the extent reasonably requested by the
Liquidity Provider, reasonably advisable, in order to establish, perfect,
protect and preserve the right, title and interest, remedies, powers,
privileges, liens and security interests of, or for the benefit of, the
Trustees, the Borrower and the Liquidity Provider created by the Operative
Agreements executed and delivered on or prior to the Closing Date;
(vii) An agreement from Atlas, pursuant to which (i) Atlas agrees to
provide copies of quarterly financial statements and audited annual
financial statements to the Liquidity Provider, and such other information
as the Liquidity Provider shall reasonably request with respect to the
transactions contemplated by the Operative Agreements, in each case, only
to the extent that Atlas is obligated to provide such information pursuant
to Section 8.2.1 of the Leases (related to Leased Aircraft) or the
corresponding section of the Indentures (related to Owned Aircraft) to the
parties thereto and (ii) Atlas agrees to allow the Liquidity Provider to
inspect Atlas's books and records regarding such transactions, and to
discuss such transactions with officers and employees of Atlas; and
(viii) Such other documents, instruments, opinions and approvals
pertaining to the transactions contemplated hereby or by the other
Operative Agreements as the Liquidity Provider shall have reasonably
requested.
(b) The following statement shall be true on and as of the Effective Date:
No event has occurred and is continuing, or would result from the entering into
of this Agreement or the making of any Advance, which constitutes a Liquidity
Event of Default.
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21
(c) The Liquidity Provider shall have received payment in full of all fees
and other sums required to be paid to or for the account of the Liquidity
Provider on or prior to the Effective Date.
(d) All conditions precedent to the issuance of the Certificates under the
Trust Agreements shall have been satisfied or waived, all conditions precedent
to the effectiveness of the other Liquidity Facilities shall have been satisfied
or waived, and all conditions precedent to the purchase of the Certificates by
the Underwriters under the Underwriting Agreement shall have been satisfied
(unless any of such conditions precedent shall have been waived by the
Underwriters) .
(e) The Borrower shall have received a certificate, dated the date hereof,
signed by a duly authorized representative of the Liquidity Provider, certifying
that all conditions precedent to the effectiveness of Section 2.01 have been
satisfied or waived.
Section 4.02. Conditions Precedent to Borrowing. The obligation of the
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 date of such Borrowing, the Borrower shall have delivered a
Notice of Borrowing which conforms to the terms and conditions of this Agreement
and has been completed as may be required by the relevant form of the Notice of
Borrowing for the type of Advances requested.
ARTICLE V
COVENANTS
Section 5.01. Affirmative Covenants of the Borrower. So long as any Advance
shall remain unpaid or the Liquidity Provider shall have any Maximum Commitment
hereunder or the Borrower shall have any obligation to pay any amount to the
Liquidity Provider hereunder, the Borrower will, unless the 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 and the other
Operative Agreements and observe and perform in all material respects the
conditions, covenants and requirements applicable to it contained in this
Agreement and the other Operative Agreements.
(b) Reporting Requirements. Furnish to the 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
<PAGE>
22
requested by the Liquidity Provider; and permit the 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 Liquidity Provider
with reasonable promptness, such Operative Agreements entered into after
the date hereof as from time to time may be reasonably requested by the
Liquidity Provider.
Section 5.02. Negative Covenants of the Borrower. So long as any Advance
shall remain unpaid or the Liquidity Provider shall have any Maximum Commitment
hereunder or the Borrower shall have any obligation to pay any amount to the
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
Liquidity Provider, which consent shall not be unreasonably withheld or delayed.
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 Liquidity Provider may, in its discretion, deliver to the
Borrower a Termination Notice, the effect of which shall be to cause (i) this
Agreement to expire on the fifth Business Day after the date on which such
Termination Notice is received by the Borrower, (ii) the Borrower to promptly
request, and the Liquidity Provider to promptly make, a Final Advance in
accordance with Section 2.02(d) hereof and Section 3.6(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 hereof,
all Advances (including, without limitation, any Provider Advance and Applied
Provider Advance), any accrued interest thereon and any other amounts
outstanding hereunder to become immediately due and payable to the Liquidity
Provider.
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23
ARTICLE VII
MISCELLANEOUS
Section 7.01. Amendments, Etc., No amendment or waiver of any provision of
this Agreement, nor consent to any departure by the Borrower therefrom, shall in
any event be effective unless the same shall be in writing and signed by the
Liquidity Provider, and, in the case of an amendment or of a waiver by the
Borrower, the Borrower, and then such waiver or consent shall be effective only
in the specific instance and for the specific purpose for which given.
Section 7.02. Notices, Etc. Except as otherwise expressly provided herein,
all notices and other communications provided for hereunder shall be in writing
(including telecopier and mailed or delivered or sent by telecopier):
Borrower: WILMINGTON TRUST COMPANY
One Rodney Square
1100 North Market Street
Wilmington, DE 19890-0001
Attention: Corporate Trust Administration
Telephone: (302) 651-1000
Telecopy: (302) 651-8882
Liquidity
Provider: ABN AMRO BANK N.V.
Aerospace Department
135 South LaSalle Street, #660
Chicago, IL 60674-9135
Attention: Claudia Heldring
Telephone: (312) 904-5031
Telecopy: (312) 606-8428
with a copy to:
ABN AMRO Bank N.V.
135 South LaSalle Street, #625
Chicago, IL 60674-9135
Attention: Loan Administration
<PAGE>
24
Telephone: (312) 904-2961
Telecopy: (312) 904-1288
or, as to each of the foregoing, at such other address as shall be
designated by such Person in a written notice to the others. All such notices
and communications shall be effective (i) if given by telecopier, when
transmitted to the telecopier number specified above, (ii) if given by mail,
when deposited in the mails addressed as specified above, and (iii) if given by
other means, when delivered at the address specified above, except that written
notices to the Liquidity Provider pursuant to the provisions of Articles II and
III hereof shall not be effective until received by the Liquidity Provider. A
copy of all notices delivered hereunder to either party shall in addition be
delivered to each of the parties to the Participation Agreements at their
respective addresses set forth therein.
Section 7.03. No Waiver: Remedies. No failure on the part of the 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 Liquidity Provider such
additional assignments, agreements, powers and instruments as the Liquidity
Provider may reasonably require or deem advisable to carry into effect the
purposes of this Agreement and the other Operative Agreements or to better
assure and confirm unto the Liquidity Provider its rights, powers and remedies
hereunder and under the other Operative Agreements.
Section 7.05. Indemnification; Survival of Certain Provisions. The
Liquidity Provider shall be indemnified hereunder to the extent and in the
manner described in Section 9.1 of the Leased Aircraft Participation Agreement,
Section 8.1 of the Owned Aircraft Participation Agreement and Section 6 of the
Note Purchase Agreement. In addition, the Borrower agrees to indemnify, protect,
defend and hold harmless the Liquidity Provider from, against and in respect of,
and shall pay on demand, all Expenses of any kind or nature whatsoever (other
than any Expenses of the nature described in Sections 3.01, 3.02 or 7.07 hereof
or in the ABN AMRO Fee Letter (regardless of whether indemnified against
pursuant to said Sections or in such ABN AMRO Fee Letter)), that may be imposed,
incurred by or asserted against any 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 ABN AMRO Fee Letter, the Intercreditor Agreement or any
Financing 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 gross negligence or willful
<PAGE>
25
misconduct of such Liquidity Indemnitee or any other Liquidity Indemnitee, (ii)
ordinary and usual operating overhead expense, or (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 ABN
AMRO Fee Letter, the Tax Letter or any other Operative Agreement to which it is
a party. The indemnities contained in Section 9.1 or 8.1, as the case may be, of
the Participation Agreements, and the provisions of Sections 3.01, 3.02, 3.03,
3.09, 7.05 and 7.07 hereof, shall survive the termination of this Agreement.
Section 7.06. Liability of the Liquidity Provider. (a) Neither the
Liquidity Provider nor any of its officers, employees, directors or affiliates
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 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 Liquidity Provider, and the Liquidity Provider shall be liable to
the Borrower, to the extent of any damages suffered by the Borrower which were
the result of (A) the Liquidity Provider's willful misconduct or negligence in
determining whether documents presented hereunder comply with the terms hereof,
or (B) any breach by the Liquidity Provider of any of the terms of this
Agreement, including, but not limited to, the Liquidity Provider's failure to
make lawful payment hereunder after the delivery to it by the Borrower of a
Notice of Borrowing strictly complying with the terms and conditions hereof.
(b) Neither the Liquidity Provider nor any of its officers, employees,
director 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 misconduct or
negligence (in which event the extent of the 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. Costs, Expenses and Taxes. The Borrower agrees to pay, or
cause to be paid (A) on the Effective Date and on such later date or dates on
which the Liquidity Provider shall make demand, all reasonable out-of-pocket
costs and expenses (including, without limitation, the reasonable fees and
expenses of outside counsel for the Liquidity Provider) of the Liquidity
Provider in connection with the preparation, negotiation, execution, delivery,
filing and recording of this Agreement, any other Operative Agreement and any
other documents which may be delivered in connection with this Agreement and (B)
on demand, all reasonable
<PAGE>
26
costs and expenses (including reasonable counsel fees and expenses) of the
Liquidity Provider in connection with (i) the enforcement of this Agreement or
any other Operative Agreement, (ii) the modification or amendment of, or
supplement to, this Agreement or any other Operative Agreement or such other
documents which may be delivered in connection herewith or therewith (whether or
not the same shall become effective) or (iii) any action or proceeding relating
to any order, injunction, or other process or decree restraining or seeking to
restrain the Liquidity Provider from paying any amount under this Agreement, the
Intercreditor Agreement or any other Operative Agreement or otherwise affecting
the application of funds in the Class A-2 Cash Collateral Account. In addition,
the Borrower shall pay any and all recording, stamp and other similar taxes and
fees payable or determined to be payable 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 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 Liquidity Provider and their respective successors and assigns,
except that neither the 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 its rights or obligations hereunder or any interest
herein without the prior written consent of the other party, subject to the
requirements of Section 7.08(b). The Liquidity Provider may grant participations
herein or in any of its rights hereunder (including, without limitation, funded
participations and participations in rights to receive interest payments
hereunder) and under the other Operative Agreements to such Persons as the
Liquidity Provider may in its sole discretion select, subject to the
requirements of Section 7.08(b). No such participation by the Liquidity
Provider, however, will relieve the Liquidity Provider of its obligations
hereunder. In connection with any participation or any proposed participation,
the Liquidity Provider may disclose to the participant or the proposed
participant any information that the Borrower is required to deliver or to
disclose to the Liquidity Provider pursuant to this Agreement. The Borrower
acknowledges and agrees that the Liquidity Provider's source of funds may derive
in part from its participants (other than Atlas). Accordingly, references in
this Agreement and the other Operative Agreements to determinations, reserve and
capital adequacy requirements, increased costs, reduced receipts, additional
amounts due pursuant to Section 3.03(a) and the like as they pertain to the
Liquidity Provider shall be deemed also to include those of each of its
participants (subject, in each case, to the maximum amount that would have been
incurred by or attributable to the Liquidity Provider directly if the Liquidity
Provider, rather than the participant, had held the interest participated).
<PAGE>
27
(b) If, pursuant to subsection (a) above, the Liquidity Provider sells any
participation in this Agreement to any bank or other entity (each, a
"Transferee"), then, concurrently with the effectiveness of such participation,
the Transferee shall (i) represent to the Liquidity Provider (for the benefit of
the Liquidity Provider and the Borrower) either (A) that it is incorporated
under the laws of the United States or a state thereof or (B) that under
applicable law and treaties, no taxes will be required to be withheld with
respect to any payments to be made to such Transferee in respect of this
Agreement, (ii) furnish to the Liquidity Provider and the Borrower either (x) a
statement that it is incorporated under the laws of the United States or a state
thereof or (y) if it is not so incorporated, two copies of a properly completed
United States Internal Revenue Service Form W-8 ECI or Form W-8 BEN, as
appropriate, or other applicable form, certificate or document prescribed by the
Internal Revenue Service certifying, in each case, such Transferee's entitlement
to a complete exemption from United States federal withholding tax in respect to
any and all payments to be made hereunder, and (iii) agree (for the benefit of
the Liquidity Provider and the Borrower) to provide the Liquidity Provider and
the Borrower a new Form W-8 ECI or Form W-8 BEN, as appropriate, (A) on or
before the date that any such form expires or becomes obsolete or (B) after the
occurrence of any event requiring a change in the most recent form previously
delivered by it and prior to the immediately following due date of any payment
by the Borrower hereunder, certifying in the case of a Form W-8 BEN or Form W-8
ECI that such Transferee is entitled to a complete exemption from United States
federal withholding tax on payments under this Agreement. Unless the Borrower
has received forms or other documents reasonably satisfactory to it (and
required by applicable law) indicating that payments hereunder are not subject
to United States federal withholding tax, the Borrower will withhold taxes as
required by law from such payments at the applicable statutory rate.
(c) Notwithstanding the other provisions of this Section 7.08, the
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 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 Liquidity Provider from its obligations hereunder.
Section 7.09. Severability. Any provision of this Agreement which is
prohibited, unenforceable or not authorized in any jurisdiction shall, as to
such jurisdiction, be ineffective to the extent of such prohibition,
unenforceability or nonauthorization without invalidating the remaining
provisions hereof or affecting the validity, enforceability or legality of such
provision in any other jurisdiction.
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28
Section 7.10. GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY, AND
CONSTRUED IN ACCORDANCE WITH, THE LAW OF THE STATE OF NEW YORK.
Section 7.11. Submission to Jurisdiction; Waiver of Jury Trial; Waiver of
Immunity. (a) Each of the parties hereto hereby irrevocably and unconditionally:
(i) submits for itself and its property in any legal action or proceeding
relating to this Agreement or any other Operative Agreement, or for
recognition and enforcement of any judgment in respect hereof or
thereof, to the nonexclusive general jurisdiction of the courts of the
State of New York, the courts of the United States of America for the
Southern District of New York, and the appellate courts from any
thereof;
(ii) consents that any such action or proceeding may be brought in such
courts, and waives any objection that it may now or hereafter have to
the venue of any such action or proceeding in any such court or that
such action or proceeding was brought in an inconvenient court and
agrees not to plead or claim the same;
(iii) agrees that service of process in any such action or proceeding may
be effected by mailing a copy thereof by registered or certified mail
(or any substantially similar form and mail), postage prepaid, to each
party hereto at its address set forth in Section 7.02 hereof, or at
such other address of which the Liquidity Provider shall have been
notified pursuant thereto; and
(iv) agrees that nothing herein shall affect the right to effect service of
process in any other manner permitted by law or shall limit the right
to sue in any other jurisdiction.
(b) THE BORROWER AND THE 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 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
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29
AMENDMENTS, RENEWALS, SUPPLEMENTS OR MODIFICATIONS TO THIS AGREEMENT.
(c) The Liquidity Provider hereby waives any immunity it may have from the
jurisdiction of the courts of the United States or of any State and waives any
immunity any of its properties located in the United States may have from
attachment or execution upon a judgement entered by any such court under the
United States Foreign Sovereign Immunities Act of 1976 or any similar successor
legislation.
Section 7.12. Execution in Counterparts. This Agreement may be executed in
any number of counterparts and by different parties 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 Agreement.
Section 7.13. Entirety. This Agreement, the Intercreditor Agreement and the
other Operative Agreements to which the Liquidity Provider is a party constitute
the entire agreement of the parties hereto with respect to the subject matter
hereof and supersedes all prior understandings and agreements of such parties.
Section 7.14. Headings. Section headings in this Agreement are included
herein for convenience of reference only and shall not constitute a part of this
Agreement for any other purpose.
Section 7.15. LIQUIDITY PROVIDER'S OBLIGATION TO MAKE ADVANCES. EXCEPT AS
EXPRESSLY SET FORTH IN THIS AGREEMENT, THE OBLIGATIONS OF THE LIQUIDITY PROVIDER
TO MAKE ADVANCES HEREUNDER, AND THE BORROWER'S RIGHTS TO DELIVER NOTICES OF
BORROWING REQUESTING THE MAKING OF ADVANCES HEREUNDER, SHALL BE UNCONDITIONAL
AND IRREVOCABLE, AND SHALL BE PAID OR PERFORMED, IN EACH CASE STRICTLY IN
ACCORDANCE WITH THE TERMS OF THIS AGREEMENT.
<PAGE>
30
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.
WILMINGTON TRUST COMPANY, not in its
individual capacity but solely as
Subordination Agent, as agent and trustee for
the Class A-2 Trust, as Borrower
By: /s/ James P. Lawler
--------------------------------------
Name: James P. Lawler
Title: Vice President
ABN AMRO BANK N.V., Chicago Branch,
as Liquidity Provider
By: /s/ Claudia C. Heldring
--------------------------------------
Name: Claudia C. Heldring
Title: Vice President
By: /s/ Carla S. Waggoner
--------------------------------------
Name: Carla S. Waggoner
Title: Assistant Vice President
<PAGE>
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 ABN AMRO Bank N.V., Chicago Branch (the
"Liquidity Provider"), with reference to the Revolving Credit Agreement
(1999-lA-2) dated as of April 13, 1999, between the Borrower and the 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 Liquidity Provider to be used, subject to
clause (3)(v) below, for the payment of the interest on the Class A-2
Certificates which was payable on (the "Distribution Date") in accordance
with the terms and provisions of the Class A-2 Trust Agreement and the
Class A-2 Certificates which Advance is requested to be made on __________,
____.
(3) The amount of the Interest Advance requested hereby (i) is $
_______, to be applied in respect of the payment of the interest which was
due and payable on the Class A-2 Certificates on the Distribution Date,
(ii) does not include any amount with respect to the payment of principal
of, or premium on, the Class A-2 Certificates, the Class A-1 Certificates,
the Class B Certificates or the Class C Certificates, or interest on the
Class A-1 Certificates, the Class B Certificates, or the Class C
Certificates, (iii) was computed in accordance with the provisions of the
Class A-2 Certificates, the Class A-2 Trust Agreement and the Intercreditor
Agreement (a copy of which computation is attached hereto as Schedule I),
(iv) does not exceed the Maximum Commitment on the date hereof, (v) does
not include any amount of interest which was due and payable on the Class
A-2 Certificates on such Distribution Date but which remains unpaid due to
the failure of the Depositary to pay any amount of accrued interest on the
Certificates of Deposit on such Distribution Date 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 3.6(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.
<PAGE>
I-2
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 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 Certificate 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 ______________, ______.
WILMINGTON TRUST COMPANY, not in its
individual capacity but solely as
Subordination Agent, as Borrower
By:
--------------------------------
Name:
Title:
<PAGE>
SCHEDULE I TO INTEREST ADVANCE NOTICE OF BORROWING
[Insert Copy of Computations in accordance with
Interest Advance Notice of Borrowing]
<PAGE>
Annex II to
Revolving Credit Agreement
NON-EXTENSION ADVANCE NOTICE OF BORROWING
The undersigned, a duly authorized signatory of the undersigned
subordination agent (the "Borrower"), hereby certifies to ABN AMRO BANK N.V.,
Chicago Branch (the "Liquidity Provider"), with reference to the Revolving
Credit Agreement (1999-lA-2) dated as of April 13, 1999, between the Borrower
and the 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 Non-Extension Advance by the Liquidity Provider to be used for the
funding of the Class A-2 Cash Collateral Account in accordance with Section
3.6(d) of the Intercreditor Agreement, which Advance is requested to be
made on _________________, ____.
(3) The amount of the Non-Extension Advance requested hereby (i) is
$______________________.__ which equals the Maximum Commitment on the date
hereof and is to be applied in respect of the funding of the Class A-2 Cash
Collateral Account in accordance with Section 3.6(d) of the Intercreditor
Agreement, (ii) does not include any amount with respect to the payment of
the principal of, or premium on, the Class A-2 Certificates, or principal
of, or interest or premium on, the Class A-1 Certificates, the Class B
Certificates or the Class C Certificates, (iii) was computed in accordance
with the provisions of the Class A-2 Certificates, the Class A-2 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 Class
A-2 Cash Collateral Account and apply the same in accordance with the terms
of Section 3.6(d) 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.
<PAGE>
II-2
(5) The Borrower hereby requests that the Advance requested hereby be
a Base Rate Advance [and that such Base Rate Advance be converted into a
LIBOR Advance on the third Business Day following your receipt of this
notice].(1)
The Borrower hereby acknowledges that, pursuant to the Liquidity Agreement,
(A) the making of the Non-Extension Advance as requested by this Notice of
Borrowing shall automatically and irrevocably terminate the obligation of the
Liquidity Provider to make further Advances under the Liquidity Agreement; and
(B) following the making by the Liquidity Provider of the NonExtension 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 _____________, ____.
WILMINGTON TRUST COMPANY, not in its
individual capacity but solely as
Subordination Agent, as Borrower
By:
--------------------------------
Name:
Title:
- ----------
1 Bracketed language may be included at Borrower's option.
<PAGE>
SCHEDULE I TO NON-EXTENSION ADVANCE NOTICE OF BORROWING
[Insert Copy of computations in accordance
with Non-Extension Advance Notice of Borrowing]
<PAGE>
Annex III to
Revolving Credit Agreement
DOWNGRADE ADVANCE NOTICE OF BORROWING
The undersigned, a duly authorized signatory of the undersigned
subordination agent (the "Borrower"), hereby certifies to ABN AMRO BANK N.V.,
Chicago Branch (the "Liquidity Provider"), with reference to the Revolving
Credit Agreement (1999-lA-2) dated as of April 13, 1999, between the Borrower
and the 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 Liquidity Provider to be used for the
funding of the Class A-2 Cash Collateral Account in accordance with Section
3.6(c) of the Intercreditor Agreement by reason of the downgrading of the
short-term unsecured debt rating of the Liquidity Provider issued by either
Rating Agency below the Threshold Rating, which Advance is requested to be
made on __________, ____.
(3) The amount of the Downgrade Advance requested hereby (i) is
$________.____, which equals the Maximum Commitment on the date hereof and
is to be applied in respect of the funding of the Class A-2 Cash Collateral
Account in accordance with Section 3.6(c) of the Intercreditor Agreement,
(ii) does not include any amount with respect to the payment of the
principal of, or premium on, the Class A-2 Certificates, or principal of,
or interest or premium on, the Class A-1 Certificates, the Class B
Certificates or the Class C Certificates, (iii) was computed in accordance
with the provisions of the Class A-2 Certificates, the Class A-2 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 Class
A-2 Cash Collateral Account and apply the same in accordance with the terms
of Section 3.6(c) 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.
<PAGE>
III-3
(5) The Borrower hereby requests that the Advance requested hereby be
a Base Rate Advance [and that such Base Rate Advance be converted into a
LIBOR Advance on the third Business Day following your receipt of this
notice].(1)
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 Liquidity
Provider to make further Advances under the Liquidity Agreement; and (B)
following the making by the 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 _______________, ____.
WILMINGTON TRUST COMPANY, not in its
individual capacity but solely as
Subordination Agent, as Borrower
By:
--------------------------------
Name:
Title:
- ----------
1 Bracketed language may be included at Borrower's option.
<PAGE>
SCHEDULE I TO DOWNGRADE ADVANCE NOTICE OF BORROWING
[Insert Copy of computations in accordance with
Downgrade Advance Notice of Borrowing]
<PAGE>
Annex IV to
Revolving Credit Agreement
FINAL ADVANCE NOTICE OF BORROWING
The undersigned, a duly authorized signatory of the undersigned borrower
(the "Borrower"), hereby certifies to ABN AMRO BANK N.V., Chicago Branch (the
"Liquidity Provider"), with reference to the Revolving Credit Agreement
(1999-lA-2) dated as of April 13, 1999, between the Borrower and the 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 Liquidity Provider to be used for the funding
of the Class A-2 Cash Collateral Account in accordance with Section 3.6(i)
of the Intercreditor Agreement by reason of the receipt by the Borrower of
a Termination Notice from the Liquidity Provider with respect to the
Liquidity Agreement, which Advance is requested to be made on
(3) The amount of the Final Advance requested hereby (i) is
$__________.__, which equals the Maximum Commitment on the date hereof and
is to be applied in respect of the funding of the Class A-2 Cash Collateral
Account in accordance with Section 3.6(i) of the Intercreditor Agreement,
(ii) does not include any amount with respect to the payment of principal
of, or premium on, the Class A-2 Certificates, or principal of, or interest
or premium on, the Class A-1 Certificates, the Class B Certificates or the
Class C Certificates, (iii) was computed in accordance with the provisions
of the Class A-2 Certificates, the Class A-2 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 Class
A-2 Cash Collateral Account and apply the same in accordance with the terms
of Section 3.6(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.
<PAGE>
IV-2
(5) The Borrower hereby requests that the Advance requested hereby be
a Base Rate Advance [and that such Base Rate Advance be converted into a
LIBOR Advance on the third Business Day following your receipt of this
notice](3).
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 Liquidity
Provider to make further Advances under the Liquidity Agreement; and (B)
following the making by the 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 ______________, ____.
WILMINGTON TRUST COMPANY, not in its
individual capacity but solely as
Subordination Agent, as Borrower
By:
--------------------------------
Name:
Title:
- ----------
1 Bracketed language may be included at Borrower's option
<PAGE>
SCHEDULE I TO FINAL ADVANCE NOTICE OF BORROWING
[Insert Copy of Computations in accordance with
Final Advance Notice of Borrowing]
<PAGE>
Annex V to
Revolving Credit Agreement
NOTICE OF TERMINATION
[Date]
Wilmington Trust Company,
as Subordination Agent, as Borrower
One Rodney Square
1100 North Market Street
Wilmington, DE 19890-0001
Attention: Corporate Trust Administration
Revolving Credit Agreement dated as of April 13, 1999, between Wilmington
Trust Company, as Subordination Agent, as agent and trustee for the Atlas Air,
Inc. Pass Through Trust, 1999-lA-2, as Borrower, and ABN AMRO BANK N.V., Chicago
Branch (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 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 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 3.6(i)
of the Intercreditor Agreement (as defined in the Liquidity Agreement) as a
consequence of your receipt of this notice.
<PAGE>
V-2
THIS NOTICE IS THE "NOTICE OF TERMINATION" PROVIDED FOR UNDER THE LIQUIDITY
AGREEMENT. OUR OBLIGATIONS TO MAKE ADVANCES UNDER THE LIQUIDITY AGREEMENT WILL
TERMINATE ON THE FIFTH BUSINESS DAY AFTER THE DATE ON WHICH YOU RECEIVE THIS
NOTICE.
Very truly yours,
ABN AMRO BANK N.V., Chicago Branch,
as Liquidity Provider
By:
------------------------------
Name:
Title:
By:
------------------------------
Name:
Title:
cc: Wilmington Trust Company, as Class A-2 Trustee
<PAGE>
Annex VI to
Revolving Credit Agreement
NOTICE OF REPLACEMENT SUBORDINATION AGENT
[Date]
Attention:
Revolving Credit Agreement dated as of April 13, 1999, between Wilmington
Trust Company, as Subordination Agent, as agent and trustee for the Atlas Air
Pass Through Trust, 1999-lA-2, as Borrower, and ABN AMRO BANK N.V., Chicago
Branch (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 8.1 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.
<PAGE>
VI-2
We ask that this transfer be effective as of _______________, ____.
WILMINGTON TRUST COMPANY, not in its
individual capacity but solely as
Subordination Agent, as Borrower
+ By:
------------------------------
Name:
Title:
EXECUTION COPY
REVOLVING CREDIT AGREEMENT
(1999-lB)
Dated as of April 13, 1999
between
WILMINGTON TRUST COMPANY,
not in its individual capacity but solely
as Subordination Agent,
as agent and trustee for the
Atlas Air Pass Through Trust 1999-lB,
as Borrower
and
MORGAN STANLEY CAPITAL SERVICES, INC.,
as Liquidity Provider
Relating to
Atlas Air Pass Through Trust 1999-lB
7.63% Atlas Air Pass Through Certificates,
Series 1999-lB
<PAGE>
TABLE OF CONTENTS
ARTICLE I
DEFINITIONS
Section 1.01. Certain Defined Terms .......................................1
ARTICLE II
AMOUNT AND TERMS OF THE COMMITMENT
Section 2.01. The Advances ...............................................8
Section 2.02. Making the 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 Liquidity Provider Under the
Intercreditor Agreement .................................12
Section 2.08. Book Entries ..............................................12
Section 2.09. Payments from Available Funds Only ........................12
Section 2.10. Extension of the Expiry Date; Non-Extension Advance .......13
ARTICLE III
OBLIGATIONS OF THE BORROWER
Section 3.01. Increased Costs ...........................................13
Section 3.02. Capital Adequacy ..........................................14
Section 3.03. Payments Free of Deductions ...............................15
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 ...................................18
Section 3.09. Funding Loss Indemnification ..............................18
Section 3.10. Illegality ................................................18
ARTICLE IV
i
<PAGE>
CONDITIONS PRECEDENT
Section 4.01. Conditions Precedent to Effectiveness of Section 2.01 .....19
Section 4.02. Conditions Precedent to Borrowing .........................21
ARTICLE V
COVENANTS
Section 5.01. Affirmative Covenants of the Borrower .....................21
Section 5.02. Negative Covenants of the Borrower ........................21
ARTICLE VI
LIQUIDITY EVENTS OF DEFAULT
Section 6.01. Liquidity Events of Default ...............................22
ARTICLE VII
MISCELLANEOUS
Section 7.01. Amendments, Etc. ..........................................22
Section 7.02. Notices, Etc. .............................................23
Section 7.03. No Waiver: Remedies .......................................23
Section 7.04. Further Assurances ........................................24
Section 7.05. Indemnification; Survival of Certain Provisions ...........24
Section 7.06. Liability of the Liquidity Provider .......................24
Section 7.07. Costs, Expenses and Taxes .................................25
Section 7.08. Binding Effect; Participations ............................26
Section 7.09. Severability ..............................................27
Section 7.10. GOVERNING LAW .............................................27
Section 7.11. Submission to Jurisdiction; Waiver of Jury Trial;
Waiver of Immunity ......................................27
Section 7.12. Execution in Counterparts .................................28
Section 7.13. Entirety ..................................................28
Section 7.14. Headings ..................................................28
Section 7.15. LIQUIDITY PROVIDER'S OBLIGATION TO MAKE ADVANCES ..........29
ii
<PAGE>
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
EXHIBIT I Form of Guarantee Agreement
iii
<PAGE>
REVOLVING CREDIT AGREEMENT
This REVOLVING CREDIT AGREEMENT dated as of April 13, 1999, between
WILMINGTON TRUST COMPANY, a Delaware banking corporation ("WTC"), not in its
individual capacity but solely as Subordination Agent under the Intercreditor
Agreement (each as defined below), as agent and trustee for the Class B Trust
(as defined below) (the "Borrower"), and MORGAN STANLEY CAPITAL SERVICES, INC.,
a Delaware corporation ("MSCS" or the "Liquidity Provider").
W I T N E S S E T H:
WHEREAS, pursuant to the Class B Trust Agreement (such term and all other
capitalized terms used in these recitals having the meanings set forth or
referred to in Section 1.01), the Class B Trust is issuing the Class B
Certificates;
WHEREAS, the Borrower, in order to support the timely payment of a portion
of the interest on the Class B Certificates in accordance with their terms, has
requested the Liquidity Provider to enter into this Agreement, providing in part
for the Borrower to request in specified circumstances that Advances be made
hereunder; and
WHEREAS, the Liquidity Provider has requested Morgan Stanley Dean Witter &
Co. (the "Guarantor") to enter into a Guarantee Agreement, providing for the
full and unconditional guarantee of the Liquidity Provider's obligations under
this Agreement (the "Guarantee Agreement");
NOW, THEREFORE, in consideration of the premises, the parties hereto agree
as follows:
ARTICLE I
DEFINITIONS
Section 1.01. Certain Defined Terms. (a) Definitions. As used in this
Agreement and unless otherwise expressly indicated, or unless the context
clearly requires otherwise, the following capitalized terms shall have the
following respective meanings for all purposes of this Agreement:
"Additional Cost" has the meaning assigned to such term in Section 3.01.
<PAGE>
-2-
"Advance" means an Interest Advance, a Final Advance or a Provider Advance,
as the case may be.
"Applicable Liquidity Rate" has the meaning assigned to such term in
Section 3.07(f).
"Applicable Margin" means (x) with respect to any Unpaid Advance or Applied
Provider Advance, 2.00% and (y) with respect to any Unapplied Downgrade Advance
or Unapplied Non-Extension Advance, 0.425%.
"Applied Downgrade Advance" has the meaning assigned to such term in
Section 2.06(a).
"Applied Non-Extension Advance" has the meaning assigned to such term in
Section 2.06(a).
"Applied Provider Advance" has the meaning assigned to such term in Section
2.06(a).
"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 (a) the weighted
average of the rates on overnight Federal funds transactions with members of the
Federal Reserve System arranged by Federal funds brokers, as published for such
day (or, if such day is not a Business Day, for the next preceding Business Day)
by the Federal Reserve Bank of New York, or if such rate is not so published for
any day that is a Business Day, the average of the quotations for such day for
such transactions received by the Liquidity Provider from three Federal funds
brokers of recognized standing selected by it, plus (b) one-quarter of one
percent (1/4 of 1%).
"Base Rate Advance" means an Advance that bears interest at a rate based
upon the Base Rate.
"Borrower" has the meaning assigned to such term in the recital of parties
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 or Sunday or a day on
which commercial banks are required or authorized to close in Denver, Colorado,
<PAGE>
3
Chicago, Illinois, New York, New York, or, so long as any Class B Certificate is
outstanding, the city and state in which the Class B Trustee, the Borrower or
any Loan Trustee maintains its Corporate Trust Office or receives or disburses
funds, and, if the applicable Business Day relates to any Advance or other
amount bearing interest based on the LIBOR Rate, on which dealings are carried
on in the London interbank market.
"Certificates of Deposit" has the meaning assigned to such term in the
Deposit Agreement.
"Deposits" has the meaning assigned to such terms in the Deposit Agreement.
"Depositary" has the meaning assigned to such term in the Deposit
Agreement.
"Deposit Agreement" means the Deposit Agreement dated April 13, 1999
between First Security Bank, National Association, as Escrow Agent and Credit
Suisse First Boston, acting through its New York Branch, as Depositary,
pertaining to the Class B Certificates, as the same may be amended, modified or
supplemented from time to time in accordance with the terms thereof.
"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 Liquidity Provider contemplated by Section 4.01(e) shall
be conclusive evidence that the Effective Date has occurred.
"Excluded Taxes" means (i) taxes imposed on the overall net income of the
Liquidity Provider or of its Lending Office by the jurisdiction where such
Liquidity Provider's principal office or such Lending Office is located, and
(ii) Excluded Withholding Taxes.
"Excluded Withholding Taxes" means (i) withholding Taxes imposed by the
United States except to the extent that such United States withholding Taxes are
imposed as a result of any change in applicable law after the date hereof
(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), or in the case of a successor Liquidity Provider (including a
transferee of an Advance) or Lending Office, after the date on which such
successor Liquidity Provider obtains its interest or on which the Lending Office
is changed, and (ii) any withholding Taxes imposed by the United States which
are imposed or increased as a result of the Liquidity Provider failing to
deliver to the Borrower any certificate or document (which certificate or
document in
<PAGE>
4
the good faith judgment of the 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.
"Expenses" means liabilities, obligations, damages, settlements, penalties,
claims, actions, suits, costs, expenses, and disbursements (including, without
limitation, reasonable fees and disbursements of legal counsel and costs of
investigation), provided that Expenses shall not include any Taxes.
"Expiry Date" means April 11, 2000, initially, or any date to which the
Expiry Date is extended pursuant to Section 2.10.
"Final Advance" means an Advance made pursuant to Section 2.02(d).
"Guarantee Agreement" has the meaning assigned to such term in the
preliminary statements of this Agreement.
"Guarantee Event" has the meaning specified in Section 2.02(c)
"Guarantor" has the meaning assigned to such term in the preliminary
statements of this Agreement.
"Intercreditor Agreement" means the Intercreditor Agreement dated the date
hereof, among the Trustees, the Liquidity Provider, the liquidity provider under
each Liquidity Facility (other than this Agreement) 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).
"Interest Period" means, with respect to any LIBOR Advance, each of the
following periods:
(i) the period beginning on the third Business Day following either (x)
the Liquidity Provider's receipt of the Notice of Borrowing for such
LIBOR Advance or (y) the withdrawal of funds from the Class B Cash
Collateral Account for the purpose of paying interest on the Class B
Certificates as contemplated by Section 2.06(a) hereof and, in either
case, ending on the next Regular Distribution Date (or ending, in the
case of an Interest Period applicable to any Unapplied Provider
Advance, on the
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5
numerically corresponding day in the first or sixth calendar month
after the first day of the applicable Interest Period and/or on the
next Regular Distribution Date, as Atlas may select by providing
notice thereof to the Borrower and the Liquidity Provider no later
than three Business Days prior to the commencement of such Interest
Period, provided that if Atlas shall not provide such a notice at
least three Business Days prior to the commencement of such Interest
Period, then Atlas shall be deemed to have selected an Interest Period
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 (or ending, in the case of an Interest Period applicable to any
Unapplied Provider Advance, on the numerically corresponding day in
the first or sixth calendar month after the first day of the
applicable Interest Period and/or on the next Regular Distribution
Date, as Atlas may select by providing notice thereof to the Borrower
and the Liquidity Provider no later than three Business Days prior to
the commencement of such Interest Period, provided that if Atlas shall
not provide such a notice at least three Business Days prior to the
commencement of such Interest Period, then Atlas shall be deemed to
have selected an Interest Period ending on the next Regular
Distribution Date);
provided, however, that (I) if an Unapplied Provider Advance which is a LIBOR
Advance becomes an Applied Provider Advance, the Interest Period then applicable
to such Unapplied Provider Advance shall be applicable to such Applied Provider
Advance and (II) if (x) the Final Advance shall have been made, or (y) other
outstanding Advances shall have been converted into the Final Advance, then the
Interest Periods shall be successive periods of one month beginning on the third
Business Day following the Liquidity Provider's receipt of the Notice of
Borrowing for such Final Advance (in the case of clause (x) above) or the
Regular Distribution Date following such conversion (in the case of clause (y)
above).
"Leased Aircraft Participation Agreement" means a participation agreement
substantially in the form of Exhibit A-1 to the Note Purchase Agreement.
"Lending Office" means the lending office of the Liquidity Provider
presently located at New York, New York, or such other lending office as the
Liquidity Provider from time to time shall notify the Borrower as its lending
office hereunder; provided that the Liquidity Provider shall not change its
Lending Office to a Lending Office
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6
outside the United States of America except in accordance with Section 3.01,
3.02 or 3.03 hereof.
"LIBOR Advance" means an Advance bearing interest at a rate based upon the
LIBOR Rate.
"LIBOR Rate" means, with respect to any Interest Period, (i) the rate per
annum appearing on display page 3750 (British Bankers Association-LIBOR) of the
Dow Jones Markets Service (or any successor or substitute therefor) at
approximately 11:00 A.M. (London time) two Business Days before the first day of
such Interest Period, as the rate for dollar deposits with a maturity comparable
to such Interest Period, or (ii) if the rate calculated pursuant to clause (i)
above is not available, the average (rounded upwards, if necessary, to the next
1/16 of 1%) of the rates per annum at which deposits in dollars are offered for
the relevant Interest Period by three banks of recognized standing selected by
the Liquidity Provider in the London interbank market at approximately 11:00
A.M. (London time) two Business Days before the first day of such Interest
Period in an amount approximately equal to the principal amount of the LIBOR
Advance to which such Interest Period is to apply and for a period comparable to
such Interest Period.
"Liquidity Event of Default" means the occurrence of either (a) the
Acceleration of all of the Equipment Notes or (b) an Atlas Bankruptcy Event.
"Liquidity Indemnitee" means (i) the Liquidity Provider, (ii) the
Guarantor, (iii) the respective directors, officers, employees and agents of the
Liquidity Provider and the Guarantor, and (iv) the successors and permitted
assigns of the persons described in clauses (i) through (iii), inclusive.
"Liquidity Provider" has the meaning assigned to such term in the recital
of parties to this Agreement.
"Maximum Commitment" shall mean, subject to the proviso contained in the
third sentence of Section 2.02(a), at any time of determination, (a) the
Required Amount 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 Commitment shall be zero.
"Non-Extension Advance" means an Advance pursuant to Section 2.02(b).
"Notice of Borrowing" has the meaning specified in Section 2.02(e).
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7
"Notice of Replacement Subordination Agent" has the meaning specified in
Section 3.08.
"Owned Aircraft Participation Agreement" means a participation agreement
substantially in the form of Exhibit C-1 to the Note Purchase Agreement.
"Participation Agreements" means, collectively, the Leased Aircraft
Participation Agreement and the Owned Aircraft Participation Agreement.
"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.
"Prospectus Supplement" means the Prospectus Supplement dated April 5, 1999
relating to the Certificates, as such Prospectus Supplement may be amended or
supplemented.
"Provider Advance" means a Downgrade Advance or a Non-Extension Advance.
"Regulatory Change" has the meaning assigned to such term in Section 3.01.
"Replenishment Amount" has the meaning assigned to such term 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 Stated Interest Rate for
the Class B Certificates, that would be payable on the Class B Certificates on
each of the three successive semiannual Regular Distribution Dates immediately
following such day or, if such day is a Regular Distribution Date, on such day
and the succeeding two semiannual Regular Distribution Dates, in each case
calculated on the basis of the Pool Balance of the Class B Certificates on such
day and without regard to expected future payments of principal on the Class B
Certificates.
"Termination Date" means the earliest to occur of the following: (i) the
Expiry Date; (ii) the date on which the Borrower delivers to the Liquidity
Provider a certificate, signed by a Responsible Officer of the Borrower,
certifying that all of the Class B Certificates have been paid in full (or
provision has been made for such payment in accordance with the Intercreditor
Agreement and the Trust Agreements) or are otherwise no longer entitled to the
benefits of this Agreement; (iii) the date on
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8
which the Borrower delivers to the Liquidity Provider a certificate, signed by a
Responsible Officer of the Borrower, certifying that a Replacement Liquidity
Facility has been substituted for this Agreement in full pursuant to Section
3.6(e) of the Intercreditor Agreement; (iv) the fifth Business Day following the
receipt by the Borrower of a Termination Notice from the Liquidity Provider
pursuant to Section 6.01 hereof; 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.
"Transferee" has the meaning assigned to such term in Section 7.08(b).
"Unapplied Downgrade Advance" means any Downgrade Advance other than an
Applied Downgrade Advance.
"Unapplied Non-Extension Advance" means any Non-Extension Advance other
than an Applied Non-Extension Advance.
"Unapplied Provider Advance" means any Provider Advance other than an
Applied Provider Advance.
"Unpaid Advance" has the meaning assigned to such term in Section 2.05.
(b) Terms Defined in the Intercreditor Agreement. For all purposes of this
Agreement, the following terms shall have the respective meanings assigned to
such terms in the Intercreditor Agreement:
"Acceleration", Atlas", "Atlas Bankruptcy Event", "Certificates", "Class
A-1 Certificates", "Class A-2 Certificates", "Class B Cash Collateral
Account", "Class B Certificates", "Class B Certificateholder", "Class B
Trust", "Class B Trust Agreement", "Class B Trustee", "Class C
Certificates", "Closing Date", "Controlling Party", "Corporate Trust
Office", "Distribution Date", "Downgraded Facility", "Equipment Notes",
"Final Legal Distribution Date", "Financing Agreement", "Indenture",
"Interest Payment Date", "Investment Earnings", "Liquidity Facility",
"Liquidity Obligations", "Loan Trustee", "MSCS Fee Letter", "MSCS Liquidity
Facilities", "Non-Extended Facility", "Note Purchase Agreement", "Operative
Agreements", "Performing Equipment Note", "Person", "Pool Balance", "Rating
Agencies", "Ratings Confirmation", "Regular Distribution Dates",
"Replacement Liquidity Facility", "Responsible Officer", "Scheduled
Payment", "Special Payment", "Stated Interest Rate",
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9
"Subordination Agent", "Taxes", "Threshold Rating", "Trust Agreement",
"Trustee", "Underwriters", "Underwriting Agreement", and "Written Notice".
ARTICLE II
AMOUNT AND TERMS OF THE COMMITMENT
Section 2.01. The Advances. The 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 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 the Advances. (a) Interest Advances shall be made in
one or more Borrowings by delivery to the Liquidity Provider of one or more
written and completed Notices of Borrowing in substantially the form of Annex I
attached hereto, signed by a Responsible Officer of the Borrower, in an amount
not exceeding the Maximum Commitment at such time and shall be used solely for
the payment when due of the interest on the Class B Certificates at the Stated
Interest Rate therefor in accordance with Section 3.6(a) of the Intercreditor
Agreement. Each Interest Advance made hereunder shall automatically reduce the
Maximum 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). Upon repayment to the Liquidity
Provider in full 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 Commitment shall be reinstated by the amount of such repaid Interest
Advance; provided, however, that the Maximum Commitment shall not be so
reinstated at any time if (i) a Liquidity Event of Default shall have occurred
and be continuing and (ii) there is a Performing Note Deficiency.
(b) A Non-Extension Advance shall be made in a single Borrowing if this
Agreement is not extended in accordance with section 3.6(d) of the Intercreditor
Agreement (unless a Replacement Liquidity Facility to replace this Agreement
shall have been delivered to the Borrower as contemplated by said Section 3.6(d)
within the time period specified in such Section) by delivery to the Liquidity
Provider of a written and completed Notice of Borrowing in substantially the
form of Annex II attached hereto, signed by a Responsible Officer of the
Borrower, in an amount equal to the Maximum Commitment at such time, and shall
be used to fund the Class B Cash Collateral Account in accordance with said
Section 3.6(d) and Section 3.6(f) of the Intercreditor Agreement.
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10
(c) A Downgrade Advance shall be made in a single Borrowing, as provided
for in Section 3.6(c) of the Intercreditor Agreement, (i) upon a downgrading of
the Guarantor's short-term unsecured debt rating issued by either Rating Agency
below the applicable Threshold Rating or (ii) if the Guarantee Agreement ceases
to be in full force and effect, becomes invalid or unenforceable or the
Guarantor denies its liability thereunder (any such occurrence, a "Guarantee
Event"), unless a Replacement Liquidity Facility to replace this Agreement shall
have been previously delivered to the Borrower in accordance with said Section
3.6(c), by delivery to the Liquidity Provider of a written and completed Notice
of Borrowing in substantially the form of Annex III attached hereto, signed by a
Responsible Officer of the Borrower, in an amount equal to the Maximum
Commitment at such time, and shall be used to fund the Class B Cash Collateral
Account in accordance with said Section 3.6(c) and Section 3.6(f) of the
Intercreditor Agreement.
(d) A Final Advance shall be made in a single Borrowing upon the receipt by
the Borrower of a Termination Notice from the Liquidity Provider pursuant to
Section 6.01 hereof by delivery to the Liquidity Provider of a written and
completed Notice of Borrowing in substantially the form of Annex IV attached
hereto, signed by a Responsible Officer of the Borrower, in an amount equal to
the Maximum Commitment at such time, and shall be used to fund the Class B Cash
Collateral Account (in accordance with Section 3.6(i) of the Intercreditor
Agreement) and Section 3.6(f) 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(b),
2.02(c) or 2.02(d), as the case may be, given by the Borrower to the Liquidity
Provider. If a Notice of Borrowing is delivered by the Borrower in respect of
any Borrowing no later than 1:00 PM (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 Liquidity Provider shall make available to the
Borrower, in accordance with its payment instructions, the amount of such
Borrowing in U.S. dollars and immediately available funds, before 4:00 PM (New
York City time) on the day of receipt of such Notice of Borrowing or 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 PM
(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
Liquidity Provider shall make available to the Borrower, in accordance with its
payment instructions, the amount of such Borrowing in U.S. dollars and
immediately available funds, before 4:00 PM (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
<PAGE>
11
instructions as the Borrower shall furnish from time to time to the
Liquidity Provider for such purpose. Each Notice of Borrowing shall be
irrevocable and binding on the Borrower.
(f) Upon the making of any Advance requested pursuant to a Notice of
Borrowing, in accordance with the Borrower's payment instructions, the Liquidity
Provider shall be fully discharged of its obligation hereunder with respect to
such Notice of Borrowing, and the 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. Notwithstanding the provisions
of Section 2.02(e), if the 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 said Section 2.02(e),
the Liquidity Provider shall have fully discharged its obligations hereunder
with respect to such Advance and shall not be in default hereunder. Following
the making of any Advance pursuant to Section 2.02(b), (c) or (d) hereof to fund
the Class B Cash Collateral Account, the Liquidity Provider shall have no
interest in or rights to the Class B Cash Collateral Account, such Advance or
any other amounts from time to time on deposit in the Class B 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
3.6(e) or (f) 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 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 Liquidity Provider
the fees set forth in the MSCS 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 Pool Balance of the Class B
Certificates 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 Liquidity Provider 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.
(b) Termination. Upon the making of any Provider Advance or Final Advance
hereunder or the occurrence of the Termination Date, the obligation of the
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.
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12
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 Liquidity Provider (which
notice and demand are hereby waived by the Borrower), to pay, or to cause to be
paid, to the Liquidity Provider on each date on which the 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 as provided in Section 3.07 hereof; provided that if (i) the 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 Liquidity Facility shall become a Downgraded Facility
or Non-Extended Facility at any time when unreimbursed Interest Advances have
reduced the Maximum 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 or Applied Non-Extension 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 Liquidity Provider in
accordance with Section 2.06 and for the purposes of Section 2.06(b)). The
Borrower and the 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
Liquidity Provider.
Section 2.06. Repayments of Provider Advances. (a) Amounts advanced
hereunder in respect of a Provider Advance shall be deposited in the Class B
Cash Collateral Account, invested and withdrawn from the Class B Cash Collateral
Account as set forth in Sections 3.6(c), (d) and (f) of the Intercreditor
Agreement. The Borrower agrees to pay to the 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 as provided in Section 3.07; provided, however, that amounts in
respect of a Provider Advance withdrawn from the Class B Cash Collateral Account
for the purpose of paying interest on the Class B Certificates in accordance
with Section 3.6(f) of the Intercreditor Agreement (the amount of any such
withdrawal being (x) in the case of a Downgrade Advance, an "Applied Downgrade
Advance" and (y) in the case of a Non- Extension Advance, an "Applied
Non-Extension Advance" and, together with an Applied Downgrade Advance, 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; provided further,
however, that if, following the making of a Provider Advance, the Liquidity
Provider delivers a Termination Notice to the Borrower pursuant to Section 6.01
hereof, 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 thereon. Subject to Sections 2.07 and 2.09 hereof,
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13
immediately upon the withdrawal of any amounts from the Class B Cash Collateral
Account on account of a reduction in the Required Amount, the Borrower shall
repay to the 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 hereof.
(b) At any time when an Applied Provider Advance (or any portion thereof)
is outstanding, upon the deposit in the Class B Cash Collateral Account of any
amount pursuant to clause "third" of Section 2.4(b) of the Intercreditor
Agreement, clause "third" of Section 3.2 of the Intercreditor Agreement or
clause "fourth" of Section 3.3 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 Liquidity Facility in replacement
of this Agreement in accordance with Section 3.6(e) of the Intercreditor
Agreement, amounts remaining on deposit in the Class B Cash Collateral Account
after giving effect to any Applied Provider Advance on the date of such
replacement shall be reimbursed to the Liquidity Provider, but only to the
extent such amounts are necessary to repay in full to the Liquidity Provider all
amounts owing to it hereunder.
Section 2.07. Payments to the Liquidity Provider Under the Intercreditor
Agreement. In order to provide for payment or repayment to the 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 Liquidity Provider pursuant to the terms
of the Intercreditor Agreement (including, without limitation, Section 3.6(f) of
the Intercreditor Agreement), shall be paid to the Liquidity Provider in
accordance with the terms thereof. Amounts so paid to the Liquidity Provider
shall be applied by the Liquidity Provider to Liquidity Obligations then due and
payable in accordance with the Intercreditor Agreement or, if not provided for
in the Intercreditor Agreement, then in such manner as the Liquidity Provider
shall deem appropriate.
Section 2.08. Book Entries. The 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,
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14
that the failure by the Liquidity Provider to maintain such account or accounts
shall not affect the obligations of the Borrower in respect of Advances.
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 or payments under Section 8.1 or
9.1, as the case may be, of the Participation Agreements and Section 6 of the
Note Purchase Agreement 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 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 Class B 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 3.6(f)
of the Intercreditor Agreement.
Section 2.10. Extension of the Expiry Date; Non-Extension Advance. The
Expiry Date shall be automatically extended, effective on the 25th day prior to
each Expiry Date (unless such Expiry Date is on or after the date that is 15
days after the Final Legal Distribution Date for the Class B Certificates), for
a period of 364 days after such Expiry Date (unless the obligations of the
Liquidity Provider are earlier terminated in accordance with the terms hereof),
without the necessity of any act on the part of the Borrower or the Liquidity
Provider, unless the Liquidity Provider shall advise the Borrower prior to such
25th day that it does not agree to such extension of such Expiry Date, in which
event (and if the Liquidity Provider shall not have been replaced in accordance
with Section 3.6(e) of the Intercreditor Agreement), the Borrower shall be
entitled on and after such 25th day (but prior to such Expiry Date) to request a
Non-Extension Advance in accordance with Section 2.02(b) hereof and Section
3.6(d) of the Intercreditor Agreement.
ARTICLE III
OBLIGATIONS OF THE BORROWER
Section 3.01. Increased Costs. The Borrower shall pay to the Liquidity
Provider from time to time such amounts as may be necessary to compensate the
Liquidity Provider for any increased costs incurred by the Liquidity Provider
which are attributable to its making or maintaining any LIBOR Advances hereunder
or its obligation to make any such Advances hereunder, or any reduction in any
amount receivable by the Liquidity Provider
<PAGE>
15
under this Agreement or the Intercreditor Agreement in respect of any such
Advances or such obligation (such increases in costs and reductions in amounts
receivable being herein called "Additional Costs"), resulting from any change
after the date of this Agreement in U.S. federal, state, municipal, or foreign
laws or regulations ("Regulatory Change") which changes the basis of taxation of
any amounts payable to the Liquidity Provider under this Agreement in respect of
any such Advances (other than Excluded Taxes). The 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 amount payable
under this Section that may thereafter accrue and would not, in the reasonable
judgment of the Liquidity Provider, be otherwise disadvantageous to the
Liquidity Provider.
The Liquidity Provider will notify the Borrower of any event occurring
after the date of this Agreement that will entitle the Liquidity Provider to
compensation pursuant to this Section 3.01 as promptly as practicable after it
obtains knowledge thereof and determines to request such compensation, which
notice shall describe in reasonable detail the calculation of the amounts owed
under this Section. Determinations by the Liquidity Provider for purposes of
this Section 3.01 of the effect of any Regulatory Change on its costs of making
or maintaining Advances or on amounts receivable by it in respect of Advances,
and of the additional amounts required to compensate the Liquidity Provider in
respect of any Additional Costs, shall be prima facie evidence of the amount
owed under this Section.
Section 3.02. Capital Adequacy. If (1) the adoption, after the date hereof,
of any applicable governmental law, rule or regulation regarding capital
adequacy, (2) any change, after the date hereof, in the interpretation or
administration of any such law, rule or regulation by any central bank or other
governmental authority charged with the interpretation or administration thereof
or (3) compliance by the Liquidity Provider or any corporation controlling the
Liquidity Provider with any applicable guideline or request of general
applicability, issued after the date hereof, by any central bank or other
governmental authority (whether or not having the force of law) that constitutes
a change of the nature described in clause (2), has the effect of requiring an
increase in the amount of capital required to be maintained by the Liquidity
Provider or any corporation controlling the Liquidity Provider, and such
increase is based upon the Liquidity Provider's obligations hereunder and other
similar obligations, the Borrower shall pay to the Liquidity Provider from time
to time such additional amount or amounts as are necessary to compensate the
Liquidity Provider for such portion of such increase as shall be reasonably
allocable to the Liquidity Provider's obligations to the Borrower hereunder. The
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 amount payable under this Section that may thereafter accrue and would not,
in the reasonable
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16
judgment of the Liquidity Provider, be otherwise materially disadvantageous to
the Liquidity Provider.
The Liquidity Provider will notify the Borrower of any event occurring
after the date of this Agreement that will entitle the Liquidity Provider to
compensation pursuant to this Section 3.02 as promptly as practicable after it
obtains knowledge thereof and determines to request such compensation, which
notice shall describe in reasonable detail the calculation of the amounts owed
under this Section. Determinations by the Liquidity Provider for purposes of
this Section 3.02 of the effect of any increase in the amount of capital
required to be maintained by the bank and of the amount allocable to the
Liquidity Provider's obligations to the Borrower hereunder shall be prima facie
evidence of the amounts owed under this Section.
Section 3.03. Payments Free of Deductions. (a) All payments made by the
Borrower under this Agreement shall be made free and clear of, and without
reduction for or on account of, any present or future stamp or other taxes,
levies, imposts, duties, charges, fees, deductions, withholdings, restrictions
or conditions of any nature whatsoever now or hereafter imposed, levied,
collected, withheld or assessed, excluding Excluded Taxes (such non-excluded
taxes being referred to herein, collectively, as "Non-Excluded Taxes" and,
individually, as a "Non-Excluded Tax"). If any Non-Excluded Taxes are required
to be withheld from any amounts payable to the Liquidity Provider under this
Agreement, the amounts so payable to the Liquidity Provider shall be increased
to the extent necessary to yield to the Liquidity Provider (after payment of all
Non-Excluded Taxes) interest or any other such amounts payable under this
Agreement at the rates or in the amounts specified in this Agreement. The
Liquidity Provider agrees to use reasonable efforts (consistent with its
internal policy and 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 Liquidity Provider, be
otherwise disadvantageous to the Liquidity Provider. From time to time upon the
reasonable request of the Borrower, the Liquidity Provider agrees to provide to
the Borrower two original Internal Revenue Service Forms W-8 BEN or W-8 ECI, as
appropriate, or any successor or other form prescribed by the Internal Revenue
Service, certifying that the Liquidity Provider is exempt from or entitled to a
reduced rate of United States withholding tax on payments pursuant to this
Agreement.
(b) All payments (including, without limitation, Advances) made by the
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 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
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17
payment required 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 hereunder,
the 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.
Section 3.04. Payments. The Borrower shall make or cause to be made each
payment to the Liquidity Provider under this Agreement so as to cause the same
to be received by the 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 lawful
money of the United States of America, to the Liquidity Provider in immediately
available funds, by wire transfer to Citibank, N.A., New York, NY, ABA#
021000089, Account Name: Morgan Stanley Capital Services, Inc., Account #
[4072-4601], Reference: Atlas Air, Inc., 1999-1B.
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 Section 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 Class B Cash Collateral Account
to pay interest on the Class B 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 Class B 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
<PAGE>
18
Advances or any such other amount) which 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 a
fluctuating interest rate per annum for each day equal to the Applicable
Liquidity Rate (as defined below) for such Advance or such other amount 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 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 amount of interest that
would have accrued if such otherwise applicable interest rate as set forth in
this Section 3.07 had at all times been in effect.
(b) Each Advance will be either a Base Rate Advance or a LIBOR Advance as
provided in this Section. Each such Advance will be a Base Rate Advance for the
period from the date of its borrowing to (but excluding) the third Business Day
following the Liquidity Provider's receipt of the Notice of Borrowing for such
Advance. Thereafter, such Advance shall be a LIBOR Advance; provided that the
Borrower (at the direction of the Controlling Party, so long as the Liquidity
Provider is not the Controlling Party) may (x) convert the Final Advance into a
Base Rate Advance on the last day of an Interest Period for such Advance by
giving the Liquidity Provider no less than four Business Days' prior written
notice of such election or (y) elect to maintain the Final Advance as a Base
Rate Advance by not requesting a conversion of the Final Advance to a LIBOR
Advance under Clause (5) of the applicable Notice of Borrowing (or, if such
Final Advance is deemed to have been made without delivery of a Notice of
Borrowing pursuant to Section 2.06, by requesting, prior to 11:00 AM on the
first Business Day immediately following the Borrower's receipt of the
applicable Termination Notice, such that such Final Advance not be converted
from a Base Rate Advance to 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
<PAGE>
19
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 amount not paid by the Borrower 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% until paid.
(f) 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. From time to time and subject to the
successor Borrower's meeting the eligibility requirements set forth in Section
6.9 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 attached
hereto (a "Notice of Replacement Subordination Agent") delivered to the
Liquidity Provider by the then Borrower, the successor Borrower designated
therein shall be substituted for as the Borrower for all purposes hereunder.
Section 3.09. Funding Loss Indemnification. The Borrower shall pay to the
Liquidity Provider, upon the request of the Liquidity Provider, such amount or
amounts as shall be sufficient (in the reasonable opinion of the 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
Liquidity Provider to fund or maintain any LIBOR Advance (but excluding loss of
anticipated profits) incurred as a result of:
(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 applicable law, rule or regulation, 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 Liquidity Provider (or its Lending
Office) 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 Liquidity Provider (or its Lending Office) to maintain or
fund
<PAGE>
20
its LIBOR Advances, then upon notice to the Borrower by the Liquidity Provider,
the outstanding principal amount of the LIBOR Advances shall be converted to
Base Rate Advances (a) immediately upon demand of the Liquidity Provider, if
such change or compliance with such request, in the judgment of the Liquidity
Provider, requires immediate repayment; or (b) at the expiration of the last
Interest Period to expire before the effective date of any such change or
request.
<PAGE>
21
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:
(a) The 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 Liquidity Provider:
(i) This Agreement duly executed on behalf of the Borrower;
(ii) The Intercreditor Agreement duly executed on behalf of each of
the parties thereto;
(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) A copy of the Prospectus Supplement, together with the related
Prospectus dated February 16, 1999, and specimen copies of the Class B
Certificates;
(v) An executed copy of each document, instrument, certificate and
opinion delivered on or before the Closing Date pursuant to the Class B
Trust Agreement, the Intercreditor Agreement and the other Operative
Agreements (in the case of each such opinion, other than the opinion of
counsel for the Underwriters, either addressed to the Liquidity Provider or
accompanied by a letter from the counsel rendering such opinion to the
effect that the Liquidity Provider is entitled to rely on such opinion as
of its date as if it were addressed to the Liquidity Provider);
(vi) Evidence that there shall have been made and shall be in full
force and effect, all filings, recordings and/or registrations, and there
shall have been given or taken any notice or other similar action as may be
reasonably necessary or, to the extent reasonably requested by the
Liquidity Provider, reasonably advisable, in order to establish, perfect,
protect and preserve the right, title and interest, remedies, powers,
privileges, liens and security interests of, or for the benefit of, the
Trustees, the Borrower and the Liquidity Provider created by the Operative
Agreements executed and delivered on or prior to the Closing Date;
<PAGE>
22
(vii) An agreement from Atlas, pursuant to which (i) Atlas agrees to
provide copies of quarterly financial statements and audited annual
financial statements to the Liquidity Provider, and such other information
as the Liquidity Provider shall reasonably request with respect to the
transactions contemplated by the Operative Agreements, in each case, only
to the extent that Atlas is obligated to provide such information pursuant
to Section 8.2.1 of the Leases (related to Leased Aircraft) or the
corresponding section of the Indentures (related to Owned Aircraft) to the
parties thereto and (ii) Atlas agrees to allow the Liquidity Provider to
inspect Atlas's books and records regarding such transactions, and to
discuss such transactions with officers and employees of Atlas; and
(viii) Such other documents, instruments, opinions and approvals
pertaining to the transactions contemplated hereby or by the other
Operative Agreements as the Liquidity Provider shall have reasonably
requested.
(b) The following statement shall be true on and as of the Effective Date:
No event has occurred and is 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 Liquidity Provider shall have received payment in full of all fees
and other sums required to be paid to or for the account of the Liquidity
Provider on or prior to the Effective Date.
(d) All conditions precedent to the issuance of the Certificates under the
Trust Agreements shall have been satisfied or waived, all conditions precedent
to the effectiveness of the other Liquidity Facilities shall have been satisfied
or waived, and all conditions precedent to the purchase of the Certificates by
the Underwriters under the Underwriting Agreement shall have been satisfied
(unless any of such conditions precedent shall have been waived by the
Underwriters) .
(e) The Borrower shall have received on or before the Closing Date each of
the following:
(i) The Guarantee Agreement, substantially in the form of Exhibit I
hereto, duly executed on behalf of each of the parties thereto;
(ii) A certificate, dated the date hereof, signed by a duly authorized
representative of the Liquidity Provider, certifying that all conditions
precedent to the effectiveness of Section 2.01 have been satisfied or
waived.
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23
Section 4.02. Conditions Precedent to Borrowing. The obligation of the
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 date of such Borrowing, the Borrower shall have delivered a
Notice of Borrowing which conforms to the terms and conditions of this Agreement
and has been completed as may be required by the relevant form of the Notice of
Borrowing for the type of Advances requested.
ARTICLE V
COVENANTS
Section 5.01. Affirmative Covenants of the Borrower. So long as any Advance
shall remain unpaid or the Liquidity Provider shall have any Maximum Commitment
hereunder or the Borrower shall have any obligation to pay any amount to the
Liquidity Provider hereunder, the Borrower will, unless the 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 and the other
Operative Agreements and observe and perform in all material respects the
conditions, covenants and requirements applicable to it contained in this
Agreement and the other Operative Agreements.
(b) Reporting Requirements. Furnish to the 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 Liquidity Provider; and permit the
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 Liquidity Provider
with reasonable promptness such Operative Agreements entered into after the
date hereof as from time to time may be reasonably requested by the
Liquidity Provider.
Section 5.02. Negative Covenants of the Borrower. So long as any Advance
shall remain unpaid or the Liquidity Provider shall have any Maximum Commitment
hereunder or the Borrower shall have any obligation to pay any amount to the
Liquidity Provider hereunder, the Borrower will not appoint or permit or suffer
to be appointed any successor
<PAGE>
24
Borrower without the prior written consent of the Liquidity Provider, which
consent shall not be unreasonably withheld or delayed.
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 Liquidity Provider may, in its discretion, deliver to the
Borrower a Termination Notice, the effect of which shall be to cause (i) this
Agreement to expire on the fifth Business Day after the date on which such
Termination Notice is received by the Borrower, (ii) the Borrower to promptly
request, and the Liquidity Provider to promptly make, a Final Advance in
accordance with Section 2.02(d) hereof and Section 3.6(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 hereof,
all Advances (including, without limitation, any Provider Advance and Applied
Provider Advance), any accrued interest thereon and any other amounts
outstanding hereunder to become immediately due and payable to the Liquidity
Provider.
ARTICLE VII
MISCELLANEOUS
Section 7.01. Amendments, Etc., No amendment or waiver of any provision of
this Agreement, nor consent to any departure by the Borrower therefrom, shall in
any event be effective unless the same shall be in writing and signed by the
Liquidity Provider, and, in the case of an amendment or of a waiver by the
Borrower, the Borrower, and then such waiver or consent shall be effective only
in the specific instance and for the specific purpose for which given.
Section 7.02. Notices, Etc. Except as otherwise expressly provided herein,
all notices and other communications provided for hereunder shall be in writing
(including telecopier and mailed or delivered or sent by telecopier):
<PAGE>
25
Borrower: WILMINGTON TRUST COMPANY
One Rodney Square
1100 North Market Street
Wilmington, DE 19890-0001
Attention: Corporate Trust Administration
Telecopy: (302) 651-8882
Liquidity
Provider: MORGAN STANLEY CAPITAL SERVICES, INC.
1585 Broadway
New York, NY 10036
Attention: Keith Amburgey
Telecopy: (212) 761-0580
or, as to each of the foregoing, at such other address as shall be designated by
such Person in a written notice to the others. All such notices and
communications shall be effective (i) if given by telecopier, when transmitted
to the telecopier number specified above, (ii) if given by mail, when deposited
in the mails addressed as specified above, and (iii) if given by other means,
when delivered at the address specified above, except that written notices to
the Liquidity Provider pursuant to the provisions of Articles II and III hereof
shall not be effective until received by the Liquidity Provider. A copy of all
notices delivered hereunder to either party shall in addition be delivered to
each of the parties to the Participation Agreements at their respective
addresses set forth therein.
Section 7.03. No Waiver: Remedies. No failure on the part of the 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 Liquidity Provider such
additional assignments, agreements, powers and instruments as the Liquidity
Provider may reasonably require or deem advisable to carry into effect the
purposes of this Agreement and the other Operative Agreements or to better
assure and confirm unto the Liquidity Provider its rights, powers and remedies
hereunder and under the other Operative Agreements.
<PAGE>
26
Section 7.05. Indemnification; Survival of Certain Provisions. The
Liquidity Provider shall be indemnified hereunder to the extent and in the
manner described in Section 9.1 of the Leased Aircraft Participation Agreement,
Section 8.1 of the Owned Aircraft Participation Agreement and Section 6 of the
Note Purchase Agreement. In addition, the Borrower agrees to indemnify, protect,
defend and hold harmless the Liquidity Provider from, against and in respect of,
and shall pay on demand, all Expenses of any kind or nature whatsoever (other
than any Expenses of the nature described in Sections 3.01, 3.02 or 7.07 hereof
or in the MSCS Fee Letter (regardless of whether indemnified against pursuant to
said Sections or in such MSCS Fee Letter)), that may be imposed, incurred by or
asserted against any 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 MSCS Fee Letter, the Intercreditor Agreement or any Financing
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 (i) to the extent such Expense is
attributable to the gross negligence or willful misconduct of such Liquidity
Indemnitee or any other Liquidity Indemnitee, (ii) ordinary and usual operating
overhead expense, or (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 MSCS Fee Letter or any other
Operative Agreement to which it is a party. The indemnities contained in Section
9.1 or 8.1, as the case may be, of the Participation Agreements, and the
provisions of Sections 3.01, 3.02, 3.03, 3.09, 7.05 and 7.07 hereof, shall
survive the termination of this Agreement.
Section 7.06. Liability of the Liquidity Provider. (a) Neither the
Liquidity Provider nor any of its officers, employees, directors or affiliates
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 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 Liquidity Provider, and the Liquidity Provider shall be liable to
the Borrower, to the extent of any damages suffered by the Borrower which were
the result of (A) the Liquidity Provider's willful misconduct or negligence in
determining whether documents presented hereunder comply with the terms hereof,
or (B) any breach by the Liquidity Provider of any of the terms of this
Agreement, including, but not limited to, the Liquidity Provider's failure to
make lawful payment hereunder after the delivery to it by the Borrower of a
Notice of Borrowing strictly complying with the terms and conditions hereof.
<PAGE>
27
(b) Neither the Liquidity Provider nor any of its officers, employees,
director 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 misconduct or
negligence (in which event the extent of the 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. Costs, Expenses and Taxes. The Borrower agrees to pay, or
cause to be paid (A) on the Effective Date and on such later date or dates on
which the Liquidity Provider shall make demand, all reasonable out-of-pocket
costs and expenses (including, without limitation, the reasonable fees and
expenses of outside counsel for the Liquidity Provider) of the Liquidity
Provider in connection with the preparation, negotiation, execution, delivery,
filing and recording of this Agreement, any other Operative Agreement and any
other documents which may be delivered in connection with this Agreement and (B)
on demand, all reasonable costs and expenses (including reasonable counsel fees
and expenses) of the Liquidity Provider in connection with (i) the enforcement
of this Agreement or any other Operative Agreement, (ii) the modification or
amendment of, or supplement to, this Agreement or any other Operative Agreement
or such other documents which may be delivered in connection herewith or
therewith (whether or not the same shall become effective) or (iii) any action
or proceeding relating to any order, injunction, or other process or decree
restraining or seeking to restrain the Liquidity Provider from paying any amount
under this Agreement, the Intercreditor Agreement or any other Operative
Agreement or otherwise affecting the application of funds in the Class B Cash
Collateral Account. In addition, the Borrower shall pay any and all recording,
stamp and other similar taxes and fees payable or determined to be payable 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
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 Liquidity Provider and their respective successors and assigns,
except that neither the 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 its rights or obligations hereunder or any interest
herein without the prior written consent of the other party, subject to the
requirements of Section 7.08(b). The Liquidity Provider may grant participations
herein or in any of its rights hereunder (including, without limitation, funded
<PAGE>
28
participations and participations in rights to receive interest payments
hereunder) and under the other Operative Agreements to such Persons as the
Liquidity Provider may in its sole discretion select, subject to the
requirements of Section 7.08(b). No such participation by the Liquidity
Provider, however, will relieve the Liquidity Provider of its obligations
hereunder. In connection with any participation or any proposed participation,
the Liquidity Provider may disclose to the participant or the proposed
participant any information that the Borrower is required to deliver or to
disclose to the Liquidity Provider pursuant to this Agreement. The Borrower
acknowledges and agrees that the Liquidity Provider's source of funds may derive
in part from its participants (other than Atlas). Accordingly, references in
this Agreement and the other Operative Agreements to determinations, reserve and
capital adequacy requirements, increased costs, reduced receipts, additional
amounts due pursuant to Section 3.03(a) and the like as they pertain to the
Liquidity Provider shall be deemed also to include those of each of its
participants (subject, in each case, to the maximum amount that would have been
incurred by or attributable to the Liquidity Provider directly if the Liquidity
Provider, rather than the participant, had held the interest participated).
(b) If, pursuant to subsection (a) above, the Liquidity Provider sells any
participation in this Agreement to any bank or other entity (each, a
"Transferee"), then, concurrently with the effectiveness of such participation,
the Transferee shall (i) represent to the Liquidity Provider (for the benefit of
the Liquidity Provider and the Borrower) either (A) that it is incorporated
under the laws of the United States or a state thereof or (B) that under
applicable law and treaties, no taxes will be required to be withheld with
respect to any payments to be made to such Transferee in respect of this
Agreement, (ii) furnish to the Liquidity Provider and the Borrower either (x) a
statement that it is incorporated under the laws of the United States or a state
thereof or (y) if it is not so incorporated, two copies of a properly completed
United States Internal Revenue Service Form W-8 ECI or Form W-8 BEN, as
appropriate, or other applicable form, certificate or document prescribed by the
Internal Revenue Service certifying, in each case, such Transferee's entitlement
to a complete exemption from United States federal withholding tax in respect to
any and all payments to be made hereunder, and (iii) agree (for the benefit of
the Liquidity Provider and the Borrower) to provide the Liquidity Provider and
the Borrower a new Form W-8 ECI or Form W-8 BEN, as appropriate, (A) on or
before the date that any such form expires or becomes obsolete or (B) after the
occurrence of any event requiring a change in the most recent form previously
delivered by it and prior to the immediately following due date of any payment
by the Borrower hereunder, certifying in the case of a Form W-8 BEN or Form W-8
ECI that such Transferee is entitled to a complete exemption from United States
federal withholding tax on payments under this Agreement. Unless the Borrower
has received forms or other documents reasonably satisfactory to it (and
required by applicable law) indicating that payments hereunder are not subject
to United States federal withholding tax, the Borrower will withhold taxes as
required by law from such payments at the applicable statutory rate. Section
7.09. Severability. Any provision of this Agreement which is prohibited,
unenforceable or not authorized in any jurisdiction shall, as to such
jurisdiction, be ineffective to the extent of such prohibition, unenforceability
or nonauthorization without invalidating the remaining provisions hereof or
affecting the validity, enforceability or legality of such provision in any
other jurisdiction.
<PAGE>
29
Section 7.10. GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY, AND
CONSTRUED IN ACCORDANCE WITH, THE LAW OF THE STATE OF NEW YORK.
Section 7.11. Submission to Jurisdiction; Waiver of Jury Trial; Waiver of
Immunity. (a) Each of the parties hereto hereby irrevocably and unconditionally:
(i) submits for itself and its property in any legal action or proceeding
relating to this Agreement or any other Operative Agreement, or for
recognition and enforcement of any judgment in respect hereof or
thereof, to the nonexclusive general jurisdiction of the courts of the
State of New York, the courts of the United States of America for the
Southern District of New York, and the appellate courts from any
thereof;
(ii) consents that any such action or proceeding may be brought in such
courts, and waives any objection that it may now or hereafter have to
the venue of any such action or proceeding in any such court or that
such action or proceeding was brought in an inconvenient court and
agrees not to plead or claim the same;
(iii) agrees that service of process in any such action or proceeding may
be effected by mailing a copy thereof by registered or certified mail
(or any substantially similar form and mail), postage prepaid, to each
party hereto at its address set forth in Section 7.02 hereof, or at
such other address of which the Liquidity Provider shall have been
notified pursuant thereto; and
(iv) agrees that nothing herein shall affect the right to effect service of
process in any other manner permitted by law or shall limit the right
to sue in any other jurisdiction.
(b) THE BORROWER AND THE 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
<PAGE>
30
ESTABLISHED, including, without limitation, contract claims, tort claims, breach
of duty claims and all other common law and statutory claims. The Borrower and
the 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.
Section 7.12. Execution in Counterparts. This Agreement may be executed in
any number of counterparts and by different parties 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 Agreement.
Section 7.13. Entirety. This Agreement, the Intercreditor Agreement and the
other Operative Agreements to which the Liquidity Provider is a party constitute
the entire agreement of the parties hereto with respect to the subject matter
hereof and supersedes all prior understandings and agreements of such parties.
Section 7.14. Headings. Section headings in this Agreement are included
herein for convenience of reference only and shall not constitute a part of this
Agreement for any other purpose.
Section 7.15. LIQUIDITY PROVIDER'S OBLIGATION TO MAKE ADVANCES. EXCEPT AS
EXPRESSLY SET FORTH IN THIS AGREEMENT, THE OBLIGATIONS OF THE LIQUIDITY PROVIDER
TO MAKE ADVANCES HEREUNDER, AND THE BORROWER'S RIGHTS TO DELIVER NOTICES OF
BORROWING REQUESTING THE MAKING OF ADVANCES HEREUNDER, SHALL BE UNCONDITIONAL
AND IRREVOCABLE, AND SHALL BE PAID OR PERFORMED, IN EACH CASE STRICTLY IN
ACCORDANCE WITH THE TERMS OF THIS AGREEMENT.
<PAGE>
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.
WILMINGTON TRUST COMPANY, not in its individual
capacity but solely as Subordination Agent,
as agent and trustee for the Class B Trust,
as Borrower
By: /s/ James P. Lawler
------------------------------------
Name: James P. Lawler
Title: Vice President
MORGAN STANLEY CAPITAL
SERVICES, INC.,
as Liquidity Provider
By: /s/ Justin Simpson
------------------------------------
Name: Justin Simpson
Title: Vice President
<PAGE>
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 Morgan Stanley Capital Services, Inc. (the
"Liquidity Provider"), with reference to the Revolving Credit Agreement
(1999-lB) dated as of April 13, 1999, between the Borrower and the 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 Liquidity Provider to be used, subject to
clause (3)(v) below, for the payment of the interest on the Class B
Certificates which was payable on (the "Distribution Date") in accordance
with the terms and provisions of the Class B Trust Agreement and the Class
B Certificates which Advance is requested to be made on __________, ____.
(3) The amount of the Interest Advance requested hereby (i) is $
_______, to be applied in respect of the payment of the interest which was
due and payable on the Class B Certificates on the Distribution Date, (ii)
does not include any amount with respect to the payment of principal of, or
premium on, the Class A-1 Certificates, the Class A-2 Certificates, the
Class B Certificates or the Class C Certificates, or interest on the Class
A-1 Certificates, the Class A-2 Certificates or the Class C Certificates,
(iii) was computed in accordance with the provisions of the Class B
Certificates, the Class B Trust Agreement and the Intercreditor Agreement
(a copy of which computation is attached hereto as Schedule I), (iv) does
not exceed the Maximum Commitment on the date hereof, (v) does not include
any amount of interest which was due and payable on the Class B
Certificates on such Distribution Date but which remains unpaid due to the
failure of the Depositary to pay any amount of accrued interest on the
Certificates of Deposit on such Distribution Date 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 3.6(b) of the Intercreditor Agreement, (b) no portion
of such amount shall be applied by
<PAGE>
I-2
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 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 Certificate 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 _____________, ____.
WILMINGTON TRUST COMPANY,
not in its individual capacity but
solely as Subordination Agent,
as Borrower
By:
------------------------------------
Name:
Title:
<PAGE>
SCHEDULE I TO INTEREST ADVANCE NOTICE OF BORROWING
[Insert Copy of Computations in accordance with
Interest Advance Notice of Borrowing]
<PAGE>
Annex II to
Revolving Credit Agreement
NON-EXTENSION ADVANCE NOTICE OF BORROWING
The undersigned, a duly authorized signatory of the undersigned
subordination agent (the "Borrower"), hereby certifies to Morgan Stanley Capital
Services, Inc. (the "Liquidity Provider"), with reference to the Revolving
Credit Agreement (1999-lB) dated as of April 13, 1999, between the Borrower and
the 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 Non-Extension Advance by the Liquidity Provider to be used for the
funding of the Class B Cash Collateral Account in accordance with Section
3.6(d) of the Intercreditor Agreement by reason of (i) the downgrading of
the short-term unsecured debt rating of the Guarantor issued by any Rating
Agency below the Threshold Rating or (ii) the occurrence of a Guarantee
Event, which Advance is requested to be made on __________, ____.
(3) The amount of the Downgrade Advance requested hereby (i) is
$________.____, which equals the Maximum Commitment on the date hereof and
is to be applied in respect of the funding of the Class B Cash Collateral
Account in accordance with Section 3.6(d) of the Intercreditor Agreement,
(ii) does not include any amount with respect to the payment of the
principal of, or premium on, the Class B Certificates, or principal of, or
interest or premium on, the Class A-1 Certificates, the Class A-2
Certificates or the Class C Certificates, (iii) was computed in accordance
with the provisions of the Class B Certificates, the Class B 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 Class B
Cash Collateral Account and apply the same in accordance with the terms of
Section 3.6(d) 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.
<PAGE>
II-2
The Borrower hereby acknowledges that, pursuant to the Liquidity Agreement,
(A) the making of the Non-Extension Advance as requested by this Notice of
Borrowing shall automatically and irrevocably terminate the obligation of the
Liquidity Provider to make further Advances under the Liquidity Agreement; and
(B) following the making by the Liquidity Provider of the Non-Extension 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 ____________, ____.
WILMINGTON TRUST COMPANY,
not in its individual capacity but
solely as Subordination Agent,
as Borrower
By:
------------------------------------
Name:
Title:
<PAGE>
SCHEDULE I TO NON-EXTENSION ADVANCE NOTICE OF BORROWING
[Insert Copy of computations in accordance with
Non-Extension Advance Notice of Borrowing]
<PAGE>
Annex III to
Revolving Credit Agreement
DOWNGRADE ADVANCE NOTICE OF BORROWING
The undersigned, a duly authorized signatory of the undersigned
subordination agent (the "Borrower"), hereby certifies to Morgan Stanley Capital
Services, Inc. (the "Liquidity Provider"), with reference to the Revolving
Credit Agreement (1999-lB) dated as of April 13, 1999, between the Borrower and
the 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 Liquidity Provider to be used for the
funding of the Class B Cash Collateral Account in accordance with Section
3.6(c) of the Intercreditor Agreement by reason of (i) the downgrading of
the short-term unsecured debt rating of the Guarantor issued by any Rating
Agency below the Threshold Rating or (ii) the occurrence of a Guarantee
Event, which Advance is requested to be made on __________, ____.
(3) The amount of the Downgrade Advance requested hereby (i) is
$________.____, which equals the Maximum Commitment on the date hereof and
is to be applied in respect of the funding of the Class B Cash Collateral
Account in accordance with Section 3.6(c) of the Intercreditor Agreement,
(ii) does not include any amount with respect to the payment of the
principal of, or premium on, the Class B Certificates, or principal of, or
interest or premium on, the Class A-1 Certificates, the Class A-2
Certificates or the Class C Certificates, (iii) was computed in accordance
with the provisions of the Class B Certificates, the Class B 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 Class B
Cash Collateral Account and apply the same in accordance with the terms of
Section 3.6(c) 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.
<PAGE>
III-2
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 Liquidity
Provider to make further Advances under the Liquidity Agreement; and (B)
following the making by the 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 _______________, ____.
WILMINGTON TRUST COMPANY,
not in its individual capacity but
solely as Subordination Agent,
as Borrower
By:
------------------------------------
Name:
Title:
<PAGE>
SCHEDULE I TO DOWNGRADE ADVANCE NOTICE OF BORROWING
[Insert Copy of computations in accordance with
Downgrade Advance Notice of Borrowing]
<PAGE>
Annex IV to
Revolving Credit Agreement
FINAL ADVANCE NOTICE OF BORROWING
The undersigned, a duly authorized signatory of the undersigned borrower
(the "Borrower"), hereby certifies to Morgan Stanley Capital Services, Inc. (the
"Liquidity Provider"), with reference to the Revolving Credit Agreement
(1999-lB) dated as of April 13, 1999, between the Borrower and the 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 Liquidity Provider to be used for the funding
of the Class B Cash Collateral Account in accordance with Section 3.6(i) of
the Intercreditor Agreement by reason of the receipt by the Borrower of a
Termination Notice from the Liquidity Provider with respect to the
Liquidity Agreement, which Advance is requested to be made on
(3) The amount of the Final Advance requested hereby (i) is
$__________.__, which equals the Maximum Commitment on the date hereof and
is to be applied in respect of the funding of the Class B Cash Collateral
Account in accordance with Section 3.6(i) of the Intercreditor Agreement,
(ii) does not include any amount with respect to the payment of principal
of, or premium on, the Class B Certificates, or principal of, or interest
or premium on, the Class A-1, the Class A-2 Certificates or the Class C
Certificates, (iii) was computed in accordance with the provisions of the
Class B Certificates, the Class B 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 Class B
Cash Collateral Account and apply the same in accordance with the terms of
Section 3.6(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.
<PAGE>
IV-2
(5) The Borrower hereby requests that the Advance requested hereby be
a Base Rate Advance [and that such Base Rate Advance be converted into a
LIBOR Advance on the third Business Day following your receipt of this
notice](1).
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 Liquidity
Provider to make further Advances under the Liquidity Agreement; and (B)
following the making by the 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 _______________, ____.
WILMINGTON TRUST COMPANY,
not in its individual capacity but
solely as Subordination Agent,
as Borrower
By:
------------------------------------
Name:
Title:
- ----------
1 Bracketed language may be included at Borrower's option.
<PAGE>
SCHEDULE I TO FINAL ADVANCE NOTICE OF BORROWING
[Insert Copy of Computations in accordance with
Final Advance Notice of Borrowing]
<PAGE>
Annex V to
Revolving Credit Agreement
NOTICE OF TERMINATION
[Date]
Wilmington Trust Company,
as Subordination Agent, as Borrower
One Rodney Square
1100 North Market Street
Wilmington, DE 19890-0001
Attention: Corporate Trust Administration
Revolving Credit Agreement dated as of April 13, 1999, between Wilmington
Trust Company, as Subordination Agent, as agent and trustee for the Atlas Air,
Inc. Pass Through Trust, 1999-lB, as Borrower, and Morgan Stanley Capital
Services, Inc. (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 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 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 3.6(i)
of the Intercreditor Agreement (as defined in the Liquidity Agreement) as a
consequence of your receipt of this notice.
<PAGE>
V-2
THIS NOTICE IS THE "NOTICE OF TERMINATION" PROVIDED FOR UNDER THE LIQUIDITY
AGREEMENT. OUR OBLIGATIONS TO MAKE ADVANCES UNDER THE LIQUIDITY AGREEMENT WILL
TERMINATE ON THE FIFTH BUSINESS DAY AFTER THE DATE ON WHICH YOU RECEIVE THIS
NOTICE.
Very truly yours,
Morgan Stanley Capital Services, Inc.,
as Liquidity Provider
By:
----------------------------------
Name:
Title:
cc: Wilmington Trust Company, as Class B Trustee
<PAGE>
Annex VI to
Revolving Credit Agreement
NOTICE OF REPLACEMENT SUBORDINATION AGENT
[Date]
Attention:
Revolving Credit Agreement dated as of April 13, 1999, between Wilmington
Trust Company, as Subordination Agent, as agent and trustee for the Atlas Air
Pass Through Trust, 1999-lB, as Borrower, and Morgan Stanley Capital Services,
Inc. (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 8.1 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.
<PAGE>
VI-2
We ask that this transfer be effective as of _______________, ____.
WILMINGTON TRUST COMPANY,
not in its individual capacity but
solely as Subordination Agent,
as Borrower
By:
------------------------------------
Name:
Title:
<PAGE>
Exhibit I to
Revolving Credit Agreement
FORM OF GUARANTEE AGREEMENT
EXECUTION COPY
REVOLVING CREDIT AGREEMENT
(1999-lC)
Dated as of April 13, 1999
between
WILMINGTON TRUST COMPANY,
not in its individual capacity but solely
as Subordination Agent,
as agent and trustee for the
Atlas Air Pass Through Trust 1999-lC,
as Borrower
and
MORGAN STANLEY CAPITAL SERVICES, INC.,
as Liquidity Provider
Relating to
Atlas Air Pass Through Trust 1999-lC
8.77% Atlas Air Pass Through Certificates,
Series 1999-lC
<PAGE>
TABLE OF CONTENTS
ARTICLE I
DEFINITIONS
Section 1.01. Certain Defined Terms ........................................ 1
ARTICLE II
AMOUNT AND TERMS OF THE COMMITMENT
Section 2.01. The Advances ................................................ 8
Section 2.02. Making the 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 Liquidity Provider Under the
Intercreditor Agreement ...................................12
Section 2.08. Book Entries ................................................12
Section 2.09. Payments from Available Funds Only ..........................12
Section 2.10. Extension of the Expiry Date; Non-Extension Advance .........13
ARTICLE III
OBLIGATIONS OF THE BORROWER
Section 3.01. Increased Costs .............................................13
Section 3.02. Capital Adequacy ............................................14
Section 3.03. Payments Free of Deductions .................................15
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 .....................................18
Section 3.09. Funding Loss Indemnification ................................18
Section 3.10. Illegality ..................................................18
ARTICLE IV
i
<PAGE>
CONDITIONS PRECEDENT
Section 4.01. Conditions Precedent to Effectiveness of Section 2.01 .......19
Section 4.02. Conditions Precedent to Borrowing ...........................21
ARTICLE V
COVENANTS
Section 5.01. Affirmative Covenants of the Borrower .......................21
Section 5.02. Negative Covenants of the Borrower ..........................21
ARTICLE VI
LIQUIDITY EVENTS OF DEFAULT
Section 6.01. Liquidity Events of Default .................................22
ARTICLE VII
MISCELLANEOUS
Section 7.01. Amendments, Etc. ........................................... 22
Section 7.02. Notices, Etc. .............................................. 23
Section 7.03. No Waiver: Remedies ........................................ 23
Section 7.04. Further Assurances ......................................... 24
Section 7.05. Indemnification; Survival of Certain Provisions .............24
Section 7.06. Liability of the Liquidity Provider .........................24
Section 7.07. Costs, Expenses and Taxes .................................. 25
Section 7.08. Binding Effect; Participations ..............................26
Section 7.09. Severability ................................................27
Section 7.10. GOVERNING LAW ...............................................27
Section 7.11. Submission to Jurisdiction; Waiver of Jury Trial;
Waiver of Immunity ........................................27
Section 7.12. Execution in Counterparts ...................................28
Section 7.13. Entirety ....................................................28
Section 7.14. Headings ....................................................28
Section 7.15. LIQUIDITY PROVIDER'S OBLIGATION TO MAKE ADVANCES ............29
ii
<PAGE>
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
EXHIBIT I Form of Guarantee Agreement
iii
<PAGE>
REVOLVING CREDIT AGREEMENT
This REVOLVING CREDIT AGREEMENT dated as of April 13, 1999, between
WILMINGTON TRUST COMPANY, a Delaware banking corporation ("WTC"), not in its
individual capacity but solely as Subordination Agent under the Intercreditor
Agreement (each as defined below), as agent and trustee for the Class C Trust
(as defined below) (the "Borrower"), and MORGAN STANLEY CAPITAL SERVICES, INC.,
a Delaware corporation ("MSCS" or the "Liquidity Provider").
W I T N E S S E T H:
WHEREAS, pursuant to the Class C Trust Agreement (such term and all other
capitalized terms used in these recitals having the meanings set forth or
referred to in Section 1.01), the Class C Trust is issuing the Class C
Certificates;
WHEREAS, the Borrower, in order to support the timely payment of a portion
of the interest on the Class C Certificates in accordance with their terms, has
requested the Liquidity Provider to enter into this Agreement, providing in part
for the Borrower to request in specified circumstances that Advances be made
hereunder; and
WHEREAS, the Liquidity Provider has requested Morgan Stanley Dean Witter &
Co. (the "Guarantor") to enter into a Guarantee Agreement, providing for the
full and unconditional guarantee of the Liquidity Provider's obligations under
this Agreement (the "Guarantee Agreement");
NOW, THEREFORE, in consideration of the premises, the parties hereto agree
as follows:
ARTICLE I
DEFINITIONS
Section 1.01. Certain Defined Terms. (a) Definitions. As used in this
Agreement and unless otherwise expressly indicated, or unless the context
clearly requires otherwise, the following capitalized terms shall have the
following respective meanings for all purposes of this Agreement:
"Additional Cost" has the meaning assigned to such term in Section 3.01.
<PAGE>
2
"Advance" means an Interest Advance, a Final Advance or a Provider Advance,
as the case may be.
"Applicable Liquidity Rate" has the meaning assigned to such term in
Section 3.07(f).
"Applicable Margin" means (x) with respect to any Unpaid Advance or Applied
Provider Advance, 2.00% and (y) with respect to any Unapplied Downgrade Advance
or Unapplied Non-Extension Advance, 0.425%.
"Applied Downgrade Advance" has the meaning assigned to such term in
Section 2.06(a).
"Applied Non-Extension Advance" has the meaning assigned to such term in
Section 2.06(a).
"Applied Provider Advance" has the meaning assigned to such term in Section
2.06(a).
"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 (a) the weighted
average of the rates on overnight Federal funds transactions with members of the
Federal Reserve System arranged by Federal funds brokers, as published for such
day (or, if such day is not a Business Day, for the next preceding Business Day)
by the Federal Reserve Bank of New York, or if such rate is not so published for
any day that is a Business Day, the average of the quotations for such day for
such transactions received by the Liquidity Provider from three Federal funds
brokers of recognized standing selected by it, plus (b) one-quarter of one
percent (1/4 of 1%).
"Base Rate Advance" means an Advance that bears interest at a rate based
upon the Base Rate.
"Borrower" has the meaning assigned to such term in the recital of parties
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 or Sunday or a day on
which commercial banks are required or authorized to close in Denver, Colorado,
<PAGE>
3
Chicago, Illinois, New York, New York, or, so long as any Class C Certificate is
outstanding, the city and state in which the Class C Trustee, the Borrower or
any Loan Trustee maintains its Corporate Trust Office or receives or disburses
funds, and, if the applicable Business Day relates to any Advance or other
amount bearing interest based on the LIBOR Rate, on which dealings are carried
on in the London interbank market.
"Certificates of Deposit" has the meaning assigned to such term in the
Deposit Agreement.
"Deposits" has the meaning assigned to such terms in the Deposit Agreement.
"Depositary" has the meaning assigned to such term in the Deposit
Agreement.
"Deposit Agreement" means the Deposit Agreement dated April 13, 1999
between First Security Bank, National Association, as Escrow Agent and Credit
Suisse First Boston, acting through its New York Branch, as Depositary,
pertaining to the Class C Certificates, as the same may be amended, modified or
supplemented from time to time in accordance with the terms thereof.
"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 Liquidity Provider contemplated by Section 4.01(e) shall
be conclusive evidence that the Effective Date has occurred.
"Excluded Taxes" means (i) taxes imposed on the overall net income of the
Liquidity Provider or of its Lending Office by the jurisdiction where such
Liquidity Provider's principal office or such Lending Office is located, and
(ii) Excluded Withholding Taxes.
"Excluded Withholding Taxes" means (i) withholding Taxes imposed by the
United States except to the extent that such United States withholding Taxes are
imposed as a result of any change in applicable law after the date hereof
(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), or in the case of a successor Liquidity Provider (including a
transferee of an Advance) or Lending Office, after the date on which such
successor Liquidity Provider obtains its interest or on which the Lending Office
is changed, and (ii) any withholding Taxes imposed by the United States which
are imposed or increased as a result of the Liquidity Provider failing to
deliver to the Borrower any certificate or document (which certificate or
document in
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4
the good faith judgment of the 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.
"Expenses" means liabilities, obligations, damages, settlements, penalties,
claims, actions, suits, costs, expenses, and disbursements (including, without
limitation, reasonable fees and disbursements of legal counsel and costs of
investigation), provided that Expenses shall not include any Taxes.
"Expiry Date" means April 11, 2000, initially, or any date to which the
Expiry Date is extended pursuant to Section 2.10.
"Final Advance" means an Advance made pursuant to Section 2.02(d).
"Guarantee Agreement" has the meaning assigned to such term in the
preliminary statements of this Agreement.
"Guarantee Event" has the meaning specified in Section 2.02(c)
"Guarantor" has the meaning assigned to such term in the preliminary
statements of this Agreement.
"Intercreditor Agreement" means the Intercreditor Agreement dated the date
hereof, among the Trustees, the Liquidity Provider, the liquidity provider under
each Liquidity Facility (other than this Agreement) 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).
"Interest Period" means, with respect to any LIBOR Advance, each of the
following periods:
(i) the period beginning on the third Business Day following either
(x) the Liquidity Provider's receipt of the Notice of Borrowing for such
LIBOR Advance or (y) the withdrawal of funds from the Class C Cash
Collateral Account for the purpose of paying interest on the Class C
Certificates as contemplated by Section 2.06(a) hereof and, in either case,
ending on the next Regular Distribution Date (or ending, in the case of an
Interest Period applicable to any Unapplied Provider Advance, on the
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5
numerically corresponding day in the first or sixth calendar month after
the first day of the applicable Interest Period and/or on the next Regular
Distribution Date, as Atlas may select by providing notice thereof to the
Borrower and the Liquidity Provider no later than three Business Days prior
to the commencement of such Interest Period, provided that if Atlas
shall not provide such a notice at least three Business Days prior
to the commencement of such Interest Period, then Atlas shall be deemed to
have selected an Interest Period 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 (or ending, in the case of an Interest Period applicable
to any Unapplied Provider Advance, on the numerically corresponding day in
the first or sixth calendar month after the first day of the applicable
Interest Period and/or on the next Regular Distribution Date, as Atlas may
select by providing notice thereof to the Borrower and the Liquidity
Provider no later than three Business Days prior to the commencement of
such Interest Period, provided that if Atlas shall not provide such a
notice at least three Business Days prior to the commencement of such
Interest Period, then Atlas shall be deemed to have selected an Interest
Period ending on the next Regular Distribution Date);
provided, however, that (I) if an Unapplied Provider Advance which is a LIBOR
Advance becomes an Applied Provider Advance, the Interest Period then applicable
to such Unapplied Provider Advance shall be applicable to such Applied Provider
Advance and (II) if (x) the Final Advance shall have been made, or (y) other
outstanding Advances shall have been converted into the Final Advance, then the
Interest Periods shall be successive periods of one month beginning on the third
Business Day following the Liquidity Provider's receipt of the Notice of
Borrowing for such Final Advance (in the case of clause (x) above) or the
Regular Distribution Date following such conversion (in the case of clause (y)
above).
"Leased Aircraft Participation Agreement" means a participation agreement
substantially in the form of Exhibit A-1 to the Note Purchase Agreement.
"Lending Office" means the lending office of the Liquidity Provider
presently located at New York, New York, or such other lending office as the
Liquidity Provider from time to time shall notify the Borrower as its lending
office hereunder; provided that the Liquidity Provider shall not change its
Lending Office to a Lending Office
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6
outside the United States of America except in accordance with Section 3.01,
3.02 or 3.03 hereof.
"LIBOR Advance" means an Advance bearing interest at a rate based upon the
LIBOR Rate.
"LIBOR Rate" means, with respect to any Interest Period, (i) the rate per
annum appearing on display page 3750 (British Bankers Association-LIBOR) of the
Dow Jones Markets Service (or any successor or substitute therefor) at
approximately 11:00 A.M. (London time) two Business Days before the first day of
such Interest Period, as the rate for dollar deposits with a maturity comparable
to such Interest Period, or (ii) if the rate calculated pursuant to clause (i)
above is not available, the average (rounded upwards, if necessary, to the next
1/16 of 1%) of the rates per annum at which deposits in dollars are offered for
the relevant Interest Period by three banks of recognized standing selected by
the Liquidity Provider in the London interbank market at approximately 11:00
A.M. (London time) two Business Days before the first day of such Interest
Period in an amount approximately equal to the principal amount of the LIBOR
Advance to which such Interest Period is to apply and for a period comparable to
such Interest Period.
"Liquidity Event of Default" means the occurrence of either (a) the
Acceleration of all of the Equipment Notes or (b) an Atlas Bankruptcy Event.
"Liquidity Indemnitee" means (i) the Liquidity Provider, (ii) the
Guarantor, (iii) the respective directors, officers, employees and agents of the
Liquidity Provider and the Guarantor, and (iv) the successors and permitted
assigns of the persons described in clauses (i) through (iii), inclusive.
"Liquidity Provider" has the meaning assigned to such term in the recital
of parties to this Agreement.
"Maximum Commitment" shall mean, subject to the proviso contained in the
third sentence of Section 2.02(a), at any time of determination, (a) the
Required Amount 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 Commitment shall be zero.
"Non-Extension Advance" means an Advance pursuant to Section 2.02(b).
"Notice of Borrowing" has the meaning specified in Section 2.02(e).
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7
"Notice of Replacement Subordination Agent" has the meaning specified in
Section 3.08.
"Owned Aircraft Participation Agreement" means a participation agreement
substantially in the form of Exhibit C-1 to the Note Purchase Agreement.
"Participation Agreements" means, collectively, the Leased Aircraft
Participation Agreement and the Owned Aircraft Participation Agreement.
"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.
"Prospectus Supplement" means the Prospectus Supplement dated April 5, 1999
relating to the Certificates, as such Prospectus Supplement may be amended or
supplemented.
"Provider Advance" means a Downgrade Advance or a Non-Extension Advance.
"Regulatory Change" has the meaning assigned to such term in Section 3.01.
"Replenishment Amount" has the meaning assigned to such term 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 Stated Interest Rate for
the Class C Certificates, that would be payable on the Class C Certificates on
each of the three successive semiannual Regular Distribution Dates immediately
following such day or, if such day is a Regular Distribution Date, on such day
and the succeeding two semiannual Regular Distribution Dates, in each case
calculated on the basis of the Pool Balance of the Class C Certificates on such
day and without regard to expected future payments of principal on the Class C
Certificates.
"Termination Date" means the earliest to occur of the following: (i) the
Expiry Date; (ii) the date on which the Borrower delivers to the Liquidity
Provider a certificate, signed by a Responsible Officer of the Borrower,
certifying that all of the Class C Certificates have been paid in full (or
provision has been made for such payment in accordance with the Intercreditor
Agreement and the Trust Agreements) or are otherwise no longer entitled to the
benefits of this Agreement; (iii) the date on
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8
which the Borrower delivers to the Liquidity Provider a certificate, signed by a
Responsible Officer of the Borrower, certifying that a Replacement Liquidity
Facility has been substituted for this Agreement in full pursuant to Section
3.6(e) of the Intercreditor Agreement; (iv) the fifth Business Day following the
receipt by the Borrower of a Termination Notice from the Liquidity Provider
pursuant to Section 6.01 hereof; 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.
"Transferee" has the meaning assigned to such term in Section 7.08(b).
"Unapplied Downgrade Advance" means any Downgrade Advance other than an
Applied Downgrade Advance.
"Unapplied Non-Extension Advance" means any Non-Extension Advance other
than an Applied Non-Extension Advance.
"Unapplied Provider Advance" means any Provider Advance other than an
Applied Provider Advance.
"Unpaid Advance" has the meaning assigned to such term in Section 2.05.
(b) Terms Defined in the Intercreditor Agreement. For all purposes of this
Agreement, the following terms shall have the respective meanings assigned to
such terms in the Intercreditor Agreement:
"Acceleration", Atlas", "Atlas Bankruptcy Event", "Certificates", "Class
A-1 Certificates", "Class A-2 Certificates", "Class B Certificates", "Class
C Cash Collateral Account", "Class C Certificates", "Class C
Certificateholder", "Class C Trust", "Class C Trust Agreement", "Class C
Trustee", "Closing Date", "Controlling Party", "Corporate Trust Office",
"Distribution Date", "Downgraded Facility", "Equipment Notes", "Final Legal
Distribution Date", "Financing Agreement", "Indenture", "Interest Payment
Date", "Investment Earnings", "Liquidity Facility", "Liquidity
Obligations", "Loan Trustee", "MSCS Fee Letter", "MSCS Liquidity
Facilities", "Non-Extended Facility", "Note Purchase Agreement", "Operative
Agreements", "Performing Equipment Note", "Person", "Pool Balance", "Rating
Agencies", "Ratings Confirmation", "Regular Distribution Dates",
"Replacement Liquidity Facility", "Responsible Officer", "Scheduled
Payment", "Special Payment", "Stated Interest Rate", "Subordination
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9
Agent", "Taxes", "Threshold Rating", "Trust Agreement", "Trustee",
"Underwriters", "Underwriting Agreement", and "Written Notice".
ARTICLE II
AMOUNT AND TERMS OF THE COMMITMENT
Section 2.01. The Advances. The 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 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 the Advances. (a) Interest Advances shall be made in
one or more Borrowings by delivery to the Liquidity Provider of one or more
written and completed Notices of Borrowing in substantially the form of Annex I
attached hereto, signed by a Responsible Officer of the Borrower, in an amount
not exceeding the Maximum Commitment at such time and shall be used solely for
the payment when due of the interest on the Class C Certificates at the Stated
Interest Rate therefor in accordance with Section 3.6(a) of the Intercreditor
Agreement. Each Interest Advance made hereunder shall automatically reduce the
Maximum 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). Upon repayment to the Liquidity
Provider in full 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 Commitment shall be reinstated by the amount of such repaid Interest
Advance; provided, however, that the Maximum Commitment shall not be so
reinstated at any time if (i) a Liquidity Event of Default shall have occurred
and be continuing and (ii) there is a Performing Note Deficiency.
(b) A Non-Extension Advance shall be made in a single Borrowing if this
Agreement is not extended in accordance with section 3.6(d) of the Intercreditor
Agreement (unless a Replacement Liquidity Facility to replace this Agreement
shall have been delivered to the Borrower as contemplated by said Section 3.6(d)
within the time period specified in such Section) by delivery to the Liquidity
Provider of a written and completed Notice of Borrowing in substantially the
form of Annex II attached hereto, signed by a Responsible Officer of the
Borrower, in an amount equal to the Maximum Commitment at such time, and shall
be used to fund the Class C Cash Collateral Account in accordance with said
Section 3.6(d) and Section 3.6(f) of the Intercreditor Agreement.
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10
(c) A Downgrade Advance shall be made in a single Borrowing, as provided
for in Section 3.6(c) of the Intercreditor Agreement, (i) upon a downgrading of
the Guarantor's short-term unsecured debt rating issued by either Rating Agency
below the applicable Threshold Rating or (ii) if the Guarantee Agreement ceases
to be in full force and effect, becomes invalid or unenforceable or the
Guarantor denies its liability thereunder (any such occurrence, a "Guarantee
Event"), unless a Replacement Liquidity Facility to replace this Agreement shall
have been previously delivered to the Borrower in accordance with said Section
3.6(c), by delivery to the Liquidity Provider of a written and completed Notice
of Borrowing in substantially the form of Annex III attached hereto, signed by a
Responsible Officer of the Borrower, in an amount equal to the Maximum
Commitment at such time, and shall be used to fund the Class C Cash Collateral
Account in accordance with said Section 3.6(c) and Section 3.6(f) of the
Intercreditor Agreement.
(d) A Final Advance shall be made in a single Borrowing upon the receipt by
the Borrower of a Termination Notice from the Liquidity Provider pursuant to
Section 6.01 hereof by delivery to the Liquidity Provider of a written and
completed Notice of Borrowing in substantially the form of Annex IV attached
hereto, signed by a Responsible Officer of the Borrower, in an amount equal to
the Maximum Commitment at such time, and shall be used to fund the Class C Cash
Collateral Account (in accordance with Section 3.6(i) of the Intercreditor
Agreement) and Section 3.6(f) 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(b),
2.02(c) or 2.02(d), as the case may be, given by the Borrower to the Liquidity
Provider. If a Notice of Borrowing is delivered by the Borrower in respect of
any Borrowing no later than 1:00 PM (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 Liquidity Provider shall make available to the
Borrower, in accordance with its payment instructions, the amount of such
Borrowing in U.S. dollars and immediately available funds, before 4:00 PM (New
York City time) on the day of receipt of such Notice of Borrowing or 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 PM
(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
Liquidity Provider shall make available to the Borrower, in accordance with its
payment instructions, the amount of such Borrowing in U.S. dollars and
immediately available funds, before 4:00 PM (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
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11
instructions as the Borrower shall furnish from time to time to the
Liquidity Provider for such purpose. Each Notice of Borrowing shall be
irrevocable and binding on the Borrower.
(f) Upon the making of any Advance requested pursuant to a Notice of
Borrowing, in accordance with the Borrower's payment instructions, the Liquidity
Provider shall be fully discharged of its obligation hereunder with respect to
such Notice of Borrowing, and the 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. Notwithstanding the provisions
of Section 2.02(e), if the 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 said Section 2.02(e),
the Liquidity Provider shall have fully discharged its obligations hereunder
with respect to such Advance and shall not be in default hereunder. Following
the making of any Advance pursuant to Section 2.02(b), (c) or (d) hereof to fund
the Class C Cash Collateral Account, the Liquidity Provider shall have no
interest in or rights to the Class C Cash Collateral Account, such Advance or
any other amounts from time to time on deposit in the Class C 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
3.6(e) or (f) 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 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 Liquidity Provider
the fees set forth in the MSCS 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 Pool Balance of the Class C
Certificates 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 Liquidity Provider 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.
(b) Termination. Upon the making of any Provider Advance or Final Advance
hereunder or the occurrence of the Termination Date, the obligation of the
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.
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12
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 Liquidity Provider (which
notice and demand are hereby waived by the Borrower), to pay, or to cause to be
paid, to the Liquidity Provider on each date on which the 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 as provided in Section 3.07 hereof; provided that if (i) the 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 Liquidity Facility shall become a Downgraded Facility
or Non-Extended Facility at any time when unreimbursed Interest Advances have
reduced the Maximum 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 or Applied Non-Extension 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 Liquidity Provider in
accordance with Section 2.06 and for the purposes of Section 2.06(b)). The
Borrower and the 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
Liquidity Provider.
Section 2.06. Repayments of Provider Advances. (a) Amounts advanced
hereunder in respect of a Provider Advance shall be deposited in the Class C
Cash Collateral Account, invested and withdrawn from the Class C Cash Collateral
Account as set forth in Sections 3.6(c), (d) and (f) of the Intercreditor
Agreement. The Borrower agrees to pay to the 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 as provided in Section 3.07; provided, however, that amounts in
respect of a Provider Advance withdrawn from the Class C Cash Collateral Account
for the purpose of paying interest on the Class C Certificates in accordance
with Section 3.6(f) of the Intercreditor Agreement (the amount of any such
withdrawal being (x) in the case of a Downgrade Advance, an "Applied Downgrade
Advance" and (y) in the case of a Non- Extension Advance, an "Applied
Non-Extension Advance" and, together with an Applied Downgrade Advance, 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; provided further,
however, that if, following the making of a Provider Advance, the Liquidity
Provider delivers a Termination Notice to the Borrower pursuant to Section 6.01
hereof, 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 thereon. Subject to Sections 2.07 and 2.09 hereof,
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13
immediately upon the withdrawal of any amounts from the Class C Cash Collateral
Account on account of a reduction in the Required Amount, the Borrower shall
repay to the 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 hereof.
(b) At any time when an Applied Provider Advance (or any portion thereof)
is outstanding, upon the deposit in the Class C Cash Collateral Account of any
amount pursuant to clause "third" of Section 2.4(b) of the Intercreditor
Agreement, clause "third" of Section 3.2 of the Intercreditor Agreement or
clause "fourth" of Section 3.3 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 Liquidity Facility in replacement
of this Agreement in accordance with Section 3.6(e) of the Intercreditor
Agreement, amounts remaining on deposit in the Class C Cash Collateral Account
after giving effect to any Applied Provider Advance on the date of such
replacement shall be reimbursed to the Liquidity Provider, but only to the
extent such amounts are necessary to repay in full to the Liquidity Provider all
amounts owing to it hereunder.
Section 2.07. Payments to the Liquidity Provider Under the Intercreditor
Agreement. In order to provide for payment or repayment to the 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 Liquidity Provider pursuant to the terms
of the Intercreditor Agreement (including, without limitation, Section 3.6(f) of
the Intercreditor Agreement), shall be paid to the Liquidity Provider in
accordance with the terms thereof. Amounts so paid to the Liquidity Provider
shall be applied by the Liquidity Provider to Liquidity Obligations then due and
payable in accordance with the Intercreditor Agreement or, if not provided for
in the Intercreditor Agreement, then in such manner as the Liquidity Provider
shall deem appropriate.
Section 2.08. Book Entries. The 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,
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14
that the failure by the Liquidity Provider to maintain such account or accounts
shall not affect the obligations of the Borrower in respect of Advances.
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 or payments under Section 8.1 or
9.1, as the case may be, of the Participation Agreements and Section 6 of the
Note Purchase Agreement 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 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 Class C 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 3.6(f)
of the Intercreditor Agreement.
Section 2.10. Extension of the Expiry Date; Non-Extension Advance. The
Expiry Date shall be automatically extended, effective on the 25th day prior to
each Expiry Date (unless such Expiry Date is on or after the date that is 15
days after the Final Legal Distribution Date for the Class C Certificates), for
a period of 364 days after such Expiry Date (unless the obligations of the
Liquidity Provider are earlier terminated in accordance with the terms hereof),
without the necessity of any act on the part of the Borrower or the Liquidity
Provider, unless the Liquidity Provider shall advise the Borrower prior to such
25th day that it does not agree to such extension of such Expiry Date, in which
event (and if the Liquidity Provider shall not have been replaced in accordance
with Section 3.6(e) of the Intercreditor Agreement), the Borrower shall be
entitled on and after such 25th day (but prior to such Expiry Date) to request a
Non-Extension Advance in accordance with Section 2.02(b) hereof and Section
3.6(d) of the Intercreditor Agreement.
ARTICLE III
OBLIGATIONS OF THE BORROWER
Section 3.01. Increased Costs. The Borrower shall pay to the Liquidity
Provider from time to time such amounts as may be necessary to compensate the
Liquidity Provider for any increased costs incurred by the Liquidity Provider
which are attributable to its making or maintaining any LIBOR Advances hereunder
or its obligation to make any such Advances hereunder, or any reduction in any
amount receivable by the Liquidity Provider
<PAGE>
15
under this Agreement or the Intercreditor Agreement in respect of any such
Advances or such obligation (such increases in costs and reductions in amounts
receivable being herein called "Additional Costs"), resulting from any change
after the date of this Agreement in U.S. federal, state, municipal, or foreign
laws or regulations ("Regulatory Change") which changes the basis of taxation of
any amounts payable to the Liquidity Provider under this Agreement in respect of
any such Advances (other than Excluded Taxes). The 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 amount payable
under this Section that may thereafter accrue and would not, in the reasonable
judgment of the Liquidity Provider, be otherwise disadvantageous to the
Liquidity Provider.
The Liquidity Provider will notify the Borrower of any event occurring
after the date of this Agreement that will entitle the Liquidity Provider to
compensation pursuant to this Section 3.01 as promptly as practicable after it
obtains knowledge thereof and determines to request such compensation, which
notice shall describe in reasonable detail the calculation of the amounts owed
under this Section. Determinations by the Liquidity Provider for purposes of
this Section 3.01 of the effect of any Regulatory Change on its costs of making
or maintaining Advances or on amounts receivable by it in respect of Advances,
and of the additional amounts required to compensate the Liquidity Provider in
respect of any Additional Costs, shall be prima facie evidence of the amount
owed under this Section.
Section 3.02. Capital Adequacy. If (1) the adoption, after the date hereof,
of any applicable governmental law, rule or regulation regarding capital
adequacy, (2) any change, after the date hereof, in the interpretation or
administration of any such law, rule or regulation by any central bank or other
governmental authority charged with the interpretation or administration thereof
or (3) compliance by the Liquidity Provider or any corporation controlling the
Liquidity Provider with any applicable guideline or request of general
applicability, issued after the date hereof, by any central bank or other
governmental authority (whether or not having the force of law) that constitutes
a change of the nature described in clause (2), has the effect of requiring an
increase in the amount of capital required to be maintained by the Liquidity
Provider or any corporation controlling the Liquidity Provider, and such
increase is based upon the Liquidity Provider's obligations hereunder and other
similar obligations, the Borrower shall pay to the Liquidity Provider from time
to time such additional amount or amounts as are necessary to compensate the
Liquidity Provider for such portion of such increase as shall be reasonably
allocable to the Liquidity Provider's obligations to the Borrower hereunder. The
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 amount payable under this Section that may thereafter accrue and would not,
in the reasonable
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16
judgment of the Liquidity Provider, be otherwise materially disadvantageous to
the Liquidity Provider.
The Liquidity Provider will notify the Borrower of any event occurring
after the date of this Agreement that will entitle the Liquidity Provider to
compensation pursuant to this Section 3.02 as promptly as practicable after it
obtains knowledge thereof and determines to request such compensation, which
notice shall describe in reasonable detail the calculation of the amounts owed
under this Section. Determinations by the Liquidity Provider for purposes of
this Section 3.02 of the effect of any increase in the amount of capital
required to be maintained by the bank and of the amount allocable to the
Liquidity Provider's obligations to the Borrower hereunder shall be prima facie
evidence of the amounts owed under this Section.
Section 3.03. Payments Free of Deductions. (a) All payments made by the
Borrower under this Agreement shall be made free and clear of, and without
reduction for or on account of, any present or future stamp or other taxes,
levies, imposts, duties, charges, fees, deductions, withholdings, restrictions
or conditions of any nature whatsoever now or hereafter imposed, levied,
collected, withheld or assessed, excluding Excluded Taxes (such non-excluded
taxes being referred to herein, collectively, as "Non-Excluded Taxes" and,
individually, as a "Non-Excluded Tax"). If any Non-Excluded Taxes are required
to be withheld from any amounts payable to the Liquidity Provider under this
Agreement, the amounts so payable to the Liquidity Provider shall be increased
to the extent necessary to yield to the Liquidity Provider (after payment of all
Non-Excluded Taxes) interest or any other such amounts payable under this
Agreement at the rates or in the amounts specified in this Agreement. The
Liquidity Provider agrees to use reasonable efforts (consistent with its
internal policy and 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 Liquidity Provider, be
otherwise disadvantageous to the Liquidity Provider. From time to time upon the
reasonable request of the Borrower, the Liquidity Provider agrees to provide to
the Borrower two original Internal Revenue Service Forms W-8 BEN or W-8 ECI, as
appropriate, or any successor or other form prescribed by the Internal Revenue
Service, certifying that the Liquidity Provider is exempt from or entitled to a
reduced rate of United States withholding tax on payments pursuant to this
Agreement.
(b) All payments (including, without limitation, Advances) made by the
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 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
<PAGE>
17
payment required 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 hereunder,
the 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.
Section 3.04. Payments. The Borrower shall make or cause to be made each
payment to the Liquidity Provider under this Agreement so as to cause the same
to be received by the 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 lawful
money of the United States of America, to the Liquidity Provider in immediately
available funds, by wire transfer to Citibank, N.A., New York, NY, ABA#
021000089, Account Name: Morgan Stanley Capital Services, Inc., Account #
[4072-4601], Reference: Atlas Air, Inc., 1999-1C.
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 Section 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 Class C Cash Collateral Account
to pay interest on the Class C 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 Class C 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
<PAGE>
18
Advances or any such other amount) which 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 a
fluctuating interest rate per annum for each day equal to the Applicable
Liquidity Rate (as defined below) for such Advance or such other amount 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 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 amount of interest that
would have accrued if such otherwise applicable interest rate as set forth in
this Section 3.07 had at all times been in effect.
(b) Each Advance will be either a Base Rate Advance or a LIBOR Advance as
provided in this Section. Each such Advance will be a Base Rate Advance for the
period from the date of its borrowing to (but excluding) the third Business Day
following the Liquidity Provider's receipt of the Notice of Borrowing for such
Advance. Thereafter, such Advance shall be a LIBOR Advance; provided that the
Borrower (at the direction of the Controlling Party, so long as the Liquidity
Provider is not the Controlling Party) may (x) convert the Final Advance into a
Base Rate Advance on the last day of an Interest Period for such Advance by
giving the Liquidity Provider no less than four Business Days' prior written
notice of such election or (y) elect to maintain the Final Advance as a Base
Rate Advance by not requesting a conversion of the Final Advance to a LIBOR
Advance under Clause (5) of the applicable Notice of Borrowing (or, if such
Final Advance is deemed to have been made without delivery of a Notice of
Borrowing pursuant to Section 2.06, by requesting, prior to 11:00 AM on the
first Business Day immediately following the Borrower's receipt of the
applicable Termination Notice, such that such Final Advance not be converted
from a Base Rate Advance to 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
<PAGE>
19
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 amount not paid by the Borrower 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% until paid.
(f) 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. From time to time and subject to the
successor Borrower's meeting the eligibility requirements set forth in Section
6.9 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 attached
hereto (a "Notice of Replacement Subordination Agent") delivered to the
Liquidity Provider by the then Borrower, the successor Borrower designated
therein shall be substituted for as the Borrower for all purposes hereunder.
Section 3.09. Funding Loss Indemnification. The Borrower shall pay to the
Liquidity Provider, upon the request of the Liquidity Provider, such amount or
amounts as shall be sufficient (in the reasonable opinion of the 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
Liquidity Provider to fund or maintain any LIBOR Advance (but excluding loss of
anticipated profits) incurred as a result of:
(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 applicable law, rule or regulation, 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 Liquidity Provider (or its Lending
Office) 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 Liquidity Provider (or its Lending Office) to maintain or
fund
<PAGE>
20
its LIBOR Advances, then upon notice to the Borrower by the Liquidity Provider,
the outstanding principal amount of the LIBOR Advances shall be converted to
Base Rate Advances (a) immediately upon demand of the Liquidity Provider, if
such change or compliance with such request, in the judgment of the Liquidity
Provider, requires immediate repayment; or (b) at the expiration of the last
Interest Period to expire before the effective date of any such change or
request.
<PAGE>
21
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:
(a) The 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 Liquidity Provider:
(i) This Agreement duly executed on behalf of the Borrower;
(ii) The Intercreditor Agreement duly executed on behalf of each of
the parties thereto;
(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) A copy of the Prospectus Supplement, together with the related
Prospectus dated February 16, 1999, and specimen copies of the Class C
Certificates;
(v) An executed copy of each document, instrument, certificate and
opinion delivered on or before the Closing Date pursuant to the Class C
Trust Agreement, the Intercreditor Agreement and the other Operative
Agreements (in the case of each such opinion, other than the opinion of
counsel for the Underwriters, either addressed to the Liquidity Provider or
accompanied by a letter from the counsel rendering such opinion to the
effect that the Liquidity Provider is entitled to rely on such opinion as
of its date as if it were addressed to the Liquidity Provider);
(vi) Evidence that there shall have been made and shall be in full
force and effect, all filings, recordings and/or registrations, and there
shall have been given or taken any notice or other similar action as may be
reasonably necessary or, to the extent reasonably requested by the
Liquidity Provider, reasonably advisable, in order to establish, perfect,
protect and preserve the right, title and interest, remedies, powers,
privileges, liens and security interests of, or for the benefit of, the
Trustees, the Borrower and the Liquidity Provider created by the Operative
Agreements executed and delivered on or prior to the Closing Date;
<PAGE>
22
(vii) An agreement from Atlas, pursuant to which (i) Atlas agrees to
provide copies of quarterly financial statements and audited annual
financial statements to the Liquidity Provider, and such other information
as the Liquidity Provider shall reasonably request with respect to the
transactions contemplated by the Operative Agreements, in each case, only
to the extent that Atlas is obligated to provide such information pursuant
to Section 8.2.1 of the Leases (related to Leased Aircraft) or the
corresponding section of the Indentures (related to Owned Aircraft) to the
parties thereto and (ii) Atlas agrees to allow the Liquidity Provider to
inspect Atlas's books and records regarding such transactions, and to
discuss such transactions with officers and employees of Atlas; and
(viii) Such other documents, instruments, opinions and approvals
pertaining to the transactions contemplated hereby or by the other
Operative Agreements as the Liquidity Provider shall have reasonably
requested.
(b) The following statement shall be true on and as of the Effective Date:
No event has occurred and is 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 Liquidity Provider shall have received payment in full of all fees
and other sums required to be paid to or for the account of the Liquidity
Provider on or prior to the Effective Date.
(d) All conditions precedent to the issuance of the Certificates under the
Trust Agreements shall have been satisfied or waived, all conditions precedent
to the effectiveness of the other Liquidity Facilities shall have been satisfied
or waived, and all conditions precedent to the purchase of the Certificates by
the Underwriters under the Underwriting Agreement shall have been satisfied
(unless any of such conditions precedent shall have been waived by the
Underwriters) .
(e) The Borrower shall have received on or before the Closing Date each of
the following:
(i) The Guarantee Agreement, substantially in the form of Exhibit I
hereto, duly executed on behalf of each of the parties thereto;
(ii) A certificate, dated the date hereof, signed by a duly authorized
representative of the Liquidity Provider, certifying that all conditions
precedent to the effectiveness of Section 2.01 have been satisfied or
waived.
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23
Section 4.02. Conditions Precedent to Borrowing. The obligation of the
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 date of such Borrowing, the Borrower shall have delivered a
Notice of Borrowing which conforms to the terms and conditions of this Agreement
and has been completed as may be required by the relevant form of the Notice of
Borrowing for the type of Advances requested.
ARTICLE V
COVENANTS
Section 5.01. Affirmative Covenants of the Borrower. So long as any Advance
shall remain unpaid or the Liquidity Provider shall have any Maximum Commitment
hereunder or the Borrower shall have any obligation to pay any amount to the
Liquidity Provider hereunder, the Borrower will, unless the 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 and the other
Operative Agreements and observe and perform in all material respects the
conditions, covenants and requirements applicable to it contained in this
Agreement and the other Operative Agreements.
(b) Reporting Requirements. Furnish to the 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 Liquidity Provider; and permit the
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 Liquidity Provider
with reasonable promptness such Operative Agreements entered into after the
date hereof as from time to time may be reasonably requested by the
Liquidity Provider.
Section 5.02. Negative Covenants of the Borrower. So long as any Advance
shall remain unpaid or the Liquidity Provider shall have any Maximum Commitment
hereunder or the Borrower shall have any obligation to pay any amount to the
Liquidity Provider hereunder, the Borrower will not appoint or permit or suffer
to be appointed any successor
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24
Borrower without the prior written consent of the Liquidity Provider, which
consent shall not be unreasonably withheld or delayed.
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 Liquidity Provider may, in its discretion, deliver to the
Borrower a Termination Notice, the effect of which shall be to cause (i) this
Agreement to expire on the fifth Business Day after the date on which such
Termination Notice is received by the Borrower, (ii) the Borrower to promptly
request, and the Liquidity Provider to promptly make, a Final Advance in
accordance with Section 2.02(d) hereof and Section 3.6(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 hereof,
all Advances (including, without limitation, any Provider Advance and Applied
Provider Advance), any accrued interest thereon and any other amounts
outstanding hereunder to become immediately due and payable to the Liquidity
Provider.
ARTICLE VII
MISCELLANEOUS
Section 7.01. Amendments, Etc., No amendment or waiver of any provision of
this Agreement, nor consent to any departure by the Borrower therefrom, shall in
any event be effective unless the same shall be in writing and signed by the
Liquidity Provider, and, in the case of an amendment or of a waiver by the
Borrower, the Borrower, and then such waiver or consent shall be effective only
in the specific instance and for the specific purpose for which given.
Section 7.02. Notices, Etc. Except as otherwise expressly provided herein,
all notices and other communications provided for hereunder shall be in writing
(including telecopier and mailed or delivered or sent by telecopier):
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25
Borrower: WILMINGTON TRUST COMPANY
One Rodney Square
1100 North Market Street
Wilmington, DE 19890-0001
Attention: Corporate Trust Administration
Telecopy: (302) 651-8882
Liquidity
Provider: MORGAN STANLEY CAPITAL SERVICES, INC.
1585 Broadway
New York, NY 10036
Attention: Keith Amburgey
Telecopy: (212) 761-0580
or, as to each of the foregoing, at such other address as shall be designated by
such Person in a written notice to the others. All such notices and
communications shall be effective (i) if given by telecopier, when transmitted
to the telecopier number specified above, (ii) if given by mail, when deposited
in the mails addressed as specified above, and (iii) if given by other means,
when delivered at the address specified above, except that written notices to
the Liquidity Provider pursuant to the provisions of Articles II and III hereof
shall not be effective until received by the Liquidity Provider. A copy of all
notices delivered hereunder to either party shall in addition be delivered to
each of the parties to the Participation Agreements at their respective
addresses set forth therein.
Section 7.03. No Waiver: Remedies. No failure on the part of the 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 Liquidity Provider such
additional assignments, agreements, powers and instruments as the Liquidity
Provider may reasonably require or deem advisable to carry into effect the
purposes of this Agreement and the other Operative Agreements or to better
assure and confirm unto the Liquidity Provider its rights, powers and remedies
hereunder and under the other Operative Agreements.
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26
Section 7.05. Indemnification; Survival of Certain Provisions. The
Liquidity Provider shall be indemnified hereunder to the extent and in the
manner described in Section 9.1 of the Leased Aircraft Participation Agreement,
Section 8.1 of the Owned Aircraft Participation Agreement and Section 6 of the
Note Purchase Agreement. In addition, the Borrower agrees to indemnify, protect,
defend and hold harmless the Liquidity Provider from, against and in respect of,
and shall pay on demand, all Expenses of any kind or nature whatsoever (other
than any Expenses of the nature described in Sections 3.01, 3.02 or 7.07 hereof
or in the MSCS Fee Letter (regardless of whether indemnified against pursuant to
said Sections or in such MSCS Fee Letter)), that may be imposed, incurred by or
asserted against any 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 MSCS Fee Letter, the Intercreditor Agreement or any Financing
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 (i) to the extent such Expense is
attributable to the gross negligence or willful misconduct of such Liquidity
Indemnitee or any other Liquidity Indemnitee, (ii) ordinary and usual operating
overhead expense, or (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 MSCS Fee Letter or any other
Operative Agreement to which it is a party. The indemnities contained in Section
9.1 or 8.1, as the case may be, of the Participation Agreements, and the
provisions of Sections 3.01, 3.02, 3.03, 3.09, 7.05 and 7.07 hereof, shall
survive the termination of this Agreement.
Section 7.06. Liability of the Liquidity Provider. (a) Neither the
Liquidity Provider nor any of its officers, employees, directors or affiliates
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 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 Liquidity Provider, and the Liquidity Provider shall be liable to
the Borrower, to the extent of any damages suffered by the Borrower which were
the result of (A) the Liquidity Provider's willful misconduct or negligence in
determining whether documents presented hereunder comply with the terms hereof,
or (B) any breach by the Liquidity Provider of any of the terms of this
Agreement, including, but not limited to, the Liquidity Provider's failure to
make lawful payment hereunder after the delivery to it by the Borrower of a
Notice of Borrowing strictly complying with the terms and conditions hereof.
<PAGE>
27
(b) Neither the Liquidity Provider nor any of its officers, employees,
director 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 misconduct or
negligence (in which event the extent of the 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. Costs, Expenses and Taxes. The Borrower agrees to pay, or
cause to be paid (A) on the Effective Date and on such later date or dates on
which the Liquidity Provider shall make demand, all reasonable out-of-pocket
costs and expenses (including, without limitation, the reasonable fees and
expenses of outside counsel for the Liquidity Provider) of the Liquidity
Provider in connection with the preparation, negotiation, execution, delivery,
filing and recording of this Agreement, any other Operative Agreement and any
other documents which may be delivered in connection with this Agreement and (B)
on demand, all reasonable costs and expenses (including reasonable counsel fees
and expenses) of the Liquidity Provider in connection with (i) the enforcement
of this Agreement or any other Operative Agreement, (ii) the modification or
amendment of, or supplement to, this Agreement or any other Operative Agreement
or such other documents which may be delivered in connection herewith or
therewith (whether or not the same shall become effective) or (iii) any action
or proceeding relating to any order, injunction, or other process or decree
restraining or seeking to restrain the Liquidity Provider from paying any amount
under this Agreement, the Intercreditor Agreement or any other Operative
Agreement or otherwise affecting the application of funds in the Class C Cash
Collateral Account. In addition, the Borrower shall pay any and all recording,
stamp and other similar taxes and fees payable or determined to be payable 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
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 Liquidity Provider and their respective successors and assigns,
except that neither the 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 its rights or obligations hereunder or any interest
herein without the prior written consent of the other party, subject to the
requirements of Section 7.08(b). The Liquidity Provider may grant participations
herein or in any of its rights hereunder (including, without limitation, funded
<PAGE>
28
participations and participations in rights to receive interest payments
hereunder) and under the other Operative Agreements to such Persons as the
Liquidity Provider may in its sole discretion select, subject to the
requirements of Section 7.08(b). No such participation by the Liquidity
Provider, however, will relieve the Liquidity Provider of its obligations
hereunder. In connection with any participation or any proposed participation,
the Liquidity Provider may disclose to the participant or the proposed
participant any information that the Borrower is required to deliver or to
disclose to the Liquidity Provider pursuant to this Agreement. The Borrower
acknowledges and agrees that the Liquidity Provider's source of funds may derive
in part from its participants (other than Atlas). Accordingly, references in
this Agreement and the other Operative Agreements to determinations, reserve and
capital adequacy requirements, increased costs, reduced receipts, additional
amounts due pursuant to Section 3.03(a) and the like as they pertain to the
Liquidity Provider shall be deemed also to include those of each of its
participants (subject, in each case, to the maximum amount that would have been
incurred by or attributable to the Liquidity Provider directly if the Liquidity
Provider, rather than the participant, had held the interest participated).
(b) If, pursuant to subsection (a) above, the Liquidity Provider sells any
participation in this Agreement to any bank or other entity (each, a
"Transferee"), then, concurrently with the effectiveness of such participation,
the Transferee shall (i) represent to the Liquidity Provider (for the benefit of
the Liquidity Provider and the Borrower) either (A) that it is incorporated
under the laws of the United States or a state thereof or (B) that under
applicable law and treaties, no taxes will be required to be withheld with
respect to any payments to be made to such Transferee in respect of this
Agreement, (ii) furnish to the Liquidity Provider and the Borrower either (x) a
statement that it is incorporated under the laws of the United States or a state
thereof or (y) if it is not so incorporated, two copies of a properly completed
United States Internal Revenue Service Form W-8 ECI or Form W-8 BEN, as
appropriate, or other applicable form, certificate or document prescribed by the
Internal Revenue Service certifying, in each case, such Transferee's entitlement
to a complete exemption from United States federal withholding tax in respect to
any and all payments to be made hereunder, and (iii) agree (for the benefit of
the Liquidity Provider and the Borrower) to provide the Liquidity Provider and
the Borrower a new Form W-8 ECI or Form W-8 BEN, as appropriate, (A) on or
before the date that any such form expires or becomes obsolete or (B) after the
occurrence of any event requiring a change in the most recent form previously
delivered by it and prior to the immediately following due date of any payment
by the Borrower hereunder, certifying in the case of a Form W-8 BEN or Form W-8
ECI that such Transferee is entitled to a complete exemption from United States
federal withholding tax on payments under this Agreement. Unless the Borrower
has received forms or other documents reasonably satisfactory to it (and
required by applicable law) indicating that payments hereunder are not subject
to United States federal withholding tax, the Borrower will withhold taxes as
required by law from such payments at the applicable statutory rate. Section
7.09. Severability. Any provision of this Agreement which is prohibited,
unenforceable or not authorized in any jurisdiction shall, as to such
jurisdiction, be ineffective to the extent of such prohibition, unenforceability
or nonauthorization without invalidating the remaining provisions hereof or
affecting the validity, enforceability or legality of such provision in any
other jurisdiction.
<PAGE>
29
Section 7.10. GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY, AND
CONSTRUED IN ACCORDANCE WITH, THE LAW OF THE STATE OF NEW YORK.
Section 7.11. Submission to Jurisdiction; Waiver of Jury Trial; Waiver of
Immunity. (a) Each of the parties hereto hereby irrevocably and unconditionally:
(i) submits for itself and its property in any legal action or proceeding
relating to this Agreement or any other Operative Agreement, or for
recognition and enforcement of any judgment in respect hereof or
thereof, to the nonexclusive general jurisdiction of the courts of the
State of New York, the courts of the United States of America for the
Southern District of New York, and the appellate courts from any
thereof;
(ii) consents that any such action or proceeding may be brought in such
courts, and waives any objection that it may now or hereafter have to
the venue of any such action or proceeding in any such court or that
such action or proceeding was brought in an inconvenient court and
agrees not to plead or claim the same;
(iii) agrees that service of process in any such action or proceeding may
be effected by mailing a copy thereof by registered or certified mail
(or any substantially similar form and mail), postage prepaid, to each
party hereto at its address set forth in Section 7.02 hereof, or at
such other address of which the Liquidity Provider shall have been
notified pursuant thereto; and
(iv) agrees that nothing herein shall affect the right to effect service of
process in any other manner permitted by law or shall limit the right
to sue in any other jurisdiction.
(b) THE BORROWER AND THE 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
<PAGE>
30
ESTABLISHED, including, without limitation, contract claims, tort claims, breach
of duty claims and all other common law and statutory claims. The Borrower and
the 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.
Section 7.12. Execution in Counterparts. This Agreement may be executed in
any number of counterparts and by different parties 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 Agreement.
Section 7.13. Entirety. This Agreement, the Intercreditor Agreement and the
other Operative Agreements to which the Liquidity Provider is a party constitute
the entire agreement of the parties hereto with respect to the subject matter
hereof and supersedes all prior understandings and agreements of such parties.
Section 7.14. Headings. Section headings in this Agreement are included
herein for convenience of reference only and shall not constitute a part of this
Agreement for any other purpose.
Section 7.15. LIQUIDITY PROVIDER'S OBLIGATION TO MAKE ADVANCES. EXCEPT AS
EXPRESSLY SET FORTH IN THIS AGREEMENT, THE OBLIGATIONS OF THE LIQUIDITY PROVIDER
TO MAKE ADVANCES HEREUNDER, AND THE BORROWER'S RIGHTS TO DELIVER NOTICES OF
BORROWING REQUESTING THE MAKING OF ADVANCES HEREUNDER, SHALL BE UNCONDITIONAL
AND IRREVOCABLE, AND SHALL BE PAID OR PERFORMED, IN EACH CASE STRICTLY IN
ACCORDANCE WITH THE TERMS OF THIS AGREEMENT.
<PAGE>
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.
WILMINGTON TRUST COMPANY, not in
its individual capacity but solely as
Subordination Agent, as agent and trustee
for the Class C Trust, as Borrower
By: /s/ James P. Lawler
------------------------------------
Name: James P. Lawler
Title: Vice President
MORGAN STANLEY CAPITAL
SERVICES, INC.,
as Liquidity Provider
By: /s/ Justin Simpson
------------------------------------
Name: Justin Simpson
Title: Vice President
<PAGE>
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 Morgan Stanley Capital Services, Inc. (the
"Liquidity Provider"), with reference to the Revolving Credit Agreement
(1999-lC) dated as of April 13, 1999, between the Borrower and the 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 Liquidity Provider to be used, subject to
clause (3)(v) below, for the payment of the interest on the Class C
Certificates which was payable on (the "Distribution Date") in accordance
with the terms and provisions of the Class C Trust Agreement and the Class
C Certificates which Advance is requested to be made on __________, ____.
(3) The amount of the Interest Advance requested hereby (i) is $
_______, to be applied in respect of the payment of the interest which was
due and payable on the Class C Certificates on the Distribution Date, (ii)
does not include any amount with respect to the payment of principal of, or
premium on, the Class A-1 Certificates, the Class A-2 Certificates, the
Class B Certificates or the Class C Certificates, or interest on the Class
A-1 Certificates, the Class A-2 Certificates or the Class B Certificates,
(iii) was computed in accordance with the provisions of the Class C
Certificates, the Class C Trust Agreement and the Intercreditor Agreement
(a copy of which computation is attached hereto as Schedule I), (iv) does
not exceed the Maximum Commitment on the date hereof, (v) does not include
any amount of interest which was due and payable on the Class C
Certificates on such Distribution Date but which remains unpaid due to the
failure of the Depositary to pay any amount of accrued interest on the
Certificates of Deposit on such Distribution Date 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 3.6(b) of the Intercreditor Agreement, (b) no portion
of such amount shall be applied by
<PAGE>
I-2
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 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 Certificate 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 __________, ____.
WILMINGTON TRUST COMPANY,
not in its individual capacity but solely
as Subordination Agent, as Borrower
By:
----------------------------------
Name:
Title:
<PAGE>
SCHEDULE I TO INTEREST ADVANCE NOTICE OF BORROWING
[Insert Copy of Computations in accordance with Interest
Advance Notice of Borrowing]
<PAGE>
Annex II to
Revolving Credit Agreement
NON-EXTENSION ADVANCE NOTICE OF BORROWING
The undersigned, a duly authorized signatory of the undersigned
subordination agent (the "Borrower"), hereby certifies to Morgan Stanley Capital
Services, Inc. (the "Liquidity Provider"), with reference to the Revolving
Credit Agreement (1999-lC) dated as of April 13, 1999, between the Borrower and
the 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 Non-Extension Advance by the Liquidity Provider to be used for the
funding of the Class C Cash Collateral Account in accordance with Section
3.6(d) of the Intercreditor Agreement by reason of (i) the downgrading of
the short-term unsecured debt rating of the Guarantor issued by any Rating
Agency below the Threshold Rating or (ii) the occurrence of a Guarantee
Event, which Advance is requested to be made on __________, ____.
(3) The amount of the Downgrade Advance requested hereby (i) is
$________.____, which equals the Maximum Commitment on the date hereof and
is to be applied in respect of the funding of the Class C Cash Collateral
Account in accordance with Section 3.6(d) of the Intercreditor Agreement,
(ii) does not include any amount with respect to the payment of the
principal of, or premium on, the Class C Certificates, or principal of, or
interest or premium on, the Class A-1 Certificates, the Class A-2
Certificates or the Class B Certificates, (iii) was computed in accordance
with the provisions of the Class C Certificates, the Class C 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 Class C
Cash Collateral Account and apply the same in accordance with the terms of
Section 3.6(d) 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.
<PAGE>
II-2
The Borrower hereby acknowledges that, pursuant to the Liquidity Agreement,
(A) the making of the Non-Extension Advance as requested by this Notice of
Borrowing shall automatically and irrevocably terminate the obligation of the
Liquidity Provider to make further Advances under the Liquidity Agreement; and
(B) following the making by the Liquidity Provider of the Non-Extension 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 __________, ____.
WILMINGTON TRUST COMPANY,
not in its individual capacity but solely
as Subordination Agent, as Borrower
By:
----------------------------------
Name:
Title:
<PAGE>
SCHEDULE I TO NON-EXTENSION ADVANCE NOTICE OF BORROWING
[Insert Copy of computations in accordance with
Non-Extension Advance Notice of Borrowing]
<PAGE>
Annex III to
Revolving Credit Agreement
DOWNGRADE ADVANCE NOTICE OF BORROWING
The undersigned, a duly authorized signatory of the undersigned
subordination agent (the "Borrower"), hereby certifies to Morgan Stanley Capital
Services, Inc. (the "Liquidity Provider"), with reference to the Revolving
Credit Agreement (1999-lC) dated as of April 13, 1999, between the Borrower and
the 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 Liquidity Provider to be used for the
funding of the Class C Cash Collateral Account in accordance with Section
3.6(c) of the Intercreditor Agreement by reason of (i) the downgrading of
the short-term unsecured debt rating of the Guarantor issued by any Rating
Agency below the Threshold Rating or (ii) the occurrence of a Guarantee
Event, which Advance is requested to be made on __________, ____.
(3) The amount of the Downgrade Advance requested hereby (i) is
$________.____, which equals the Maximum Commitment on the date hereof and
is to be applied in respect of the funding of the Class C Cash Collateral
Account in accordance with Section 3.6(c) of the Intercreditor Agreement,
(ii) does not include any amount with respect to the payment of the
principal of, or premium on, the Class C Certificates, or principal of, or
interest or premium on, the Class A-1 Certificates, the Class A-2
Certificates or the Class B Certificates, (iii) was computed in accordance
with the provisions of the Class C Certificates, the Class C 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 Class C
Cash Collateral Account and apply the same in accordance with the terms of
Section 3.6(c) 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.
<PAGE>
III-2
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 Liquidity
Provider to make further Advances under the Liquidity Agreement; and (B)
following the making by the 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 __________, ____.
WILMINGTON TRUST COMPANY,
not in its individual capacity but solely
as Subordination Agent, as Borrower
By:
----------------------------------
Name:
Title:
<PAGE>
SCHEDULE I TO DOWNGRADE ADVANCE NOTICE OF BORROWING
[Insert Copy of computations in accordance with
Downgrade Advance Notice of Borrowing]
<PAGE>
Annex IV to
Revolving Credit Agreement
FINAL ADVANCE NOTICE OF BORROWING
The undersigned, a duly authorized signatory of the undersigned borrower
(the "Borrower"), hereby certifies to Morgan Stanley Capital Services, Inc. (the
"Liquidity Provider"), with reference to the Revolving Credit Agreement
(1999-lC) dated as of April 13, 1999, between the Borrower and the 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 Liquidity Provider to be used for the funding
of the Class C Cash Collateral Account in accordance with Section 3.6(i) of
the Intercreditor Agreement by reason of the receipt by the Borrower of a
Termination Notice from the Liquidity Provider with respect to the
Liquidity Agreement, which Advance is requested to be made on
(3) The amount of the Final Advance requested hereby (i) is
$__________.__, which equals the Maximum Commitment on the date hereof and
is to be applied in respect of the funding of the Class C Cash Collateral
Account in accordance with Section 3.6(i) of the Intercreditor Agreement,
(ii) does not include any amount with respect to the payment of principal
of, or premium on, the Class C Certificates, or principal of, or interest
or premium on, the Class A-1, the Class A-2 Certificates or the Class B
Certificates, (iii) was computed in accordance with the provisions of the
Class C Certificates, the Class C 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 Class C
Cash Collateral Account and apply the same in accordance with the terms of
Section 3.6(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.
<PAGE>
IV-2
(5) The Borrower hereby requests that the Advance requested hereby be
a Base Rate Advance [and that such Base Rate Advance be converted into a
LIBOR Advance on the third Business Day following your receipt of this
notice](1).
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 Liquidity
Provider to make further Advances under the Liquidity Agreement; and (B)
following the making by the 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 ___________, ____.
WILMINGTON TRUST COMPANY,
not in its individual capacity but solely
as Subordination Agent, as Borrower
By:
----------------------------------
Name:
Title:
- ----------
1 Bracketed language may be included at Borrower's option.
<PAGE>
SCHEDULE I TO FINAL ADVANCE NOTICE OF BORROWING
[Insert Copy of Computations in accordance with
Final Advance Notice of Borrowing]
<PAGE>
Annex V to
Revolving Credit Agreement
NOTICE OF TERMINATION
[Date]
Wilmington Trust Company,
as Subordination Agent, as Borrower
One Rodney Square
1100 North Market Street
Wilmington, DE 19890-0001
Attention: Corporate Trust Administration
Revolving Credit Agreement dated as of April 13, 1999, between Wilmington
Trust Company, as Subordination Agent, as agent and trustee for the Atlas Air,
Inc. Pass Through Trust, 1999-lC, as Borrower, and Morgan Stanley Capital
Services, Inc. (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 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 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 3.6(i)
of the Intercreditor Agreement (as defined in the Liquidity Agreement) as a
consequence of your receipt of this notice.
<PAGE>
V-2
THIS NOTICE IS THE "NOTICE OF TERMINATION" PROVIDED FOR UNDER THE LIQUIDITY
AGREEMENT. OUR OBLIGATIONS TO MAKE ADVANCES UNDER THE LIQUIDITY AGREEMENT WILL
TERMINATE ON THE FIFTH BUSINESS DAY AFTER THE DATE ON WHICH YOU RECEIVE THIS
NOTICE.
Very truly yours,
Morgan Stanley Capital Services, Inc.,
as Liquidity Provider
By:
-----------------------------------
Name:
Title:
cc: Wilmington Trust Company, as Class C Trustee
<PAGE>
Annex VI to
Revolving Credit Agreement
NOTICE OF REPLACEMENT SUBORDINATION AGENT
[Date]
Attention:
Revolving Credit Agreement dated as of April 13, 1999, between Wilmington
Trust Company, as Subordination Agent, as agent and trustee for the Atlas Air
Pass Through Trust, 1999-lC, as Borrower, and Morgan Stanley Capital Services,
Inc. (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 8.1 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.
<PAGE>
VI-2
We ask that this transfer be effective as of _______________, ____.
WILMINGTON TRUST COMPANY,
not in its individual capacity but solely
as Subordination Agent, as Borrower
By:
----------------------------------
Name:
Title:
<PAGE>
Exhibit I to
Revolving Credit Agreement
FORM OF GUARANTEE AGREEMENT
April 13, 1999
Atlas Air Pass Through Trust 1999-1B
Ladies and Gentlemen:
In consideration of each of the Revolving Credit Agreement (the
"Agreement") dated as of April 13, 1999 between Morgan Stanley Capital Services
Inc., a Delaware corporation (hereinafter "MSCS") and Wilmington Trust Company
as Subordination Agent, as agent and trustee for the Atlas Air Pass Through
Trust 1999-1B ("Counterparty"), Morgan Stanley Dean Witter & Co., a Delaware
corporation (hereinafter "MSDW"), hereby irrevocably and unconditionally
guarantees to Counterparty, with effect from the date of the Agreement, the due
and punctual payment of all amounts payable by MSCS under the Agreement when the
same shall become due and payable, whether on scheduled payment dates, upon
demand, upon declaration of termination or otherwise, in accordance with the
terms of the Agreement and giving effect to any applicable grace period. Upon
failure of MSCS punctually to pay any such amounts, and upon written demand by
Counterparty to MSDW at its address set forth in the signature block of this
Guarantee (or to such other address as MSDW may specify in writing), MSDW agrees
to pay or cause to be paid such amounts; provided that delay by Counterparty in
giving such demand shall in no event affect MSDW's obligations under this
Guarantee.
MSDW hereby agrees that its obligations hereunder shall be unconditional
and will not be discharged except by complete payment of the amounts payable
under the Agreement, irrespective of any claim as to the Agreement's validity,
regularity or enforceability or the lack of authority of MSCS to execute or
deliver the Agreement; or any change in or amendment to the Agreement; or any
waiver or consent by Counterparty with respect to any provisions thereof; or the
absence of any action to enforce the Agreement or the recovery of any judgment
against MSCS or of any action to enforce a judgment against MSCS under the
Agreement; or any similar circumstance which might otherwise constitute a legal
or equitable discharge or defense of a guarantor generally. MSDW hereby waives
diligence, presentment, demand on MSCS for payment or otherwise (except as
provided hereinabove), filing of claims, requirement of a prior proceeding
against MSCS and protest or notice, except as provided for in the Agreement with
respect to amounts payable by MSCS. If at any time payment under the Agreement
is rescinded or must be otherwise restored or returned by Counterparty upon the
insolvency, bankruptcy or reorganization of MSCS or MSDW or otherwise, MSDW's
obligations hereunder with respect to such payment shall be reinstated upon such
restoration or return being made by Counterparty.
MSDW represents to Counterparty as of the date hereof, which
representations will be deemed to be repeated by MSDW on each date on which a
Transaction is entered into, that:
(1) it is duly organized and validly existing under the laws of the
jurisdiction of its incorporation and has full power and legal right to execute
and deliver this Guarantee and to perform the provisions of this Guarantee on
its part to be performed;
(2) its execution, delivery and performance of this Guarantee have been and
remain duly authorized by all necessary corporate action and do not contravene
any provision of its certificate of incorporation or by-laws or any law,
regulation or contractual restriction binding on it or its assets;
<PAGE>
(3) all consents, authorizations, approvals and clearances (including,
without limitation, any necessary exchange control approval) and notifications,
reports and registrations requisite for its due execution, delivery and
performance of this Guarantee have been obtained from or, as the case may be,
filed with the relevant governmental authorities having jurisdiction and remain
in full force and effect and all conditions thereof have been duly complied with
and no other action by, and no notice to or filing with, any governmental
authority having jurisdiction is required for such execution, delivery or
performance; and
(4) this Guarantee is its legal, valid and binding obligation enforceable
against it in accordance with its terms except as enforcement hereof may be
limited by applicable bankruptcy, insolvency, reorganization or other similar
laws affecting the enforcement of creditors' rights or by general equity
principles.
By accepting this Guarantee and entering into the Agreement, Counterparty
agrees that MSDW shall be subrogated to all rights of Counterparty against MSCS
in respect of any amounts paid by MSDW pursuant to this Guarantee, provided that
MSDW shall be entitled to enforce or to receive any payment arising out of or
based upon such right of subrogation only to the extent that it has paid all
amounts payable by MSCS under the Agreement.
This Guarantee shall be governed by and construed in accordance with the
laws of the State of New York. All capitalized terms not otherwise defined
herein shall have the respective meanings assigned to them in the Agreement.
MORGAN STANLEY DEAN WITTER & CO.
By: /s/ Eileen S. Wallace
--------------------------------
Name: Eileen S. Wallace
Title: Assistant Treasurer
Address: 1585 Broadway
3rd Floor
New York, NY 10036
Attention: Swap Group
Fax No.: (212) 761-0580
April 13, 1999
Atlas Air Pass Through Trust 1999-1C
Ladies and Gentlemen:
In consideration of each of the Revolving Credit Agreement (the
"Agreement") dated as of April 13, 1999 between Morgan Stanley Capital Services
Inc., a Delaware corporation (hereinafter "MSCS") and Wilmington Trust Company
as Subordination Agent, as agent and trustee for the Atlas Air Pass Through
Trust 1999-1C ("Counterparty"), Morgan Stanley Dean Witter & Co., a Delaware
corporation (hereinafter "MSDW"), hereby irrevocably and unconditionally
guarantees to Counterparty, with effect from the date of the Agreement, the due
and punctual payment of all amounts payable by MSCS under the Agreement when the
same shall become due and payable, whether on scheduled payment dates, upon
demand, upon declaration of termination or otherwise, in accordance with the
terms of the Agreement and giving effect to any applicable grace period. Upon
failure of MSCS punctually to pay any such amounts, and upon written demand by
Counterparty to MSDW at its address set forth in the signature block of this
Guarantee (or to such other address as MSDW may specify in writing), MSDW agrees
to pay or cause to be paid such amounts; provided that delay by Counterparty in
giving such demand shall in no event affect MSDW's obligations under this
Guarantee.
MSDW hereby agrees that its obligations hereunder shall be unconditional
and will not be discharged except by complete payment of the amounts payable
under the Agreement, irrespective of any claim as to the Agreement's validity,
regularity or enforceability or the lack of authority of MSCS to execute or
deliver the Agreement; or any change in or amendment to the Agreement; or any
waiver or consent by Counterparty with respect to any provisions thereof; or the
absence of any action to enforce the Agreement or the recovery of any judgment
against MSCS or of any action to enforce a judgment against MSCS under the
Agreement; or any similar circumstance which might otherwise constitute a legal
or equitable discharge or defense of a guarantor generally. MSDW hereby waives
diligence, presentment, demand on MSCS for payment or otherwise (except as
provided hereinabove), filing of claims, requirement of a prior proceeding
against MSCS and protest or notice, except as provided for in the Agreement with
respect to amounts payable by MSCS. If at any time payment under the Agreement
is rescinded or must be otherwise restored or returned by Counterparty upon the
insolvency, bankruptcy or reorganization of MSCS or MSDW or otherwise, MSDW's
obligations hereunder with respect to such payment shall be reinstated upon such
restoration or return being made by Counterparty.
MSDW represents to Counterparty as of the date hereof, which
representations will be deemed to be repeated by MSDW on each date on which a
Transaction is entered into, that:
(1) it is duly organized and validly existing under the laws of the
jurisdiction of its incorporation and has full power and legal right to execute
and deliver this Guarantee and to perform the provisions of this Guarantee on
its part to be performed;
(2) its execution, delivery and performance of this Guarantee have been and
remain duly authorized by all necessary corporate action and do not contravene
any provision of its certificate of incorporation or by-laws or any law,
regulation or contractual restriction binding on it or its assets;
<PAGE>
(3) all consents, authorizations, approvals and clearances (including,
without limitation, any necessary exchange control approval) and notifications,
reports and registrations requisite for its due execution, delivery and
performance of this Guarantee have been obtained from or, as the case may be,
filed with the relevant governmental authorities having jurisdiction and remain
in full force and effect and all conditions thereof have been duly complied with
and no other action by, and no notice to or filing with, any governmental
authority having jurisdiction is required for such execution, delivery or
performance; and
(4) this Guarantee is its legal, valid and binding obligation enforceable
against it in accordance with its terms except as enforcement hereof may be
limited by applicable bankruptcy, insolvency, reorganization or other similar
laws affecting the enforcement of creditors' rights or by general equity
principles.
By accepting this Guarantee and entering into the Agreement, Counterparty
agrees that MSDW shall be subrogated to all rights of Counterparty against MSCS
in respect of any amounts paid by MSDW pursuant to this Guarantee, provided that
MSDW shall be entitled to enforce or to receive any payment arising out of or
based upon such right of subrogation only to the extent that it has paid all
amounts payable by MSCS under the Agreement.
This Guarantee shall be governed by and construed in accordance with the
laws of the State of New York. All capitalized terms not otherwise defined
herein shall have the respective meanings assigned to them in the Agreement.
MORGAN STANLEY DEAN WITTER & CO.
By: /s/ Eileen S. Wallace
--------------------------------
Name: Eileen S. Wallace
Title: Assistant Treasurer
Address: 1585 Broadway
3rd Floor
New York, NY 10036
Attention: Swap Group
Fax No.: (212) 761-0580
- -------------------------------------------------------------------------------
PASS THROUGH TRUST AGREEMENT
Dated as of April 1, 1999
between
ATLAS AIR, INC.
and
WILMINGTON TRUST COMPANY
as Trustee
- -------------------------------------------------------------------------------
<PAGE>
TABLE OF CONTENTS
Page
ARTICLE I
DEFINITIONS
Section 1.01. Definitions...................................................2
Section 1.02. Compliance Certificates and Opinions.........................12
Section 1.03. Form of Documents Delivered to Trustee.......................13
Section 1.04. Directions of Certificateholders.............................13
ARTICLE II
ORIGINAL ISSUANCE OF CERTIFICATES;
ACQUISITION OF THE TRUST PROPERTY
Section 2.01. Amount Unlimited; Issuable in Series.........................15
Section 2.02. Acquisition of Equipment Notes...............................17
Section 2.03. Acceptance by Trustee........................................19
Section 2.04. Limitation of Powers.........................................20
ARTICLE III
THE CERTIFICATES
Section 3.01. Form, Denomination and Execution of Certificates............20
Section 3.02. Authentication of Certificates...............................21
Section 3.03. Temporary Certificates.......................................21
Section 3.04. Transfer and Exchange........................................22
Section 3.05. Book-Entry and Definitive Certificates.......................22
Section 3.06. Mutilated, Destroyed, Lost or Stolen Certificates............24
Section 3.07. Persons Deemed Owners........................................25
Section 3.08. Cancellation.................................................25
Section 3.09. Limitation of Liability for Payments.........................25
<PAGE>
ARTICLE IV
DISTRIBUTIONS; STATEMENTS TO
CERTIFICATEHOLDERS
Section 4.01. Certificate Account and Special Payments Account.............26
Section 4.02. Distributions from Certificate Account and Special
Payments Account...........................................27
Section 4.03. Statements to Certificateholders.............................29
Section 4.04. Investment of Special Payment Moneys.........................30
ARTICLE V
THE COMPANY
Section 5.01. Maintenance of Corporate Existence...........................30
Section 5.02. Consolidation, Merger, Etc...................................30
ARTICLE VI
DEFAULT
Section 6.01. Events of Default............................................32
Section 6.02. Incidents of Sale of Equipment Notes.........................33
Section 6.03. Judicial Proceedings Instituted by Trustee; Trustee
May Bring Suit.............................................34
Section 6.04. Control by Certificateholders................................34
Section 6.05. Waiver of Past Defaults......................................34
Section 6.06. Right of Certificateholders to Receive Payments Not
to Be Impaired.............................................35
Section 6.07. Certificateholders May Not Bring Suit Except Under
Certain Conditions.........................................35
Section 6.08. Remedies Cumulative..........................................36
Section 6.09. Undertaking for Costs........................................36
ARTICLE VII
THE TRUSTEE
Section 7.01. Certain Duties and Responsibilities..........................37
Section 7.02. Notice of Defaults...........................................37
Section 7.03. Certain Rights of Trustee....................................38
Section 7.04. Not Responsible for Recitals or Issuance of Certificates.....39
Section 7.05. May Hold Certificates........................................39
<PAGE>
Section 7.06. Money Held in Trust..........................................39
Section 7.07. Compensation and Reimbursement...............................39
Section 7.08. Corporate Trustee Required; Eligibility......................40
Section 7.09. Resignation and Removal, Appointment of Successor............41
Section 7.10. Acceptance of Appointment by Successor.......................43
Section 7.11. Merger, Conversion, Consolidation or Succession to Business..44
Section 7.12. Maintenance of Agencies......................................44
Section 7.13. Money for Certificate Payments to Be Held in Trust...........45
Section 7.14. Registration of Equipment Notes in Trustee's Name............46
Section 7.15. Representations and Warranties of Trustee....................46
Section 7.16. Withholding Taxes: Information Reporting.....................47
Section 7.17. Trustee's Liens..............................................47
Section 7.18. Preferential Collection of Claims............................47
ARTICLE VIII
CERTIFICATEHOLDERS' LISTS AND REPORTS BY TRUSTEE
Section 8.01. The Company to Furnish Trustee with Names and
Addresses of Certificateholders............................48
Section 8.02. Preservation of Information, Communications to
Certificateholders.........................................48
Section 8.03. Reports by Trustee...........................................48
Section 8.04. Reports by the Company.......................................48
ARTICLE IX
SUPPLEMENTAL AGREEMENTS
Section 9.01. Supplemental Agreements Without Consent of
Certificateholders.........................................49
Section 9.02. Supplemental Agreements with Consent of Certificateholders...51
Section 9.03. Documents Affecting Immunity or Indemnity....................52
Section 9.04. Execution of Supplemental Agreements.........................52
Section 9.05. Effect of Supplemental Agreements............................52
Section 9.06. Conformity with Trust Indenture Act..........................53
Section 9.07. Reference in Certificates to Supplemental Agreements.........53
ARTICLE X
AMENDMENTS TO INDENTURE AND NOTE DOCUMENTS
Section 10.01. Amendments and Supplements to Indenture and Other
Note Documents.............................................53
<PAGE>
ARTICLE XI
TERMINATION OF TRUSTS
Section 11.01. Termination of the Trust.....................................54
ARTICLE XII
MISCELLANEOUS PROVISIONS
Section 12.01. Limitation on Rights of Certificateholders...................55
Section 12.02. Registration of Equipment Notes in Name of Subordination
Agent......................................................55
Section 12.03. Notices......................................................56
Section 12.04. Governing Law................................................57
Section 12.05. Severability of Provisions...................................57
Section 12.06. Trust Indenture Act Controls.................................57
Section 12.07. Effect of Headings and Table of Contents.....................57
Section 12.08. Successors and Assigns.......................................57
Section 12.09. Benefits of Agreement........................................57
Section 12.10. Legal Holidays...............................................58
Section 12.11. Counterparts.................................................58
Section 12.12. Communication by Certificateholders, with Other
Certificateholders.........................................58
Section 12.13. Intention of Parties.........................................58
<PAGE>
Reconciliation and tie between Atlas Air Pass Through Trust Agreement, dated as
of _________ , 1999 and the Trust Indenture Act of 1939. This reconciliation
does not constitute part of the Pass Through Trust Agreement.
Trust Indenture Act Pass Through Trust
of 1939 Section Agreement Section
- ------------------------------------- --------------------------------
310(a)(1) 7.07
(a)(2) 7.07
312(a) 3.05; 8.01; 8.02
313(a) 7.07
314(a) 8.04(a)-(c)
(a)(4) 8.04(d)
(c)(1) 1.02
(c)(2) 1.02
(d)(1) 7.13; 11.01
(d)(2) 7.13; 11.01
(d)(3) 2.01
(e) 1.02
315(b) 7.02
316(a)(last sentence) 1.01(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) 12.05
-i-
<PAGE>
PASS THROUGH TRUST AGREEMENT
This PASS THROUGH TRUST AGREEMENT, dated as of April 1, 1999, the ("Basic
Agreement"), between ATLAS AIR, INC., a Delaware corporation (the "Company"),
and WILMINGTON TRUST COMPANY, a Delaware banking corporation, as Trustee, is
made with respect to the formation from time to time of separate Atlas Air Pass
Through Trusts and the issuance from time to time of separate series of Pass
Through Certificates representing fractional undivided interests in the Trusts.
W I T N E S S E T H:
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 acceptance 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;
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 same 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,
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, has duly authorized the execution and delivery of this Basic
Agreement and each Trust Supplement with respect to all such Certificates and is
under-
<PAGE>
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taking to perform certain administrative and ministerial duties hereunder and is
also undertaking to pay the fees and expenses of the Trustee; and
WHEREAS, this Basic Agreement, as supplemented from time to time, is
subject to the provisions of the Trust Indenture Act of 1939, as amended, 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:
(a) 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;
(b) all other terms used herein which 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;
(c) 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 Agreement;
(d) 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;
(e) 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
<PAGE>
-3-
(f) 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 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, any day other than
a Saturday, a Sunday or a day on which commercial banks are required or
authorized to close in Denver, Colorado, New York, New York, Salt Lake City,
Utah or, so long as any Certificate 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.
<PAGE>
-4-
"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.
"Certificate Owner" means, with respect to the Certificates of any series,
for purposes of Section 3.05, the Person who owns a Book-Entry Certificate of
such series.
"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.
"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 Atlas Air, Inc., a Delaware corporation, or its successor
in interest pursuant to Section 5.02, or (only in the context of provisions
hereof, if any, when such reference is required for purposes of compliance with
the Trust Indenture Act) any other "obligor" (within the meaning of the Trust
Indenture Act) with respect to the Certificates of any series.
"Controlling Party" means the Person entitled to act as such pursuant to
the terms of the 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).
"Equipment Notes" means, with respect to the Certificates of any series,
all of the equipment notes issued under the Indentures related to such series of
Certificates.
<PAGE>
-5-
"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 the Certificates of any
series, 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.
"Fractional Undivided Interest" means the fractional undivided interest in
a Trust that is evidenced by a Certificate relating to such Trust.
"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 having substantially the same terms and
conditions which relates to a Substitute Aircraft, as each such indenture may be
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
Indenture Event of Default (as such term is defined in such Indenture).
"Initial Regular Distribution Date" means, with respect to the Certificate
of any series, the first Regular Distribution Date on which a Scheduled Payment
is to be made.
"Intercreditor Agreement" means any agreement by and among the Trustee, as
trustee hereunder with respect to one or more Trusts, one or more Liquidity
Providers and a Subordination Agent providing, among other things, for the
distribution of payments made in respect of Equipment Notes held by such Trusts.
"Issuance Date" means, with respect to the Certificates of any series, the
date of the issuance of such Certificates.
<PAGE>
-6-
"Lease" means any lease between an Owner Trustee, 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 of any series and the
initial Clearing Agency.
"Liquidity Facility" means, with respect to the Certificates of any series,
any revolving credit agreement, letter of credit or similar facility relating to
the Certificates of such series between a bank or other financial institution
and a Subordination Agent, as amended, replaced, supplemented or otherwise
modified from time to time in accordance with its terms and the terms of any
Intercreditor Agreement.
"Liquidity Provider" means, with respect to the Certificates of any series,
a bank or other financial institution 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 or trust company 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.
"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, Note Purchase Agreement and, if the
related Aircraft is leased to the Company, the related Lease and the related
Owner Trustee's Purchase Agreement.
"Note Purchase Agreement" means, with respect to the Certificates of any
series, any note purchase, refunding, participation or similar agreement
providing for, among other things, the purchase of Equipment Notes by the
Trustee on behalf of the relevant Trust; and "Note Purchase Agreements" means
all such agreements.
"Officer's Certificate" means a certificate signed, (a) in the case of the
Company, by the Chairman or Vice Chairman of the Board of Directors, the
President, any Vice President or the Treasurer of the Company, signing alone, or
(b) in the case of the Trustee or an Owner Trustee or a Loan Trustee, a
Responsible Officer of 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 (i) a senior attorney of the Company
one of whose
<PAGE>
-7-
principal duties is furnishing advice as to legal matters, (ii) Cahill Gordon &
Reindel or (iii) 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, may be such counsel as may be designated by any of them whether or not
such counsel is an employee of any of them, and who shall be reasonably
acceptable to the Trustee.
"Other Agreements" has the meaning specified in Section 6.01(b).
"Outstanding" when used with respect to Certificates of any series, means,
as of the date of determination, all Certificates of such series therefore
authenticated and delivered under this Agreement, except:
(i) Certificates of such series theretofore canceled 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 theretofore deposited with the
Trustee in trust for the Holders of the Certificates 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.
"Owner Trustee's Purchase Agreement" has the meaning, with respect to the
Certificates of any series if the related Aircraft is leased to the Company,
specified therefor in the related Lease.
"Paying Agent" means, with respect to the Certificates of any series, the
paying agent maintained and appointed for the Certificates pursuant to Section
7.12.
<PAGE>
-8-
"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, (i) the original aggregate face amount of the Certificates of any
series less (ii) the aggregate amount of all payments made in respect of such
Certificates other than payments made in respect of interest or premium thereon
or reimbursement of any costs or expenses incurred in connection therewith. The
Pool Balance as of any Distribution Date 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
Distribution Date.
"Pool Factor" means, with respect to any series of Certificates as of any
date, the quotient (rounded to the seventh decimal place) computed by dividing
(i) the Pool Balance of such series as at such date by (ii) the original
aggregate face amount of the Certificates of such series. The Pool Factor as of
any Distribution Date 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 Distribution 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).
<PAGE>
-9-
"Postponement Notice" means, with respect to any Trust or the related
series of Certificates, an Officer's Certificate of the Company signed by an
officer of the Company (1) 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, (2) identifying the amount of the purchase price
of each such Equipment Note and the aggregate purchase price for all such
Equipment Notes, (3) setting forth the reasons for such postponement and (4)
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
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 Note Purchase 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 Note Purchase Agreement).
"Potential Purchaser" has the meaning, with respect to any
Certificateholder, specified in Section 6.01(b).
"PTC Event of Default" means, with respect to the Certificates of any
series, any failure to pay within 10 Business Days of the due date thereof: (i)
the outstanding Pool Balance of such series of Certificates on the date
specified in any Trust Supplement for such payment or (ii) interest due on the
Certificates of such series on any Distribution Date (unless the related
Subordination Agent shall have made an Interest Drawing or Drawings (as defined
in the related Intercreditor Agreement), or a withdrawal or withdrawals pursuant
to a cash collateral account under such Intercreditor Agreement, with respect
thereto in an aggregate amount sufficient to pay such interest and shall have
distributed such amount to the Trustee).
"Purchasing Certificateholder" has the meaning, with respect to any
Certificateholder, specified in Section 6.01(b).
"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, 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.
"Register" and "Registrar" means, each with respect to the Certificates of
any series, the register maintained and the registrar appointed pursuant to
Sections 3.04 and 7.12.
"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 Agree-
<PAGE>
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ment, until payment of all the Scheduled Payments to be made under the Equipment
Notes held in the Trust have been made.
"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 of the
Trustee, Loan Trustee or Owner Trustee or any other officer customarily
performing functions similar to those performed by the persons who at the time
shall be such officers, respectively, or to whom any corporate trust matter is
referred because of his knowledge of and familiarity with a particular subject.
"Responsible Party" means, with respect to the Certificates of any series,
the person designated as such in the related Trust Supplement.
"Scheduled Payment" means, with respect to any Equipment Note, (i) any
payment 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 of the date on which such payment is scheduled to be made) or
(ii) any payment of interest on the Certificates with funds drawn under the
Liquidity Facility for such series, which payment represents the installment of
principal on such Equipment Note 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, 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 after the execution of this instrument 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(b).
"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 (i) any payment (other than a Scheduled Payment) in
respect of, or any proceeds of, any Equipment Note or Trust Indenture Estate (as
defined in
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each Indenture), (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 or agencies thereof, (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, a division of The McGraw-Hill Companies, Inc., (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 $100,000,000 which banks or their holding
companies have a rating of A or its equivalent by Moody's Investors Service,
Inc. or Standard & Poor's Ratings Services, a division of The McGraw-Hill
Companies, Inc.; 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) U.S. dollar-denominated offshore
certificates of deposit issued by, or offshore time deposits with, any
commercial bank described in clause (iii) above or any subsidiary thereof and
(v) repurchase agreements with any financial institution having combined capital
and surplus of at least $100,000,000 with any of the obligations described in
clauses (i) through (iv) above 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.
"Subordination Agent" has the meaning specified therefor in any
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 assigned to that term or any of the terms
"Delivery Date", "Funding Date" or "Closing Date" in a Note Purchase 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 Note Purchase Agreement.
"Triggering Event" has the meaning specified therefor in any Intercreditor
Agreement.
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"Trust" means, with respect to the Certificates of any series, the trust
under this Agreement.
"Trustee" means Wilmington Trust Company, or its successor in interest, and
any successor or other trustee appointed as provided herein.
"Trust Indenture Act", except as otherwise provided in Section 9.06, means,
with respect to any particular Trust, the United States Trust Indenture Act of
1939, as in force at the date as of which the related Trust Supplement was
executed.
"Trust Property" means, with respect to any Trust, (i) subject to any
related Intercreditor Agreement, the Equipment Notes held as the property of the
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 related Escrow
Account, the related Certificate Account and the related Special Payments
Account and, subject to the related Intercreditor Agreement, any proceeds from
the sale by the Trustee pursuant to Article VI hereof of any such Equipment
Note, (iii) all rights of the Trust and the Trustee, on behalf of the Trust,
under the Intercreditor Agreement, including, without limitation, all monies
receivable in respect of such rights and (iv) all monies receivable under any
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.
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 signers, all conditions
precedent, if any, provided for in this Basic Agreement or this Agreement
relating to the proposed action have been complied with and (ii) an Opinion of
Counsel stating that in the opinion of such counsel all such conditions
precedent, if any, have been complied with, 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 Certificate
of any series,
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this Agreement (other than a certificate provided pursuant to Section 8.04(d))
or any Trust Supplement shall include:
(a) 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;
(b) 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;
(c) 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 complied with; and
(d) a statement as to whether, in the opinion of each such individual,
such condition or covenant has been complied with.
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 this Agreement, they may, but need
not, be consolidated and form one instrument.
Section 1.04. Directions of Certificateholders. (a) Any direction, consent,
request, demand, authorization, notice, waiver or other action provided by this
Agreement 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 hereby 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
<PAGE>
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agent or proxy shall be sufficient for any purpose of this Trust 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 or
any Affiliate thereof shall be disregarded and deemed not to be Outstanding for
purposes of any such determination. In determining whether the Trustee shall be
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 (ii) if any
amount of Certificates of any series so 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 or any
Affiliate thereof.
(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 record of the applicable series 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 shall be computed as of such record date; provided, however, that
no such Direction by the Certificateholders on such rec-
<PAGE>
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ord date shall be deemed effective unless it shall become effective pursuant to
the provisions of this Agreement not later than one year after such record date.
(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 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.
ARTICLE II
ORIGINAL ISSUANCE OF CERTIFICATES;
ACQUISITION OF THE TRUST PROPERTY
Section 2.01. Amount Unlimited; Issuable in Series. (a) The aggregate
principal amount of Certificates which 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 specified in the related Trust
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 contained in any
Intercreditor Agreement, 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 among 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
<PAGE>
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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) any limit upon the aggregate principal amount of the Certificates
of such series which may be authenticated and delivered (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 and 3.06);
(4) the Cut-off Date with respect to the Certificates of such series;
(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 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 3.02, the denominations in
which the Certificates of such series shall be issuable;
(9) if other than United States dollars, the currency or currencies
(including currency units) in which the Certificates of such series shall
be denominated;
(10) the specific form of the Certificates of such series (including
the interest 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 (or, in the case of any Certificates denominated in
a currency other than United States dollars and if other than as provided
in Section 3.05, whether and the circumstances under which beneficial
owners of interests in such Certificates in permanent global form may
exchange such interests for Certificates of such series and of like tenor
of any authorized form and denomination);
<PAGE>
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(11) a description of the Equipment Notes to be acquired and held in
the related Trust and of the related Aircraft and Note Documents;
(12) provisions with respect to the terms for which the definitions
set forth in Article I hereof or the terms of Section 11.01 hereof permit
or require further specification in the related Trust Supplement;
(13) any restrictions (including legends) in respect of ERISA;
(14) whether such series will be subject to an Intercreditor Agreement
and, if so, the specific designation of such Intercreditor Agreement;
(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 or other arrangement
prior to the delivery of one or more Aircraft and, if so, any terms
appropriate thereto; and
(17) any other terms of the Certificates of such series (which terms
shall not be inconsistent with the provisions of the Trust Indenture Act),
including any terms of the Certificates of such series which may be
required or advisable under United States laws or regulations or advisable
in connection with the marketing of Certificates of the series.
(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
Note Purchase Agreements in the form delivered to the Trustee by the Company and
shall, subject to the respective terms thereof, perform its obligations under
such Note Purchase Agreements. 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 Note Purchase Agreements and, concurrently
therewith, the Trustee shall purchase, pursuant to the terms and conditions of
the Note Purchase Agreements, such Equipment Notes at a purchase
<PAGE>
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price equal to the amount of such consideration so received. Except as provided
in Sections 3.03, 3.04 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 shall deliver 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 such
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 by the Trustee at the written
direction and risk of, and for the benefit of, the Responsible Party in
Specified Investments (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 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 Note Purchase Agreements on or prior to
the related Cut-off Date, the Trustee shall purchase the applicable Postponed
Notes with the Escrowed Funds withdrawn from the Escrow Account. The purchase
price shall equal the principal amount of such Postponed Notes.
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.
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 losses on such Specified Investments as incurred. On the
Initial Regular Distribution Date in respect of the Certificates of any series,
the Responsible Party will pay (in immediately available funds) to the Trustee
an amount equal to the interest that would have accrued on any Postponed Notes
with respect to such Certificates, if any, purchased after the Issuance Date if
such Postponed Notes had been purchased on the Issuance Date, from the Issuance
Date to, but not including, the date of the purchase of such Postponed Notes by
the Trustee.
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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 to the Trustee for deposit in
the related Special Payments Account, in immediately available funds, an amount
equal to the interest that would have accrued on the Postponed Notes designated
in such notice at a rate equal to the interest rate applicable to such
Certificates from the Issuance Date 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 such 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 at a rate equal to
the interest rate applicable to such Certificates from the Issuance Date 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, upon 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 Note Purchase Agreements and shall declare that the Trustee holds
and will hold all 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.
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Section 2.04. Limitation of Powers. The Trust is 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, the Trustee shall not
be authorized or empowered to acquire any other investments or engage in any
other activities and, in particular, 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 respective 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. 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 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 respective 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 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.
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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) On the Issuance Date, the
Trustee shall duly execute, authenticate and deliver Certificates of each series
in authorized denominations equalling in the aggregate the aggregate principal
amount of the Equipment Notes that may be purchased by the Trustee pursuant to
the related Note Purchase 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 the manual signature of one of
its authorized signatories, 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 each series but
may have insertions, substitutions, omissions and other variations determined to
be appropriate by the officers executing the temporary Certificates of each
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 each series to be prepared without unreasonable
delay. After the preparation of definitive Certificates of each series, the
temporary Certificates shall be exchangeable for definitive Certificates upon
surrender of the temporary Certificates at 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, the temporary Certificates shall be entitled to the same benefits
under this Agreement as definitive Certificates.
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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 of this Agreement 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 the 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
Certificate 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 similar governmental charge that may be
imposed in connection with any transfer or exchange of Certificates.
Certificates surrendered for registration of transfer or exchange shall be
canceled and subsequently destroyed by the Trustee.
Section 3.05. Book-Entry and Definitive Certificates.
(a) The Certificates of any series may be issued 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 nomi-
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nee 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 above and in Subsection (d)
below. As to the Certificates of any series, unless and until definitive, fully
registered Certificates (the "Definitive Certificates") have been issued
pursuant to Subsection (d) below:
(i) the provisions of this Section 3.05 shall be in full force and
effect;
(ii) the Company, the Paying Agent, the Registrar and the Trustee may
deal with the Clearing Agency Participants for all purposes (including the
making of distributions on the Certificates) as the authorized
representatives of the Certificate Owners;
(iii) 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;
(iv) 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; and
(v) 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. The Trustee shall have no obligation to
determine whether the Clearing Agency has in fact received any such
instructions.
(b) Whenever notice or other communication to the Certificateholders of
such 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.
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(c) Unless and until Definitive Certificates of a series are issued
pursuant to Subsection (d) below, 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.
(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 Person
in whose name 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) Except as otherwise provided in the related Trust Supplement, the
Trustee shall enter into the applicable Letter of Representations with respect
to such series of Certificates and fulfill its responsibilities thereunder.
(f) 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.
Section 3.06. Mutilated, Destroyed, Lost or Stolen Certificates. If (a) 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 (b) there is delivered to the
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Registrar and the Trustee such security, indemnity or bond, as may be required
by them to save each of them 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 bona fide purchaser, 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 may 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 shall be 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 Trustee, the Registrar and any
Paying Agent may treat the Person in whose name any Certificate is registered
(as of the day of determination) as the owner of such Certificate for the
purpose of receiving distributions pursuant to Article IV and for all other
purposes whatsoever, and none of the Trustee, the Registrar or any Paying Agent
shall be affected by any notice to the contrary.
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 canceled 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.
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 shall have sufficient
income or proceeds from the Trust Property to make such pay-
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ments 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, the Liquidity Providers, the Owner Trustees or
the Owner Participants, except as otherwise expressly provided herein or in the
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 (except as otherwise expressly provided
herein).
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. On each day when a Scheduled
Payment is made to the Trustee (under the Intercreditor Agreement, if
applicable) with respect to the Certificates of such series, the Trustee, upon
receipt thereof, shall immediately deposit the aggregate amount of such
Scheduled Payment in such 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. On each day when one
or more Special Payments are made to the Trustee (under the Intercreditor
Agreement, if applicable) with respect to the Certificates of such series, the
Trustee, upon receipt thereof, shall immediately deposit the aggregate amount of
such Special Payments in such Special Payments Account.
(c) The Trustee shall present (or, if applicable, cause the Subordination
Agent to present) to the related Loan Trustee of each Equipment Note such
Equipment Note on the date of its stated final maturity or, in the case of any
Equipment Note which is to be redeemed
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in whole pursuant to the related Indenture, on the applicable redemption date
under such Indenture.
Section 4.02. Distributions from Certificate Account and Special Payments
Account. (a) On each Regular Distribution Date with respect to a series of
Certificates or as soon thereafter as the Trustee has confined receipt of the
payment of all or any part of the Scheduled Payments due on the Equipment Notes
held (subject to the Intercreditor Agreement) 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 Fractional Undivided Interest
in the 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) 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
(subject to the Intercreditor Agreement) 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 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).
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(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 at his address as it appears in the Register. 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. In the event
that the Trustee receives a notice from the Company that Postponed Notes will
not be purchased by the Trustee pursuant to Section 2.02, 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
Payment or (if such 15th day is not practicable) as soon as practicable
thereafter. In the event that any Special Payment is to be made pursuant to the
last paragraph of Section 2.02(b) hereof, there 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), notice of such Special Payment stating the
Special Distribution Date for such Special Payment, which shall occur 15 days
after the date of such notice of such Special Payment (or, if such 15th day is
not practicable, as soon as practicable thereafter). In the case of any other
Special Payments, such notice shall be mailed as soon as practicable after the
Trustee has confirmed that it has received funds for such Special Payment,
stating the Special Distribution Date for such Special Payment which shall occur
not less than 15 days after the date of such notice and as soon as practicable
thereafter. Notices mailed by the Trustee 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;
(iv) whether such Special Payment may be cancelled or such Special
Distribution Date may be postponed and if so, the conditions under which
the Special Payment may be cancelled or such Special Distribution Date may
be postponed; and
(v) if the Special Distribution Date is the same date as a Regular
Distribution Date for the Certificates, the total amount to be received on
such date for each $1,000 face amount Certificate.
If the amount of (i) 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 Pay-
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ment, 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 of the Equipment Notes held in any Trust is cancelled or
postponed, the Trustee, as soon as possible after learning thereof, shall cause
notice thereof to be mailed to each Certificateholder 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 of a Scheduled Payment or Special Payment, as the case may be,
to Certificateholders of the related series a statement setting forth the
information provided below. Such statement shall set forth (per $1,000 aggregate
principal amount of Certificate as to (i) and (ii) below) the following
information:
(i) the amount of such distribution hereunder allocable to principal
and the amount allocable to premium, if any;
(ii) the amount of such distribution under this Agreement allocable to
interest;
(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 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. On each Distribution Date, the 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 Participant for
forwarding to holders of interests in 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, 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 shall 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
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Trustee to such Clearing Agency Participants to be available for forwarding by
such Clearing Agency Participants to the holders of interests in the
Certificates in the manner described in Section 4.03(a).
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 in Permitted Investments by 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. 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.
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 shall determine that the preservation thereof is no
longer desirable in the conduct of the business of the Company.
Section 5.02. Consolidation, Merger, Etc. The Company shall not consolidate
with or merge into any other corporation or convey, transfer or lease
substantially all of its assets as an entirety to any Person unless:
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(a) 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 (i) organized and validly existing under the laws of the United States
of America or any state thereof or the District of Columbia, (ii) a
"citizen of the United States" as defined in 49 U.S.C. ss. 40102(a)(15), as
amended, and (iii) a United States certificated air carrier, if and so long
as such status is a condition of entitlement to the benefits of Section
1110 of the Bankruptcy Reform Act of 1978, as amended (11 U.S.C. ss. 1110),
with respect to the Leases or the Aircraft owned by the Company;
(b) the corporation formed by such consolidation or into which the
Company is merged or the Person which acquires by conveyance, transfer or
lease substantially all of the assets of the Company as an entirety shall
execute and deliver to the Trustee applicable to the Certificates of each
series a duly authorized, valid, binding and enforceable agreement in form
and substance reasonably satisfactory to the Trustee containing an
assumption by such successor corporation or Person of the due and punctual
performance and observance of each covenant and condition of the Note
Documents, of the Note Purchase Agreement and of this Agreement applicable
to the Certificates of each series to be performed or observed by the
Company; and
(c) the Company shall have delivered to the Trustee an Officer's
Certificate of the Company and an Opinion of Counsel of the Company
reasonably satisfactory to the Trustee, each stating that such
consolidation, merger, conveyance, transfer or lease and the assumption
agreement mentioned in clause (b) above comply with this Section 5.02 and
that all conditions precedent herein provided for relating to such
transaction have been complied with.
Upon any consolidation or merger, or any conveyance, transfer or lease of
substantially all of the assets of the Company as an entirety in accordance with
this Section 5.02, the successor corporation or Person formed by such
consolidation or into which the 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, the Company under this Agreement applicable
to the Certificates of each series with the same effect as if such successor
corporation or Person had been named as the Company herein. No such conveyance,
transfer or lease of substantially all of the assets of the Company as an
entirety shall have the effect of releasing the Company or any successor
corporation or Person which shall have become such in the manner prescribed in
this Section 5.02 from its liability in respect of this Agreement, the Note
Purchase Agreement and any Note Document applicable to the Certificates of such
series to which it is a party.
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ARTICLE VI
DEFAULT
Section 6.01. Events of Default. (a) Exercise of Remedies. Upon the
occurrence and during the continuation of any Indenture Event of Default under
any Indenture, the Trustee may (i) to the extent it is the Controlling Party at
such time (as determined pursuant to the Intercreditor Agreement), direct the
exercise of remedies as provided in the Intercreditor Agreement and (ii) if
there is no related Intercreditor Agreement, direct the exercise of remedies or
take other action as provided in the relevant Indenture to the extent that it
may do so as the holder of the Equipment Notes issued under such Indenture and
held in the related Trust.
(b) Purchase Rights of Certificateholders: 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") will 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 shall be equal to
the Pool Balance of the Certificates of such series, together with accrued and
unpaid interest thereon to the date of such purchase, without premium, but
including any other amounts then due and payable to the Certificateholders of
such series under this Agreement, any related Intercreditor Agreement or any
other Note Document or on or in respect of the Certificates of such series;
provided, however, that if such purchase occurs after a Record Date, such
purchase price shall be reduced by the amount to be distributed hereunder on the
related Distribution Date (which deducted amounts shall remain distributable to,
and may be retained by, the Certificateholder as of such Record Date); provided,
further, that no such purchase of Certificates of such series shall be effective
unless the purchasing Certificateholder (each, a "Purchasing Certificateholder"
and, collectively, the "Purchasing Certificateholders") shall certify to the
Trustee that contemporaneously with such purchase, one or more Purchasing
Certificateholders are purchasing, pursuant to the terms of this Agreement and
the other Agreements, if any, relating to the Certificates of a series that are
subject to the same Intercreditor Agreement (such other Agreements, the "Other
Agreements"), the Certificates of each such series that the Trust Supplement
applicable to the Certificates held by the Purchasing Certificateholder
specifies may be purchased by such Purchasing Certificateholder. Each payment of
the purchase price of the Certificates of any series 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 6.01. 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 Trig-
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gering Event, it will, upon payment of the purchase price specified herein by
one or more Purchasing Certificateholders, forthwith sell, assign, transfer and
convey to 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, the 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, the 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:
(a) 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.
(b) Receipt of Trustee Shall Discharge Purchaser. The receipt of the
Trustee making such sale shall be a sufficient discharge to any purchaser
for his 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 nonapplication
thereof.
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(c) 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.
Section 6.03. Judicial Proceedings Instituted by Trustee; Trustee May Bring
Suit. If there shall be 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
shall be 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 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), 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.
Section 6.04. Control by Certificateholders. Subject to Section 6.03 and
the 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 the Trust or pursuant to the terms of the
Intercreditor Agreement, or exercising any trust or power conferred on the
Trustee under this Agreement or the Intercreditor Agreement, 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, however, that
(a) 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,
(b) 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, and
(c) the Trustee may take any other action deemed proper by the Trustee
which is not inconsistent with such Direction.
Section 6.05. Waiver of Past Defaults. Subject to any related Intercreditor
Agreement, the Certificateholders holding Certificates of a series evidencing
Fractional Undi-
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vided Interests aggregating not less than a majority in interest in the Trust
(i) may on behalf of all of the Certificateholders waive any past 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 Event of Default under any related Indenture and its
consequences except a default:
(a) 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
(b) in the payment of the principal of (premium, if any) or interest
on the Equipment Notes held in the related Trust, or
(c) 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 a 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 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.
Section 6.06. Right of Certificateholders to Receive Payments Not To Be
Impaired. Anything in this Agreement to the contrary notwithstanding, including,
without limitation, Section 6.07 hereof, 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 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:
(a) such Certificateholder previously shall have given written notice
to the Trustee of a continuing Event of Default;
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(b) 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);
(c) 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
(d) 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 Trust.
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 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 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 herein
provided and for the equal, ratable and common benefit of all the
Certificateholders of such series subject to the provisions of this Agreement.
Section 6.08. Remedies Cumulative. Every remedy given hereunder to the
Trustee or to any of the Certificateholders of any series shall not be exclusive
of any other remedy or remedies, and every such remedy shall be cumulative and
in addition to every other remedy given hereunder or now or hereafter given by
statute, law, equity or otherwise.
Section 6.09. Undertaking for Costs. 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; provided, however, that neither
this Section 6.09 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.
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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, the Trustee undertakes
to perform such duties in respect of the Trust as are specifically set forth in
this Agreement, and no implied covenants or obligations shall be read into this
Agreement against the Trustee.
(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 the Trust, and use the same degree of care
and skill in their exercise, as a prudent man would exercise or use under the
circumstances in the conduct of his own affairs.
(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
(i) this Subsection shall not be construed to limit the effect of
Subsection (a) of this Section 7.01; and
(ii) 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.
(d) 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 transmit by
mail to the Company, any related Owner Trustees, any related Owner Participants,
the related Loan Trustees and the Certificateholders holding Certificates of the
related series in accordance with Section 313(c) of the Trust Indenture Act,
notice of such default hereunder known to the Trustee, unless such default shall
have been cured or waived; 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. For the purpose of this Section 7.02 in respect of any
Trust, the term
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"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.
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 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;
(c) whenever in the administration of this Agreement or the
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 the Intercreditor Agreement, unless the
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
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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.
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, the Certificates of any series, and 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, the Note
Purchase Agreement, and each Intercreditor Agreement 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 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.
Section 7.07. Compensation and Reimbursement. The Company agrees:
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(a) to pay, or cause to be paid, to the Trustee from time to time
reasonable compensation for all services rendered by it hereunder (which
compensation shall not be limited by any provision of law in regard to the
compensation of a trustee of an express trust); and
(b) except as 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 or any Intercreditor Agreement (including
the reasonable compensation and the expenses and disbursements of its
agents and counsel), except any such expense, disbursement or advance as
may be attributable to its 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.
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 any 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 the 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 may seek
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 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 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, any state or territory
thereof or of the District of Columbia and having a combined capital and surplus
of at least $75,000,000). If 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
corporation shall be deemed to be its combined capital and surplus as set forth
in its most recent report of conditions so published.
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In case at any time the Trustee shall cease 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.
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 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, the
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,
the 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 by Direction of the
Certificateholders of the related series holding Certificates evidencing
Fractional Undivided Interests aggregating not less than a majority in interest
in such Trust delivered to the Trustee and to the Company, the related Owner
Trustees and the related Loan Trustees.
(d) If at any time in respect of the Trust:
(i) the Trustee shall fail to comply with Section 310 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
(ii) the Trustee shall cease to be eligible under Section 7.08 and
shall fail to resign after written request therefor by the Company or by
any such Certificateholder; or
(iii) the Trustee shall become incapable of acting or shall be
adjudged a bankrupt or insolvent, or a receiver of the Trustee or of its
property shall be 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 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 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 the Trust.
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(e) If a Responsible Officer of the Trustee shall obtain 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, resign as Trustee of such Trust
hereunder unless within such 30-day period the Trustee shall have received
notice that the Company has agreed to pay such tax. The Company shall promptly
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) such Trust Property,
(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 Trustee were located in another state, or
jurisdiction within a state, within the United States of America. A tax shall
not be an Avoidable Tax in respect of any Trust if the Company or any Owner
Trustee shall agree 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, the related Owner Trustees, the related Loan Trustee
and the retiring Trustee, then the successor Trustee 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 and supersede the successor Trustee appointed as provided
above. If no successor Trustee shall have been so appointed 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.
(g) The successor Trustee shall give notice of the resignation and removal
of the Trustee and appointment of the successor Trustee by mailing written
notice of such event by first-class mail, postage prepaid, to 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.
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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 an instrument accepting such appointment, and thereupon the
resignation or removal of the retiring Trustee 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;
but, 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. 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 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 Trustee hereunder unless
at the time of such acceptance such institution shall be qualified and eligible
under this Article VII.
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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, however,
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.
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, however,
that, if it shall be necessary that the Trustee maintain an office or agency in
another location with respect to the Certificates (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 or trust company, shall be a corporation organized and doing
business under the laws of the United States or any state, with a combined
capital and surplus of at least $75,000,000, or a corporation having a combined
capital and surplus in excess of $5,000,000, the obligations of which are
guaranteed by a corporation organized and doing business under the laws of the
United States or any state, 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 shall
furnish to the Trustee, at stated intervals of not more than six months, and at
such
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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 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.
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
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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, the Trustee agrees that all
Equipment Notes to be purchased by any Trust and Permitted Investments, if any,
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 or Permitted
Investments, as the case may be, in the register of the issuer of such Equipment
Notes or Permitted Investments, as the case may be.
Section 7.15. Representations and Warranties of Trustee. The Trustee hereby
represents and warrants that:
(a) the Trustee is a Delaware banking corporation organized and
validly existing in good standing under the laws of the State of Delaware;
(b) the Trustee has full power, authority and legal right to execute,
deliver and perform this Agreement, any Intercreditor Agreement and the
Note Purchase Agreements and has taken all necessary action to authorize
execution, delivery and performance by it of this Agreement, any
Intercreditor Agreement and the Note Purchase Agreements.
(c) the execution, delivery and performance by the Trustee of this
Agreement, any Intercreditor Agreement and the Note Purchase Agreements (i)
will not violate any provision of any United States federal law or the law
of the state of the United States where it is located governing 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, 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, which violation, default or lien could reasonably be expected
to have an adverse effect on the Trustee's performance or ability to
perform its duties hereunder or thereunder or on the transactions
contemplated herein or therein;
(d) the execution, delivery and performance by the Trustee of this
Agreement, any Intercreditor Agreement and the Note Purchase Agreements
will not require the authorization, consent, or approval of, the giving of
notice to, the filing or registration
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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 it is located regulating the banking and corporate trust activities
of the Trustee; and
(e) this Agreement, any Intercreditor Agreement and the Note Purchase
Agreements have been duly executed and delivered by the Trustee and
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.
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, 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 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.
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ARTICLE VIII
CERTIFICATEHOLDERS' LISTS AND REPORTS BY TRUSTEE
Section 8.01. The Company to Furnish Trustee with Names and Addresses of
Certificateholders. The Company will furnish to the Trustee within 15 days after
each Record Date with respect to a Scheduled Payment, 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 each series, in each case as of a
date not more than 15 days prior to the time such list is 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, however, 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 Section 313(a) of the Trust Indenture
Act.
Section 8.04. Reports by the Company. The Company shall:
<PAGE>
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(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;
(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, including, in the case of
annual reports, if required by such rules and regulations, certificates or
opinions of independent public accountants, conforming to the requirements
of Section 1.02;
(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, 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 knowledge of the
Company's compliance with all conditions and covenants under this Agreement
(it being understood that for purposes of this paragraph (d), such
compliance shall be determined without regard to any period of grace 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 the Certificateholders, the Company
may (but will not be required
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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 or a
Liquidity Facility, in form satisfactory to the Trustee, for any of the
following purposes:
(a) to provide for the formation of a Trust, the issuance of a series
of Certificates and other matters contemplated by Section 2.01; or
(b) to evidence the succession of another corporation to the Company
and the assumption by any such successor of the covenants of the Company
herein contained or of the Company's obligations under any Intercreditor
Agreement or any Liquidity Facility; or
(c) 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 Intercreditor Agreement
or any Liquidity Facility; or
(d) to correct or supplement any provision in this Agreement, any
Intercreditor Agreement or any Liquidity Facility which may be defective or
inconsistent with any other provision herein or therein or to cure any
ambiguity or to modify any other provision with respect to matters or
questions arising under this Agreement, any Intercreditor Agreement or any
Liquidity Facility, provided, however, that any such action shall not
materially adversely affect the interests of the Certificateholders of any
series; to correct any mistake in this Agreement, any Intercreditor
Agreement or any Liquidity Facility; or, as provided in any Intercreditor
Agreement, to give effect to or provide for a Replacement Liquidity
Facility (as defined in the Intercreditor Agreement); or
(e) to comply with any requirement of the SEC, any applicable law,
rules or regulations of any exchange or quotation system on which the
Certificates of any series are listed or of any regulatory body; or
(f) 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, any
Intercreditor Agreement or any Liquidity Facility (including any
supplemental agreement) 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
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(g) to evidence and provide for the acceptance of appointment under
this Agreement, any Intercreditor Agreement or any Liquidity Facility by a
successor Trustee 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, pursuant to the requirements of
Section 7.10; or
(h) to provide the information required under Section 7.12 and Section
12.04 as to the Trustee; or
(i) to make any other amendments or modifications hereto, provided,
however, that such amendments or modifications shall apply to Certificates
of any series to be thereafter issued;
provided, however, that no such supplemental agreement shall adversely
affect the status of any Trust as a grantor trust under Subpart E, Part I
of Subchapter J of Chapter 1 of Subtitle A of the Internal Revenue Code of
1986, as amended, for U.S. 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 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 the
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:
(a) 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, 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
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(b) permit the disposition of any Equipment Note included in the Trust
Property of such Trust except as permitted by this Agreement, or otherwise
deprive such Certificateholder of the benefit of the ownership of the
Equipment Notes in such Trust; or
(c) alter the priority of distributions specified in the Intercreditor
Agreement in a manner materially adverse to the interests of the
Certificateholders of any series; or
(d) reduce the specified percentage of the aggregate Fractional Undivided
Interests of such Trust that is required for any such supplemental
agreement, or reduce such specified percentage required for any waiver (of
compliance with certain provisions of this Agreement or certain defaults
hereunder and their consequences) provided for in this Agreement; or
(e) modify any of the provisions of this Section 9.02 or Section 6.05,
except to increase any such percentage or to provide that certain other
provisions of this Agreement cannot be modified or waived without the
consent of the Certificateholder of each Certificate of such series
affected thereby.
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 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, this Basic
Agreement shall be modified in accordance therewith, and such supplemental
agreement shall form a part of this Basic 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.
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Section 9.06. Conformity with Trust Indenture Act. Every supplemental
agreement executed pursuant to this Article 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
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 INDENTURE AND NOTE DOCUMENTS
Section 10.01. Amendments and Supplements to Indenture and Other Note
Documents. In the event that the Trustee, as holder (or beneficial owner through
the 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, other
Note Document or any other related document, 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
as 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 amounts
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 Cer-
<PAGE>
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tificates 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 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
property held as part of the Trust Property of such Trust; provided, however,
that in no event shall the Trust continue beyond one hundred ten (110) years
following the date of the execution of the Trust Supplement with respect to such
Trust (or such other final expiration date as may be specified in such Trust
Supplement).
Notice of any termination of a Trust, specifying the applicable Regular
Distribution Date (or the 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 of days and not later than 15 days preceding
such final distribution specifying (A) 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, (B) the amount of any such proposed final payment, and (C) 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 pres-
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entation and surrender of the Certificates of such series at the office or
agency of the Trustee therein specified. In the event that a notice of
termination shall be given in connection with the termination of a Lease, the
Special Distribution Date may be postponed for up to 10 Business Days. 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. In the
event that any money held by the Trustee for the payment of distributions on the
Certificates of such series shall remain 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 the related Owner Trustees, the Owner
Participants and the Company.
ARTICLE XII
MISCELLANEOUS PROVISIONS
Section 12.01. Limitation on Rights of Certificateholders. The 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 the parties
hereto or any of them.
Section 12.02. Registration of Equipment Notes in Name of Subordination
Agent. If the Trust is party to an Intercreditor Agreement, the Trustee agrees
that all Equipment Notes to be purchased by such Trust shall 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
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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 12.03. Notices. (a) Unless otherwise specifically provided herein
or in the applicable Trust Supplement, all notices required 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 United States mail, courier
service or telecopy, and any such notice shall be effective when delivered or
received or, if mailed, three days after deposit in the United States mail with
proper postage for ordinary mail prepaid,
(i) if to the Company:
Atlas Air, Inc.
538 Commons Drive
Golden, CO 80401
Attention: Chief Financial Officer
Facsimile: (303) 526-5051
(ii) if to the Trustee:
Wilmington Trust Company
One Rodney Square
1100 N. Market Street
Wilmington, DE 19890-0001
Attention: Corporate Trust Department
Facsimile: (302) 651-8882
(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
within the time prescribed, it is conclusively presumed to have been duly given,
whether or not the addressee receives it.
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(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) Notwithstanding the foregoing, all communications or notices to the
Trustee shall be deemed to be given only when received by a Responsible Officer
of the Trustee.
(g) 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, Owner Trustee or Loan Trustee.
Section 12.04. Governing Law. THIS BASIC AGREEMENT HAS BEEN DELIVERED IN
THE STATE OF NEW YORK AND, TOGETHER WITH ALL TRUST SUPPLEMENTS AND CERTIFICATES,
SHALL BE CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK AND THE
OBLIGATIONS, RIGHTS AND REMEDIES OF THE PARTIES HEREUNDER SHALL BE DETERMINED IN
ACCORDANCE WITH SUCH LAWS.
Section 12.05. Severability of Provisions. If any one or more of the
covenants, agreements, provisions or terms of this Agreement shall be for any
reason whatsoever held invalid, then such covenants, agreements, provisions, or
terms shall be deemed severable from the remaining covenants, agreements,
provisions or terms of this Agreement and shall in no way affect the validity or
enforceability of the other provisions of this Agreement or the related Trust,
or of the Certificates of such series or the rights of the Certificateholders
thereof.
Section 12.06. Trust Indenture Act Controls. This Agreement is subject to
the provisions of the Trust Indenture Act and shall, to the extent applicable,
be governed by such provisions. 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.
Section 12.07. 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 12.08. 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.
Section 12.09. 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
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hereto and their successors hereunder, and the Certificateholders of such
series, any benefit or any legal or equitable right, remedy or claim under this
Agreement.
Section 12.10. Legal Holidays. In any case where any Regular Distribution
Date or Special Distribution Date relating to any Certificate of any series
shall not be a Business Day, 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 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 12.11. 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 12.12. Communication by Certificateholders, with Other
Certificateholders. Certificateholders of any series may communicate with other
Certificateholders of any 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 12.13. Intention of Parties. The parties hereto intend that each
Trust be classified for U.S. federal income tax purposes as a grantor trust
under Subpart E, Part I of Subchapter J of the Internal Revenue Code of 1986, as
amended, and not as a trust or association taxable as a corporation or as a
partnership. The Trustee agrees to hold all assets of each Trust for investment
purposes only. The powers granted and obligations undertaken pursuant to this
Agreement shall be so construed so as to further such intent.
<PAGE>
IN WITNESS WHEREOF, the parties have caused this Agreement to be duly
executed by their respective representatives hereunto duly authorized as of the
day and year first written above.
ATLAS AIR, INC.
By: /s/ Richard H. Shuyler
--------------------------------------
Name: Richard H. Shuyler
Title: Executive Vice President,
Treasurer and Director
WILMINGTON TRUST COMPANY,
as Trustee
By: /s/ James P. Lawler
--------------------------------------
Name: James P. Lawler
Title: Vice President
<PAGE>
EXHIBIT A
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.1
ATLAS AIR PASS THROUGH TRUST
Pass Through Certificate, Series _______
Final Regular Distribution Date: ___________, ____
evidencing a fractional undivided interest in a
trust, the property of which includes certain
equipment notes each secured by Aircraft owned
by or leased to Atlas Air, Inc.
Certificate
No._______ $___________ Fractional Undivided Interest
representing ____% 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 Atlas Air Pass Through Trust, Series ___ (the "Trust") created by
Wilmington Trust Company, not in its individual capacity but solely as trustee
(the "Trustee"), pursuant to a Pass
- ----------
1 This legend to appear on Book-Entry Certificates to be deposted with The
Depository Trust Company.
<PAGE>
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Through Trust Agreement dated as of ___, 1999 (the "Basic Agreement"), as
supplemented by Trust Supplement No. ___ thereto dated ___, 1999 (collectively,
the "Agreement"), between the Trustee and Atlas Air, 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 "___% Atlas Air Pass Through Certificate, 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
Intercreditor Agreement. The property of the Trust includes certain Equipment
Notes and all rights 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 aircraft leased to or owned by the Company.
The Certificates represent fractional undivided interests in the Trust and
the Trust Property, and 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, 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,
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 Spe-
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cial 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 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 or the 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
distribution to such Certificateholder as provided in the 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
<PAGE>
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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 transferees 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.
No service charge will be made for any such registration or 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 Trustee, the Registrar, and any agent of the Trustee or the Registrar
may treat the person in whose name this Certificate is registered as the owner
hereof for all purposes, and neither the Trustee, the Registrar, nor 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 HAVE EACH BEEN DELIVERED IN THE STATE OF
NEW YORK AND SHALL BE CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW
YORK AND THE OBLIGATIONS, RIGHTS AND REMEDIES OF THE PARTIES AND
CERTIFICATEHOLDERS HEREUNDER AND THEREUNDER SHALL BE DETERMINED IN ACCORDANCE
WITH SUCH LAWS.
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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.
IN WITNESS WHEREOF, the Trustee has caused this Certificate to be duly
executed.
ATLAS AIR PASS THROUGH TRUST
By: Wilmington Trust Company,
not in its individual capacity
but solely as Trustee
By:________________________
Title: ______________________
Dated: ___________________________
<PAGE>
FORM OF THE TRUSTEE'S CERTIFICATE OF AUTHENTICATION
This is one of the Certificates
referred to in the
within-mentioned Agreement.
WILMINGTON TRUST COMPANY,
not in its individual capacity
but solely as Trustee
By:________________________
Authorized Officer
TRUST SUPPLEMENT No. 1999-1A-1
Dated as of April 13, 1999
between
WILMINGTON TRUST COMPANY
as Trustee,
and
ATLAS AIR INC.
to
PASS THROUGH TRUST AGREEMENT
Dated as of April 1, 1999
$268,208,000
Atlas Air Pass Through Trust 1999-1A-1
7.20% Atlas Air
Pass Through Certificates,
Series 1999-lA-1
This Trust Supplement No. 1999-1A-1 (herein called the "TRUST SUPPLEMENT")
dated as of April 13, 1999 between Atlas Air, Inc., a Delaware corporation (the
"COMPANY"), and Wilmington Trust Company (the "TRUSTEE") to the Pass Through
Trust Agreement dated as of April 1, 1999, between the Company and the Trustee
(the "BASIC AGREEMENT").
W I T N E S S E T H:
WHEREAS, the Basic Agreement, unlimited as to the aggregate principal
amount of Certificates (unless otherwise specified herein, capitalized terms
used herein without definition having the respective meanings specified in the
Basic Agreement) which may be issued thereunder, has heretofore been executed
and delivered;
WHEREAS, the Company has obtained commitments from Boeing for the delivery
of certain Aircraft;
WHEREAS, the Company intends to finance the acquisition of each such
Aircraft either (i) through separate leveraged lease transactions, in which case
the Company will lease such Aircraft (collectively,
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the "LEASED AIRCRAFT"), or (ii) through separate secured loan transactions, in
which case the Company will own such Aircraft (collectively, the "OWNED
AIRCRAFT");
WHEREAS, in the case of each Leased Aircraft, each Owner Trustee, acting on
behalf of the corresponding Owner Participant, will issue pursuant to an
Indenture, on a non-recourse basis, Equipment Notes in order to finance a
portion of its purchase price of such Leased Aircraft;
WHEREAS, in the case of each Owned Aircraft, the Company will issue
pursuant to an Indenture, on a recourse basis, Equipment Notes to finance all or
a portion of the purchase price of such Owned Aircraft;
WHEREAS, the Trustee hereby declares the creation of this Atlas Air Pass
Through Trust 1999-1A-1 (the "APPLICABLE TRUST") for the benefit of the
Applicable Certificateholders, and the initial Applicable Certificateholders as
the grantors of the Applicable Trust, by their respective acceptances of the
Applicable Certificates, join in the creation of the Applicable Trust with the
Trustee;
WHEREAS, all Certificates to be issued by the Applicable Trust will
evidence fractional undivided interests in the Applicable Trust and will convey
no rights, benefits or interests in respect of any property other than the Trust
Property, except for those Certificates to which an Escrow Receipt has been
affixed;
WHEREAS, the Escrow Agent, the Trustee and the Underwriters have
contemporaneously herewith entered into an Escrow Agreement with the Escrow
Paying Agent pursuant to which the Underwriters have delivered to the Escrow
Agent the proceeds from the sale of the Applicable Certificates and have
irrevocably instructed the Escrow Agent to withdraw and pay funds from such
proceeds upon request and proper certification by the Trustee to purchase
Equipment Notes as the Aircraft are delivered by Boeing under the Aircraft
Purchase Agreement from time to time prior to the Delivery Period Termination
Date;
WHEREAS, the Escrow Agent on behalf of the Applicable Certificateholders
has contemporaneously herewith entered into a Deposit Agreement with the
Depositary under which the Deposits referred to therein will be made and from
which it will withdraw funds to allow the Trustee to purchase Equipment Notes
from time to time prior to the Delivery Period Termination Date;
WHEREAS, pursuant to the terms and conditions of the Basic Agreement as
supplemented by this Trust Supplement (the "AGREEMENT") and the Note Purchase
Agreement, upon or shortly following delivery of an Aircraft, the Trustee on
behalf of the Applicable Trust, using funds withdrawn under the Escrow
Agreement, shall purchase one or more Equipment Notes having the same interest
rate as, and final maturity date not later than the Final Regular Distribution
Date of, the Applicable Certificates issued hereunder and shall hold such
Equipment Notes in trust for the benefit of the Applicable Certificateholders;
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, this Trust Supplement is subject to the provisions of the Trust
Indenture Act of 1939, as amended, and shall, to the extent applicable, be
governed by such provisions;
NOW THEREFORE, in consideration of the premises herein, it is agreed
between the Company and the Trustee as follows:
<PAGE>
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ARTICLE I
THE CERTIFICATES
Section 1.01. THE CERTIFICATES. There is hereby created a series of
Certificates to be issued under the Agreement to be distinguished and known as
"7.20% Atlas Air Pass Through Certificates, Series 1999-lA-1" (hereinafter
defined as the "APPLICABLE CERTIFICATES"). Each Applicable Certificate
represents a fractional undivided interest in the Applicable Trust created
hereby. The Applicable Certificates shall be the only instruments evidencing a
fractional undivided interest in the Applicable Trust.
The terms and conditions applicable to the Applicable Certificates are as
follows:
(a) The aggregate principal amount of the Applicable Certificates that
shall be authenticated under the Agreement (except for Applicable Certificates
authenticated and delivered pursuant to Sections 3. 03, 3.04, 3.05 and 3.06 of
the Basic Agreement) is $268,208,000.
(b) The Regular Distribution Dates with respect to any payment of Scheduled
Payments means January 2 and July 2 of each year, commencing on January 2, 2000,
until payment of all of the Scheduled Payments to be made under the Equipment
Notes has been made.
(c) The Special Distribution Dates with respect to the Applicable
Certificates means any Business Day on which a Special Payment is to be
distributed pursuant to the Agreement.
(d) At the Escrow Agent's request under the Escrow Agreement, the Trustee
shall affix the corresponding Escrow Receipt to each Applicable Certificate. In
any event, any transfer or exchange of any Applicable Certificate shall also
effect a transfer or exchange of the related Escrow Receipt. Prior to the Final
Withdrawal Date, no transfer or exchange of any Applicable Certificate shall be
permitted unless the corresponding Escrow Receipt is attached thereto and also
is so transferred or exchanged. By acceptance of any Applicable Certificate to
which an Escrow Receipt is attached, each Holder of such an Applicable
Certificate acknowledges and accepts the restrictions on transfer of the Escrow
Receipt set forth herein and in the Escrow Agreement.
(e) (i) The Applicable Certificates shall be in the form attached hereto as
Exhibit A. Any Person acquiring or accepting an Applicable Certificate or an
interest therein will, by such acquisition or acceptance, be deemed to represent
and warrant to and for the benefit of, among other persons, each Owner
Participant, the Company, the Underwriters and the Trustee that either (i) the
assets of an employee benefit plan subject to Title I of the Employee Retirement
Income Security Act of 1974, as amended ("ERISA"), or of a plan subject to
Section 4975 of the Internal Revenue Code of 1986, as amended (the "CODE"), have
not been used to purchase Applicable Certificates or an interest therein or (ii)
the purchase and holding of Applicable Certificates or an interest therein is
exempt from the prohibited transaction restrictions of ERISA and the Code
pursuant to one or more prohibited transaction statutory or administrative
exemptions.
(ii) The Applicable Certificates shall be Book-Entry Certificates and shall
be subject to the conditions set forth in the Letter of Representations between
the Company and the Clearing Agency attached hereto as Exhibit B.
(f) The Applicable Certificates are subject to the Intercreditor Agreement,
the Deposit Agreement and the Escrow Agreement.
<PAGE>
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(g) The Applicable Certificates will have the benefit of the Liquidity
Facility.
(h) The Responsible Party is the Company.
(i) The date referred to in clause (i) of the definition of the term "PTC
Event of Default" in the Basic Agreement is the Final Maturity Date.
(j) The particular "sections of the Note Purchase Agreement", for purposes
of clause (3) of Section 7.07 of the Basic Agreement, are Section 8.1 (with
respect to Owned Aircraft) and Section 9.1 (with respect to Leased Aircraft) of
each Participation Agreement.
(k) The Equipment Notes to be acquired and held in the Applicable Trust,
and the related Aircraft and Note Documents, are described in the Note Purchase
Agreement.
ARTICLE II
DEFINITIONS
Section 2.01. DEFINITIONS. For all purposes of the Basic Agreement as
supplemented by this Trust Supplement, the following capitalized terms have the
following meanings (any term used herein which is defined in both this Trust
Supplement and the Basic Agreement shall have the meaning assigned thereto in
this Trust Supplement for purposes of the Basic Agreement as supplemented by
this Trust Supplement):
AGREEMENT: has the meaning specified in the recitals hereto.
AIRCRAFT: means each of the Aircraft or Substitute Aircraft in respect of
which a Participation Agreement is or is to be, as the case may be, entered into
in accordance with the Note Purchase Agreement.
AIRCRAFT PURCHASE AGREEMENT: has the meaning specified in the Note Purchase
Agreement.
APPLICABLE CERTIFICATE: has the meaning specified in Section 1.01 of this
Trust Supplement.
APPLICABLE CERTIFICATEHOLDER: means the Person in whose name an Applicable
Certificate is registered on the Register for the Applicable Certificates.
APPLICABLE DELIVERY DATE: has the meaning specified in Section 5.01(b) of
this Trust Supplement.
APPLICABLE PARTICIPATION AGREEMENT: has the meaning specified in Section
5.01(b) of this Trust Supplement.
APPLICABLE TRUST: has the meaning specified in the recitals hereto.
BASIC AGREEMENT: has the meaning specified in the first paragraph of this
Trust Supplement.
<PAGE>
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BOEING: means The Boeing Company.
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 Denver, Colorado,
New York, New York, Salt Lake City, Utah or, so long as any Applicable
Certificate is Outstanding, the city and state in which the Trustee or any Loan
Trustee maintains its Corporate Trust Office or receives and disburses funds.
CLASS D CERTIFICATEHOLDER: has the meaning specified in Section 4.01(b)(iv)
of this Trust Supplement.
COMPANY: has the meaning specified in the first paragraph of this Trust
Supplement.
CUT-OFF DATE: means the earlier of (a) the Delivery Period Termination Date
and (b) the date on which a Triggering Event occurs.
DELIVERY NOTICE: has the meaning specified in the Note Purchase Agreement.
DELIVERY PERIOD TERMINATION DATE: means the earlier of (a) May 31, 2000
(PROVIDED that, if a labor strike occurs at Boeing prior to May 31, 2000 such
date shall be extended by adding thereto the number of days that such strike
continues in effect) or (b) the date on which Equipment Notes issued with
respect to all of the Aircraft (or Substitute Aircraft in lieu thereof) have
been purchased by the Applicable Trust and the Other Trusts in accordance with
the Note Purchase Agreement.
DEPOSITS: has the meaning specified in the Deposit Agreement.
DEPOSIT AGREEMENT: means the Deposit Agreement dated as of April 13, 1999
relating to the Applicable Certificates between the Depositary and the Escrow
Agent, as the same may be amended, supplemented or otherwise modified from time
to time in accordance with its terms.
DEPOSITARY: means Credit Suisse First Boston, a banking institution
organized under the laws of Switzerland, acting through its New York branch.
DISTRIBUTION DATE: means any Regular Distribution Date or Special
Distribution Date as the context requires.
ESCROW AGENT: means, First Security Bank, National Association, or any
replacement or successor therefor appointed in accordance with the Escrow
Agreement.
ESCROW AGREEMENT: means the Escrow and Paying Agent Agreement dated as of
April 13, 1999 relating to the Applicable Certificates, among the Escrow Agent,
the Escrow Paying Agent, the Trustee and the Underwriters, as the same may be
amended, supplemented or otherwise modified from time to time in accordance with
its terms.
ESCROW PAYING AGENT: means the Person acting as paying agent under the
Escrow Agreement.
ESCROW RECEIPT: means the receipt substantially in the form annexed to the
Escrow Agreement representing a fractional undivided interest in the funds held
in escrow thereunder.
<PAGE>
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FINAL MATURITY DATE: means July 2, 2020.
FINAL WITHDRAWAL: has the meaning specified in the Escrow Agreement.
FINAL WITHDRAWAL DATE: has the meaning specified in the Escrow Agreement.
FINAL WITHDRAWAL NOTICE: has the meaning specified in Section 5.02 of this
Trust Supplement.
INDENTURE: means each of the separate trust indentures and mortgages
relating to the Aircraft, each as specified or described in a Delivery Notice
delivered pursuant to the Note Purchase Agreement or the related Participation
Agreement, in each case as the same may be amended, supplemented or otherwise
modified from time to time in accordance with its terms.
INTERCREDITOR AGREEMENT: means the Intercreditor Agreement dated as of
April 13, 1999, among the Trustee, the Other Trustees, the Liquidity Provider,
the Liquidity Providers relating to the Certificates issued under each of the
Other Agreements, and Wilmington Trust Company, as Subordination Agent and as
trustee thereunder, as amended, supplemented or otherwise modified from time to
time in accordance with its terms.
INVESTORS: means the Underwriters together with all subsequent beneficial
owners of the Applicable Certificates.
LEASE: means, with respect to each Leased Aircraft, the lease between an
Owner Trustee, 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.
LEASED AIRCRAFT: has the meaning specified in the third recital to this
Trust Supplement.
LEASED AIRCRAFT INDENTURE: has the meaning specified in the Note Purchase
Agreement.
LIQUIDITY FACILITY: means, initially, the Revolving Credit Agreement dated
as of April 13, 1999 relating to the Applicable Certificates, between the
Liquidity Provider and Wilmington Trust Company, as Subordination Agent, as
agent and trustee for the Applicable Trust, and, from and after the replacement
of such agreement pursuant to the Intercreditor Agreement, the replacement
liquidity facility therefor, in each case as amended, supplemented or otherwise
modified from time to time in accordance with their respective terms.
LIQUIDITY PROVIDER: means ABN AMRO Bank N.V., a banking institution
organized under the laws of the Netherlands, acting through its Chicago branch,
or any replacements or successors therefor appointed in accordance with the
Intercreditor Agreement.
NOTE DOCUMENTS: means the Equipment Notes with respect to the Applicable
Certificates and, with respect to any such Equipment Note, (i) the Indenture and
the Participation Agreement relating to such Equipment Note, and (ii) in the
case of any Equipment Note related to a Leased Aircraft, the Lease relating to
such Leased Aircraft.
<PAGE>
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NOTE PURCHASE AGREEMENT: means the Note Purchase Agreement dated as of
April 13, 1999 among the Trustee, the Other Trustees, the Company, the Escrow
Agent, the Escrow Paying Agent and the Subordination Agent, providing for, among
other things, the purchase of Equipment Notes by the Trustee on behalf of the
Trust, as the same may be amended, supplemented or otherwise modified from time
to time, in accordance with its terms.
NOTICE OF PREPAYMENT WITHDRAWAL: has the meaning specified in the Deposit
Agreement.
NOTICE OF PURCHASE WITHDRAWAL: has the meaning specified in the Deposit
Agreement.
OTHER AGREEMENTS: means (i) the Basic Agreement as supplemented by Trust
Supplement No. 1999-1A-2 dated as of the date hereof relating to Atlas Air Pass
Through Trust 1999-1A-2; (ii) the Basic Agreement as supplemented by Trust
Supplement No. 1999-lB dated as of the date hereof relating to Atlas Air Pass
Through Trust 1999-lB; (iii) the Basic Agreement as supplemented by Trust
Supplement No. 1999-lC dated as of the date hereof relating to Atlas Air Pass
Through Trust 1999-1C; and (iv) if Class D Certificates are issued, the Basic
Agreement as supplemented by Trust Supplement No. 1999-1D relating to Atlas Air
Pass Through Trust 1999-D.
OTHER TRUSTEES: means the trustees under the Other Agreements, and any
successor or other trustee appointed as provided therein.
OTHER TRUSTS: means the Atlas Air Pass Through Trust 1999-1A-2, the Atlas
Air Pass Through Trust 1999-lB and the Atlas Air Pass Through Trust 1999-lC,
each created on the date hereof, and if Class D Certificates are issued, the
Atlas Air Pass Through Trust 1999-1D.
OWNED AIRCRAFT: has the meaning specified in the third recital to this
Trust Supplement.
OWNED AIRCRAFT INDENTURE: has the meaning specified in the Note Purchase
Agreement.
OWNER PARTICIPANT: with respect to any Equipment Note relating to a Leased
Aircraft, means the "Owner Participant" 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: with respect to any Equipment Note relating to a Leased
Aircraft, means the "Owner Trustee", 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 Indentures.
OWNER TRUSTEE'S PURCHASE AGREEMENT: means, with respect to any Leased
Aircraft, the agreement between the Company and the relevant Owner Trustee
pursuant to which, inter alia, the Company assigns to the Owner Trustee certain
rights of the Company under the aircraft purchase agreement with respect to such
Leased Aircraft.
<PAGE>
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PARTICIPATION AGREEMENT: means each Participation Agreement to be entered
into, or entered into (as the case may be), by the Trustee pursuant to the Note
Purchase Agreement, as the same may be amended, supplemented or otherwise
modified in accordance with its terms.
POOL BALANCE: means, as of any date, (i) the original aggregate face amount
of the Applicable Certificates less (ii) the aggregate amount of all payments
made in respect of such Applicable Certificates or in respect of Deposits
relating to the Applicable Trust other than payments made in respect of interest
or premium thereon or reimbursement of any costs or expenses incurred in
connection therewith. The Pool Balance as of any Distribution Date shall be
computed after giving effect to any special distribution with respect to unused
Deposits, payment of principal of the Equipment Notes or payment with respect to
other Trust Property and the distribution thereof to be made on that date.
POOL FACTOR: means, as of any Distribution Date, the quotient (rounded to
the seventh decimal place) computed by dividing (i) the Pool Balance by (ii) the
original aggregate face amount of the Applicable Certificates. The Pool Factor
as of any Distribution Date shall be computed after giving effect to any special
distribution with respect to unused Deposits, payment of principal of the
Equipment Notes or payments with respect to other Trust Property and the
distribution thereof to be made on that date.
PREPAYMENT WITHDRAWAL CERTIFICATE: has the meaning specified in the Escrow
Agreement.
PROSPECTUS SUPPLEMENT: means the prospectus supplement dated April 5, 1999
relating to the offering of the Certificates.
SCHEDULED DELIVERY DATE: has the meaning specified in the Note Purchase
Agreement.
SPECIAL PAYMENT: means any payment (other than a Scheduled Payment) in
respect of, or any proceeds of, any Equipment Note, Trust Indenture Estate (as
defined in each Leased Aircraft Indenture) or Collateral (as defined in each
Owned Aircraft Indenture).
SPECIAL REDEMPTION PREMIUM: means the premium payable by the Company
pursuant to Section 4(a)(i) of the Note Purchase Agreement.
SUBSTITUTE AIRCRAFT: has the meaning specified in the Note Purchase
Agreement.
TRIGGERING EVENT: has the meaning assigned to such term in the
Intercreditor Agreement.
TRUST PROPERTY: means (i) subject to the Intercreditor Agreement, the
Equipment Notes held as the property of the Applicable 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 and, subject to the Intercreditor Agreement, any proceeds from the sale
by the Trustee pursuant to Article VI of the Basic Agreement of any Equipment
Note and (iii) all rights of the Applicable Trust and the Trustee, on behalf of
the Applicable Trust, under the Intercreditor Agreement, the Escrow Agreement,
the Note Purchase Agreement and the Liquidity Facility, including, without
limitation, all rights to receive certain payments thereunder, and all monies
paid to the Trustee on behalf of the Applicable Trust pursuant to the
Intercreditor Agreement or the Liquidity Facility, PROVIDED that rights with
respect to the Deposits or under the Escrow Agree-
<PAGE>
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ment, except for the right to direct withdrawals for the purchase of Equipment
Notes to be held herein, will not constitute Trust Property.
TRUST SUPPLEMENT: has the meaning specified in the first paragraph of this
trust supplement.
UNDERWRITERS: means, collectively, Morgan Stanley & Co. Incorporated, BT
Alex. Brown Incorporated, ING Baring Furman Selz, LLC and CIBC Oppenheimer Corp.
UNDERWRITING AGREEMENT: means the Underwriting Agreement dated April 5,
1999 among the Underwriters and the Company, as the same may be amended,
supplemented or otherwise modified from time to time in accordance with its
terms.
ARTICLE III
STATEMENTS TO CERTIFICATEHOLDERS
Section 3.01. ADDITIONS TO ARTICLE IV OF THE BASIC AGREEMENT. In addition
to the provisions of Article IV of the Basic Agreement, the following provisions
shall apply to the Applicable Trust:
(a) Upon the payment of Special Redemption Premium to the Trustee under the
Note Purchase Agreement, the Trustee, upon receipt thereof, shall immediately
deposit the aggregate amount of such Special Redemption Premium in the Special
Payments Account;
(b) The distribution of amounts of Special Redemption Premium as provided
for in Section 4.02(b) of the Basic Agreement shall be on the Special
Distribution Date with respect to such Special Payment or as soon thereafter as
the Trustee has confirmed receipt of the related Special Redemption Premium;
(c) In the event of the payment of a Special Redemption Premium by the
Company to the Trustee under the Note Purchase Agreement, the notice provided
for in Section 4.02(c) of the Basic Agreement shall be mailed, together with the
notice by the Escrow Paying Agent under Section 2.06 of the Escrow Agreement,
not less than 15 days prior to the Special Distribution Date for such amount,
which Special Distribution Date shall be the Final Withdrawal Date; and
(d) The last sentence of the first paragraph of Section 4.02(c) of the
Basic Agreement shall apply equally if the amount of Special Redemption Premium,
if any, has not been calculated at the time the Trustee mails notice of a
Special Payment.
Section 3.02. STATEMENTS TO APPLICABLE CERTIFICATEHOLDERS. (a) On each
Distribution Date, the Trustee will include with each distribution to Applicable
Certificateholders of a Scheduled Payment or Special Payment, as the case may
be, a statement setting forth the information provided below (in the case of a
Special Payment, reflecting in part the information provided by the Escrow
Paying Agent under the Escrow Agreement). Such statement shall set forth (per
$1,000 face amount Applicable Certificate as to (ii), (iii), (iv) and (v) below)
the following information:
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(i) the aggregate amount of funds distributed on such Distribution Date
under the Agreement and under the Escrow Agreement, indicating the
amount allocable to each source;
(ii) the amount of such distribution under the Agreement allocable to
principal and the amount allocable to premium (including any premium
paid with respect to unused Deposits), if any;
(iii) the amount of such distribution under the Agreement allocable to
interest;
(iv) the amount of such distribution under the Escrow Agreement allocable
to interest;
(v) the amount of such distribution under the Escrow Agreement allocable
to unused Deposits, if any; and
(vi) the Pool Balance and the Pool Factor.
With respect to the Applicable Certificates registered in the name of a
Clearing Agency, on the Record Date prior to each Distribution Date, the Trustee
will request from such Clearing Agency a securities position listing setting
forth the names of all Clearing Agency Participants reflected on such Clearing
Agency's books as holding interests in the Applicable Certificates on such
Record Date. On each Distribution Date, the 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 Participant for
forwarding to holders of interests in the Applicable 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 an Applicable
Certificateholder of record a statement containing the sum of the amounts
determined pursuant to clauses (a)(i), (a)(ii), (a)(iii), (a)(iv) and (a)(v)
above for such calendar year or, in the event such Person was an Applicable
Certificateholder of record during a portion of such calendar year, for such
portion of such year, and such other items as are readily available to the
Trustee and which an Applicable Certificateholder shall reasonably request as
necessary for the purpose of such Applicable Certificateholder's preparation of
its federal income tax returns. 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 Applicable Certificates in the
manner described in Section 3.02(a) of this Trust Supplement.
(c) If the aggregate principal payments scheduled for January 2, 2000, on
the Equipment Notes held as Trust Property as of December 8, 1999, differs from
the amount thereof set forth for the Applicable Certificates on page S-45 of the
Prospectus Supplement, by no later than December 15, 1999 the Trustee shall mail
written notice of the actual amount of such scheduled payments to the Applicable
Certificateholders of record as of a date within 10 Business Days prior to the
date of mailing.
(d) Promptly following (i) the Delivery Period Termination Date, if there
has been any change in the information set forth in clauses (x), (y) and (z)
below from that set forth in page S-45 of the Prospectus Supplement, and (ii)
any early redemption or purchase of, or any default in the payment of principal
or interest in respect of, any of the Equipment Notes held in the Applicable
Trust, or any Final Withdrawal, the Trustee shall furnish to Applicable
Certificateholders of record on such date a statement setting forth (x) the
expected Pool Balances for each subsequent Regular Distribution Date following
the Delivery Period Termination Date, (y) the
<PAGE>
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related Pool Factors for such Regular Distribution Dates and (z) the expected
principal distribution schedule of the Equipment Notes, in the aggregate, held
as Trust Property at the date of such notice. With respect to the Applicable
Certificates registered in the name of a Clearing Agency, on the Delivery Period
Termination Date, the Trustee will request from such Clearing Agency a
securities position listing setting forth the names of all Clearing Agency
Participants reflected on such Clearing Agency's books as holding interests in
the Applicable Certificates on such date. The 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 Participant for
forwarding to holders of interests in the Applicable Certificates.
(e) This Section 3.02 supersedes and replaces Section 4.03 of the Basic
Agreement, with respect to the Applicable Trust.
ARTICLE IV
DEFAULT
Section 4.01. PURCHASE RIGHTS OF CERTIFICATEHOLDERS. (a) At any time after
the occurrence and during the continuance of a Triggering Event, if the Class
A-2 Trustee is then the Controlling Party, each Applicable Certificateholder
shall have the right to purchase, for the purchase price set forth in the Class
A-2 Trust Agreement, all, but not less than all, of the Class A-2 Certificates
upon ten days' written notice to the Class A-2 Trustee and each other Applicable
Certificateholder, provided that (i) if prior to the end of such ten-day period
any other Applicable Certificateholder notifies such purchasing Applicable
Certificateholder that such other Applicable Certificateholder wants to
participate in such purchase, then such other Applicable Certificateholder may
join with the purchasing Applicable Certificateholder to purchase all, but not
less than all, of the Class A-2 Certificates pro rata based on the Fractional
Undivided Interest in the Applicable Trust held by each such Applicable
Certificateholder and (ii) if prior to the end of such ten-day period any other
Applicable Certificateholder fails to notify the purchasing Applicable
Certificateholder of such other Applicable Certificateholder's desire to
participate in such a purchase, then such other Applicable Certificateholder
shall lose its right to purchase the Class A-2 Certificates pursuant to this
Section 4.01(a).
(b) By acceptance of its Applicable Certificate, each Applicable
Certificateholder agrees that at any time after the occurrence and during the
continuation of a Triggering Event,
(i) if the Applicable Certificateholders are then represented by the
Controlling Party each Class A-2 Certificateholder shall have the right to
purchase all, but not less than all, of the Applicable Certificates upon
ten days' written notice to the Trustee and each other Class A-2
Certificateholder, PROVIDED that (A) if prior to the end of such ten-day
period any other Class A-2 Certificateholder notifies such purchasing Class
A-2 Certificateholder that such other Class A-2 Certificateholder wants to
participate in such purchase, then such other Class A-2 Certificateholder
may join with the purchasing Class A-2 Certificateholder to purchase all,
but not less than all, of the Applicable Certificates pro rata based on the
Fractional Undivided Interest in the Class A-2 Trust held by each such
Class A-2 Certificateholder and (B) if prior to the end of such ten-day
period any other Class A-2 Certificateholder fails to notify the purchasing
Class A-2 Certificateholder of such other Class A-2 Certifiateholder's
desire to participate in such a purchase, then such other Class A-2
Certificateholder shall lose its right to purchase the Applicable
Certificates pursuant to this Section 4.01(b);
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(ii) each Class B Certificateholder shall have the right (which shall
not expire upon any purchase of the Applicable Certificates or the Class
A-2 Certificates pursuant to clause (a) or (b)(i) above) to purchase all,
but not less than all, of the Applicable Certificates and the Class A-2
Certificates upon ten days' written notice to the Trustee, the Class A-2
Trustee and each other Class B Certificateholder, PROVIDED that (A) if
prior to the end of such ten-day period any other Class B Certificateholder
notifies such purchasing Class B Certificateholder that such other Class B
Certificateholder wants to participate in such purchase, then such other
Class B Certificateholder may join with the purchasing Class B
Certificateholder to purchase all, but not less than all, of the Applicable
Certificates and the Class A-2 Certificates pro rata based on the
Fractional Undivided Interest in the Class B Trust held by each such Class
B Certificateholder and (B) if prior to the end of such ten-day period any
other Class B Certificateholder fails to notify the purchasing Class B
Certificateholder of such other Class B Certificateholder's desire to
participate in such a purchase, then such other Class B Certificateholder
shall lose its right to purchase the Applicable Certificates and the Class
A-2 Certificates pursuant to this Section 4.01(b);
(iii) each Class C Certificateholder shall have the right (which shall
not expire upon any purchase of the Applicable Certificates or the Class
A-2 Certificates pursuant to clause (a) or (b)(i) and (ii) above) to
purchase all, but not less than all, of the Applicable Certificates and the
Class A-2 Certificates and the Class B Certificates upon ten days' written
notice to the Trustee, the Class A-2 Trustee, the Class B 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 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 Applicable
Certificates, the Class A-2 Certificates and the Class B 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
Applicable Certificates, the Class A-2 Certificates and the Class B
Certificates pursuant to this Section 4.01(b); and
(iv) each holder of a Class D Certificate (a "CLASS D
CERTIFICATEHOLDER") shall have the right (which shall not expire upon any
purchase of the Applicable Certificates or the Class A-2 Certificates
pursuant to clause (a), (b)(i) or (ii) above or the Class B Certificates
pursuant to clause (iii) above) to purchase all, but not less than all, of
the Applicable Certificates, the Class A-2 Certificates, the Class B
Certificates and the Class C Certificates upon ten days' written notice to
the Trustee, the Class A-2 Trustee, the Class B 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
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 Applicable
Certificates, the Class A-2 Certificates, the Class B 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
Applicable Certificates, the Class A-2 Certificates, the Class B
Certificates and the Class C Certificates pursuant to this Section 4.01(b).
<PAGE>
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The purchase price with respect to the Applicable Certificates shall be
equal to the Pool Balance of the Applicable Certificates, together with accrued
and unpaid interest thereon to the date of such purchase, without premium, but
including any other amounts then due and payable to the Applicable
Certificateholders under the Agreement, the Intercreditor Agreement, the Escrow
Agreement or any Note Document or on or in respect of the Applicable
Certificates; PROVIDED, HOWEVER, that (x) if such purchase occurs after a record
date specified in Section 2.03 of the Escrow Agreement relating to the
distribution of unused Deposits and/or accrued and unpaid interest on Deposits
and prior to or on the related distribution date thereunder, such purchase price
shall be reduced by the aggregate amount of unused Deposits and/or interest to
be distributed under the Escrow Agreement (which deducted amounts shall remain
distributable to, and may be retained by, the Applicable Certificateholder as of
such record date) and (y) if such purchase occurs after a Record Date and prior
to or on the related Distribution Date, such purchase price shall be reduced by
the amount to be distributed under this Agreement on the related Distribution
Date (which deducted amounts shall remain distributable to, and may be retained
by, the Applicable Certificateholder as of such Record Date); provided further
that no such purchase of Applicable Certificates shall be effective unless the
purchaser(s) shall certify to the Trustee that contemporaneously with such
purchase, such purchaser(s) is (are) purchasing, pursuant to the terms of the
Agreement and the Other Agreements, (A) in the case of any purchase of the
Applicable Certificates pursuant to clause(b)(i) above, all of the Applicable
Certificates, or (B) in all other cases, the Applicable Certificates, the Class
A-2 Certificates, the Class B Certificates and the Class C Certificates which
are senior to the securities held by such purchaser(s). Each payment of the
purchase price of the Applicable 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 4.01(b). Each
Applicable Certificateholder agrees by its acceptance of its Applicable
Certificate that (at any time after the occurrence and during the continuation
of a Triggering Event) it will, upon payment from such Class A-2
Certificateholder(s), Class B Certificateholder(s), Class C Certificateholder(s)
or Class D Certificateholder(s), 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 for its own acts), all of the right, title, interest
and obligation of such Applicable Certificateholder in the Agreement, the Escrow
Agreement, the Deposit Agreement, the Intercreditor Agreement, the Liquidity
Facility, the Note Purchase Agreement, the Note Documents and all Applicable
Certificates and Escrow Receipts held by such Applicable Certificateholder
(subject to clauses (x) and (y) in the first sentence of this paragraph and
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 shall assume all of such Applicable
Certificateholder's obligations under the Agreement, the Escrow Agreement, the
Deposit Agreement, the Intercreditor Agreement, the Liquidity Facility, the Note
Purchase Agreement, the Note Documents and all such Applicable Certificates and
Escrow Receipts). The Applicable Certificates will be deemed to be purchased on
the date payment of the purchase price is made notwithstanding the failure of
the Applicable Certificateholders to deliver any Applicable Certificates and,
upon such a purchase, (I) the only rights of the Applicable Certificateholders
will be to deliver the Applicable Certificates to the purchaser(s) and receive
the purchase price for such Applicable Certificates and (II) if the purchaser(s)
shall so request, such Applicable Certificateholder will comply with all the
provisions of Section 3.04 of the Basic Agreement to enable new Applicable
Certificates to be issued to the purchaser in such denominations as it shall
request. All charges and expenses in connection with the issuance of any such
new Applicable Certificates shall be borne by the purchaser thereof.
As used in this Section 4.01 and elsewhere in this Trust Supplement, the
terms "Class A-2 Certificate", "Class A-2 Certificateholder", "Class A-2 Trust",
"Class A-2 Trustee", "Class B Certificate", "Class B Certificateholder", "Class
B Trust", "Class B Trustee", "Class C Certificate", "Class C Certificateholder",
"Class C Trust", "Class C Trustee", "Class D Certificate" and "Class D Trust",
shall have the respective meanings assigned to such terms in the Intercreditor
Agreement.
<PAGE>
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(c) This Section 4.01 supersedes and replaces Section 6.01(b) of the Basic
Agreement, with respect to the Applicable Trust.
ARTICLE V
THE TRUSTEE
Section 5.01. DELIVERY OF DOCUMENTS; DELIVERY DATES. (a) The Trustee is
hereby directed (i) to execute and deliver the Intercreditor Agreement, the
Escrow Agreement and the Note Purchase Agreement on or prior to the Issuance
Date, each in the form delivered to the Trustee by the Company, and (ii) subject
to the respective terms thereof, to perform its obligations thereunder. Upon
request of the Company and the satisfaction or waiver of the closing conditions
specified in the Underwriting Agreement, the Trustee shall execute, deliver,
authenticate, issue and sell Applicable Certificates in authorized denominations
equaling in the aggregate the amount set forth, with respect to the Applicable
Trust, in Schedule I to the Underwriting Agreement evidencing the entire
ownership interest in the Applicable Trust, which amount equals the maximum
aggregate principal amount of Equipment Notes which may be purchased by the
Trustee pursuant to the Note Purchase Agreement. Except as provided in Sections
3.03, 3.04, 3.05 and 3.06 of the Basic Agreement, the Trustee shall not execute,
authenticate or deliver Applicable Certificates in excess of the aggregate
amount specified in this paragraph. The provisions of this Section 5.01(a)
supersede and replace the first sentence of Section 3.02(a) of the Basic
Agreement, with respect to the Applicable Trust.
(b) On or after the Issuance Date, the Company may deliver from time to
time to the Trustee a Delivery Notice relating to one or more Equipment Notes.
After receipt of a Delivery Notice and in any case no later than one Business
Day prior to a Scheduled Delivery Date as to which such Delivery Notice relates
(the "APPLICABLE DELIVERY DATE"), the Trustee shall (as and when specified in
the Delivery Notice) instruct the Escrow Agent to provide a Notice of Purchase
Withdrawal to the Depositary requesting (A) the withdrawal of one or more
Deposits on the Applicable Delivery Date in accordance with and to the extent
permitted by the terms of the Escrow Agreement and the Deposit Agreement and (B)
the payment of all, or a portion, of such Deposit or Deposits in an amount equal
in the aggregate to the purchase price of such Equipment Notes to or on behalf
of the Owner Trustee or the Company, as the case may be, issuing such Equipment
Notes, all as shall be described in the Delivery Notice. The Trustee shall (as
and when specified in such Delivery Notice), subject to the conditions set forth
in Section 2 of the Note Purchase Agreement, enter into and perform its
obligations under the Participation Agreement specified in such Delivery Notice
(the "APPLICABLE PARTICIPATION AGREEMENT") and cause such certificates,
documents and legal opinions relating to the Trustee to be duly delivered as
required by the Applicable Participation Agreement. If at any time prior to the
Applicable Delivery Date, the Trustee receives a notice of postponement pursuant
to Section 1(e) or 1(f) of the Note Purchase Agreement, then the Trustee shall
give the Depositary (with a copy to the Escrow Agent) a notice of cancellation
of such Notice of Purchase Withdrawal relating to such Deposit or Deposits on
such Applicable Delivery Date. Upon satisfaction of the conditions specified in
the Note Purchase Agreement and the Applicable Participation Agreement, the
Trustee shall purchase the applicable Equipment Notes with the proceeds of the
withdrawals of one or more Deposits made on the Applicable Delivery Date in
accordance with the terms of the Deposit Agreement and the Escrow Agreement. The
purchase price of such Equipment Notes shall equal the principal amount of such
Equipment Notes. Amounts withdrawn from such Deposit or Deposits in excess of
the purchase price of the Equipment Notes or to the extent not applied on the
Applicable Delivery Date to the purchase price of the Equipment Notes, shall be
re-deposited by the Trustee with the Depositary on the Applicable Delivery Date
in accordance with the terms of the Deposit Agreement. The provisions of this
Section 5.01(b) supersede and replace the provisions of Section 2.02 of the
Basic Agreement, with respect to the Applicable Trust, and all provi-
<PAGE>
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sions of the Basic Agreement relating to Postponed Notes and Section 2.02 of the
Basic Agreement shall not apply to the Applicable Trust.
(c) The Trustee acknowledges its acceptance of all right, title and
interest in and to the Trust Property to be acquired pursuant to Section 5.01(b)
of this Trust Supplement, the Note Purchase Agreement and each Applicable
Participation Agreement, and declares that it holds and will hold such right,
title and interest for the benefit of all present and future Applicable
Certificateholders, upon the trusts set forth in this Agreement. By its
acceptance of an Applicable Certificate, each initial Applicable
Certificateholder, as a grantor of the Applicable Trust, joins with the Trustee
in the creation of the Applicable Trust. The provisions of this Section 5.01(c)
supersede and replace the provisions of Section 2.03 of the Basic Agreement,
with respect to the Applicable Trust.
Section 5.02. WITHDRAWAL OF DEPOSITS. (a) If the Company shall receive
written notice from Boeing that the delivery date of any Aircraft will be
delayed beyond the Delivery Period Termination Date, the Company may deliver to
the Trustee written notice to such effect and requesting that the Trustee
deliver to the Escrow Agent a Prepayment Withdrawal Certificate pursuant to the
Escrow Agreement directing the Escrow Agent to provide a Notice of Prepayment
Withdrawal to the Depositary requesting the withdrawal of the Deposits relating
to Equipment Notes in respect of such Aircraft in accordance with and to the
extent permitted by the terms of the Escrow Agreement and the Deposit Agreement.
(b) If any Deposits remain outstanding on the Business Day next succeeding
the Cut-off Date, the Trustee shall (i) give the Escrow Agent notice that the
Trustee's obligation to purchase Equipment Notes under the Note Purchase
Agreement has terminated and instruct the Escrow Agent to provide a notice of
Final Withdrawal to the Depositary substantially in the form of Exhibit B to the
Deposit Agreement (the "FINAL WITHDRAWAL NOTICE") and (ii) shall make demand
upon the Company pursuant to the Note Purchase Agreement for an amount equal to
the Deposit Make Whole Amount, if any, such payment to be made on the Final
Withdrawal Date.
Section 5.03. THE TRUSTEE. (a) Subject to Section 5.04 of this Trust
Supplement and Section 7.15 of the Basic Agreement, the Trustee shall not be
responsible in any manner whatsoever for or in respect of the validity or
sufficiency of this Trust Supplement, the Deposit Agreement, the Note Purchase
Agreement or the Escrow Agreement or the due execution hereof or thereof by the
Company or the other parties thereto (other than the Trustee), or for or in
respect of the recitals and statements contained herein or therein, all of which
recitals and statements are made solely by the Company, except that the Trustee
hereby represents and warrants that each of this Trust Supplement, the Basic
Agreement, each Applicable Certificate, the Intercreditor Agreement, the Note
Purchase Agreement and the Escrow Agreement has been executed and delivered by
one of its officers who is duly authorized to execute and deliver such document
on its behalf.
(b) Except as herein otherwise provided and except during the continuance
of an Event of Default in respect of the Applicable Trust created hereby, no
duties, responsibilities or liabilities are assumed, or shall be construed to be
assumed, by the Trustee by reason of this Trust Supplement other than as set
forth in the Agreement, and this Trust Supplement is executed and accepted on
behalf of the Trustee, subject to all the terms and conditions set forth in the
Agreement, as fully to all intents as if the same were herein set forth at
length.
Section 5.04. REPRESENTATIONS AND WARRANTIES OF THE TRUSTEE. The Trustee
hereby represents and warrants that:
(a) the Trustee has full power, authority and legal right to execute,
deliver and perform this Trust Supplement, the Intercreditor Agreement, the
Escrow Agreement, the Note Purchase Agreement and the
<PAGE>
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Note Documents to which it is or is to become a party and has taken all
necessary action to authorize the execution, delivery and performance by it of
this Trust Supplement, the Intercreditor Agreement, the Escrow Agreement, the
Note Purchase Agreement and the Note Documents to which it is or is to become a
party;
(b) the execution, delivery and performance by the Trustee of this Trust
Supplement, the Intercreditor Agreement, the Escrow Agreement, the Note Purchase
Agreement and the Note Documents to which it is or is to become a party (i) will
not violate any provision of any United States federal law or the law of the
state of the United States where it is located governing 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, 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, which violation, default
or lien could reasonably be expected to have an adverse effect on the Trustee's
performance or ability to perform its duties hereunder or thereunder or on the
transactions contemplated herein or therein;
(c) the execution, delivery and performance by the Trustee of this Trust
Supplement, the Intercreditor Agreement, the Escrow Agreement, the Note Purchase
Agreement and the Note Documents to which it is or is to become a party 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 it is located regulating the banking and corporate trust
activities of the Trustee; and
(d) this Trust Supplement, the Intercreditor Agreement, the Escrow
Agreement, the Note Purchase Agreement and the Note Documents to which it is or
is to become a party have been, or will be, as applicable, duly executed and
delivered by the Trustee and constitute, or will constitute, as applicable, 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.
Section 5.05. TRUSTEE LIENS. The Trustee in its individual capacity agrees,
in addition to the agreements contained in Section 7.17 of the Basic Agreement,
that it will at its own cost and expense promptly take any action as may be
necessary to duly discharge and satisfy in full any Trustee's Liens on or with
respect to the Trust Property which is attributable to the Trustee in its
individual capacity and which is unrelated to the transactions contemplated by
the Intercreditor Agreement or the Note Purchase Agreement.
ARTICLE VI
ADDITIONAL AMENDMENT; SUPPLEMENTAL AGREEMENTS
Section 6.01. SUPPLEMENTAL AGREEMENTS WITHOUT CONSENT OF APPLICABLE
CERTIFICATEHOLDERS. Without limitation of Section 9.01 of the Basic Agreement,
under the terms of, and subject to the limitations contained in, Section 9.01 of
the Basic Agreement, the Company may (but will not be required to), and the
Trustee (subject to Section 9.03 of the Basic Agreement) shall, at the Company's
request, at any time and from time to time, (i) enter into one or more
agreements supplemental to the Escrow Agreement, the Note Purchase Agreement or
the Deposit Agreement, for any of the purposes set forth in clauses (a) through
(i) of such Section 9.01, and (without limitation of the foregoing or Section
9.01 of the Basic
<PAGE>
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Agreement) clauses (b) and (c) of such Section 9.01 shall also be deemed to
include the Company's obligations under (in the case of clause (b)), and the
Company's rights and powers conferred by (in the case of clause (c)), the Note
Purchase Agreement and references in clauses (d), (f) and (g) of such Section
9.01 to "any Intercreditor Agreement or any Liquidity Facility" shall also be
deemed to refer to "the Intercreditor Agreement, the Liquidity Facility, the
Escrow Agreement, the Note Purchase Agreement or the Deposit Agreement" and (ii)
enter into one or more agreements supplemental to the Basic Agreement to provide
for the formation of a Class D Trust, the issuance of Class D Certificates, the
purchase by the Class D Trust of Equipment Notes and other matters incidental
thereto or otherwise contemplated by Section 2.01(b) of the Basic Agreement.
Section 6.02. SUPPLEMENTAL AGREEMENTS WITH CONSENT OF APPLICABLE
CERTIFICATEHOLDERS. Without limitation of Section 9.02 of the Basic Agreement,
the provisions of Section 9.02 of the Basic Agreement shall apply to agreements
or amendments for the purpose of adding any provisions to or changing in any
manner or eliminating any of the provisions of the Escrow Agreement, the Deposit
Agreement or the Note Purchase Agreement or modifying in any manner the rights
and obligations of the Applicable Certificateholders under the Escrow Agreement,
the Deposit Agreement or the Note Purchase Agreement; provided that the
provisions of Section 9.02(a) of the Basic Agreement shall be deemed to include
reductions in any manner of, or delay in the timing of, any receipt by the
Applicable Certificateholders of payments upon the Deposits.
ARTICLE VII
TERMINATION OF TRUST
Section 7.01. TERMINATION OF THE APPLICABLE TRUST. (a) The respective
obligations and responsibilities of the Company and the Trustee with respect to
the Applicable Trust shall terminate upon distribution to all Applicable
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 Applicable
Trust continue beyond one hundred ten (110) years following the date of the
execution of this Trust Supplement.
ARTICLE VIII
MISCELLANEOUS PROVISIONS
Section 8.01. 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. All replacements of provisions of, and other modifications of the
Basic Agreement set forth in this Trust Supplement are solely with respect to
the Applicable Trust.
SECTION 8.02. GOVERNING LAW. THIS TRUST SUPPLEMENT AND THE APPLICABLE
CERTIFICATES SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF
THE STATE OF NEW YORK.
<PAGE>
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Section 8.03. EXECUTION IN COUNTERPARTS. This Trust Supplement may be
executed in any number of counterparts, each of which shall be an original, but
such counterparts shall together constitute but one and the same instrument.
Section 8.04. INTENTION OF PARTIES. The parties hereto intend that the
Applicable Trust be classified for U.S. federal income tax purposes as a grantor
trust under Subpart E, Part I of Subchapter J 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 Applicable Certificateholder and Investor, by its
acceptance of its Applicable Certificate or a beneficial interest therein,
agrees to treat the Applicable Trust as a grantor trust for all U.S. federal,
state and local income tax purposes. The powers granted and obligations
undertaken pursuant to the Agreement shall be so construed so as to further such
intent.
<PAGE>
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IN WITNESS WHEREOF, the Company and the Trustee have caused this Trust
Supplement to be duly executed by their respective representatives thereto duly
authorized, as of the day and year first written above.
ATLAS AIR, INC.
By: /s/ Richard H. Shuyler
----------------------------------
Name: Richard H. Shuyler
Title: Executive Vice President,
Treasurer and Director
WILMINGTON TRUST COMPANY,
as Trustee
By: /s/ James P. Lawler
----------------------------------
Name: James P. Lawler
Title: Vice President
<PAGE>
EXHIBIT A
FORM OF CERTIFICATE
Certificate
No._____
[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.]*
ATLAS AIR PASS THROUGH TRUST 1999-lA-1
% Atlas Air Pass Through Certificate, Series 1999-lA-1
Issuance Date: , 1999
Final Expected Distribution Date:
Evidencing A Fractional Undivided Interest In The
Atlas Air Pass Through Trust 1999-lA-1, The
Property Of Which Shall Include Certain Equipment Notes
Each Secured By An Aircraft Leased To Or Owned By
Atlas Air, Inc.
______________Fractional Undivided Interest
representing % 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 Atlas Air Pass Through Trust 1999-1A-1 (the "TRUST") created by
Wilmington Trust Company, as trustee (the "Trustee"), pursuant to a Pass Through
Trust Agreement, dated as of April __, 1999 (the "BASIC AGREEMENT"), between the
Trustee and Atlas Air, Inc., a Delaware corporation (the "Company"), as
supplemented by Trust Supplement No. 1999-1A-1 thereto, dated as of April __,
1999 (the "Trust Supplement" and, together with the Basic Agreement, 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 " % Atlas Air Pass Through Certificates, Series
1999-lA-1" (herein called the "CERTIFICATES").
- ----------
* This legend toappear on Book-Entry Certificates to be deposited with
the Depository Trust Company.
<PAGE>
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This Certificate is issued under and is subject to the terms, provisions and
conditions of the Agreement. By virtue of its acceptance hereof, the holder of
this Certificate (the "CERTIFICATEHOLDER" and, together with all other holders
of Certificates issued by the Trust, the "CERTIFICATEHOLDERS") assents to and
agrees to be bound by the provisions of the Agreement and the Intercreditor
Agreement. The property of the Trust includes certain Equipment Notes and all
rights of the Trust to receive payments under the Intercreditor Agreement and
the Liquidity Facility (the "TRUST PROPERTY"). Each issue of the Equipment Notes
is secured by, among other things, a security interest in an Aircraft leased to
or owned by the Company.
The Certificates represent Fractional Undivided Interests in the Trust and
the Trust Property and 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 2 and July 2 (a "REGULAR DISTRIBUTION DATE")
commencing January 2, 2000, 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 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 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 distribution 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 or the 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
distribution to such Certificateholder as provided in the 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 busi-
<PAGE>
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ness 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
Certificateholders 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.
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.
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.
Each Certificateholder and Investor, by its acceptance of this Certificate
or a beneficial interest herein, agrees to treat the Trust as a grantor trust
for all U.S. federal, state and local income tax purposes.
The Trustee, the Registrar, and any agent of the Trustee or the Registrar
may treat the person in whose name this Certificate is registered as the owner
hereof for all purposes, and neither the Trustee, the Registrar, nor 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 have represented and
warranted that either: (i) the assets of an employee benefit plan subject to
Title I of the Employee Retirement Income Security Act of 1974, as amended
("ERISA"), or of a plan subject to Section 4975 of the Internal Revenue Code of
1986, as amended (the "CODE"), have not been used to purchase this Certificate
or an interest herein or (ii) the purchase and holding of this Certificate or an
in-
<PAGE>
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terest herein are exempt from the prohibited transaction restrictions of ERISA
and the Code pursuant to one or more prohibited transaction statutory or
administrative exemptions.
THE AGREEMENT AND THIS CERTIFICATE SHALL BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK AND THE OBLIGATIONS, RIGHTS
AND REMEDIES OF THE PARTIES HEREUNDER 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.
<PAGE>
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IN WITNESS WHEREOF, the Trustee has caused this Certificate to be duly
executed.
ATLAS AIR PASS THROUGH TRUST
1999-1A-1
By: WILMINGTON TRUST COMPANY,
not in its individual capacity but solely
as Trustee
By:
----------------------------------
Name:
Title:
<PAGE>
FORM OF THE TRUSTEE'S CERTIFICATE OF AUTHENTICATION
This is one of the Certificates referred to in the within-mentioned
Agreement.
WILMINGTON TRUST COMPANY,
not in its individual capacity but solely
as Trustee
By:
----------------------------------
Name:
Title:
<PAGE>
EXHIBIT B
DTC Letter of Representations
TRUST SUPPLEMENT No. 1999-1A-2
Dated as of April 13, 1999
between
WILMINGTON TRUST COMPANY
as Trustee,
and
ATLAS AIR INC.
to
PASS THROUGH TRUST AGREEMENT
Dated as of April 1, 1999
$43,544,000
Atlas Air Pass Through Trust 1999-1A-2
6.88% Atlas Air
Pass Through Certificates,
Series 1999-lA-2
This Trust Supplement No. 1999-1A-2 (herein called the "TRUST SUPPLEMENT")
dated as of April 13, 1999 between Atlas Air, Inc., a Delaware corporation (the
"COMPANY"), and Wilmington Trust Company (the "TRUSTEE") to the Pass Through
Trust Agreement dated as of April 1, 1999, between the Company and the Trustee
(the "BASIC AGREEMENT").
W I T N E S S E T H:
WHEREAS, the Basic Agreement, unlimited as to the aggregate principal
amount of Certificates (unless otherwise specified herein, capitalized terms
used herein without definition having the respective meanings specified in the
Basic Agreement) which may be issued thereunder, has heretofore been executed
and delivered;
WHEREAS, the Company has obtained commitments from Boeing for the delivery
of certain Aircraft;
WHEREAS, the Company intends to finance the acquisition of each such
Aircraft either (i) through separate leveraged lease transactions, in which case
the Company will lease such Aircraft (collectively,
<PAGE>
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the "LEASED AIRCRAFT"), or (ii) through separate secured loan transactions, in
which case the Company will own such Aircraft (collectively, the "OWNED
AIRCRAFT");
WHEREAS, in the case of each Leased Aircraft, each Owner Trustee, acting on
behalf of the corresponding Owner Participant, will issue pursuant to an
Indenture, on a non-recourse basis, Equipment Notes in order to finance a
portion of its purchase price of such Leased Aircraft;
WHEREAS, in the case of each Owned Aircraft, the Company will issue
pursuant to an Indenture, on a recourse basis, Equipment Notes to finance all or
a portion of the purchase price of such Owned Aircraft;
WHEREAS, the Trustee hereby declares the creation of this Atlas Air Pass
Through Trust 1999-1A-2 (the "APPLICABLE TRUST") for the benefit of the
Applicable Certificateholders, and the initial Applicable Certificateholders as
the grantors of the Applicable Trust, by their respective acceptances of the
Applicable Certificates, join in the creation of the Applicable Trust with the
Trustee;
WHEREAS, all Certificates to be issued by the Applicable Trust will
evidence fractional undivided interests in the Applicable Trust and will convey
no rights, benefits or interests in respect of any property other than the Trust
Property, except for those Certificates to which an Escrow Receipt has been
affixed;
WHEREAS, the Escrow Agent, the Trustee and the Underwriters have
contemporaneously herewith entered into an Escrow Agreement with the Escrow
Paying Agent pursuant to which the Underwriters have delivered to the Escrow
Agent the proceeds from the sale of the Applicable Certificates and have
irrevocably instructed the Escrow Agent to withdraw and pay funds from such
proceeds upon request and proper certification by the Trustee to purchase
Equipment Notes as the Aircraft are delivered by Boeing under the Aircraft
Purchase Agreement from time to time prior to the Delivery Period Termination
Date;
WHEREAS, the Escrow Agent on behalf of the Applicable Certificateholders
has contemporaneously herewith entered into a Deposit Agreement with the
Depositary under which the Deposits referred to therein will be made and from
which it will withdraw funds to allow the Trustee to purchase Equipment Notes
from time to time prior to the Delivery Period Termination Date;
WHEREAS, pursuant to the terms and conditions of the Basic Agreement as
supplemented by this Trust Supplement (the "AGREEMENT") and the Note Purchase
Agreement, upon or shortly following delivery of an Aircraft, the Trustee on
behalf of the Applicable Trust, using funds withdrawn under the Escrow
Agreement, shall purchase one or more Equipment Notes having the same interest
rate as, and final maturity date not later than the Final Regular Distribution
Date of, the Applicable Certificates issued hereunder and shall hold such
Equipment Notes in trust for the benefit of the Applicable Certificateholders;
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, this Trust Supplement is subject to the provisions of the Trust
Indenture Act of 1939, as amended, and shall, to the extent applicable, be
governed by such provisions;
NOW THEREFORE, in consideration of the premises herein, it is agreed
between the Company and the Trustee as follows:
<PAGE>
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ARTICLE I
THE CERTIFICATES
Section 1.01. THE CERTIFICATES. There is hereby created a series of
Certificates to be issued under the Agreement to be distinguished and known as
"6.88% Atlas Air Pass Through Certificates, Series 1999-lA-2" (hereinafter
defined as the "APPLICABLE CERTIFICATES"). Each Applicable Certificate
represents a fractional undivided interest in the Applicable Trust created
hereby. The Applicable Certificates shall be the only instruments evidencing a
fractional undivided interest in the Applicable Trust.
The terms and conditions applicable to the Applicable Certificates are as
follows:
(a) The aggregate principal amount of the Applicable Certificates that
shall be authenticated under the Agreement (except for Applicable Certificates
authenticated and delivered pursuant to Sections 3. 03, 3.04, 3.05 and 3.06 of
the Basic Agreement) is $43,544,000.
(b) The Regular Distribution Dates with respect to any payment of Scheduled
Payments means January 2 and July 2 of each year, commencing on January 2, 2000,
until payment of all of the Scheduled Payments to be made under the Equipment
Notes has been made.
(c) The Special Distribution Dates with respect to the Applicable
Certificates means any Business Day on which a Special Payment is to be
distributed pursuant to the Agreement.
(d) At the Escrow Agent's request under the Escrow Agreement, the Trustee
shall affix the corresponding Escrow Receipt to each Applicable Certificate. In
any event, any transfer or exchange of any Applicable Certificate shall also
effect a transfer or exchange of the related Escrow Receipt. Prior to the Final
Withdrawal Date, no transfer or exchange of any Applicable Certificate shall be
permitted unless the corresponding Escrow Receipt is attached thereto and also
is so transferred or exchanged. By acceptance of any Applicable Certificate to
which an Escrow Receipt is attached, each Holder of such an Applicable
Certificate acknowledges and accepts the restrictions on transfer of the Escrow
Receipt set forth herein and in the Escrow Agreement.
(e) (i) The Applicable Certificates shall be in the form attached hereto as
Exhibit A. Any Person acquiring or accepting an Applicable Certificate or an
interest therein will, by such acquisition or acceptance, be deemed to represent
and warrant to and for the benefit of, among other persons, each Owner
Participant, the Company, the Underwriters and the Pass Through Trustee that
either (i) the assets of an employee benefit plan subject to Title I of the
Employee Retirement Income Security Act of 1974, as amended ("ERISA"), or of a
plan subject to Section 4975 of the Internal Revenue Code of 1986, as amended
(the "CODE"), have not been used to purchase Applicable Certificates or an
interest therein or (ii) the purchase and holding of Applicable Certificates or
an interest therein is exempt from the prohibited transaction restrictions of
ERISA and the Code pursuant to one or more prohibited transaction statutory or
administrative exemptions.
(ii) The Applicable Certificates shall be Book-Entry Certificates and shall
be subject to the conditions set forth in the Letter of Representations between
the Company and the Clearing Agency attached hereto as Exhibit B.
(f) The Applicable Certificates are subject to the Intercreditor Agreement,
the Deposit Agreement and the Escrow Agreement.
<PAGE>
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(g) The Applicable Certificates will have the benefit of the Liquidity
Facility.
(h) The Responsible Party is the Company.
(i) The date referred to in clause (i) of the definition of the term "PTC
Event of Default" in the Basic Agreement is the Final Maturity Date.
(j) The particular "sections of the Note Purchase Agreement", for purposes
of clause (3) of Section 7.07 of the Basic Agreement, are Section 8.1 (with
respect to Owned Aircraft) and Section 9.1 (with respect to Leased Aircraft) of
each Participation Agreement.
(k) The Equipment Notes to be acquired and held in the Applicable Trust,
and the related Aircraft and Note Documents, are described in the Note Purchase
Agreement.
ARTICLE II
DEFINITIONS
Section 2.01. DEFINITIONS. For all purposes of the Basic Agreement as
supplemented by this Trust Supplement, the following capitalized terms have the
following meanings (any term used herein which is defined in both this Trust
Supplement and the Basic Agreement shall have the meaning assigned thereto in
this Trust Supplement for purposes of the Basic Agreement as supplemented by
this Trust Supplement):
AGREEMENT: has the meaning specified in the recitals hereto.
AIRCRAFT: means each of the Aircraft or Substitute Aircraft in respect of
which a Participation Agreement is or is to be, as the case may be, entered into
in accordance with the Note Purchase Agreement.
AIRCRAFT PURCHASE AGREEMENT: has the meaning specified in the Note Purchase
Agreement.
APPLICABLE CERTIFICATE: has the meaning specified in Section 1.01 of this
Trust Supplement.
APPLICABLE CERTIFICATEHOLDER: means the Person in whose name an Applicable
Certificate is registered on the Register for the Applicable Certificates.
APPLICABLE DELIVERY DATE: has the meaning specified in Section 5.01(b) of
this Trust Supplement.
APPLICABLE PARTICIPATION AGREEMENT: has the meaning specified in Section
5.01(b) of this Trust Supplement. APPLICABLE TRUST: has the meaning specified in
the recitals hereto.
BASIC AGREEMENT: has the meaning specified in the first paragraph of this
Trust Supplement.
<PAGE>
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BOEING: means The Boeing Company.
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 Denver, Colorado,
New York, New York, Salt Lake City, Utah or, so long as any Applicable
Certificate is Outstanding, the city and state in which the Trustee or any Loan
Trustee maintains its Corporate Trust Office or receives and disburses funds.
CLASS D CERTIFICATEHOLDER: has the meaning specified in Section 4.01(b)(iv)
of this Trust Supplement.
COMPANY: has the meaning specified in the first paragraph of this Trust
Supplement.
CUT-OFF DATE: means the earlier of (a) the Delivery Period Termination Date
and (b) the date on which a Triggering Event occurs.
DELIVERY NOTICE: has the meaning specified in the Note Purchase Agreement.
DELIVERY PERIOD TERMINATION DATE: means the earlier of (a) May 31, 2000
(PROVIDED that, if a labor strike occurs at Boeing prior to May 31, 2000 such
date shall be extended by adding thereto the number of days that such strike
continues in effect) or (b) the date on which Equipment Notes issued with
respect to all of the Aircraft (or Substitute Aircraft in lieu thereof) have
been purchased by the Applicable Trust and the Other Trusts in accordance with
the Note Purchase Agreement.
DEPOSITS: has the meaning specified in the Deposit Agreement.
DEPOSIT AGREEMENT: means the Deposit Agreement dated as of April 13, 1999
relating to the Applicable Certificates between the Depositary and the Escrow
Agent, as the same may be amended, supplemented or otherwise modified from time
to time in accordance with its terms.
DEPOSITARY: means Credit Suisse First Boston, a banking institution
organized under the laws of Switzerland, acting through its New York branch.
DISTRIBUTION DATE: means any Regular Distribution Date or Special
Distribution Date as the context requires.
ESCROW AGENT: means, First Security Bank, National Association, or any
replacement or successor therefor appointed in accordance with the Escrow
Agreement.
ESCROW AGREEMENT: means the Escrow and Paying Agent Agreement dated as of
April 13, 1999 relating to the Applicable Certificates, among the Escrow Agent,
the Escrow Paying Agent, the Trustee and the Underwriters, as the same may be
amended, supplemented or otherwise modified from time to time in accordance with
its terms.
ESCROW PAYING AGENT: means the Person acting as paying agent under the
Escrow Agreement.
ESCROW RECEIPT: means the receipt substantially in the form annexed to the
Escrow Agreement representing a fractional undivided interest in the funds held
in escrow thereunder.
<PAGE>
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FINAL MATURITY DATE: means January 2, 2011.
FINAL WITHDRAWAL: has the meaning specified in the Escrow Agreement.
FINAL WITHDRAWAL DATE: has the meaning specified in the Escrow Agreement.
FINAL WITHDRAWAL NOTICE: has the meaning specified in Section 5.02 of this
Trust Supplement.
INDENTURE: means each of the separate trust indentures and mortgages
relating to the Aircraft, each as specified or described in a Delivery Notice
delivered pursuant to the Note Purchase Agreement or the related Participation
Agreement, in each case as the same may be amended, supplemented or otherwise
modified from time to time in accordance with its terms.
INTERCREDITOR AGREEMENT: means the Intercreditor Agreement dated as of
April 13, 1999, among the Trustee, the Other Trustees, the Liquidity Provider,
the Liquidity Providers relating to the Certificates issued under each of the
Other Agreements, and Wilmington Trust Company, as Subordination Agent and as
trustee thereunder, as amended, supplemented or otherwise modified from time to
time in accordance with its terms.
INVESTORS: means the Underwriters together with all subsequent beneficial
owners of the Applicable Certificates.
LEASE: means, with respect to each Leased Aircraft, the lease between an
Owner Trustee, 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.
LEASED AIRCRAFT: has the meaning specified in the third recital to this
Trust Supplement.
LEASED AIRCRAFT INDENTURE: has the meaning specified in the Note Purchase
Agreement.
LIQUIDITY FACILITY: means, initially, the Revolving Credit Agreement dated
as of April 13, 1999 relating to the Applicable Certificates, between the
Liquidity Provider and Wilmington Trust Company, as Subordination Agent, as
agent and trustee for the Applicable Trust, and, from and after the replacement
of such agreement pursuant to the Intercreditor Agreement, the replacement
liquidity facility therefor, in each case as amended, supplemented or otherwise
modified from time to time in accordance with their respective terms.
LIQUIDITY PROVIDER: means ABN AMRO Bank N.V., a banking institution
organized under the laws of the Netherlands, acting through its Chicago branch,
or any replacements or successors therefor appointed in accordance with the
Intercreditor Agreement.
NOTE DOCUMENTS: means the Equipment Notes with respect to the Applicable
Certificates and, with respect to any such Equipment Note, (i) the Indenture and
the Participation Agreement relating to such Equipment Note, and (ii) in the
case of any Equipment Note related to a Leased Aircraft, the Lease relating to
such Leased Aircraft.
<PAGE>
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NOTE PURCHASE AGREEMENT: means the Note Purchase Agreement dated as of
April 13, 1999 among the Trustee, the Other Trustees, the Company, the Escrow
Agent, the Escrow Paying Agent and the Subordination Agent, providing for, among
other things, the purchase of Equipment Notes by the Trustee on behalf of the
Trust, as the same may be amended, supplemented or otherwise modified from time
to time, in accordance with its terms.
NOTICE OF PREPAYMENT WITHDRAWAL: has the meaning specified in the Deposit
Agreement.
NOTICE OF PURCHASE WITHDRAWAL: has the meaning specified in the Deposit
Agreement.
OTHER AGREEMENTS: means (i) the Basic Agreement as supplemented by Trust
Supplement No. 1999-1A-1 dated as of the date hereof relating to Atlas Air Pass
Through Trust 1999-1A-1; (ii) the Basic Agreement as supplemented by Trust
Supplement No. 1999-lB dated as of the date hereof relating to Atlas Air Pass
Through Trust 1999-lB; (iii) the Basic Agreement as supplemented by Trust
Supplement No. 1999-lC dated as of the date hereof relating to Atlas Air Pass
Through Trust 1999-1C; and (iv) if Class D Certificates are issued, the Basic
Agreement as supplemented by Trust Supplement No. 1999-1D relating to Atlas Air
Pass Through Trust 1999-D.
OTHER TRUSTEES: means the trustees under the Other Agreements, and any
successor or other trustee appointed as provided therein.
OTHER TRUSTS: means the Atlas Air Pass Through Trust 1999-1A-1, the Atlas
Air Pass Through Trust 1999-lB and the Atlas Air Pass Through Trust 1999-lC,
each created on the date hereof, and if Class D Certificates are issued, the
Atlas Air Pass Through Trust 1999-1D.
OWNED AIRCRAFT: has the meaning specified in the third recital to this
Trust Supplement.
OWNED AIRCRAFT INDENTURE: has the meaning specified in the Note Purchase
Agreement.
OWNER PARTICIPANT: with respect to any Equipment Note relating to a Leased
Aircraft, means the "Owner Participant" 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: with respect to any Equipment Note relating to a Leased
Aircraft, means the "Owner Trustee", 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 Indentures.
OWNER TRUSTEE'S PURCHASE AGREEMENT: means, with respect to any Leased
Aircraft, the agreement between the Company and the relevant Owner Trustee
pursuant to which, inter alia, the Company assigns to the Owner Trustee certain
rights of the Company under the aircraft purchase agreement with respect to such
Leased Aircraft.
<PAGE>
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PARTICIPATION AGREEMENT: means each Participation Agreement to be entered
into, or entered into (as the case may be), by the Trustee pursuant to the Note
Purchase Agreement, as the same may be amended, supplemented or otherwise
modified in accordance with its terms.
POOL BALANCE: means, as of any date, (i) the original aggregate face amount
of the Applicable Certificates less (ii) the aggregate amount of all payments
made in respect of such Applicable Certificates or in respect of Deposits
relating to the Applicable Trust other than payments made in respect of interest
or premium thereon or reimbursement of any costs or expenses incurred in
connection therewith. The Pool Balance as of any Distribution Date shall be
computed after giving effect to any special distribution with respect to unused
Deposits, payment of principal of the Equipment Notes or payment with respect to
other Trust Property and the distribution thereof to be made on that date.
POOL FACTOR: means, as of any Distribution Date, the quotient (rounded to
the seventh decimal place) computed by dividing (i) the Pool Balance by (ii) the
original aggregate face amount of the Applicable Certificates. The Pool Factor
as of any Distribution Date shall be computed after giving effect to any special
distribution with respect to unused Deposits, payment of principal of the
Equipment Notes or payments with respect to other Trust Property and the
distribution thereof to be made on that date.
PREPAYMENT WITHDRAWAL CERTIFICATE: has the meaning specified in the Escrow
Agreement.
PROSPECTUS SUPPLEMENT: means the prospectus supplement dated April 5, 1999
relating to the offering of the Certificates.
SCHEDULED DELIVERY DATE: has the meaning specified in the Note Purchase
Agreement.
SPECIAL PAYMENT: means any payment (other than a Scheduled Payment) in
respect of, or any proceeds of, any Equipment Note, Trust Indenture Estate (as
defined in each Leased Aircraft Indenture) or Collateral (as defined in each
Owned Aircraft Indenture).
SPECIAL REDEMPTION PREMIUM: means the premium payable by the Company
pursuant to Section 4(a)(i) of the Note Purchase Agreement.
SUBSTITUTE AIRCRAFT: has the meaning specified in the Note Purchase
Agreement.
TRIGGERING EVENT: has the meaning assigned to such term in the
Intercreditor Agreement.
TRUST PROPERTY: means (i) subject to the Intercreditor Agreement, the
Equipment Notes held as the property of the Applicable 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 and, subject to the Intercreditor Agreement, any proceeds from the sale
by the Trustee pursuant to Article VI of the Basic Agreement of any Equipment
Note and (iii) all rights of the Applicable Trust and the Trustee, on behalf of
the Applicable Trust, under the Intercreditor Agreement, the Escrow Agreement,
the Note Purchase Agreement and the Liquidity Facility, including, without
limitation, all rights to receive certain payments thereunder, and all monies
paid to the Trustee on behalf of the Applicable Trust pursuant to the
Intercreditor Agreement or the Liquidity Facility, PROVIDED that rights with
respect to the Deposits or under the Escrow Agree-
<PAGE>
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ment, except for the right to direct withdrawals for the purchase of Equipment
Notes to be held herein, will not constitute Trust Property.
TRUST SUPPLEMENT: has the meaning specified in the first paragraph of this
trust supplement.
UNDERWRITERS: means, collectively, Morgan Stanley & Co. Incorporated, BT
Alex. Brown Incorporated, ING Baring Furman Selz, LLC and CIBC Oppenheimer Corp.
UNDERWRITING AGREEMENT: means the Underwriting Agreement dated April 5,
1999 among the Underwriters and the Company, as the same may be amended,
supplemented or otherwise modified from time to time in accordance with its
terms.
ARTICLE III
STATEMENTS TO CERTIFICATEHOLDERS
Section 3.01. ADDITIONS TO ARTICLE IV OF THE BASIC AGREEMENT. In addition
to the provisions of Article IV of the Basic Agreement, the following provisions
shall apply to the Applicable Trust:
(a) Upon the payment of Special Redemption Premium to the Trustee under the
Note Purchase Agreement, the Trustee, upon receipt thereof, shall immediately
deposit the aggregate amount of such Special Redemption Premium in the Special
Payments Account;
(b) The distribution of amounts of Special Redemption Premium as provided
for in Section 4.02(b) of the Basic Agreement shall be on the Special
Distribution Date with respect to such Special Payment or as soon thereafter as
the Trustee has confirmed receipt of the related Special Redemption Premium;
(c) In the event of the payment of a Special Redemption Premium by the
Company to the Trustee under the Note Purchase Agreement, the notice provided
for in Section 4.02(c) of the Basic Agreement shall be mailed, together with the
notice by the Escrow Paying Agent under Section 2.06 of the Escrow Agreement,
not less than 15 days prior to the Special Distribution Date for such amount,
which Special Distribution Date shall be the Final Withdrawal Date; and
(d) The last sentence of the first paragraph of Section 4.02(c) of the
Basic Agreement shall apply equally if the amount of Special Redemption Premium,
if any, has not been calculated at the time the Trustee mails notice of a
Special Payment.
Section 3.02. STATEMENTS TO APPLICABLE CERTIFICATEHOLDERS. (a) On each
Distribution Date, the Trustee will include with each distribution to Applicable
Certificateholders of a Scheduled Payment or Special Payment, as the case may
be, a statement setting forth the information provided below (in the case of a
Special Payment, reflecting in part the information provided by the Escrow
Paying Agent under the Escrow Agreement). Such statement shall set forth (per
$1,000 face amount Applicable Certificate as to (ii), (iii), (iv) and (v) below)
the following information:
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(i) the aggregate amount of funds distributed on such Distribution Date
under the Agreement and under the Escrow Agreement, indicating the
amount allocable to each source;
(ii) the amount of such distribution under the Agreement allocable to
principal and the amount allocable to premium (including any premium
paid with respect to unused Deposits), if any;
(iii) the amount of such distribution under the Agreement allocable to
interest;
(iv) the amount of such distribution under the Escrow Agreement allocable
to interest;
(v) the amount of such distribution under the Escrow Agreement allocable
to unused Deposits, if any; and
(vi) the Pool Balance and the Pool Factor.
With respect to the Applicable Certificates registered in the name of a
Clearing Agency, on the Record Date prior to each Distribution Date, the Trustee
will request from such Clearing Agency a securities position listing setting
forth the names of all Clearing Agency Participants reflected on such Clearing
Agency's books as holding interests in the Applicable Certificates on such
Record Date. On each Distribution Date, the 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 Participant for
forwarding to holders of interests in the Applicable 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 an Applicable
Certificateholder of record a statement containing the sum of the amounts
determined pursuant to clauses (a)(i), (a)(ii), (a)(iii), (a)(iv) and (a)(v)
above for such calendar year or, in the event such Person was an Applicable
Certificateholder of record during a portion of such calendar year, for such
portion of such year, and such other items as are readily available to the
Trustee and which an Applicable Certificateholder shall reasonably request as
necessary for the purpose of such Applicable Certificateholder's preparation of
its federal income tax returns. 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 Applicable Certificates in the
manner described in Section 3.02(a) of this Trust Supplement.
(c) If the aggregate principal payments scheduled for January 2, 2000, on
the Equipment Notes held as Trust Property as of December 8, 1999, differs from
the amount thereof set forth for the Applicable Certificates on page S-45 of the
Prospectus Supplement, by no later than December 15, 1999 the Trustee shall mail
written notice of the actual amount of such scheduled payments to the Applicable
Certificateholders of record as of a date within 10 Business Days prior to the
date of mailing.
(d) Promptly following (i) the Delivery Period Termination Date, if there
has been any change in the information set forth in clauses (x), (y) and (z)
below from that set forth in page S-45 of the Prospectus Supplement, and (ii)
any early redemption or purchase of, or any default in the payment of principal
or interest in respect of, any of the Equipment Notes held in the Applicable
Trust, or any Final Withdrawal, the Trustee shall furnish to Applicable
Certificateholders of record on such date a statement setting forth (x) the
expected Pool Balances for each subsequent Regular Distribution Date following
the Delivery Period Termination Date, (y) the
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related Pool Factors for such Regular Distribution Dates and (z) the expected
principal distribution schedule of the Equipment Notes, in the aggregate, held
as Trust Property at the date of such notice. With respect to the Applicable
Certificates registered in the name of a Clearing Agency, on the Delivery Period
Termination Date, the Trustee will request from such Clearing Agency a
securities position listing setting forth the names of all Clearing Agency
Participants reflected on such Clearing Agency's books as holding interests in
the Applicable Certificates on such date. The 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 Participant for
forwarding to holders of interests in the Applicable Certificates.
(e) This Section 3.02 supersedes and replaces Section 4.03 of the Basic
Agreement, with respect to the Applicable Trust.
ARTICLE IV
DEFAULT
Section 4.01. PURCHASE RIGHTS OF CERTIFICATEHOLDERS. (a) At any time after
the occurrence and during the continuance of a Triggering Event, if the Class
A-1 Trustee is then the Controlling Party, each Applicable Certificateholder
shall have the right to purchase, for the purchase price set forth in the Class
A-1 Trust Agreement, all, but not less than all, of the Class A-1 Certificates
upon ten days' written notice to the Class A-1 Trustee and each other Applicable
Certificateholder, provided that (i) if prior to the end of such ten-day period
any other Applicable Certificateholder notifies such purchasing Applicable
Certificateholder that such other Applicable Certificateholder wants to
participate in such purchase, then such other Applicable Certificateholder may
join with the purchasing Applicable Certificateholder to purchase all, but not
less than all, of the Class A-1 Certificates pro rata based on the Fractional
Undivided Interest in the Applicable Trust held by each such Applicable
Certificateholder and (ii) if prior to the end of such ten-day period any other
Applicable Certificateholder fails to notify the purchasing Applicable
Certificateholder of such other Applicable Certificateholder's desire to
participate in such a purchase, then such other Applicable Certificateholder
shall lose its right to purchase the Class A-1 Certificates pursuant to this
Section 4.01(a).
(b) By acceptance of its Applicable Certificate, each Applicable
Certificateholder agrees that at any time after the occurrence and during the
continuation of a Triggering Event,
(i) if the Applicable Certificateholders are then represented by the
Controlling Party each Class A-1 Certificateholder shall have the right to
purchase all, but not less than all, of the Applicable Certificates upon
ten days' written notice to the Trustee and each other Class A-1
Certificateholder, PROVIDED that (A) if prior to the end of such ten-day
period any other Class A-1 Certificateholder notifies such purchasing Class
A-1 Certificateholder that such other Class A-1 Certificateholder wants to
participate in such purchase, then such other Class A-1 Certificateholder
may join with the purchasing Class A-1 Certificateholder to purchase all,
but not less than all, of the Applicable Certificates pro rata based on the
Fractional Undivided Interest in the Class A-1 Trust held by each such
Class A-1 Certificateholder and (B) if prior to the end of such ten-day
period any other Class A-1 Certificateholder fails to notify the purchasing
Class A-1 Certificateholder of such other Class A-1 Certifiateholder's
desire to participate in such a purchase, then such other Class A-1
Certificateholder shall lose its right to purchase the Applicable
Certificates pursuant to this Section 4.01(b);
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(ii) each Class B Certificateholder shall have the right (which shall
not expire upon any purchase of the Applicable Certificates or the Class
A-1 Certificates pursuant to clause (a) or (b)(i) above) to purchase all,
but not less than all, of the Applicable Certificates and the Class A-1
Certificates upon ten days' written notice to the Trustee, the Class A-1
Trustee and each other Class B Certificateholder, PROVIDED that (A) if
prior to the end of such ten-day period any other Class B Certificateholder
notifies such purchasing Class B Certificateholder that such other Class B
Certificateholder wants to participate in such purchase, then such other
Class B Certificateholder may join with the purchasing Class B
Certificateholder to purchase all, but not less than all, of the Applicable
Certificates and the Class A-1 Certificates pro rata based on the
Fractional Undivided Interest in the Class B Trust held by each such Class
B Certificateholder and (B) if prior to the end of such ten-day period any
other Class B Certificateholder fails to notify the purchasing Class B
Certificateholder of such other Class B Certificateholder's desire to
participate in such a purchase, then such other Class B Certificateholder
shall lose its right to purchase the Applicable Certificates and the Class
A-1 Certificates pursuant to this Section 4.01(b);
(iii) each Class C Certificateholder shall have the right (which shall
not expire upon any purchase of the Applicable Certificates or the Class
A-1 Certificates pursuant to clause (a) or (b)(i) and (ii) above) to
purchase all, but not less than all, of the Applicable Certificates and the
Class A-1 Certificates and the Class B Certificates upon ten days' written
notice to the Trustee, the Class A-1 Trustee, the Class B 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 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 Applicable
Certificates, the Class A-1 Certificates and the Class B 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
Applicable Certificates, the Class A-1 Certificates and the Class B
Certificates pursuant to this Section 4.01(b); and
(iv) each holder of a Class D Certificate (a "CLASS D
CERTIFICATEHOLDER") shall have the right (which shall not expire upon any
purchase of the Applicable Certificates or the Class A-1 Certificates
pursuant to clause (a), (b)(i) or (ii) above or the Class B Certificates
pursuant to clause (iii) above) to purchase all, but not less than all, of
the Applicable Certificates, the Class A-1 Certificates, the Class B
Certificates and the Class C Certificates upon ten days' written notice to
the Trustee, the Class A-1 Trustee, the Class B 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
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 Applicable
Certificates, the Class A-1 Certificates, the Class B 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
Applicable Certificates, the Class A-1 Certificates, the Class B
Certificates and the Class C Certificates pursuant to this Section 4.01(b).
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The purchase price with respect to the Applicable Certificates shall be
equal to the Pool Balance of the Applicable Certificates, together with accrued
and unpaid interest thereon to the date of such purchase, without premium, but
including any other amounts then due and payable to the Applicable
Certificateholders under the Agreement, the Intercreditor Agreement, the Escrow
Agreement or any Note Document or on or in respect of the Applicable
Certificates; PROVIDED, HOWEVER, that (x) if such purchase occurs after a record
date specified in Section 2.03 of the Escrow Agreement relating to the
distribution of unused Deposits and/or accrued and unpaid interest on Deposits
and prior to or on the related distribution date thereunder, such purchase price
shall be reduced by the aggregate amount of unused Deposits and/or interest to
be distributed under the Escrow Agreement (which deducted amounts shall remain
distributable to, and may be retained by, the Applicable Certificateholder as of
such record date) and (y) if such purchase occurs after a Record Date and prior
to or on the related Distribution Date, such purchase price shall be reduced by
the amount to be distributed under this Agreement on the related Distribution
Date (which deducted amounts shall remain distributable to, and may be retained
by, the Applicable Certificateholder as of such Record Date); provided further
that no such purchase of Applicable Certificates shall be effective unless the
purchaser(s) shall certify to the Trustee that contemporaneously with such
purchase, such purchaser(s) is (are) purchasing, pursuant to the terms of the
Agreement and the Other Agreements, (A) in the case of any purchase of the
Applicable Certificates pursuant to clause(b)(i) above, all of the Applicable
Certificates, or (B) in all other cases, the Applicable Certificates, the Class
A-1 Certificates, the Class B Certificates and the Class C Certificates which
are senior to the securities held by such purchaser(s). Each payment of the
purchase price of the Applicable 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 4.01(b). Each
Applicable Certificateholder agrees by its acceptance of its Applicable
Certificate that (at any time after the occurrence and during the continuation
of a Triggering Event) it will, upon payment from such Class A-1
Certificateholder(s), Class B Certificateholder(s), Class C Certificateholder(s)
or Class D Certificateholder(s), 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 for its own acts), all of the right, title, interest
and obligation of such Applicable Certificateholder in the Agreement, the Escrow
Agreement, the Deposit Agreement, the Intercreditor Agreement, the Liquidity
Facility, the Note Purchase Agreement, the Note Documents and all Applicable
Certificates and Escrow Receipts held by such Applicable Certificateholder
(subject to clauses (x) and (y) in the first sentence of this paragraph and
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 shall assume all of such Applicable
Certificateholder's obligations under the Agreement, the Escrow Agreement, the
Deposit Agreement, the Intercreditor Agreement, the Liquidity Facility, the Note
Purchase Agreement, the Note Documents and all such Applicable Certificates and
Escrow Receipts). The Applicable Certificates will be deemed to be purchased on
the date payment of the purchase price is made notwithstanding the failure of
the Applicable Certificateholders to deliver any Applicable Certificates and,
upon such a purchase, (I) the only rights of the Applicable Certificateholders
will be to deliver the Applicable Certificates to the purchaser(s) and receive
the purchase price for such Applicable Certificates and (II) if the purchaser(s)
shall so request, such Applicable Certificateholder will comply with all the
provisions of Section 3.04 of the Basic Agreement to enable new Applicable
Certificates to be issued to the purchaser in such denominations as it shall
request. All charges and expenses in connection with the issuance of any such
new Applicable Certificates shall be borne by the purchaser thereof.
As used in this Section 4.01 and elsewhere in this Trust Supplement, the
terms "Class A-1 Certificate", "Class A-1 Certificateholder", "Class A-1 Trust",
"Class A-1 Trustee", "Class B Certificate", "Class B Certificateholder", "Class
B Trust", "Class B Trustee", "Class C Certificate", "Class C Certificateholder",
"Class C Trust", "Class C Trustee", "Class D Certificate" and "Class D Trust",
shall have the respective meanings assigned to such terms in the Intercreditor
Agreement.
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(c) This Section 4.01 supersedes and replaces Section 6.01(b) of the Basic
Agreement, with respect to the Applicable Trust.
ARTICLE V
THE TRUSTEE
Section 5.01. DELIVERY OF DOCUMENTS; DELIVERY DATES. (a) The Trustee is
hereby directed (i) to execute and deliver the Intercreditor Agreement, the
Escrow Agreement and the Note Purchase Agreement on or prior to the Issuance
Date, each in the form delivered to the Trustee by the Company, and (ii) subject
to the respective terms thereof, to perform its obligations thereunder. Upon
request of the Company and the satisfaction or waiver of the closing conditions
specified in the Underwriting Agreement, the Trustee shall execute, deliver,
authenticate, issue and sell Applicable Certificates in authorized denominations
equaling in the aggregate the amount set forth, with respect to the Applicable
Trust, in Schedule I to the Underwriting Agreement evidencing the entire
ownership interest in the Applicable Trust, which amount equals the maximum
aggregate principal amount of Equipment Notes which may be purchased by the
Trustee pursuant to the Note Purchase Agreement. Except as provided in Sections
3.03, 3.04, 3.05 and 3.06 of the Basic Agreement, the Trustee shall not execute,
authenticate or deliver Applicable Certificates in excess of the aggregate
amount specified in this paragraph. The provisions of this Section 5.01(a)
supersede and replace the first sentence of Section 3.02(a) of the Basic
Agreement, with respect to the Applicable Trust.
(b) On or after the Issuance Date, the Company may deliver from time to
time to the Trustee a Delivery Notice relating to one or more Equipment Notes.
After receipt of a Delivery Notice and in any case no later than one Business
Day prior to a Scheduled Delivery Date as to which such Delivery Notice relates
(the "APPLICABLE DELIVERY DATE"), the Trustee shall (as and when specified in
the Delivery Notice) instruct the Escrow Agent to provide a Notice of Purchase
Withdrawal to the Depositary requesting (A) the withdrawal of one or more
Deposits on the Applicable Delivery Date in accordance with and to the extent
permitted by the terms of the Escrow Agreement and the Deposit Agreement and (B)
the payment of all, or a portion, of such Deposit or Deposits in an amount equal
in the aggregate to the purchase price of such Equipment Notes to or on behalf
of the Owner Trustee or the Company, as the case may be, issuing such Equipment
Notes, all as shall be described in the Delivery Notice. The Trustee shall (as
and when specified in such Delivery Notice), subject to the conditions set forth
in Section 2 of the Note Purchase Agreement, enter into and perform its
obligations under the Participation Agreement specified in such Delivery Notice
(the "APPLICABLE PARTICIPATION AGREEMENT") and cause such certificates,
documents and legal opinions relating to the Trustee to be duly delivered as
required by the Applicable Participation Agreement. If at any time prior to the
Applicable Delivery Date, the Trustee receives a notice of postponement pursuant
to Section 1(e) or 1(f) of the Note Purchase Agreement, then the Trustee shall
give the Depositary (with a copy to the Escrow Agent) a notice of cancellation
of such Notice of Purchase Withdrawal relating to such Deposit or Deposits on
such Applicable Delivery Date. Upon satisfaction of the conditions specified in
the Note Purchase Agreement and the Applicable Participation Agreement, the
Trustee shall purchase the applicable Equipment Notes with the proceeds of the
withdrawals of one or more Deposits made on the Applicable Delivery Date in
accordance with the terms of the Deposit Agreement and the Escrow Agreement. The
purchase price of such Equipment Notes shall equal the principal amount of such
Equipment Notes. Amounts withdrawn from such Deposit or Deposits in excess of
the purchase price of the Equipment Notes or to the extent not applied on the
Applicable Delivery Date to the purchase price of the Equipment Notes, shall be
re-deposited by the Trustee with the Depositary on the Applicable Delivery Date
in accordance with the terms of the Deposit Agreement. The provisions of this
Section 5.01(b) supersede and replace the provisions of Section 2.02 of the
Basic Agreement, with respect to the Applicable Trust, and all provi-
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sions of the Basic Agreement relating to Postponed Notes and Section 2.02 of the
Basic Agreement shall not apply to the Applicable Trust.
(c) The Trustee acknowledges its acceptance of all right, title and
interest in and to the Trust Property to be acquired pursuant to Section 5.01(b)
of this Trust Supplement, the Note Purchase Agreement and each Applicable
Participation Agreement, and declares that it holds and will hold such right,
title and interest for the benefit of all present and future Applicable
Certificateholders, upon the trusts set forth in this Agreement. By its
acceptance of an Applicable Certificate, each initial Applicable
Certificateholder, as a grantor of the Applicable Trust, joins with the Trustee
in the creation of the Applicable Trust. The provisions of this Section 5.01(c)
supersede and replace the provisions of Section 2.03 of the Basic Agreement,
with respect to the Applicable Trust.
Section 5.02. WITHDRAWAL OF DEPOSITS. (a) If the Company shall receive
written notice from Boeing that the delivery date of any Aircraft will be
delayed beyond the Delivery Period Termination Date, the Company may deliver to
the Trustee written notice to such effect and requesting that the Trustee
deliver to the Escrow Agent a Prepayment Withdrawal Certificate pursuant to the
Escrow Agreement directing the Escrow Agent to provide a Notice of Prepayment
Withdrawal to the Depositary requesting the withdrawal of the Deposits relating
to Equipment Notes in respect of such Aircraft in accordance with and to the
extent permitted by the terms of the Escrow Agreement and the Deposit Agreement.
(b) If any Deposits remain outstanding on the Business Day next succeeding
the Cut-off Date, the Trustee shall (i) give the Escrow Agent notice that the
Trustee's obligation to purchase Equipment Notes under the Note Purchase
Agreement has terminated and instruct the Escrow Agent to provide a notice of
Final Withdrawal to the Depositary substantially in the form of Exhibit B to the
Deposit Agreement (the "FINAL WITHDRAWAL NOTICE") and (ii) shall make demand
upon the Company pursuant to the Note Purchase Agreement for an amount equal to
the Deposit Make Whole Amount, if any, such payment to be made on the Final
Withdrawal Date.
Section 5.03. THE TRUSTEE. (a) Subject to Section 5.04 of this Trust
Supplement and Section 7.15 of the Basic Agreement, the Trustee shall not be
responsible in any manner whatsoever for or in respect of the validity or
sufficiency of this Trust Supplement, the Deposit Agreement, the Note Purchase
Agreement or the Escrow Agreement or the due execution hereof or thereof by the
Company or the other parties thereto (other than the Trustee), or for or in
respect of the recitals and statements contained herein or therein, all of which
recitals and statements are made solely by the Company, except that the Trustee
hereby represents and warrants that each of this Trust Supplement, the Basic
Agreement, each Applicable Certificate, the Intercreditor Agreement, the Note
Purchase Agreement and the Escrow Agreement has been executed and delivered by
one of its officers who is duly authorized to execute and deliver such document
on its behalf.
(b) Except as herein otherwise provided and except during the continuance
of an Event of Default in respect of the Applicable Trust created hereby, no
duties, responsibilities or liabilities are assumed, or shall be construed to be
assumed, by the Trustee by reason of this Trust Supplement other than as set
forth in the Agreement, and this Trust Supplement is executed and accepted on
behalf of the Trustee, subject to all the terms and conditions set forth in the
Agreement, as fully to all intents as if the same were herein set forth at
length.
Section 5.04. REPRESENTATIONS AND WARRANTIES OF THE TRUSTEE. The Trustee
hereby represents and warrants that:
(a) the Trustee has full power, authority and legal right to execute,
deliver and perform this Trust Supplement, the Intercreditor Agreement, the
Escrow Agreement, the Note Purchase Agreement and the
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Note Documents to which it is or is to become a party and has taken all
necessary action to authorize the execution, delivery and performance by it of
this Trust Supplement, the Intercreditor Agreement, the Escrow Agreement, the
Note Purchase Agreement and the Note Documents to which it is or is to become a
party;
(b) the execution, delivery and performance by the Trustee of this Trust
Supplement, the Intercreditor Agreement, the Escrow Agreement, the Note Purchase
Agreement and the Note Documents to which it is or is to become a party (i) will
not violate any provision of any United States federal law or the law of the
state of the United States where it is located governing 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, 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, which violation, default
or lien could reasonably be expected to have an adverse effect on the Trustee's
performance or ability to perform its duties hereunder or thereunder or on the
transactions contemplated herein or therein;
(c) the execution, delivery and performance by the Trustee of this Trust
Supplement, the Intercreditor Agreement, the Escrow Agreement, the Note Purchase
Agreement and the Note Documents to which it is or is to become a party 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 it is located regulating the banking and corporate trust
activities of the Trustee; and
(d) this Trust Supplement, the Intercreditor Agreement, the Escrow
Agreement, the Note Purchase Agreement and the Note Documents to which it is or
is to become a party have been, or will be, as applicable, duly executed and
delivered by the Trustee and constitute, or will constitute, as applicable, 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.
Section 5.05. TRUSTEE LIENS. The Trustee in its individual capacity agrees,
in addition to the agreements contained in Section 7.17 of the Basic Agreement,
that it will at its own cost and expense promptly take any action as may be
necessary to duly discharge and satisfy in full any Trustee's Liens on or with
respect to the Trust Property which is attributable to the Trustee in its
individual capacity and which is unrelated to the transactions contemplated by
the Intercreditor Agreement or the Note Purchase Agreement.
ARTICLE VI
ADDITIONAL AMENDMENT; SUPPLEMENTAL AGREEMENTS
Section 6.01. SUPPLEMENTAL AGREEMENTS WITHOUT CONSENT OF APPLICABLE
CERTIFICATEHOLDERS. Without limitation of Section 9.01 of the Basic Agreement,
under the terms of, and subject to the limitations contained in, Section 9.01 of
the Basic Agreement, the Company may (but will not be required to), and the
Trustee (subject to Section 9.03 of the Basic Agreement) shall, at the Company's
request, at any time and from time to time, (i) enter into one or more
agreements supplemental to the Escrow Agreement, the Note Purchase Agreement or
the Deposit Agreement, for any of the purposes set forth in clauses (a) through
(i) of such Section 9.01, and (without limitation of the foregoing or Section
9.01 of the Basic
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Agreement) clauses (b) and (c) of such Section 9.01 shall also be deemed to
include the Company's obligations under (in the case of clause (b)), and the
Company's rights and powers conferred by (in the case of clause (c)), the Note
Purchase Agreement and references in clauses (d), (f) and (g) of such Section
9.01 to "any Intercreditor Agreement or any Liquidity Facility" shall also be
deemed to refer to "the Intercreditor Agreement, the Liquidity Facility, the
Escrow Agreement, the Note Purchase Agreement or the Deposit Agreement" and (ii)
enter into one or more agreements supplemental to the Basic Agreement to provide
for the formation of a Class D Trust, the issuance of Class D Certificates, the
purchase by the Class D Trust of Equipment Notes and other matters incidental
thereto or otherwise contemplated by Section 2.01(b) of the Basic Agreement.
Section 6.02. SUPPLEMENTAL AGREEMENTS WITH CONSENT OF APPLICABLE
CERTIFICATEHOLDERS. Without limitation of Section 9.02 of the Basic Agreement,
the provisions of Section 9.02 of the Basic Agreement shall apply to agreements
or amendments for the purpose of adding any provisions to or changing in any
manner or eliminating any of the provisions of the Escrow Agreement, the Deposit
Agreement or the Note Purchase Agreement or modifying in any manner the rights
and obligations of the Applicable Certificateholders under the Escrow Agreement,
the Deposit Agreement or the Note Purchase Agreement; provided that the
provisions of Section 9.02(a) of the Basic Agreement shall be deemed to include
reductions in any manner of, or delay in the timing of, any receipt by the
Applicable Certificateholders of payments upon the Deposits.
ARTICLE VII
TERMINATION OF TRUST
Section 7.01. TERMINATION OF THE APPLICABLE TRUST. (a) The respective
obligations and responsibilities of the Company and the Trustee with respect to
the Applicable Trust shall terminate upon distribution to all Applicable
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 Applicable
Trust continue beyond one hundred ten (110) years following the date of the
execution of this Trust Supplement.
ARTICLE VIII
MISCELLANEOUS PROVISIONS
Section 8.01. 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. All replacements of provisions of, and other modifications of the
Basic Agreement set forth in this Trust Supplement are solely with respect to
the Applicable Trust.
SECTION 8.02. GOVERNING LAW. THIS TRUST SUPPLEMENT AND THE APPLICABLE
CERTIFICATES SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF
THE STATE OF NEW YORK.
<PAGE>
-18-
Section 8.03. EXECUTION IN COUNTERPARTS. This Trust Supplement may be
executed in any number of counterparts, each of which shall be an original, but
such counterparts shall together constitute but one and the same instrument.
Section 8.04. INTENTION OF PARTIES. The parties hereto intend that the
Applicable Trust be classified for U.S. federal income tax purposes as a grantor
trust under Subpart E, Part I of Subchapter J 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 Applicable Certificateholder and Investor, by its
acceptance of its Applicable Certificate or a beneficial interest therein,
agrees to treat the Applicable Trust as a grantor trust for all U.S. federal,
state and local income tax purposes. The powers granted and obligations
undertaken pursuant to the Agreement shall be so construed so as to further such
intent.
<PAGE>
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IN WITNESS WHEREOF, the Company and the Trustee have caused this Trust
Supplement to be duly executed by their respective representatives thereto duly
authorized, as of the day and year first written above.
ATLAS AIR, INC.
By: /s/ Richard H. Shuyler
--------------------------------
Name: Richard H. Shuyler
Title: Executive Vice President,
Treasurer and Director
WILMINGTON TRUST COMPANY,
as Trustee
By: /s/ James P. Lawler
--------------------------------
Name: James P. Lawler
Title: Vice President
<PAGE>
EXHIBIT A
FORM OF CERTIFICATE
Certificate
No._____
[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.]*
ATLAS AIR PASS THROUGH TRUST 1999-lA-2
% Atlas Air Pass Through Certificate, Series 1999-lA-2
Issuance Date: , 1999
Final Expected Distribution Date:
Evidencing A Fractional Undivided Interest In The
Atlas Air Pass Through Trust 1999-lA-2, The
Property Of Which Shall Include Certain Equipment Notes
Each Secured By An Aircraft Leased To Or Owned By
Atlas Air, Inc.
______________Fractional Undivided Interest
representing % 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 Atlas Air Pass Through Trust 1999-1A-2 (the "TRUST") created by
Wilmington Trust Company, as trustee (the "Trustee"), pursuant to a Pass Through
Trust Agreement, dated as of April __, 1999 (the "BASIC AGREEMENT"), between the
Trustee and Atlas Air, Inc., a Delaware corporation (the "Company"), as
supplemented by Trust Supplement No. 1999-1A-2 thereto, dated as of April __,
1999 (the "Trust Supplement" and, together with the Basic Agreement, 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 " % Atlas Air Pass Through Certificates, Series
1999-lA-2" (herein called the "CERTIFICATES").
- ----------
* This legend to appear on Book-Entry Certificates to be deposited with the
Depository Trust Company.
<PAGE>
-2-
This Certificate is issued under and is subject to the terms, provisions and
conditions of the Agreement. By virtue of its acceptance hereof, the holder of
this Certificate (the "CERTIFICATEHOLDER" and, together with all other holders
of Certificates issued by the Trust, the "CERTIFICATEHOLDERS") assents to and
agrees to be bound by the provisions of the Agreement and the Intercreditor
Agreement. The property of the Trust includes certain Equipment Notes and all
rights of the Trust to receive payments under the Intercreditor Agreement and
the Liquidity Facility (the "TRUST PROPERTY"). Each issue of the Equipment Notes
is secured by, among other things, a security interest in an Aircraft leased to
or owned by the Company.
The Certificates represent Fractional Undivided Interests in the Trust and
the Trust Property and 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 2 and July 2 (a "REGULAR DISTRIBUTION DATE")
commencing January 2, 2000, 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 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 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 distribution 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 or the 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
distribution to such Certificateholder as provided in the 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 busi-
<PAGE>
-3-
ness 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
Certificateholders 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.
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.
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.
Each Certificateholder and Investor, by its acceptance of this Certificate
or a beneficial interest herein, agrees to treat the Trust as a grantor trust
for all U.S. federal, state and local income tax purposes.
The Trustee, the Registrar, and any agent of the Trustee or the Registrar
may treat the person in whose name this Certificate is registered as the owner
hereof for all purposes, and neither the Trustee, the Registrar, nor 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 have represented and
warranted that either: (i) the assets of an employee benefit plan subject to
Title I of the Employee Retirement Income Security Act of 1974, as amended
("ERISA"), or of a plan subject to Section 4975 of the Internal Revenue Code of
1986, as amended (the "CODE"), have not been used to purchase this Certificate
or an in-
<PAGE>
-4-
terest herein or (ii) the purchase and holding of this Certificate or an
interest herein are exempt from the prohibited transaction restrictions of ERISA
and the Code pursuant to one or more prohibited transaction statutory or
administrative exemptions.
THE AGREEMENT AND THIS CERTIFICATE SHALL BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK AND THE OBLIGATIONS, RIGHTS
AND REMEDIES OF THE PARTIES HEREUNDER 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.
<PAGE>
-5-
IN WITNESS WHEREOF, the Trustee has caused this Certificate to be duly
executed.
ATLAS AIR PASS THROUGH TRUST
1999-1A-2
By: WILMINGTON TRUST COMPANY,
not in its individual capacity but solely
as Trustee
By:
--------------------------------
Name:
Title:
<PAGE>
FORM OF THE TRUSTEE'S CERTIFICATE OF AUTHENTICATION
This is one of the Certificates referred to in the within-mentioned
Agreement.
WILMINGTON TRUST COMPANY,
not in its individual capacity but solely
as Trustee
By:
--------------------------------
Name:
Title:
<PAGE>
EXHIBIT B
DTC Letter of Representations
TRUST SUPPLEMENT No. 1999-1B
Dated as of April 13, 1999
between
WILMINGTON TRUST COMPANY
as Trustee,
and
ATLAS AIR INC.
to
PASS THROUGH TRUST AGREEMENT
Dated as of April 1, 1999
$111,910,000
Atlas Air Pass Through Trust 1999-1B
7.63% Atlas Air
Pass Through Certificates,
Series 1999-lB
This Trust Supplement No. 1999-1B (herein called the "TRUST SUPPLEMENT")
dated as of April 13, 1999 between Atlas Air, Inc., a Delaware corporation (the
"COMPANY"), and Wilmington Trust Company (the "TRUSTEE") to the Pass Through
Trust Agreement dated as of April 1, 1999, between the Company and the Trustee
(the "BASIC AGREEMENT").
W I T N E S S E T H:
WHEREAS, the Basic Agreement, unlimited as to the aggregate principal
amount of Certificates (unless otherwise specified herein, capitalized terms
used herein without definition having the respective meanings specified in the
Basic Agreement) which may be issued thereunder, has heretofore been executed
and delivered;
WHEREAS, the Company has obtained commitments from Boeing for the delivery
of certain Aircraft;
WHEREAS, the Company intends to finance the acquisition of each such
Aircraft either (i) through separate leveraged lease transactions, in which case
the Company will lease such Aircraft (collectively,
<PAGE>
-2-
the "LEASED AIRCRAFT"), or (ii) through separate secured loan transactions, in
which case the Company will own such Aircraft (collectively, the "OWNED
AIRCRAFT");
WHEREAS, in the case of each Leased Aircraft, each Owner Trustee, acting on
behalf of the corresponding Owner Participant, will issue pursuant to an
Indenture, on a non-recourse basis, Equipment Notes in order to finance a
portion of its purchase price of such Leased Aircraft;
WHEREAS, in the case of each Owned Aircraft, the Company will issue
pursuant to an Indenture, on a recourse basis, Equipment Notes to finance all or
a portion of the purchase price of such Owned Aircraft;
WHEREAS, the Trustee hereby declares the creation of this Atlas Air Pass
Through Trust 1999-1B (the "APPLICABLE TRUST") for the benefit of the Applicable
Certificateholders, and the initial Applicable Certificateholders as the
grantors of the Applicable Trust, by their respective acceptances of the
Applicable Certificates, join in the creation of the Applicable Trust with the
Trustee;
WHEREAS, all Certificates to be issued by the Applicable Trust will
evidence fractional undivided interests in the Applicable Trust and will convey
no rights, benefits or interests in respect of any property other than the Trust
Property, except for those Certificates to which an Escrow Receipt has been
affixed;
WHEREAS, the Escrow Agent, the Trustee and the Underwriters have
contemporaneously herewith entered into an Escrow Agreement with the Escrow
Paying Agent pursuant to which the Underwriters have delivered to the Escrow
Agent the proceeds from the sale of the Applicable Certificates and have
irrevocably instructed the Escrow Agent to withdraw and pay funds from such
proceeds upon request and proper certification by the Trustee to purchase
Equipment Notes as the Aircraft are delivered by Boeing under the Aircraft
Purchase Agreement from time to time prior to the Delivery Period Termination
Date;
WHEREAS, the Escrow Agent on behalf of the Applicable Certificateholders
has contemporaneously herewith entered into a Deposit Agreement with the
Depositary under which the Deposits referred to therein will be made and from
which it will withdraw funds to allow the Trustee to purchase Equipment Notes
from time to time prior to the Delivery Period Termination Date;
WHEREAS, pursuant to the terms and conditions of the Basic Agreement as
supplemented by this Trust Supplement (the "AGREEMENT") and the Note Purchase
Agreement, upon or shortly following delivery of an Aircraft, the Trustee on
behalf of the Applicable Trust, using funds withdrawn under the Escrow
Agreement, shall purchase one or more Equipment Notes having the same interest
rate as, and final maturity date not later than the Final Regular Distribution
Date of, the Applicable Certificates issued hereunder and shall hold such
Equipment Notes in trust for the benefit of the Applicable Certificateholders;
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, this Trust Supplement is subject to the provisions of the Trust
Indenture Act of 1939, as amended, and shall, to the extent applicable, be
governed by such provisions;
NOW THEREFORE, in consideration of the premises herein, it is agreed
between the Company and the Trustee as follows:
<PAGE>
-3-
ARTICLE I
THE CERTIFICATES
Section 1.01. THE CERTIFICATES. There is hereby created a series of
Certificates to be issued under the Agreement to be distinguished and known as
"7.63% Atlas Air Pass Through Certificates, Series 1999-lB" (hereinafter defined
as the "APPLICABLE CERTIFICATES"). Each Applicable Certificate represents a
fractional undivided interest in the Applicable Trust created hereby. The
Applicable Certificates shall be the only instruments evidencing a fractional
undivided interest in the Applicable Trust.
The terms and conditions applicable to the Applicable Certificates are as
follows:
(a) The aggregate principal amount of the Applicable Certificates that
shall be authenticated under the Agreement (except for Applicable Certificates
authenticated and delivered pursuant to Sections 3. 03, 3.04, 3.05 and 3.06 of
the Basic Agreement) is $111,910,000.
(b) The Regular Distribution Dates with respect to any payment of Scheduled
Payments means January 2 and July 2 of each year, commencing on January 2, 2000,
until payment of all of the Scheduled Payments to be made under the Equipment
Notes has been made.
(c) The Special Distribution Dates with respect to the Applicable
Certificates means any Business Day on which a Special Payment is to be
distributed pursuant to the Agreement.
(d) At the Escrow Agent's request under the Escrow Agreement, the Trustee
shall affix the corresponding Escrow Receipt to each Applicable Certificate. In
any event, any transfer or exchange of any Applicable Certificate shall also
effect a transfer or exchange of the related Escrow Receipt. Prior to the Final
Withdrawal Date, no transfer or exchange of any Applicable Certificate shall be
permitted unless the corresponding Escrow Receipt is attached thereto and also
is so transferred or exchanged. By acceptance of any Applicable Certificate to
which an Escrow Receipt is attached, each Holder of such an Applicable
Certificate acknowledges and accepts the restrictions on transfer of the Escrow
Receipt set forth herein and in the Escrow Agreement.
(e) (i) The Applicable Certificates shall be in the form attached hereto as
Exhibit A. Any Person acquiring or accepting an Applicable Certificate or an
interest therein will, by such acquisition or acceptance, be deemed to represent
and warrant to and for the benefit of, among other persons, each Owner
Participant, the Company, the Underwriters and the Pass Through Trustee that
either (i) the assets of an employee benefit plan subject to Title I of the
Employee Retirement Income Security Act of 1974, as amended ("ERISA"), or of a
plan subject to Section 4975 of the Internal Revenue Code of 1986, as amended
(the "CODE"), have not been used to purchase Applicable Certificates or an
interest therein or (ii) the purchase and holding of Applicable Certificates or
an interest therein is exempt from the prohibited transaction restrictions of
ERISA and the Code pursuant to one or more prohibited transaction statutory or
administrative exemptions.
(ii) The Applicable Certificates shall be Book-Entry Certificates and shall
be subject to the conditions set forth in the Letter of Representations between
the Company and the Clearing Agency attached hereto as Exhibit B.
(f) The Applicable Certificates are subject to the Intercreditor Agreement,
the Deposit Agreement and the Escrow Agreement.
<PAGE>
-4-
(g) The Applicable Certificates will have the benefit of the Liquidity
Facility.
(h) The Responsible Party is the Company.
(i) The date referred to in clause (i) of the definition of the term "PTC
Event of Default" in the Basic Agreement is the Final Maturity Date.
(j) The particular "sections of the Note Purchase Agreement", for purposes
of clause (3) of Section 7.07 of the Basic Agreement, are Section 8.1 (with
respect to Owned Aircraft) and Section 9.1 (with respect to Leased Aircraft) of
each Participation Agreement.
(k) The Equipment Notes to be acquired and held in the Applicable Trust,
and the related Aircraft and Note Documents, are described in the Note Purchase
Agreement.
ARTICLE II
DEFINITIONS
Section 2.01. DEFINITIONS. For all purposes of the Basic Agreement as
supplemented by this Trust Supplement, the following capitalized terms have the
following meanings (any term used herein which is defined in both this Trust
Supplement and the Basic Agreement shall have the meaning assigned thereto in
this Trust Supplement for purposes of the Basic Agreement as supplemented by
this Trust Supplement):
AGREEMENT: has the meaning specified in the recitals hereto.
AIRCRAFT: means each of the Aircraft or Substitute Aircraft in respect of
which a Participation Agreement is or is to be, as the case may be, entered into
in accordance with the Note Purchase Agreement.
AIRCRAFT PURCHASE AGREEMENT: has the meaning specified in the Note Purchase
Agreement.
APPLICABLE CERTIFICATE: has the meaning specified in Section 1.01 of this
Trust Supplement.
APPLICABLE CERTIFICATEHOLDER: means the Person in whose name an Applicable
Certificate is registered on the Register for the Applicable Certificates.
APPLICABLE DELIVERY DATE: has the meaning specified in Section 5.01(b) of
this Trust Supplement.
APPLICABLE PARTICIPATION AGREEMENT: has the meaning specified in Section
5.01(b) of this Trust Supplement. APPLICABLE TRUST: has the meaning specified in
the recitals hereto.
BASIC AGREEMENT: has the meaning specified in the first paragraph of this
Trust Supplement.
<PAGE>
-5-
BOEING: means The Boeing Company.
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 Denver, Colorado,
New York, New York, Salt Lake City, Utah or, so long as any Applicable
Certificate is Outstanding, the city and state in which the Trustee or any Loan
Trustee maintains its Corporate Trust Office or receives and disburses funds.
CLASS D CERTIFICATEHOLDER: has the meaning specified in Section 4.01(b)(ii)
of this Trust Supplement.
COMPANY: has the meaning specified in the first paragraph of this Trust
Supplement.
CUT-OFF DATE: means the earlier of (a) the Delivery Period Termination Date
and (b) the date on which a Triggering Event occurs.
DELIVERY NOTICE: has the meaning specified in the Note Purchase Agreement.
DELIVERY PERIOD TERMINATION DATE: means the earlier of (a) May 31, 2000
(PROVIDED that, if a labor strike occurs at Boeing prior to May 31, 2000 such
date shall be extended by adding thereto the number of days that such strike
continues in effect) or (b) the date on which Equipment Notes issued with
respect to all of the Aircraft (or Substitute Aircraft in lieu thereof) have
been purchased by the Applicable Trust and the Other Trusts in accordance with
the Note Purchase Agreement.
DEPOSITS: has the meaning specified in the Deposit Agreement.
DEPOSIT AGREEMENT: means the Deposit Agreement dated as of April 13, 1999
relating to the Applicable Certificates between the Depositary and the Escrow
Agent, as the same may be amended, supplemented or otherwise modified from time
to time in accordance with its terms.
DEPOSITARY: means Credit Suisse First Boston, a banking institution
organized under the laws of Switzerland, acting through its New York branch.
DISTRIBUTION DATE: means any Regular Distribution Date or Special
Distribution Date as the context requires.
ESCROW AGENT: means, First Security Bank, National Association, or any
replacement or successor therefor appointed in accordance with the Escrow
Agreement.
ESCROW AGREEMENT: means the Escrow and Paying Agent Agreement dated as of
April 13, 1999 relating to the Applicable Certificates, among the Escrow Agent,
the Escrow Paying Agent, the Trustee and the Underwriters, as the same may be
amended, supplemented or otherwise modified from time to time in accordance with
its terms.
ESCROW PAYING AGENT: means the Person acting as paying agent under the
Escrow Agreement.
ESCROW RECEIPT: means the receipt substantially in the form annexed to the
Escrow Agreement representing a fractional undivided interest in the funds held
in escrow thereunder.
<PAGE>
-6-
FINAL MATURITY DATE: means July 2, 2016.
FINAL WITHDRAWAL: has the meaning specified in the Escrow Agreement.
FINAL WITHDRAWAL DATE: has the meaning specified in the Escrow Agreement.
FINAL WITHDRAWAL NOTICE: has the meaning specified in Section 5.02 of this
Trust Supplement.
INDENTURE: means each of the separate trust indentures and mortgages
relating to the Aircraft, each as specified or described in a Delivery Notice
delivered pursuant to the Note Purchase Agreement or the related Participation
Agreement, in each case as the same may be amended, supplemented or otherwise
modified from time to time in accordance with its terms.
INTERCREDITOR AGREEMENT: means the Intercreditor Agreement dated as of
April 13, 1999, among the Trustee, the Other Trustees, the Liquidity Provider,
the Liquidity Providers relating to the Certificates issued under each of the
Other Agreements, and Wilmington Trust Company, as Subordination Agent and as
trustee thereunder, as amended, supplemented or otherwise modified from time to
time in accordance with its terms.
INVESTORS: means the Underwriters together with all subsequent beneficial
owners of the Applicable Certificates.
LEASE: means, with respect to each Leased Aircraft, the lease between an
Owner Trustee, 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.
LEASED AIRCRAFT: has the meaning specified in the third recital to this
Trust Supplement.
LEASED AIRCRAFT INDENTURE: has the meaning specified in the Note Purchase
Agreement.
LIQUIDITY FACILITY: means, initially, the Revolving Credit Agreement dated
as of April 13, 1999 relating to the Applicable Certificates, between the
Liquidity Provider and Wilmington Trust Company, as Subordination Agent, as
agent and trustee for the Applicable Trust, and, from and after the replacement
of such agreement pursuant to the Intercreditor Agreement, the replacement
liquidity facility therefor, in each case as amended, supplemented or otherwise
modified from time to time in accordance with their respective terms.
LIQUIDITY PROVIDER: means ABN AMRO Bank N.V., a banking institution
organized under the laws of the Netherlands, acting through its Chicago branch,
or any replacements or successors therefor appointed in accordance with the
Intercreditor Agreement.
NOTE DOCUMENTS: means the Equipment Notes with respect to the Applicable
Certificates and, with respect to any such Equipment Note, (i) the Indenture and
the Participation Agreement relating to such Equipment Note, and (ii) in the
case of any Equipment Note related to a Leased Aircraft, the Lease relating to
such Leased Aircraft.
<PAGE>
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NOTE PURCHASE AGREEMENT: means the Note Purchase Agreement dated as of
April 13, 1999 among the Trustee, the Other Trustees, the Company, the Escrow
Agent, the Escrow Paying Agent and the Subordination Agent, providing for, among
other things, the purchase of Equipment Notes by the Trustee on behalf of the
Trust, as the same may be amended, supplemented or otherwise modified from time
to time, in accordance with its terms.
NOTICE OF PREPAYMENT WITHDRAWAL: has the meaning specified in the Deposit
Agreement.
NOTICE OF PURCHASE WITHDRAWAL: has the meaning specified in the Deposit
Agreement.
OTHER AGREEMENTS: means (i) the Basic Agreement as supplemented by Trust
Supplement No. 1999-1A-1 dated as of the date hereof relating to Atlas Air Pass
Through Trust 1999-1A-1; (ii) the Basic Agreement as supplemented by Trust
Supplement No. 1999-1A-2 dated as of the date hereof relating to Atlas Air Pass
Through Trust 1999-lA-2; (iii) the Basic Agreement as supplemented by Trust
Supplement No. 1999-lC dated as of the date hereof relating to Atlas Air Pass
Through Trust 1999-1C; and (iv) if Class D Certificates are issued, the Basic
Agreement as supplemented by Trust Supplement No. 1999-1D relating to Atlas Air
Pass Through Trust 1999-D.
OTHER TRUSTEES: means the trustees under the Other Agreements, and any
successor or other trustee appointed as provided therein.
OTHER TRUSTS: means the Atlas Air Pass Through Trust 1999-1A-1, the Atlas
Air Pass Through Trust 1999-lA-2 and the Atlas Air Pass Through Trust 1999-lC,
each created on the date hereof, and if Class D Certificates are issued, the
Atlas Air Pass Through Trust 1999-1D.
OWNED AIRCRAFT: has the meaning specified in the third recital to this
Trust Supplement.
OWNED AIRCRAFT INDENTURE: has the meaning specified in the Note Purchase
Agreement.
OWNER PARTICIPANT: with respect to any Equipment Note relating to a Leased
Aircraft, means the "Owner Participant" 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: with respect to any Equipment Note relating to a Leased
Aircraft, means the "Owner Trustee", 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 Indentures.
OWNER TRUSTEE'S PURCHASE AGREEMENT: means, with respect to any Leased
Aircraft, the agreement between the Company and the relevant Owner Trustee
pursuant to which, inter alia, the Company assigns to the Owner Trustee certain
rights of the Company under the aircraft purchase agreement with respect to such
Leased Aircraft.
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PARTICIPATION AGREEMENT: means each Participation Agreement to be entered
into, or entered into (as the case may be), by the Trustee pursuant to the Note
Purchase Agreement, as the same may be amended, supplemented or otherwise
modified in accordance with its terms.
POOL BALANCE: means, as of any date, (i) the original aggregate face amount
of the Applicable Certificates less (ii) the aggregate amount of all payments
made in respect of such Applicable Certificates or in respect of Deposits
relating to the Applicable Trust other than payments made in respect of interest
or premium thereon or reimbursement of any costs or expenses incurred in
connection therewith. The Pool Balance as of any Distribution Date shall be
computed after giving effect to any special distribution with respect to unused
Deposits, payment of principal of the Equipment Notes or payment with respect to
other Trust Property and the distribution thereof to be made on that date.
POOL FACTOR: means, as of any Distribution Date, the quotient (rounded to
the seventh decimal place) computed by dividing (i) the Pool Balance by (ii) the
original aggregate face amount of the Applicable Certificates. The Pool Factor
as of any Distribution Date shall be computed after giving effect to any special
distribution with respect to unused Deposits, payment of principal of the
Equipment Notes or payments with respect to other Trust Property and the
distribution thereof to be made on that date.
PREPAYMENT WITHDRAWAL CERTIFICATE: has the meaning specified in the Escrow
Agreement.
PROSPECTUS SUPPLEMENT: means the prospectus supplement dated April 5, 1999
relating to the offering of the Certificates.
SCHEDULED DELIVERY DATE: has the meaning specified in the Note Purchase
Agreement.
SPECIAL PAYMENT: means any payment (other than a Scheduled Payment) in
respect of, or any proceeds of, any Equipment Note, Trust Indenture Estate (as
defined in each Leased Aircraft Indenture) or Collateral (as defined in each
Owned Aircraft Indenture).
SPECIAL REDEMPTION PREMIUM: means the premium payable by the Company
pursuant to Section 4(a)(i) of the Note Purchase Agreement.
SUBSTITUTE AIRCRAFT: has the meaning specified in the Note Purchase
Agreement.
TRIGGERING EVENT: has the meaning assigned to such term in the
Intercreditor Agreement.
TRUST PROPERTY: means (i) subject to the Intercreditor Agreement, the
Equipment Notes held as the property of the Applicable 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 and, subject to the Intercreditor Agreement, any proceeds from the sale
by the Trustee pursuant to Article VI of the Basic Agreement of any Equipment
Note and (iii) all rights of the Applicable Trust and the Trustee, on behalf of
the Applicable Trust, under the Intercreditor Agreement, the Escrow Agreement,
the Note Purchase Agreement and the Liquidity Facility, including, without
limitation, all rights to receive certain payments thereunder, and all monies
paid to the Trustee on behalf of the Applicable Trust pursuant to the
Intercreditor Agreement or the Liquidity Facility, PROVIDED that rights with
respect to the Deposits or under the Escrow Agree-
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ment, except for the right to direct withdrawals for the purchase of Equipment
Notes to be held herein, will not constitute Trust Property.
TRUST SUPPLEMENT: has the meaning specified in the first paragraph of this
trust supplement.
UNDERWRITERS: means, collectively, Morgan Stanley & Co. Incorporated, BT
Alex. Brown Incorporated, ING Baring Furman Selz, LLC and CIBC Oppenheimer Corp.
UNDERWRITING AGREEMENT: means the Underwriting Agreement dated April 5,
1999 among the Underwriters and the Company, as the same may be amended,
supplemented or otherwise modified from time to time in accordance with its
terms.
ARTICLE III
STATEMENTS TO CERTIFICATEHOLDERS
Section 3.01. ADDITIONS TO ARTICLE IV OF THE BASIC AGREEMENT. In addition
to the provisions of Article IV of the Basic Agreement, the following provisions
shall apply to the Applicable Trust:
(a) Upon the payment of Special Redemption Premium to the Trustee under the
Note Purchase Agreement, the Trustee, upon receipt thereof, shall immediately
deposit the aggregate amount of such Special Redemption Premium in the Special
Payments Account;
(b) The distribution of amounts of Special Redemption Premium as provided
for in Section 4.02(b) of the Basic Agreement shall be on the Special
Distribution Date with respect to such Special Payment or as soon thereafter as
the Trustee has confirmed receipt of the related Special Redemption Premium;
(c) In the event of the payment of a Special Redemption Premium by the
Company to the Trustee under the Note Purchase Agreement, the notice provided
for in Section 4.02(c) of the Basic Agreement shall be mailed, together with the
notice by the Escrow Paying Agent under Section 2.06 of the Escrow Agreement,
not less than 15 days prior to the Special Distribution Date for such amount,
which Special Distribution Date shall be the Final Withdrawal Date; and
(d) The last sentence of the first paragraph of Section 4.02(c) of the
Basic Agreement shall apply equally if the amount of Special Redemption Premium,
if any, has not been calculated at the time the Trustee mails notice of a
Special Payment.
Section 3.02. STATEMENTS TO APPLICABLE CERTIFICATEHOLDERS. (a) On each
Distribution Date, the Trustee will include with each distribution to Applicable
Certificateholders of a Scheduled Payment or Special Payment, as the case may
be, a statement setting forth the information provided below (in the case of a
Special Payment, reflecting in part the information provided by the Escrow
Paying Agent under the Escrow Agreement). Such statement shall set forth (per
$1,000 face amount Applicable Certificate as to (ii), (iii), (iv) and (v) below)
the following information:
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(i) the aggregate amount of funds distributed on such Distribution Date
under the Agreement and under the Escrow Agreement, indicating the
amount allocable to each source;
(ii) the amount of such distribution under the Agreement allocable to
principal and the amount allocable to premium (including any premium
paid with respect to unused Deposits), if any;
(iii) the amount of such distribution under the Agreement allocable to
interest;
(iv) the amount of such distribution under the Escrow Agreement allocable
to interest;
(v) the amount of such distribution under the Escrow Agreement allocable
to unused Deposits, if any; and
(vi) the Pool Balance and the Pool Factor.
With respect to the Applicable Certificates registered in the name of a
Clearing Agency, on the Record Date prior to each Distribution Date, the Trustee
will request from such Clearing Agency a securities position listing setting
forth the names of all Clearing Agency Participants reflected on such Clearing
Agency's books as holding interests in the Applicable Certificates on such
Record Date. On each Distribution Date, the 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 Participant for
forwarding to holders of interests in the Applicable 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 an Applicable
Certificateholder of record a statement containing the sum of the amounts
determined pursuant to clauses (a)(i), (a)(ii), (a)(iii), (a)(iv) and (a)(v)
above for such calendar year or, in the event such Person was an Applicable
Certificateholder of record during a portion of such calendar year, for such
portion of such year, and such other items as are readily available to the
Trustee and which an Applicable Certificateholder shall reasonably request as
necessary for the purpose of such Applicable Certificateholder's preparation of
its federal income tax returns. 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 Applicable Certificates in the
manner described in Section 3.02(a) of this Trust Supplement.
(c) If the aggregate principal payments scheduled for January 2, 2000, on
the Equipment Notes held as Trust Property as of December 8, 1999, differs from
the amount thereof set forth for the Applicable Certificates on page S-45 of the
Prospectus Supplement, by no later than December 15, 1999 the Trustee shall mail
written notice of the actual amount of such scheduled payments to the Applicable
Certificateholders of record as of a date within 10 Business Days prior to the
date of mailing.
(d) Promptly following (i) the Delivery Period Termination Date, if there
has been any change in the information set forth in clauses (x), (y) and (z)
below from that set forth in page S-45 of the Prospectus Supplement, and (ii)
any early redemption or purchase of, or any default in the payment of principal
or interest in respect of, any of the Equipment Notes held in the Applicable
Trust, or any Final Withdrawal, the Trustee shall furnish to Applicable
Certificateholders of record on such date a statement setting forth (x) the
expected Pool Balances for each subsequent Regular Distribution Date following
the Delivery Period Termination Date, (y) the
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related Pool Factors for such Regular Distribution Dates and (z) the expected
principal distribution schedule of the Equipment Notes, in the aggregate, held
as Trust Property at the date of such notice. With respect to the Applicable
Certificates registered in the name of a Clearing Agency, on the Delivery Period
Termination Date, the Trustee will request from such Clearing Agency a
securities position listing setting forth the names of all Clearing Agency
Participants reflected on such Clearing Agency's books as holding interests in
the Applicable Certificates on such date. The 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 Participant for
forwarding to holders of interests in the Applicable Certificates.
(e) This Section 3.02 supersedes and replaces Section 4.03 of the Basic
Agreement, with respect to the Applicable Trust.
ARTICLE IV
DEFAULT
Section 4.01. PURCHASE RIGHTS OF CERTIFICATEHOLDERS. (a) At any time after
the occurrence and during the continuance of a Triggering Event, each Applicable
Certificateholder shall have the right (which shall not expire upon any purchase
of the Class A-2 Certificates pursuant to the Class A-1 Trust Agreement or any
purchase of the Class A-1 Certificates pursuant to the Class A-2 Trust
Agreement) to purchase, for the purchase price set forth in the Class A-1 Trust
Agreement and the Class A-2 Trust Agreement, respectively, all, but not less
than all, of the Class A-1 Certificates and the Class A-2 Certificates upon ten
days' written notice to the Class A-1 Trustee, the Class A-2 Trustee and each
other Applicable Certificateholder, provided that (i) if prior to the end of
such ten-day period any other Applicable Certificateholder notifies such
purchasing Applicable Certificateholder that such other Applicable
Certificateholder wants to participate in such purchase, then such other
Applicable Certificateholder may join with the purchasing Applicable
Certificateholder to purchase all, but not less than all, of the Class A-1
Certificates and the Class A-2 Certificates pro rata based on the Fractional
Undivided Interest in the Applicable Trust held by each such Applicable
Certificateholder and (ii) if prior to the end of such ten-day period any other
Applicable Certificateholder fails to notify the purchasing Applicable
Certificateholder of such other Applicable Certificateholder's desire to
participate in such a purchase, then such other Applicable Certificateholder
shall lose its right to purchase the Class A-1 Certificates and the Class A-2
Certificates pursuant to this Seciton 4.01(a).
(b) By acceptance of its Applicable Certificate, each Applicable
Certificateholder agrees that at any time after the occurrence and during the
continuation of a Triggering Event,
(i) each Class C Certificateholder shall have the right (which shall
not expire upon any purchase of the Class A-2 Certificates pursuant to the
Class A-1 Trust Agreement, any purchase of the Class A-1 Certificates
pursuant to the Class A-2 Trust Agreement or any purchase of the Class A-1
and the Class A-2 Certificates pursuant to clause (a) above) to purchase
all, but not less than all, of the Applicable Certificates, the Class A-1
Certificates and the A-2 Certificates upon ten days' written notice to the
Trustee, the Class A-1 Trustee and the Class A-2 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 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 Applicable Certificates, the Class A-1
Certificates and the Class A-2 Certificates pro rata based on the
Fractional Undivided In-
<PAGE>
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terest 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 Applicable Certificates, the Class A-1 Certificates and the
Class A-2 Certificates pursuant to this Section 4.01(b); and
(ii) each holder of a Class D Certificate (a "CLASS D
CERTIFICATEHOLDER") shall have the right (which shall not expire upon any
purchase of the Class A-2 Certificates pursuant to the Class A-1 Trust
Agreement, any purchase of the Class A-1 Certificates pursuant to the Class
A-2 Trust Agreement, any purchase of the Class A-1 and Class A-2
Certificates pursuant to clause (a) above or any purchase of the Applicable
Certificates pursuant to clause (b)(i) above) to purchase all, but not less
than all, of the Applicable Certificates, the Class A-1 Certificates, the
Class A-2 Certificates and the Class C Certificates upon ten days' written
notice to the Trustee, the Class A-1 Trustee, the Class A-2 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 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
Applicable Certificates, the Class A-1 Certificates, the Class A-2
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 Applicable Certificates, the Class A-1
Certificates, the Class A-2 Certificates and the Class C Certificates
pursuant to this Section 4.01(b).
The purchase price with respect to the Applicable Certificates shall be
equal to the Pool Balance of the Applicable Certificates, together with accrued
and unpaid interest thereon to the date of such purchase, without premium, but
including any other amounts then due and payable to the Applicable
Certificateholders under the Agreement, the Intercreditor Agreement, the Escrow
Agreement or any Note Document or on or in respect of the Applicable
Certificates; PROVIDED, HOWEVER, that (x) if such purchase occurs after a record
date specified in Section 2.03 of the Escrow Agreement relating to the
distribution of unused Deposits and/or accrued and unpaid interest on Deposits
and prior to or on the related distribution date thereunder, such purchase price
shall be reduced by the aggregate amount of unused Deposits and/or interest to
be distributed under the Escrow Agreement (which deducted amounts shall remain
distributable to, and may be retained by, the Applicable Certificateholder as of
such record date) and (y) if such purchase occurs after a Record Date and prior
to or on the related Distribution Date, such purchase price shall be reduced by
the amount to be distributed under this Agreement on the related Distribution
Date (which deducted amounts shall remain distributable to, and may be retained
by, the Applicable Certificateholder as of such Record Date); provided further
that no such purchase of Applicable Certificates shall be effective unless the
purchaser(s) shall certify to the Trustee that contemporaneously with such
purchase, such purchaser(s) is (are) purchasing, pursuant to the terms of the
Agreement and the Other Agreements, the Applicable Certificates, the Class A-1
Certificates, the Class A-2 Certificates and the Class C Certificates which are
senior to the securities held by such purchaser(s). Each payment of the purchase
price of the Applicable 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 4.01(b). Each Applicable
Certificateholder agrees by its acceptance of its Applicable Certificate that
(at any time after the occurrence and during the continuation of a Triggering
Event) it will, upon payment from such Class C Certificateholder(s) or Class D
Certificateholder(s), 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 for its own acts), all of the right, title, interest and obligation
of
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such Applicable Certificateholder in the Agreement, the Escrow Agreement, the
Deposit Agreement, the Intercreditor Agreement, the Liquidity Facility, the Note
Purchase Agreement, the Note Documents and all Applicable Certificates and
Escrow Receipts held by such Applicable Certificateholder (subject to clauses
(x) and (y) in the first sentence of this paragraph and 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 shall assume all of such Applicable Certificateholder's obligations
under the Agreement, the Escrow Agreement, the Deposit Agreement, the
Intercreditor Agreement, the Liquidity Facility, the Note Purchase Agreement,
the Note Documents and all such Applicable Certificates and Escrow Receipts. The
Applicable Certificates will be deemed to be purchased on the date payment of
the purchase price is made notwithstanding the failure of the Applicable
Certificateholders to deliver any Applicable Certificates and, upon such a
purchase, (I) the only rights of the Applicable Certificateholders will be to
deliver the Applicable Certificates to the purchaser(s) and receive the purchase
price for such Applicable Certificates and (II) if the purchaser(s) shall so
request, such Applicable Certificateholder will comply with all the provisions
of Section 3.04 of the Basic Agreement to enable new Applicable Certificates to
be issued to the purchaser in such denominations as it shall request. All
charges and expenses in connection with the issuance of any such new Applicable
Certificates shall be borne by the purchaser thereof.
As used in this Section 4.01 and elsewhere in this Trust Supplement, the
terms "Class A-1 Certificate", "Class A-1 Certificateholder", "Class A-1 Trust",
"Class A-1 Trustee", "Class A-2 Certificate", "Class A-2 Certificateholder",
"Class A-2 Trust", "Class A-2 Trustee", "Class C Certificate", "Class C
Certificateholder", "Class C Trust", "Class C Trustee", "Class D Certificate"
and "Class D Trust", shall have the respective meanings assigned to such terms
in the Intercreditor Agreement.
(c) This Section 4.01 supersedes and replaces Section 6.01(b) of the Basic
Agreement, with respect to the Applicable Trust.
ARTICLE V
THE TRUSTEE
Section 5.01. DELIVERY OF DOCUMENTS; DELIVERY DATES. (a) The Trustee is
hereby directed (i) to execute and deliver the Intercreditor Agreement, the
Escrow Agreement and the Note Purchase Agreement on or prior to the Issuance
Date, each in the form delivered to the Trustee by the Company, and (ii) subject
to the respective terms thereof, to perform its obligations thereunder. Upon
request of the Company and the satisfaction or waiver of the closing conditions
specified in the Underwriting Agreement, the Trustee shall execute, deliver,
authenticate, issue and sell Applicable Certificates in authorized denominations
equaling in the aggregate the amount set forth, with respect to the Applicable
Trust, in Schedule I to the Underwriting Agreement evidencing the entire
ownership interest in the Applicable Trust, which amount equals the maximum
aggregate principal amount of Equipment Notes which may be purchased by the
Trustee pursuant to the Note Purchase Agreement. Except as provided in Sections
3.03, 3.04, 3.05 and 3.06 of the Basic Agreement, the Trustee shall not execute,
authenticate or deliver Applicable Certificates in excess of the aggregate
amount specified in this paragraph. The provisions of this Section 5.01(a)
supersede and replace the first sentence of Section 3.02(a) of the Basic
Agreement, with respect to the Applicable Trust.
(b) On or after the Issuance Date, the Company may deliver from time to
time to the Trustee a Delivery Notice relating to one or more Equipment Notes.
After receipt of a Delivery Notice and in any case no later than one Business
Day prior to a Scheduled Delivery Date as to which such Delivery Notice relates
(the
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"APPLICABLE DELIVERY DATE"), the Trustee shall (as and when specified in
the Delivery Notice) instruct the Escrow Agent to provide a Notice of Purchase
Withdrawal to the Depositary requesting (A) the withdrawal of one or more
Deposits on the Applicable Delivery Date in accordance with and to the extent
permitted by the terms of the Escrow Agreement and the Deposit Agreement and (B)
the payment of all, or a portion, of such Deposit or Deposits in an amount equal
in the aggregate to the purchase price of such Equipment Notes to or on behalf
of the Owner Trustee or the Company, as the case may be, issuing such Equipment
Notes, all as shall be described in the Delivery Notice. The Trustee shall (as
and when specified in such Delivery Notice), subject to the conditions set forth
in Section 2 of the Note Purchase Agreement, enter into and perform its
obligations under the Participation Agreement specified in such Delivery Notice
(the "APPLICABLE PARTICIPATION AGREEMENT") and cause such certificates,
documents and legal opinions relating to the Trustee to be duly delivered as
required by the Applicable Participation Agreement. If at any time prior to the
Applicable Delivery Date, the Trustee receives a notice of postponement pursuant
to Section 1(e) or 1(f) of the Note Purchase Agreement, then the Trustee shall
give the Depositary (with a copy to the Escrow Agent) a notice of cancellation
of such Notice of Purchase Withdrawal relating to such Deposit or Deposits on
such Applicable Delivery Date. Upon satisfaction of the conditions specified in
the Note Purchase Agreement and the Applicable Participation Agreement, the
Trustee shall purchase the applicable Equipment Notes with the proceeds of the
withdrawals of one or more Deposits made on the Applicable Delivery Date in
accordance with the terms of the Deposit Agreement and the Escrow Agreement. The
purchase price of such Equipment Notes shall equal the principal amount of such
Equipment Notes. Amounts withdrawn from such Deposit or Deposits in excess of
the purchase price of the Equipment Notes or to the extent not applied on the
Applicable Delivery Date to the purchase price of the Equipment Notes, shall be
re-deposited by the Trustee with the Depositary on the Applicable Delivery Date
in accordance with the terms of the Deposit Agreement. The provisions of this
Section 5.01(b) supersede and replace the provisions of Section 2.02 of the
Basic Agreement, with respect to the Applicable Trust, and all provisions of the
Basic Agreement relating to Postponed Notes and Section 2.02 of the Basic
Agreement shall not apply to the Applicable Trust.
(c) The Trustee acknowledges its acceptance of all right, title and
interest in and to the Trust Property to be acquired pursuant to Section 5.01(b)
of this Trust Supplement, the Note Purchase Agreement and each Applicable
Participation Agreement, and declares that it holds and will hold such right,
title and interest for the benefit of all present and future Applicable
Certificateholders, upon the trusts set forth in this Agreement. By its
acceptance of an Applicable Certificate, each initial Applicable
Certificateholder, as a grantor of the Applicable Trust, joins with the Trustee
in the creation of the Applicable Trust. The provisions of this Section 5.01(c)
supersede and replace the provisions of Section 2.03 of the Basic Agreement,
with respect to the Applicable Trust.
Section 5.02. WITHDRAWAL OF DEPOSITS. (a) If the Company shall receive
written notice from Boeing that the delivery date of any Aircraft will be
delayed beyond the Delivery Period Termination Date, the Company may deliver to
the Trustee written notice to such effect and requesting that the Trustee
deliver to the Escrow Agent a Prepayment Withdrawal Certificate pursuant to the
Escrow Agreement directing the Escrow Agent to provide a Notice of Prepayment
Withdrawal to the Depositary requesting the withdrawal of the Deposits relating
to Equipment Notes in respect of such Aircraft in accordance with and to the
extent permitted by the terms of the Escrow Agreement and the Deposit Agreement.
(b) If any Deposits remain outstanding on the Business Day next succeeding
the Cut-off Date, the Trustee shall (i) give the Escrow Agent notice that the
Trustee's obligation to purchase Equipment Notes under the Note Purchase
Agreement has terminated and instruct the Escrow Agent to provide a notice of
Final Withdrawal to the Depositary substantially in the form of Exhibit B to the
Deposit Agreement (the "FINAL WITHDRAWAL NOTICE") and (ii) shall make demand
upon the Company pursuant to the Note Purchase
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Agreement for an amount equal to the Deposit Make Whole Amount, if any, such
payment to be made on the Final Withdrawal Date.
Section 5.03. THE TRUSTEE. (a) Subject to Section 5.04 of this Trust
Supplement and Section 7.15 of the Basic Agreement, the Trustee shall not be
responsible in any manner whatsoever for or in respect of the validity or
sufficiency of this Trust Supplement, the Deposit Agreement, the Note Purchase
Agreement or the Escrow Agreement or the due execution hereof or thereof by the
Company or the other parties thereto (other than the Trustee), or for or in
respect of the recitals and statements contained herein or therein, all of which
recitals and statements are made solely by the Company, except that the Trustee
hereby represents and warrants that each of this Trust Supplement, the Basic
Agreement, each Applicable Certificate, the Intercreditor Agreement, the Note
Purchase Agreement and the Escrow Agreement has been executed and delivered by
one of its officers who is duly authorized to execute and deliver such document
on its behalf.
(b) Except as herein otherwise provided and except during the continuance
of an Event of Default in respect of the Applicable Trust created hereby, no
duties, responsibilities or liabilities are assumed, or shall be construed to be
assumed, by the Trustee by reason of this Trust Supplement other than as set
forth in the Agreement, and this Trust Supplement is executed and accepted on
behalf of the Trustee, subject to all the terms and conditions set forth in the
Agreement, as fully to all intents as if the same were herein set forth at
length.
Section 5.04. REPRESENTATIONS AND WARRANTIES OF THE TRUSTEE. The Trustee
hereby represents and warrants that:
(a) the Trustee has full power, authority and legal right to execute,
deliver and perform this Trust Supplement, the Intercreditor Agreement, the
Escrow Agreement, the Note Purchase Agreement and the Note Documents to which it
is or is to become a party and has taken all necessary action to authorize the
execution, delivery and performance by it of this Trust Supplement, the
Intercreditor Agreement, the Escrow Agreement, the Note Purchase Agreement and
the Note Documents to which it is or is to become a party;
(b) the execution, delivery and performance by the Trustee of this Trust
Supplement, the Intercreditor Agreement, the Escrow Agreement, the Note Purchase
Agreement and the Note Documents to which it is or is to become a party (i) will
not violate any provision of any United States federal law or the law of the
state of the United States where it is located governing 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, 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, which violation, default
or lien could reasonably be expected to have an adverse effect on the Trustee's
performance or ability to perform its duties hereunder or thereunder or on the
transactions contemplated herein or therein;
(c) the execution, delivery and performance by the Trustee of this Trust
Supplement, the Intercreditor Agreement, the Escrow Agreement, the Note Purchase
Agreement and the Note Documents to which it is or is to become a party 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 it is located regulating the banking and corporate trust
activities of the Trustee; and
(d) this Trust Supplement, the Intercreditor Agreement, the Escrow
Agreement, the Note Purchase Agreement and the Note Documents to which it is or
is to become a party have been, or will be, as applica-
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ble, duly executed and delivered by the Trustee and constitute, or will
constitute, as applicable, 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.
Section 5.05. TRUSTEE LIENS. The Trustee in its individual capacity agrees,
in addition to the agreements contained in Section 7.17 of the Basic Agreement,
that it will at its own cost and expense promptly take any action as may be
necessary to duly discharge and satisfy in full any Trustee's Liens on or with
respect to the Trust Property which is attributable to the Trustee in its
individual capacity and which is unrelated to the transactions contemplated by
the Intercreditor Agreement or the Note Purchase Agreement.
ARTICLE VI
ADDITIONAL AMENDMENT; SUPPLEMENTAL AGREEMENTS
Section 6.01. SUPPLEMENTAL AGREEMENTS WITHOUT CONSENT OF APPLICABLE
CERTIFICATEHOLDERS. Without limitation of Section 9.01 of the Basic Agreement,
under the terms of, and subject to the limitations contained in, Section 9.01 of
the Basic Agreement, the Company may (but will not be required to), and the
Trustee (subject to Section 9.03 of the Basic Agreement) shall, at the Company's
request, at any time and from time to time, (i) enter into one or more
agreements supplemental to the Escrow Agreement, the Note Purchase Agreement or
the Deposit Agreement, for any of the purposes set forth in clauses (a) through
(i) of such Section 9.01, and (without limitation of the foregoing or Section
9.01 of the Basic Agreement) clauses (b) and (c) of such Section 9.01 shall also
be deemed to include the Company's obligations under (in the case of clause
(b)), and the Company's rights and powers conferred by (in the case of clause
(c)), the Note Purchase Agreement and references in clauses (d), (f) and (g) of
such Section 9.01 to "any Intercreditor Agreement or any Liquidity Facility"
shall also be deemed to refer to "the Intercreditor Agreement, the Liquidity
Facility, the Escrow Agreement, the Note Purchase Agreement or the Deposit
Agreement" and (ii) enter into one or more agreements supplemental to the Basic
Agreement to provide for the formation of a Class D Trust, the issuance of Class
D Certificates, the purchase by the Class D Trust of Equipment Notes and other
matters incidental thereto or otherwise contemplated by Section 2.01(b) of the
Basic Agreement.
Section 6.02. SUPPLEMENTAL AGREEMENTS WITH CONSENT OF APPLICABLE
CERTIFICATEHOLDERS. Without limitation of Section 9.02 of the Basic Agreement,
the provisions of Section 9.02 of the Basic Agreement shall apply to agreements
or amendments for the purpose of adding any provisions to or changing in any
manner or eliminating any of the provisions of the Escrow Agreement, the Deposit
Agreement or the Note Purchase Agreement or modifying in any manner the rights
and obligations of the Applicable Certificateholders under the Escrow Agreement,
the Deposit Agreement or the Note Purchase Agreement; provided that the
provisions of Section 9.02(a) of the Basic Agreement shall be deemed to include
reductions in any manner of, or delay in the timing of, any receipt by the
Applicable Certificateholders of payments upon the Deposits.
<PAGE>
-17-
ARTICLE VII
TERMINATION OF TRUST
Section 7.01. TERMINATION OF THE APPLICABLE TRUST. (a) The respective
obligations and responsibilities of the Company and the Trustee with respect to
the Applicable Trust shall terminate upon distribution to all Applicable
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 Applicable
Trust continue beyond one hundred ten (110) years following the date of the
execution of this Trust Supplement.
ARTICLE VIII
MISCELLANEOUS PROVISIONS
Section 8.01. 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. All replacements of provisions of, and other modifications of the
Basic Agreement set forth in this Trust Supplement are solely with respect to
the Applicable Trust.
SECTION 8.02. GOVERNING LAW. THIS TRUST SUPPLEMENT AND THE APPLICABLE
CERTIFICATES SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF
THE STATE OF NEW YORK.
Section 8.03. EXECUTION IN COUNTERPARTS. This Trust Supplement may be
executed in any number of counterparts, each of which shall be an original, but
such counterparts shall together constitute but one and the same instrument.
Section 8.04. INTENTION OF PARTIES. The parties hereto intend that the
Applicable Trust be classified for U.S. federal income tax purposes as a grantor
trust under Subpart E, Part I of Subchapter J 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 Applicable Certificateholder and Investor, by its
acceptance of its Applicable Certificate or a beneficial interest therein,
agrees to treat the Applicable Trust as a grantor trust for all U.S. federal,
state and local income tax purposes. The powers granted and obligations
undertaken pursuant to the Agreement shall be so construed so as to further such
intent.
<PAGE>
-18-
IN WITNESS WHEREOF, the Company and the Trustee have caused this Trust
Supplement to be duly executed by their respective representatives thereto duly
authorized, as of the day and year first written above.
ATLAS AIR, INC.
By: /s/ Richard H. Shuyler
--------------------------------
Name: Richard H. Shuyler
Title: Executive Vice President,
Treasurer and Director
WILMINGTON TRUST COMPANY,
as Trustee
By: /s/ James P. Lawler
--------------------------------
Name: James P. Lawler
Title: Vice President
<PAGE>
EXHIBIT A
FORM OF CERTIFICATE
Certificate
No._____
[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.]1
ATLAS AIR PASS THROUGH TRUST 1999-lB
% Atlas Air Pass Through Certificate, Series 1999-lB
Issuance Date: , 1999
Final Expected Distribution Date:
Evidencing A Fractional Undivided Interest In The
Atlas Air Pass Through Trust 1999-lB, The
Property Of Which Shall Include Certain Equipment Notes
Each Secured By An Aircraft Leased To Or Owned By
Atlas Air, Inc.
______________Fractional Undivided Interest
representing % 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 Atlas Air Pass Through Trust 1999-1B (the "TRUST") created by Wilmington
Trust Company, as trustee (the "Trustee"), pursuant to a Pass Through Trust
Agreement, dated as of April __, 1999 (the "BASIC AGREEMENT"), between the
Trustee and Atlas Air, Inc., a Delaware corporation (the "Company"), as
supplemented by Trust Supplement No. 1999-1B thereto, dated as of April __, 1999
(the "Trust Supplement" and, together with the Basic Agreement, 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 " % Atlas Air Pass Through Certificates, Series
1999-lB" (herein called the "CERTIFICATES").
- ----------
* This legend to appear on Book-Entry Certificates to be deposited with the
Depository Trust Company.
<PAGE>
-2-
This Certificate is issued under and is subject to the terms, provisions and
conditions of the Agreement. By virtue of its acceptance hereof, the holder of
this Certificate (the "CERTIFICATEHOLDER" and, together with all other holders
of Certificates issued by the Trust, the "CERTIFICATEHOLDERS") assents to and
agrees to be bound by the provisions of the Agreement and the Intercreditor
Agreement. The property of the Trust includes certain Equipment Notes and all
rights of the Trust to receive payments under the Intercreditor Agreement and
the Liquidity Facility (the "TRUST PROPERTY"). Each issue of the Equipment Notes
is secured by, among other things, a security interest in an Aircraft leased to
or owned by the Company.
The Certificates represent Fractional Undivided Interests in the Trust and
the Trust Property and 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 2 and July 2 (a "REGULAR DISTRIBUTION DATE")
commencing January 2, 2000, 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 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 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 distribution 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 or the 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
distribution to such Certificateholder as provided in the 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 busi-
<PAGE>
-3-
ness 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
Certificateholders 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.
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.
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.
Each Certificateholder and Investor, by its acceptance of this Certificate
or a beneficial interest herein, agrees to treat the Trust as a grantor trust
for all U.S. federal, state and local income tax purposes.
The Trustee, the Registrar, and any agent of the Trustee or the Registrar
may treat the person in whose name this Certificate is registered as the owner
hereof for all purposes, and neither the Trustee, the Registrar, nor 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 have represented and
warranted that either: (i) the assets of an employee benefit plan subject to
Title I of the Employee Retirement Income Security Act of 1974, as amended
("ERISA"), or of a plan subject to Section 4975 of the Internal Revenue Code of
1986, as amended (the "CODE"), have not been used to purchase this Certificate
or an interest herein or (ii) the purchase and holding of this Certificate or an
in-
<PAGE>
-4-
terest herein are exempt from the prohibited transaction restrictions of ERISA
and the Code pursuant to one or more prohibited transaction statutory or
administrative exemptions.
THE AGREEMENT AND THIS CERTIFICATE SHALL BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK AND THE OBLIGATIONS, RIGHTS
AND REMEDIES OF THE PARTIES HEREUNDER 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.
<PAGE>
-5-
IN WITNESS WHEREOF, the Trustee has caused this Certificate to be duly
executed.
ATLAS AIR PASS THROUGH TRUST
1999-1B
By: WILMINGTON TRUST COMPANY,
not in its individual capacity but solely
as Trustee
By:
--------------------------------
Name:
Title:
<PAGE>
FORM OF THE TRUSTEE'S CERTIFICATE OF AUTHENTICATION
This is one of the Certificates referred to in the within-mentioned
Agreement.
WILMINGTON TRUST COMPANY,
not in its individual capacity but solely
as Trustee
By:
--------------------------------
Name:
Title:
<PAGE>
EXHIBIT B
DTC Letter of Representations
TRUST SUPPLEMENT No. 1999-1C
Dated as of April 13, 1999
between
WILMINGTON TRUST COMPANY
as Trustee,
and
ATLAS AIR INC.
to
PASS THROUGH TRUST AGREEMENT
Dated as of April 1, 1999
$119, 904,000
Atlas Air Pass Through Trust 1999-1C
8.77% Atlas Air
Pass Through Certificates,
Series 1999-lC
This Trust Supplement No. 1999-1C (herein called the "TRUST SUPPLEMENT")
dated as of April 13, 1999 between Atlas Air, Inc., a Delaware corporation (the
"COMPANY"), and Wilmington Trust Company (the "TRUSTEE") to the Pass Through
Trust Agreement dated as of April 1, 1999, between the Company and the Trustee
(the "BASIC AGREEMENT").
W I T N E S S E T H:
WHEREAS, the Basic Agreement, unlimited as to the aggregate principal
amount of Certificates (unless otherwise specified herein, capitalized terms
used herein without definition having the respective meanings specified in the
Basic Agreement) which may be issued thereunder, has heretofore been executed
and delivered;
WHEREAS, the Company has obtained commitments from Boeing for the delivery
of certain Aircraft;
WHEREAS, the Company intends to finance the acquisition of each such
Aircraft either (i) through separate leveraged lease transactions, in which case
the Company will lease such Aircraft (collectively,
<PAGE>
-2-
the "LEASED AIRCRAFT"), or (ii) through separate secured loan transactions, in
which case the Company will own such Aircraft (collectively, the "OWNED
AIRCRAFT");
WHEREAS, in the case of each Leased Aircraft, each Owner Trustee, acting on
behalf of the corresponding Owner Participant, will issue pursuant to an
Indenture, on a non-recourse basis, Equipment Notes in order to finance a
portion of its purchase price of such Leased Aircraft;
WHEREAS, in the case of each Owned Aircraft, the Company will issue
pursuant to an Indenture, on a recourse basis, Equipment Notes to finance all or
a portion of the purchase price of such Owned Aircraft;
WHEREAS, the Trustee hereby declares the creation of this Atlas Air Pass
Through Trust 1999-1C (the "APPLICABLE TRUST") for the benefit of the Applicable
Certificateholders, and the initial Applicable Certificateholders as the
grantors of the Applicable Trust, by their respective acceptances of the
Applicable Certificates, join in the creation of the Applicable Trust with the
Trustee;
WHEREAS, all Certificates to be issued by the Applicable Trust will
evidence fractional undivided interests in the Applicable Trust and will convey
no rights, benefits or interests in respect of any property other than the Trust
Property, except for those Certificates to which an Escrow Receipt has been
affixed;
WHEREAS, the Escrow Agent, the Trustee and the Underwriters have
contemporaneously herewith entered into an Escrow Agreement with the Escrow
Paying Agent pursuant to which the Underwriters have delivered to the Escrow
Agent the proceeds from the sale of the Applicable Certificates and have
irrevocably instructed the Escrow Agent to withdraw and pay funds from such
proceeds upon request and proper certification by the Trustee to purchase
Equipment Notes as the Aircraft are delivered by Boeing under the Aircraft
Purchase Agreement from time to time prior to the Delivery Period Termination
Date;
WHEREAS, the Escrow Agent on behalf of the Applicable Certificateholders
has contemporaneously herewith entered into a Deposit Agreement with the
Depositary under which the Deposits referred to therein will be made and from
which it will withdraw funds to allow the Trustee to purchase Equipment Notes
from time to time prior to the Delivery Period Termination Date;
WHEREAS, pursuant to the terms and conditions of the Basic Agreement as
supplemented by this Trust Supplement (the "AGREEMENT") and the Note Purchase
Agreement, upon or shortly following delivery of an Aircraft, the Trustee on
behalf of the Applicable Trust, using funds withdrawn under the Escrow
Agreement, shall purchase one or more Equipment Notes having the same interest
rate as, and final maturity date not later than the Final Regular Distribution
Date of, the Applicable Certificates issued hereunder and shall hold such
Equipment Notes in trust for the benefit of the Applicable Certificateholders;
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, this Trust Supplement is subject to the provisions of the Trust
Indenture Act of 1939, as amended, and shall, to the extent applicable, be
governed by such provisions;
NOW THEREFORE, in consideration of the premises herein, it is agreed
between the Company and the Trustee as follows:
<PAGE>
-3-
ARTICLE I
THE CERTIFICATES
Section 1.01. THE CERTIFICATES. There is hereby created a series of
Certificates to be issued under the Agreement to be distinguished and known as
"8.77% Atlas Air Pass Through Certificates, Series 1999-lC" (hereinafter defined
as the "APPLICABLE CERTIFICATES"). Each Applicable Certificate represents a
fractional undivided interest in the Applicable Trust created hereby. The
Applicable Certificates shall be the only instruments evidencing a fractional
undivided interest in the Applicable Trust.
The terms and conditions applicable to the Applicable Certificates are as
follows:
(a) The aggregate principal amount of the Applicable Certificates that
shall be authenticated under the Agreement (except for Applicable Certificates
authenticated and delivered pursuant to Sections 3. 03, 3.04, 3.05 and 3.06 of
the Basic Agreement) is $119,904,000.
(b) The Regular Distribution Dates with respect to any payment of Scheduled
Payments means January 2 and July 2 of each year, commencing on January 2, 2000,
until payment of all of the Scheduled Payments to be made under the Equipment
Notes has been made.
(c) The Special Distribution Dates with respect to the Applicable
Certificates means any Business Day on which a Special Payment is to be
distributed pursuant to the Agreement.
(d) At the Escrow Agent's request under the Escrow Agreement, the Trustee
shall affix the corresponding Escrow Receipt to each Applicable Certificate. In
any event, any transfer or exchange of any Applicable Certificate shall also
effect a transfer or exchange of the related Escrow Receipt. Prior to the Final
Withdrawal Date, no transfer or exchange of any Applicable Certificate shall be
permitted unless the corresponding Escrow Receipt is attached thereto and also
is so transferred or exchanged. By acceptance of any Applicable Certificate to
which an Escrow Receipt is attached, each Holder of such an Applicable
Certificate acknowledges and accepts the restrictions on transfer of the Escrow
Receipt set forth herein and in the Escrow Agreement.
(e) (i) The Applicable Certificates shall be in the form attached hereto as
Exhibit A. Any Person acquiring or accepting an Applicable Certificate or an
interest therein will, by such acquisition or acceptance, be deemed to represent
and warrant to and for the benefit of, among other persons, each Owner
Participant, the Company, the Underwriters and the Trustee that either (i) the
assets of an employee benefit plan subject to Title I of the Employee Retirement
Income Security Act of 1974, as amended ("ERISA"), or of a plan subject to
Section 4975 of the Internal Revenue Code of 1986, as amended (the "CODE"), have
not been used to purchase Applicable Certificates or an interest therein or (ii)
the purchase and holding of Applicable Certificates or an interest therein is
exempt from the prohibited transaction restrictions of ERISA and the Code
pursuant to one or more prohibited transaction statutory or administrative
exemptions.
(ii) The Applicable Certificates shall be Book-Entry Certificates and shall
be subject to the conditions set forth in the Letter of Representations between
the Company and the Clearing Agency attached hereto as Exhibit B.
(f) The Applicable Certificates are subject to the Intercreditor Agreement,
the Deposit Agreement and the Escrow Agreement.
<PAGE>
-4-
(g) The Applicable Certificates will have the benefit of the Liquidity
Facility.
(h) The Responsible Party is the Company.
(i) The date referred to in clause (i) of the definition of the term "PTC
Event of Default" in the Basic Agreement is the Final Maturity Date.
(j) The particular "sections of the Note Purchase Agreement", for purposes
of clause (3) of Section 7.07 of the Basic Agreement, are Section 8.1 (with
respect to Owned Aircraft) and Section 9.1 (with respect to Leased Aircraft) of
each Participation Agreement.
(k) The Equipment Notes to be acquired and held in the Applicable Trust,
and the related Aircraft and Note Documents, are described in the Note Purchase
Agreement.
ARTICLE II
DEFINITIONS
Section 2.01. DEFINITIONS. For all purposes of the Basic Agreement as
supplemented by this Trust Supplement, the following capitalized terms have the
following meanings (any term used herein which is defined in both this Trust
Supplement and the Basic Agreement shall have the meaning assigned thereto in
this Trust Supplement for purposes of the Basic Agreement as supplemented by
this Trust Supplement):
AGREEMENT: has the meaning specified in the recitals hereto.
AIRCRAFT: means each of the Aircraft or Substitute Aircraft in respect of
which a Participation Agreement is or is to be, as the case may be, entered into
in accordance with the Note Purchase Agreement.
AIRCRAFT PURCHASE AGREEMENT: has the meaning specified in the Note Purchase
Agreement.
APPLICABLE CERTIFICATE: has the meaning specified in Section 1.01 of this
Trust Supplement.
APPLICABLE CERTIFICATEHOLDER: means the Person in whose name an Applicable
Certificate is registered on the Register for the Applicable Certificates.
APPLICABLE DELIVERY DATE: has the meaning specified in Section 5.01(b) of
this Trust Supplement.
APPLICABLE PARTICIPATION AGREEMENT: has the meaning specified in Section
5.01(b) of this Trust Supplement. APPLICABLE TRUST: has the meaning specified in
the recitals hereto.
BASIC AGREEMENT: has the meaning specified in the first paragraph of this
Trust Supplement.
<PAGE>
-5-
BOEING: means The Boeing Company.
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 Denver, Colorado,
New York, New York, Salt Lake City, Utah or, so long as any Applicable
Certificate is Outstanding, the city and state in which the Trustee or any Loan
Trustee maintains its Corporate Trust Office or receives and disburses funds.
CLASS D CERTIFICATEHOLDER: has the meaning specified in Section 4.01(b) of
this Trust Supplement.
COMPANY: has the meaning specified in the first paragraph of this Trust
Supplement.
CUT-OFF DATE: means the earlier of (a) the Delivery Period Termination Date
and (b) the date on which a Triggering Event occurs.
DELIVERY NOTICE: has the meaning specified in the Note Purchase Agreement.
DELIVERY PERIOD TERMINATION DATE: means the earlier of (a) May 31, 2000
(PROVIDED that, if a labor strike occurs at Boeing prior to May 31, 2000 such
date shall be extended by adding thereto the number of days that such strike
continues in effect) or (b) the date on which Equipment Notes issued with
respect to all of the Aircraft (or Substitute Aircraft in lieu thereof) have
been purchased by the Applicable Trust and the Other Trusts in accordance with
the Note Purchase Agreement.
DEPOSITS: has the meaning specified in the Deposit Agreement.
DEPOSIT AGREEMENT: means the Deposit Agreement dated as of April 13, 1999
relating to the Applicable Certificates between the Depositary and the Escrow
Agent, as the same may be amended, supplemented or otherwise modified from time
to time in accordance with its terms.
DEPOSITARY: means Credit Suisse First Boston, a banking institution
organized under the laws of Switzerland, acting through its New York branch.
DISTRIBUTION DATE: means any Regular Distribution Date or Special
Distribution Date as the context requires.
ESCROW AGENT: means, First Security Bank, National Association, or any
replacement or successor therefor appointed in accordance with the Escrow
Agreement.
ESCROW AGREEMENT: means the Escrow and Paying Agent Agreement dated as of
April 13, 1999 relating to the Applicable Certificates, among the Escrow Agent,
the Escrow Paying Agent, the Trustee and the Underwriters, as the same may be
amended, supplemented or otherwise modified from time to time in accordance with
its terms.
ESCROW PAYING AGENT: means the Person acting as paying agent under the
Escrow Agreement.
ESCROW RECEIPT: means the receipt substantially in the form annexed to the
Escrow Agreement representing a fractional undivided interest in the funds held
in escrow thereunder.
<PAGE>
-6-
FINAL MATURITY DATE: means July 2, 2012.
FINAL WITHDRAWAL: has the meaning specified in the Escrow Agreement.
FINAL WITHDRAWAL DATE: has the meaning specified in the Escrow Agreement.
FINAL WITHDRAWAL NOTICE: has the meaning specified in Section 5.02 of this
Trust Supplement.
INDENTURE: means each of the separate trust indentures and mortgages
relating to the Aircraft, each as specified or described in a Delivery Notice
delivered pursuant to the Note Purchase Agreement or the related Participation
Agreement, in each case as the same may be amended, supplemented or otherwise
modified from time to time in accordance with its terms.
INTERCREDITOR AGREEMENT: means the Intercreditor Agreement dated as of
April 13, 1999, among the Trustee, the Other Trustees, the Liquidity Provider,
the Liquidity Providers relating to the Certificates issued under each of the
Other Agreements, and Wilmington Trust Company, as Subordination Agent and as
trustee thereunder, as amended, supplemented or otherwise modified from time to
time in accordance with its terms.
INVESTORS: means the Underwriters together with all subsequent beneficial
owners of the Applicable Certificates.
LEASE: means, with respect to each Leased Aircraft, the lease between an
Owner Trustee, 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.
LEASED AIRCRAFT: has the meaning specified in the third recital to this
Trust Supplement.
LEASED AIRCRAFT INDENTURE: has the meaning specified in the Note Purchase
Agreement.
LIQUIDITY FACILITY: means, initially, the Revolving Credit Agreement dated
as of April 13, 1999 relating to the Applicable Certificates, between the
Liquidity Provider and Wilmington Trust Company, as Subordination Agent, as
agent and trustee for the Applicable Trust, and, from and after the replacement
of such agreement pursuant to the Intercreditor Agreement, the replacement
liquidity facility therefor, in each case as amended, supplemented or otherwise
modified from time to time in accordance with their respective terms.
LIQUIDITY PROVIDER: means ABN AMRO Bank N.V., a banking institution
organized under the laws of the Netherlands, acting through its Chicago branch,
or any replacements or successors therefor appointed in accordance with the
Intercreditor Agreement.
NOTE DOCUMENTS: means the Equipment Notes with respect to the Applicable
Certificates and, with respect to any such Equipment Note, (i) the Indenture and
the Participation Agreement relating to such Equipment Note, and (ii) in the
case of any Equipment Note related to a Leased Aircraft, the Lease relating to
such Leased Aircraft.
<PAGE>
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NOTE PURCHASE AGREEMENT: means the Note Purchase Agreement dated as of
April 13, 1999 among the Trustee, the Other Trustees, the Company, the Escrow
Agent, the Escrow Paying Agent and the Subordination Agent, providing for, among
other things, the purchase of Equipment Notes by the Trustee on behalf of the
Trust, as the same may be amended, supplemented or otherwise modified from time
to time, in accordance with its terms.
NOTICE OF PREPAYMENT WITHDRAWAL: has the meaning specified in the Deposit
Agreement.
NOTICE OF PURCHASE WITHDRAWAL: has the meaning specified in the Deposit
Agreement.
OTHER AGREEMENTS: means (i) the Basic Agreement as supplemented by Trust
Supplement No. 1999-1A-1 dated as of the date hereof relating to Atlas Air Pass
Through Trust 1999-1A-1; (ii) the Basic Agreement as supplemented by Trust
Supplement No. 1999-lA-2 dated as of the date hereof relating to Atlas Air Pass
Through Trust 1999-1A-2; (iii) the Basic Agreement as supplemented by Trust
Supplement No. 1999-lB dated as of the date hereof relating to Atlas Air Pass
Through Trust 1999-1B; and (iv) if Class D Certificates are issued, the Basic
Agreement as supplemented by Trust Supplement No. 1999-1D relating to Atlas Air
Pass Through Trust 1999-D.
OTHER TRUSTEES: means the trustees under the Other Agreements, and any
successor or other trustee appointed as provided therein.
OTHER TRUSTS: means the Atlas Air Pass Through Trust 1999-1A-1, the Atlas
Air Pass Through Trust 1999-lA-2 and the Atlas Air Pass Through Trust 1999-lB,
each created on the date hereof, and if Class D Certificates are issued, the
Atlas Air Pass Through Trust 1999-1D.
OWNED AIRCRAFT: has the meaning specified in the third recital to this
Trust Supplement.
OWNED AIRCRAFT INDENTURE: has the meaning specified in the Note Purchase
Agreement.
OWNER PARTICIPANT: with respect to any Equipment Note relating to a Leased
Aircraft, means the "Owner Participant" 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: with respect to any Equipment Note relating to a Leased
Aircraft, means the "Owner Trustee", 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 Indentures.
OWNER TRUSTEE'S PURCHASE AGREEMENT: means, with respect to any Leased
Aircraft, the agreement between the Company and the relevant Owner Trustee
pursuant to which, inter alia, the Company assigns to the Owner Trustee certain
rights of the Company under the aircraft purchase agreement with respect to such
Leased Aircraft.
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PARTICIPATION AGREEMENT: means each Participation Agreement to be entered
into, or entered into (as the case may be), by the Trustee pursuant to the Note
Purchase Agreement, as the same may be amended, supplemented or otherwise
modified in accordance with its terms.
POOL BALANCE: means, as of any date, (i) the original aggregate face amount
of the Applicable Certificates less (ii) the aggregate amount of all payments
made in respect of such Applicable Certificates or in respect of Deposits
relating to the Applicable Trust other than payments made in respect of interest
or premium thereon or reimbursement of any costs or expenses incurred in
connection therewith. The Pool Balance as of any Distribution Date shall be
computed after giving effect to any special distribution with respect to unused
Deposits, payment of principal of the Equipment Notes or payment with respect to
other Trust Property and the distribution thereof to be made on that date.
POOL FACTOR: means, as of any Distribution Date, the quotient (rounded to
the seventh decimal place) computed by dividing (i) the Pool Balance by (ii) the
original aggregate face amount of the Applicable Certificates. The Pool Factor
as of any Distribution Date shall be computed after giving effect to any special
distribution with respect to unused Deposits, payment of principal of the
Equipment Notes or payments with respect to other Trust Property and the
distribution thereof to be made on that date.
PREPAYMENT WITHDRAWAL CERTIFICATE: has the meaning specified in the Escrow
Agreement.
PROSPECTUS SUPPLEMENT: means the prospectus supplement dated April 5, 1999
relating to the offering of the Certificates.
SCHEDULED DELIVERY DATE: has the meaning specified in the Note Purchase
Agreement.
SPECIAL PAYMENT: means any payment (other than a Scheduled Payment) in
respect of, or any proceeds of, any Equipment Note, Trust Indenture Estate (as
defined in each Leased Aircraft Indenture) or Collateral (as defined in each
Owned Aircraft Indenture).
SPECIAL REDEMPTION PREMIUM: means the premium payable by the Company
pursuant to Section 4(a)(i) of the Note Purchase Agreement.
SUBSTITUTE AIRCRAFT: has the meaning specified in the Note Purchase
Agreement.
TRIGGERING EVENT: has the meaning assigned to such term in the
Intercreditor Agreement.
TRUST PROPERTY: means (i) subject to the Intercreditor Agreement, the
Equipment Notes held as the property of the Applicable 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 and, subject to the Intercreditor Agreement, any proceeds from the sale
by the Trustee pursuant to Article VI of the Basic Agreement of any Equipment
Note and (iii) all rights of the Applicable Trust and the Trustee, on behalf of
the Applicable Trust, under the Intercreditor Agreement, the Escrow Agreement,
the Note Purchase Agreement and the Liquidity Facility, including, without
limitation, all rights to receive certain payments thereunder, and all monies
paid to the Trustee on behalf of the Applicable Trust pursuant to the
Intercreditor Agreement or the Liquidity Facility, PROVIDED that rights with
respect to the Deposits or under the Escrow Agree-
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ment, except for the right to direct withdrawals for the purchase of Equipment
Notes to be held herein, will not constitute Trust Property.
TRUST SUPPLEMENT: has the meaning specified in the first paragraph of this
trust supplement.
UNDERWRITERS: means, collectively, Morgan Stanley & Co. Incorporated, BT
Alex. Brown Incorporated, ING Baring Furman Selz, LLC and CIBC Oppenheimer Corp.
UNDERWRITING AGREEMENT: means the Underwriting Agreement dated April 5,
1999 among the Underwriters and the Company, as the same may be amended,
supplemented or otherwise modified from time to time in accordance with its
terms.
ARTICLE III
STATEMENTS TO CERTIFICATEHOLDERS
Section 3.01. ADDITIONS TO ARTICLE IV OF THE BASIC AGREEMENT. In addition
to the provisions of Article IV of the Basic Agreement, the following provisions
shall apply to the Applicable Trust:
(a) Upon the payment of Special Redemption Premium to the Trustee under the
Note Purchase Agreement, the Trustee, upon receipt thereof, shall immediately
deposit the aggregate amount of such Special Redemption Premium in the Special
Payments Account;
(b) The distribution of amounts of Special Redemption Premium as provided
for in Section 4.02(b) of the Basic Agreement shall be on the Special
Distribution Date with respect to such Special Payment or as soon thereafter as
the Trustee has confirmed receipt of the related Special Redemption Premium;
(c) In the event of the payment of a Special Redemption Premium by the
Company to the Trustee under the Note Purchase Agreement, the notice provided
for in Section 4.02(c) of the Basic Agreement shall be mailed, together with the
notice by the Escrow Paying Agent under Section 2.06 of the Escrow Agreement,
not less than 15 days prior to the Special Distribution Date for such amount,
which Special Distribution Date shall be the Final Withdrawal Date; and
(d) The last sentence of the first paragraph of Section 4.02(c) of the
Basic Agreement shall apply equally if the amount of Special Redemption Premium,
if any, has not been calculated at the time the Trustee mails notice of a
Special Payment.
Section 3.02. STATEMENTS TO APPLICABLE CERTIFICATEHOLDERS. (a) On each
Distribution Date, the Trustee will include with each distribution to Applicable
Certificateholders of a Scheduled Payment or Special Payment, as the case may
be, a statement setting forth the information provided below (in the case of a
Special Payment, reflecting in part the information provided by the Escrow
Paying Agent under the Escrow Agreement). Such statement shall set forth (per
$1,000 face amount Applicable Certificate as to (ii), (iii), (iv) and (v) below)
the following information:
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(i) the aggregate amount of funds distributed on such Distribution Date
under the Agreement and under the Escrow Agreement, indicating the
amount allocable to each source;
(ii) the amount of such distribution under the Agreement allocable to
principal and the amount allocable to premium (including any premium
paid with respect to unused Deposits), if any;
(iii) the amount of such distribution under the Agreement allocable to
interest;
(iv) the amount of such distribution under the Escrow Agreement allocable
to interest;
(v) the amount of such distribution under the Escrow Agreement allocable
to unused Deposits, if any; and
(vi) the Pool Balance and the Pool Factor.
With respect to the Applicable Certificates registered in the name of a
Clearing Agency, on the Record Date prior to each Distribution Date, the Trustee
will request from such Clearing Agency a securities position listing setting
forth the names of all Clearing Agency Participants reflected on such Clearing
Agency's books as holding interests in the Applicable Certificates on such
Record Date. On each Distribution Date, the 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 Participant for
forwarding to holders of interests in the Applicable 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 an Applicable
Certificateholder of record a statement containing the sum of the amounts
determined pursuant to clauses (a)(i), (a)(ii), (a)(iii), (a)(iv) and (a)(v)
above for such calendar year or, in the event such Person was an Applicable
Certificateholder of record during a portion of such calendar year, for such
portion of such year, and such other items as are readily available to the
Trustee and which an Applicable Certificateholder shall reasonably request as
necessary for the purpose of such Applicable Certificateholder's preparation of
its federal income tax returns. 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 Applicable Certificates in the
manner described in Section 3.02(a) of this Trust Supplement.
(c) If the aggregate principal payments scheduled for January 2, 2000, on
the Equipment Notes held as Trust Property as of December 8, 1999, differs from
the amount thereof set forth for the Applicable Certificates on page S-45 of the
Prospectus Supplement, by no later than December 15, 1999 the Trustee shall mail
written notice of the actual amount of such scheduled payments to the Applicable
Certificateholders of record as of a date within 10 Business Days prior to the
date of mailing.
(d) Promptly following (i) the Delivery Period Termination Date, if there
has been any change in the information set forth in clauses (x), (y) and (z)
below from that set forth in page S-45 of the Prospectus Supplement, and (ii)
any early redemption or purchase of, or any default in the payment of principal
or interest in respect of, any of the Equipment Notes held in the Applicable
Trust, or any Final Withdrawal, the Trustee shall furnish to Applicable
Certificateholders of record on such date a statement setting forth (x) the
expected Pool Balances for each subsequent Regular Distribution Date following
the Delivery Period Termination Date, (y) the
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related Pool Factors for such Regular Distribution Dates and (z) the expected
principal distribution schedule of the Equipment Notes, in the aggregate, held
as Trust Property at the date of such notice. With respect to the Applicable
Certificates registered in the name of a Clearing Agency, on the Delivery Period
Termination Date, the Trustee will request from such Clearing Agency a
securities position listing setting forth the names of all Clearing Agency
Participants reflected on such Clearing Agency's books as holding interests in
the Applicable Certificates on such date. The 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 Participant for
forwarding to holders of interests in the Applicable Certificates.
(e) This Section 3.02 supersedes and replaces Section 4.03 of the Basic
Agreement, with respect to the Applicable Trust.
ARTICLE IV
DEFAULT
Section 4.01. PURCHASE RIGHTS OF CERTIFICATEHOLDERS. (a) At any time after
the occurrence and during the continuance of a Triggering Event, each Applicable
Certificateholder shall have the right (which shall not expire upon any purchase
of the Class A-2 Certificates pursuant to the Class A-1 Trust Agreement, any
purchase of the Class A-1 Certificates pursuant to the Class A-2 Trust Agreement
or any purchase of the Class A-1 Certificates and the Class A-2 Certificates
pursuant to the Class B Trust Agreement) to purchase, for the purchase prices
set forth in the Class A-1 Trust Agreement, the Class A-2 Trust Agreement and
the Class B Trust Agreement, respectively, all, but not less than all, of the
Class A-1 Certificates, the Class A-2 Certificates and the Class B Certificates
upon ten days' written notice to the Class A-1 Trustee, the Class A-2 Trustee,
the Class B Trustee and each other Applicable Certificateholder, provided that
(i) if prior to the end of such ten-day period any other Applicable
Certificateholder notifies such purchasing Applicable Certificateholder that
such other Applicable Certificateholder wants to participate in such purchase,
then such other Applicable Certificateholder may join with the purchasing
Applicable Certificateholder to purchase all, but not less than all, of the
Class A-1 Certificates, the Class A-2 Certificates and the Class B Certificates
pro rata based on the Fractional Undivided Interest held by each such Applicable
Certificateholder and (ii) if prior to the end of such ten-day period any other
Applicable Certificateholder fails to notify the purchasing Applicable
Certificateholder of such other Applicable Certificateholder's desire to
participate in such a purchase, then such other Applicable Certificateholder
shall lose its right to purchase the Class A-1 Certificates, the Class A-2
Certificates and the Class B Certificates pursuant to this Section 4.01(a).
(b) By acceptance of its Applicable Certificate, each Applicable
Certificateholder agrees that at any time after the occurrence and during the
continuation of a Triggering Event, each holder of a Class D Certificate (a
"CLASS D CERTIFICATEHOLDER") shall have the right (which shall not expire upon
any purchase of the Class A-2 Certificates pursuant to the Class A-1 Trust
Agreement, any purchase of the Class A-1 Certificates pursuant to the Class A-2
Trust Agreement, any purchase of the Class A-1 Certificates and the Class A-2
Certificates pursuant to the Class B Trust Agreement or any purchase of
Applicable Certificates pursuant to clause (a) above) to purchase all, but not
<PAGE>
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less than all, of the Applicable Certificates, the Class A-1 Certificates, the
Class A-2 Certificates and the Class B Certificates upon ten days' written
notice to the Trustee, the Class A-1 Trustee, the Class A-2 Trustee, the Class B
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 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 Applicable Certificates, the Class A-1 Certificates, the
Class A-2 Certificates and the Class B 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 Applicable Certificates, the Class A-1
Certificates, the Class A-2 Certificates and the Class B Certificates pursuant
to this Section 4.01(b).
The purchase price with respect to the Applicable Certificates shall be
equal to the Pool Balance of the Applicable Certificates, together with accrued
and unpaid interest thereon to the date of such purchase, without premium, but
including any other amounts then due and payable to the Applicable
Certificateholders under the Agreement, the Intercreditor Agreement, the Escrow
Agreement or any Note Document or on or in respect of the Applicable
Certificates; PROVIDED, HOWEVER, that (x) if such purchase occurs after a record
date specified in Section 2.03 of the Escrow Agreement relating to the
distribution of unused Deposits and/or accrued and unpaid interest on Deposits
and prior to or on the related distribution date thereunder, such purchase price
shall be reduced by the aggregate amount of unused Deposits and/or interest to
be distributed under the Escrow Agreement (which deducted amounts shall remain
distributable to, and may be retained by, the Applicable Certificateholder as of
such record date) and (y) if such purchase occurs after a Record Date and prior
to or on the related Distribution Date, such purchase price shall be reduced by
the amount to be distributed under this Agreement on the related Distribution
Date (which deducted amounts shall remain distributable to, and may be retained
by, the Applicable Certificateholder as of such Record Date); provided further
that no such purchase of Applicable Certificates shall be effective unless the
purchaser(s) shall certify to the Trustee that contemporaneously with such
purchase, such purchaser(s) is (are) purchasing, pursuant to the terms of the
Agreement and the Other Agreements, the Applicable Certificates, the Class A-1
Certificates, the Class A-2 Certificates and the Class B Certificates which are
senior to the securities held by such purchaser(s). Each payment of the purchase
price of the Applicable 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 4.01(b). Each Applicable
Certificateholder agrees by its acceptance of its Applicable Certificate that
(at any time after the occurrence and during the continuation of a Triggering
Event) it will, upon payment from such Class D Certificateholder(s) 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 for its own acts), all of the
right, title, interest and obligation of such Applicable Certificateholder in
the Agreement, the Escrow Agreement, the Deposit Agreement, the Intercreditor
Agreement, the Liquidity Facility, the Note Purchase Agreement, the Note
Documents and all Applicable Certificates and Escrow Receipts held by such
Applicable Certificateholder (subject to clauses (x) and (y) in the first
sentence of this paragraph and 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 shall assume
all of such Applicable Certificateholder's obligations under the Agreement, the
Escrow Agreement, the Deposit Agreement, the Intercreditor Agreement, the
Liquidity Facility, the Note Purchase Agreement, the Note Documents and all such
Applicable Certificates and Escrow Receipts). The Applicable Certificates will
be deemed to be purchased on the date payment of the purchase price is made
notwithstanding the failure of the Applicable Certificateholders to deliver any
Applicable Certificates and, upon such a purchase, (I) the only rights of the
Applicable Certificateholders will be to deliver the Applicable Certificates to
the purchaser(s) and receive the purchase price for such Applicable Certificates
and (II) if the purchaser(s) shall so request, such Applicable Certificateholder
will comply with all the provisions of Section 3.04 of the Basic Agreement to
enable new Applicable Certificates to be issued to the purchaser in such
denominations as it shall request. All charges and expenses in connection with
the issuance of any such new Applicable Certificates shall be borne by the
purchaser thereof.
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As used in this Section 4.01 and elsewhere in this Trust Supplement, the
terms "Class A-1 Certificate", "Class A-1 Certificateholder", "Class A-1 Trust",
"Class A-1 Trustee", "Class A-2 Certificate", "Class A-2 Certificateholder",
"Class A-2 Trust", "Class A-2 Trustee", "Class B Certificate", "Class B
Certificateholder", "Class B Trust", "Class B Trustee", "Class D Certificate"
and "Class D Trust", shall have the respective meanings assigned to such terms
in the Intercreditor Agreement.
(c) This Section 4.01 supersedes and replaces Section 6.01(b) of the Basic
Agreement, with respect to the Applicable Trust.
ARTICLE V
THE TRUSTEE
Section 5.01. DELIVERY OF DOCUMENTS; DELIVERY DATES. (a) The Trustee is
hereby directed (i) to execute and deliver the Intercreditor Agreement, the
Escrow Agreement and the Note Purchase Agreement on or prior to the Issuance
Date, each in the form delivered to the Trustee by the Company, and (ii) subject
to the respective terms thereof, to perform its obligations thereunder. Upon
request of the Company and the satisfaction or waiver of the closing conditions
specified in the Underwriting Agreement, the Trustee shall execute, deliver,
authenticate, issue and sell Applicable Certificates in authorized denominations
equaling in the aggregate the amount set forth, with respect to the Applicable
Trust, in Schedule I to the Underwriting Agreement evidencing the entire
ownership interest in the Applicable Trust, which amount equals the maximum
aggregate principal amount of Equipment Notes which may be purchased by the
Trustee pursuant to the Note Purchase Agreement. Except as provided in Sections
3.03, 3.04, 3.05 and 3.06 of the Basic Agreement, the Trustee shall not execute,
authenticate or deliver Applicable Certificates in excess of the aggregate
amount specified in this paragraph. The provisions of this Section 5.01(a)
supersede and replace the first sentence of Section 3.02(a) of the Basic
Agreement, with respect to the Applicable Trust.
(b) On or after the Issuance Date, the Company may deliver from time to
time to the Trustee a Delivery Notice relating to one or more Equipment Notes.
After receipt of a Delivery Notice and in any case no later than one Business
Day prior to a Scheduled Delivery Date as to which such Delivery Notice relates
(the "APPLICABLE DELIVERY DATE"), the Trustee shall (as and when specified in
the Delivery Notice) instruct the Escrow Agent to provide a Notice of Purchase
Withdrawal to the Depositary requesting (A) the withdrawal of one or more
Deposits on the Applicable Delivery Date in accordance with and to the extent
permitted by the terms of the Escrow Agreement and the Deposit Agreement and (B)
the payment of all, or a portion, of such Deposit or Deposits in an amount equal
in the aggregate to the purchase price of such Equipment Notes to or on behalf
of the Owner Trustee or the Company, as the case may be, issuing such Equipment
Notes, all as shall be described in the Delivery Notice. The Trustee shall (as
and when specified in such Delivery Notice), subject to the conditions set forth
in Section 2 of the Note Purchase Agreement, enter into and perform its
obligations under the Participation Agreement specified in such Delivery Notice
(the "APPLICABLE PARTICIPATION AGREEMENT") and cause such certificates,
documents and legal opinions relating to the Trustee to be duly delivered as
required by the Applicable Participation Agreement. If at any time prior to the
Applicable Delivery Date, the Trustee receives a notice of postponement pursuant
to Section 1(e) or 1(f) of the Note Purchase Agreement, then the Trustee shall
give the Depositary (with a copy to the Escrow Agent) a notice of cancellation
of such Notice of Purchase Withdrawal relating to such Deposit or Deposits on
such Applicable Delivery Date. Upon satisfaction of the conditions specified in
the Note Purchase Agreement and the Applicable Participation Agreement, the
Trustee shall purchase the applicable Equipment Notes with the proceeds of the
withdrawals of one or more Deposits made on the Applicable Delivery Date in
accordance with the terms of the Deposit Agree-
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ment and the Escrow Agreement. The purchase price of such Equipment Notes shall
equal the principal amount of such Equipment Notes. Amounts withdrawn from such
Deposit or Deposits in excess of the purchase price of the Equipment Notes or to
the extent not applied on the Applicable Delivery Date to the purchase price of
the Equipment Notes, shall be re-deposited by the Trustee with the Depositary on
the Applicable Delivery Date in accordance with the terms of the Deposit
Agreement. The provisions of this Section 5.01(b) supersede and replace the
provisions of Section 2.02 of the Basic Agreement, with respect to the
Applicable Trust, and all provisions of the Basic Agreement relating to
Postponed Notes and Section 2.02 of the Basic Agreement shall not apply to the
Applicable Trust.
(c) The Trustee acknowledges its acceptance of all right, title and
interest in and to the Trust Property to be acquired pursuant to Section 5.01(b)
of this Trust Supplement, the Note Purchase Agreement and each Applicable
Participation Agreement, and declares that it holds and will hold such right,
title and interest for the benefit of all present and future Applicable
Certificateholders, upon the trusts set forth in this Agreement. By its
acceptance of an Applicable Certificate, each initial Applicable
Certificateholder, as a grantor of the Applicable Trust, joins with the Trustee
in the creation of the Applicable Trust. The provisions of this Section 5.01(c)
supersede and replace the provisions of Section 2.03 of the Basic Agreement,
with respect to the Applicable Trust.
Section 5.02. WITHDRAWAL OF DEPOSITS. (a) If the Company shall receive
written notice from Boeing that the delivery date of any Aircraft will be
delayed beyond the Delivery Period Termination Date, the Company may deliver to
the Trustee written notice to such effect and requesting that the Trustee
deliver to the Escrow Agent a Prepayment Withdrawal Certificate pursuant to the
Escrow Agreement directing the Escrow Agent to provide a Notice of Prepayment
Withdrawal to the Depositary requesting the withdrawal of the Deposits relating
to Equipment Notes in respect of such Aircraft in accordance with and to the
extent permitted by the terms of the Escrow Agreement and the Deposit Agreement.
(b) If any Deposits remain outstanding on the Business Day next succeeding
the Cut-off Date, the Trustee shall (i) give the Escrow Agent notice that the
Trustee's obligation to purchase Equipment Notes under the Note Purchase
Agreement has terminated and instruct the Escrow Agent to provide a notice of
Final Withdrawal to the Depositary substantially in the form of Exhibit B to the
Deposit Agreement (the "FINAL WITHDRAWAL NOTICE") and (ii) shall make demand
upon the Company pursuant to the Note Purchase Agreement for an amount equal to
the Deposit Make Whole Amount, if any, such payment to be made on the Final
Withdrawal Date.
Section 5.03. THE TRUSTEE. (a) Subject to Section 5.04 of this Trust
Supplement and Section 7.15 of the Basic Agreement, the Trustee shall not be
responsible in any manner whatsoever for or in respect of the validity or
sufficiency of this Trust Supplement, the Deposit Agreement, the Note Purchase
Agreement or the Escrow Agreement or the due execution hereof or thereof by the
Company or the other parties thereto (other than the Trustee), or for or in
respect of the recitals and statements contained herein or therein, all of which
recitals and statements are made solely by the Company, except that the Trustee
hereby represents and warrants that each of this Trust Supplement, the Basic
Agreement, each Applicable Certificate, the Intercreditor Agreement, the Note
Purchase Agreement and the Escrow Agreement has been executed and delivered by
one of its officers who is duly authorized to execute and deliver such document
on its behalf.
(b) Except as herein otherwise provided and except during the continuance
of an Event of Default in respect of the Applicable Trust created hereby, no
duties, responsibilities or liabilities are assumed, or shall be construed to be
assumed, by the Trustee by reason of this Trust Supplement other than as set
forth in the Agreement, and this Trust Supplement is executed and accepted on
behalf of the Trustee, subject to all the terms and conditions set forth in the
Agreement, as fully to all intents as if the same were herein set forth at
length.
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Section 5.04. REPRESENTATIONS AND WARRANTIES OF THE TRUSTEE. The Trustee
hereby represents and warrants that:
(a) the Trustee has full power, authority and legal right to execute,
deliver and perform this Trust Supplement, the Intercreditor Agreement, the
Escrow Agreement, the Note Purchase Agreement and the Note Documents to which it
is or is to become a party and has taken all necessary action to authorize the
execution, delivery and performance by it of this Trust Supplement, the
Intercreditor Agreement, the Escrow Agreement, the Note Purchase Agreement and
the Note Documents to which it is or is to become a party;
(b) the execution, delivery and performance by the Trustee of this Trust
Supplement, the Intercreditor Agreement, the Escrow Agreement, the Note Purchase
Agreement and the Note Documents to which it is or is to become a party (i) will
not violate any provision of any United States federal law or the law of the
state of the United States where it is located governing 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, 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, which violation, default
or lien could reasonably be expected to have an adverse effect on the Trustee's
performance or ability to perform its duties hereunder or thereunder or on the
transactions contemplated herein or therein;
(c) the execution, delivery and performance by the Trustee of this Trust
Supplement, the Intercreditor Agreement, the Escrow Agreement, the Note Purchase
Agreement and the Note Documents to which it is or is to become a party 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 it is located regulating the banking and corporate trust
activities of the Trustee; and
(d) this Trust Supplement, the Intercreditor Agreement, the Escrow
Agreement, the Note Purchase Agreement and the Note Documents to which it is or
is to become a party have been, or will be, as applicable, duly executed and
delivered by the Trustee and constitute, or will constitute, as applicable, 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.
Section 5.05. TRUSTEE LIENS. The Trustee in its individual capacity agrees,
in addition to the agreements contained in Section 7.17 of the Basic Agreement,
that it will at its own cost and expense promptly take any action as may be
necessary to duly discharge and satisfy in full any Trustee's Liens on or with
respect to the Trust Property which is attributable to the Trustee in its
individual capacity and which is unrelated to the transactions contemplated by
the Intercreditor Agreement or the Note Purchase Agreement.
ARTICLE VI
ADDITIONAL AMENDMENT; SUPPLEMENTAL AGREEMENTS
Section 6.01. SUPPLEMENTAL AGREEMENTS WITHOUT CONSENT OF APPLICABLE
CERTIFICATEHOLDERS. Without limitation of Section 9.01 of the Basic Agreement,
under
<PAGE>
-16-
the terms of, and subject to the limitations contained in, Section 9.01 of the
Basic Agreement, the Company may (but will not be required to), and the Trustee
(subject to Section 9.03 of the Basic Agreement) shall, at the Company's
request, at any time and from time to time, (i) enter into one or more
agreements supplemental to the Escrow Agreement, the Note Purchase Agreement or
the Deposit Agreement, for any of the purposes set forth in clauses (a) through
(i) of such Section 9.01, and (without limitation of the foregoing or Section
9.01 of the Basic Agreement) clauses (b) and (c) of such Section 9.01 shall also
be deemed to include the Company's obligations under (in the case of clause
(b)), and the Company's rights and powers conferred by (in the case of clause
(c)), the Note Purchase Agreement and references in clauses (d), (f) and (g) of
such Section 9.01 to "any Intercreditor Agreement or any Liquidity Facility"
shall also be deemed to refer to "the Intercreditor Agreement, the Liquidity
Facility, the Escrow Agreement, the Note Purchase Agreement or the Deposit
Agreement" and (ii) enter into one or more agreements supplemental to the Basic
Agreement to provide for the formation of a Class D Trust, the issuance of Class
D Certificates, the purchase by the Class D Trust of Equipment Notes and other
matters incidental thereto or otherwise contemplated by Section 2.01(b) of the
Basic Agreement.
Section 6.02. SUPPLEMENTAL AGREEMENTS WITH CONSENT OF APPLICABLE
CERTIFICATEHOLDERS. Without limitation of Section 9.02 of the Basic Agreement,
the provisions of Section 9.02 of the Basic Agreement shall apply to agreements
or amendments for the purpose of adding any provisions to or changing in any
manner or eliminating any of the provisions of the Escrow Agreement, the Deposit
Agreement or the Note Purchase Agreement or modifying in any manner the rights
and obligations of the Applicable Certificateholders under the Escrow Agreement,
the Deposit Agreement or the Note Purchase Agreement; provided that the
provisions of Section 9.02(a) of the Basic Agreement shall be deemed to include
reductions in any manner of, or delay in the timing of, any receipt by the
Applicable Certificateholders of payments upon the Deposits.
ARTICLE VII
TERMINATION OF TRUST
Section 7.01. TERMINATION OF THE APPLICABLE TRUST. (a) The respective
obligations and responsibilities of the Company and the Trustee with respect to
the Applicable Trust shall terminate upon distribution to all Applicable
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 Applicable
Trust continue beyond one hundred ten (110) years following the date of the
execution of this Trust Supplement.
ARTICLE VIII
MISCELLANEOUS PROVISIONS
Section 8.01. 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. All replacements of provisions of, and other modifications of the
Basic Agreement set forth in this Trust Supplement are solely with respect to
the Applicable Trust.
<PAGE>
-17-
SECTION 8.02. GOVERNING LAW. THIS TRUST SUPPLEMENT AND THE APPLICABLE
CERTIFICATES SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF
THE STATE OF NEW YORK.
Section 8.03. EXECUTION IN COUNTERPARTS. This Trust Supplement may be
executed in any number of counterparts, each of which shall be an original, but
such counterparts shall together constitute but one and the same instrument.
Section 8.04. INTENTION OF PARTIES. The parties hereto intend that the
Applicable Trust be classified for U.S. federal income tax purposes as a grantor
trust under Subpart E, Part I of Subchapter J 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 Applicable Certificateholder and Investor, by its
acceptance of its Applicable Certificate or a beneficial interest therein,
agrees to treat the Applicable Trust as a grantor trust for all U.S. federal,
state and local income tax purposes. The powers granted and obligations
undertaken pursuant to the Agreement shall be so construed so as to further such
intent.
<PAGE>
-18-
IN WITNESS WHEREOF, the Company and the Trustee have caused this Trust
Supplement to be duly executed by their respective representatives thereto duly
authorized, as of the day and year first written above.
ATLAS AIR, INC.
By: /s/ Richard H. Shuyler
----------------------------------
Name: Richard H. Shuyler
Title: Executive Vice President,
Treasurer and Director
WILMINGTON TRUST COMPANY,
as Trustee
By: /s/ James P. Lawler
----------------------------------
Name: James P. Lawler
Title: Vice President
<PAGE>
EXHIBIT A
FORM OF CERTIFICATE
Certificate
No._____
[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.]*
ATLAS AIR PASS THROUGH TRUST 1999-lC
% Atlas Air Pass Through Certificate, Series 1999-lC
Issuance Date: , 1999
Final Expected Distribution Date:
Evidencing A Fractional Undivided Interest In The
Atlas Air Pass Through Trust 1999-lC, The
Property Of Which Shall Include Certain Equipment Notes
Each Secured By An Aircraft Leased To Or Owned By
Atlas Air, Inc.
______________Fractional Undivided Interest
representing % 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 Atlas Air Pass Through Trust 1999-1C (the "TRUST") created by Wilmington
Trust Company, as trustee (the "Trustee"), pursuant to a Pass Through Trust
Agreement, dated as of April __, 1999 (the "BASIC AGREEMENT"), between the
Trustee and Atlas Air, Inc., a Delaware corporation (the "Company"), as
supplemented by Trust Supplement No. 1999-1C thereto, dated as of April __, 1999
(the "Trust Supplement" and, together with the Basic Agreement, 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 " % Atlas Air Pass Through Certificates, Series
1999-lC" (herein called the "CERTIFICATES").
- ----------
* This legend to appear on Book-Entry Certificates to be deposited with the
Depository Trust Company.
<PAGE>
-2-
This Certificate is issued under and is subject to the terms, provisions and
conditions of the Agreement. By virtue of its acceptance hereof, the holder of
this Certificate (the "CERTIFICATEHOLDER" and, together with all other holders
of Certificates issued by the Trust, the "CERTIFICATEHOLDERS") assents to and
agrees to be bound by the provisions of the Agreement and the Intercreditor
Agreement. The property of the Trust includes certain Equipment Notes and all
rights of the Trust to receive payments under the Intercreditor Agreement and
the Liquidity Facility (the "TRUST PROPERTY"). Each issue of the Equipment Notes
is secured by, among other things, a security interest in an Aircraft leased to
or owned by the Company.
The Certificates represent Fractional Undivided Interests in the Trust and
the Trust Property and 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 2 and July 2 (a "REGULAR DISTRIBUTION DATE")
commencing January 2, 2000, 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 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 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 distribution 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 or the 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
distribution to such Certificateholder as provided in the 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 busi-
<PAGE>
-3-
ness 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
Certificateholders 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.
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.
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.
Each Certificateholder and Investor, by its acceptance of this Certificate
or a beneficial interest herein, agrees to treat the Trust as a grantor trust
for all U.S. federal, state and local income tax purposes.
The Trustee, the Registrar, and any agent of the Trustee or the Registrar
may treat the person in whose name this Certificate is registered as the owner
hereof for all purposes, and neither the Trustee, the Registrar, nor 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 have represented and
warranted that either: (i) the assets of an employee benefit plan subject to
Title I of the Employee Retirement Income Security Act of 1974, as amended
("ERISA"), or of a plan subject to Section 4975 of the Internal Revenue Code of
1986, as amended (the "CODE"), have not been used to purchase this Certificate
or an interest herein or (ii) the purchase and holding of this Certificate or an
in-
<PAGE>
-4-
terest herein are exempt from the prohibited transaction restrictions of ERISA
and the Code pursuant to one or more prohibited transaction statutory or
administrative exemptions.
THE AGREEMENT AND THIS CERTIFICATE SHALL BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK AND THE OBLIGATIONS, RIGHTS
AND REMEDIES OF THE PARTIES HEREUNDER 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.
<PAGE>
-5-
IN WITNESS WHEREOF, the Trustee has caused this Certificate to be duly
executed.
ATLAS AIR PASS THROUGH TRUST
1999-1C
By: WILMINGTON TRUST COMPANY,
not in its individual capacity but solely
as Trustee
By:
----------------------------------
Name:
Title:
<PAGE>
FORM OF THE TRUSTEE'S CERTIFICATE OF AUTHENTICATION
This is one of the Certificates referred to in the within-mentioned
Agreement.
WILMINGTON TRUST COMPANY,
not in its individual capacity but solely
as Trustee
By:
----------------------------------
Name:
Title:
<PAGE>
EXHIBIT B
DTC Letter of Representations
EXECUTION COPY
INTERCREDITOR AGREEMENT
Dated as of
April 13, 1999
AMONG
WILMINGTON TRUST COMPANY,
not in its individual capacity
but solely as Trustee under the
Atlas Air Pass Through Trust 1999-1A-1,
Atlas Air Pass Through Trust 1999-1A-2,
Atlas Air Pass Through Trust 1999-1B
and
Atlas Air Pass Through Trust 1999-1C,
ABN AMRO BANK N.V.,
Chicago Branch,
as Class A-1 Liquidity Provider,
and as Class A-2 Liquidity Provider,
MORGAN STANLEY CAPITAL SERVICES, INC.,
as Class B Liquidity Provider
and
as Class C Liquidity Provider
AND
WILMINGTON TRUST COMPANY
not in its individual capacity except
as expressly set forth herein but
solely as Subordination Agent and Trustee
<PAGE>
TABLE OF CONTENTS
Page
ARTICLE I DEFINITIONS
SECTION 1.1. Definitions ............................................... 2
ARTICLE II TRUST ACCOUNTS; CONTROLLING PARTY
SECTION 2.1. Agreement to Terms of Subordination; Payments from
Monies Received Only ....................................24
SECTION 2.2. Trust Accounts ............................................24
SECTION 2.3. Deposits to the Collection Account and Special Payments
Account .................................................26
SECTION 2.4. Distributions of Special Payments .........................26
SECTION 2.5. Designated Representatives ................................29
SECTION 2.6. Controlling Party .........................................30
ARTICLE III RECEIPT, DISTRIBUTION AND APPLICATION OF AMOUNTS RECEIVED
SECTION 3.1. Written Notice of Distribution ............................31
SECTION 3.2. Distribution of Amounts on Deposit in the Collection
Account .................................................34
SECTION 3.3. Distribution of Amounts on Deposit Following a
Triggering Event ........................................35
SECTION 3.4. Other Payments ............................................37
SECTION 3.5. Payments to the Trustees and the Liquidity Providers ......38
SECTION 3.6. Liquidity Facilities ......................................38
ARTICLE IV EXERCISE OF REMEDIES
SECTION 4.1. Directions from the Controlling Party .....................46
SECTION 4.2. Remedies Cumulative .......................................48
SECTION 4.3. Discontinuance of Proceedings .............................48
SECTION 4.4. Right of Certificateholders to Receive Payments Not
to Be Impaired ..........................................48
SECTION 4.5. Undertaking for Costs .....................................48
-i-
<PAGE>
ARTICLE V DUTIES OF THE SUBORDINATION AGENT; AGREEMENTS OF TRUSTEES, ETC.
SECTION 5.1. Notice of Indenture Event of Default or Triggering Event ..49
SECTION 5.2. Indemnification ...........................................49
SECTION 5.3. No Duties Except as Specified in Intercreditor Agreement ..50
SECTION 5.4. Notice from the Liquidity Providers and Trustees ..........50
ARTICLE VI THE SUBORDINATION AGENT
SECTION 6.1. Authorization; Acceptance of Trusts and Duties ............50
SECTION 6.2. Absence of Duties .........................................51
SECTION 6.3. No Representations or Warranties as to Documents ..........51
SECTION 6.4. No Segregation of Monies; No Interest .....................51
SECTION 6.5. Reliance; Agents; Advice of Counsel .......................51
SECTION 6.6. Capacity in Which Acting ..................................52
SECTION 6.7. Compensation ..............................................52
SECTION 6.8. May Become Certificateholder ..............................52
SECTION 6.9. Subordination Agent Required; Eligibility .................52
SECTION 6.10. Money to Be Held in Trust .................................53
ARTICLE VII INDEMNIFICATION OF SUBORDINATION AGENT
SECTION 7.1. Scope of Indemnification ..................................53
ARTICLE VIII SUCCESSOR SUBORDINATION AGENT
SECTION 8.1. Replacement of Subordination Agent; Appointment
of Successor ............................................53
ARTICLE IX SUPPLEMENTS AND AMENDMENTS
SECTION 9.1. Amendments, Waivers, etc. .................................54
-ii-
<PAGE>
SECTION 9.2. Subordination Agent Protected .............................56
SECTION 9.3. Effect of Supplemental Agreements .........................56
SECTION 9.4. Notice to Rating Agencies .................................57
ARTICLE X MISCELLANEOUS
SECTION 10.1. Termination of Intercreditor Agreement ...................57
SECTION 10.2. Intercreditor Agreement for Benefit of Trustees,
Liquidity Providers and Subordination Agent .......57
SECTION 10.3. Notices ..................................................57
SECTION 10.4. Severability .............................................59
SECTION 10.5. No Oral Modifications or Continuing Waivers ..............59
SECTION 10.6. Successors and Assigns ...................................59
SECTION 10.7. Headings .................................................59
SECTION 10.8. Counterpart Form .........................................59
SECTION 10.9. Subordination ............................................59
SECTION 10.10 Governing Law ............................................61
SECTION 10.11. Submission to Jurisdiction; Waiver of Jury Trial;
Waiver of Immunity ................................61
-iii-
<PAGE>
INTERCREDITOR AGREEMENT
INTERCREDITOR AGREEMENT dated as of April 13, 1999, among WILMINGTON TRUST
COMPANY, a Delaware banking corporation ("WTC"), not in its individual capacity
but solely as Trustee of each Trust (each as defined below); ABN AMRO BANK N.V.,
a bank organized under the laws of the Netherlands, acting through its Chicago
Branch ("ABN AMRO"), as Class A-1 Liquidity Provider and as Class A-2 Liquidity
Provider; MORGAN STANLEY CAPITAL SERVICES, INC. ("MSCS"), a corporation
organized under the laws of Delaware, as Class B Liquidity Provider and as Class
C Liquidity Provider; and WILMINGTON TRUST COMPANY, 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 VIII hereof, the "Subordination Agent").
WHEREAS, all capitalized terms used herein shall have the respective
meanings referred to in Article I hereof;
WHEREAS, pursuant to each Indenture (i) in the case of each Aircraft that
is owned by Atlas at the time such Indenture is entered into (the "Owned
Aircraft"), Atlas will issue on a recourse basis, up to five series of Equipment
Notes to finance the purchase of such Aircraft, and (ii) in the case of each
Aircraft that is leased to Atlas pursuant to a related Lease at the time such
Indenture is entered into (the "Leased Aircraft"), the related Owner Trustee
will issue on a nonrecourse basis, three series of Equipment Notes to finance
the purchase of such Aircraft;
WHEREAS, pursuant to the Financing Agreements, each Trust will acquire
Equipment Notes having an interest rate equal 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 Underwriting Agreement, the Underwriters propose
to purchase the Certificates issued by each Trust in the aggregate face amount
set forth opposite the name of such Trust on Schedule I thereto on the terms and
subject to the conditions set forth therein;
WHEREAS, ABN AMRO (with respect to the Class A-1 Trust and the Class A-2
Trust) and MSCS (with respect to the Class B Trust and the Class C Trust)
propose to enter into separate revolving credit agreements (each, a "Liquidity
Facility") with the
<PAGE>
Subordination Agent, as agent for the Trustee of such Trusts, respectively, for
the benefit of the Certificateholders of such Trusts; and
WHEREAS, Morgan Stanley Dean Witter & Co. (the "Guarantor") will guarantee
in full, pursuant to separate Guarantee Agreements dated as of the date hereof
(each, a "Guarantee Agreement"), the obligations of MSCS under the Class B
Liquidity Facility and the Class C Liquidity Facility, respectively;
WHEREAS, it is a condition precedent to the obligations of the Underwriters
under the Underwriting Agreement that the Subordination Agent, the Trustees and
the Liquidity Providers agree to the terms of subordination set forth in this
Agreement in respect of each Class of Certificates, and the Subordination Agent,
the Trustees and the Liquidity Providers, by entering into this Agreement,
hereby acknowledge and agree to such terms of subordination and the other
provisions of this Agreement.
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 1.1. Definitions. For all purposes of this Agreement, except as
otherwise expressly provided or unless the context otherwise requires:
(1) the terms used herein that are defined in this Article have the
meanings assigned to them in this Article, and include the plural as well
as the singular;
(2) all references in this Agreement to designated "Articles",
"Sections" and other subdivisions are to the designated Articles, Sections
and other subdivisions of this Agreement;
(3) 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; and
(4) the term "including" shall mean "including without limitation".
"ABN AMRO" has the meaning assigned to such term in the recital of the
parties to this Agreement.
2
<PAGE>
"ABN AMRO Fee Letter" means the Fee Letter dated the date hereof between
ABN AMRO and the Subordination Agent with respect to the Class A-1 Liquidity
Facility and the Class A-2 Liquidity Facility.
"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.
"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 on such Certificates (excluding interest, if any, payable with respect
to the Deposits related to such Trust) 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 (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, but
without giving effect to any reduction in the Pool Balance as a result of
any distribution attributable to Deposits occurring after the immediately
preceding Distribution Date (or, if the Current Distribution Date is the
first Distribution Date, occurring after the initial issuance of the
Certificates of such Trust), 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), less the
amount of the Deposits for such Class of Certificates as of such preceding
Distribution Date (or, if the Current Distribution Date is the first
Distribution Date, the original aggregate amount of the Deposits for such
Class of Certificates) other than any portion of such Deposits thereafter
used to acquire Equipment Notes pursuant to the Note Purchase Agreement,
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, clause (B) shall
not apply.
3
<PAGE>
For purposes of calculating Adjusted Expected Distributions with respect to
the Certificates of any Trust, any premium paid on the Equipment Notes held in
such Trust that has not been distributed to the Certificateholders of such Trust
(other than such premium or a portion thereof applied to the payment 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", with respect to any Liquidity Facility, means any Advances as
defined in such Liquidity Facility.
"Affiliate" means, with respect to any Person, any other Person directly or
indirectly controlling, controlled by or under common control with such Person.
For the purposes of this definition, "control" 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 the product of (A) (i) the sum of the applicable LTV
Collateral Amounts for each Leased Aircraft and Owned Aircraft, minus (ii) 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, multiplied by (B) (i) in the case of
the Class A-1 Certificates or Class A-2 Certificates, a fraction the numerator
of which equals the Current Pool Balance for the Class A-1 Certificates or Class
A-2 Certificates, as the case may be, and the denominator of which equals the
sum of the Current Pool Balances of the Class A-1 Certificates and Class A-2
Certificates, and (ii) in the case of the Class B and Class C Certificates, 1.0
.
"Aircraft" has the meaning set forth in the Note Purchase Agreement and,
with respect to each Indenture, means 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 Leased Aircraft or Owned Aircraft
means the lower of the average and the median of the three most recent
Appraisals of such Aircraft.
"Appraisers" means AvS, MBA and Simat, Helliesen & Eichner, Inc.
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"Atlas" means Atlas Air, Inc., a Delaware corporation, and its successors
and assigns.
"Atlas Bankruptcy Event" means the occurrence and continuation of any of
the following:
(a) Atlas shall consent 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, or Atlas shall admit in writing its
inability to pay its debts generally as they come due, or does not pay its
debts generally as they become due or shall make a general assignment for
the benefit of creditors, or Atlas shall file a voluntary petition in
bankruptcy or a voluntary petition or an answer seeking reorganization,
liquidation or other relief in a case under any bankruptcy laws or other
insolvency laws (as in effect at such time) or an answer admitting the
material allegations of a petition filed against Atlas in any such case, or
Atlas shall seek 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
Atlas shall seek an agreement, composition, extension or adjustment with
its creditors under such laws, or Atlas' board of directors shall adopt a
resolution authorizing corporate action in furtherance of any of the
foregoing; or
(b) an order, judgment or decree shall be entered by any court of
competent jurisdiction appointing, without the consent of Atlas, a
receiver, trustee or liquidator of Atlas or of any substantial part of its
property, or any substantial part of the property of Atlas shall be
sequestered, or granting any other relief in respect of Atlas as a debtor
under any bankruptcy laws or other insolvency laws (as in effect at such
time), and any such order, judgment or decree of appointment or
sequestration shall remain in force undismissed, unstayed and unvacated for
a period of 60 days after the date of entry thereof; or
(c) a petition against Atlas in a case under any bankruptcy laws or
other insolvency laws (as in effect at such time) is filed and not
withdrawn or dismissed within 60 days thereafter, or if, under the
provisions of any law providing for reorganization or winding-up of
corporations which may apply to Atlas, any court of competent jurisdiction
assumes jurisdiction, custody or control of Atlas 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 60 days.
"Atlas Provisions" has the meaning specified in Section 9.1(a).
"Available Amount" means, with respect to any Liquidity Facility on any
drawing date, subject to the proviso contained in the first sentence of Section
3.6(g) hereof, an amount equal to (a) the Maximum Commitment (as defined in such
Liquidity Facility) of such
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Liquidity Facility at such time, less (b) the aggregate amount of each Interest
Drawing honored by the Liquidity Provider under such Liquidity Facility on or
prior to such date which has not been reimbursed or reinstated as of such date;
provided that, following a Downgrade Drawing, a Non-Extension Drawing or a Final
Drawing under such Liquidity Facility, the Available Amount of such Liquidity
Facility shall be zero.
"AvS" means Aviation Solutions Inc.
"Basic Agreement" means the Pass Through Trust Agreement dated as of April
1, 1999 between Atlas and WTC, not in its individual capacity, except as
otherwise expressly provided therein, but solely as trustee.
"Business Day" means any day other than a Saturday or Sunday or a day on
which commercial banks are required or authorized to close in Denver, Colorado,
Chicago, Illinois, New York, New York, or, so long as any Certificate is
outstanding, the city and state in which any Trustee, the Subordination Agent or
any Loan Trustee maintains its Corporate Trust Office or receives and disburses
funds, and that, solely with respect to draws under any Liquidity Facility, also
is a "Business Day" as defined in such Liquidity Facility.
"Cash Collateral Account" means the Class A-1 Cash Collateral Account, the
Class A-2 Cash Collateral Account, the Class B Cash Collateral Account or the
Class C Cash Collateral Account, as applicable.
"Certificate" means a Class A-1 Certificate, a Class A-2 Certificate, a
Class B Certificate or a Class C Certificate, as applicable.
"Certificateholder" means any holder of one or more Certificates.
"Class" has the meaning assigned to such term in the preliminary statements
to this Agreement.
"Class A-1 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 shall so qualify, into which all amounts
drawn under the Class A-1 Liquidity Facility pursuant to Section 3.6(c), 3.6(d)
or 3.6(i) shall be deposited.
"Class A-1 Certificateholder" means, at any time, any holder of one or more
Class A-1 Certificates.
"Class A-1 Certificates" means the certificates issued by the Class A-1
Trust, substantially in the form of Exhibit A to the Class A-1 Trust Agreement,
and authenticated by the Class A-1 Trustee, representing fractional undivided
interests in the Class A-1 Trust, and
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any certificates issued in exchange therefor or replacement thereof pursuant to
the terms of the Class A-1 Trust Agreement.
"Class A-1 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 A-1 Trustee, and ABN AMRO, and from and after
the replacement of such Agreement pursuant hereto, the Replacement Liquidity
Facility therefor, if any, in each case as amended, supplemented or otherwise
modified from time to time in accordance with its terms.
"Class A-1 Liquidity Provider" means ABN AMRO, together with any
Replacement Liquidity Provider which has issued a Replacement Liquidity Facility
to replace the Class A-1 Liquidity Facility pursuant to Section 3.6(e).
"Class A-1 Trust" means the Atlas Air Pass Through Trust 1999-1A-1 created
and administered pursuant to the Class A-1 Trust Agreement.
"Class A-1 Trust Agreement" means the Basic Agreement, as supplemented by
Supplement No. 1999-1A-1 thereto dated as of the date hereof, governing the
creation and administration of the Atlas Air Pass Through Trust 1999-1A-1 and
the issuance of the Class A-1 Certificates, as the same may be amended,
supplemented or otherwise modified from time to time in accordance with its
terms.
"Class A-1 Trustee" means WTC, not in its individual capacity except as
expressly set forth in the Class A-1 Trust Agreement, but solely as trustee
under the Class A-1 Trust Agreement, together with any successor trustee
appointed pursuant thereto.
"Class A-2 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 shall so qualify, into which all amounts
drawn under the Class A-2 Liquidity Facility pursuant to Section 3.6(c), 3.6(d)
or 3.6(i) shall be deposited.
"Class A-2 Certificateholder" means, at any time, any holder of one or more
Class A-2 Certificates.
"Class A-2 Certificates" means the certificates issued by the Class A-2
Trust, substantially in the form of Exhibit A to the Class A-2 Trust Agreement,
and authenticated by the Class A-2 Trustee, representing fractional undivided
interests in the Class A-2 Trust, and any certificates issued in exchange
therefor or replacement thereof pursuant to the terms of the Class A-2 Trust
Agreement.
"Class A-2 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 A-2 Trustee, and ABN AMRO and, from and after
the replacement of such Agreement
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pursuant hereto, the Replacement Liquidity Facility therefor, if any, in each
case as amended, supplemented or otherwise modified from time to time in
accordance with its terms.
"Class A-2 Liquidity Provider" means ABN AMRO, together with any
Replacement Liquidity Provider which has issued a Replacement Liquidity Facility
to replace the Class A-2 Liquidity Facility pursuant to Section 3.6(e).
"Class A-2 Trust" means the Atlas Air Pass Through Trust 1999-1A-2 created
and administered pursuant to the Class A-2 Trust Agreement.
"Class A-2 Trust Agreement" means the Basic Agreement, as supplemented by
Supplement No. 1999-1A-2 thereto dated as of the date hereof, governing the
creation and administration of the Atlas Air Pass Through Trust 1999-1A-2 and
the issuance of the Class A-2 Certificates, as the same may be amended,
supplemented or otherwise modified from time to time in accordance with its
terms.
"Class A-2 Trustee" means WTC, not in its individual capacity except as
expressly set forth in the Class A-2 Trust Agreement, but solely as trustee
under the Class A-2 Trust Agreement, together with any successor trustee
appointed pursuant thereto.
"Class B 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 shall so qualify, into which all amounts
drawn under the Class B Liquidity Facility pursuant to Section 3.6(c), 3.6(d) or
3.6(i) shall be deposited.
"Class B Certificateholder" means, at any time, any holder of one or more
Class B Certificates.
"Class B Certificates" means the certificates issued by the Class B Trust,
substantially in the form of Exhibit A to the Class B Trust Agreement, and
authenticated by the Class B Trustee, representing fractional undivided
interests in the Class B Trust, and any certificates issued in exchange therefor
or replacement thereof pursuant to the terms of the Class B Trust Agreement.
"Class B 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 B Trustee, and MSCS and, from and after the
replacement of such Agreement pursuant hereto, the Replacement Liquidity
Facility therefor, if any, in each case as amended, supplemented or otherwise
modified from time to time in accordance with its terms.
"Class B Liquidity Provider" means MSCS, together with any Replacement
Liquidity Provider which has issued a Replacement Liquidity Facility to replace
the Class B Liquidity Facility pursuant to Section 3.6(e).
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<PAGE>
"Class B Trust" means the Atlas Air Pass Through Trust 1999-1B created and
administered pursuant to the Class B Trust Agreement.
"Class B Trust Agreement" means the Basic Agreement, as supplemented by
Supplement No. 1999-1B thereto dated as of the date hereof, governing the
creation and administration of the Atlas Air Pass Through Trust 1999-1B and the
issuance of the Class B Certificates, as the same may be amended, supplemented
or otherwise modified from time to time in accordance with its terms.
"Class B Trustee" means WTC, not in its individual capacity except as
expressly set forth in the Class B Trust Agreement, but solely as trustee under
the Class B Trust Agreement, together with any successor trustee appointed
pursuant thereto.
"Class C Cash Collateral Account" means an Eligible Deposit Account in the
name of the Subordination Agent and maintained at an Eligible Institution, which
shall be the Subordination Agent if it shall so qualify, into which all amounts
drawn under the Class C Liquidity Facility pursuant to Section 3.6(c), 3.6(d) or
3.6(i) shall be deposited.
"Class C Certificateholder" means, at any time, any holder 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.
"Class C 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 C Trustee, and MSCS, and, from and after the
replacement of such Agreement pursuant hereto, the Replacement Liquidity
Facility therefor, if any, in each case as amended, supplemented or otherwise
modified from time to time in accordance with its terms.
"Class C Liquidity Provider means MSCS, together with any Replacement
Liquidity Provider which has issued a Replacement Liquidity Facility to replace
the Class C Liquidity Facility pursuant to Section 3.6(e).
"Class C Trust" means the Atlas Air Pass Through Trust 1999-1C created and
administered pursuant to the Class C Trust Agreement.
"Class C Trust Agreement" means the Basic Agreement, as supplemented by
Supplement No. 1999-1C thereto dated as of the date hereof, governing the
creation and administration of the Atlas Air Pass Through Trust 1999-1C and the
issuance of the Class C
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<PAGE>
Certificates, as the same may be amended, supplemented or otherwise modified
from time to time in accordance with its terms.
"Class C Trustee" means WTC, 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 Certificates" means any pass through certificates issued by the
Class D Trust representing fractional undivided interests in the Class D Trust.
"Class D Trust" means the Atlas Air Pass Through Trust 1999-1D, if and when
established.
"Closing Date" means April 13, 1999.
"Code" means the Internal Revenue Code of 1986, as amended from time to
time, and Treasury Regulations promulgated thereunder.
"Collection Account" means the Eligible Deposit Account established by the
Subordination Agent pursuant to Section 2.2 which the Subordination Agent shall
make deposits in and withdrawals from in accordance with this Agreement.
"Controlling Party" means the Person entitled to act as such pursuant to
the terms of Section 2.6.
"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.
"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.
"Deposit Agreement" shall mean, with respect to any Class, the Deposit
Agreement pertaining to such Class dated the date hereof between the Escrow
Agent and the Depositary, as the same may be amended, modified or supplemented
from time to time in accordance with the terms thereof.
"Depositary" means Credit Suisse First Boston, acting through its New York
Branch, as depositary under each Deposit Agreement.
"Deposits" with respect to any Class, shall have the meaning set forth in
the Deposit Agreement pertaining to such Class.
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"Designated Representatives" means the Subordination Agent Representatives,
the Trustee Representatives and the LP Representatives identified under Section
2.5.
"Distribution Date" means a Regular Distribution Date or a Special
Distribution Date.
"Dollars" means United States dollars.
"Downgrade Drawing" has the meaning assigned to such term in Section
3.6(c).
"Downgraded Facility" has the meaning assigned to such term in Section
3.6(c).
"Drawing" means an Interest Drawing, a Final Drawing, a Non-Extension
Drawing or a Downgrade Drawing, as the case may be.
"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 of America or any one of the states thereof or the District of Columbia
(or any U.S. 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 from each
Rating Agency of at least A-3 or its equivalent. An Eligible Deposit Account may
be maintained with a Liquidity Provider so long as such Liquidity Provider is an
Eligible Institution; provided that such Liquidity Provider shall have waived
all rights of set-off and counterclaim with respect to such account; and
provided further that no Cash Collateral Account may be maintained with a
Liquidity Provider at any time Atlas holds any participation in the related
Liquidity Facility unless written confirmation shall have been received from
each Rating Agency prior to such time to the effect that such maintenance of the
Cash Collateral Account with the Liquidity Provider will not result in a
withdrawal or downgrading of the ratings of the Certificates.
"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 one
of the states thereof or the District of Columbia (or any U.S. branch of a
foreign bank), which has a long-term unsecured debt rating from each Rating
Agency of at least A-3 or its equivalent; provided that a Liquidity Provider
shall not qualify as an Eligible Institution at any time Atlas holds any
participation in the related Liquidity Facility unless written confirmation
shall have been received from each Rating Agency to the effect that such
Liquidity Provider's status as an Eligible Institution will not result in a
withdrawal or downgrading of the ratings of the Certificates.
"Eligible Investments" means (a) investments in obligations of, or
guaranteed by, the United States Government having maturities no later than 90
days following the date of
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such investment, (b) investments in open market commercial paper of any
corporation incorporated under the laws of the United States of America or any
state thereof with a short-term unsecured debt rating issued by Moody's and S&P
of at least A-1 and P-1, respectively, having maturities no later than 90 days
following the date of such investment or (c) investments in negotiable
certificates of deposit, time deposits, banker's acceptances, commercial paper
or other direct obligations of, or obligations guaranteed by, commercial banks
organized under the laws of the United States or of any political subdivision
thereof (or any U.S. branch of a foreign bank) with issuer ratings of at least
B/C by Thomson Bankwatch, having maturities no later than 90 days following the
date of such investment; provided, however, that (x) all Eligible Investments
that are bank obligations shall be denominated in U.S. dollars; and (y) the
aggregate amount of Eligible Investments at any one time that are bank
obligations issued by any one bank shall not be in excess of 5% of such bank's
capital surplus; provided further that (1) any investment of the types described
in clauses (a), (b) and (c) above may be made through a repurchase agreement in
commercially reasonable form with a bank or other financial institution
qualifying as an Eligible Institution so long as such investment is held by a
third party custodian also qualifying as an Eligible Institution, and (2) all
such investments set forth in clause (a), (b) or (c) above mature no later than
the Business Day immediately preceding the next Regular Distribution Date;
provided further, however, that in the case of any Eligible Investment issued by
a domestic branch of a foreign bank, the income from such investment shall be
from sources within the United States for purposes of the Code. Notwithstanding
the foregoing, no investment of the types described in clause (b) or (c) above
which is issued or guaranteed by a Liquidity Provider or Atlas or any of their
respective Affiliates, and no investment in the obligations of any one bank in
excess of $10,000,000, shall be an Eligible Investment at any time Atlas holds
any participation in the related Liquidity Facility unless written confirmation
shall have been received from each Rating Agency that the making of such
investment will not result in a withdrawal or downgrading of the ratings of the
Certificates.
"Equipment Notes" means, at any time, the Series A-1 Equipment Notes, the
Series A-2 Equipment Notes, the Series B Equipment Notes and the Series C
Equipment Notes, collectively, and in each case, any Equipment Notes issued in
exchange therefor or replacement thereof pursuant to the terms of the
Indentures.
"Escrow Agent" means First Security Bank, National Association, as escrow
agent under each Escrow and Paying Agent Agreement, together with its successors
in such capacity.
"Escrow and Paying Agent Agreement" shall mean, with respect to any Class,
the Escrow and Paying Agent Agreement pertaining to such Class dated the date
hereof among the Escrow Agent, the Underwriters, the Trustee for such Class and
the Paying Agent, as the same may be amended, modified or supplemented from time
to time in accordance with the terms thereof.
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<PAGE>
"Expected Distributions" means, with respect to the Certificates of any
Trust on any Current Distribution Date, the sum of (x) accrued and unpaid
interest on such Certificates (excluding interest, if any, payable with respect
to the Deposits related to such Trust) 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,
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, but without giving effect to any reduction in
the Pool Balance as a result of any distribution attributable to Deposits
occurring after the immediately preceding Distribution Date (or, if the Current
Distribution Date is the first Distribution Date, occurring after the initial
issuance of the Certificates of such Trust). For purposes of calculating
Expected Distributions with respect to the Certificates of any Trust, any
premium paid on the Equipment Notes held in such Trust which has not been
distributed to the Certificateholders of such Trust (other than such premium or
a portion thereof applied to the payment 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.
"Expiry Date" with respect to any Liquidity Facility, shall have the
meaning set forth in such Liquidity Facility.
"Fee Letter" means, collectively, the ABN AMRO Fee Letter and the MSCS Fee
Letter and any fee letter entered into between the Subordination Agent and any
Replacement 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 on such Certificates (excluding interest, if any, payable with
respect to the Deposits relating to such Trust) and (y) the Pool Balance of such
Certificates as of the immediately preceding Distribution Date (less the amount
of the Deposits for such Class of Certificates as of such preceding Distribution
Date other than any portion of such Deposits thereafter used to acquire
Equipment Notes pursuant to the Note Purchase Agreement). For purposes of
calculating Final Distributions with respect to the Certificates of any Trust,
any premium paid on the Equipment Notes held in such Trust which has not been
distributed to the Certificateholders of such Trust (other than such premium or
a portion thereof applied to the payment 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 assigned to such term in Section 3.6(i).
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"Final Legal Distribution Date" means (i) with respect to the Class A-1
Certificates, July 2, 2020, (ii) with respect to the Class A-2 Certificates,
January 2, 2011, (iii) with respect to the Class B Certificates, July 2, 2016
and (iv) with respect to the Class C Certificates, July 2, 2012.
"Financing Agreement" means each of the Participation Agreements and the
Note Purchase Agreement.
"Guarantee Agreement" has the meaning assigned to such term in the
preliminary statements to this Agreement.
"Guarantee Event" has the meaning assigned to such term in Section 3.6(c).
"Guarantor" has the meaning assigned to such term in the preliminary
statements to this Agreement.
"Indenture" means each of the Trust Indentures entered into by the Loan
Trustee, and the Owner Trustee or Atlas, pursuant to the Note Purchase
Agreement, 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.
"Interest Drawing" has the meaning assigned to such term in Section 3.6(a).
"Interest Payment Date" means, with respect to any Liquidity Facility, each
date on which interest is due and payable under Section 3.07(c) or (d) of such
Liquidity Facility on a Downgrade Drawing, Non-Extension Drawing or Final
Drawing thereunder.
"Investment Earnings" means investment earnings on funds on deposit in the
Trust Accounts net of losses and investment expenses of the Subordination Agent
in making such investments.
"Lease" means, with respect to each Indenture pertaining to a Leased
Aircraft, the "Lease" referred to therein.
"Leased Aircraft" has the meaning assigned to such term in the preliminary
statements of this Agreement.
"Leased Aircraft Participation Agreement" means a participation agreement
substantially in the form of Exhibit A-1 to the Note Purchase Agreement, as the
same may be amended, supplemented or otherwise modified in accordance with its
terms.
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"Lending Office" means, with respect to any Liquidity Facility, the lending
office of such Liquidity Provider thereunder, presently located at Chicago,
Illinois and New York, New York, for ABN AMRO and MSCS, respectively, or such
other lending office as such Liquidity Provider from time to time shall notify
the applicable Trustee as its lending office under any such Liquidity Facility;
provided that such Liquidity Provider shall not change its Lending Office to a
Lending Office outside the United States of America except in accordance with
Section 3.01, 3.02 or 3.03 of any such Liquidity Facility.
"Lien" means any mortgage, pledge, lien, charge, claim, disposition of
title, encumbrance, lease, sublease, sub-sublease or security interest of any
kind, including, without limitation, any thereof arising under any conditional
sales or other title retention agreement.
"Liquidity Event of Default" with respect to any Liquidity Facility, has
the meaning assigned to such term in such Liquidity Facility.
"Liquidity Expenses" means all Liquidity Obligations other than (i) the
principal amount of any Drawings under the Liquidity Facilities and (ii) any
interest accrued on any Liquidity Obligations.
"Liquidity Facility" means, at any time, the Class A-1 Liquidity Facility,
the Class A-2 Liquidity Facility, the Class B Liquidity Facility or the Class C
Liquidity Facility.
"Liquidity Obligations" means all principal, interest, fees and other
amounts owing to the Liquidity Providers under the Liquidity Facilities, Section
8.1 of the Owned Aircraft Participation Agreements, Section 9.1 of the Leased
Aircraft Participation Agreements or the Fee Letters.
"Liquidity Provider" means, at any time, the Class A-1 Liquidity Provider,
Class A-2 Liquidity Provider, the Class B Liquidity Provider or the Class C
Liquidity Provider, as applicable.
"Loan Trustee" means, with respect to any Indenture, the loan trustee
thereunder.
"LP Incumbency Certificate" has the meaning assigned to such term in
Section 2.5(b).
"LP Representatives" has the meaning assigned to such term in Section
2.5(b).
"LTV Appraisals" has the meaning assigned to such term in Section 4.1(a).
"LTV Collateral Amount" of any Leased Aircraft or Owned Aircraft for any
Class of Certificates means, as of any Distribution Date, the lesser of (i) the
LTV Ratio for
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such Class of Certificates multiplied by the Appraised Current
Market Value of such Aircraft (or with respect to any such Aircraft which has
suffered an Event of Loss under and as defined in the relevant Lease (in the
case of a Leased Aircraft) or Indenture (in the case of an Owned Aircraft), 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 for the Class A-1 Certificates and the Class A-2
Certificates 39.0%, for the Class B Certificates 53.0%, and for the Class C
Certificates, 68.0%.
"Majority Liquidity Providers" means, at any time, Liquidity Providers
holding at least a majority of the aggregate outstanding Liquidity Obligations
at such time.
"MBA" means Morten Beyer & Agnew.
"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.
"MSCS" has the meaning assigned to such term in the recital of the parties
to this Agreement.
"MSCS Fee Letter" means the Fee Letter dated the date hereof, between MSCS
and the Subordination Agent with respect to the Class B Liquidity Facility and
the Class C Liquidity Facility.
"MSCS Liquidity Facilities" means the Class B Liquidity Facility and the
Class C Liquidity Facility.
"Non-Controlling Party" means, at any time, any Trustee or Liquidity
Provider which is not the Controlling Party at such time.
"Non-Extended Facility" has the meaning assigned to such term in Section
3.6(d).
"Non-Extension Drawing" has the meaning assigned to such term in Section
3.6(d).
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"Non-Performing Equipment Note" means an Equipment Note that is not a
Performing Equipment Note.
"Note Purchase Agreement" means the Note Purchase Agreement dated as of the
date hereof, among Atlas, each Trustee, the Escrow Agent, the Subordination
Agent and the Paying Agent.
"Officer's Certificate" of any Person means a certification signed by a
Responsible Officer of such Person.
"Operative Agreements" means this Agreement, the Liquidity Facilities, the
Indentures, the Trust Agreements, the Underwriting Agreement, the Financing
Agreements, the Leases, the Fee Letter, the Equipment Notes and the
Certificates, together with all exhibits and schedules included with any of the
foregoing.
"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 canceled by the Registrar
(as defined in such Trust Agreement) or delivered to the Trustee thereunder
or such Registrar for cancellation;
(ii) Certificates of such Class for which money in the full amount
required to make the final distribution with respect to such Certificates
pursuant to Section 11.01 of such Trust Agreement has been theretofore
deposited with the related Trustee in trust for the holders of such
Certificates as provided in Section 4.01 of such Trust Agreement pending
distribution of such money to such Certificateholders pursuant to such
final distribution payment; and
(iii) Certificates of such Class in exchange for or in lieu of which
other Certificates have been authenticated and delivered pursuant to such
Trust Agreement;
provided, however, that in determining whether the holders of the requisite
Outstanding amount of such Certificates have given any request, demand,
authorization, direction, notice, consent or waiver hereunder, any Certificates
owned by Atlas or any of its Affiliates shall be disregarded and deemed not to
be Outstanding, except that, 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. Certificates so owned that have been pledged in
good faith may be regarded as Outstanding 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 Atlas or any of its
Affiliates.
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"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.
"Owned Aircraft" has the meaning assigned to such term in the preliminary
statements of this Agreement.
"Owned Aircraft Participation Agreement" means a participation agreement
substantially in the form of Exhibit C-1 to the Note Purchase Agreement, as the
same may be amended, supplemented or otherwise modified in accordance with its
terms.
"Owner Trustee" means, with respect to any Indenture pertaining to a Leased
Aircraft, the Owner Trustee (as defined therein) not in its individual capacity
but solely as trustee under the related owner trust agreement, together with any
successor trustee appointed pursuant to such owner trust agreement.
"Participation Agreement" means, collectively, any Leased Aircraft
Participation Agreement and any Owned Aircraft Participation Agreement.
"Payee" has the meaning assigned to such term in Section 2.4(e).
"Paying Agent" means WTC, as paying agent under each Escrow and Paying
Agent Agreement, together with its successors in such capacity.
"Performing Equipment Note" means an Equipment Note 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 involving
Atlas under Title 11 of the United States Code (the "Bankruptcy Code"), (i) any
payment default existing during the 60- day period under Section 1110(a)(1)(A)
of the Bankruptcy Code (or such longer period as may apply under Section 1110(b)
of the Bankruptcy Code) (the "Section 1110 Period") shall not be taken into
consideration, unless during the Section 1110 Period the trustee in such
proceeding or Atlas refuses to assume or agree to perform its obligations under
the Lease related to such Equipment Note (in the case of a Leased Aircraft) or
under the Indenture related to such Equipment Note (in the case of an Owned
Aircraft) and (ii) any payment default occurring after the date of the order of
relief in such proceeding shall not be taken into consideration if such payment
default is cured under Section 1110(a)(1)(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.
"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.
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"Person" means any individual, corporation, partnership, joint venture,
association, limited liability company, joint-stock company, trust, trustee,
unincorporated organization or government or any agency or political subdivision
thereof.
"Pool Balance" means, with respect to each Trust or the Certificates issued
by any Trust, as of any date, (i) the original aggregate face amount of the
Certificates of such Trust less (ii) the aggregate amount of all payments made
in respect of the Certificates of such Trust or in respect of Deposits relating
to such Trust other than payments made in respect of interest or premium thereon
or reimbursement of any costs and expenses in connection therewith. The Pool
Balance for each Trust or for the Certificates issued by any Trust as of any
Distribution Date shall be computed after giving effect to any special
distribution with respect to unused Deposits, payment of principal of the
Equipment Notes or payment with respect to other Trust Property held in such
Trust and the distribution thereof to be made on that date.
"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 pay within 10 Business Days of the due date thereof: (i) the
outstanding Pool Balance of the applicable Class of Certificates on the Final
Legal Distribution Date for such Class or (ii) interest due on such Certificates
on any Distribution Date (unless the Subordination Agent shall have made an
Interest Drawing, or a withdrawal from the Cash Collateral Account, with respect
thereto in an aggregate amount sufficient to pay such interest and shall have
distributed such amount to the Trustee entitled thereto).
"Rating Agencies" means Moody's and Standard & Poor's.
"Ratings Confirmation" means, with respect to any action proposed to be
taken, a written confirmation from each of the Rating Agencies that such action
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.
"Regular Distribution Dates" means each January 2 and July 2, commencing on
January 2, 2000; 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 without additional interest.
"Replacement Liquidity Facility" means, for any Liquidity Facility, an
irrevocable revolving credit agreement in substantially the form of the replaced
Liquidity Facility, including reinstatement provisions, or in such other form
(which may include a letter of credit) as shall permit the Rating Agencies to
confirm in writing their respective ratings then
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in effect for the Certificates (before downgrading of such ratings, if any, as a
result of the downgrading of the applicable Liquidity Provider), in a face
amount (or in an aggregate face amount) equal to the amount of interest payable
on the Certificates of such Trust (at the Stated Interest Rate for such Trust,
and without regard to expected future principal payments) on the three Regular
Distribution Dates following the date of replacement of such Liquidity Facility
and issued by a Person (or Persons) having unsecured short-term debt ratings
issued by the Rating Agencies which are equal to or higher than the Threshold
Rating. Without limitation of the form that a Replacement Liquidity Facility
otherwise may have pursuant to the preceding sentence, a Replacement Liquidity
Facility for any Class of Certificates may have a stated expiration date earlier
than 15 days after the Final Maturity Date of such Class of Certificates so long
as such Replacement Liquidity Facility provides for a Non-Extension Drawing as
contemplated by Section 3.6(d) hereof.
"Replacement Liquidity Provider" means a Person who issues a Replacement
Liquidity Facility.
"Required Amount" means, with respect to each Liquidity Facility, or the
Cash Collateral Account, for any Class, for any day, the sum of the aggregate
amount of interest, calculated at the rate per annum equal to the Stated
Interest Rate for the related Class of Certificates, that would be payable on
such Class of Certificates on each of the three successive Regular Distribution
Dates immediately following such day or, if such day is a Regular Distribution
Date, on such day and the succeeding two Regular Distribution Dates, in each
case calculated on the basis of the Pool Balance of such Class of Certificates
on such date and without regard to expected future payments of principal on such
Class of Certificates.
"Responsible Officer" means (i) with respect to the Subordination Agent and
each of the Trustees, any officer in the corporate trust administration
department of the Subordination Agent or such Trustee or any other officer
customarily performing functions similar to those performed by the Persons who
at the time shall be such officers, respectively, or to whom any corporate trust
matter is referred because of his knowledge of and familiarity with a particular
subject, and (ii) with respect to each Liquidity Provider, any authorized
officer of such Liquidity Provider.
"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) due from the obligor thereon or (ii) any payment of interest
on the corresponding Class of Certificates with funds drawn under any Liquidity
Facility, which payment represents the installment of principal at the stated
maturity of such installment of principal on such Equipment Note, the payment of
regularly scheduled interest accrued on the unpaid principal amount of such
Equipment Note, or both; provided that any payment of principal of, premium, if
any, or interest resulting from the redemption or purchase of any Equipment Note
shall not constitute a Scheduled Payment.
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"Scheduled Payment Date" means, with respect to any Scheduled Payment, the
date on which such Scheduled Payment is scheduled to be made.
"Series A-1 Equipment Notes" means the 7.20% Series A-1 Equipment Notes
issued pursuant to each Indenture by the related Owner Trustee or Atlas, as the
case may be, 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 A-2 Equipment Notes" means the 6.88% Series A-2 Equipment Notes.
issued by Atlas pursuant to an Indenture relating to an Owned Aircraft 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 B Equipment Notes" means the 7.63% Series B Equipment Notes issued
pursuant to each Indenture by the related Owner Trustee or Atlas, as the case
may be, 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 C Equipment Notes" means the 8.77% Series C Equipment Notes issued
pursuant to each Indenture by the related Owner Trustee or Atlas, as the case
may be, 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, with respect to any Special Payment, the
date chosen by the Subordination Agent pursuant to Section 2.4(a) for the
distribution of such Special Payment in accordance with this Agreement.
"Special Payment" means any payment (other than a Scheduled Payment) in
respect of, or any proceeds of, any Equipment Note or Trust Indenture Estate (as
defined in each Indenture).
"Special Payments Account" means the Eligible Deposit Account created
pursuant to Section 2.2 as a sub-account to the Collection Account.
"Standard & Poor's" means Standard & Poor's Ratings Services, a division of
The McGraw-Hill Companies, Inc.
"Stated Expiration Date" has the meaning specified in Section 3.6(d).
"Stated Interest Rate" means (i) with respect to the Class A-1
Certificates, 7.20% per annum, (ii) with respect to the Class A-2 Certificates,
6.88% per annum, (iii) with respect to the Class B Certificates, 7.63% per annum
and (iv) with respect to the Class C Certificates, 8.77% per annum.
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"Subordination Agent" has the meaning assigned to it in the preliminary
statements to this Agreement.
"Subordination Agent Incumbency Certificate" has the meaning assigned to
such term in Section 2.5(a).
"Subordination Agent Representatives" has the meaning assigned to such term
in Section 2.5(a).
"Substitute Aircraft" shall have the meaning set forth in the Note Purchase
Agreement.
"Tax" and "Taxes" mean any and all taxes, fees, levies, duties, tariffs,
imposts, and other charges of any kind (together with any and all interest,
penalties, loss, damage, liability, expense, additions to tax and additional
amounts or costs incurred or imposed with respect thereto) imposed or otherwise
assessed by the United States of America or by any state, local or foreign
government (or any subdivision or agency thereof) or other taxing authority,
including, without limitation: taxes or other charges on or with respect to
income, franchises, windfall or other profits, gross receipts, property, sales,
use, capital stock, payroll, employment, social security, workers' compensation,
unemployment compensation, or net worth and similar charges; taxes or other
charges in the nature of excise, withholding, ad valorem, stamp, transfer, value
added, taxes on goods and services, gains taxes, license, registration and
documentation fees, customs duties, tariffs, and similar charges.
"Tax Letter" means, collectively, the Tax Letter dated as of the date
hereof, between Atlas and ABN AMRO with respect to the Class A-1 Liquidity
Facility and the Class A-2 Liquidity Facility and all tax letters entered into
between Atlas and any Replacement Liquidity Provider.
"Termination Notice" with respect to any Liquidity Facility has the meaning
assigned to such term in such Liquidity Facility.
"Threshold Rating" means the short-term unsecured debt rating of P-1 by
Moody's and A-1+ by Standard & Poor's, in the case of the Class A-1 and Class
A-2 Liquidity Provider, and the short-term unsecured debt rating of P-1 by
Moody's, and A-1 by Standard & Poor's, in the case of the Class B Liquidity
Provider and the Class C Liquidity Provider (or the Guarantor, so long as MSCS
is the Class B Liquidity Provider or the Class C Liquidity Provider, as the case
may be).
"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.
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"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 (provided that during the
Delivery Period the aggregate principal amount of such Equipment Notes exceeds
$300,000,000) or (z) the occurrence of an Atlas Bankruptcy Event.
"Trust" means any of the Class A-1 Trust, Class A-2 Trust, the Class B
Trust or the Class C Trust.
"Trust Accounts" has the meaning assigned to such term in Section 2.2(a).
"Trust Agreement" means any of the Class A-1 Trust Agreement, the Class A-2
Trust Agreement, the Class B Trust Agreement or the Class C Trust Agreement.
"Trust Property" with respect to any Trust, has the meaning set forth in
the Trust Agreement for such Trust.
"Trustee" means any of the Class A-1 Trustee, the Class A-2 Trustee, the
Class B Trustee or the Class C Trustee.
"Trustee Incumbency Certificate" has the meaning assigned to such term in
Section 2.5(a).
"Trustee Representatives" has the meaning assigned to such term in Section
2.5(a).
"Underwriters" means Morgan Stanley & Co. Incorporated, BT Alex. Brown
Incorporated, CIBC Oppenheimer Corp. and ING Baring Furman Selz LLC.
"Underwriting Agreement" means the Underwriting Agreement dated April 5,
1999 among the Underwriters and Atlas, relating to the purchase of the
Certificates by the Underwriters, as the same may be amended, supplemented or
otherwise modified from time to time in accordance with its terms.
"Written Notice" means, from the Subordination Agent, any Trustee or
Liquidity Provider, a written instrument executed by the Designated
Representative of such Person. An invoice delivered by a Liquidity Provider
pursuant to Section 3.1 in accordance with its normal invoicing procedures shall
constitute Written Notice under such Section.
"WTC" has the meaning assigned to such term in the recital of parties to
this Agreement.
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ARTICLE II
TRUST ACCOUNTS; CONTROLLING PARTY
SECTION 2.1. Agreement to Terms of Subordination; Payments from Monies
Received Only. (a) Each Trustee hereby acknowledges and agrees to the terms of
subordination set forth in this Agreement in respect of each Class of
Certificates and agrees to enforce such provisions and cause all payments in
respect of the Equipment Notes and the Liquidity Facilities to be applied in
accordance with the terms of this Agreement. 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 2.1, 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, payments under Section 9.1 of the
Participation Agreements or payments under Sections 6 and 7 of the Note Purchase
Agreement, 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, as provided in each Trust Agreement, each
Certificateholder, by its acceptance of a Certificate, and each Liquidity
Provider, by entering into the Liquidity Facility to which it is a party, has
agreed to look solely to such amounts to the extent available for distribution
to it as provided in this Agreement and to the relevant Deposits and that none
of the Trustees, Owner Trustees, Loan Trustees, Owner Participants nor the
Subordination Agent is personally liable to any of them for any amounts payable
or any liability under this Agreement, any Trust Agreement, any Liquidity
Facility 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
in each Trust Agreement or (in the case of the Owner Trustees and the Loan
Trustees) as expressly provided in any Operative Agreement.
SECTION 2.2. 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 and the Liquidity Providers, and (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 and the Liquidity Providers. The Subordination Agent shall
establish and maintain the Cash Collateral Accounts pursuant to and under the
circumstances set forth in Section 3.6(f) hereof.
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Upon such establishment and maintenance under Section 3.6(f) hereof, the Cash
Collateral Accounts shall, together with the Collection Account, constitute the
"Trust Accounts" hereunder.
(b) Funds on deposit in the Trust Accounts shall be invested and reinvested
by the Subordination Agent in Eligible Investments selected by the Subordination
Agent 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 2.4 hereof, as the case may be,
next following the date of such investment; (or, in the case of any amount on
deposit in the Cash Collateral Account with respect to any Liquidity Facility
(with respect to such Liquidity Facility, the "Relevant Amount"), (A) in the
case of a portion of the Relevant Amount equal to the amount scheduled to be
paid to the Liquidity Provider with respect to such Liquidity Facility on the
Regular Distribution Date next following the date of such investment in
accordance with clause (iv), (v) or (vi) of Section 3.6(f), the Business Day
immediately preceding such Regular Distribution Date, or (B) in the case of a
portion of the Relevant Amount equal to the Relevant Amount minus the amount
described in clause (A) above, the Business Day immediately preceding the
scheduled Interest Payment Date with respect to such Liquidity Facility next
following the date of such investment); provided, however, that following the
making of a Downgrade Drawing or a Non-Extension Drawing under any Liquidity
Facility, the Subordination Agent shall invest and reinvest such amounts in
Eligible Investments at the direction of Atlas; provided, however, that upon the
occurrence and during the continuation of a Triggering Event, the Subordination
Agent shall invest and reinvest such amounts 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 deposit in the Cash Collateral Accounts, Section 3.6(f) hereof), 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 and any losses shall be charged against the principal amount
invested, in each case net of the Subordination Agent's reasonable fees and
expenses in making such investments. 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 gross 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
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Certificateholders and the Liquidity Providers, 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 each Rating Agency may consent) establish a
new Collection Account, Special Payments Account or Cash Collateral 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
or Cash Collateral Account, as the case may be. So long as WTC is an Eligible
Institution, the Trust Accounts shall be maintained with it as Eligible Deposit
Accounts.
SECTION 2.3. Deposits to the Collection Account and Special Payments
Account. (a) The Subordination Agent shall, upon receipt thereof, deposit in the
Collection Account all Scheduled Payments received by it.
(b) The Subordination Agent shall, on each date 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.
SECTION 2.4. Distributions of Special Payments. (a) Notice of Special
Payment. Except as provided in Section 2.4(e) below, 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 and the Liquidity Providers. The
Subordination Agent shall promptly calculate the amount of the redemption or
purchase of Equipment Notes or the amount of any Overdue Scheduled Payment, as
the case may be, comprising such Special Payment under the applicable Indenture
or Indentures and shall promptly send to each Trustee 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 (a "Special Distribution
Date"), which shall be the Business Day which immediately 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 2.4(b) and 2.4(c) hereof, as applicable.
(b) Redemptions and Purchases 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 2.4(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 hereof) or prepayment 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:
first, such amount as shall be required to pay (A) all accrued and unpaid
Liquidity Expenses then in arrears plus (B) the product of (x) the
aggregate amount of all accrued
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and unpaid Liquidity Expenses not in arrears to such Special Payment 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 Payment Date and the denominator of which is the
aggregate outstanding principal amount of all Equipment Notes, shall be
distributed to the Liquidity Providers pari passu on the basis of the
amount of Liquidity Expenses owed to each Liquidity Provider;
second, such amount as shall be required to pay (A) all accrued and unpaid
interest then in arrears on all Liquidity Obligations (including interest
accrued and unpaid on any Interest Drawing or any Applied Provider Advance
(as defined in any Liquidity Facility)) plus (B) the product of (x) the
aggregate amount of all accrued and unpaid interest on all Liquidity
Obligations not in arrears to such Special Payment Date (at the rate
provided in the applicable Liquidity Facility) 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 Payment Date and the denominator of which is the aggregate
outstanding principal amount of all Equipment Notes, shall be distributed
to the Liquidity Providers pari passu on the basis of the amount of such
Liquidity Obligations owed to each Liquidity Provider;
third, such amount as shall be required (A) if any Cash Collateral Account
had been previously funded as provided in Section 3.6(f), to fund such Cash
Collateral Account up to its Required Amount shall be deposited in such
Cash Collateral Account, (B) if any Liquidity Facility shall become a
Downgraded Facility or a Non-Extended Facility at a time when unreimbursed
Interest Drawings under such Liquidity Facility have reduced the Available
Amount thereunder to zero, to deposit into the related Cash Collateral
Account an amount equal to such Cash Collateral Account's Required Amount
shall be deposited in such Cash Collateral Account, and (C) if, with
respect to any particular Liquidity Facility, neither subclause (A) nor
subclause (B) of this clause "third" are applicable, to pay or reimburse
the Liquidity Provider in respect of such Liquidity Facility in an amount
equal to the amount of any unreimbursed Interest Drawings under such
Liquidity Facility shall be distributed to such Liquidity Provider, pari
passu on the basis of the amounts of all such deficiencies and/or
unreimbursed Interest Drawings;
fourth, if, with respect to any particular Liquidity Facility, any amounts
are to be distributed pursuant to either subclause (A) or (B) of clause
"third" above, then the Liquidity Provider with respect to such Liquidity
Facility shall be paid the excess of (x) the aggregate outstanding amount
of unreimbursed Advances (whether or not then due) under such Liquidity
Facility over (y) the Required Amount for the relevant Class, pari passu on
the basis of such amounts in respect of each Liquidity Provider;
fifth, such amount as shall be required to pay in full Expected
Distributions to the holders of Class A-1 Certificates on such Special
Distribution Date shall be distributed
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to the Class A-1 Trustee and such amount as shall be required to pay in
full Expected Distributions to the holders of Class A-2 Certificates on
such Special Distribution Date shall be distributed to the Class A-2
Trustee, pro rata on the basis of such amounts in respect of each such
Class of Certificates;
sixth, such amount as shall be required to pay in full Expected
Distributions to the holders of Class B Certificates on such Special
Distribution Date shall be distributed to the Class B Trustee;
seventh, 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; and
eighth, the balance, if any, of such Special Payment shall be transferred
to the Collection Account for distribution in accordance with Section 3.2
hereof.
For the purposes of this Section 2.4(b), clause (x) of the definition of
"Expected Distributions" shall be deemed to read as follows: "(x) 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 Equipment Notes being redeemed, purchased or
prepaid (immediately prior to such redemption, purchase or prepayment)
(excluding interest, if any, payable with respect to the Deposits related to
such Trust)".
(ii) Upon the occurrence of a Triggering Event (whether or not continuing),
the Subordination Agent shall make distributions pursuant to this Section 2.4(b)
of amounts on deposit in the Special Payments Account on account of the
redemption or purchase of all of the Equipment Notes issued pursuant to an
Indenture on the Special Distribution Date for such Special Payment in
accordance with Section 3.3 hereof.
(c) Other Special Payments. Except as provided in clause (e) below, any
amounts on deposit in the Special Payments Account other than in respect of
amounts to be distributed pursuant to Section 2.4(b) shall be distributed on the
Special Distribution Date therefor in accordance with Article III hereof.
(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 2.4(b) or (c) shall be invested in accordance with Section
2.2(b). Investment Earnings on such investments shall be distributed in
accordance with Section 2.4(b) or (c), as the case may be.
(e) Certain Payments. The Subordination Agent will distribute promptly upon
receipt thereof (i) any indemnity payment received by it from the Owner
Participant, the Owner Trustee or Atlas in respect of any Trustee, any Liquidity
Provider, any Paying Agent, any Depositary or any Escrow Agent (collectively,
the "Payees") and (ii) any compensation
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(including, without limitation, any fees payable to any Liquidity Provider under
Section 2.03 of any Liquidity Facility) received by it from the Owner
Participant, the Owner Trustee or Atlas under any Operative Agreement in respect
of any Payee, directly to the Payee entitled thereto.
SECTION 2.5. Designated Representatives. (a) With the delivery of this
Agreement, the Subordination Agent shall furnish to each Liquidity Provider and
each Trustee, and from time to time thereafter may furnish to each Liquidity
Provider and each Trustee, at the Subordination Agent's discretion, or upon any
Liquidity 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 and 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, 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 (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 (the "Trustee Representatives") authorized to give Written
Notices on behalf of such Trustee hereunder. Until the Subordination Agent
receives a subsequent Trustee Incumbency Certificate, it shall be entitled to
rely on the last Trustee Incumbency Certificate 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 (an "LP Incumbency Certificate") of
any Responsible Officer of such Liquidity Provider certifying as to the
incumbency and specimen signatures of any officer, attorney-in-fact, agent or
other designated representative of such Liquidity Provider (the "LP
Representatives" and, together with the Subordination Agent Representatives and
the Trustee Representatives, the "Designated Representatives") authorized to
give Written Notices on behalf of such Liquidity Provider hereunder. Until the
Subordination Agent receives a subsequent LP Incumbency Certificate, it shall be
entitled to rely on the last LP Incumbency Certificate delivered to it
hereunder.
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SECTION 2.6. Controlling Party. (a) The Trustees and the Liquidity
Providers hereby agree that, with respect to any Indenture at any given time,
the Loan Trustee thereunder will be directed (i) in taking, or refraining from
taking, any action under such Indenture or with respect to the Equipment Notes
issued thereunder, so long as no Indenture Event of Default has occurred and is
continuing thereunder, by the holders of at least a majority of the outstanding
principal amount of such Equipment Notes (provided that, for so long as the
Subordination Agent is the registered holder of the Equipment Notes, the
Subordination Agent shall act with respect to this clause (i) in accordance with
the directions of the Trustees (in the case of each such Trustee, with respect
to the Equipment Notes issued under such Indenture and held as Trust Property of
such Trust) constituting, in the aggregate, directions with respect to such
principal amount of Equipment Notes), and (ii) after the occurrence and during
the continuance of an Indenture Event of Default thereunder (which, in the case
of an Indenture pertaining to a Leased Aircraft, has not been cured by the
applicable Owner Trustee or the applicable Owner Participant, if applicable,
pursuant to Section 4.03 of such Indenture), in taking, or refraining from
taking, any action under such Indenture or with respect to such Equipment Notes,
including exercising remedies thereunder (including Accelerating the Equipment
Notes issued thereunder or foreclosing the Lien on the Aircraft securing such
Equipment Notes), by the Controlling Party.
(b) The Person who shall be the "Controlling Party" with respect to any
Indenture shall be: (w) the Class A-1 Trustee or Class A-2 Trustee, whichever
represents the Class with the larger principal amount of Certificates
outstanding at the time that an Indenture Event of Default occurs (whether or
not any other Indenture Event of Default shall thereafter occur so long as such
initial Indenture Event of Default shall continue); (x) upon payment of Final
Distributions to the holders of Certificates of such larger Class, the other of
the Class A-1 Trustee or Class A-2 Trustee; (y) upon payment of Final
Distributions to the holders of Class A-1 Certificates and Class A-2
Certificates, the Class B Trustee and (z) upon payment of Final Distributions to
the holders of Class B Certificates, the Class C 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.
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(c) Notwithstanding the foregoing, at any time after 18 months from the
earlier to occur of (i) the date on which the entire Available Amount under any
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 shall
have been withdrawn from the relevant Cash Collateral Account to pay interest on
the relevant Class of Certificates and remains unreimbursed, and (iii) the date
on which all Equipment Notes shall have been Accelerated, the Liquidity
Providers with at least a majority of unreimbursed Liquidity Obligations shall
have the right to elect, by Written Notice to the Subordination Agent 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.
(d) The exercise of remedies by the Controlling Party under this Agreement
shall be expressly limited by Section 4.1(a)(ii) hereof.
(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.
ARTICLE III
RECEIPT, DISTRIBUTION AND APPLICATION OF
AMOUNTS RECEIVED
SECTION 3.1. Written Notice of Distribution. (a) 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 2.4(b)
hereof, 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 A-1 Certificates and the Class A-2
Certificates, the Class A-1 Trustee and the Class A-2 Trustee,
respectively, shall separately set forth the amounts to be paid in
accordance with clause "fifth" of Section 3.2 or 2.4(b), as the case may
be, hereof (without giving effect to the pro rata sharing therein);
(ii) With respect to the Class B Certificates, the Class B Trustee
shall separately set forth the amounts to be paid in accordance with clause
"sixth" of Section 3.2 or 2.4(b), as the case may be, hereof;
(iii) With respect to the Class C Certificates, the Class C Trustee
shall separately set forth the amounts to be paid in accordance with clause
"seventh" of Section 3.2 or 2.4(b), as the case may be, hereof;
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(iv) With respect to each Liquidity Facility, the Liquidity Provider
thereunder shall separately set forth the amounts to be paid in accordance
with clauses "first", "second", "third" and "fourth" of Section 3.2 or
2.4(b), as the case may be, hereof; and
(v) Each Trustee shall set forth the amounts to be paid in accordance
with clause "eighth" of Section 3.2 hereof.
The notices required under this Section 3.1(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 prepayment of the Certificates, 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, the Subordination Agent
shall request the following information from the following Persons, and each of
the following Persons shall, upon the 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 A-1 Certificates and the Class A-2
Certificates, the Class A-1 Trustee and Class A-2 Trustee, respectively,
shall separately set forth the amounts to be paid in accordance with
clauses "first" (to reimburse payments made by the Class A-1
Certificateholders and Class A-2 Certificateholders, respectively, pursuant
to subclause (iii) of clause "first" of Section 3.3 hereof) and "seventh"
of Section 3.3 hereof (without giving effect to the pro rata sharing
therein);
(ii) With respect to the Class B Certificates, the Class B Trustee
shall separately set forth the amounts to be paid in accordance with
clauses "first" (to reimburse payments made by the Class B
Certificateholders pursuant to subclause (iii) of clause "first" of Section
3.3 hereof) and "eighth" of Section 3.3 hereof;
(iii) With respect to the Class C Certificates, 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 (iii) of clause "first" of Section
3.3 hereof) and "ninth" of Section 3.3 hereof;
(iv) With respect to each Liquidity Facility, the Liquidity Provider
thereunder shall separately set forth the amounts to be paid to it in
accordance with subclause (iii) of clause "first" of Section 3.3 hereof and
clauses "second", "third", "fourth" and "fifth" of Section 3.3 hereof; and
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(v) Each Trustee shall set forth the amounts to be paid in accordance
with clause "sixth" of Section 3.3 hereof.
(c) At such time as a Trustee or a Liquidity 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 2.4, 3.2 or 3.3 hereof, as
applicable, and, in the case of a Liquidity Provider, its commitment under the
related Liquidity Facility 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 6.5 hereof, the Subordination Agent shall be
fully protected in relying on any of the information set forth in a Written
Notice provided by any Trustee or any Liquidity Provider pursuant to paragraphs
(a) through (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 or a Liquidity Provider, as
applicable, pursuant to Section 3.1(a), 3.1(b) or 3.1(c) hereof, if made prior
to 10:00 A.M. (New York City time) shall be effective on the date delivered (or
if delivered later 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 paragraph (a) or (b) above which is required to
enable the Subordination Agent to make a distribution to such Person pursuant to
Section 3.2 or 3.3 hereof, the Subordination Agent shall request such
information and, failing to receive any such information, 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
"ninth" of Section 3.2 and clauses "first" through "ninth" of Section 3.3 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, until the Subordination Agent shall receive all necessary
information to enable it to distribute any funds so withheld.
(g) On such dates (but not more frequently than monthly) as any Liquidity
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 3.1(f) hereof.
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SECTION 3.2. Distribution of Amounts on Deposit in the Collection Account.
Except as otherwise provided in Sections 2.4, 3.1(f), 3.3, 3.4 and 3.6(b),
amounts on deposit in the Collection Account (or, in the case of any amount
described in Section 2.4(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 2.4(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 3.1(a)
hereof:
first, such amount as shall be required to pay all accrued and unpaid
Liquidity Expenses owed to each Liquidity Provider shall be distributed to
the Liquidity Providers pari passu on the basis of the amount of Liquidity
Expenses owed to each Liquidity Provider;
second, such amount as shall be required to pay in full the aggregate
amount of interest accrued on all Liquidity Obligations (at the rate, or in
the amount, provided in the applicable Liquidity Facility) and unpaid shall
be distributed to the Liquidity Providers pari passu on the basis of the
amount of such Liquidity Obligations owed to each Liquidity Provider;
third, such amount as shall be required (A) if any Cash Collateral
Account had been previously funded as provided in Section 3.6(f), to fund
such Cash Collateral Account up to its Required Amount shall be deposited
in such Cash Collateral Account, (B) if any Liquidity Facility shall become
a Downgraded Facility or a Non-Extended Facility at a time when
unreimbursed Interest Drawings under such Liquidity Facility have reduced
the Available Amount thereunder to zero, to deposit into the related Cash
Collateral Account an amount equal to such Cash Collateral Account's
Required Amount shall be deposited in such Cash Collateral Account, and (C)
if, with respect to any particular Liquidity Facility, neither subclause
(A) nor subclause (B) of this clause "third" is applicable, to pay or
reimburse the Liquidity Provider in respect of such Liquidity Facility in
an amount equal to the amount of all Liquidity Obligations then due under
such Liquidity Facility (other than amounts payable pursuant to clause
"first" or "second" of this Section 3.2) shall be distributed to such
Liquidity Provider, pari passu on the basis of the amounts of all such
deficiencies and/or unreimbursed Liquidity Obligations;
fourth, if, with respect to any particular Liquidity Facility, any
amounts are to be distributed pursuant to either subclause (A) or (B) of
clause "third" above, then the Liquidity Provider with respect to such
Liquidity Facility shall be paid the excess of (x) the aggregate
outstanding amount of unreimbursed Advances (whether or not then due) under
such Liquidity Facility over (y) the Required Amount for the relevant
Class, pari passu on the basis of such amounts in respect of each Liquidity
Provider;
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fifth, such amount as shall be required to pay in full Expected
Distributions to the holders of the Class A-1 Certificates on such
Distribution Date shall be distributed to the Class A-1 Trustee and such
amount as shall be required to pay in full Expected Distributions to the
holders of the Class A-2 Certificates on such Distribution Date shall be
distributed to the Class A-2 Trustee, pro rata on the basis of such amounts
in respect of each such Class of Certificates;
sixth, such amount as shall be required to pay in full Expected
Distributions to the holders of the Class B Certificates on such
Distribution Date shall be distributed to the Class B Trustee;
seventh, 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;
eighth, such amount as shall be required to pay in full 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; and
ninth, 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 3.3. Distribution of Amounts on Deposit Following a Triggering
Event. (a) Except as otherwise provided in Sections 3.1(f) and 3.6(b) hereof,
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:
first, such amount as shall be required to reimburse (i) the
Subordination Agent for any 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 Trust
Indenture Estate, shall be applied by the Subordination Agent in
reimbursement of such costs and expenses, (ii) each Trustee for any amounts
of the nature described in clause (i) above actually incurred by it under
the applicable Trust Agreement (to the extent not previously reimbursed),
shall be distributed to such Trustee, and (iii) any Liquidity Provider or
Certificateholder for payments, if any, made by it to the Subordination
Agent or any Trustee in respect of amounts described in clause (i) above,
shall be distributed to such Liquidity Provider or to the applicable
Trustee for the account of such Certificateholder, in each such case, pari
passu on the basis of all amounts described in clauses (i) through (iii)
above;
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second, such amount remaining as shall be required to pay all accrued
and unpaid Liquidity Expenses shall be distributed to each Liquidity
Provider pari passu on the basis of the amount of Liquidity Expenses owed
to each Liquidity Provider;
third, such amount remaining as shall be required to pay accrued and
unpaid interest on the Liquidity Obligations as provided in the Liquidity
Facilities shall be distributed to each Liquidity Provider pari passu on
the basis of the amount of such accrued and unpaid interest owed to each
Liquidity Provider;
fourth, such amount remaining as shall be required (A) if any Cash
Collateral Account had been previously funded as provided in Section
3.6(f), unless (i) a Performing Note Deficiency exists and a Liquidity
Event of Default shall have occurred and be continuing with respect to the
relevant Liquidity Facility or (ii) a Final Drawing shall have occurred
with respect to such Liquidity Facility, to fund such Cash Collateral
Account up to its Required Amount (less the amount of any repayments of
Interest Drawings under such Liquidity Facility while subclause (A)(i)
above is applicable) shall be deposited in such Cash Collateral Account,
(B) if any Liquidity Facility shall become a Downgraded Facility or a
Non-Extended Facility at a time when unreimbursed Interest Drawings under
such Liquidity Facility have reduced the Available Amount thereunder to
zero, unless (i) a Performing Note Deficiency exists and a Liquidity Event
of Default shall have occurred and be continuing with respect to the
relevant Liquidity Facility or (ii) a Final Drawing shall have occurred
with respect to such Liquidity Facility, to deposit into the related Cash
Collateral Account an amount equal to such Cash Collateral Account's
Required Amount (less the amount of any repayments of Interest Drawings
under such Liquidity Facility while subclause (B)(i) above is applicable)
shall be deposited in such Cash Collateral Account, and (C) if, with
respect to any particular Liquidity Facility, neither subclause (A) nor
subclause (B) of this clause "fourth" are applicable, to pay in full the
outstanding amount of all Liquidity Obligations then due under such
Liquidity Facility (other than amounts payable pursuant to clause "second"
or "third" of this Section 3.3) shall be distributed to such Liquidity
Provider, pari passu on the basis of the amounts of all such deficiencies
and/or unreimbursed Liquidity Obligations;
fifth, if, with respect to any particular Liquidity Facility, any
amounts are to be distributed pursuant to either subclause (A) or (B) of
clause "fourth" above, then the Liquidity Provider with respect to such
Liquidity Facility shall be paid the excess of (x) the aggregate
outstanding amount of unreimbursed Advances (whether or not then due) under
such Liquidity Facility over (y) the Required Amount for the relevant Class
(less the amount of any repayments of Interest Drawings under such
Liquidity Facility while subclause (A)(i) or (B)(i), as the case may be, of
clause "fourth" above is applicable), pari passu on the basis of such
amounts in respect of each Liquidity Provider;
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sixth, such amount as shall be required to reimburse or pay (i) 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, (ii) each Trustee for any Tax (other than Taxes imposed on
compensation paid under the applicable Trust Agreement), expense, fee,
charge, loss 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 (iii) each Certificateholder for
payments, if any, made by it pursuant to Section 5.2 hereof in respect of
amounts described in clause (i) above, shall be distributed to the
applicable Trustee for the account of such Certificateholder, in each such
case, pari passu on the basis of all amounts described in clauses (i)
through (iii) above;
seventh, such amount remaining as shall be required to pay in full
Adjusted Expected Distributions on the Class A-1 Certificates shall be
distributed to the Class A-1 Trustee and such amount remaining as shall be
required to pay in full Adjusted Expected Distributions on the Class A-2
Certificates shall be distributed to the Class A-2 Trustee, pro rata on the
basis of such amounts in respect of each such Class of Certificates;
eighth, such amount remaining as shall be required to pay in full
Adjusted Expected Distributions on the Class B Certificates shall be
distributed to the Class B Trustee; and
ninth, such amount remaining as shall be required to pay in full
Adjusted Expected Distributions on the Class C Certificates shall be
distributed to the Class C Trustee.
SECTION 3.4. 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 (i) in the order of
priority specified in Section 3.3 hereof and (ii) to the extent received or
realized at any time after the Final Distributions for each Class of
Certificates have been made, in the manner provided in clause "first" of Section
3.3 hereof.
(b) On any Interest Payment Date under each Liquidity Facility which is not
a Distribution Date, the Subordination Agent shall pay to the Liquidity Provider
under such Liquidity Facility from, and to the extent of, amounts on deposit in
the Collection Account, an amount equal to the amount of interest then due and
payable to such Liquidity Provider under such Liquidity Facility.
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(c) Except as otherwise provided in Section 3.3 hereof, 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 3.2 hereof;
provided that, for the purposes of this Section 3.4(c) only, each reference in
clause "eighth" of Section 3.2 to "Distribution Date" shall be deemed to mean
the actual date of payment of such Scheduled Payment and each reference in
clause "fifth", "sixth" or "seventh" of Section 3.2 to "Distribution Date" shall
be deemed to refer to such Scheduled Payment Date.
SECTION 3.5. Payments to the Trustees and the Liquidity Providers. Any
amounts distributed hereunder to any Liquidity Provider shall be paid to such
Liquidity Provider by wire transfer of funds to the address such Liquidity
Provider shall provide to the Subordination Agent. The Subordination Agent shall
provide a Written Notice of any such transfer to the applicable Liquidity
Provider, as the case may be, at the time of such transfer. Any amounts
distributed hereunder by the Subordination Agent to any Trustee which shall not
be the same institution as the Subordination Agent shall be paid to such Trustee
by wire transfer funds at the address such Trustee shall provide to the
Subordination Agent.
SECTION 3.6. Liquidity Facilities. (a) Interest Drawings. If on any
Distribution Date, after giving effect to the subordination provisions of this
Agreement, 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
A-1 Certificates, the Class A-2 Certificates, the Class B Certificates or the
Class C Certificates (at the Stated Interest Rate for such Class of
Certificates), then, prior to 1:00 PM (New York City time) on such Distribution
Date, the Subordination Agent shall request a drawing (each such drawing, an
"Interest Drawing") under each Liquidity Facility with respect to such Class of
Certificates in an amount equal to the lesser of (i) of an amount sufficient to
pay the amount of such accrued interest (at the Stated Interest Rate for such
Class of Certificates) and (ii) the Available Amount under such Liquidity
Facility, and shall pay such amount to the Trustee with respect to such Class of
Certificates in payment of such accrued interest.
(b) Application of Interest Drawings. 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 Class A-1
Liquidity Facility and all amounts withdrawn by the
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Subordination Agent from the Class A-1 Cash Collateral Account, and payable in
each case to the Class A-1 Certificateholders or the Class A-1 Trustee, shall be
promptly distributed to the Class A-1 Trustee, (ii) all payments received by the
Subordination Agent in respect of an Interest Drawing under the Class A-2
Liquidity Facility and all amounts withdrawn by the Subordination Agent from the
Class A-2 Cash Collateral Account, and payable in each case to the Class A-2
Certificateholders, shall be promptly distributed to the Class A-2 Trustee,
(iii) all payments received by the Subordination Agent in respect of an Interest
Drawing under the Class B Liquidity Facility and all amounts withdrawn by the
Subordination Agent from the Class B Cash Collateral Account, and payable in
each case to the Class B Certificateholders, shall be promptly distributed to
the Class B Trustee and (iv) all payments received by the Subordination Agent in
respect of an Interest Drawing under the Class C Liquidity Facility and all
amounts withdrawn by the Subordination Agent from the Class C Cash Collateral
Account, and payable in each case to the Class C Certificateholders, shall be
promptly distributed to the Class C Trustee.
(c) Downgrade Drawings. If at any time (i) in the case of any Liquidity
Facility (other than as provided in clause (ii) below) the short-term unsecured
debt rating of the Liquidity Provider thereof issued by any Rating Agency is
lower than the applicable Threshold Rating or (ii) (with respect to any MSCS
Liquidity Facility, so long as MSCS is the Liquidity Provider thereunder) the
short-term unsecured debt rating of the Guarantor issued by any Rating Agency is
lower than the applicable Threshold Rating or the related Guarantee Agreement
ceases to be in full force and effect, becomes invalid or unenforceable or the
Guarantor denies its liability thereunder (any such occurrence, a "Guarantee
Event"), within 10 days after receiving notice of such downgrading or Guarantee
Event, as the case may be (but not later than the expiration date of the
Liquidity Facility issued by the relevant Liquidity Provider (the "Downgraded
Facility")), such Liquidity Provider or Atlas may arrange for a Replacement
Liquidity Provider to issue and deliver a Replacement 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 (or if such day is not a Business Day, on the next succeeding Business
Day) (or, if earlier, 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 3.6(f) hereof. The Liquidity
Provider may also arrange for a Replacement Liquidity Provider to issue and
deliver a Replacement Liquidity Facility at any time after such Downgrade
Drawing so long as such Downgrade Drawing has not been reimbursed in full to the
Liquidity Provider.
(d) Non-Extension Drawings. If the any Liquidity Facility with respect to
any Class of Certificates 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 such Class of Certificates, then, no earlier than the 60th
day and no later than the 40th day prior to the then Stated Expiration Date, the
Subordination Agent shall request that such Liquidity Provider extend the Stated
Expiration Date for a period of 364 days after the Stated Expiration Date
(unless the obligations of such Liquidity Provider thereunder are earlier
terminated in accordance therewith). The applicable Liquidity Provider shall
advise the Borrower, no earlier than 40 days and no later than 25 days prior to
such Stated Expiration Date, whether, in its sole discretion, it agrees to so
extend the Stated Expiration Date for such Liquidity Facility. If, on or before
such 25th day, such Liquidity Facility shall not have been so extended or
replaced in accordance with Section 3.6(e), or if such Liquidity Provider fails
irrevocably and unconditionally to advise the Borrower on or before the 25th day
prior to the Stated Expiration
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Date then in effect that such Stated Expiration Date shall be so extended, the
Subordination Agent shall, on such 25th day (or as soon as possible thereafter),
in accordance with and to the extent permitted by the terms of the expiring
Liquidity Facility (a "Non-Extended Facility"), request a drawing under such
expiring 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 3.6(f) hereof. Notwithstanding the immediately preceding three
sentences, so long as MSCS is the Liquidity Provider for any MSCS Liquidity
Facility, the Stated Expiration Date therefor shall be automatically extended,
effective on the 25th day prior to such Stated Expiration Date (unless such
Stated Expiration Date is on or after the date that is 15 days after the Final
Legal Distribution Date for the relevant Class of Certificates), for a period of
364 days after such Stated Expiration Date (unless the obligations of such
Liquidity Provider are earlier terminated in accordance with such Liquidity
Facility) without the necessity of any act by the Subordination Agent or such
Liquidity Provider, unless such Liquidity Provider shall advise the
Subordination Agent, prior to such 25th day, that it does not agree to such
extension of the Stated Expiration Date, in which event, the Subordination Agent
shall, on such 25th day (or as soon as possible thereafter), in accordance with
and to the extent permitted by the terms of the Non-Extended Facility, request a
Non-Extension Drawing under the Non-Extended Facility of all available and
undrawn amounts thereunder.
(e) Issuance of Replacement Liquidity Facility. (i) At any time, Atlas may,
at its option, with cause or without cause, arrange for a Replacement Liquidity
Facility to replace any Liquidity Facility for any Class of Certificates
(including any Replacement Liquidity Facility provided pursuant to Section
3.6(e)(ii) hereof); provided, however, that neither ABN AMRO nor MSCS shall be
replaced by Atlas as a Liquidity Provider with respect to any Class of
Certificates prior to the fourth anniversary of the Closing Date unless (A)
there shall have become due to such Liquidity Provider, or such Liquidity
Provider shall have demanded, amounts pursuant to Section 3.01, 3.02 or 3.03 of
any Liquidity Facility or pursuant to the Tax Letter and the replacement of such
Liquidity Provider would reduce or eliminate the obligation to pay such amounts
or Atlas determines in good faith that there is a substantial likelihood that
such Liquidity Provider will have the right to claim any such amounts (unless
such Liquidity Provider waives, in writing, any right it may have to claim such
amounts), which determination shall be set forth in a certificate delivered by
Atlas to such Liquidity Provider setting forth the basis for such determination
and accompanied by an opinion of outside counsel selected by Atlas and
reasonably acceptable to such Liquidity Provider verifying the legal
conclusions, if any, of such certificate relating to such basis, provided that,
in the case of any likely claim for such amounts based upon any proposed, or
proposed change in, law, rule, regulation, interpretation, directive,
requirement, request or administrative practice, such opinion may assume the
adoption or promulgation of such proposed matter, (B) it shall become unlawful
or impossible for such Liquidity Provider (or its Lending Office) to maintain or
fund its LIBOR Advances as described in Section 3.10 of any Liquidity Facility,
(C) with respect to any Liquidity Facility for which MSCS is not the Liquidity
Provider, the short-term unsecured debt rating of such Liquidity Provider or,
with
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respect to the MSCS Liquidity Facilities (so long as MCSC is the Liquidity
Provider thereunder), the short-term unsecured debt rating of the Guarantor, is
downgraded by any Rating Agency and there is a resulting downgrade in the rating
by any Rating Agency of any related Class of Certificates, (D) a Downgrade
Drawing or a Non-Extension Drawing shall have occurred under any Liquidity
Facility, or (E) such Liquidity Provider shall have breached any of its payment
(including, without limitation, funding) obligations under any Liquidity
Facility. If such Replacement Liquidity Facility is provided at any time after a
Downgrade Drawing or Non-Extension Drawing has been made, all funds on deposit
in the relevant Cash Collateral Account will be returned to the Liquidity
Provider being replaced.
(ii) If any Liquidity Provider shall determine not to extend any of
its Liquidity Facility in accordance with Section 3.6(d), then such
Liquidity Provider may, at its option, arrange for a Replacement Liquidity
Facility to replace such 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 Liquidity Facility.
(iii) No Replacement Liquidity Facility arranged by Atlas or a
Liquidity Provider in accordance with clause (i) or (ii) above,
respectively, shall become effective and no such Replacement Liquidity
Facility shall be deemed a "Liquidity Facility" under the Operative
Agreements (in each case other than insofar as necessary to permit the
repayment of amounts owed to the replaced Liquidity Provider), unless and
until (A) each of the conditions referred to in clause (iv) below shall
have been satisfied, (B) if such Replacement Liquidity Facility shall
materially adversely affect the rights, remedies, interests or obligations
of the Class A-1 Certificateholders, the Class A-2 Certificateholders, the
Class B Certificateholders or the Class C Certificateholders under any of
the Operative Agreements, the applicable Trustee shall have consented, in
writing, to the execution and issuance of such Replacement Liquidity
Facility and (C) in the case of a Replacement Liquidity Facility arranged
by a Liquidity Provider under Section 3.6(e)(ii), such Replacement
Liquidity Facility is acceptable to Atlas.
(iv) In connection with the issuance of each Replacement Liquidity
Facility, the Subordination Agent shall (x) prior to the issuance of such
Replacement Liquidity Facility, obtain written confirmation from each
Rating Agency that such Replacement Liquidity Facility will not cause a
reduction of any rating then in effect for any Class of Certificates by
such Rating Agency (without regard to any downgrading of any rating of any
Liquidity Provider being replaced pursuant to Section 3.6(c) hereof), (y)
pay all Liquidity Obligations then owing to the replaced Liquidity Provider
(which payment shall be made first from available funds in the Cash
Collateral Account as described in clause (vii) of Section 3.6(f) hereof,
and thereafter from any other available source, including, without
limitation, a drawing under the Replacement Liquidity Facility) and (z)
cause the issuer of the Replacement Liquidity Facility to deliver the
Replacement Liquidity Facility to the Subordination Agent, together with a
legal opinion opining that
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such Replacement Liquidity Facility is an enforceable obligation of such
Replacement Liquidity Provider.
(v) Upon satisfaction of the conditions set forth in clauses (iii) and
(iv) of this Section 3.6(e), (w) the replaced Liquidity Facility shall
terminate, (x) the Subordination Agent shall, if and to the extent so
requested by Atlas or the Liquidity Provider being replaced, execute and
deliver any certificate or other instrument required in order to terminate
the replaced Liquidity Facility, shall surrender the replaced Liquidity
Facility to the Liquidity Provider being replaced and shall execute and
deliver the Replacement Liquidity Facility and any associated Fee Letter,
(y) each of the parties hereto shall enter into any amendments to this
Agreement necessary to give effect to (1) the replacement of the applicable
Liquidity Provider with the applicable Replacement Liquidity Provider and
(2) the replacement of the applicable Liquidity Facility with the
applicable Replacement Liquidity Facility and (z) the applicable
Replacement Liquidity Provider shall be deemed to be a Liquidity Provider
with the rights and obligations of a Liquidity Provider hereunder and under
the other Operative Agreements and such Replacement Liquidity Facility
shall be deemed to be a Liquidity Facility hereunder and under the other
Operative Agreements.
(f) Cash Collateral Accounts; Withdrawals; Investments. In the event the
Subordination Agent shall draw all available amounts under the Class A-1
Liquidity Facility, the Class A-2 Liquidity Facility, the Class B Liquidity
Facility or the Class C Liquidity Facility pursuant to Section 3.6(c), 3.6(d) or
3.6(i) hereof, or in the event amounts are to be deposited in the Cash
Collateral Account pursuant to subclause (B) of clause "third" of Section
2.4(b), subclause (B) of clause "third" of Section 3.2 or subclause (B) of
clause "fourth" of Section 3.3, amounts so drawn or to be deposited, as the case
may be, shall be deposited by the Subordination Agent in the Class A-1 Cash
Collateral Account, the Class A-2 Cash Collateral Account, the Class B Cash
Collateral Account or the Class C Cash Collateral Account, respectively. All
amounts on deposit in each Cash Collateral Account shall be invested and
reinvested in Eligible Investments in accordance with Section 2.2(b) hereof.
Investment Earnings on amounts on deposit in the Cash Collateral Account with
respect to each Liquidity Facility shall be deposited in the Collection Account
on each Interest Payment Date under such Liquidity Facility and applied on such
Interest Payment Date in accordance with Section 3.2, 3.3 or 3.4 (as
applicable). The Subordination Agent shall deliver a written statement to Atlas
and the Liquidity Provider one day prior to each Interest Payment Date setting
forth the aggregate amount of Investment Earnings held in the Cash Collateral
Accounts as of such date. 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 A-1 Certificates (at the Stated Interest Rate
for the Class A-1 Certificates) from any other source, withdraw from the
Class A-1 Cash Collateral Account, and pay to the
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Class A-1 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 A-1 Certificates) on such Class A-1 Certificates and (y) the amount
on deposit in the Class A-1 Cash Collateral Account;
(ii) 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 A-2 Certificates (at the Stated Interest Rate
for the Class A-2 Certificates) from any other source, withdraw from the
Class A-2 Cash Collateral Account, and pay to the Class A-2 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 A-2
Certificates) on such Class A-2 Certificates and (y) the amount on deposit
in the Class A-2 Cash Collateral Account;
(iii) 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 B Certificates (at the Stated Interest Rate for
the Class B Certificates) from any other source, withdraw from the Class B
Cash Collateral Account, and pay to the Class B 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 B Certificates) on such Class B
Certificates and (y) the amount on deposit in the Class B Cash Collateral
Account;
(iv) 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 C Certificates (at the Stated Interest Rate for
the Class C Certificates) from any other source, withdraw from the Class C
Cash Collateral Account, and pay to the Class C 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 C Certificates) on such Class C
Certificates and (y) the amount on deposit in the Class C Cash Collateral
Account;
(v) on each date on which the Pool Balance of the Class A-1 Trust
shall have been reduced by payments made to the Class A-1
Certificateholders pursuant to Section 2.4, 3.2 or 3.3 hereof or pursuant
to Section 2.03 of the Escrow and Paying Agent Agreement for such Class,
the Subordination Agent shall withdraw from the Class A-1 Cash Collateral
Account such amount as is necessary so that, after giving effect to the
reduction of the Pool Balance on such date (including any such reduction
resulting from a prior withdrawal of amounts on deposit in the Class A-1
Cash Collateral Account on such date), an amount equal to the sum of the
Required Amount (with respect to the Class A-1 Liquidity Facility) plus
Investment Earnings on deposit in such Cash Collateral Account will be on
deposit in the Class A-1 Cash Collateral Account and shall first, pay such
amount to the relevant Class A-1 Liquidity Provider until the Liquidity
Obligations (with respect to the Class A-1 Certificates) owing to such
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Liquidity Provider shall have been paid in full, and second, deposit any
remaining amount in the Collection Account;
(vi) on each date on which the Pool Balance of the Class A-2 Trust
shall have been reduced by payments made to the Class A-2
Certificateholders pursuant to Section 2.4, 3.2 or 3.3 hereof or pursuant
to Section 2.03 of the Escrow and Paying Agent Agreement for such Class,
the Subordination Agent shall withdraw from the Class A-2 Cash Collateral
Account such amount as is necessary so that, after giving effect to the
reduction of the Pool Balance on such date (including any such reduction
resulting from a prior withdrawal of amounts on deposit in the Class A-2
Cash Collateral Account on such date), an amount equal to the sum of the
Required Amount (with respect to the Class A-2 Liquidity Facility) plus
Investment Earnings on deposit in such Cash Collateral Account will be on
deposit in the Class A-2 Cash Collateral Account and shall first, pay such
amount to the Class A-2 Liquidity Provider until the Liquidity Obligations
(with respect to the Class A-2 Certificates) owing to such Liquidity
Provider shall have been paid in full, and second, deposit any remaining
amount in the Collection Account;
(vii) on each date on which the Pool Balance of the Class B Trust
shall have been reduced by payments made to the Class B Certificateholders
pursuant to Section 2.4, 3.2 or 3.3 hereof or pursuant to Section 2.03 of
the Escrow and Paying Agent Agreement of such Class, the Subordination
Agent shall withdraw from the Class B Cash Collateral Account such amount
as is necessary so that, after giving effect to the reduction of the Pool
Balance on such date (including any such reduction resulting from a prior
withdrawal of amounts on deposit in the Class B Cash Collateral Account on
such date), an amount equal to the sum of the Required Amount (with respect
to the Class B Liquidity Facility) plus Investment Earnings on deposit in
such Cash Collateral Account will be on deposit in the Class B Cash
Collateral Account and shall first, pay such amount to the Class B
Liquidity Provider until the Liquidity Obligations (with respect to the
Class B Certificates) owing to such Liquidity Provider shall have been paid
in full, and second, deposit any remaining amount in the Collection
Account;
(viii) on each date on which the Pool Balance of the Class C Trust
shall have been reduced by payments made to the Class C Certificateholders
pursuant to Section 2.4, 3.2 or 3.3 hereof or pursuant to Section 2.03 of
the Escrow and Paying Agent Agreement for such Class, the Subordination
Agent shall withdraw from the Class C Cash Collateral Account such amount
as is necessary so that, after giving effect to the reduction of the Pool
Balance on such date (including any such reduction resulting from a prior
withdrawal of amounts on deposit in the Class C Cash Collateral Account on
such date), an amount equal to the sum of the Required Amount (with respect
to the Class C Liquidity Facility) plus Investment Earnings on deposit in
such Cash Collateral Account will be on deposit in the Class C Cash
Collateral Account and shall first, pay such amount to the Class C
Liquidity Provider until the Liquidity
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Obligations (with respect to the Class C Certificates) owing to such
Liquidity Provider shall have been paid in full, and second, deposit any
remaining amount in the Collection Account;
(ix) if a Replacement Liquidity Facility for any Class of Certificates
shall be delivered to the Subordination Agent following the date on which
funds have been deposited into the Cash Collateral Account for such Class
of Certificates, the Subordination Agent shall withdraw all amounts on
deposit in such Cash Collateral Account and shall pay such amounts to the
replaced Liquidity Provider until all Liquidity Obligations owed to such
Person shall have been paid in full, and shall deposit any remaining amount
in the Collection Account; and
(x) following the payment of Final Distributions with respect to any
Class of Certificates, on the date on which the Subordination Agent shall
have been notified by the Liquidity Provider for such Class of Certificates
that the Liquidity Obligations owed to such Liquidity Provider have been
paid in full, the Subordination Agent shall withdraw all amounts on deposit
in the Cash Collateral Account in respect of such Class of Certificates and
shall deposit such amount in the Collection Account.
(g) Reinstatement. With respect to any Interest Drawing under the Liquidity
Facility for any Trust, upon the reimbursement of the applicable Liquidity
Provider for all or any part of the amount of such Interest Drawing, together
with any accrued interest thereon, the Available Amount of such Liquidity
Facility shall be reinstated by an amount equal to the amount of such Interest
Drawing so reimbursed to the applicable Liquidity Provider but not to exceed the
Maximum Commitment with respect to such Liquidity Facility; provided, however,
that such 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 with respect to the relevant
Liquidity Facility or (y) a Final Drawing shall have occurred with respect to
such Liquidity Facility. In the event that, with respect to any particular
Liquidity Facility (i) funds are withdrawn from any Cash Collateral Account
pursuant to clause (i), (ii),(iii) or (iv) of Section 3.6(f) hereof or (ii) such
Liquidity Facility shall become a Downgraded Facility or a Non-Extended Facility
at a time when unreimbursed Interest Drawings under such Liquidity Facility have
reduced the Available Amount thereunder to zero, then funds received by the
Subordination Agent at any time other than (x) any time when a Liquidity Event
of Default shall have occurred and be continuing with respect to such Liquidity
Facility and a Performing Note Deficiency exists or (y) any time after a Final
Drawing shall have occurred with respect to such Liquidity Facility shall be
deposited in such Cash Collateral Account as and to the extent provided in
clause "third" of Section 2.4(b), clause "third" of Section 3.2 or clause
"fourth" of Section 3.3, as applicable, and applied in accordance with Section
3.6(f) hereof.
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(h) Reimbursement. The amount of each drawing under the Liquidity
Facilities shall be due and payable, together with interest thereon, on the
dates and at the rates, respectively, provided in the Liquidity Facilities.
(i) Final Drawing. Upon receipt from a Liquidity Provider of a Termination
Notice with respect to any 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 such Liquidity Facility, request a
drawing under such 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 3.6(f) hereof.
(j) Reduction of Stated Amount. Promptly following each date on which the
Required Amount of the Liquidity Facility for a Class of Certificates is reduced
as a result of a reduction in the Pool Balance with respect to such
Certificates, the Subordination Agent shall, if any such Liquidity Facility
provides for reductions of the Stated Amount of such Liquidity Facility and
regardless of whether such reductions are automatic, request such Liquidity
Provider for such Class of Certificates to reduce such Stated Amount to an
amount equal to the Required Amount with respect to such 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 applicable
Liquidity Facility.
(k) Relation to Subordination Provisions. Interest Drawings under the
Liquidity Facilities and withdrawals from the Cash Collateral Accounts, in each
case, in respect of interest on the Certificates of any Class, will be
distributed to the Trustee for such Class of Certificates, notwithstanding
Sections 3.2, 3.3 and 3.6(h) hereof.
ARTICLE IV
EXERCISE OF REMEDIES
SECTION 4.1. Directions from the Controlling Party. (a) (i) Following the
occurrence and during the continuation of an Indenture Event of Default under
any Indenture, the Controlling Party shall direct the Subordination Agent, which
in turn shall direct the Loan Trustee under such 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. Subject to the Owner Trustees' and the Owner
Participants' rights, if any, set forth in the Indentures with respect to Leased
Aircraft to purchase the Equipment Notes and the provisions of the next
paragraph, if the Equipment Notes issued pursuant to any Indenture have been
Accelerated following an Indenture Event of Default with respect thereto, the
Controlling Party direct the Subordination Agent to, assign,
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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 in accordance with applicable law.
(ii) Subject to the Owner Trustees' and the Owner Participants'
rights, if any, set forth in the Indentures with respect to Leased Aircraft
to purchase the Equipment Notes, and 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
Atlas Bankruptcy Event, without the consent of each Trustee, (A) 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, and (B) with respect
to any Leased Aircraft, the amount and payment dates of rentals payable by
Atlas under the Lease for such Aircraft may not be adjusted, if, as a
result of such adjustment, the discounted present value of all such rentals
would be less than 75% of the discounted present value of the rentals
payable by Atlas under such Lease before giving effect to such adjustment,
in each case, using the weighted average interest rate of the Equipment
Notes issued pursuant to such Indenture as the discount rate.
(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 LTV
Appraisals 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, the Controlling Party shall have the
right to obtain or cause to be obtained substitute any LTV Appraisals
(including any LTV Appraisals based upon physical inspection of the
Aircraft).
(b) 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, the Controlling Party may maintain possession of such
Equipment Notes and continue to apply monies received in respect of such
Equipment Notes in accordance with Article III hereof. 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, subject to the terms and
conditions
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of the related Indenture, instruct the Loan Trustee under such Indenture to
foreclose on the Lien on the related Aircraft.
SECTION 4.2. Remedies Cumulative. Each and every right, power and remedy
given to the Trustees, the Liquidity Providers, 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 Controlling Party
or the Subordination Agent, as appropriate, 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 any Trustee, any Liquidity 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 4.3. 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 4.4. Right of Certificateholders to Receive Payments Not to Be
Impaired. Anything in this Agreement to the contrary notwithstanding but subject
to each Trust Agreement, the right of any Certificateholder or any Liquidity
Provider, respectively, to receive payments hereunder (including without
limitation pursuant to Section 2.4, 3.2 or 3.3 hereof) when due, or to institute
suit for the enforcement of any such payment on or after the applicable
Distribution Date, shall not be impaired or affected without the consent of such
Certificateholder or such Liquidity Provider, respectively.
SECTION 4.5. Undertaking for Costs. In any Proceeding for the enforcement
of any right or remedy under this Agreement or in any Proceeding against any
Controlling Party or the Subordination Agent for any action taken or omitted by
it as Controlling Party or Subordination Agent, as the case may be, a court in
its discretion may require the filing by any party litigant in the suit of an
undertaking to pay the costs of the suit, and the court in its discretion may
assess reasonable costs, including reasonable attorneys' fees and expenses,
against any party litigant in the suit, having due regard to the merits and good
faith of the claims or defenses made by the party litigant. The provisions of
this Section do not apply to a
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suit instituted by the Subordination Agent, a Liquidity Provider or a Trustee or
a suit by Certificateholders holding more than 10% of the original principal
amount of any Class of Certificates.
ARTICLE V
DUTIES OF THE SUBORDINATION AGENT;
AGREEMENTS OF TRUSTEES, ETC.
SECTION 5.1. Notice of Indenture Event of Default or Triggering Event. (a)
In the event the Subordination Agent shall have actual knowledge of the
occurrence of an Indenture Event of Default or a Triggering Event, as promptly
as practicable, and in any event within 10 days after obtaining knowledge
thereof, the Subordination Agent shall transmit by mail or courier to the Rating
Agencies, the Liquidity Providers and the Trustees notice of such Indenture
Event of Default or Triggering Event, 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 on the part of a Responsible
Officer, the Subordination Agent shall not be deemed to have knowledge of any
Indenture Event of Default or Triggering Event unless notified in writing by one
or more Trustees, one or more Liquidity Providers or one or more
Certificateholders.
(b) Other Notices. The Subordination Agent will furnish to each Liquidity
Provider and 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 or Trustee, as applicable, pursuant to the express provision
of any other Operative Agreement.
SECTION 5.2. Indemnification. The Subordination Agent shall not be required
to take any action or refrain from taking any action under Section 5.1 (other
than the first sentence thereof) or Article IV hereof unless the Subordination
Agent shall have been indemnified (to the extent and in the manner reasonably
satisfactory to the Subordination Agent) against any liability, cost or expense
(including counsel fees and expenses) which may be incurred in connection
therewith. The Subordination Agent shall not be under any obligation to take any
action under this Agreement and nothing contained in this Agreement shall
require the Subordination Agent to expend or risk its own funds or otherwise
incur any financial liability in the performance of any of its duties hereunder
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 or liability is not reasonably assured to it. The Subordination Agent
shall not be required to take any action under Section 5.1 (other than the first
sentence thereof) or Article IV hereof, nor shall any other provision of this
Agreement be
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deemed to impose a duty on the Subordination Agent to take any action, if the
Subordination Agent shall have been advised by counsel that such action is
contrary to the terms hereof or is otherwise contrary to law.
SECTION 5.3. 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 under Section 7.1 hereof) promptly take such action as may
be necessary to duly discharge all Liens on any of the Trust Accounts or any
monies deposited therein which result from claims against it in its individual
capacity not related to its activities hereunder or any other Operative
Agreement.
SECTION 5.4. Notice from the Liquidity Providers and Trustees. If any
Liquidity Provider or 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 and 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.
ARTICLE VI
THE SUBORDINATION AGENT
SECTION 6.1. Authorization; Acceptance of Trusts and Duties. Each of the
Class A-1 Trustee, the Class A-2 Trustee, the Class B Trustee and the Class C
Trustee hereby designates and appoints the Subordination Agent as the agent and
trustee of such Trustee under the applicable Liquidity Facility and authorizes
the Subordination Agent to enter into the applicable Liquidity Facility as agent
and trustee for such Trustee. Each of the Liquidity Providers and the Trustees
hereby designates and appoints the Subordination Agent as the Subordination
Agent under this Agreement. WTC hereby accepts the duties hereby created and
applicable to it as the Subordination Agent and agrees to perform the same but
only upon the terms of this Agreement and agrees to receive and disburse all
monies received by it in accordance with the terms hereof. The Subordination
Agent shall not be answerable or accountable under any circumstances, except (a)
for its own willful misconduct or gross negligence (or ordinary negligence in
the handling of funds), (b) as provided in Section 2.2 hereof and (c) for
liabilities that may result from the material inaccuracy of any representation
or warranty of the Subordination Agent made in its individual capacity in any
Operative Agreement. The Subordination Agent shall not be liable for any error
of judgment made in good faith by a Responsible Officer of the Subordination
Agent, unless it is proved that the Subordination Agent was negligent in
ascertaining the pertinent facts. SECTION 6.2. 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.
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SECTION 6.3. No Representations or Warranties as to Documents. The
Subordination Agent in its individual capacity does not make nor shall be deemed
to have made any representation or warranty as to the validity, legality or
enforceability of this Agreement or any other Operative Agreement or as to the
correctness of any statement contained in any thereof, except for the
representations and warranties of the Subordination Agent, made in its
individual capacity, under any Operative Agreement to which it is a party. The
Certificateholders, the Trustees and the Liquidity Providers make no
representation or warranty hereunder whatsoever.
SECTION 6.4. 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 or any Liquidity Provider as
provided in Articles II and III hereof 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 2.2 hereof) 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 6.5. Reliance; Agents; Advice of Counsel. The Subordination Agent
shall not incur 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 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 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. The Subordination Agent shall
assume, and shall be fully protected in assuming, that each of the Liquidity
Providers and each of the Trustees are authorized to enter into this Agreement
and to take all action to be taken by them pursuant to the provisions hereof,
and shall not inquire into the authorization of each of the Liquidity Providers
and each of the Trustees with respect thereto. In the administration of the
trusts hereunder, the Subordination Agent may execute any of the trusts or
powers hereof and perform its powers and duties hereunder directly or through
agents or attorneys and may consult with counsel,
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accountants and other skilled persons to be selected and retained by it, and the
Subordination Agent shall not be liable for the acts or omissions of any agent
appointed with due care or for anything done, suffered or omitted in good faith
by it in accordance with the advice or written opinion of any such counsel,
accountants or other skilled persons.
SECTION 6.6. Capacity in Which Acting. The Subordination Agent acts
hereunder solely as agent and trustee herein and not in its individual capacity,
except as otherwise expressly provided in the Operative Agreements.
SECTION 6.7. Compensation. The Subordination Agent shall be entitled to
reasonable compensation, including expenses and disbursements, for all services
rendered hereunder and shall have a priority claim to the extent set forth in
Article III hereof 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
or Liquidity Provider for any fee as compensation for its services as agent
under this Agreement. The provisions of this Section 6.7 shall survive the
termination of this Agreement.
SECTION 6.8. 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 6.9. Subordination Agent Required; Eligibility. There shall at all
times be a Subordination Agent hereunder which shall be a corporation organized
and doing business under the laws of the United States of America or of any
State or the District of Columbia having a combined capital and surplus of at
least $100,000,000 (or 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 of America, any
State thereof or of the District of Columbia and having a combined capital and
surplus of at least $100,000,000), if there is such an institution willing and
able to perform the duties of the Subordination Agent hereunder upon reasonable
or customary terms. Such corporation shall be a citizen of the United States and
shall be authorized under the laws of the United States or any State thereof or
of the District of Columbia to exercise corporate trust powers and shall be
subject to supervision or examination by federal, state or District of Columbia
authorities. If such corporation publishes reports of condition at least
annually, pursuant to law or to the requirements of any of the aforesaid
supervising or examining authorities, then, for the purposes of this Section
6.9, the combined capital and surplus of such corporation shall be deemed to be
its combined capital and surplus as set forth in its most recent report of
condition so published.
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In case at any time the Subordination Agent shall cease to be eligible in
accordance with the provisions of this Section, the Subordination Agent shall
resign immediately in the manner and with the effect specified in Section 8.1.
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. All such Equipment Notes,
monies or other property shall be held in the Trust Department of the
institution acting as Subordination Agent hereunder.
ARTICLE VII
INDEMNIFICATION OF SUBORDINATION AGENT
SECTION 7.1. Scope of Indemnification. The Subordination Agent shall be
indemnified hereunder to the extent and in the manner described in Section 9.1
of the Participation Agreements and Section 7 of the Note Purchase Agreement.
The indemnities contained in such Sections of such agreements shall survive the
termination of this Agreement.
ARTICLE VIII
SUCCESSOR SUBORDINATION AGENT
SECTION 8.1. Replacement of Subordination Agent; Appointment of Successor.
The Subordination Agent may resign at any time by so notifying the Trustees and
the Liquidity Providers. The Controlling Party may remove the Subordination
Agent for cause by so notifying the Subordination Agent and may appoint a
successor Subordination Agent. The Controlling Party shall remove the
Subordination Agent if:
(1) the Subordination Agent fails to comply with Section 6.9 hereof;
(2) the Subordination Agent is adjudged bankrupt or insolvent;
(3) a receiver or other public officer takes charge of the
Subordination Agent or its property; 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
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referred to herein as the retiring Subordination Agent), the Controlling Party
shall promptly appoint a successor Subordination Agent.
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 and the
Trustees. The retiring Subordination Agent shall promptly transfer its rights
under each of the Liquidity Facilities and all of the property held by it as
Subordination Agent to the successor Subordination Agent.
If a successor Subordination Agent does not take office within 60 days
after the retiring Subordination Agent resigns or is removed, the retiring
Subordination Agent or one or more of the Trustees may petition any court of
competent jurisdiction for the appointment of a successor Subordination Agent.
If the Subordination Agent fails to comply with Section 6.9 hereof (to the
extent applicable), one or more of the Trustees or one or more of the Liquidity
Providers may petition any 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.
ARTICLE IX
SUPPLEMENTS AND AMENDMENTS
SECTION 9.1. 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 3.6(e)(v)(y) hereof,
with the consent of holders of Certificates of the related Class evidencing
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), the Subordination Agent and each Liquidity Provider; provided,
however, that this Agreement may be supplemented, amended or modified without
the consent of (x) any Trustee if such supplement, amendment or modification (i)
is in accordance with Section 9.1(c) hereof or (ii) cures an ambiguity or
inconsistency or does not materially adversely affect such Trustee or the
holders of the related Class of Certificates and (y) any Liquidity Provider if
such
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supplement, amendment or modification is in accordance with Section 9.1(c)
hereof; provided further, however, that, if such supplement, amendment or
modification (A) would (x) directly or indirectly modify or supersede, or
otherwise conflict with, Section 2.2(b), Section 3.6(e), Section 3.6(f)(other
than the last sentence thereof), or the second sentence of Section 10.6
(collectively, together with this proviso and Section 9.1(c), the "Atlas
Provisions") or (y) otherwise adversely affect the interests of a potential
Replacement Liquidity Provider or of Atlas with respect to its ability to
replace any Liquidity Facility or with respect to its payment obligations under
any Financing Agreement, Leased or Owned Aircraft Indenture or (B) is made
pursuant to Section 9.1(c), then such supplement, amendment or modification
shall not be effective without the additional written consent of Atlas.
Notwithstanding the foregoing, without the consent of each Certificateholder and
the Liquidity Provider with respect to the applicable Class of Certificates, no
supplement, amendment or modification of this Agreement may (i) reduce the
percentage of the interest in the related 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
Section 9.1(c), modify Section 2.4, 3.2 or 3.3 hereof, relating to the
distribution of monies received by the Subordination Agent hereunder from the
Equipment Notes or pursuant to the Liquidity Facilities. Nothing contained in
this Section shall require the consent of a Trustee at any time following the
payment of Final Distributions with respect to the related Class of
Certificates.
(b) In the event that 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, the Indenture
pursuant to which such Equipment Notes were issued, or the related Lease,
Participation Agreement or other related document, (i) if no Indenture Event of
Default shall have occurred and be continuing with respect to such Indenture,
the Subordination Agent shall request directions with respect to each Series of
such Equipment Notes from the Trustee of the Trust which holds such Equipment
Notes and shall vote or consent in accordance with the directions of such
Trustee and (ii) if any Indenture Event of Default (which, in the case of any
Indenture pertaining to a Leased Aircraft, has not been cured by the applicable
Owner Trustee or the applicable Owner Participant, if applicable, pursuant to
Section 4.03 of such Indenture) shall have occurred and be continuing with
respect to such Indenture, the Subordination Agent will exercise its voting
rights as directed by the Controlling Party, subject to Sections 4.1 and 4.4
hereof; provided that no such amendment, modification or waiver shall, without
the consent of each Liquidity Provider, reduce the amount of rent, supplemental
rent or stipulated loss values payable by Atlas under any Lease or reduce the
amount of principal or interest payable by Atlas under any Equipment Note issued
under any Indenture in respect of an Owned Aircraft.
(c) If with respect to any Owned Aircraft Atlas issues Class D
Certificates, this Agreement shall be amended by written agreement of Atlas and
the Subordination Agent to provide for the subordination of such Class D
Certificates to the Class A-1 Certificates, the Class A-2 Certificates, the
Class B Certificates and the Class C Certificates substantially in the same
manner as the Class C Certificates are subordinated hereunder to the Class B
Certificates,
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the Class A-1 Certificates and the Class A-2 Certificates. No such amendment
shall materially adversely affect any Trustee. The amendment to this Agreement
to give effect to the issuance of any Class D Certificates shall include,
without limitation:
(i) the trustee of the Class D Trust shall be added as a party to this
Agreement;
(ii) the definitions of "Cash Collateral Account," "Certificate,"
"Class," "Equipment Notes," "Final Legal Distribution Date," "Liquidity
Facilities," "Liquidity Provider," "LTV Ratio," "Stated Interest Rate,"
"Trust," "Trust Agreement" and "Controlling Party" shall be revised, as
appropriate, to reflect the issuance of the Class D Certificates (and the
subordination thereof); and
(iii) provisions of this Agreement governing payments with respect to
Certificates and related notices, including, without limitation, Sections
2.4, 3.1, 3.2, 3.3 and 3.6(e), shall be revised to provide for
distributions on the Class D Certificates after payment of all relevant
distributions on Class C Certificates.
If with respect to any Aircraft, Series D Equipment Notes are issued to any
Person other than the Class D Trust, this Agreement shall be amended by written
agreement of Atlas and the Subordination Agent to (i) provide for each holder of
a Series D Equipment Note to be bound by the provision of Section 2.6(a) hereof
so that the Controlling Party shall be entitled to direct the Loan Trustee as
provided therein (and such Series D Equipment Notes shall make effective
provision therefor so as to bind each holder thereof to such provisions of
Section 2.6(a) hereof) and (ii) to revise the definitions of "Controlling Party"
and "Equipment Notes", as appropriate, to reflect the issuance of the Series D
Equipment Notes (and the prior rights, as against the holders of such Series D
Equipment Notes, of the Class A-1 Trustee, the Class A-2 Trustee, the Class B
Trustee and the Class C Trustee to be such "Controlling Party"). No such
amendment shall materially adversely affect any Trustee.
SECTION 9.2. Subordination Agent Protected. If, in the reasonable opinion
of the institution acting as the Subordination Agent hereunder, any document
required to be executed pursuant to the terms of Section 9.1 affects any right,
duty, immunity or indemnity with respect to it under this Agreement or any
Liquidity Facility, the Subordination Agent may in its discretion decline to
execute such document.
SECTION 9.3. Effect of Supplemental Agreements. Upon the execution of any
amendment, consent or supplement hereto pursuant to the provisions hereof, this
Agreement shall be and be deemed to be and shall 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
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be deemed to be and shall 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 IX, 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 9.4. Notice to Rating Agencies. Promptly following its receipt of
each amendment, consent, modification, supplement or waiver contemplated by this
Article IX, the Subordination Agent shall send a copy thereof to each Rating
Agency.
ARTICLE X
MISCELLANEOUS
SECTION 10.1. Termination of Intercreditor Agreement. Following payment of
Final Distributions with respect to each Class of Certificates and the payment
in full of all Liquidity Obligations to the Liquidity Providers and provided
that there shall then be no other amounts due to the Certificateholders, the
Trustees, the Liquidity Providers and the Subordination Agent hereunder or under
the Trust Agreements, and that the commitment of the Liquidity Providers under
the Liquidity Facilities shall have expired or been terminated, this Agreement
and the trusts created hereby shall terminate and this Agreement 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 10.2. Intercreditor Agreement for Benefit of Trustees, Liquidity
Providers and Subordination Agent. Subject to the second sentence of Section
10.6 and the provisions of Section 4.4, nothing in this Agreement, whether
express or implied, shall be construed to give to any Person other than the
Trustees, the Liquidity Providers and the Subordination Agent any legal or
equitable right, remedy or claim under or in respect of this Agreement.
SECTION 10.3. Notices. Unless otherwise expressly specified or permitted by
the terms hereof, all notices, requests, demands, authorizations, directions,
consents, waivers or documents provided or permitted by this Agreement to be
made, given, furnished or filed shall be in writing, mailed by certified mail,
postage prepaid, or by confirmed telecopy and
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(i) if to the Subordination Agent, addressed to at its office at:
WILMINGTON TRUST COMPANY
One Rodney Square
1100 N. Market Street
Wilmington, DE 19890-0001
Attention: Corporate Trust Administration
Telecopy: (302) 651-8882
(ii) if to any Trustee, addressed to it at its office at:
WILMINGTON TRUST COMPANY
One Rodney Square
1100 N. Market Street
Wilmington, DE 19890-0001
Attention: Corporate Trust Administration
Telecopy: (302) 651-8882
(iii) if to ABN AMRO as Liquidity Provider, addressed to it at its
offices at:
ABN AMRO BANK N.V., Chicago Branch 135 South LaSalle Street,
Suite 660 Chicago, IL 60674-9135
Attention: Claudia Heldring
Telecopier: 312-606-8428
and
ABN AMRO BANK N.V., Chicago Branch 135 South LaSalle Street,
Suite 625 Chicago, IL 60674-9135
Attention: Loan Administration
Telecopier: 312-904-1288
(iv) if to MSCS as Liquidity Provider, addressed to it at its office
at:
MORGAN STANLEY CAPITAL SERVICES, INC.
1585 Broadway
New York, NY 10036
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Attention: Keith Amburgey
Telecopier: 212-761-0580
Whenever any notice in writing is required to be given by any Trustee or
Liquidity Provider or the Subordination Agent to any of the other of them, such
notice shall be deemed given and such requirement satisfied when such notice is
received. Any party hereto may change the address to which notices to such party
will be sent by giving notice of such change to the other parties to this
Agreement.
SECTION 10.4. 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 10.5. 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 10.6. Successors and Assigns. All covenants and agreements
contained herein shall be binding upon, and inure to the benefit of, each of the
parties hereto and the successors and assigns of each, all as herein provided.
In addition, the Atlas Provisions shall inure to the benefit of Atlas and its
successors and assigns, and (without limitation of the foregoing) Atlas is
hereby constituted, and agreed to be, an express third party beneficiary of the
Atlas Provisions.
SECTION 10.7. 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 10.8. Counterpart Form. This Agreement may be executed by the
parties hereto in separate counterparts, each of which when so executed and
delivered shall be an original, but all such counterparts shall together
constitute but one and the same agreement.
SECTION 10.9. Subordination. (a) As between the Liquidity Providers, on the
one hand, and the Trustees and the Certificateholders, on the other hand, this
Agreement shall be a subordination agreement for purposes of Section 510 of the
United States Bankruptcy Code, as amended from time to time.
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(b) Notwithstanding the provisions of this Agreement, if prior to the
payment in full to the Liquidity Providers of all Liquidity Obligations then due
and payable, 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 or the Subordination Agent
receives any payment in respect of any obligations owing hereunder (or, in the
case of the Liquidity Providers, in respect of the Liquidity Obligations), 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, in the case of the Liquidity Providers, such
Liquidity Obligations) 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 and the Subordination Agent confirm that the payment
priorities specified in Sections 2.4, 3.2 and 3.3 shall apply in all
circumstances, notwithstanding the fact that the obligations owed to the
Trustees and the holders of Certificates are secured by certain assets and the
Liquidity Obligations may not be so secured. The Trustees expressly agree (on
behalf of themselves and the holders of Certificates) not to assert priority
over the holders of Liquidity Obligations 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 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 Liquidity Providers, the Liquidity
Obligations,
(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 Liquidity Providers, any of the Liquidity Obligations,
(iii) renew, extend, increase, alter or exchange any amounts owing to
it hereunder, including, in the case of the Liquidity Providers, any of the
Liquidity Obligations, or release or compromise any obligation of any
obligor with respect thereto,
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(iv) refrain from exercising any right or remedy, or delay in
exercising such 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,
the Liquidity Providers or the Subordination Agent shall not prejudice the
rights or adversely affect the obligations of any other party under this
Agreement.
SECTION 10.10. Governing Law. THIS AGREEMENT SHALL IN ALL RESPECTS BE
GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAW OF THE STATE OF NEW YORK,
INCLUDING ALL MATTERS OF CONSTRUCTION, VALIDITY AND PERFORMANCE.
SECTION 10.11. Submission to Jurisdiction; Waiver of Jury Trial; Waiver of
Immunity. (a) Each of the parties hereto hereby irrevocably and unconditionally:
(i) submits for itself and its property in any legal action or
proceeding relating to this Agreement or any other Operative Agreement, or
for recognition and enforcement of any judgment in respect hereof or
thereof, to the nonexclusive general jurisdiction of the courts of the
State of New York, the courts of the United States of America for the
Southern District of New York, and the appellate courts from any thereof;
(ii) consents that any such action or proceeding may be brought in
such courts, and waives any objection that it may now or hereafter have to
the venue of any such action or proceeding in any such court or that such
action or proceeding was brought in an inconvenient court and agrees not to
plead or claim the same;
(iii) agrees that service of process in any such action or proceeding
may be effected by mailing a copy thereof by registered or certified mail
(or any substantially similar form and mail), postage prepaid, to each
party hereto at its address set forth in Section 10.3 hereof, or at such
other address of which the other parties shall have been notified pursuant
thereto; and
(iv) agrees that nothing herein shall affect the right to effect
service of process in any other manner permitted by law or shall limit the
right to sue in any other jurisdiction.
(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
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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. 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 of America or of any State and
waives any immunity any of its properties located in the United States of
America 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.
62
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed by their respective officers thereunto duly authorized, as of the
day and year first above written, and acknowledge that this Agreement has been
made and delivered in the City of New York, and this Agreement has become
effective only upon such execution and delivery.
WILMINGTON TRUST COMPANY,
not in its individual capacity but solely as
Trustee for each of the Trusts
By /s/ James P. Lawler
------------------------------------------
Name: James P. Lawler
Title: Vice President
ABN AMRO BANK N.V.,
Chicago Branch, as
Class A-1 Liquidity
Provider and Class A-2
Liquidity Provider
By s/ Claudia C. Heldring
------------------------------------------
Name: Claudia C. Heldring
Title: Vice President
By /s/ Carla S. Waggoner
------------------------------------------
Name: Carla S. Waggoner
Title: Assistant Vice President
MORGAN STANLEY CAPITAL
SERVICES, INC.
as Class B Liquidity Provider
and Class C Liquidity Provider
By /s/ Justin Simpson
------------------------------------------
Name: Justin Simpson
Title: Vice President
<PAGE>
WILMINGTON TRUST COMPANY,
not in its individual
capacity except as
expressly set forth
herein, but solely as
Subordination Agent
and Trustee
By /s/ James P. Lawler
------------------------------------------
Name: James P. Lawler
Title: Vice President
EXECUTION COPY
DEPOSIT AGREEMENT
(Class A-1)
Dated as of April 13, 1999
between
FIRST SECURITY BANK, NATIONAL ASSOCIATION
as Escrow Agent
and
CREDIT SUISSE FIRST BOSTON,
New York Branch,
as Depositary
<PAGE>
DEPOSIT AGREEMENT (Class A-1) dated as of April 13, 1999 (as amended, modified
or supplemented from time to time, this "Agreement") between First Security
Bank, National Association, a national banking association, as Escrow Agent
under the Escrow and Paying Agent Agreement referred to below (in such capacity,
together with its successors in such capacity, the "Escrow Agent"), and CREDIT
SUISSE FIRST BOSTON, a banking institution organized under the laws of
Switzerland, acting through its New York Branch as depositary bank ("Credit
Suisse" and, in its capacity as depositary hereunder, the "Depositary").
W I T N E S S E T H
WHEREAS, Atlas Air, Inc. ("Atlas") and Wilmington Trust Company, not in its
individual capacity except as otherwise expressly provided therein, but solely
as trustee (in such capacity, together with its successors in such capacity, the
"Pass Through Trustee") have entered into a Trust Supplement, dated the date
hereof to the Pass Through Trust Agreement dated as of April 1, 1999 (together,
as amended, modified or supplemented from time to time in accordance with the
terms thereof, the "Pass Through Trust Agreement") relating to Atlas Air Pass
Through Trust 1999-1A-1 pursuant to which the Atlas Air Pass Through Trust,
Series 1999-1A-1 Certificates referred to therein (the "Certificates") are being
issued;
WHEREAS, Atlas and Morgan Stanley & Co. Incorporated, BT Alex. Brown
Incorporated, CIBC Oppenheimer Corp. and ING Baring Furman Selz LLC
(collectively, the "Underwriters" and, together with their respective
transferees and assigns as registered owners of the Certificates, the
"Investors") have entered into an Underwriting Agreement dated April 5, 1999
pursuant to which the Pass Through Trustee will issue and sell the Certificates
to the Underwriters;
WHEREAS, Atlas, the Pass Through Trustee, certain other pass through
trustees and certain other persons concurrently herewith are entering into the
Note Purchase Agreement, dated as of the date hereof (the "Note Purchase
Agreement"), pursuant to which the Pass Through Trustee has agreed to acquire,
subject to the terms thereof, from time to time on or prior to the Delivery
Period Termination Date (as defined in the Note Purchase Agreement) equipment
notes (the "Equipment Notes") issued to finance the acquisition of aircraft by
Atlas, as lessee or as owner, utilizing a portion of the proceeds from the sale
of the Certificates (the "Net Proceeds");
WHEREAS, the Escrow Agent, the Underwriters, the Pass Through Trustee and
Wilmington Trust Company, as paying agent for the Escrow Agent (in such
capacity, together with its successors in such capacity, the "Paying Agent")
concurrently herewith are entering into an Escrow and Paying Agent Agreement,
dated as of the date hereof (as amended, modified or supplemented from time
to time in accordance with the terms thereof, the "Escrow Agreement");
<PAGE>
WHEREAS, Atlas and the Depositary concurrently herewith are entering into
an Indemnity Agreement, dated as of the date hereof (the "Indemnity Agreement");
and
WHEREAS, the Underwriters and the Pass Through Trustee intend that the Net
Proceeds be held in escrow by the Escrow Agent on behalf of the Investors
pursuant to the Escrow Agreement, subject to withdrawal upon request of and
proper certification by the Pass Through Trustee for the purpose of purchasing
Equipment Notes, and that pending such withdrawal the Net Proceeds be deposited
by the Escrow Agent with the Depositary pursuant to this Agreement, which
provides for the Depositary to pay interest for distribution to the Investors
and to establish accounts from which the Escrow Agent shall make withdrawals
upon request of and proper certification by the Pass Through Trustee.
NOW, THEREFORE, in consideration of the obligations contained herein, and
for other good and valuable consideration, the receipt and sufficiency of which
are hereby acknowledged, the parties hereto hereby agree as follows:
SECTION 1.1 Acceptance of Depositary. The Depositary hereby agrees to act
as depositary bank as provided herein and in connection therewith to accept all
amounts to be delivered to or held by the Depositary pursuant to the terms of
this Agreement. The Depositary further agrees to hold, maintain and safeguard
the Deposits and the Accounts (as defined below) during the term of this
Agreement in accordance with the provisions of this Agreement. The Escrow Agent
shall not have any right to withdraw, assign or otherwise transfer moneys held
in the Accounts except as permitted by this Agreement.
SECTION 1.2 Establishment of Accounts. The Escrow Agent hereby instructs
the Depositary, and the Depositary agrees, to establish the separate deposit
accounts listed on Schedule I hereto and to establish such additional separate
deposit accounts as may be required in connection with the deposits contemplated
by Section 2.4 hereof (each, an "Account" and collectively, the "Accounts"),
each in the name of the Escrow Agent and all on the terms and conditions set
forth in this Agreement.
SECTION 2.1 Deposits. The Escrow Agent shall direct the Underwriters to
deposit with the Depositary on the date of this Agreement (the "Deposit Date")
in Federal (same day) funds by wire transfer to: Bank of New York, Reference:
Atlas Air EETC 1999-1, ABA # 021000018, Account #8900-329238, and the Depositary
shall accept from the Underwriters, on behalf of the Escrow Agent, the sum of
US$268,208,000. Upon acceptance of such sum, the Depositary shall (i) establish
each of the deposits specified in Schedule I hereto maturing on the respective
dates set forth therein (including any deposit made pursuant to Section 2.4
hereof, individually, a "Deposit" and, collectively, the "Deposits") and (ii)
credit each Deposit to the related Account as set forth therein. No amount shall
be deposited in any Account other than the related Deposit.
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<PAGE>
SECTION 2.2 Interest. The Depositary shall pay interest on each Deposit
from and including the date of deposit to but excluding the date of withdrawal
at the rate of 7.20% per annum (computed on the basis of a year of twelve 30-day
months) payable to the Paying Agent on behalf of the Escrow Agent semi-annually
in arrears on each January 2 and July 2, commencing on January 2, 2000 (each, an
"Interest Payment Date"), and on the date of each Prepayment Withdrawal and the
Final Withdrawal (as defined below), all in accordance with the terms of this
Agreement (whether or not any such Deposit is withdrawn on an Interest Payment
Date). Interest accrued on any Deposit that is withdrawn pursuant to a Notice of
Purchase Withdrawal (as defined below) shall be paid on the next Interest
Payment Date, notwithstanding any intervening Final Withdrawal.
SECTION 2.3 Withdrawals. (a) On and after the date seven days after the
establishment of any Deposit, the Escrow Agent may, by providing at least one
Business Day's prior notice of withdrawal to the Depositary in the form of
Exhibit A hereto (a "Notice of Purchase Withdrawal"), withdraw not less than the
entire balance of such Deposit, except that at any time prior to the actual
withdrawal of such Deposit, the Escrow Agent or the Pass Through Trustee may, by
notice to the Depositary, cancel such withdrawal (including on the scheduled
date therefor), and thereafter such Deposit shall continue to be maintained by
the Depositary in accordance with the original terms thereof. Following such
withdrawal the balance in the related Account shall be zero and the Depositary
shall close such Account. As used herein, "Business Day" means any day, other
than a Saturday, Sunday or other day on which commercial banks are authorized or
required by law to close in New York, New York, Denver, Colorado, Salt Lake
City, Utah or Wilmington, Delaware.
(b) The Escrow Agent may, by providing at least 15 days' prior notice of
withdrawal to the Depositary in the form of Exhibit B hereto (a "Notice of
Prepayment Withdrawal"), withdraw not less than the entire balance of any
Deposit together with all accrued and unpaid interest on such Deposit to but
excluding the specified date of withdrawal (a "Prepayment Withdrawal"), on such
date as shall be specified in such Notice of Prepayment Withdrawal. Following
such withdrawal the balance in the related Account shall be zero and the
Depositary shall close such Account. Upon any Prepayment Withdrawal, the
Depositary shall pay to the Paying Agent the amount requested in the related
Notice of Prepayment Withdrawal.
(c) The Escrow Agent may, by providing at least 15 days' prior notice of
withdrawal to the Depositary in the form of Exhibit C hereto (a "Notice of Final
Withdrawal"), withdraw the entire amount of all of the remaining Deposits
together with the all accrued and unpaid interest on such Deposits to but
excluding the specified date of withdrawal (a "Final Withdrawal"), on such date
as shall be specified in such Notice of Final Withdrawal. Following such
withdrawal the balance in the related Accounts shall be zero and the Depositary
shall close such Accounts. If a Notice of Final Withdrawal has not been given to
the Depositary on or before May 31, 2000 (provided, that if a labor strike or
work stoppage occurs at The Boeing Company prior to such date, such date shall
be extended by adding
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<PAGE>
thereto the number of days that each such labor strike or work stoppage
continues in effect) and there are unwithdrawn Deposits on such date, the
Depositary shall pay the amount of the Final Withdrawal to the Paying Agent on
June 15, 2000 (or if the May 31, 2000 date has been extended as set forth in
this sentence, the fifteenth day after the Delivery Period Termination Date).
(d) If the Depositary receives a duly completed Notice of Purchase
Withdrawal, Notice of Prepayment Withdrawal or Notice of Final Withdrawal
complying with the provisions of this Agreement, it shall make the payments
specified therein in accordance with the provisions of this Agreement.
SECTION 2.4 Other Accounts. On the date of withdrawal of any Deposit, the
Escrow Agent, or the Pass Through Trustee on behalf of the Escrow Agent, shall
be entitled to re-deposit with the Depositary any portion thereof and the
Depositary shall accept the same for deposit hereunder. Any sums so received for
deposit shall be established as a new Deposit and credited to a new Account, all
as more fully provided in Section 2.1 hereof, and thereafter the provisions of
this Agreement shall apply thereto as fully and with the same force and effect
as if such Deposit had been established on the Deposit Date except that (i) such
Deposit may not be withdrawn prior to the date seven days after the
establishment thereof and (ii) such Deposit shall mature on June 15, 2000 (as
such date may be extended from time to time to the fifteenth day after the
Delivery Period Termination Date) and bear interest as provided in Section 2.2.
The Depositary shall promptly give notice to the Escrow Agent of the account
number assigned to any such re-deposit.
SECTION 3.1 Termination. This Agreement shall terminate on the later of the
date on which (i) all of the Deposits shall have been withdrawn and paid as
provided herein without any re-deposit and (ii) all accrued and unpaid interest
on the Deposits shall have been paid as provided herein, but in no event prior
to the date on which the Depositary shall have performed in full its obligations
hereunder.
SECTION 3.2 Substitute Depositary. In the event that Atlas is required
under the provisions of Section 6 or Section 7 of the Indemnity Agreement to
make payments in a material amount to the Depositary, Atlas may elect to
terminate the Depositary as a party to this Agreement, the other Deposit
Agreements and the Indemnity Agreement; provided that, concurrently with such
termination, (i) Atlas shall pay the Depositary all amounts (including, without
limitation, amounts, if any, owed under such Section 6 and Section 7) owed to
the Depositary pursuant to any such Agreement through such date of termination,
(ii) another financial institution satisfactory to Atlas and the Rating Agencies
(as defined in the Note Purchase Agreement) shall agree, as of such date, to
assume all rights and obligations of the Depositary under all such Agreements to
be terminated as of such date, and (iii) all documents and supporting materials
necessary to evidence the termination of the Depositary and the substitution of
such other financial institution shall have been received as of such date.
4
<PAGE>
SECTION 4. Payments. All payments (including, without limitation, those
payments made in respect of Taxes (as defined and provided for below)) made by
the Depositary hereunder shall be paid in United States Dollars and immediately
available funds by wire transfer (i) in the case of accrued interest on the
Deposits payable under Section 2.2 hereof, any Prepayment Withdrawal or any
Final Withdrawal, directly to the Paying Agent at Wilmington Trust Company,
Wilmington, Delaware, ABA # 03-11-000-92, Account No. 44043-0, Attention: Robert
Hines, Reference: Atlas Air, or to such other account as the Paying Agent may
direct from time to time in writing to the Depositary and the Escrow Agent and
(ii) in the case of any withdrawal of one or more Deposits pursuant to a Notice
of Purchase Withdrawal, directly to or as directed by the Pass Through Trustee
as specified and in the manner provided in such Notice of Purchase Withdrawal.
The Depositary hereby waives any and all rights of set-off, combination of
accounts, right of retention or similar right (whether arising under applicable
law, contract or otherwise) it may have against the Deposits howsoever arising.
All payments on or in respect of each Deposit shall be made free and clear of
and without reduction for or on account of any and all taxes, levies or other
impositions or charges (collectively, "Taxes"). However, if the Depositary or
the Paying Agent (pursuant to Section 2.04 of the Escrow Agreement) shall be
required by law to deduct or withhold any Taxes from or in respect of any sum
payable hereunder, the Depositary shall (i) make such deductions or withholding,
(ii) pay the full amount deducted or withheld (including in respect of such
additional amounts) to the competent taxation authority and (iii) if the Taxes
required to be deducted or withheld are imposed by Switzerland or any political
subdivision thereof, pay such additional amounts as may be necessary in order
that the actual amount received by the designated recipient of such sum under
this Agreement or the Escrow Agreement after such deduction or withholding
equals the sum it would have received had no such deduction or withholding been
required. If the date on which any payment due on any Deposit would otherwise
fall on a day which is not a Business Day, such payment shall be made on the
next succeeding Business Day, with the same force and effect as if made on such
scheduled date, and no additional interest shall accrue in respect of such
extension.
SECTION 5. Representation and Warranties. The Depositary hereby represents
and warrants to Atlas, the Escrow Agent, the Pass Through Trustee and the Paying
Agent that:
(a) it is a bank duly organized and validly existing in good standing
under the laws of its jurisdiction of organization and is duly qualified to
conduct banking business in the State of New York through its New York
Branch;
(b) it has full power, authority and legal right to conduct its
business and operations as currently conducted and to enter into and
perform its obligations under this Agreement;
(c) the execution, delivery and performance of this Agreement have
been duly authorized by all necessary corporate action on the part of it
and do not require
5
<PAGE>
any stockholder approval, or approval or consent of any trustee or holder
of any indebtedness or obligations of it, and such document has been duly
executed and delivered by it and constitutes its legal, valid and binding
obligations enforceable against it in accordance with the terms hereof;
(d) no authorization, consent or approval of or other action by, and
no notice to or filing with, any United States federal or state
governmental authority or regulatory body is required for the execution,
delivery or performance by it of this Agreement;
(e) neither the execution, delivery or performance by it of this
Agreement, nor compliance with the terms and provisions hereof, conflicts
or will conflict with or results or will result in a breach or violation of
any of the terms, conditions or provisions of, or will require any consent
or approval under, any law, governmental rule or regulation or the charter
documents, as amended, or bylaws, as amended, of it or any similar
instrument binding on it or any order, writ, injunction or decree of any
court or governmental authority against it or by which it or any of its
properties is bound or any indenture, mortgage or contract or other
agreement or instrument to which it is a party or by which it or any of its
properties is bound, or constitutes or will constitute a default thereunder
or results or will result in the imposition of any lien upon any of its
properties;
(f) there are no pending or, to its knowledge, threatened actions,
suits, investigations or proceedings (whether or not purportedly on behalf
of it) against or affecting it or any of its property before or by any
court or administrative agency which, if adversely determined, (i) would
adversely affect the ability of it to perform its obligations under this
Agreement or (ii) would call into question or challenge the validity of
this Agreement or the enforceability hereof in accordance with the terms
hereof, nor is the Depositary in default with respect to any order of any
court, governmental authority, arbitration board or administrative agency
so as to adversely affect its ability to perform its obligations under this
Agreement; and
(g) the Depositary will make all payments under this Agreement from
its own funds and not from funds provided by, or on deposit from, Atlas or
any of Atlas' subsidiaries.
SECTION 6. Transfer. Neither party hereto shall be entitled to assign or
otherwise transfer this Agreement (or any interest herein) other than (in the
case of the Escrow Agent) to a successor escrow agent under the Escrow
Agreement, and any purported assignment in violation thereof shall be void. This
Agreement shall be binding upon the parties hereto and their respective
successors and (in the case of the Escrow Agent) permitted assigns.
6
<PAGE>
SECTION 7. Amendment, Etc. This Agreement may not be amended, waived or
otherwise modified except by an instrument in writing signed by the party
against whom the amendment, waiver or other modification is sought to be
enforced and by the Pass Through Trustee.
SECTION 8. Notices. Unless otherwise expressly specified or permitted by
the terms hereof, all notices, requests, demands, authorizations, directions,
consents, waivers or documents provided or permitted by this Agreement to be
made, given, furnished or filed shall be in writing, mailed by certified mail,
postage prepaid, or by confirmed telecopy and
(i) if to the Escrow Agent, addressed to at its office at:
FIRST SECURITY BANK, NATIONAL ASSOCIATION 79 South
Main Street Salt Lake City, UT 84111
Attention: Corporate Trust Department
Telecopier: 801-246-5053
(ii) if to the Depositary, addressed to it at its offices at:
CREDIT SUISSE FIRST BOSTON
11 Madison Avenue
New York, NY 10010
Attention: Robert Finney and Jennifer Toth
Telecopier: 212-325-8319
(iii) in each case, with a copy to the Pass Through Trustee, addressed
to it at its office at:
WILMINGTON TRUST COMPANY
One Rodney Square
1100 N. Market Street
Wilmington, DE 19890-0001
Attention: Corporate Trust Administration
Telecopy: 302-651-8882
and to Atlas, addressed to it at its office at:
ATLAS AIR, INC.
538 Commons Drive
7
<PAGE>
Golden, CO 80401
Attention: Chief Financial Officer
Telecopier: 303-526-5051
Whenever any notice in writing is required to be given by either of the
Escrow Agent or the Depositary to the other, such notice shall be deemed given
and such requirement satisfied when such notice is received. Any party hereto
may change the address to which notices to such party will be sent by giving
notice of such change to the other party to this Agreement.
On or prior to the execution of this Agreement, the Escrow Agent has
delivered to the Depositary a certificate containing specimen signatures of the
representatives of the Escrow Agent who are authorized to give notices and
instructions with respect to this Agreement. The Depositary may conclusively
rely on such certificate until the Depositary receives written notice from the
Escrow Agent to the contrary.
SECTION 9. Obligations Unconditional. The Depositary hereby acknowledges
and agrees that its obligation to repay each Deposit together with interest
thereon as provided herein is absolute, irrevocable and unconditional and
constitutes a full recourse obligation of the Depositary enforceable against it
to the full extent of all of its assets and properties.
SECTION 10. Entire Agreement. This Agreement (including all attachments
hereto) sets forth all of the promises, covenants, agreements, conditions and
understandings between the Depositary and the Escrow Agent with respect to the
subject matter hereof and supersedes all prior and contemporaneous agreements
and undertakings, inducements or conditions, express or implied, oral or
written.
SECTION 11. Governing Law. This Agreement, and the rights and obligations
of the Depositary and the Escrow Agent with respect to the Deposits, shall be
governed by, and construed in accordance with, the laws of the State of New York
and subject to the provisions of Regulation D of the Board of Governors of the
Federal Reserve System (or any successor), as the same may be modified and
supplemented and in effect from time to time.
SECTION 12. Submission to Jurisdiction; Waiver of Jury Trial. (a) Each of
the parties hereto hereby irrevocably and unconditionally:
(i) submits for itself and its property in any legal action or
proceeding relating to this Agreement, or for recognition and enforcement
of any judgment in respect hereof, to the nonexclusive general jurisdiction
of the courts of the State of New York, the courts of the United States of
America for the Southern District of New York, and the appellate courts
from any thereof;
8
<PAGE>
(ii) consents that any such action or proceeding may be brought in
such courts, and waives any objection that it may now or hereafter have to
the venue of any such action or proceeding in any such court or that such
action or proceeding was brought in an inconvenient court and agrees not to
plead or claim the same;
(iii) agrees that service of process in any such action or proceeding
may be effected by mailing a copy thereof by registered or certified mail
(or any substantially similar form and mail), postage prepaid, to each
party hereto at its address set forth in Section 8 hereof, or at such other
address of which the other parties shall have been notified pursuant
thereto; and
(iv) agrees that nothing herein shall affect the right to effect
service of process in any other manner permitted by law or shall limit the
right to sue in any other jurisdiction.
(b) EACH OF THE DEPOSITARY AND THE ESCROW AGENT ACKNOWLEDGES AND ACCEPTS
THAT IN ANY SUIT, ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO THIS
AGREEMENT SUCH PARTY KNOWINGLY, VOLUNTARILY AND INTENTIONALLY IRREVOCABLY
WAIVES, TO THE GREATEST EXTENT PERMISSIBLE BY LAW, ITS RIGHT TO A TRIAL BY JURY.
SECTION 13. Counterparts. This Agreement may be executed in one or more
counterparts, all of which taken together shall constitute one instrument.
SECTION 14. Depositary's Obligations. The Depositary and the Escrow Agent
understand and agree that in connection with this Agreement, the Depositary is
not acting as a fiduciary, agent of other representative of the Escrow Agent,
the Pass Through Trustees, the Underwriters or anyone else, and has no and shall
have no obligation to monitor, account for or otherwise concern itself with the
source of funds invested hereunder or the application of such funds or of
payments made by the Depositary hereunder and in accordance with the terms
hereof.
SECTION 15. Head Office Obligation. Credit Suisse First Boston hereby
agrees that the obligations and agreements of the Depositary hereunder are also
the obligations and agreements of Credit Suisse First Boston's Head Office in
Zurich, Switzerland. Accordingly, any beneficiary of this Agreement will be able
to proceed (including, in accordance with Section 12 hereof) directly against
Credit Suisse First Boston's Head Office in Zurich, Switzerland if Credit Suisse
First Boston's New York Branch defaults in its obligation to such beneficiary
under this Agreement.
9
<PAGE>
IN WITNESS WHEREOF, the Escrow Agent and the Depositary have caused this
Deposit Agreement to be duly executed as of the day and year first above
written.
FIRST SECURITY BANK,
NATIONAL ASSOCIATION,
as Escrow Agent
By /s/ Scott Nielsen
--------------------------------
Name: Scott Nielsen
Title: Vice President
CREDIT SUISSE FIRST BOSTON,
New York Branch,
as Depositary
By /s/ Jeffrey B. Ulmer
--------------------------------
Name: Jeffrey B. Ulmer
Title: Vice President
By /s/ Thomas G. Muoio
--------------------------------
Name: Thomas G. Muoio
Title: Vice Presdient
<PAGE>
Schedule I
Schedule of Deposits
(Class A-1)
Date Deposit Amount Account No. Maturity Date
<PAGE>
EXHIBIT A
NOTICE OF PURCHASE WITHDRAWAL
CREDIT SUISSE FIRST BOSTON
New York Branch
11 Madison Avenue
New York, NY 10010
Attention: Robert Finney and Jennifer Toth
Telecopier: 212-325-8319
Ladies and Gentlemen:
Reference is made to the Deposit Agreement (Class A-1) dated as of April ,
1999 (the "Deposit Agreement") between First Security Bank, N.A., as Escrow
Agent, and Credit Suisse First Boston, New York Branch, as Depositary (the
"Depositary").
In accordance with Section 2.3(a) of the Deposit Agreement, the undersigned
hereby requests the withdrawal of the entire amount of the Deposit, $_______,
Account No. ____________.
The undersigned hereby directs that on _______________, the Depositary (i)
pay $___________ of the proceeds of the Deposit to ________________, Account No.
_____, Reference: Atlas Air upon the telephonic request of a representative
reasonably believed by the Depositary to be that of the Pass Through Trustee and
(ii) redeposit $___________ of such proceeds in accordance with Section 2.4 of
the Deposit Agreement..
FIRST SECURITY BANK,
NATIONAL ASSOCIATION,
as Escrow Agent
By: ________________________________
Name:
Title:
Dated: _______ __, ____
<PAGE>
EXHIBIT B
NOTICE OF PREPAYMENT WITHDRAWAL
CREDIT SUISSE FIRST BOSTON
New York Branch
11 Madison Avenue
New York, NY 10010
Attention: Robert Finney and Jennifer Toth
Telecopier: 212-325-8319
Reference is made to the Deposit Agreement (Class A-1) dated as of April
__, 1999 (the "Deposit Agreement") between First Security Bank, N.A., as Escrow
Agent, and Credit Suisse First Boston, New York Branch, as Depositary (the
"Depositary").
In accordance with Section 2.3(b) of the Deposit Agreement, the undersigned
hereby requests the withdrawal of the entire amount of the Deposit, $_______,
Account No. ____________ on ________________.
The undersigned hereby directs the Depositary to pay the proceeds of such
Deposit and accrued interest thereon to the Paying Agent at Wilmington Trust
Company, ABA# 03-11-000-92, Account No.44043-0, Reference: Atlas Air.
FIRST SECURITY BANK,
NATIONAL ASSOCIATION,
as Escrow Agent
By ________________________________
Name:
Title:
Dated: __________________
<PAGE>
EXHIBIT C
NOTICE OF FINAL WITHDRAWAL
CREDIT SUISSE FIRST BOSTON
New York Branch
11 Madison Avenue
New York, NY 10010
Attention: Robert Finney and Jennifer Toth
Telecopier: 212-325-8319
Ladies and Gentlemen:
Reference is made to the Deposit Agreement (Class A-1) dated as of April ,
1999 (the "Deposit Agreement") between First Security Bank, N.A., as Escrow
Agent, and Credit Suisse First Boston, New York Branch, as Depositary (the
"Depositary").
In accordance with Section 2.3(c) of the Deposit Agreement, the undersigned
hereby requests the withdrawal of the entire amount of all Deposits on
_____________.
The undersigned hereby directs the Depositary to pay the proceeds of the
Deposits and accrued interest thereon to the Paying Agent at Wilmington Trust
Company, ABA# 03-11-000-92, Account No. 44043-0, Reference: Atlas Air.
FIRST SECURITY BANK,
NATIONAL ASSOCIATION,
as Escrow Agent
By: ________________________________
Name:
Title:
Dated: _________, ______
EXECUTION COPY
DEPOSIT AGREEMENT
(Class A-2)
Dated as of April 13, 1999
between
FIRST SECURITY BANK, NATIONAL ASSOCIATION
as Escrow Agent
and
CREDIT SUISSE FIRST BOSTON,
New York Branch,
as Depositary
<PAGE>
DEPOSIT AGREEMENT (Class A-2) dated as of April 13, 1999 (as amended, modified
or supplemented from time to time, this "Agreement") between First Security
Bank, National Association, a national banking association, as Escrow Agent
under the Escrow and Paying Agent Agreement referred to below (in such capacity,
together with its successors in such capacity, the "Escrow Agent"), and CREDIT
SUISSE FIRST BOSTON, a banking institution organized under the laws of
Switzerland, acting through its New York Branch as depositary bank ("Credit
Suisse" and, in its capacity as depositary hereunder, the "Depositary").
W I T N E S S E T H
WHEREAS, Atlas Air, Inc. ("Atlas") and Wilmington Trust Company, not in its
individual capacity except as otherwise expressly provided therein, but solely
as trustee (in such capacity, together with its successors in such capacity, the
"Pass Through Trustee") have entered into a Trust Supplement, dated the date
hereof to the Pass Through Trust Agreement dated as of April 1, 1999 (together,
as amended, modified or supplemented from time to time in accordance with the
terms thereof, the "Pass Through Trust Agreement") relating to Atlas Air Pass
Through Trust 1999-1A-2 pursuant to which the Atlas Air Pass Through Trust,
Series 1999-1A-2 Certificates referred to therein (the "Certificates") are being
issued;
WHEREAS, Atlas and Morgan Stanley & Co. Incorporated, BT Alex. Brown
Incorporated, CIBC Oppenheimer Corp. and ING Baring Furman Selz LLC
(collectively, the "Underwriters" and, together with their respective
transferees and assigns as registered owners of the Certificates, the
"Investors") have entered into an Underwriting Agreement dated April 5, 1999
pursuant to which the Pass Through Trustee will issue and sell the Certificates
to the Underwriters;
WHEREAS, Atlas, the Pass Through Trustee, certain other pass through
trustees and certain other persons concurrently herewith are entering into the
Note Purchase Agreement, dated as of the date hereof (the "Note Purchase
Agreement"), pursuant to which the Pass Through Trustee has agreed to acquire,
subject to the terms thereof, from time to time on or prior to the Delivery
Period Termination Date (as defined in the Note Purchase Agreement) equipment
notes (the "Equipment Notes") issued to finance the acquisition of aircraft by
Atlas, as lessee or as owner, utilizing a portion of the proceeds from the sale
of the Certificates (the "Net Proceeds");
WHEREAS, the Escrow Agent, the Underwriters, the Pass Through Trustee and
Wilmington Trust Company, as paying agent for the Escrow Agent (in such
capacity, together with its successors in such capacity, the "Paying Agent")
concurrently herewith are entering into an Escrow and Paying Agent Agreement,
dated as of the date hereof (as amended, modified or supplemented from time
to time in accordance with the terms thereof, the "Escrow Agreement");
<PAGE>
WHEREAS, Atlas and the Depositary concurrently herewith are entering into
an Indemnity Agreement, dated as of the date hereof (the "Indemnity Agreement");
and
WHEREAS, the Underwriters and the Pass Through Trustee intend that the Net
Proceeds be held in escrow by the Escrow Agent on behalf of the Investors
pursuant to the Escrow Agreement, subject to withdrawal upon request of and
proper certification by the Pass Through Trustee for the purpose of purchasing
Equipment Notes, and that pending such withdrawal the Net Proceeds be deposited
by the Escrow Agent with the Depositary pursuant to this Agreement, which
provides for the Depositary to pay interest for distribution to the Investors
and to establish accounts from which the Escrow Agent shall make withdrawals
upon request of and proper certification by the Pass Through Trustee.
NOW, THEREFORE, in consideration of the obligations contained herein, and
for other good and valuable consideration, the receipt and sufficiency of which
are hereby acknowledged, the parties hereto hereby agree as follows:
SECTION 1.1 Acceptance of Depositary. The Depositary hereby agrees to act
as depositary bank as provided herein and in connection therewith to accept all
amounts to be delivered to or held by the Depositary pursuant to the terms of
this Agreement. The Depositary further agrees to hold, maintain and safeguard
the Deposits and the Accounts (as defined below) during the term of this
Agreement in accordance with the provisions of this Agreement. The Escrow Agent
shall not have any right to withdraw, assign or otherwise transfer moneys held
in the Accounts except as permitted by this Agreement.
SECTION 1.2 Establishment of Accounts. The Escrow Agent hereby instructs
the Depositary, and the Depositary agrees, to establish the separate deposit
accounts listed on Schedule I hereto and to establish such additional separate
deposit accounts as may be required in connection with the deposits contemplated
by Section 2.4 hereof (each, an "Account" and collectively, the "Accounts"),
each in the name of the Escrow Agent and all on the terms and conditions set
forth in this Agreement.
SECTION 2.1 Deposits. The Escrow Agent shall direct the Underwriters to
deposit with the Depositary on the date of this Agreement (the "Deposit Date")
in Federal (same day) funds by wire transfer to: Bank of New York, Reference:
Atlas Air EETC 1999-1, ABA # 021000018, Account #8900-329238 and the Depositary
shall accept from the Underwriters, on behalf of the Escrow Agent, the sum of
US$43,544,000. Upon acceptance of such sum, the Depositary shall (i) establish
each of the deposits specified in Schedule I hereto maturing on the respective
dates set forth therein (including any deposit made pursuant to Section 2.4
hereof, individually, a "Deposit" and, collectively, the "Deposits") and (ii)
credit each Deposit to the related Account as set forth therein. No amount shall
be deposited in any Account other than the related Deposit.
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<PAGE>
SECTION 2.2 Interest. The Depositary shall pay interest on each Deposit
from and including the date of deposit to but excluding the date of withdrawal
at the rate of 7.20% per annum (computed on the basis of a year of twelve 30-day
months) payable to the Paying Agent on behalf of the Escrow Agent semi-annually
in arrears on each January 2 and July 2, commencing on January 2, 2000 (each, an
"Interest Payment Date"), and on the date of each Prepayment Withdrawal and the
Final Withdrawal (as defined below), all in accordance with the terms of this
Agreement (whether or not any such Deposit is withdrawn on an Interest Payment
Date). Interest accrued on any Deposit that is withdrawn pursuant to a Notice of
Purchase Withdrawal (as defined below) shall be paid on the next Interest
Payment Date, notwithstanding any intervening Final Withdrawal.
SECTION 2.3 Withdrawals. (a) On and after the date seven days after the
establishment of any Deposit, the Escrow Agent may, by providing at least one
Business Day's prior notice of withdrawal to the Depositary in the form of
Exhibit A hereto (a "Notice of Purchase Withdrawal"), withdraw not less than the
entire balance of such Deposit, except that at any time prior to the actual
withdrawal of such Deposit, the Escrow Agent or the Pass Through Trustee may, by
notice to the Depositary, cancel such withdrawal (including on the scheduled
date therefor), and thereafter such Deposit shall continue to be maintained by
the Depositary in accordance with the original terms thereof. Following such
withdrawal the balance in the related Account shall be zero and the Depositary
shall close such Account. As used herein, "Business Day" means any day, other
than a Saturday, Sunday or other day on which commercial banks are authorized or
required by law to close in New York, New York, Denver, Colorado, Salt Lake
City, Utah or Wilmington, Delaware.
(b) The Escrow Agent may, by providing at least 15 days' prior notice of
withdrawal to the Depositary in the form of Exhibit B hereto (a "Notice of
Prepayment Withdrawal"), withdraw not less than the entire balance of any
Deposit together with all accrued and unpaid interest on such Deposit to but
excluding the specified date of withdrawal (a "Prepayment Withdrawal"), on such
date as shall be specified in such Notice of Prepayment Withdrawal. Following
such withdrawal the balance in the related Account shall be zero and the
Depositary shall close such Account. Upon any Prepayment Withdrawal, the
Depositary shall pay to the Paying Agent the amount requested in the related
Notice of Prepayment Withdrawal.
(c) The Escrow Agent may, by providing at least 15 days' prior notice of
withdrawal to the Depositary in the form of Exhibit C hereto (a "Notice of Final
Withdrawal"), withdraw the entire amount of all of the remaining Deposits
together with the all accrued and unpaid interest on such Deposits to but
excluding the specified date of withdrawal (a "Final Withdrawal"), on such date
as shall be specified in such Notice of Final Withdrawal. Following such
withdrawal the balance in the related Accounts shall be zero and the Depositary
shall close such Accounts. If a Notice of Final Withdrawal has not been given to
the Depositary on or before May 31, 2000 (provided, that if a labor strike or
work stoppage occurs at The Boeing Company prior to such date, such date shall
be extended by adding
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<PAGE>
thereto the number of days that each such labor strike or work stoppage
continues in effect) and there are unwithdrawn Deposits on such date, the
Depositary shall pay the amount of the Final Withdrawal to the Paying Agent on
June 15, 2000 (or if the May 31, 2000 date has been extended as set forth in
this sentence, the fifteenth day after the Delivery Period Termination Date).
(d) If the Depositary receives a duly completed Notice of Purchase
Withdrawal, Notice of Prepayment Withdrawal or Notice of Final Withdrawal
complying with the provisions of this Agreement, it shall make the payments
specified therein in accordance with the provisions of this Agreement.
SECTION 2.4 Other Accounts. On the date of withdrawal of any Deposit, the
Escrow Agent, or the Pass Through Trustee on behalf of the Escrow Agent, shall
be entitled to re-deposit with the Depositary any portion thereof and the
Depositary shall accept the same for deposit hereunder. Any sums so received for
deposit shall be established as a new Deposit and credited to a new Account, all
as more fully provided in Section 2.1 hereof, and thereafter the provisions of
this Agreement shall apply thereto as fully and with the same force and effect
as if such Deposit had been established on the Deposit Date except that (i) such
Deposit may not be withdrawn prior to the date seven days after the
establishment thereof and (ii) such Deposit shall mature on June 15, 2000 (as
such date may be extended from time to time to the fifteenth day after the
Delivery Period Termination Date) and bear interest as provided in Section 2.2.
The Depositary shall promptly give notice to the Escrow Agent of the account
number assigned to any such re-deposit.
SECTION 3.1 Termination. This Agreement shall terminate on the later of the
date on which (i) all of the Deposits shall have been withdrawn and paid as
provided herein without any re-deposit and (ii) all accrued and unpaid interest
on the Deposits shall have been paid as provided herein, but in no event prior
to the date on which the Depositary shall have performed in full its obligations
hereunder.
SECTION 3.2 Substitute Depositary. In the event that Atlas is required
under the provisions of Section 6 or Section 7 of the Indemnity Agreement to
make payments in a material amount to the Depositary, Atlas may elect to
terminate the Depositary as a party to this Agreement, the other Deposit
Agreements and the Indemnity Agreement; provided that, concurrently with such
termination, (i) Atlas shall pay the Depositary all amounts (including, without
limitation, amounts, if any, owed under such Section 6 and Section 7) owed to
the Depositary pursuant to any such Agreement through such date of termination,
(ii) another financial institution satisfactory to Atlas and the Rating Agencies
(as defined in the Note Purchase Agreement) shall agree, as of such date, to
assume all rights and obligations of the Depositary under all such Agreements to
be terminated as of such date, and (iii) all documents and supporting materials
necessary to evidence the termination of the Depositary and the substitution of
such other financial institution shall have been received as of such date.
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<PAGE>
SECTION 4. Payments. All payments (including, without limitation, those
payments made in respect of Taxes (as defined and provided for below)) made by
the Depositary hereunder shall be paid in United States Dollars and immediately
available funds by wire transfer (i) in the case of accrued interest on the
Deposits payable under Section 2.2 hereof, any Prepayment Withdrawal or any
Final Withdrawal, directly to the Paying Agent at Wilmington Trust Company,
Wilmington, Delaware, ABA # 03-11-000-92, Account No. 44043-0, Attention: Robert
Hines, Reference: Atlas Air, or to such other account as the Paying Agent may
direct from time to time in writing to the Depositary and the Escrow Agent and
(ii) in the case of any withdrawal of one or more Deposits pursuant to a Notice
of Purchase Withdrawal, directly to or as directed by the Pass Through Trustee
as specified and in the manner provided in such Notice of Purchase Withdrawal.
The Depositary hereby waives any and all rights of set-off, combination of
accounts, right of retention or similar right (whether arising under applicable
law, contract or otherwise) it may have against the Deposits howsoever arising.
All payments on or in respect of each Deposit shall be made free and clear of
and without reduction for or on account of any and all taxes, levies or other
impositions or charges (collectively, "Taxes"). However, if the Depositary or
the Paying Agent (pursuant to Section 2.04 of the Escrow Agreement) shall be
required by law to deduct or withhold any Taxes from or in respect of any sum
payable hereunder, the Depositary shall (i) make such deductions or withholding,
(ii) pay the full amount deducted or withheld (including in respect of such
additional amounts) to the competent taxation authority and (iii) if the Taxes
required to be deducted or withheld are imposed by Switzerland or any political
subdivision thereof, pay such additional amounts as may be necessary in order
that the actual amount received by the designated recipient of such sum under
this Agreement or the Escrow Agreement after such deduction or withholding
equals the sum it would have received had no such deduction or withholding been
required. If the date on which any payment due on any Deposit would otherwise
fall on a day which is not a Business Day, such payment shall be made on the
next succeeding Business Day, with the same force and effect as if
made on such scheduled date, and no additional interest shall accrue in respect
of such extension.
SECTION 5. Representation and Warranties. The Depositary hereby represents
and warrants to Atlas, the Escrow Agent, the Pass Through Trustee and the Paying
Agent that:
(a) it is a bank duly organized and validly existing in good standing
under the laws of its jurisdiction of organization and is duly qualified to
conduct banking business in the State of New York through its New York
Branch;
(b) it has full power, authority and legal right to conduct its
business and operations as currently conducted and to enter into and
perform its obligations under this Agreement;
(c) the execution, delivery and performance of this Agreement have
been duly authorized by all necessary corporate action on the part of it
and do not require
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<PAGE>
any stockholder approval, or approval or consent of any trustee or holder
of any indebtedness or obligations of it, and such document has been duly
executed and delivered by it and constitutes its legal, valid and binding
obligations enforceable against it in accordance with the terms hereof;
(d) no authorization, consent or approval of or other action by, and
no notice to or filing with, any United States federal or state
governmental authority or regulatory body is required for the execution,
delivery or performance by it of this Agreement;
(e) neither the execution, delivery or performance by it of this
Agreement, nor compliance with the terms and provisions hereof, conflicts
or will conflict with or results or will result in a breach or violation of
any of the terms, conditions or provisions of, or will require any consent
or approval under, any law, governmental rule or regulation or the charter
documents, as amended, or bylaws, as amended, of it or any similar
instrument binding on it or any order, writ, injunction or decree of any
court or governmental authority against it or by which it or any of its
properties is bound or any indenture, mortgage or contract or other
agreement or instrument to which it is a party or by which it or any of its
properties is bound, or constitutes or will constitute a default thereunder
or results or will result in the imposition of any lien upon any of its
properties;
(f) there are no pending or, to its knowledge, threatened actions,
suits, investigations or proceedings (whether or not purportedly on behalf
of it) against or affecting it or any of its property before or by any
court or administrative agency which, if adversely determined, (i) would
adversely affect the ability of it to perform its obligations under this
Agreement or (ii) would call into question or challenge the validity of
this Agreement or the enforceability hereof in accordance with the terms
hereof, nor is the Depositary in default with respect to any order of any
court, governmental authority, arbitration board or administrative agency
so as to adversely affect its ability to perform its obligations under this
Agreement; and
(g) the Depositary will make all payments under this Agreement from
its own funds and not from funds provided by, or on deposit from, Atlas or
any of Atlas' subsidiaries.
SECTION 6. Transfer. Neither party hereto shall be entitled to assign or
otherwise transfer this Agreement (or any interest herein) other than (in the
case of the Escrow Agent) to a successor escrow agent under the Escrow
Agreement, and any purported assignment in violation thereof shall be void. This
Agreement shall be binding upon the parties hereto and their respective
successors and (in the case of the Escrow Agent) permitted assigns.
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<PAGE>
SECTION 7. Amendment, Etc. This Agreement may not be amended, waived or
otherwise modified except by an instrument in writing signed by the party
against whom the amendment, waiver or other modification is sought to be
enforced and by the Pass Through Trustee.
SECTION 8. Notices. Unless otherwise expressly specified or permitted by
the terms hereof, all notices, requests, demands, authorizations, directions,
consents, waivers or documents provided or permitted by this Agreement to be
made, given, furnished or filed shall be in writing, mailed by certified mail,
postage prepaid, or by confirmed telecopy and
(i) if to the Escrow Agent, addressed to at its office at:
FIRST SECURITY BANK, NATIONAL ASSOCIATION 79 South
Main Street Salt Lake City, UT 84111
Attention: Corporate Trust Department
Telecopier: 801-246-5053
(ii) if to the Depositary, addressed to it at its offices at:
CREDIT SUISSE FIRST BOSTON
11 Madison Avenue
New York, NY 10010
Attention: Robert Finney and Jennifer Toth
Telecopier: 212-325-8319
(iii) in each case, with a copy to the Pass Through Trustee, addressed
to it at its office at:
WILMINGTON TRUST COMPANY
One Rodney Square
1100 N. Market Street
Wilmington, DE 19890-0001
Attention: Corporate Trust Administration
Telecopy: 302-651-8882
and to Atlas, addressed to it at its office at:
ATLAS AIR, INC.
538 Commons Drive
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<PAGE>
Golden, CO 80401
Attention: Chief Financial Officer
Telecopier: 303-526-5051
Whenever any notice in writing is required to be given by either of the
Escrow Agent or the Depositary to the other, such notice shall be deemed given
and such requirement satisfied when such notice is received. Any party hereto
may change the address to which notices to such party will be sent by giving
notice of such change to the other party to this Agreement.
On or prior to the execution of this Agreement, the Escrow Agent has
delivered to the Depositary a certificate containing specimen signatures of the
representatives of the Escrow Agent who are authorized to give notices and
instructions with respect to this Agreement. The Depositary may conclusively
rely on such certificate until the Depositary receives written notice from the
Escrow Agent to the contrary.
SECTION 9. Obligations Unconditional. The Depositary hereby acknowledges
and agrees that its obligation to repay each Deposit together with interest
thereon as provided herein is absolute, irrevocable and unconditional and
constitutes a full recourse obligation of the Depositary enforceable against it
to the full extent of all of its assets and properties.
SECTION 10. Entire Agreement. This Agreement (including all attachments
hereto) sets forth all of the promises, covenants, agreements, conditions and
understandings between the Depositary and the Escrow Agent with respect to the
subject matter hereof and supersedes all prior and contemporaneous agreements
and undertakings, inducements or conditions, express or implied, oral or
written.
SECTION 11. Governing Law. This Agreement, and the rights and obligations
of the Depositary and the Escrow Agent with respect to the Deposits, shall be
governed by, and construed in accordance with, the laws of the State of New York
and subject to the provisions of Regulation D of the Board of Governors of the
Federal Reserve System (or any successor), as the same may be modified and
supplemented and in effect from time to time.
SECTION 12. Submission to Jurisdiction; Waiver of Jury Trial. (a) Each of
the parties hereto hereby irrevocably and unconditionally:
(i) submits for itself and its property in any legal action or
proceeding relating to this Agreement, or for recognition and enforcement
of any judgment in respect hereof, to the nonexclusive general jurisdiction
of the courts of the State of New York, the courts of the United States of
America for the Southern District of New York, and the appellate courts
from any thereof;
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(ii) consents that any such action or proceeding may be brought in
such courts, and waives any objection that it may now or hereafter have to
the venue of any such action or proceeding in any such court or that such
action or proceeding was brought in an inconvenient court and agrees not to
plead or claim the same;
(iii) agrees that service of process in any such action or proceeding
may be effected by mailing a copy thereof by registered or certified mail
(or any substantially similar form and mail), postage prepaid, to each
party hereto at its address set forth in Section 8 hereof, or at such other
address of which the other parties shall have been notified pursuant
thereto; and
(iv) agrees that nothing herein shall affect the right to effect
service of process in any other manner permitted by law or shall limit the
right to sue in any other jurisdiction.
(b) EACH OF THE DEPOSITARY AND THE ESCROW AGENT ACKNOWLEDGES AND ACCEPTS
THAT IN ANY SUIT, ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO THIS
AGREEMENT SUCH PARTY KNOWINGLY, VOLUNTARILY AND INTENTIONALLY IRREVOCABLY
WAIVES, TO THE GREATEST EXTENT PERMISSIBLE BY LAW, ITS RIGHT TO A TRIAL BY JURY.
SECTION 13. Counterparts. This Agreement may be executed in one or more
counterparts, all of which taken together shall constitute one instrument.
SECTION 14. Depositary's Obligations. The Depositary and the Escrow Agent
understand and agree that in connection with this Agreement, the Depositary is
not acting as a fiduciary, agent of other representative of the Escrow Agent,
the Pass Through Trustees, the Underwriters or anyone else, and has no and
shall have no obligation to monitor, account for or otherwise concern itself
with the source of funds invested hereunder or the application of such funds or
of payments made by the Depositary hereunder and in accordance with the terms
hereof.
SECTION 15. Head Office Obligation. Credit Suisse First Boston hereby
agrees that the obligations and agreements of the Depositary hereunder are also
the obligations and agreements of Credit Suisse First Boston's Head Office in
Zurich, Switzerland. Accordingly, any beneficiary of this Agreement will be able
to proceed (including, in accordance with Section 12 hereof) directly against
Credit Suisse First Boston's Head Office in Zurich, Switzerland if Credit Suisse
First Boston's New York Branch defaults in its obligation to such beneficiary
under this Agreement.
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IN WITNESS WHEREOF, the Escrow Agent and the Depositary have caused this
Deposit Agreement to be duly executed as of the day and year first above
written.
FIRST SECURITY BANK,
NATIONAL ASSOCIATION,
as Escrow Agent
By /s/ Scott Nielsen
--------------------------------
Name: Scott Nielsen
Title: Vice President
CREDIT SUISSE FIRST BOSTON,
New York Branch,
as Depositary
By /s/ Jeffrey B. Ulmer
--------------------------------
Name: Jeffrey B. Ulmer
Title: Vice President
By /s/ Thomas G. Muoio
--------------------------------
Name: Thomas G. Muoio
Title: Vice Presdient
<PAGE>
Schedule I
Schedule of Deposits
(Class A-2)
Date Deposit Amount Account No. Maturity Date
<PAGE>
EXHIBIT A
NOTICE OF PURCHASE WITHDRAWAL
CREDIT SUISSE FIRST BOSTON
New York Branch
11 Madison Avenue
New York, NY 10010
Attention: Robert Finney and Jennifer Toth
Telecopier: 212-325-8319
Ladies and Gentlemen:
Reference is made to the Deposit Agreement (Class A-2) dated as of April ,
1999 (the "Deposit Agreement") between First Security Bank, N.A., as Escrow
Agent, and Credit Suisse First Boston, New York Branch, as Depositary (the
"Depositary").
In accordance with Section 2.3(a) of the Deposit Agreement, the undersigned
hereby requests the withdrawal of the entire amount of the Deposit, $_______,
Account No. ____________.
The undersigned hereby directs that on _______________, the Depositary (i)
pay $___________ of the proceeds of the Deposit to ________________, Account No.
_____, Reference: Atlas Air upon the telephonic request of a representative
reasonably believed by the Depositary to be that of the Pass Through Trustee and
(ii) redeposit $___________ of such proceeds in accordance with Section 2.4 of
the Deposit Agreement..
FIRST SECURITY BANK,
NATIONAL ASSOCIATION,
as Escrow Agent
By: ________________________________
Name:
Title:
Dated: _______ __, ____
<PAGE>
EXHIBIT B
NOTICE OF PREPAYMENT WITHDRAWAL
CREDIT SUISSE FIRST BOSTON
New York Branch
11 Madison Avenue
New York, NY 10010
Attention: Robert Finney and Jennifer Toth
Telecopier: 212-325-8319
Reference is made to the Deposit Agreement (Class A-2) dated as of April
__, 1999 (the "Deposit Agreement") between First Security Bank, N.A., as Escrow
Agent, and Credit Suisse First Boston, New York Branch, as Depositary (the
"Depositary").
In accordance with Section 2.3(b) of the Deposit Agreement, the undersigned
hereby requests the withdrawal of the entire amount of the Deposit, $_______,
Account No. ____________ on ________________.
The undersigned hereby directs the Depositary to pay the proceeds of such
Deposit and accrued interest thereon to the Paying Agent at Wilmington Trust
Company, ABA# 03-11-000-92, Account No.44043-0, Reference: Atlas Air.
FIRST SECURITY BANK,
NATIONAL ASSOCIATION,
as Escrow Agent
By ________________________________
Name:
Title:
Dated: __________________
<PAGE>
EXHIBIT C
NOTICE OF FINAL WITHDRAWAL
CREDIT SUISSE FIRST BOSTON
New York Branch
11 Madison Avenue
New York, NY 10010
Attention: Robert Finney and Jennifer Toth
Telecopier: 212-325-8319
Ladies and Gentlemen:
Reference is made to the Deposit Agreement (Class A-2) dated as of April ,
1999 (the "Deposit Agreement") between First Security Bank, N.A., as Escrow
Agent, and Credit Suisse First Boston, New York Branch, as Depositary (the
"Depositary").
In accordance with Section 2.3(c) of the Deposit Agreement, the undersigned
hereby requests the withdrawal of the entire amount of all Deposits on
_____________.
The undersigned hereby directs the Depositary to pay the proceeds of the
Deposits and accrued interest thereon to the Paying Agent at Wilmington Trust
Company, ABA# 03-11-000-92, Account No. 44043-0, Reference: Atlas Air.
FIRST SECURITY BANK,
NATIONAL ASSOCIATION,
as Escrow Agent
By: ________________________________
Name:
Title:
Dated: _______ __, ______
EXECUTION COPY
DEPOSIT AGREEMENT
(Class B)
Dated as of April 13, 1999
between
FIRST SECURITY BANK, NATIONAL ASSOCIATION
as Escrow Agent
and
CREDIT SUISSE FIRST BOSTON,
New York Branch,
as Depositary
<PAGE>
DEPOSIT AGREEMENT (Class B) dated as of April 13, 1999 (as amended, modified or
supplemented from time to time, this "Agreement") between First Security Bank,
National Association, a national banking association, as Escrow Agent under the
Escrow and Paying Agent Agreement referred to below (in such capacity, together
with its successors in such capacity, the "Escrow Agent"), and CREDIT SUISSE
FIRST BOSTON, a banking institution organized under the laws of Switzerland,
acting through its New York Branch as depositary bank ("Credit Suisse" and, in
its capacity as depositary hereunder, the "Depositary").
W I T N E S S E T H
WHEREAS, Atlas Air, Inc. ("Atlas") and Wilmington Trust Company, not in its
individual capacity except as otherwise expressly provided therein, but solely
as trustee (in such capacity, together with its successors in such capacity, the
"Pass Through Trustee") have entered into a Trust Supplement, dated the date
hereof to the Pass Through Trust Agreement dated as of April 1, 1999 (together,
as amended, modified or supplemented from time to time in accordance with the
terms thereof, the "Pass Through Trust Agreement") relating to Atlas Air Pass
Through Trust 1999-1B pursuant to which the Atlas Air Pass Through Trust, Series
1999-1B Certificates referred to therein (the "Certificates") are being issued;
WHEREAS, Atlas and Morgan Stanley & Co. Incorporated, BT Alex. Brown
Incorporated, CIBC Oppenheimer Corp. and ING Baring Furman Selz LLC
(collectively, the "Underwriters" and, together with their respective
transferees and assigns as registered owners of the Certificates, the
"Investors") have entered into an Underwriting Agreement dated April 5, 1999
pursuant to which the Pass Through Trustee will issue and sell the Certificates
to the Underwriters;
WHEREAS, Atlas, the Pass Through Trustee, certain other pass through
trustees and certain other persons concurrently herewith are entering into the
Note Purchase Agreement, dated as of the date hereof (the "Note Purchase
Agreement"), pursuant to which the Pass Through Trustee has agreed to acquire,
subject to the terms thereof, from time to time on or prior to the Delivery
Period Termination Date (as defined in the Note Purchase Agreement) equipment
notes (the "Equipment Notes") issued to finance the acquisition of aircraft by
Atlas, as lessee or as owner, utilizing a portion of the proceeds from the sale
of the Certificates (the "Net Proceeds");
WHEREAS, the Escrow Agent, the Underwriters, the Pass Through Trustee and
Wilmington Trust Company, as paying agent for the Escrow Agent (in such
capacity, together with its successors in such capacity, the "Paying Agent")
concurrently herewith are entering into an Escrow and Paying Agent Agreement,
dated as of the date hereof (as amended, modified or supplemented from time
to time in accordance with the terms thereof, the "Escrow Agreement");
<PAGE>
WHEREAS, Atlas and the Depositary concurrently herewith are entering into
an Indemnity Agreement, dated as of the date hereof (the "Indemnity Agreement");
and
WHEREAS, the Underwriters and the Pass Through Trustee intend that the Net
Proceeds be held in escrow by the Escrow Agent on behalf of the Investors
pursuant to the Escrow Agreement, subject to withdrawal upon request of and
proper certification by the Pass Through Trustee for the purpose of purchasing
Equipment Notes, and that pending such withdrawal the Net Proceeds be deposited
by the Escrow Agent with the Depositary pursuant to this Agreement, which
provides for the Depositary to pay interest for distribution to the Investors
and to establish accounts from which the Escrow Agent shall make withdrawals
upon request of and proper certification by the Pass Through Trustee.
NOW, THEREFORE, in consideration of the obligations contained herein, and
for other good and valuable consideration, the receipt and sufficiency of which
are hereby acknowledged, the parties hereto hereby agree as follows:
SECTION 1.1 Acceptance of Depositary. The Depositary hereby agrees to act
as depositary bank as provided herein and in connection therewith to accept all
amounts to be delivered to or held by the Depositary pursuant to the terms of
this Agreement. The Depositary further agrees to hold, maintain and safeguard
the Deposits and the Accounts (as defined below) during the term of this
Agreement in accordance with the provisions of this Agreement. The Escrow Agent
shall not have any right to withdraw, assign or otherwise transfer moneys held
in the Accounts except as permitted by this Agreement.
SECTION 1.2 Establishment of Accounts. The Escrow Agent hereby instructs
the Depositary, and the Depositary agrees, to establish the separate deposit
accounts listed on Schedule I hereto and to establish such additional separate
deposit accounts as may be required in connection with the deposits contemplated
by Section 2.4 hereof (each, an "Account" and collectively, the "Accounts"),
each in the name of the Escrow Agent and all on the terms and conditions set
forth in this Agreement.
SECTION 2.1 Deposits. The Escrow Agent shall direct the Underwriters to
deposit with the Depositary on the date of this Agreement (the "Deposit Date")
in Federal (same day) funds by wire transfer to: Bank of New York, Reference:
Atlas Air EETC 1999-1, ABA # 021000018, Account #8900-329238 and the Depositary
shall accept from the Underwriters, on behalf of the Escrow Agent, the sum of
US$111,910,000. Upon acceptance of such sum, the Depositary shall (i) establish
each of the deposits specified in Schedule I hereto maturing on the respective
dates set forth therein (including any deposit made pursuant to Section 2.4
hereof, individually, a "Deposit" and, collectively, the "Deposits") and (ii)
credit each Deposit to the related Account as set forth therein. No amount shall
be deposited in any Account other than the related Deposit.
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<PAGE>
SECTION 2.2 Interest. The Depositary shall pay interest on each Deposit
from and including the date of deposit to but excluding the date of withdrawal
at the rate of 7.20% per annum (computed on the basis of a year of twelve 30-day
months) payable to the Paying Agent on behalf of the Escrow Agent semi-annually
in arrears on each January 2 and July 2, commencing on January 2, 2000 (each, an
"Interest Payment Date"), and on the date of each Prepayment Withdrawal and the
Final Withdrawal (as defined below), all in accordance with the terms of this
Agreement (whether or not any such Deposit is withdrawn on an Interest Payment
Date). Interest accrued on any Deposit that is withdrawn pursuant to a Notice of
Purchase Withdrawal (as defined below) shall be paid on the next Interest
Payment Date, notwithstanding any intervening Final Withdrawal.
SECTION 2.3 Withdrawals. (a) On and after the date seven days after the
establishment of any Deposit, the Escrow Agent may, by providing at least one
Business Day's prior notice of withdrawal to the Depositary in the form of
Exhibit A hereto (a "Notice of Purchase Withdrawal"), withdraw not less than the
entire balance of such Deposit, except that at any time prior to the actual
withdrawal of such Deposit, the Escrow Agent or the Pass Through Trustee may, by
notice to the Depositary, cancel such withdrawal (including on the scheduled
date therefor), and thereafter such Deposit shall continue to be maintained by
the Depositary in accordance with the original terms thereof. Following such
withdrawal the balance in the related Account shall be zero and the Depositary
shall close such Account. As used herein, "Business Day" means any day, other
than a Saturday, Sunday or other day on which commercial banks are authorized or
required by law to close in New York, New York, Denver, Colorado, Salt Lake
City, Utah or Wilmington, Delaware.
(b) The Escrow Agent may, by providing at least 15 days' prior notice of
withdrawal to the Depositary in the form of Exhibit B hereto (a "Notice of
Prepayment Withdrawal"), withdraw not less than the entire balance of any
Deposit together with all accrued and unpaid interest on such Deposit to but
excluding the specified date of withdrawal (a "Prepayment Withdrawal"), on such
date as shall be specified in such Notice of Prepayment Withdrawal. Following
such withdrawal the balance in the related Account shall be zero and the
Depositary shall close such Account. Upon any Prepayment Withdrawal, the
Depositary shall pay to the Paying Agent the amount requested in the related
Notice of Prepayment Withdrawal.
(c) The Escrow Agent may, by providing at least 15 days' prior notice of
withdrawal to the Depositary in the form of Exhibit C hereto (a "Notice of Final
Withdrawal"), withdraw the entire amount of all of the remaining Deposits
together with the all accrued and unpaid interest on such Deposits to but
excluding the specified date of withdrawal (a "Final Withdrawal"), on such date
as shall be specified in such Notice of Final Withdrawal. Following such
withdrawal the balance in the related Accounts shall be zero and the Depositary
shall close such Accounts. If a Notice of Final Withdrawal has not been given to
the Depositary on or before May 31, 2000 (provided, that if a labor strike or
work stoppage occurs at The Boeing Company prior to such date, such date shall
be extended by adding
3
<PAGE>
thereto the number of days that each such labor strike or work stoppage
continues in effect) and there are unwithdrawn Deposits on such date, the
Depositary shall pay the amount of the Final Withdrawal to the Paying Agent on
June 15, 2000 (or if the May 31, 2000 date has been extended as set forth in
this sentence, the fifteenth day after the Delivery Period Termination Date).
(d) If the Depositary receives a duly completed Notice of Purchase
Withdrawal, Notice of Prepayment Withdrawal or Notice of Final Withdrawal
complying with the provisions of this Agreement, it shall make the payments
specified therein in accordance with the provisions of this Agreement.
SECTION 2.4 Other Accounts. On the date of withdrawal of any Deposit, the
Escrow Agent, or the Pass Through Trustee on behalf of the Escrow Agent, shall
be entitled to re-deposit with the Depositary any portion thereof and the
Depositary shall accept the same for deposit hereunder. Any sums so received for
deposit shall be established as a new Deposit and credited to a new Account, all
as more fully provided in Section 2.1 hereof, and thereafter the provisions of
this Agreement shall apply thereto as fully and with the same force and effect
as if such Deposit had been established on the Deposit Date except that (i) such
Deposit may not be withdrawn prior to the date seven days after the
establishment thereof and (ii) such Deposit shall mature on June 15, 2000 (as
such date may be extended from time to time to the fifteenth day after the
Delivery Period Termination Date) and bear interest as provided in Section 2.2.
The Depositary shall promptly give notice to the Escrow Agent of the account
number assigned to any such re-deposit.
SECTION 3.1 Termination. This Agreement shall terminate on the later of the
date on which (i) all of the Deposits shall have been withdrawn and paid as
provided herein without any re-deposit and (ii) all accrued and unpaid interest
on the Deposits shall have been paid as provided herein, but in no event prior
to the date on which the Depositary shall have performed in full its obligations
hereunder.
SECTION 3.2 Substitute Depositary. In the event that Atlas is required
under the provisions of Section 6 or Section 7 of the Indemnity Agreement to
make payments in a material amount to the Depositary, Atlas may elect to
terminate the Depositary as a party to this Agreement, the other Deposit
Agreements and the Indemnity Agreement; provided that, concurrently with such
termination, (i) Atlas shall pay the Depositary all amounts (including, without
limitation, amounts, if any, owed under such Section 6 and Section 7) owed to
the Depositary pursuant to any such Agreement through such date of termination,
(ii) another financial institution satisfactory to Atlas and the Rating Agencies
(as defined in the Note Purchase Agreement) shall agree, as of such date, to
assume all rights and obligations of the Depositary under all such Agreements to
be terminated as of such date, and (iii) all documents and supporting materials
necessary to evidence the termination of the Depositary and the substitution of
such other financial institution shall have been received as of such date.
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<PAGE>
SECTION 4. Payments. All payments (including, without limitation, those
payments made in respect of Taxes (as defined and provided for below)) made by
the Depositary hereunder shall be paid in United States Dollars and immediately
available funds by wire transfer (i) in the case of accrued interest on the
Deposits payable under Section 2.2 hereof, any Prepayment Withdrawal or any
Final Withdrawal, directly to the Paying Agent at Wilmington Trust Company,
Wilmington, Delaware, ABA # 03-11-000-92, Account No. 44043-0, Attention: Robert
Hines, Reference: Atlas Air, or to such other account as the Paying Agent may
direct from time to time in writing to the Depositary and the Escrow Agent and
(ii) in the case of any withdrawal of one or more Deposits pursuant to a Notice
of Purchase Withdrawal, directly to or as directed by the Pass Through Trustee
as specified and in the manner provided in such Notice of Purchase Withdrawal.
The Depositary hereby waives any and all rights of set-off, combination of
accounts, right of retention or similar right (whether arising under applicable
law, contract or otherwise) it may have against the Deposits howsoever arising.
All payments on or in respect of each Deposit shall be made free and clear of
and without reduction for or on account of any and all taxes, levies or other
impositions or charges (collectively, "Taxes"). However, if the Depositary or
the Paying Agent (pursuant to Section 2.04 of the Escrow Agreement) shall be
required by law to deduct or withhold any Taxes from or in respect of any sum
payable hereunder, the Depositary shall (i) make such deductions or withholding,
(ii) pay the full amount deducted or withheld (including in respect of such
additional amounts) to the competent taxation authority and (iii) if the Taxes
required to be deducted or withheld are imposed by Switzerland or any political
subdivision thereof, pay such additional amounts as may be necessary in order
that the actual amount received by the designated recipient of such sum under
this Agreement or the Escrow Agreement after such deduction or withholding
equals the sum it would have received had no such deduction or withholding been
required. If the date on which any payment due on any Deposit would otherwise
fall on a day which is not a Business Day, such payment shall be made on the
next succeeding Business Day, with the same force and effect as if made on such
scheduled date, and no additional interest shall accrue in respect of such
extension.
SECTION 5. Representation and Warranties. The Depositary hereby represents
and warrants to Atlas, the Escrow Agent, the Pass Through Trustee and the Paying
Agent that:
(a) it is a bank duly organized and validly existing in good standing
under the laws of its jurisdiction of organization and is duly qualified to
conduct banking business in the State of New York through its New York
Branch;
(b) it has full power, authority and legal right to conduct its
business and operations as currently conducted and to enter into and
perform its obligations under this Agreement;
(c) the execution, delivery and performance of this Agreement have
been duly authorized by all necessary corporate action on the part of it
and do not require
5
<PAGE>
any stockholder approval, or approval or consent of any trustee or holder
of any indebtedness or obligations of it, and such document has been duly
executed and delivered by it and constitutes its legal, valid and binding
obligations enforceable against it in accordance with the terms hereof;
(d) no authorization, consent or approval of or other action by, and
no notice to or filing with, any United States federal or state
governmental authority or regulatory body is required for the execution,
delivery or performance by it of this Agreement;
(e) neither the execution, delivery or performance by it of this
Agreement, nor compliance with the terms and provisions hereof, conflicts
or will conflict with or results or will result in a breach or violation of
any of the terms, conditions or provisions of, or will require any consent
or approval under, any law, governmental rule or regulation or the charter
documents, as amended, or bylaws, as amended, of it or any similar
instrument binding on it or any order, writ, injunction or decree of any
court or governmental authority against it or by which it or any of its
properties is bound or any indenture, mortgage or contract or other
agreement or instrument to which it is a party or by which it or any of its
properties is bound, or constitutes or will constitute a default thereunder
or results or will result in the imposition of any lien upon any of its
properties;
(f) there are no pending or, to its knowledge, threatened actions,
suits, investigations or proceedings (whether or not purportedly on behalf
of it) against or affecting it or any of its property before or by any
court or administrative agency which, if adversely determined, (i) would
adversely affect the ability of it to perform its obligations under this
Agreement or (ii) would call into question or challenge the validity of
this Agreement or the enforceability hereof in accordance with the terms
hereof, nor is the Depositary in default with respect to any order of any
court, governmental authority, arbitration board or administrative agency
so as to adversely affect its ability to perform its obligations under this
Agreement; and
(g) the Depositary will make all payments under this Agreement from
its own funds and not from funds provided by, or on deposit from, Atlas or
any of Atlas' subsidiaries.
SECTION 6. Transfer. Neither party hereto shall be entitled to assign or
otherwise transfer this Agreement (or any interest herein) other than (in the
case of the Escrow Agent) to a successor escrow agent under the Escrow
Agreement, and any purported assignment in violation thereof shall be void. This
Agreement shall be binding upon the parties hereto and their respective
successors and (in the case of the Escrow Agent) permitted assigns.
6
<PAGE>
SECTION 7. Amendment, Etc. This Agreement may not be amended, waived or
otherwise modified except by an instrument in writing signed by the party
against whom the amendment, waiver or other modification is sought to be
enforced and by the Pass Through Trustee.
SECTION 8. Notices. Unless otherwise expressly specified or permitted by
the terms hereof, all notices, requests, demands, authorizations, directions,
consents, waivers or documents provided or permitted by this Agreement to be
made, given, furnished or filed shall be in writing, mailed by certified mail,
postage prepaid, or by confirmed telecopy and
(i) if to the Escrow Agent, addressed to at its office at:
FIRST SECURITY BANK, NATIONAL ASSOCIATION 79 South
Main Street Salt Lake City, UT 84111
Attention: Corporate Trust Department
Telecopier: 801-246-5053
(ii) if to the Depositary, addressed to it at its offices at:
CREDIT SUISSE FIRST BOSTON
11 Madison Avenue
New York, NY 10010
Attention: Robert Finney and Jennifer Toth
Telecopier: 212-325-8319
(iii) in each case, with a copy to the Pass Through Trustee, addressed
to it at its office at:
WILMINGTON TRUST COMPANY
One Rodney Square
1100 N. Market Street
Wilmington, DE 19890-0001
Attention: Corporate Trust Administration
Telecopy: 302-651-8882
and to Atlas, addressed to it at its office at:
ATLAS AIR, INC.
538 Commons Drive
7
<PAGE>
Golden, CO 80401
Attention: Chief Financial Officer
Telecopier: 303-526-5051
Whenever any notice in writing is required to be given by either of the
Escrow Agent or the Depositary to the other, such notice shall be deemed given
and such requirement satisfied when such notice is received. Any party hereto
may change the address to which notices to such party will be sent by giving
notice of such change to the other party to this Agreement.
On or prior to the execution of this Agreement, the Escrow Agent has
delivered to the Depositary a certificate containing specimen signatures of the
representatives of the Escrow Agent who are authorized to give notices and
instructions with respect to this Agreement. The Depositary may conclusively
rely on such certificate until the Depositary receives written notice from the
Escrow Agent to the contrary.
SECTION 9. Obligations Unconditional. The Depositary hereby acknowledges
and agrees that its obligation to repay each Deposit together with interest
thereon as provided herein is absolute, irrevocable and unconditional and
constitutes a full recourse obligation of the Depositary enforceable against it
to the full extent of all of its assets and properties.
SECTION 10. Entire Agreement. This Agreement (including all attachments
hereto) sets forth all of the promises, covenants, agreements, conditions and
understandings between the Depositary and the Escrow Agent with respect to the
subject matter hereof and supersedes all prior and contemporaneous agreements
and undertakings, inducements or conditions, express or implied, oral or
written.
SECTION 11. Governing Law. This Agreement, and the rights and obligations
of the Depositary and the Escrow Agent with respect to the Deposits, shall be
governed by, and construed in accordance with, the laws of the State of New York
and subject to the provisions of Regulation D of the Board of Governors of the
Federal Reserve System (or any successor), as the same may be modified and
supplemented and in effect from time to time.
SECTION 12. Submission to Jurisdiction; Waiver of Jury Trial. (a) Each of
the parties hereto hereby irrevocably and unconditionally:
(i) submits for itself and its property in any legal action or
proceeding relating to this Agreement, or for recognition and enforcement
of any judgment in respect hereof, to the nonexclusive general jurisdiction
of the courts of the State of New York, the courts of the United States of
America for the Southern District of New York, and the appellate courts
from any thereof;
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<PAGE>
(ii) consents that any such action or proceeding may be brought in
such courts, and waives any objection that it may now or hereafter have to
the venue of any such action or proceeding in any such court or that such
action or proceeding was brought in an inconvenient court and agrees not to
plead or claim the same;
(iii) agrees that service of process in any such action or proceeding
may be effected by mailing a copy thereof by registered or certified mail
(or any substantially similar form and mail), postage prepaid, to each
party hereto at its address set forth in Section 8 hereof, or at such other
address of which the other parties shall have been notified pursuant
thereto; and
(iv) agrees that nothing herein shall affect the right to effect
service of process in any other manner permitted by law or shall limit the
right to sue in any other jurisdiction.
(b) EACH OF THE DEPOSITARY AND THE ESCROW AGENT ACKNOWLEDGES AND ACCEPTS
THAT IN ANY SUIT, ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO THIS
AGREEMENT SUCH PARTY KNOWINGLY, VOLUNTARILY AND INTENTIONALLY IRREVOCABLY
WAIVES, TO THE GREATEST EXTENT PERMISSIBLE BY LAW, ITS RIGHT TO A TRIAL BY JURY.
SECTION 13. Counterparts. This Agreement may be executed in one or more
counterparts, all of which taken together shall constitute one instrument.
SECTION 14. Depositary's Obligations. The Depositary and the Escrow Agent
understand and agree that in connection with this Agreement, the Depositary is
not acting as a fiduciary, agent of other representative of the Escrow Agent,
the Pass Through Trustees, the Underwriters or anyone else, and has no and shall
have no obligation to monitor, account for or otherwise concern itself with the
source of funds invested hereunder or the application of such funds or of
payments made by the Depositary hereunder and in accordance with the terms
hereof.
SECTION 15. Head Office Obligation. Credit Suisse First Boston hereby
agrees that the obligations and agreements of the Depositary hereunder are also
the obligations and agreements of Credit Suisse First Boston's Head Office in
Zurich, Switzerland. Accordingly, any beneficiary of this Agreement will be able
to proceed (including, in accordance with Section 12 hereof) directly against
Credit Suisse First Boston's Head Office in Zurich, Switzerland if Credit Suisse
First Boston's New York Branch defaults in its obligation to such beneficiary
under this Agreement.
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<PAGE>
IN WITNESS WHEREOF, the Escrow Agent and the Depositary have caused this
Deposit Agreement to be duly executed as of the day and year first above
written.
FIRST SECURITY BANK,
NATIONAL ASSOCIATION,
as Escrow Agent
By /s/ Scott Nielsen
--------------------------------
Name: Scott Nielsen
Title: Vice President
CREDIT SUISSE FIRST BOSTON,
New York Branch,
as Depositary
By /s/ Jeffrey B. Ulmer
--------------------------------
Name: Jeffrey B. Ulmer
Title: Vice President
By /s/ Thomas G. Muoio
--------------------------------
Name: Thomas G. Muoio
Title: Vice Presdient
<PAGE>
Schedule I
Schedule of Deposits
(Class B)
Date Deposit Amount Account No. Maturity Date
<PAGE>
EXHIBIT A
NOTICE OF PURCHASE WITHDRAWAL
CREDIT SUISSE FIRST BOSTON
New York Branch
11 Madison Avenue
New York, NY 10010
Attention: Robert Finney and Jennifer Toth
Telecopier: 212-325-8319
Ladies and Gentlemen:
Reference is made to the Deposit Agreement (Class B) dated as of April ,
1999 (the "Deposit Agreement") between First Security Bank, N.A., as Escrow
Agent, and Credit Suisse First Boston, New York Branch, as Depositary (the
"Depositary").
In accordance with Section 2.3(a) of the Deposit Agreement, the undersigned
hereby requests the withdrawal of the entire amount of the Deposit, $_______,
Account No. ____________.
The undersigned hereby directs that on _______________, the
Depositary (i) pay $___________ of the proceeds of the Deposit to
________________, Account No. _____, Reference: Atlas Air upon the telephonic
request of a representative reasonably believed by the Depositary to be that of
the Pass Through Trustee and (ii) redeposit $___________ of such proceeds in
accordance with Section 2.4 of the Deposit Agreement..
FIRST SECURITY BANK,
NATIONAL ASSOCIATION,
as Escrow Agent
By: ________________________________
Name:
Title:
Dated: _______ __, ____
<PAGE>
EXHIBIT B
NOTICE OF PREPAYMENT WITHDRAWAL
CREDIT SUISSE FIRST BOSTON
New York Branch
11 Madison Avenue
New York, NY 10010
Attention: Robert Finney and Jennifer Toth
Telecopier: 212-325-8319
Reference is made to the Deposit Agreement (Class B) dated as of April __,
1999 (the "Deposit Agreement") between First Security Bank, N.A., as Escrow
Agent, and Credit Suisse First Boston, New York Branch, as Depositary (the
"Depositary").
In accordance with Section 2.3(b) of the Deposit Agreement, the undersigned
hereby requests the withdrawal of the entire amount of the Deposit, $_______,
Account No. ____________ on ________________.
The undersigned hereby directs the Depositary to pay the proceeds of such
Deposit and accrued interest thereon to the Paying Agent at Wilmington Trust
Company, ABA# 03-11-000-92, Account No.44043-0, Reference: Atlas Air.
FIRST SECURITY BANK,
NATIONAL ASSOCIATION,
as Escrow Agent
By ________________________________
Name:
Title:
Dated: __________________
<PAGE>
EXHIBIT C
NOTICE OF FINAL WITHDRAWAL
CREDIT SUISSE FIRST BOSTON
New York Branch
11 Madison Avenue
New York, NY 10010
Attention: Robert Finney and Jennifer Toth
Telecopier: 212-325-8319
Ladies and Gentlemen:
Reference is made to the Deposit Agreement (Class B) dated as of April ,
1999 (the "Deposit Agreement") between First Security Bank, N.A., as Escrow
Agent, and Credit Suisse First Boston, New York Branch, as Depositary (the
"Depositary").
In accordance with Section 2.3(c) of the Deposit Agreement, the undersigned
hereby requests the withdrawal of the entire amount of all Deposits on
_____________.
The undersigned hereby directs the Depositary to pay the proceeds of the
Deposits and accrued interest thereon to the Paying Agent at Wilmington Trust
Company, ABA# 03-11-000-92, Account No. 44043-0, Reference: Atlas Air.
FIRST SECURITY BANK,
NATIONAL ASSOCIATION,
as Escrow Agent
By: ________________________________
Name:
Title:
Dated: _______ __, ______
EXECUTION COPY
DEPOSIT AGREEMENT
(Class C)
Dated as of April 13, 1999
between
FIRST SECURITY BANK, NATIONAL ASSOCIATION
as Escrow Agent
and
CREDIT SUISSE FIRST BOSTON,
New York Branch,
as Depositary
<PAGE>
DEPOSIT AGREEMENT (Class C) dated as of April 13, 1999 (as amended, modified or
supplemented from time to time, this "Agreement") between First Security Bank,
National Association, a national banking association, as Escrow Agent under the
Escrow and Paying Agent Agreement referred to below (in such capacity, together
with its successors in such capacity, the "Escrow Agent"), and CREDIT SUISSE
FIRST BOSTON, a banking institution organized under the laws of Switzerland,
acting through its New York Branch as depositary bank ("Credit Suisse" and, in
its capacity as depositary hereunder, the "Depositary").
W I T N E S S E T H
WHEREAS, Atlas Air, Inc. ("Atlas") and Wilmington Trust Company, not in its
individual capacity except as otherwise expressly provided therein, but solely
as trustee (in such capacity, together with its successors in such capacity, the
"Pass Through Trustee") have entered into a Trust Supplement, dated the date
hereof to the Pass Through Trust Agreement dated as of April 1, 1999 (together,
as amended, modified or supplemented from time to time in accordance with the
terms thereof, the "Pass Through Trust Agreement") relating to Atlas Air Pass
Through Trust 1999-1C pursuant to which the Atlas Air Pass Through Trust, Series
1999-1C Certificates referred to therein (the "Certificates") are being issued;
WHEREAS, Atlas and Morgan Stanley & Co. Incorporated, BT Alex. Brown
Incorporated, CIBC Oppenheimer Corp. and ING Baring Furman Selz LLC
(collectively, the "Underwriters" and, together with their respective
transferees and assigns as registered owners of the Certificates, the
"Investors") have entered into an Underwriting Agreement dated April 5, 1999
pursuant to which the Pass Through Trustee will issue and sell the Certificates
to the Underwriters;
WHEREAS, Atlas, the Pass Through Trustee, certain other pass through
trustees and certain other persons concurrently herewith are entering into the
Note Purchase Agreement, dated as of the date hereof (the "Note Purchase
Agreement"), pursuant to which the Pass Through Trustee has agreed to acquire,
subject to the terms thereof, from time to time on or prior to the Delivery
Period Termination Date (as defined in the Note Purchase Agreement) equipment
notes (the "Equipment Notes") issued to finance the acquisition of aircraft by
Atlas, as lessee or as owner, utilizing a portion of the proceeds from the sale
of the Certificates (the "Net Proceeds");
WHEREAS, the Escrow Agent, the Underwriters, the Pass Through Trustee and
Wilmington Trust Company, as paying agent for the Escrow Agent (in such
capacity, together with its successors in such capacity, the "Paying Agent")
concurrently herewith are entering into an Escrow and Paying Agent Agreement,
dated as of the date hereof (as amended, modified or supplemented from time to
time in accordance with the terms thereof, the "Escrow Agreement");
<PAGE>
WHEREAS, Atlas and the Depositary concurrently herewith are entering into
an Indemnity Agreement, dated as of the date hereof (the "Indemnity Agreement");
and
WHEREAS, the Underwriters and the Pass Through Trustee intend that the Net
Proceeds be held in escrow by the Escrow Agent on behalf of the Investors
pursuant to the Escrow Agreement, subject to withdrawal upon request of and
proper certification by the Pass Through Trustee for the purpose of purchasing
Equipment Notes, and that pending such withdrawal the Net Proceeds be deposited
by the Escrow Agent with the Depositary pursuant to this Agreement, which
provides for the Depositary to pay interest for distribution to the Investors
and to establish accounts from which the Escrow Agent shall make withdrawals
upon request of and proper certification by the Pass Through Trustee.
NOW, THEREFORE, in consideration of the obligations contained herein, and
for other good and valuable consideration, the receipt and sufficiency of which
are hereby acknowledged, the parties hereto hereby agree as follows:
SECTION 1.1 Acceptance of Depositary. The Depositary hereby agrees to act
as depositary bank as provided herein and in connection therewith to accept all
amounts to be delivered to or held by the Depositary pursuant to the terms of
this Agreement. The Depositary further agrees to hold, maintain and safeguard
the Deposits and the Accounts (as defined below) during the term of this
Agreement in accordance with the provisions of this Agreement. The Escrow Agent
shall not have any right to withdraw, assign or otherwise transfer moneys held
in the Accounts except as permitted by this Agreement.
SECTION 1.2 Establishment of Accounts. The Escrow Agent hereby instructs
the Depositary, and the Depositary agrees, to establish the separate deposit
accounts listed on Schedule I hereto and to establish such additional separate
deposit accounts as may be required in connection with the deposits contemplated
by Section 2.4 hereof (each, an "Account" and collectively, the "Accounts"),
each in the name of the Escrow Agent and all on the terms and conditions set
forth in this Agreement.
SECTION 2.1 Deposits. The Escrow Agent shall direct the Underwriters to
deposit with the Depositary on the date of this Agreement (the "Deposit Date")
in Federal (same day) funds by wire transfer to: Bank of New York, Reference:
Atlas Air EETC 1999-1, ABA # 021000018, Account #8900-329238 and the Depositary
shall accept from the Underwriters, on behalf of the Escrow Agent, the sum of
US$119,904,000. Upon acceptance of such sum, the Depositary shall (i) establish
each of the deposits specified in Schedule I hereto maturing on the respective
dates set forth therein (including any deposit made pursuant to Section 2.4
hereof, individually, a "Deposit" and, collectively, the "Deposits") and (ii)
credit each Deposit to the related Account as set forth therein. No amount shall
be deposited in any Account other than the related Deposit.
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SECTION 2.2 Interest. The Depositary shall pay interest on each Deposit
from and including the date of deposit to but excluding the date of withdrawal
at the rate of 7.20% per annum (computed on the basis of a year of twelve 30-day
months) payable to the Paying Agent on behalf of the Escrow Agent semi-annually
in arrears on each January 2 and July 2, commencing on January 2, 2000 (each, an
"Interest Payment Date"), and on the date of each Prepayment Withdrawal and the
Final Withdrawal (as defined below), all in accordance with the terms of this
Agreement (whether or not any such Deposit is withdrawn on an Interest Payment
Date). Interest accrued on any Deposit that is withdrawn pursuant to a Notice of
Purchase Withdrawal (as defined below) shall be paid on the next Interest
Payment Date, notwithstanding any intervening Final Withdrawal.
SECTION 2.3 Withdrawals. (a) On and after the date seven days after the
establishment of any Deposit, the Escrow Agent may, by providing at least one
Business Day's prior notice of withdrawal to the Depositary in the form of
Exhibit A hereto (a "Notice of Purchase Withdrawal"), withdraw not less than the
entire balance of such Deposit, except that at any time prior to the actual
withdrawal of such Deposit, the Escrow Agent or the Pass Through Trustee may, by
notice to the Depositary, cancel such withdrawal (including on the scheduled
date therefor), and thereafter such Deposit shall continue to be maintained by
the Depositary in accordance with the original terms thereof. Following such
withdrawal the balance in the related Account shall be zero and the Depositary
shall close such Account. As used herein, "Business Day" means any day, other
than a Saturday, Sunday or other day on which commercial banks are authorized or
required by law to close in New York, New York, Denver, Colorado, Salt Lake
City, Utah or Wilmington, Delaware.
(b) The Escrow Agent may, by providing at least 15 days' prior notice of
withdrawal to the Depositary in the form of Exhibit B hereto (a "Notice of
Prepayment Withdrawal"), withdraw not less than the entire balance of any
Deposit together with all accrued and unpaid interest on such Deposit to but
excluding the specified date of withdrawal (a "Prepayment Withdrawal"), on such
date as shall be specified in such Notice of Prepayment Withdrawal. Following
such withdrawal the balance in the related Account shall be zero and the
Depositary shall close such Account. Upon any Prepayment Withdrawal, the
Depositary shall pay to the Paying Agent the amount requested in the related
Notice of Prepayment Withdrawal.
(c) The Escrow Agent may, by providing at least 15 days' prior notice of
withdrawal to the Depositary in the form of Exhibit C hereto (a "Notice of Final
Withdrawal"), withdraw the entire amount of all of the remaining Deposits
together with the all accrued and unpaid interest on such Deposits to but
excluding the specified date of withdrawal (a "Final Withdrawal"), on such date
as shall be specified in such Notice of Final Withdrawal. Following such
withdrawal the balance in the related Accounts shall be zero and the Depositary
shall close such Accounts. If a Notice of Final Withdrawal has not been given to
the Depositary on or before May 31, 2000 (provided, that if a labor strike or
work stoppage occurs at The Boeing Company prior to such date, such date shall
be extended by adding
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<PAGE>
thereto the number of days that each such labor strike or work stoppage
continues in effect) and there are unwithdrawn Deposits on such date, the
Depositary shall pay the amount of the Final Withdrawal to the Paying Agent on
June 15, 2000 (or if the May 31, 2000 date has been extended as set forth in
this sentence, the fifteenth day after the Delivery Period Termination Date).
(d) If the Depositary receives a duly completed Notice of Purchase
Withdrawal, Notice of Prepayment Withdrawal or Notice of Final Withdrawal
complying with the provisions of this Agreement, it shall make the payments
specified therein in accordance with the provisions of this Agreement.
SECTION 2.4 Other Accounts. On the date of withdrawal of any Deposit, the
Escrow Agent, or the Pass Through Trustee on behalf of the Escrow Agent, shall
be entitled to re-deposit with the Depositary any portion thereof and the
Depositary shall accept the same for deposit hereunder. Any sums so received for
deposit shall be established as a new Deposit and credited to a new Account, all
as more fully provided in Section 2.1 hereof, and thereafter the provisions of
this Agreement shall apply thereto as fully and with the same force and effect
as if such Deposit had been established on the Deposit Date except that (i) such
Deposit may not be withdrawn prior to the date seven days after the
establishment thereof and (ii) such Deposit shall mature on June 15, 2000 (as
such date may be extended from time to time to the fifteenth day after the
Delivery Period Termination Date) and bear interest as provided in Section 2.2.
The Depositary shall promptly give notice to the Escrow Agent of the account
number assigned to any such re-deposit.
SECTION 3.1 Termination. This Agreement shall terminate on the later of the
date on which (i) all of the Deposits shall have been withdrawn and paid as
provided herein without any re-deposit and (ii) all accrued and unpaid interest
on the Deposits shall have been paid as provided herein, but in no event prior
to the date on which the Depositary shall have performed in full its obligations
hereunder.
SECTION 3.2 Substitute Depositary. In the event that Atlas is required
under the provisions of Section 6 or Section 7 of the Indemnity Agreement to
make payments in a material amount to the Depositary, Atlas may elect to
terminate the Depositary as a party to this Agreement, the other Deposit
Agreements and the Indemnity Agreement; provided that, concurrently with such
termination, (i) Atlas shall pay the Depositary all amounts (including, without
limitation, amounts, if any, owed under such Section 6 and Section 7) owed to
the Depositary pursuant to any such Agreement through such date of termination,
(ii) another financial institution satisfactory to Atlas and the Rating Agencies
(as defined in the Note Purchase Agreement) shall agree, as of such date, to
assume all rights and obligations of the Depositary under all such Agreements to
be terminated as of such date, and (iii) all documents and supporting materials
necessary to evidence the termination of the Depositary and the substitution of
such other financial institution shall have been received as of such date.
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SECTION 4. Payments. All payments (including, without limitation, those
payments made in respect of Taxes (as defined and provided for below)) made by
the Depositary hereunder shall be paid in United States Dollars and immediately
available funds by wire transfer (i) in the case of accrued interest on the
Deposits payable under Section 2.2 hereof, any Prepayment Withdrawal or any
Final Withdrawal, directly to the Paying Agent at Wilmington Trust Company,
Wilmington, Delaware, ABA # 03-11-000-92, Account No. 44043-0, Attention: Robert
Hines, Reference: Atlas Air, or to such other account as the Paying Agent may
direct from time to time in writing to the Depositary and the Escrow Agent and
(ii) in the case of any withdrawal of one or more Deposits pursuant to a Notice
of Purchase Withdrawal, directly to or as directed by the Pass Through Trustee
as specified and in the manner provided in such Notice of Purchase Withdrawal.
The Depositary hereby waives any and all rights of set-off, combination of
accounts, right of retention or similar right (whether arising under applicable
law, contract or otherwise) it may have against the Deposits howsoever arising.
All payments on or in respect of each Deposit shall be made free and clear of
and without reduction for or on account of any and all taxes, levies or other
impositions or charges (collectively, "Taxes"). However, if the Depositary or
the Paying Agent (pursuant to Section 2.04 of the Escrow Agreement) shall be
required by law to deduct or withhold any Taxes from or in respect of any sum
payable hereunder, the Depositary shall (i) make such deductions or withholding,
(ii) pay the full amount deducted or withheld (including in respect of such
additional amounts) to the competent taxation authority and (iii) if the Taxes
required to be deducted or withheld are imposed by Switzerland or any political
subdivision thereof, pay such additional amounts as may be necessary in order
that the actual amount received by the designated recipient of such sum under
this Agreement or the Escrow Agreement after such deduction or withholding
equals the sum it would have received had no such deduction or withholding been
required. If the date on which any payment due on any Deposit would otherwise
fall on a day which is not a Business Day, such payment shall be made on the
next succeeding Business Day, with the same force and effect as if made on such
scheduled date, and no additional interest shall accrue in respect of such
extension.
SECTION 5. Representation and Warranties. The Depositary hereby represents
and warrants to Atlas, the Escrow Agent, the Pass Through Trustee and the Paying
Agent that:
(a) it is a bank duly organized and validly existing in good standing
under the laws of its jurisdiction of organization and is duly qualified to
conduct banking business in the State of New York through its New York
Branch;
(b) it has full power, authority and legal right to conduct its
business and operations as currently conducted and to enter into and
perform its obligations under this Agreement;
(c) the execution, delivery and performance of this Agreement have
been duly authorized by all necessary corporate action on the part of it
and do not require
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any stockholder approval, or approval or consent of any trustee or holder
of any indebtedness or obligations of it, and such document has been duly
executed and delivered by it and constitutes its legal, valid and binding
obligations enforceable against it in accordance with the terms hereof;
(d) no authorization, consent or approval of or other action by, and
no notice to or filing with, any United States federal or state
governmental authority or regulatory body is required for the execution,
delivery or performance by it of this Agreement;
(e) neither the execution, delivery or performance by it of this
Agreement, nor compliance with the terms and provisions hereof, conflicts
or will conflict with or results or will result in a breach or violation of
any of the terms, conditions or provisions of, or will require any consent
or approval under, any law, governmental rule or regulation or the charter
documents, as amended, or bylaws, as amended, of it or any similar
instrument binding on it or any order, writ, injunction or decree of any
court or governmental authority against it or by which it or any of its
properties is bound or any indenture, mortgage or contract or other
agreement or instrument to which it is a party or by which it or any of its
properties is bound, or constitutes or will constitute a default thereunder
or results or will result in the imposition of any lien upon any of its
properties;
(f) there are no pending or, to its knowledge, threatened actions,
suits, investigations or proceedings (whether or not purportedly on behalf
of it) against or affecting it or any of its property before or by any
court or administrative agency which, if adversely determined, (i) would
adversely affect the ability of it to perform its obligations under this
Agreement or (ii) would call into question or challenge the validity of
this Agreement or the enforceability hereof in accordance with the terms
hereof, nor is the Depositary in default with respect to any order of any
court, governmental authority, arbitration board or administrative agency
so as to adversely affect its ability to perform its obligations under this
Agreement; and
(g) the Depositary will make all payments under this Agreement from
its own funds and not from funds provided by, or on deposit from, Atlas or
any of Atlas' subsidiaries.
SECTION 6. Transfer. Neither party hereto shall be entitled to assign or
otherwise transfer this Agreement (or any interest herein) other than (in the
case of the Escrow Agent) to a successor escrow agent under the Escrow
Agreement, and any purported assignment in violation thereof shall be void. This
Agreement shall be binding upon the parties hereto and their respective
successors and (in the case of the Escrow Agent) permitted assigns.
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SECTION 7. Amendment, Etc. This Agreement may not be amended, waived or
otherwise modified except by an instrument in writing signed by the party
against whom the amendment, waiver or other modification is sought to be
enforced and by the Pass Through Trustee.
SECTION 8. Notices. Unless otherwise expressly specified or permitted by
the terms hereof, all notices, requests, demands, authorizations, directions,
consents, waivers or documents provided or permitted by this Agreement to be
made, given, furnished or filed shall be in writing, mailed by certified mail,
postage prepaid, or by confirmed telecopy and
(i) if to the Escrow Agent, addressed to at its office at:
FIRST SECURITY BANK, NATIONAL ASSOCIATION 79 South
Main Street Salt Lake City, UT 84111
Attention: Corporate Trust Department
Telecopier: 801-246-5053
(ii) if to the Depositary, addressed to it at its offices at:
CREDIT SUISSE FIRST BOSTON
11 Madison Avenue
New York, NY 10010
Attention: Robert Finney and Jennifer Toth
Telecopier: 212-325-8319
(iii) in each case, with a copy to the Pass Through Trustee, addressed
to it at its office at:
WILMINGTON TRUST COMPANY
One Rodney Square
1100 N. Market Street
Wilmington, DE 19890-0001
Attention: Corporate Trust Administration
Telecopy: 302-651-8882
and to Atlas, addressed to it at its office at:
ATLAS AIR, INC.
538 Commons Drive
7
<PAGE>
Golden, CO 80401
Attention: Chief Financial Officer
Telecopier: 303-526-5051
Whenever any notice in writing is required to be given by either of the
Escrow Agent or the Depositary to the other, such notice shall be deemed given
and such requirement satisfied when such notice is received. Any party hereto
may change the address to which notices to such party will be sent by giving
notice of such change to the other party to this Agreement.
On or prior to the execution of this Agreement, the Escrow Agent has
delivered to the Depositary a certificate containing specimen signatures of the
representatives of the Escrow Agent who are authorized to give notices and
instructions with respect to this Agreement. The Depositary may conclusively
rely on such certificate until the Depositary receives written notice from the
Escrow Agent to the contrary.
SECTION 9. Obligations Unconditional. The Depositary hereby acknowledges
and agrees that its obligation to repay each Deposit together with interest
thereon as provided herein is absolute, irrevocable and unconditional and
constitutes a full recourse obligation of the Depositary enforceable against it
to the full extent of all of its assets and properties.
SECTION 10. Entire Agreement. This Agreement (including all attachments
hereto) sets forth all of the promises, covenants, agreements, conditions and
understandings between the Depositary and the Escrow Agent with respect to the
subject matter hereof and supersedes all prior and contemporaneous agreements
and undertakings, inducements or conditions, express or implied, oral or
written.
SECTION 11. Governing Law. This Agreement, and the rights and obligations
of the Depositary and the Escrow Agent with respect to the Deposits, shall be
governed by, and construed in accordance with, the laws of the State of New York
and subject to the provisions of Regulation D of the Board of Governors of the
Federal Reserve System (or any successor), as the same may be modified and
supplemented and in effect from time to time.
SECTION 12. Submission to Jurisdiction; Waiver of Jury Trial. (a) Each of
the parties hereto hereby irrevocably and unconditionally:
(i) submits for itself and its property in any legal action or
proceeding relating to this Agreement, or for recognition and enforcement
of any judgment in respect hereof, to the nonexclusive general jurisdiction
of the courts of the State of New York, the courts of the United States of
America for the Southern District of New York, and the appellate courts
from any thereof;
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(ii) consents that any such action or proceeding may be brought in
such courts, and waives any objection that it may now or hereafter have to
the venue of any such action or proceeding in any such court or that such
action or proceeding was brought in an inconvenient court and agrees not to
plead or claim the same;
(iii) agrees that service of process in any such action or proceeding
may be effected by mailing a copy thereof by registered or certified mail
(or any substantially similar form and mail), postage prepaid, to each
party hereto at its address set forth in Section 8 hereof, or at such other
address of which the other parties shall have been notified pursuant
thereto; and
(iv) agrees that nothing herein shall affect the right to effect
service of process in any other manner permitted by law or shall limit the
right to sue in any other jurisdiction.
(b) EACH OF THE DEPOSITARY AND THE ESCROW AGENT ACKNOWLEDGES AND ACCEPTS
THAT IN ANY SUIT, ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO THIS
AGREEMENT SUCH PARTY KNOWINGLY, VOLUNTARILY AND INTENTIONALLY IRREVOCABLY
WAIVES, TO THE GREATEST EXTENT PERMISSIBLE BY LAW, ITS RIGHT TO A TRIAL BY JURY.
SECTION 13. Counterparts. This Agreement may be executed in one or more
counterparts, all of which taken together shall constitute one instrument.
SECTION 14. Depositary's Obligations. The Depositary and the Escrow Agent
understand and agree that in connection with this Agreement, the Depositary is
not acting as a fiduciary, agent of other representative of the Escrow Agent,
the Pass Through Trustees, the Underwriters or anyone else, and has no and shall
have no obligation to monitor, account for or otherwise concern itself with the
source of funds invested hereunder or the application of such funds or of
payments made by the Depositary hereunder and in accordance with the terms
hereof.
SECTION 15. Head Office Obligation. Credit Suisse First Boston hereby
agrees that the obligations and agreements of the Depositary hereunder are also
the obligations and agreements of Credit Suisse First Boston's Head Office in
Zurich, Switzerland. Accordingly, any beneficiary of this Agreement will be able
to proceed (including, in accordance with Section 12 hereof) directly against
Credit Suisse First Boston's Head Office in Zurich, Switzerland if Credit Suisse
First Boston's New York Branch defaults in its obligation to such beneficiary
under this Agreement.
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IN WITNESS WHEREOF, the Escrow Agent and the Depositary have caused this
Deposit Agreement to be duly executed as of the day and year first above
written.
FIRST SECURITY BANK,
NATIONAL ASSOCIATION,
as Escrow Agent
By /s/ Scott Nielsen
--------------------------------
Name: Scott Nielsen
Title: Vice President
CREDIT SUISSE FIRST BOSTON,
New York Branch,
as Depositary
By /s/ Jeffrey B. Ulmer
--------------------------------
Name: Jeffrey B. Ulmer
Title: Vice President
By /s/ Thomas G. Muoio
--------------------------------
Name: Thomas G. Muoio
Title: Vice Presdient
<PAGE>
Schedule I
Schedule of Deposits
(Class C)
Date Deposit Amount Account No. Maturity Date
<PAGE>
EXHIBIT A
NOTICE OF PURCHASE WITHDRAWAL
CREDIT SUISSE FIRST BOSTON
New York Branch
11 Madison Avenue
New York, NY 10010
Attention: Robert Finney and Jennifer Toth
Telecopier: 212-325-8319
Ladies and Gentlemen:
Reference is made to the Deposit Agreement (Class C) dated as of April ,
1999 (the "Deposit Agreement") between First Security Bank, N.A., as Escrow
Agent, and Credit Suisse First Boston, New York Branch, as Depositary (the
"Depositary").
In accordance with Section 2.3(a) of the Deposit Agreement, the undersigned
hereby requests the withdrawal of the entire amount of the Deposit, $_______,
Account No. ____________.
The undersigned hereby directs that on _______________, the Depositary (i)
pay $___________ of the proceeds of the Deposit to ________________, Account No.
_____, Reference: Atlas Air upon the telephonic request of a representative
reasonably believed by the Depositary to be that of the Pass Through Trustee and
(ii) redeposit $___________ of such proceeds in accordance with Section 2.4 of
the Deposit Agreement..
FIRST SECURITY BANK,
NATIONAL ASSOCIATION,
as Escrow Agent
By: ________________________________
Name:
Title:
Dated: _______ __, ____
<PAGE>
EXHIBIT B
NOTICE OF PREPAYMENT WITHDRAWAL
CREDIT SUISSE FIRST BOSTON
New York Branch
11 Madison Avenue
New York, NY 10010
Attention: Robert Finney and Jennifer Toth
Telecopier: 212-325-8319
Reference is made to the Deposit Agreement (Class C) dated as of April __,
1999 (the "Deposit Agreement") between First Security Bank, N.A., as Escrow
Agent, and Credit Suisse First Boston, New York Branch, as Depositary (the
"Depositary").
In accordance with Section 2.3(b) of the Deposit Agreement, the undersigned
hereby requests the withdrawal of the entire amount of the Deposit, $_______,
Account No. ____________ on ________________.
The undersigned hereby directs the Depositary to pay the proceeds of such
Deposit and accrued interest thereon to the Paying Agent at Wilmington Trust
Company, ABA# 03-11-000-92, Account No.44043-0, Reference: Atlas Air.
FIRST SECURITY BANK,
NATIONAL ASSOCIATION,
as Escrow Agent
By ________________________________
Name:
Title:
Dated: __________________
<PAGE>
EXHIBIT C
NOTICE OF FINAL WITHDRAWAL
CREDIT SUISSE FIRST BOSTON
New York Branch
11 Madison Avenue
New York, NY 10010
Attention: Robert Finney and Jennifer Toth
Telecopier: 212-325-8319
Ladies and Gentlemen:
Reference is made to the Deposit Agreement (Class C) dated as of April ,
1999 (the "Deposit Agreement") between First Security Bank, N.A., as Escrow
Agent, and Credit Suisse First Boston, New York Branch, as Depositary (the
"Depositary").
In accordance with Section 2.3(c) of the Deposit Agreement, the undersigned
hereby requests the withdrawal of the entire amount of all Deposits on
_____________.
The undersigned hereby directs the Depositary to pay the proceeds of the
Deposits and accrued interest thereon to the Paying Agent at Wilmington Trust
Company, ABA# 03-11-000-92, Account No. 44043-0, Reference: Atlas Air.
FIRST SECURITY BANK,
NATIONAL ASSOCIATION,
as Escrow Agent
By: ________________________________
Name:
Title:
Dated: _______ __, ______
EXECUTION COPY
ESCROW AND PAYING AGENT AGREEMENT
(Class A-1)
Dated as of April 13, 1999
among
FIRST SECURITY BANK, NATIONAL ASSOCIATION
as Escrow Agent
MORGAN STANLEY & CO. INCORPORATED
BT ALEX. BROWN INCORPORATED
CIBC OPPENHEIMER CORP.
ING BARING FURMAN SELZ LLC
as Underwriters
WILMINGTON TRUST COMPANY
not in its individual capacity,
but solely as Pass Through Trustee
for and on behalf of
Atlas Air Pass Through Trust 1999-1A-1
as Pass Through Trustee
and
WILMINGTON TRUST COMPANY
as Paying Agent
<PAGE>
TABLE OF CONTENTS
Page
SECTION 1. Escrow Agent ............................................ 2
Section 1.01. Appointment of Escrow Agent ............................. 2
Section 1.02. Instruction; Etc ........................................ 3
Section 1.03. Initial Escrow Amount; Issuance of Escrow Receipts ...... 3
Section 1.04. Payments to Receiptholders .............................. 4
Section 1.05. Mutilated, Destroyed, Lost or Stolen Escrow Receipt ..... 4
Section 1.06. Additional Escrow Amounts ............................... 5
Section 1.07. Resignation or Removal of Escrow Agent .................. 5
Section 1.08. Persons Deemed Owners ................................... 6
Section 1.09. Further Assurances ...................................... 6
SECTION 2. Paying Agent ............................................ 6
Section 2.01. Appointment of Paying Agent ............................. 6
Section 2.02. Establishment of Paying Agent Account ................... 6
Section 2.03. Payments from Paying Agent Account ...................... 7
Section 2.04. Withholding Taxes ....................................... 8
Section 2.05. Resignation or Removal of Paying Agent .................. 8
Section 2.06. Notice of Prepayment Withdrawal and Final Withdrawal .... 8
SECTION 3. Payments ................................................ 9
SECTION 4. Other Actions ........................................... 9
SECTION 5. Representations and Warranties of the Escrow Agent ...... 10
-i-
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Page
SECTION 6. Representations and Warranties of the Paying Agent ...... 11
SECTION 7. Indemnification ......................................... 12
SECTION 8. Amendment, Etc. ......................................... 12
SECTION 9. Notices ................................................. 13
SECTION 10. Transfer ................................................ 14
SECTION 11. Entire Agreement ........................................ 14
SECTION 12. Governing Law ........................................... 14
SECTION 13. Waiver of Jury Trial Right .............................. 14
SECTION 14. Counterparts ............................................ 14
Exhibit A Escrow Receipt
Exhibit B Withdrawal Certificate
Exhibit C Prepayment Withdrawal Certificate
-ii-
<PAGE>
ESCROW AND PAYING AGENT AGREEMENT (Class A-1) dated as of April 13, 1999
(as amended, modified or supplemented from time to time, this "Agreement") among
FIRST SECURITY BANK, NATIONAL ASSOCIATION, a national banking association, as
Escrow Agent (in such capacity, together with its successors in such capacity,
the "Escrow Agent"); MORGAN STANLEY & CO. INCORPORATED, BT ALEX. BROWN
INCORPORATED, CIBC OPPENHEIMER CORP. and ING BARING FURMAN SELZ LLC, as
Underwriters of the Certificates referred to below (the "Underwriters" and
together with their respective transferees and assigns as registered owners of
the Certificates, the "Investors") under the Underwriting Agreement referred to
below; WILMINGTON TRUST COMPANY, a Delaware banking corporation, not in its
individual capacity, but solely as trustee (in such capacity, together with its
successors in such capacity, the "Pass Through Trustee") under the Pass Through
Trust Agreement referred to below; and WILMINGTON TRUST COMPANY, a Delaware
banking corporation, as paying agent hereunder (in such capacity, together with
its successors in such capacity, the "Paying Agent").
W I T N E S S E T H
WHEREAS, Atlas Air, Inc. ("Atlas") and the Pass Through Trustee have
entered into a Trust Supplement dated the date hereof to the Pass Through Trust
Agreement, dated as of April 1, 1999 (together, as amended, modified or
supplemented from time to time in accordance with the terms thereof, the "Pass
Through Trust Agreement") relating to Atlas Air Pass Through Trust 1999-1A-1
(the "Pass Through Trust") pursuant to which the Atlas Air Pass Through Trust,
Series 1999-1A-1 Certificates referred to therein (the "Certificates") are being
issued;
WHEREAS, Atlas and the Underwriters have entered into an Underwriting
Agreement dated as of April 5, 1999 (as amended, modified or supplemented from
time to time in accordance with the terms thereof, the "Underwriting Agreement")
pursuant to which the Pass Through Trustee will issue and sell the Certificates
to the Underwriters;
WHEREAS, Atlas, the Pass Through Trustee, certain other pass through
trustees and certain other persons concurrently herewith are entering into the
Note Purchase Agreement, dated as of the date hereof (the "Note Purchase
Agreement"), pursuant to which the Pass Through Trustee has agreed to acquire
from time to time on or prior to the Cut-Off Date (as defined in the Note
Purchase Agreement) equipment notes (the "Equipment Notes") issued to finance
the acquisition of aircraft by Atlas, as lessee or as owner, utilizing a portion
of the proceeds from the sale of the Certificates (the "Net Proceeds");
WHEREAS, the Underwriters and the Pass Through Trustee intend that the Net
Proceeds be held in escrow by the Escrow Agent on behalf of the Investors,
subject to withdrawal upon request by the Pass Through Trustee and satisfaction
of the conditions set forth in the Note Purchase Agreement for the purpose of
purchasing Equipment Notes, and that pending such withdrawal the Net Proceeds be
deposited on behalf of the Escrow Agent with
<PAGE>
Credit Suisse First Boston, acting through its New York Branch, as Depositary
(the "Depositary") under the Deposit Agreement, dated as of the date hereof
between the Depositary and the Escrow Agent relating to the Pass Through Trust
(as amended, modified or supplemented from time to time in accordance with the
terms thereof, the "Deposit Agreement"), pursuant to which, among other things,
the Depositary will pay interest for distribution to the Investors and establish
accounts from which the Escrow Agent shall make withdrawals upon request of and
proper certification by the Pass Through Trustee;
WHEREAS, the Escrow Agent wishes to appoint the Paying Agent to pay amounts
required to be distributed to the Investors in accordance with this Agreement;
and
WHEREAS, capitalized terms used but not defined herein shall have the
meanings ascribed to such terms in the Pass Through Trust Agreement.
NOW, THEREFORE, in consideration of the obligations contained herein, and
for other good and valuable consideration, the receipt and sufficiency of which
is hereby acknowledged, the parties hereto hereby agree as follows:
SECTION 1. Escrow Agent.
Section 1.01. Appointment of Escrow Agent. Each of the Underwriters, for
and on behalf of each of the Investors, hereby irrevocably appoints, authorizes
and directs the Escrow Agent to act as escrow agent and fiduciary hereunder and
under the Deposit Agreement for such specific purposes and with such powers as
are specifically delegated to the Escrow Agent by the terms of this Agreement,
together with such other powers as are reasonably incidental thereto. Any and
all money received and held by the Escrow Agent under this Agreement or the
Deposit Agreement shall be held in escrow by the Escrow Agent in accordance with
the terms of this Agreement. This Agreement is irrevocable and the Investors'
rights with respect to any monies received and held in escrow by the Escrow
Agent under this Agreement or the Deposit Agreement shall only be as provided
under the terms and conditions of this Agreement and the Deposit Agreement. The
Escrow Agent (which term as used in this sentence shall include reference to its
affiliates and its own and its affiliates' officers, directors, employees and
agents): (a) shall have no duties or responsibilities except those expressly set
forth in this Agreement; (b) shall not be responsible to the Pass Through
Trustee or the Investors for any recitals, statements, representations or
warranties of any person other then itself contained in this Agreement or the
Deposit Agreement or for the failure by the Pass Through Trustee, the Investors
or any other person or entity (other than the Escrow Agent) to perform any of
its obligations hereunder (whether or not the Escrow Agent shall have any
knowledge thereof); and (c) shall not be responsible for any action taken or
omitted to be taken by it hereunder or provided for herein or in connection
herewith, except for its own willful misconduct or gross negligence (or simple
negligence in connection with the handling of funds).
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Section 1.02. Instruction; Etc. The Underwriters, for and on behalf of each
of the Investors, hereby irrevocably instruct the Escrow Agent, and the Escrow
Agent agrees, (a) to enter into the Deposit Agreement, (b) to appoint the Paying
Agent as provided in this Agreement, (c) upon receipt at any time and from time
to time prior to the Delivery Period Termination Date (as defined in the Note
Purchase Agreement) of a certificate substantially in the form of Exhibit B
hereto (a "Withdrawal Certificate") executed by the Pass Through Trustee,
together with an attached Notice of Purchase Withdrawal in substantially the
form of Exhibit A to the Deposit Agreement duly completed by the Pass Through
Trustee (the "Applicable Notice of Purchase Withdrawal" and the withdrawal to
which it relates, a "Purchase Withdrawal"), immediately to execute the
Applicable Notice of Purchase Withdrawal as Escrow Agent and transmit it to the
Depositary by facsimile transmission in accordance with the Deposit Agreement;
provided that, upon the request of the Pass Through Trustee after such
transmission, the Escrow Agent shall cancel such Applicable Notice of Purchase
Withdrawal, (d) upon receipt at any time and from time to time prior to the
Delivery Period Termination Date of a certificate substantially in the form of
Exhibit C hereto (a "Prepayment Withdrawal Certificate") executed by the Pass
Through Trustee, together with an attached Notice of Prepayment Withdrawal in
substantially the form of Exhibit B to the Deposit Agreement duly completed by
the Pass Through Trustee (the "Applicable Notice of Prepayment Withdrawal" and
the withdrawal to which it relates, a "Prepayment Withdrawal"), immediately to
execute the Applicable Notice of Prepayment Withdrawal as Escrow Agent and
transmit it to the Depositary by facsimile transmission in accordance with the
Deposit Agreement; provided that, upon the request of the Pass Through Trustee
after such transmission, the Escrow Agent shall cancel such Applicable Notice of
Prepayment Withdrawal, and (e) if there are any undrawn Deposits (as defined in
the Deposit Agreement) on the earlier of (i) the Delivery Period Termination
Date and (ii) the date on which the Escrow Agent receives notice from the Pass
Through Trustee that the Pass Through Trustee's obligation to purchase Equipment
Notes under the Note Purchase Agreement has terminated, to give notice to the
Depositary (with a copy to the Paying Agent) substantially in the form of
Exhibit C to the Deposit Agreement requesting a withdrawal of all of the
remaining Deposits, together with accrued and unpaid interest on such Deposits
to the date of withdrawal, on the 15th day after the date that such notice of
withdrawal is given to the Depositary (or, if not a Business Day, on the next
succeeding Business Day) (a "Final Withdrawal"), provided that if the day
scheduled for the Final Withdrawal in accordance with the foregoing is within 10
days before a Regular Distribution Date, then the Escrow Agent shall request
that such requested Final Withdrawal be made on such Regular Distribution Date
(the date of such requested withdrawal, the "Final Withdrawal Date"). If for any
reason the Escrow Agent shall have failed to give the Final Withdrawal Notice to
the Depositary on or before May 31, 2000 (provided, that if a labor strike or
work stoppage occurs at The Boeing Company prior to such date, such date shall
be extended by adding thereto the number of days that each such labor strike or
work stoppage continues in effect), and there are unwithdrawn Deposits on such
date, the Final Withdrawal Date shall be deemed to be June 15, 2000 (or, if the
May 31, 2000 date has been extended as provided in this sentence, the fifteenth
day after the Delivery Period Termination Date).
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Section 1.03. Initial Escrow Amount; Issuance of Escrow Receipts. The
Escrow Agent hereby directs the Underwriters to, and the Underwriters hereby
acknowledge that on the date hereof they shall, irrevocably deliver to the
Depositary on behalf of the Escrow Agent, an amount in U.S. dollars ("Dollars")
and immediately available funds equal to $268,208,000 for deposit on behalf of
the Escrow Agent with the Depositary in accordance with Section 2.1 of the
Deposit Agreement. The Underwriters hereby instruct the Escrow Agent, upon
receipt of such sum from the Underwriters, to confirm such receipt by executing
and delivering to the Pass Through Trustee an Escrow Receipt in the form of
Exhibit A hereto (an "Escrow Receipt"), (a) to be affixed by the Pass Through
Trustee to each Certificate and (b) to evidence the same percentage interest
(the "Escrow Interest") in the Account Amounts (as defined below) as the
Fractional Undivided Interest in the Pass Through Trust evidenced by the
Certificate to which it is to be affixed. The Escrow Agent shall provide to the
Pass Through Trustee for attachment to each Certificate newly issued under and
in accordance with the Pass Through Trust Agreement an executed Escrow Receipt
as the Pass Through Trustee may from time to time request of the Escrow Agent.
Each Escrow Receipt shall be registered by the Escrow Agent in a register (the
"Register") maintained by the Escrow Agent in the same name and same manner as
the Certificate to which it is attached and may not thereafter be detached from
such Certificate to which it is to be affixed prior to the distribution of the
Final Withdrawal (the "Final Distribution"). After the Final Distribution, no
additional Escrow Receipts shall be issued and the Pass Through Trustee shall
request the return to the Escrow Agent for cancellation of all outstanding
Escrow Receipts.
Section 1.04. Payments to Receiptholders. All payments and distributions
made to holders of an Escrow Receipt (collectively "Receiptholders") in respect
of the Escrow Receipt shall be made only from amounts deposited in the Paying
Agent Account (as defined below) ("Account Amounts"). Each Receiptholder, by its
acceptance of an Escrow Receipt, agrees that (a) it will look solely to the
Account Amounts for any payment or distribution due to such Receiptholder
pursuant to the terms of the Escrow Receipt and this Agreement and (b) it will
have no recourse to Atlas, the Pass Through Trustee, the Paying Agent or the
Escrow Agent, except as expressly provided herein or in the Pass Through Trust
Agreement. No Receiptholder shall have any right to vote or in any manner
otherwise control the operation and management of the Paying Agent Account or
the obligations of the parties hereto, nor shall anything set forth herein, or
contained in the terms of the Escrow Receipt, be construed so as to constitute
the Receiptholders from time to time as partners or members of an association.
Section 1.05. Mutilated, Destroyed, Lost or Stolen Escrow Receipt. If (a)
any mutilated Escrow Receipt is surrendered to the Escrow Agent or the Escrow
Agent receives evidence to its satisfaction of the destruction, loss or theft of
any Escrow Receipt and (b) there is delivered to the Escrow Agent and the Pass
Through Trustee such security, indemnity or bond, as may be required by them to
hold each of them harmless, then, absent notice to the Escrow Agent or the Pass
Through Trustee that such destroyed, lost or stolen Escrow Receipt has been
acquired by a bona fide purchaser, and provided that the requirements of Section
8-405 of the Uniform Commercial Code in effect in any applicable jurisdiction
are met, the
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Escrow Agent shall execute, authenticate and deliver, in exchange for or in lieu
of any such mutilated, destroyed, lost or stolen Escrow Receipt, a new Escrow
Receipt or Escrow Receipts and of like Escrow Interest in the Account Amounts
and bearing a number not contemporaneously outstanding.
In connection with the issuance of any new Escrow Receipt under this
Section 1.05, the Escrow Agent may 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 Pass
Through Trustee and the Escrow Agent) connected therewith.
Any duplicate Escrow Receipt issued pursuant to this Section 1.05 shall
constitute conclusive evidence of the appropriate Escrow Interest in the Account
Amounts, as if originally issued, whether or not the lost, stolen or destroyed
Escrow Receipt shall be found at any time.
The provisions of this Section 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 Escrow Receipts.
Section 1.06. Additional Escrow Amounts. On the date of any Purchase
Withdrawal, the Pass Through Trustee may re-deposit with the Depositary some or
all of the amounts so withdrawn in accordance with Section 2.4 of the Deposit
Agreement.
Section 1.07. Resignation or Removal of Escrow Agent. Subject to the
appointment and acceptance of a successor Escrow Agent as provided below, the
Escrow Agent may resign at any time by giving 30 days' prior written notice
thereof to the Investors, but may not otherwise be removed except for cause by
the written consent of the Investors with respect to Investors representing
Escrow Interests aggregating not less than a majority in interest in the Account
Amounts (an "Action of Investors"). Upon any such resignation or removal, the
Investors, by an Action of Investors, shall have the right to appoint a
successor Escrow Agent. If no successor Escrow Agent shall have been so
appointed and shall have accepted such appointment within 30 days after the
retiring Escrow Agent's giving of notice of resignation or the removal of the
retiring Escrow Agent, then the retiring Escrow Agent may appoint a successor
Escrow Agent. Any successor Escrow Agent shall be a bank which has an office in
the United States with a combined capital and surplus of at least $100,000,000.
Upon the acceptance of any appointment as Escrow Agent hereunder by a successor
Escrow Agent, such successor Escrow Agent shall enter into such documents as the
Pass Through Trustee shall require and shall thereupon succeed to and become
vested with all the rights, powers, privileges and duties of the retiring Escrow
Agent, and the retiring Escrow Agent shall be discharged from its duties and
obligations hereunder. No resignation or removal of the Escrow Agent shall be
effective unless a written confirmation shall have been obtained from each of
Moody's Investors Service, Inc. and Standard & Poor's Rating Group, a division
of McGraw- Hill Inc. that the replacement of the Escrow Agent with the successor
Escrow Agent will not
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result in (a) a reduction of the rating for the Certificates below the then
current rating for the Certificates or (b) a withdrawal or suspension of the
rating of the Certificates.
Section 1.08. Persons Deemed Owners. Prior to due presentment of a
Certificate for registration of transfer, the Escrow Agent and the Paying Agent
may treat the Person in whose name any Escrow Receipt is registered (as of the
day of determination) as the owner of such Escrow Receipt for the purpose of
receiving distributions pursuant to this Agreement and for all other purposes
whatsoever, and neither the Escrow Agent nor the Paying Agent shall be affected
by any notice to the contrary.
Section 1.09. Further Assurances. The Escrow Agent agrees to take such
actions, and execute such other documents, as may be reasonably requested by the
Pass Through Trustee in order to effectuate the purposes of this Agreement and
the performance by the Escrow Agent of its obligations hereunder.
SECTION 2. Paying Agent.
Section 2.01. Appointment of Paying Agent. The Escrow Agent hereby
irrevocably appoints and authorizes the Paying Agent to act as its paying agent
hereunder, for the benefit of the Investors, for such specific purposes and with
such powers as are specifically delegated to the Paying Agent by the terms of
this Agreement, together with such other powers as are reasonably incidental
thereto. Any and all money received and held by the Paying Agent under this
Agreement or the Deposit Agreement shall be held in the Paying Agent Account for
the benefit of the Investors. The Paying Agent (which term as used in this
sentence shall include reference to its affiliates and its own and its
affiliates' officers, directors, employees and agents): (a) shall have no duties
or responsibilities except those expressly set forth in this Agreement, and
shall not by reason of this Agreement be a trustee for the Escrow Agent; (b)
shall not be responsible to the Escrow Agent for any recitals, statements,
representations or warranties of any person other then itself contained in this
Agreement or for the failure by the Escrow Agent or any other person or entity
(other than the Paying Agent) to perform any of its obligations hereunder
(whether or not the Paying Agent shall have any knowledge thereof); and (c)
shall not be responsible for any action taken or omitted to be taken by it
hereunder or provided for herein or in connection herewith, except for its own
willful misconduct or gross negligence (or simple negligence in connection with
the handling of funds).
Section 2.02. Establishment of Paying Agent Account. The Paying Agent shall
establish a deposit account (the "Paying Agent Account") at Wilmington Trust
Company in the name of the Escrow Agent. It is expressly understood by the
parties hereto that the Paying Agent is acting as the paying agent of the Escrow
Agent hereunder and that no amounts on deposit in the Paying Agent Account
constitute part of the Trust Property.
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Section 2.03. Payments from Paying Agent Account. The Escrow Agent hereby
irrevocably instructs the Paying Agent, and the Paying Agent agrees to act, as
follows:
(a) On each Interest Payment Date (as defined in the Deposit
Agreement) or as soon thereafter as the Paying Agent has confirmed receipt
in the Paying Agent Account from the Depositary of any amount in respect of
accrued interest on the Deposits, the Paying Agent shall distribute out of
the Paying Agent Account the entire amount deposited therein by the
Depositary. There shall be so distributed to each Receiptholder of record
on the 15th day (whether or not a Business Day) preceding such Interest
Payment Date by check mailed to such Receiptholder, at the address
appearing in the Register, such Receiptholder's pro rata share (based on
the Escrow Interest in the Account Amounts held by such Receiptholder) of
the total amount of interest deposited by the Depositary in the Paying
Agent Account on such date, except that, with respect to Escrow Receipts
registered on the record date in the name of a nominee of the Depository
Trust Company ("DTC"), such distribution shall be made by wire transfer in
immediately available funds to the account designated by DTC.
(b) Upon the confirmation by the Paying Agent of receipt in the Paying
Agent Account from the Depositary of any amount in respect of the Final
Withdrawal, the Paying Agent shall forthwith distribute the entire amount
of the Final Withdrawal deposited therein by the Depositary. There shall be
so distributed to each Receiptholder of record on the 15th day (whether or
not a Business Day) preceding the Final Withdrawal Date by check mailed to
such Receiptholder, at the address appearing in the Register, such
Receiptholder's pro rata share (based on the Escrow Interest in the Account
Amounts held by such Receiptholder) of the total amount in the Paying Agent
Account on account of such Final Withdrawal, except that, with respect to
Escrow Receipts registered on the record date in the name of a nominee of
DTC, such distribution shall be made by wire transfer in immediately
available funds to the account designated by DTC.
(c) If any payment of interest or principal in respect of the Final
Withdrawal is not received by the Paying Agent within five days of the
applicable date when due, then it shall be distributed to Receiptholders
after actual receipt by the Paying Agent on the same basis as a Special
Payment is distributed under the Pass Through Trust Agreement.
(d) Upon the confirmation by the Paying Agent of receipt in the Paying
Agent Account from the Depositary of any amount in respect of a Prepayment
Withdrawal, the Paying Agent shall forthwith distribute the entire amount
of such Prepayment Withdrawal upon not less than 15 days prior notice to
the Receiptholders. There shall be distributed to each Receiptholder of
record on the 15th day (whether or not a Business Day) preceding such date
of distribution by check mailed to such Receiptholder, at the address
appearing in the Register, such Receiptholder's pro rata
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share (based on the Escrow Interest in the Account Amounts held by such
Receiptholder) of the total amount in the Paying Agent Account on account
of such Prepayment Withdrawal, except that, with respect to the Escrow
Receipts registered on such record date in the name of a nominee of DTC,
such distribution shall be made by wire transfer in immediately available
funds to the account designated by DTC.
(e) The Paying Agent shall include with any check mailed pursuant to
this Section any notice required to be distributed under the Pass Through
Trust Agreement that is furnished to the Paying Agent by the Pass Through
Trustee.
Section 2.04. Withholding Taxes. The Paying Agent shall exclude and
withhold from each distribution of accrued interest on the Deposits (as defined
in the Deposit Agreement) and any amount in respect of any Prepayment Withdrawal
and the Final Withdrawal any and all withholding taxes applicable thereto as
required by law. The Paying Agent 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 Deposits (as defined in the Deposit Agreement) or the escrow amounts, to
withhold such amounts and timely pay the same to the appropriate authority in
the name of and on behalf of the Receiptholders, 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 Receiptholder
appropriate documentation showing the payment thereof, together with such
additional documentary evidence as such Receiptholder may reasonably request
from time to time. The Paying Agent agrees to file any other information reports
as it may be required to file under United States law.
Section 2.05. Resignation or Removal of Paying Agent. Subject to the
appointment and acceptance of a successor Paying Agent as provided below, the
Paying Agent may resign at any time by giving 30 days' prior written notice
thereof to the Escrow Agent, but may not otherwise be removed except for cause
by the Escrow Agent. Upon any such resignation or removal, the Escrow Agent
shall have the right to appoint a successor Paying Agent. If no successor Paying
Agent shall have been so appointed and shall have accepted such appointment
within 30 days after the retiring Paying Agent's giving of notice of resignation
or the removal of the retiring Paying Agent, then the retiring Paying Agent may
appoint a successor Paying Agent. Any Successor Paying Agent shall be a bank
which has an office in the United States with a combined capital and surplus of
at least $100,000,000. Upon the acceptance of any appointment as Paying Agent
hereunder by a successor Paying Agent, such successor Paying Agent shall enter
into such documents as the Escrow Agent shall require and shall thereupon
succeed to and become vested with all the rights, powers, privileges and duties
of the retiring Paying Agent, and the retiring Paying Agent shall be discharged
from its duties and obligations hereunder.
Section 2.06. Notice of Prepayment Withdrawal and Final Withdrawal.
Promptly after receipt by the Paying Agent of notice that the Escrow Agent has
requested a
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Prepayment Withdrawal or a Final Withdrawal or that a Prepayment Withdrawal or a
Final Withdrawal will be made, the Paying Agent shall cause notice of such
distribution to be mailed to each of the Receiptholders at its address as it
appears in the Register. Such notice shall be mailed not less than 15 days prior
to the distribution date of such Prepayment Withdrawal (the "Prepayment
Withdrawal Date") or of the Final Withdrawal Date, as the case may be. Such
notice shall set forth:
(i) the Prepayment Withdrawal or the Final Withdrawal Date, as the
case may be, and the date for determining Receiptholders of record who
shall be entitled to receive distributions in respect of the Prepayment
Withdrawal or Final Withdrawal,
(ii) the amount of the payment in respect of the Prepayment Withdrawal
or Final Withdrawal, as the case may be, for each $1,000 face amount
Certificate (based on information provided by the Pass Through Trustee) and
the amount thereof constituting unused Deposits (as defined in the Deposit
Agreement) and interest thereon, and
(iii) if the Prepayment Withdrawal Date or Final Withdrawal Date is
the same date as a Regular Distribution Date, the total amount to be
received on such date for each $1,000 face amount Certificate (based on
information provided by the Pass Through Trustee).
Such mailing may include any notice required to be given to
Certificateholders in connection with such distribution pursuant to the Pass
Through Trust Agreement.
SECTION 3. Payments. If, notwithstanding the instructions in Section 4 of
the Deposit Agreement that all amounts payable to the Escrow Agent under the
Deposit Agreement be paid by the Depositary directly to the Paying Agent or the
Pass Through Trustee (depending on the circumstances), the Escrow Agent receives
any payment thereunder, then the Escrow Agent shall forthwith pay such amount in
Dollars and in immediately available funds by wire transfer to (a) in the case
of a payment of accrued interest on the Deposits (as defined in the Deposit
Agreement), any Prepayment Withdrawal or any Final Withdrawal, directly to the
Paying Agent Account and (b) in the case of any Purchase Withdrawal, directly to
the Pass Through Trustee or its designee as specified and in the manner provided
in the Applicable Notice of Purchase Withdrawal. The Escrow Agent hereby waives
any and all rights of set-off, combination of accounts, right of retention or
similar right (whether arising under applicable law, contract or otherwise) it
may have against amounts payable to the Paying Agent howsoever arising.
SECTION 4. Other Actions. The Escrow Agent shall take such other actions
under or in respect of the Deposit Agreement (including, without limitation, the
enforcement
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of the obligations of the Depositary thereunder) as the Investors, by an Action
of Investors, may from time to time request.
SECTION 5. Representations and Warranties of the Escrow Agent. The Escrow
Agent represents and warrants to Atlas, the Investors, the Paying Agent and the
Pass Through Trustee as follows:
(i) it is a national banking association duly organized and validly
existing in good standing under the laws of the United States of America;
(ii) it has full power, authority and legal right to conduct its
business and operations as currently conducted and to enter into and
perform its obligations under this Agreement and the Deposit Agreement;
(iii) the execution, delivery and performance of each of this
Agreement and the Deposit Agreement have been duly authorized by all
necessary corporate action on the part of it and do not require any
stockholder approval, or approval or consent of any trustee or holder of
any indebtedness or obligations of it, and each such document has been duly
executed and delivered by it and constitutes its legal, valid and binding
obligations enforceable against it in accordance with the terms hereof or
thereof except as such enforceability may be limited by bankruptcy,
insolvency, moratorium, reorganization or other similar laws or equitable
principles of general application to or affecting the enforcement of
creditors' rights generally (regardless of whether such enforceability is
considered in a proceeding in equity or at law);
(iv) no authorization, consent or approval of or other action by, and
no notice to or filing with, any United States federal or state
governmental authority or regulatory body is required for the execution,
delivery or performance by it of this Agreement or the Deposit Agreement;
(v) neither the execution, delivery or performance by it of this
Agreement or the Deposit Agreement, nor compliance with the terms and
provisions hereof or thereof, conflicts or will conflict with or results or
will result in a breach or violation of any of the terms, conditions or
provisions of, or will require any consent or approval under, any law,
governmental rule or regulation or the charter documents, as amended, or
bylaws, as amended, of it or any similar instrument binding on it or any
order, writ, injunction or decree of any court or governmental authority
against it or by which it or any of its properties is bound or any
indenture, mortgage or contract or other agreement or instrument to which
it is a party or by which it or any of its properties is bound, or
constitutes or will constitute a default thereunder or results or will
result in the imposition of any lien upon any of its properties; and
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(vi) there are no pending or, to its knowledge, threatened actions,
suits, investigations or proceedings (whether or not purportedly on behalf
of it) against or affecting it or any of its property before or by any
court or administrative agency which, if adversely determined, (A) would
adversely affect the ability of it to perform its obligations under this
Agreement or the Deposit Agreement or (B) would call into question or
challenge the validity of this Agreement or the Deposit Agreement or the
enforceability hereof or thereof in accordance with the terms hereof or
thereof, nor is the Escrow Agent in default with respect to any order of
any court, governmental authority, arbitration board or administrative
agency so as to adversely affect its ability to perform its obligations
under this Agreement or the Deposit Agreement.
SECTION 6. Representations and Warranties of the Paying Agent. The Paying
Agent represents and warrants to Atlas, the Investors, the Escrow Agent and the
Pass Through Trustee as follows:
(i) it is a Delaware banking company duly organized and validly
existing in good standing under the laws of its jurisdiction of
incorporation;
(ii) it has full power, authority and legal right to conduct its
business and operations as currently conducted and to enter into and
perform its obligations under this Agreement;
(iii) the execution, delivery and performance of this Agreement has
been duly authorized by all necessary corporate action on the part of it
and does not require any stockholder approval, or approval or consent of
any trustee or holder of any indebtedness or obligations of it, and such
document has been duly executed and delivered by it and constitutes its
legal, valid and binding obligations enforceable against it in accordance
with the terms hereof except as such enforceability may be limited by
bankruptcy, insolvency, moratorium, reorganization or other similar laws or
equitable principles of general application to or affecting the enforcement
of creditors' rights generally (regardless of whether such enforceability
is considered in a proceeding in equity or at law);
(iv) no authorization, consent or approval of or other action by, and
no notice to or filing with, any United States federal or state
governmental authority or regulatory body is required for the execution,
delivery or performance by it of this Agreement;
(v) neither the execution, delivery or performance by it of this
Agreement, nor compliance with the terms and provisions hereof, conflicts
or will conflict with or results or will result in a breach or violation of
any of the
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terms, conditions or provisions of, or will require any consent or approval
under, any law, governmental rule or regulation or the charter documents,
as amended, or bylaws, as amended, of it or any similar instrument binding
on it or any order, writ, injunction or decree of any court or governmental
authority against it or by which it or any of its properties is bound or
any indenture, mortgage or contract or other agreement or instrument to
which it is a party or by which it or any of its properties is bound, or
constitutes or will constitute a default thereunder or results or will
result in the imposition of any lien upon any of its properties; and
(vi) there are no pending or, to its knowledge, threatened actions,
suits, investigations or proceedings (whether or not purportedly on behalf
of it) against or affecting it or any of its property before or by any
court or administrative agency which, if adversely determined, (A) would
adversely affect the ability of it to perform its obligations under this
Agreement or (B) would call into question or challenge the validity of this
Agreement or the enforceability hereof in accordance with the terms hereof,
nor is the Paying Agent in default with respect to any order of any court,
governmental authority, arbitration board or administrative agency so as to
adversely affect its ability to perform its obligations under this
Agreement.
SECTION 7. Indemnification. Except for actions expressly required of the
Escrow Agent or the Paying Agent hereunder, each of the Escrow Agent and the
Paying Agent shall in all cases be fully justified in failing or refusing to act
hereunder unless it shall have been indemnified by the party requesting such
action in a manner reasonably satisfactory to it against any and all liability
and expense which may be incurred by it by reason of taking or continuing to
take any such action. In the event Atlas requests any amendment to any Operative
Agreement (as defined in the Note Purchase Agreement), the Pass Through Trustee
agrees to pay all reasonable fees and expenses (including, without limitation,
fees and disbursements of counsel) of the Escrow Agent and the Paying Agent in
connection therewith.
SECTION 8. Amendment, Etc. Upon request of the Pass Through Trustee and
approval by an Action of Investors, the Escrow Agent shall enter into an
amendment to this Agreement, so long as such amendment does not adversely affect
the rights or obligations of the Escrow Agent or the Paying Agent, provided that
upon request of the Pass Through Trustee and without any consent of the
Investors, the Escrow Agent shall enter into an amendment to this Agreement for
any of the following purposes:
(1) to correct or supplement any provision in this Agreement which may
be defective or inconsistent with any other provision herein or to cure any
ambiguity or correct any mistake or to modify any other provision with
respect to matters or questions arising under this Agreement, provided that
any such action shall not materially adversely affect the interests of the
Investors; or
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(2) to comply with any requirement of the SEC, applicable law, rules
or regulations of any exchange or quotation system on which the
Certificates are listed or any regulatory body; or
(3) to evidence and provide for the acceptance of appointment under
this Agreement of a successor Escrow Agent, successor Paying Agent or
successor Pass Through Trustee.
SECTION 9. Notices. Unless otherwise expressly provided herein, any notice
or other communication under this Agreement shall be in writing (including by
facsimile) and shall be deemed to be given and effective upon receipt thereof.
All notices shall be sent to
(i) if to the Investors, as their respective names shall appear in the
Register;
(ii) if to the Escrow Agent, addressed to at its office at:
FIRST SECURITY BANK, NATIONAL ASSOCIATION 79 South
Main Street Salt Lake City, UT 84111
Attention: Corporate Trust Department
Telecopier: 801-246-5053
(iii) if to the Pass Through Trustee, addressed to it at its office at:
WILMINGTON TRUST COMPANY
One Rodney Square
1100 N. Market Street
Wilmington, DE 19890-0001
Attention: Corporate Trust Administration
Telecopier: 302-651-8882
(iv) if to the Paying Agent, addressed to it at its office at:
WILMINGTON TRUST COMPANY
One Rodney Square
1100 N. Market Street
Wilmington, DE 19890-0001
Attention: Corporate Trust Administration
Telecopier: 302-651-8882
13
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(v) in each case with a copy to Atlas, addressed to it at its office at:
ATLAS AIR, INC.
538 Commons Drive
Golden, CO 80401
Attention: Chief Financial Officer
Telecopier: 303-526-5051
(or at such other address as any such party may specify from time to time in a
written notice to the other parties). On or prior to the execution of this
Agreement, the Pass Through Trustee has delivered to the Escrow Agent a
certificate containing specimen signatures of the representatives of the Pass
Through Trustee who are authorized to give notices and instructions with respect
to this Agreement. The Escrow Agent may conclusively rely on such certificate
until the Escrow Agent receives written notice from the Pass Through Trustee to
the contrary.
SECTION 10. Transfer. No party hereto shall be entitled to assign or
otherwise transfer this Agreement (or any interest herein) other than (in the
case of the Escrow Agent) to a successor escrow agent under Section 1.07 hereof
or (in the case of the Paying Agent) to a successor paying agent under Section
2.05 hereof, and any purported assignment in violation thereof shall be void.
This Agreement shall be binding upon the parties hereto and their respective
successors and (in the case of the Escrow Agent and the Paying Agent) their
respective permitted assigns.
SECTION 11. Entire Agreement. This Agreement sets forth all of the
promises, covenants, agreements, conditions and understandings among the Escrow
Agent, the Paying Agent, the Underwriters and the Pass Through Trustee with
respect to the subject matter hereof, and supersedes all prior and
contemporaneous agreements and undertakings, inducements or conditions, express
or implied, oral or written.
SECTION 12. Governing Law. This Agreement shall be governed by, and
construed in accordance with, the laws of the State of New York.
SECTION 13. Waiver of Jury Trial Right. EACH OF THE ESCROW AGENT, THE
PAYING AGENT, THE INVESTORS AND THE PASS THROUGH TRUSTEE ACKNOWLEDGES AND
ACCEPTS THAT IN ANY SUIT, ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO
THIS AGREEMENT SUCH PARTY IRREVOCABLY WAIVES ITS RIGHT TO A TRIAL BY JURY.
SECTION 14. Counterparts. This Agreement may be executed in one or more
counterparts, all of which taken together shall constitute one instrument.
14
<PAGE>
IN WITNESS WHEREOF, the Escrow Agent, the Paying Agent, the Underwriters
and the Pass Through Trustee have caused this Escrow and Paying Agent Agreement
(Class A-1) to be duly executed as of the day and year first above written.
FIRST SECURITY BANK, NATIONAL ASSOCIATION,
as Escrow Agent
By /s/ C. Scott Nielsen
-------------------------------------
Name: C. Scott Nielsen
Title: Vice President
<PAGE>
MORGAN STANLEY & CO. INCORPORATED;
BT ALEX. BROWN INCORPORATED;
CIBC OPPENHEIMER CORP.
ING BARING FURMAN SELZ LLC,
as Underwriters
By: MORGAN STANLEY & CO.
INCORPORATED
By /s/ Christopher Chaput
-------------------------------------
Name: Christopher Chaput
Title: Vice President
WILMINGTON TRUST COMPANY, not
in its individual capacity,
but solely as Pass Through
Trustee for and on behalf of
Atlas Air Pass Through Trust
1999-1A-1
By /s/ James P. Lawler
-------------------------------------
Name: James P. Lawler
Title: Vice President
WILMINGTON TRUST COMPANY,
as Paying Agent
By /s/ James P. Lawler
-------------------------------------
Name: James P. Lawler
Title: Vice President
<PAGE>
EXHIBIT A
ATLAS AIR, INC. 1999-1A-1 ESCROW RECEIPT
No. _
This Escrow Receipt evidences a fractional undivided interest in amounts
("Account Amounts") from time to time deposited into a certain paying agent
account (the "Paying Agent Account") described in the Escrow and Paying Agent
Agreement (Class A-1) dated as of April 13, 1999 (as amended, modified or
supplemented from time to time, the "Escrow and Paying Agent Agreement") among
First Security Bank, National Association, as Escrow Agent (in such capacity,
together with its successors in such capacity, the "Escrow Agent"), Morgan
Stanley & Co. Incorporated, BT Alex. Brown Incorporated, CIBC Oppenheimer Corp.
and ING Baring Furman Selz, LLC, as Underwriters, Wilmington Trust Company as
Pass Through Trustee (in such capacity, together with its successors in such
capacity, the "Pass Through Trustee") and Wilmington Trust Company, as paying
agent (in such capacity, together with its successors in such capacity, the
"Paying Agent"). Capitalized terms not defined herein shall have the meanings
assigned to them in the Escrow and Paying Agent Agreement.
This Escrow Receipt is issued under and is subject to the terms, provisions
and conditions of the Escrow and Paying Agent Agreement. By virtue of its
acceptance hereof the holder of this Escrow Receipt assents and agrees to be
bound by the provisions of the Escrow and Paying Agent Agreement and this Escrow
Receipt.
This Escrow Receipt represents a fractional undivided interest in amounts
deposited from time to time in the Paying Agent Account, and grants or
represents no rights, benefits or interests of any kind in respect of any assets
or property other than such amounts. This Escrow Receipt evidences the same
percentage interest in the Account Amounts as the Fractional Undivided Interest
in the Pass Through Trust evidenced by the Certificate to which this Escrow
Receipt is affixed.
All payments and distributions made to Receiptholders in respect of the
Escrow Receipt shall be made only from Account Amounts deposited in the Paying
Agent Account. The holder of this Escrow Receipt, by its acceptance of this
Escrow Receipt, agrees that it will look solely to the Account Amounts for any
payment or distribution due to it pursuant to this Escrow Receipt and that it
will not have any recourse to Atlas, the Pass Through Trustee, the Paying Agent
or the Escrow Agent, except as expressly provided herein or in the Pass Through
Trust Agreement. No Receiptholder of this Escrow Receipt shall have any right to
vote or in any manner otherwise control the operation and management of the
Paying Agent Account, nor shall anything set forth herein, or contained in the
terms of this Escrow Receipt, be construed so as to constitute the
Receiptholders from time to time as partners or members of an association.
<PAGE>
This Escrow Receipt may not be assigned or transferred except in connection
with the assignment or transfer of the Certificate to which this Escrow Receipt
is affixed. After payment to the holder hereof of its Escrow Interest in the
Final Distribution, upon the request of the Pass Through Trustee, the holder
hereof will return this Escrow Receipt to the Pass Through Trustee.
The Paying Agent may treat the person in whose name the Certificate to
which this Escrow Receipt is attached as the owner hereof for all purposes, and
the Paying Agent shall not be affected by any notice to the contrary.
THIS ESCROW RECEIPT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH
THE LAWS OF THE STATE OF NEW YORK.
IN WITNESS WHEREOF, the Escrow Agent has caused this Escrow Receipt to be
duly executed.
Dated: _____________, ____
FIRST SECURITY BANK, NATIONAL ASSOCIATION,
as Escrow Agent
By:__________________________
Name:
Title:
2
<PAGE>
EXHIBIT B
WITHDRAWAL CERTIFICATE
(Class A-1)
First Security Bank, National Association,
as Escrow Agent
79 South Main Street
Salt Lake City, UT 84111
Attention: Corporate Trust Services
Dear Sirs:
Reference is made to the Escrow and Paying Agent Agreement, dated as of
April 13, 1999 (the "Agreement"). We hereby certify to you that the conditions
to the obligations of the undersigned to execute a Participation Agreement
pursuant to the Note Purchase Agreement have been satisfied. Pursuant to Section
1.02(c) of the Agreement, please execute the attached Notice of Purchase
Withdrawal and immediately transmit by facsimile to the Depositary, at
_________, Attention: ____________________________.
Very truly yours,
WILMINGTON TRUST COMPANY,
not in its individual capacity but
solely as Pass Through Trustee
By:__________________________
Name:
Dated: ____________
<PAGE>
EXHIBIT C
PREPAYMENT WITHDRAWAL CERTIFICATE
(Class A-1)
First Security Bank, National Association,
as Escrow Agent
79 South Main Street
Salt Lake City, UT 84111
Attention: Corporate Trust Services
Dear Sirs:
Reference is made to the Escrow and Paying Agent Agreement, dated as of
April 13, 1999 (the "Agreement"). The undersigned has been notified by Atlas
Air, Inc. that it has received written notice from The Boeing Company that the
delivery date for the Aircraft in respect of which the attached Notice of
Prepayment Withdrawal is to be given will be delayed beyond the Delivery Period
Termination Date. Pursuant to Section 1.02(d) of the Agreement, please execute
the attached Notice of Prepayment Withdrawal and immediately transmit by
facsimile to the Depositary, at ____________, Attention: _________.
Very truly yours,
WILMINGTON TRUST COMPANY,
not in its individual capacity but
solely as Pass Through Trustee
By __________________________
Name
EXECUTION COPY
ESCROW AND PAYING AGENT AGREEMENT
(Class A-2)
Dated as of April 13, 1999
among
FIRST SECURITY BANK, NATIONAL ASSOCIATION
as Escrow Agent
MORGAN STANLEY & CO. INCORPORATED
BT ALEX. BROWN INCORPORATED
CIBC OPPENHEIMER CORP.
ING BARING FURMAN SELZ LLC
as Underwriters
WILMINGTON TRUST COMPANY
not in its individual capacity,
but solely as Pass Through Trustee
for and on behalf of
Atlas Air Pass Through Trust 1999-1A-2
as Pass Through Trustee
and
WILMINGTON TRUST COMPANY
as Paying Agent
<PAGE>
TABLE OF CONTENTS
Page
SECTION 1. Escrow Agent ............................................ 2
Section 1.01. Appointment of Escrow Agent ............................. 2
Section 1.02. Instruction; Etc ........................................ 3
Section 1.03. Initial Escrow Amount; Issuance of Escrow Receipts ...... 3
Section 1.04. Payments to Receiptholders .............................. 4
Section 1.05. Mutilated, Destroyed, Lost or Stolen Escrow Receipt ..... 4
Section 1.06. Additional Escrow Amounts ............................... 5
Section 1.07. Resignation or Removal of Escrow Agent .................. 5
Section 1.08. Persons Deemed Owners ................................... 6
Section 1.09. Further Assurances ...................................... 6
SECTION 2. Paying Agent ............................................ 6
Section 2.01. Appointment of Paying Agent ............................. 6
Section 2.02. Establishment of Paying Agent Account ................... 6
Section 2.03. Payments from Paying Agent Account ...................... 7
Section 2.04. Withholding Taxes ....................................... 8
Section 2.05. Resignation or Removal of Paying Agent .................. 8
Section 2.06. Notice of Prepayment Withdrawal and Final Withdrawal .... 8
SECTION 3. Payments ................................................ 9
SECTION 4. Other Actions ........................................... 9
SECTION 5. Representations and Warranties of the Escrow Agent ...... 10
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Page
SECTION 6. Representations and Warranties of the Paying Agent ...... 11
SECTION 7. Indemnification ......................................... 12
SECTION 8. Amendment, Etc. ......................................... 12
SECTION 9. Notices ................................................. 13
SECTION 10. Transfer ................................................ 14
SECTION 11. Entire Agreement ........................................ 14
SECTION 12. Governing Law ........................................... 14
SECTION 13. Waiver of Jury Trial Right .............................. 14
SECTION 14. Counterparts ............................................ 14
Exhibit A Escrow Receipt
Exhibit B Withdrawal Certificate
Exhibit C Prepayment Withdrawal Certificate
ii
<PAGE>
ESCROW AND PAYING AGENT AGREEMENT (Class A-2) dated as of April 13, 1999
(as amended, modified or supplemented from time to time, this "Agreement") among
FIRST SECURITY BANK, NATIONAL ASSOCIATION, a national banking association, as
Escrow Agent (in such capacity, together with its successors in such capacity,
the "Escrow Agent"); MORGAN STANLEY & CO. INCORPORATED, BT ALEX. BROWN
INCORPORATED, CIBC OPPENHEIMER CORP. and ING BARING FURMAN SELZ LLC, as
Underwriters of the Certificates referred to below (the "Underwriters" and
together with their respective transferees and assigns as registered owners of
the Certificates, the "Investors") under the Underwriting Agreement referred to
below; WILMINGTON TRUST COMPANY, a Delaware banking corporation, not in its
individual capacity, but solely as trustee (in such capacity, together with its
successors in such capacity, the "Pass Through Trustee") under the Pass Through
Trust Agreement referred to below; and WILMINGTON TRUST COMPANY, a Delaware
banking corporation, as paying agent hereunder (in such capacity, together with
its successors in such capacity, the "Paying Agent").
W I T N E S S E T H
WHEREAS, Atlas Air, Inc. ("Atlas") and the Pass Through Trustee have
entered into a Trust Supplement dated the date hereof to the Pass Through Trust
Agreement, dated as of April 1, 1999 (together, as amended, modified or
supplemented from time to time in accordance with the terms thereof, the "Pass
Through Trust Agreement") relating to Atlas Air Pass Through Trust 1999-1A-2
(the "Pass Through Trust") pursuant to which the Atlas Air Pass Through Trust,
Series 1999-1A-2 Certificates referred to therein (the "Certificates") are being
issued;
WHEREAS, Atlas and the Underwriters have entered into an Underwriting
Agreement dated as of April 5, 1999 (as amended, modified or supplemented from
time to time in accordance with the terms thereof, the "Underwriting Agreement")
pursuant to which the Pass Through Trustee will issue and sell the Certificates
to the Underwriters;
WHEREAS, Atlas, the Pass Through Trustee, certain other pass through
trustees and certain other persons concurrently herewith are entering into the
Note Purchase Agreement, dated as of the date hereof (the "Note Purchase
Agreement"), pursuant to which the Pass Through Trustee has agreed to acquire
from time to time on or prior to the Cut-Off Date (as defined in the Note
Purchase Agreement) equipment notes (the "Equipment Notes") issued to finance
the acquisition of aircraft by Atlas, as lessee or as owner, utilizing a portion
of the proceeds from the sale of the Certificates (the "Net Proceeds");
WHEREAS, the Underwriters and the Pass Through Trustee intend that the Net
Proceeds be held in escrow by the Escrow Agent on behalf of the Investors,
subject to withdrawal upon request by the Pass Through Trustee and satisfaction
of the conditions set forth in the Note Purchase Agreement for the purpose of
purchasing Equipment Notes, and that pending such withdrawal the Net Proceeds be
deposited on behalf of the Escrow Agent with
<PAGE>
Credit Suisse First Boston, acting through its New York Branch, as Depositary
(the "Depositary") under the Deposit Agreement, dated as of the date hereof
between the Depositary and the Escrow Agent relating to the Pass Through Trust
(as amended, modified or supplemented from time to time in accordance with the
terms thereof, the "Deposit Agreement"), pursuant to which, among other things,
the Depositary will pay interest for distribution to the Investors and establish
accounts from which the Escrow Agent shall make withdrawals upon request of and
proper certification by the Pass Through Trustee;
WHEREAS, the Escrow Agent wishes to appoint the Paying Agent to pay amounts
required to be distributed to the Investors in accordance with this Agreement;
and
WHEREAS, capitalized terms used but not defined herein shall have the
meanings ascribed to such terms in the Pass Through Trust Agreement.
NOW, THEREFORE, in consideration of the obligations contained herein, and
for other good and valuable consideration, the receipt and sufficiency of which
is hereby acknowledged, the parties hereto hereby agree as follows:
SECTION 1. Escrow Agent.
Section 1.01. Appointment of Escrow Agent. Each of the Underwriters, for
and on behalf of each of the Investors, hereby irrevocably appoints, authorizes
and directs the Escrow Agent to act as escrow agent and fiduciary hereunder and
under the Deposit Agreement for such specific purposes and with such powers as
are specifically delegated to the Escrow Agent by the terms of this Agreement,
together with such other powers as are reasonably incidental thereto. Any and
all money received and held by the Escrow Agent under this Agreement or the
Deposit Agreement shall be held in escrow by the Escrow Agent in accordance with
the terms of this Agreement. This Agreement is irrevocable and the Investors'
rights with respect to any monies received and held in escrow by the Escrow
Agent under this Agreement or the Deposit Agreement shall only be as provided
under the terms and conditions of this Agreement and the Deposit Agreement. The
Escrow Agent (which term as used in this sentence shall include reference to its
affiliates and its own and its affiliates' officers, directors, employees and
agents): (a) shall have no duties or responsibilities except those expressly set
forth in this Agreement; (b) shall not be responsible to the Pass Through
Trustee or the Investors for any recitals, statements, representations or
warranties of any person other then itself contained in this Agreement or the
Deposit Agreement or for the failure by the Pass Through Trustee, the Investors
or any other person or entity (other than the Escrow Agent) to perform any of
its obligations hereunder (whether or not the Escrow Agent shall have any
knowledge thereof); and (c) shall not be responsible for any action taken or
omitted to be taken by it hereunder or provided for herein or in connection
herewith, except for its own willful misconduct or gross negligence (or simple
negligence in connection with the handling of funds).
2
<PAGE>
Section 1.02. Instruction; Etc. The Underwriters, for and on behalf of each
of the Investors, hereby irrevocably instruct the Escrow Agent, and the Escrow
Agent agrees, (a) to enter into the Deposit Agreement, (b) to appoint the Paying
Agent as provided in this Agreement, (c) upon receipt at any time and from time
to time prior to the Delivery Period Termination Date (as defined in the Note
Purchase Agreement) of a certificate substantially in the form of Exhibit B
hereto (a "Withdrawal Certificate") executed by the Pass Through Trustee,
together with an attached Notice of Purchase Withdrawal in substantially the
form of Exhibit A to the Deposit Agreement duly completed by the Pass Through
Trustee (the "Applicable Notice of Purchase Withdrawal" and the withdrawal to
which it relates, a "Purchase Withdrawal"), immediately to execute the
Applicable Notice of Purchase Withdrawal as Escrow Agent and transmit it to the
Depositary by facsimile transmission in accordance with the Deposit Agreement;
provided that, upon the request of the Pass Through Trustee after such
transmission, the Escrow Agent shall cancel such Applicable Notice of Purchase
Withdrawal, (d) upon receipt at any time and from time to time prior to the
Delivery Period Termination Date of a certificate substantially in the form of
Exhibit C hereto (a "Prepayment Withdrawal Certificate") executed by the Pass
Through Trustee, together with an attached Notice of Prepayment Withdrawal in
substantially the form of Exhibit B to the Deposit Agreement duly completed by
the Pass Through Trustee (the "Applicable Notice of Prepayment Withdrawal" and
the withdrawal to which it relates, a "Prepayment Withdrawal"), immediately to
execute the Applicable Notice of Prepayment Withdrawal as Escrow Agent and
transmit it to the Depositary by facsimile transmission in accordance with the
Deposit Agreement; provided that, upon the request of the Pass Through Trustee
after such transmission, the Escrow Agent shall cancel such Applicable Notice of
Prepayment Withdrawal, and (e) if there are any undrawn Deposits (as defined in
the Deposit Agreement) on the earlier of (i) the Delivery Period Termination
Date and (ii) the date on which the Escrow Agent receives notice from the Pass
Through Trustee that the Pass Through Trustee's obligation to purchase Equipment
Notes under the Note Purchase Agreement has terminated, to give notice to the
Depositary (with a copy to the Paying Agent) substantially in the form of
Exhibit C to the Deposit Agreement requesting a withdrawal of all of the
remaining Deposits, together with accrued and unpaid interest on such Deposits
to the date of withdrawal, on the 15th day after the date that such notice of
withdrawal is given to the Depositary (or, if not a Business Day, on the next
succeeding Business Day) (a "Final Withdrawal"), provided that if the day
scheduled for the Final Withdrawal in accordance with the foregoing is within 10
days before a Regular Distribution Date, then the Escrow Agent shall request
that such requested Final Withdrawal be made on such Regular Distribution Date
(the date of such requested withdrawal, the "Final Withdrawal Date"). If for any
reason the Escrow Agent shall have failed to give the Final Withdrawal Notice to
the Depositary on or before May 31, 2000 (provided, that if a labor strike or
work stoppage occurs at The Boeing Company prior to such date, such date shall
be extended by adding thereto the number of days that each such labor strike or
work stoppage continues in effect), and there are unwithdrawn Deposits on such
date, the Final Withdrawal Date shall be deemed to be June 15, 2000 (or, if the
May 31, 2000 date has been extended as provided in this sentence, the fifteenth
day after the Delivery Period Termination Date).
3
<PAGE>
Section 1.03. Initial Escrow Amount; Issuance of Escrow Receipts. The
Escrow Agent hereby directs the Underwriters to, and the Underwriters hereby
acknowledge that on the date hereof they shall, irrevocably deliver to the
Depositary on behalf of the Escrow Agent, an amount in U.S. dollars ("Dollars")
and immediately available funds equal to $43,544,000 for deposit on behalf of
the Escrow Agent with the Depositary in accordance with Section 2.1 of the
Deposit Agreement. The Underwriters hereby instruct the Escrow Agent, upon
receipt of such sum from the Underwriters, to confirm such receipt by executing
and delivering to the Pass Through Trustee an Escrow Receipt in the form of
Exhibit A hereto (an "Escrow Receipt"), (a) to be affixed by the Pass Through
Trustee to each Certificate and (b) to evidence the same percentage interest
(the "Escrow Interest") in the Account Amounts (as defined below) as the
Fractional Undivided Interest in the Pass Through Trust evidenced by the
Certificate to which it is to be affixed. The Escrow Agent shall provide to the
Pass Through Trustee for attachment to each Certificate newly issued under and
in accordance with the Pass Through Trust Agreement an executed Escrow Receipt
as the Pass Through Trustee may from time to time request of the Escrow Agent.
Each Escrow Receipt shall be registered by the Escrow Agent in a register (the
"Register") maintained by the Escrow Agent in the same name and same manner as
the Certificate to which it is attached and may not thereafter be detached from
such Certificate to which it is to be affixed prior to the distribution of the
Final Withdrawal (the "Final Distribution"). After the Final Distribution, no
additional Escrow Receipts shall be issued and the Pass Through Trustee shall
request the return to the Escrow Agent for cancellation of all outstanding
Escrow Receipts.
Section 1.04. Payments to Receiptholders. All payments and distributions
made to holders of an Escrow Receipt (collectively "Receiptholders") in respect
of the Escrow Receipt shall be made only from amounts deposited in the Paying
Agent Account (as defined below) ("Account Amounts"). Each Receiptholder, by its
acceptance of an Escrow Receipt, agrees that (a) it will look solely to the
Account Amounts for any payment or distribution due to such Receiptholder
pursuant to the terms of the Escrow Receipt and this Agreement and (b) it will
have no recourse to Atlas, the Pass Through Trustee, the Paying Agent or the
Escrow Agent, except as expressly provided herein or in the Pass Through Trust
Agreement. No Receiptholder shall have any right to vote or in any manner
otherwise control the operation and management of the Paying Agent Account or
the obligations of the parties hereto, nor shall anything set forth herein, or
contained in the terms of the Escrow Receipt, be construed so as to constitute
the Receiptholders from time to time as partners or members of an association.
Section 1.05. Mutilated, Destroyed, Lost or Stolen Escrow Receipt. If (a)
any mutilated Escrow Receipt is surrendered to the Escrow Agent or the Escrow
Agent receives evidence to its satisfaction of the destruction, loss or theft of
any Escrow Receipt and (b) there is delivered to the Escrow Agent and the Pass
Through Trustee such security, indemnity or bond, as may be required by them to
hold each of them harmless, then, absent notice to the Escrow Agent or the Pass
Through Trustee that such destroyed, lost or stolen Escrow Receipt has been
acquired by a bona fide purchaser, and provided that the requirements of Section
8-405 of the Uniform Commercial Code in effect in any applicable jurisdiction
are met, the
4
<PAGE>
Escrow Agent shall execute, authenticate and deliver, in exchange for or in lieu
of any such mutilated, destroyed, lost or stolen Escrow Receipt, a new Escrow
Receipt or Escrow Receipts and of like Escrow Interest in the Account Amounts
and bearing a number not contemporaneously outstanding.
In connection with the issuance of any new Escrow Receipt under this
Section 1.05, the Escrow Agent may 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 Pass
Through Trustee and the Escrow Agent) connected therewith.
Any duplicate Escrow Receipt issued pursuant to this Section 1.05 shall
constitute conclusive evidence of the appropriate Escrow Interest in the Account
Amounts, as if originally issued, whether or not the lost, stolen or destroyed
Escrow Receipt shall be found at any time.
The provisions of this Section 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 Escrow Receipts.
Section 1.06. Additional Escrow Amounts. On the date of any Purchase
Withdrawal, the Pass Through Trustee may re-deposit with the Depositary some or
all of the amounts so withdrawn in accordance with Section 2.4 of the Deposit
Agreement.
Section 1.07. Resignation or Removal of Escrow Agent. Subject to the
appointment and acceptance of a successor Escrow Agent as provided below, the
Escrow Agent may resign at any time by giving 30 days' prior written notice
thereof to the Investors, but may not otherwise be removed except for cause by
the written consent of the Investors with respect to Investors representing
Escrow Interests aggregating not less than a majority in interest in the Account
Amounts (an "Action of Investors"). Upon any such resignation or removal, the
Investors, by an Action of Investors, shall have the right to appoint a
successor Escrow Agent. If no successor Escrow Agent shall have been so
appointed and shall have accepted such appointment within 30 days after the
retiring Escrow Agent's giving of notice of resignation or the removal of the
retiring Escrow Agent, then the retiring Escrow Agent may appoint a successor
Escrow Agent. Any successor Escrow Agent shall be a bank which has an office in
the United States with a combined capital and surplus of at least $100,000,000.
Upon the acceptance of any appointment as Escrow Agent hereunder by a successor
Escrow Agent, such successor Escrow Agent shall enter into such documents as the
Pass Through Trustee shall require and shall thereupon succeed to and become
vested with all the rights, powers, privileges and duties of the retiring Escrow
Agent, and the retiring Escrow Agent shall be discharged from its duties and
obligations hereunder. No resignation or removal of the Escrow Agent shall be
effective unless a written confirmation shall have been obtained from each of
Moody's Investors Service, Inc. and Standard & Poor's Rating Group, a division
of McGraw- Hill Inc. that the replacement of the Escrow Agent with the successor
Escrow Agent will not
5
<PAGE>
result in (a) a reduction of the rating for the Certificates below the then
current rating for the Certificates or (b) a withdrawal or suspension of the
rating of the Certificates.
Section 1.08. Persons Deemed Owners. Prior to due presentment of a
Certificate for registration of transfer, the Escrow Agent and the Paying Agent
may treat the Person in whose name any Escrow Receipt is registered (as of the
day of determination) as the owner of such Escrow Receipt for the purpose of
receiving distributions pursuant to this Agreement and for all other purposes
whatsoever, and neither the Escrow Agent nor the Paying Agent shall be affected
by any notice to the contrary.
Section 1.09. Further Assurances. The Escrow Agent agrees to take such
actions, and execute such other documents, as may be reasonably requested by the
Pass Through Trustee in order to effectuate the purposes of this Agreement and
the performance by the Escrow Agent of its obligations hereunder.
SECTION 2. Paying Agent.
Section 2.01. Appointment of Paying Agent. The Escrow Agent hereby
irrevocably appoints and authorizes the Paying Agent to act as its paying agent
hereunder, for the benefit of the Investors, for such specific purposes and with
such powers as are specifically delegated to the Paying Agent by the terms of
this Agreement, together with such other powers as are reasonably incidental
thereto. Any and all money received and held by the Paying Agent under this
Agreement or the Deposit Agreement shall be held in the Paying Agent Account for
the benefit of the Investors. The Paying Agent (which term as used in this
sentence shall include reference to its affiliates and its own and its
affiliates' officers, directors, employees and agents): (a) shall have no duties
or responsibilities except those expressly set forth in this Agreement, and
shall not by reason of this Agreement be a trustee for the Escrow Agent; (b)
shall not be responsible to the Escrow Agent for any recitals, statements,
representations or warranties of any person other then itself contained in this
Agreement or for the failure by the Escrow Agent or any other person or entity
(other than the Paying Agent) to perform any of its obligations hereunder
(whether or not the Paying Agent shall have any knowledge thereof); and (c)
shall not be responsible for any action taken or omitted to be taken by it
hereunder or provided for herein or in connection herewith, except for its own
willful misconduct or gross negligence (or simple negligence in connection with
the handling of funds).
Section 2.02. Establishment of Paying Agent Account. The Paying Agent shall
establish a deposit account (the "Paying Agent Account") at Wilmington Trust
Company in the name of the Escrow Agent. It is expressly understood by the
parties hereto that the Paying Agent is acting as the paying agent of the Escrow
Agent hereunder and that no amounts on deposit in the Paying Agent Account
constitute part of the Trust Property.
6
<PAGE>
Section 2.03. Payments from Paying Agent Account. The Escrow Agent hereby
irrevocably instructs the Paying Agent, and the Paying Agent agrees to act, as
follows:
(a) On each Interest Payment Date (as defined in the Deposit
Agreement) or as soon thereafter as the Paying Agent has confirmed receipt
in the Paying Agent Account from the Depositary of any amount in respect of
accrued interest on the Deposits, the Paying Agent shall distribute out of
the Paying Agent Account the entire amount deposited therein by the
Depositary. There shall be so distributed to each Receiptholder of record
on the 15th day (whether or not a Business Day) preceding such Interest
Payment Date by check mailed to such Receiptholder, at the address
appearing in the Register, such Receiptholder's pro rata share (based on
the Escrow Interest in the Account Amounts held by such Receiptholder) of
the total amount of interest deposited by the Depositary in the Paying
Agent Account on such date, except that, with respect to Escrow Receipts
registered on the record date in the name of a nominee of the Depository
Trust Company ("DTC"), such distribution shall be made by wire transfer in
immediately available funds to the account designated by DTC.
(b) Upon the confirmation by the Paying Agent of receipt in the Paying
Agent Account from the Depositary of any amount in respect of the Final
Withdrawal, the Paying Agent shall forthwith distribute the entire amount
of the Final Withdrawal deposited therein by the Depositary. There shall be
so distributed to each Receiptholder of record on the 15th day (whether or
not a Business Day) preceding the Final Withdrawal Date by check mailed to
such Receiptholder, at the address appearing in the Register, such
Receiptholder's pro rata share (based on the Escrow Interest in the Account
Amounts held by such Receiptholder) of the total amount in the Paying Agent
Account on account of such Final Withdrawal, except that, with respect to
Escrow Receipts registered on the record date in the name of a nominee of
DTC, such distribution shall be made by wire transfer in immediately
available funds to the account designated by DTC.
(c) If any payment of interest or principal in respect of the Final
Withdrawal is not received by the Paying Agent within five days of the
applicable date when due, then it shall be distributed to Receiptholders
after actual receipt by the Paying Agent on the same basis as a Special
Payment is distributed under the Pass Through Trust Agreement.
(d) Upon the confirmation by the Paying Agent of receipt in the Paying
Agent Account from the Depositary of any amount in respect of a Prepayment
Withdrawal, the Paying Agent shall forthwith distribute the entire amount
of such Prepayment Withdrawal upon not less than 15 days prior notice to
the Receiptholders. There shall be distributed to each Receiptholder of
record on the 15th day (whether or not a Business Day) preceding such date
of distribution by check mailed to such Receiptholder, at the address
appearing in the Register, such Receiptholder's pro rata
7
<PAGE>
share (based on the Escrow Interest in the Account Amounts held by such
Receiptholder) of the total amount in the Paying Agent Account on account
of such Prepayment Withdrawal, except that, with respect to the Escrow
Receipts registered on such record date in the name of a nominee of DTC,
such distribution shall be made by wire transfer in immediately available
funds to the account designated by DTC.
(e) The Paying Agent shall include with any check mailed pursuant to
this Section any notice required to be distributed under the Pass Through
Trust Agreement that is furnished to the Paying Agent by the Pass Through
Trustee.
Section 2.04. Withholding Taxes. The Paying Agent shall exclude and
withhold from each distribution of accrued interest on the Deposits (as defined
in the Deposit Agreement) and any amount in respect of any Prepayment Withdrawal
and the Final Withdrawal any and all withholding taxes applicable thereto as
required by law. The Paying Agent 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 Deposits (as defined in the Deposit Agreement) or the escrow amounts, to
withhold such amounts and timely pay the same to the appropriate authority in
the name of and on behalf of the Receiptholders, 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 Receiptholder
appropriate documentation showing the payment thereof, together with such
additional documentary evidence as such Receiptholder may reasonably request
from time to time. The Paying Agent agrees to file any other information reports
as it may be required to file under United States law.
Section 2.05. Resignation or Removal of Paying Agent. Subject to the
appointment and acceptance of a successor Paying Agent as provided below, the
Paying Agent may resign at any time by giving 30 days' prior written notice
thereof to the Escrow Agent, but may not otherwise be removed except for cause
by the Escrow Agent. Upon any such resignation or removal, the Escrow Agent
shall have the right to appoint a successor Paying Agent. If no successor Paying
Agent shall have been so appointed and shall have accepted such appointment
within 30 days after the retiring Paying Agent's giving of notice of resignation
or the removal of the retiring Paying Agent, then the retiring Paying Agent may
appoint a successor Paying Agent. Any Successor Paying Agent shall be a bank
which has an office in the United States with a combined capital and surplus of
at least $100,000,000. Upon the acceptance of any appointment as Paying Agent
hereunder by a successor Paying Agent, such successor Paying Agent shall enter
into such documents as the Escrow Agent shall require and shall thereupon
succeed to and become vested with all the rights, powers, privileges and duties
of the retiring Paying Agent, and the retiring Paying Agent shall be discharged
from its duties and obligations hereunder.
Section 2.06. Notice of Prepayment Withdrawal and Final Withdrawal.
Promptly after receipt by the Paying Agent of notice that the Escrow Agent has
requested a
8
<PAGE>
Prepayment Withdrawal or a Final Withdrawal or that a Prepayment Withdrawal or a
Final Withdrawal will be made, the Paying Agent shall cause notice of such
distribution to be mailed to each of the Receiptholders at its address as it
appears in the Register. Such notice shall be mailed not less than 15 days prior
to the distribution date of such Prepayment Withdrawal (the "Prepayment
Withdrawal Date") or of the Final Withdrawal Date, as the case may be. Such
notice shall set forth:
(i) the Prepayment Withdrawal or the Final Withdrawal Date, as the
case may be, and the date for determining Receiptholders of record who
shall be entitled to receive distributions in respect of the Prepayment
Withdrawal or Final Withdrawal,
(ii) the amount of the payment in respect of the Prepayment Withdrawal
or Final Withdrawal, as the case may be, for each $1,000 face amount
Certificate (based on information provided by the Pass Through Trustee) and
the amount thereof constituting unused Deposits (as defined in the Deposit
Agreement) and interest thereon, and
(iii) if the Prepayment Withdrawal Date or Final Withdrawal Date is
the same date as a Regular Distribution Date, the total amount to be
received on such date for each $1,000 face amount Certificate (based on
information provided by the Pass Through Trustee).
Such mailing may include any notice required to be given to
Certificateholders in connection with such distribution pursuant to the Pass
Through Trust Agreement.
SECTION 3. Payments. If, notwithstanding the instructions in Section 4 of
the Deposit Agreement that all amounts payable to the Escrow Agent under the
Deposit Agreement be paid by the Depositary directly to the Paying Agent or the
Pass Through Trustee (depending on the circumstances), the Escrow Agent receives
any payment thereunder, then the Escrow Agent shall forthwith pay such amount in
Dollars and in immediately available funds by wire transfer to (a) in the case
of a payment of accrued interest on the Deposits (as defined in the Deposit
Agreement), any Prepayment Withdrawal or any Final Withdrawal, directly to the
Paying Agent Account and (b) in the case of any Purchase Withdrawal, directly to
the Pass Through Trustee or its designee as specified and in the manner provided
in the Applicable Notice of Purchase Withdrawal. The Escrow Agent hereby waives
any and all rights of set-off, combination of accounts, right of retention or
similar right (whether arising under applicable law, contract or otherwise) it
may have against amounts payable to the Paying Agent howsoever arising.
SECTION 4. Other Actions. The Escrow Agent shall take such other actions
under or in respect of the Deposit Agreement (including, without limitation, the
enforcement
9
<PAGE>
of the obligations of the Depositary thereunder) as the Investors, by an Action
of Investors, may from time to time request.
SECTION 5. Representations and Warranties of the Escrow Agent. The Escrow
Agent represents and warrants to Atlas, the Investors, the Paying Agent and the
Pass Through Trustee as follows:
(i) it is a national banking association duly organized and validly
existing in good standing under the laws of the United States of America;
(ii) it has full power, authority and legal right to conduct its
business and operations as currently conducted and to enter into and
perform its obligations under this Agreement and the Deposit Agreement;
(iii) the execution, delivery and performance of each of this
Agreement and the Deposit Agreement have been duly authorized by all
necessary corporate action on the part of it and do not require any
stockholder approval, or approval or consent of any trustee or holder of
any indebtedness or obligations of it, and each such document has been duly
executed and delivered by it and constitutes its legal, valid and binding
obligations enforceable against it in accordance with the terms hereof or
thereof except as such enforceability may be limited by bankruptcy,
insolvency, moratorium, reorganization or other similar laws or equitable
principles of general application to or affecting the enforcement of
creditors' rights generally (regardless of whether such enforceability is
considered in a proceeding in equity or at law);
(iv) no authorization, consent or approval of or other action by, and
no notice to or filing with, any United States federal or state
governmental authority or regulatory body is required for the execution,
delivery or performance by it of this Agreement or the Deposit Agreement;
(v) neither the execution, delivery or performance by it of this
Agreement or the Deposit Agreement, nor compliance with the terms and
provisions hereof or thereof, conflicts or will conflict with or results or
will result in a breach or violation of any of the terms, conditions or
provisions of, or will require any consent or approval under, any law,
governmental rule or regulation or the charter documents, as amended, or
bylaws, as amended, of it or any similar instrument binding on it or any
order, writ, injunction or decree of any court or governmental authority
against it or by which it or any of its properties is bound or any
indenture, mortgage or contract or other agreement or instrument to which
it is a party or by which it or any of its properties is bound, or
constitutes or will constitute a default thereunder or results or will
result in the imposition of any lien upon any of its properties; and
10
<PAGE>
(vi) there are no pending or, to its knowledge, threatened actions,
suits, investigations or proceedings (whether or not purportedly on behalf
of it) against or affecting it or any of its property before or by any
court or administrative agency which, if adversely determined, (A) would
adversely affect the ability of it to perform its obligations under this
Agreement or the Deposit Agreement or (B) would call into question or
challenge the validity of this Agreement or the Deposit Agreement or the
enforceability hereof or thereof in accordance with the terms hereof or
thereof, nor is the Escrow Agent in default with respect to any order of
any court, governmental authority, arbitration board or administrative
agency so as to adversely affect its ability to perform its obligations
under this Agreement or the Deposit Agreement.
SECTION 6. Representations and Warranties of the Paying Agent. The Paying
Agent represents and warrants to Atlas, the Investors, the Escrow Agent and the
Pass Through Trustee as follows:
(i) it is a Delaware banking company duly organized and validly
existing in good standing under the laws of its jurisdiction of
incorporation;
(ii) it has full power, authority and legal right to conduct its
business and operations as currently conducted and to enter into and
perform its obligations under this Agreement;
(iii) the execution, delivery and performance of this Agreement has
been duly authorized by all necessary corporate action on the part of it
and does not require any stockholder approval, or approval or consent of
any trustee or holder of any indebtedness or obligations of it, and such
document has been duly executed and delivered by it and constitutes its
legal, valid and binding obligations enforceable against it in accordance
with the terms hereof except as such enforceability may be limited by
bankruptcy, insolvency, moratorium, reorganization or other similar laws or
equitable principles of general application to or affecting the enforcement
of creditors' rights generally (regardless of whether such enforceability
is considered in a proceeding in equity or at law);
(iv) no authorization, consent or approval of or other action by, and
no notice to or filing with, any United States federal or state
governmental authority or regulatory body is required for the execution,
delivery or performance by it of this Agreement;
(v) neither the execution, delivery or performance by it of this
Agreement, nor compliance with the terms and provisions hereof, conflicts
or will conflict with or results or will result in a breach or violation of
any of the
11
<PAGE>
terms, conditions or provisions of, or will require any consent or approval
under, any law, governmental rule or regulation or the charter documents,
as amended, or bylaws, as amended, of it or any similar instrument binding
on it or any order, writ, injunction or decree of any court or governmental
authority against it or by which it or any of its properties is bound or
any indenture, mortgage or contract or other agreement or instrument to
which it is a party or by which it or any of its properties is bound, or
constitutes or will constitute a default thereunder or results or will
result in the imposition of any lien upon any of its properties; and
(vi) there are no pending or, to its knowledge, threatened actions,
suits, investigations or proceedings (whether or not purportedly on behalf
of it) against or affecting it or any of its property before or by any
court or administrative agency which, if adversely determined, (A) would
adversely affect the ability of it to perform its obligations under this
Agreement or (B) would call into question or challenge the validity of this
Agreement or the enforceability hereof in accordance with the terms hereof,
nor is the Paying Agent in default with respect to any order of any court,
governmental authority, arbitration board or administrative agency so as to
adversely affect its ability to perform its obligations under this
Agreement.
SECTION 7. Indemnification. Except for actions expressly required of the
Escrow Agent or the Paying Agent hereunder, each of the Escrow Agent and the
Paying Agent shall in all cases be fully justified in failing or refusing to act
hereunder unless it shall have been indemnified by the party requesting such
action in a manner reasonably satisfactory to it against any and all liability
and expense which may be incurred by it by reason of taking or continuing to
take any such action. In the event Atlas requests any amendment to any Operative
Agreement (as defined in the Note Purchase Agreement), the Pass Through Trustee
agrees to pay all reasonable fees and expenses (including, without limitation,
fees and disbursements of counsel) of the Escrow Agent and the Paying Agent in
connection therewith.
SECTION 8. Amendment, Etc. Upon request of the Pass Through Trustee and
approval by an Action of Investors, the Escrow Agent shall enter into an
amendment to this Agreement, so long as such amendment does not adversely affect
the rights or obligations of the Escrow Agent or the Paying Agent, provided that
upon request of the Pass Through Trustee and without any consent of the
Investors, the Escrow Agent shall enter into an amendment to this Agreement for
any of the following purposes:
(1) to correct or supplement any provision in this Agreement which may
be defective or inconsistent with any other provision herein or to cure any
ambiguity or correct any mistake or to modify any other provision with
respect to matters or questions arising under this Agreement, provided that
any such action shall not materially adversely affect the interests of the
Investors; or
12
<PAGE>
(2) to comply with any requirement of the SEC, applicable law, rules
or regulations of any exchange or quotation system on which the
Certificates are listed or any regulatory body; or
(3) to evidence and provide for the acceptance of appointment under
this Agreement of a successor Escrow Agent, successor Paying Agent or
successor Pass Through Trustee.
SECTION 9. Notices. Unless otherwise expressly provided herein, any notice
or other communication under this Agreement shall be in writing (including by
facsimile) and shall be deemed to be given and effective upon receipt thereof.
All notices shall be sent to
(i) if to the Investors, as their respective names shall appear in
the Register;
(ii) if to the Escrow Agent, addressed to at its office at:
FIRST SECURITY BANK, NATIONAL ASSOCIATION 79 South
Main Street Salt Lake City, UT 84111
Attention: Corporate Trust Department
Telecopier: 801-246-5053
(iii) if to the Pass Through Trustee, addressed to it at its office
at:
WILMINGTON TRUST COMPANY
One Rodney Square
1100 N. Market Street
Wilmington, DE 19890-0001
Attention: Corporate Trust Administration
Telecopier: 302-651-8882
(iv) if to the Paying Agent, addressed to it at its office at:
WILMINGTON TRUST COMPANY
One Rodney Square
1100 N. Market Street
Wilmington, DE 19890-0001
Attention: Corporate Trust Administration
Telecopier: 302-651-8882
13
<PAGE>
(v) in each case with a copy to Atlas, addressed to it at its office
at:
ATLAS AIR, INC.
538 Commons Drive
Golden, CO 80401
Attention: Chief Financial Officer
Telecopier: 303-526-5051
(or at such other address as any such party may specify from time to time in a
written notice to the other parties). On or prior to the execution of this
Agreement, the Pass Through Trustee has delivered to the Escrow Agent a
certificate containing specimen signatures of the representatives of the Pass
Through Trustee who are authorized to give notices and instructions with respect
to this Agreement. The Escrow Agent may conclusively rely on such certificate
until the Escrow Agent receives written notice from the Pass Through Trustee to
the contrary.
SECTION 10. Transfer. No party hereto shall be entitled to assign or
otherwise transfer this Agreement (or any interest herein) other than (in the
case of the Escrow Agent) to a successor escrow agent under Section 1.07 hereof
or (in the case of the Paying Agent) to a successor paying agent under Section
2.05 hereof, and any purported assignment in violation thereof shall be void.
This Agreement shall be binding upon the parties hereto and their respective
successors and (in the case of the Escrow Agent and the Paying Agent) their
respective permitted assigns.
SECTION 11. Entire Agreement. This Agreement sets forth all of the
promises, covenants, agreements, conditions and understandings among the Escrow
Agent, the Paying Agent, the Underwriters and the Pass Through Trustee with
respect to the subject matter hereof, and supersedes all prior and
contemporaneous agreements and undertakings, inducements or conditions, express
or implied, oral or written.
SECTION 12. Governing Law. This Agreement shall be governed by, and
construed in accordance with, the laws of the State of New York.
SECTION 13. Waiver of Jury Trial Right. EACH OF THE ESCROW AGENT, THE
PAYING AGENT, THE INVESTORS AND THE PASS THROUGH TRUSTEE ACKNOWLEDGES AND
ACCEPTS THAT IN ANY SUIT, ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO
THIS AGREEMENT SUCH PARTY IRREVOCABLY WAIVES ITS RIGHT TO A TRIAL BY JURY.
SECTION 14. Counterparts. This Agreement may be executed in one or more
counterparts, all of which taken together shall constitute one instrument.
<PAGE>
IN WITNESS WHEREOF, the Escrow Agent, the Paying Agent, the Underwriters
and the Pass Through Trustee have caused this Escrow and Paying Agent Agreement
(Class A-2) to be duly executed as of the day and year first above written.
FIRST SECURITY BANK, NATIONAL ASSOCIATION,
as Escrow Agent
By /s/ C. Scott Nielsen
-------------------------------------
Name: C. Scott Nielsen
Title: Vice President
<PAGE>
MORGAN STANLEY & CO. INCORPORATED;
BT ALEX. BROWN INCORPORATED;
CIBC OPPENHEIMER CORP.
ING BARING FURMAN SELZ LLC,
as Underwriters
By: MORGAN STANLEY & CO.
INCORPORATED
By /s/ Christopher Chaput
-------------------------------------
Name: Christopher Chaput
Title: Vice President
WILMINGTON TRUST COMPANY, not
in its individual capacity,
but solely as Pass Through
Trustee for and on behalf of
Atlas Air Pass Through Trust
1999-1A-2
By /s/ James P. Lawler
-------------------------------------
Name: James P. Lawler
Title: Vice President
WILMINGTON TRUST COMPANY,
as Paying Agent
By /s/ James P. Lawler
-------------------------------------
Name: James P. Lawler
Title: Vice President
<PAGE>
EXHIBIT A
ATLAS AIR, INC. 1999-1A-2 ESCROW RECEIPT
No. __
This Escrow Receipt evidences a fractional undivided interest in amounts
("Account Amounts") from time to time deposited into a certain paying agent
account (the "Paying Agent Account") described in the Escrow and Paying Agent
Agreement (Class A-2) dated as of April 13, 1999 (as amended, modified or
supplemented from time to time, the "Escrow and Paying Agent Agreement") among
First Security Bank, National Association, as Escrow Agent (in such capacity,
together with its successors in such capacity, the "Escrow Agent"), Morgan
Stanley & Co. Incorporated, BT Alex. Brown Incorporated, CIBC Oppenheimer Corp.
and ING Baring Furman Selz, LLC, as Underwriters, Wilmington Trust Company as
Pass Through Trustee (in such capacity, together with its successors in such
capacity, the "Pass Through Trustee") and Wilmington Trust Company, as paying
agent (in such capacity, together with its successors in such capacity, the
"Paying Agent"). Capitalized terms not defined herein shall have the meanings
assigned to them in the Escrow and Paying Agent Agreement.
This Escrow Receipt is issued under and is subject to the terms, provisions
and conditions of the Escrow and Paying Agent Agreement. By virtue of its
acceptance hereof the holder of this Escrow Receipt assents and agrees to be
bound by the provisions of the Escrow and Paying Agent Agreement and this Escrow
Receipt.
This Escrow Receipt represents a fractional undivided interest in amounts
deposited from time to time in the Paying Agent Account, and grants or
represents no rights, benefits or interests of any kind in respect of any assets
or property other than such amounts. This Escrow Receipt evidences the same
percentage interest in the Account Amounts as the Fractional Undivided Interest
in the Pass Through Trust evidenced by the Certificate to which this Escrow
Receipt is affixed.
All payments and distributions made to Receiptholders in respect of the
Escrow Receipt shall be made only from Account Amounts deposited in the Paying
Agent Account. The holder of this Escrow Receipt, by its acceptance of this
Escrow Receipt, agrees that it will look solely to the Account Amounts for any
payment or distribution due to it pursuant to this Escrow Receipt and that it
will not have any recourse to Atlas, the Pass Through Trustee, the Paying Agent
or the Escrow Agent, except as expressly provided herein or in the Pass Through
Trust Agreement. No Receiptholder of this Escrow Receipt shall have any right to
vote or in any manner otherwise control the operation and management of the
Paying Agent Account, nor shall anything set forth herein, or contained in the
terms of this Escrow Receipt, be construed so as to constitute the
Receiptholders from time to time as partners or members of an association.
<PAGE>
This Escrow Receipt may not be assigned or transferred except in connection
with the assignment or transfer of the Certificate to which this Escrow Receipt
is affixed. After payment to the holder hereof of its Escrow Interest in the
Final Distribution, upon the request of the Pass Through Trustee, the holder
hereof will return this Escrow Receipt to the Pass Through Trustee.
The Paying Agent may treat the person in whose name the Certificate to
which this Escrow Receipt is attached as the owner hereof for all purposes, and
the Paying Agent shall not be affected by any notice to the contrary.
THIS ESCROW RECEIPT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH
THE LAWS OF THE STATE OF NEW YORK.
IN WITNESS WHEREOF, the Escrow Agent has caused this Escrow Receipt to be
duly executed.
Dated: ______________, ____
FIRST SECURITY BANK, NATIONAL ASSOCIATION,
as Escrow Agent
By:__________________________
Name:
Title:
2
<PAGE>
EXHIBIT B
WITHDRAWAL CERTIFICATE
(Class A-2)
First Security Bank, National Association,
as Escrow Agent
79 South Main Street
Salt Lake City, UT 84111
Attention: Corporate Trust Services
Dear Sirs:
Reference is made to the Escrow and Paying Agent Agreement, dated as of
April 13, 1999 (the "Agreement"). We hereby certify to you that the conditions
to the obligations of the undersigned to execute a Participation Agreement
pursuant to the Note Purchase Agreement have been satisfied. Pursuant to Section
1.02(c) of the Agreement, please execute the attached Notice of Purchase
Withdrawal and immediately transmit by facsimile to the Depositary, at
_________, Attention: ____________________________.
Very truly yours,
WILMINGTON TRUST COMPANY,
not in its individual capacity but
solely as Pass Through Trustee
By:__________________________
Name:
Dated: ____________
<PAGE>
EXHIBIT C
PREPAYMENT WITHDRAWAL CERTIFICATE
(Class A-2)
First Security Bank, National Association,
as Escrow Agent
79 South Main Street
Salt Lake City, UT 84111
Attention: Corporate Trust Services
Dear Sirs:
Reference is made to the Escrow and Paying Agent Agreement, dated as of
April 13, 1999 (the "Agreement"). The undersigned has been notified by Atlas
Air, Inc. that it has received written notice from The Boeing Company that the
delivery date for the Aircraft in respect of which the attached Notice of
Prepayment Withdrawal is to be given will be delayed beyond the Delivery Period
Termination Date. Pursuant to Section 1.02(d) of the Agreement, please execute
the attached Notice of Prepayment Withdrawal and immediately transmit by
facsimile to the Depositary, at ____________, Attention:
_______________________________.
Very truly yours,
WILMINGTON TRUST COMPANY,
not in its individual capacity but
solely as Pass Through Trustee
By __________________________
Name
EXECUTION COPY
ESCROW AND PAYING AGENT AGREEMENT
(Class B)
Dated as of April 13, 1999
among
FIRST SECURITY BANK, NATIONAL ASSOCIATION
as Escrow Agent
MORGAN STANLEY & CO. INCORPORATED
BT ALEX. BROWN INCORPORATED
CIBC OPPENHEIMER CORP.
ING BARING FURMAN SELZ LLC
as Underwriters
WILMINGTON TRUST COMPANY
not in its individual capacity,
but solely as Pass Through Trustee
for and on behalf of
Atlas Air Pass Through Trust 1999-1B
as Pass Through Trustee
and
WILMINGTON TRUST COMPANY
as Paying Agent
<PAGE>
TABLE OF CONTENTS
Page
SECTION 1. Escrow Agent ............................................ 2
Section 1.01. Appointment of Escrow Agent ............................. 2
Section 1.02. Instruction; Etc ........................................ 3
Section 1.03. Initial Escrow Amount; Issuance of Escrow Receipts ...... 3
Section 1.04. Payments to Receiptholders .............................. 4
Section 1.05. Mutilated, Destroyed, Lost or Stolen Escrow Receipt ..... 4
Section 1.06. Additional Escrow Amounts ............................... 5
Section 1.07. Resignation or Removal of Escrow Agent .................. 5
Section 1.08. Persons Deemed Owners ................................... 6
Section 1.09. Further Assurances ...................................... 6
SECTION 2. Paying Agent ............................................ 6
Section 2.01. Appointment of Paying Agent ............................. 6
Section 2.02. Establishment of Paying Agent Account ................... 6
Section 2.03. Payments from Paying Agent Account ...................... 7
Section 2.04. Withholding Taxes ....................................... 8
Section 2.05. Resignation or Removal of Paying Agent .................. 8
Section 2.06. Notice of Prepayment Withdrawal and Final Withdrawal .... 8
SECTION 3. Payments ................................................ 9
SECTION 4. Other Actions ........................................... 9
SECTION 5. Representations and Warranties of the Escrow Agent ...... 10
i
<PAGE>
Page
SECTION 6. Representations and Warranties of the Paying Agent ...... 11
SECTION 7. Indemnification ......................................... 12
SECTION 8. Amendment, Etc. ......................................... 12
SECTION 9. Notices ................................................. 13
SECTION 10. Transfer ................................................ 14
SECTION 11. Entire Agreement ........................................ 14
SECTION 12. Governing Law ........................................... 14
SECTION 13. Waiver of Jury Trial Right .............................. 14
SECTION 14. Counterparts ............................................ 14
Exhibit A Escrow Receipt
Exhibit B Withdrawal Certificate
Exhibit C Prepayment Withdrawal Certificate
ii
<PAGE>
ESCROW AND PAYING AGENT AGREEMENT (Class B) dated as of April 13, 1999 (as
amended, modified or supplemented from time to time, this "Agreement") among
FIRST SECURITY BANK, NATIONAL ASSOCIATION, a national banking association, as
Escrow Agent (in such capacity, together with its successors in such capacity,
the "Escrow Agent"); MORGAN STANLEY & CO. INCORPORATED, BT ALEX. BROWN
INCORPORATED, CIBC OPPENHEIMER CORP. and ING BARING FURMAN SELZ LLC, as
Underwriters of the Certificates referred to below (the "Underwriters" and
together with their respective transferees and assigns as registered owners of
the Certificates, the "Investors") under the Underwriting Agreement referred to
below; WILMINGTON TRUST COMPANY, a Delaware banking corporation, not in its
individual capacity, but solely as trustee (in such capacity, together with its
successors in such capacity, the "Pass Through Trustee") under the Pass Through
Trust Agreement referred to below; and WILMINGTON TRUST COMPANY, a Delaware
banking corporation, as paying agent hereunder (in such capacity, together with
its successors in such capacity, the "Paying Agent").
W I T N E S S E T H
WHEREAS, Atlas Air, Inc. ("Atlas") and the Pass Through Trustee have
entered into a Trust Supplement dated the date hereof to the Pass Through Trust
Agreement, dated as of April 1, 1999 (together, as amended, modified or
supplemented from time to time in accordance with the terms thereof, the "Pass
Through Trust Agreement") relating to Atlas Air Pass Through Trust 1999-1B (the
"Pass Through Trust") pursuant to which the Atlas Air Pass Through Trust, Series
1999-1B Certificates referred to therein (the "Certificates") are being issued;
WHEREAS, Atlas and the Underwriters have entered into an Underwriting
Agreement dated as of April 5, 1999 (as amended, modified or supplemented from
time to time in accordance with the terms thereof, the "Underwriting Agreement")
pursuant to which the Pass Through Trustee will issue and sell the Certificates
to the Underwriters;
WHEREAS, Atlas, the Pass Through Trustee, certain other pass through
trustees and certain other persons concurrently herewith are entering into the
Note Purchase Agreement, dated as of the date hereof (the "Note Purchase
Agreement"), pursuant to which the Pass Through Trustee has agreed to acquire
from time to time on or prior to the Cut-Off Date (as defined in the Note
Purchase Agreement) equipment notes (the "Equipment Notes") issued to finance
the acquisition of aircraft by Atlas, as lessee or as owner, utilizing a portion
of the proceeds from the sale of the Certificates (the "Net Proceeds");
WHEREAS, the Underwriters and the Pass Through Trustee intend that the Net
Proceeds be held in escrow by the Escrow Agent on behalf of the Investors,
subject to withdrawal upon request by the Pass Through Trustee and satisfaction
of the conditions set forth in the Note Purchase Agreement for the purpose of
purchasing Equipment Notes, and that pending such withdrawal the Net Proceeds be
deposited on behalf of the Escrow Agent with
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Credit Suisse First Boston, acting through its New York Branch, as Depositary
(the "Depositary") under the Deposit Agreement, dated as of the date hereof
between the Depositary and the Escrow Agent relating to the Pass Through Trust
(as amended, modified or supplemented from time to time in accordance with the
terms thereof, the "Deposit Agreement"), pursuant to which, among other things,
the Depositary will pay interest for distribution to the Investors and establish
accounts from which the Escrow Agent shall make withdrawals upon request of and
proper certification by the Pass Through Trustee;
WHEREAS, the Escrow Agent wishes to appoint the Paying Agent to pay amounts
required to be distributed to the Investors in accordance with this Agreement;
and
WHEREAS, capitalized terms used but not defined herein shall have the
meanings ascribed to such terms in the Pass Through Trust Agreement.
NOW, THEREFORE, in consideration of the obligations contained herein, and
for other good and valuable consideration, the receipt and sufficiency of which
is hereby acknowledged, the parties hereto hereby agree as follows:
SECTION 1. Escrow Agent.
Section 1.01. Appointment of Escrow Agent. Each of the Underwriters, for
and on behalf of each of the Investors, hereby irrevocably appoints, authorizes
and directs the Escrow Agent to act as escrow agent and fiduciary hereunder and
under the Deposit Agreement for such specific purposes and with such powers as
are specifically delegated to the Escrow Agent by the terms of this Agreement,
together with such other powers as are reasonably incidental thereto. Any and
all money received and held by the Escrow Agent under this Agreement or the
Deposit Agreement shall be held in escrow by the Escrow Agent in accordance with
the terms of this Agreement. This Agreement is irrevocable and the Investors'
rights with respect to any monies received and held in escrow by the Escrow
Agent under this Agreement or the Deposit Agreement shall only be as provided
under the terms and conditions of this Agreement and the Deposit Agreement. The
Escrow Agent (which term as used in this sentence shall include reference to its
affiliates and its own and its affiliates' officers, directors, employees and
agents): (a) shall have no duties or responsibilities except those expressly set
forth in this Agreement; (b) shall not be responsible to the Pass Through
Trustee or the Investors for any recitals, statements, representations or
warranties of any person other then itself contained in this Agreement or the
Deposit Agreement or for the failure by the Pass Through Trustee, the Investors
or any other person or entity (other than the Escrow Agent) to perform any of
its obligations hereunder (whether or not the Escrow Agent shall have any
knowledge thereof); and (c) shall not be responsible for any action taken or
omitted to be taken by it hereunder or provided for herein or in connection
herewith, except for its own willful misconduct or gross negligence (or simple
negligence in connection with the handling of funds).
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Section 1.02. Instruction; Etc. The Underwriters, for and on behalf of each
of the Investors, hereby irrevocably instruct the Escrow Agent, and the Escrow
Agent agrees, (a) to enter into the Deposit Agreement, (b) to appoint the Paying
Agent as provided in this Agreement, (c) upon receipt at any time and from time
to time prior to the Delivery Period Termination Date (as defined in the Note
Purchase Agreement) of a certificate substantially in the form of Exhibit B
hereto (a "Withdrawal Certificate") executed by the Pass Through Trustee,
together with an attached Notice of Purchase Withdrawal in substantially the
form of Exhibit A to the Deposit Agreement duly completed by the Pass Through
Trustee (the "Applicable Notice of Purchase Withdrawal" and the withdrawal to
which it relates, a "Purchase Withdrawal"), immediately to execute the
Applicable Notice of Purchase Withdrawal as Escrow Agent and transmit it to the
Depositary by facsimile transmission in accordance with the Deposit Agreement;
provided that, upon the request of the Pass Through Trustee after such
transmission, the Escrow Agent shall cancel such Applicable Notice of Purchase
Withdrawal, (d) upon receipt at any time and from time to time prior to the
Delivery Period Termination Date of a certificate substantially in the form of
Exhibit C hereto (a "Prepayment Withdrawal Certificate") executed by the Pass
Through Trustee, together with an attached Notice of Prepayment Withdrawal in
substantially the form of Exhibit B to the Deposit Agreement duly completed by
the Pass Through Trustee (the "Applicable Notice of Prepayment Withdrawal" and
the withdrawal to which it relates, a "Prepayment Withdrawal"), immediately to
execute the Applicable Notice of Prepayment Withdrawal as Escrow Agent and
transmit it to the Depositary by facsimile transmission in accordance with the
Deposit Agreement; provided that, upon the request of the Pass Through Trustee
after such transmission, the Escrow Agent shall cancel such Applicable Notice of
Prepayment Withdrawal, and (e) if there are any undrawn Deposits (as defined in
the Deposit Agreement) on the earlier of (i) the Delivery Period Termination
Date and (ii) the date on which the Escrow Agent receives notice from the Pass
Through Trustee that the Pass Through Trustee's obligation to purchase Equipment
Notes under the Note Purchase Agreement has terminated, to give notice to the
Depositary (with a copy to the Paying Agent) substantially in the form of
Exhibit C to the Deposit Agreement requesting a withdrawal of all of the
remaining Deposits, together with accrued and unpaid interest on such Deposits
to the date of withdrawal, on the 15th day after the date that such notice of
withdrawal is given to the Depositary (or, if not a Business Day, on the next
succeeding Business Day) (a "Final Withdrawal"), provided that if the day
scheduled for the Final Withdrawal in accordance with the
foregoing is within 10 days before a Regular Distribution Date, then the Escrow
Agent shall request that such requested Final Withdrawal be made on such Regular
Distribution Date (the date of such requested withdrawal, the "Final Withdrawal
Date"). If for any reason the Escrow Agent shall have failed to give the Final
Withdrawal Notice to the Depositary on or before May 31, 2000 (provided, that if
a labor strike or work stoppage occurs at The Boeing Company prior to such date,
such date shall be extended by adding thereto the number of days that each such
labor strike or work stoppage continues in effect), and there are unwithdrawn
Deposits on such date, the Final Withdrawal Date shall be deemed to be June 15,
2000 (or, if the May 31, 2000 date has been extended as provided in this
sentence, the fifteenth day after the Delivery Period Termination Date).
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Section 1.03. Initial Escrow Amount; Issuance of Escrow Receipts. The
Escrow Agent hereby directs the Underwriters to, and the Underwriters hereby
acknowledge that on the date hereof they shall, irrevocably deliver to the
Depositary on behalf of the Escrow Agent, an amount in U.S. dollars ("Dollars")
and immediately available funds equal to $111,910,000 for deposit on behalf of
the Escrow Agent with the Depositary in accordance with Section 2.1 of the
Deposit Agreement. The Underwriters hereby instruct the Escrow Agent, upon
receipt of such sum from the Underwriters, to confirm such receipt by executing
and delivering to the Pass Through Trustee an Escrow Receipt in the form of
Exhibit A hereto (an "Escrow Receipt"), (a) to be affixed by the Pass Through
Trustee to each Certificate and (b) to evidence the same percentage interest
(the "Escrow Interest") in the Account Amounts (as defined below) as the
Fractional Undivided Interest in the Pass Through Trust evidenced by the
Certificate to which it is to be affixed. The Escrow Agent shall provide to the
Pass Through Trustee for attachment to each Certificate newly issued under and
in accordance with the Pass Through Trust Agreement an executed Escrow Receipt
as the Pass Through Trustee may from time to time request of the Escrow Agent.
Each Escrow Receipt shall be registered by the Escrow Agent in a register (the
"Register") maintained by the Escrow Agent in the same name and same manner as
the Certificate to which it is attached and may not thereafter be detached from
such Certificate to which it is to be affixed prior to the distribution of the
Final Withdrawal (the "Final Distribution"). After the Final Distribution, no
additional Escrow Receipts shall be issued and the Pass Through Trustee shall
request the return to the Escrow Agent for cancellation of all outstanding
Escrow Receipts.
Section 1.04. Payments to Receiptholders. All payments and distributions
made to holders of an Escrow Receipt (collectively "Receiptholders") in respect
of the Escrow Receipt shall be made only from amounts deposited in the Paying
Agent Account (as defined below) ("Account Amounts"). Each Receiptholder, by its
acceptance of an Escrow Receipt, agrees that (a) it will look solely to the
Account Amounts for any payment or distribution due to such Receiptholder
pursuant to the terms of the Escrow Receipt and this Agreement and (b) it will
have no recourse to Atlas, the Pass Through Trustee, the Paying Agent or the
Escrow Agent, except as expressly provided herein or in the Pass Through Trust
Agreement. No Receiptholder shall have any right to vote or in any manner
otherwise control the operation and management of the Paying Agent Account or
the obligations of the parties hereto, nor shall anything set forth herein, or
contained in the terms of the Escrow Receipt, be construed so as to constitute
the Receiptholders from time to time as partners or members of an association.
Section 1.05. Mutilated, Destroyed, Lost or Stolen Escrow Receipt. If (a)
any mutilated Escrow Receipt is surrendered to the Escrow Agent or the Escrow
Agent receives evidence to its satisfaction of the destruction, loss or theft of
any Escrow Receipt and (b) there is delivered to the Escrow Agent and the Pass
Through Trustee such security, indemnity or bond, as may be required by them to
hold each of them harmless, then, absent notice to the Escrow Agent or the Pass
Through Trustee that such destroyed, lost or stolen Escrow Receipt has been
acquired by a bona fide purchaser, and provided that the requirements of Section
8-405 of the Uniform Commercial Code in effect in any applicable jurisdiction
are met, the
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Escrow Agent shall execute, authenticate and deliver, in exchange for or in lieu
of any such mutilated, destroyed, lost or stolen Escrow Receipt, a new Escrow
Receipt or Escrow Receipts and of like Escrow Interest in the Account Amounts
and bearing a number not contemporaneously outstanding.
In connection with the issuance of any new Escrow Receipt under this
Section 1.05, the Escrow Agent may 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 Pass
Through Trustee and the Escrow Agent) connected therewith.
Any duplicate Escrow Receipt issued pursuant to this Section 1.05 shall
constitute conclusive evidence of the appropriate Escrow Interest in the Account
Amounts, as if originally issued, whether or not the lost, stolen or destroyed
Escrow Receipt shall be found at any time.
The provisions of this Section 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 Escrow Receipts.
Section 1.06. Additional Escrow Amounts. On the date of any Purchase
Withdrawal, the Pass Through Trustee may re-deposit with the Depositary some or
all of the amounts so withdrawn in accordance with Section 2.4 of the Deposit
Agreement.
Section 1.07. Resignation or Removal of Escrow Agent. Subject to the
appointment and acceptance of a successor Escrow Agent as provided below, the
Escrow Agent may resign at any time by giving 30 days' prior written notice
thereof to the Investors, but may not otherwise be removed except for cause by
the written consent of the Investors with respect to Investors representing
Escrow Interests aggregating not less than a majority in interest in the Account
Amounts (an "Action of Investors"). Upon any such resignation or removal, the
Investors, by an Action of Investors, shall have the right to appoint a
successor Escrow Agent. If no successor Escrow Agent shall have been so
appointed and shall have accepted such appointment within 30 days after the
retiring Escrow Agent's giving of notice of resignation or the removal of the
retiring Escrow Agent, then the retiring Escrow Agent may appoint a successor
Escrow Agent. Any successor Escrow Agent shall be a bank which has an office in
the United States with a combined capital and surplus of at least $100,000,000.
Upon the acceptance of any appointment as Escrow Agent hereunder by a successor
Escrow Agent, such successor Escrow Agent shall enter into such documents as the
Pass Through Trustee shall require and shall thereupon succeed to and become
vested with all the rights, powers, privileges and duties of the retiring Escrow
Agent, and the retiring Escrow Agent shall be discharged from its duties and
obligations hereunder. No resignation or removal of the Escrow Agent shall be
effective unless a written confirmation shall have been obtained from each of
Moody's Investors Service, Inc. and Standard & Poor's Rating Group, a division
of McGraw- Hill Inc. that the replacement of the Escrow Agent with the successor
Escrow Agent will not
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result in (a) a reduction of the rating for the Certificates below the then
current rating for the Certificates or (b) a withdrawal or suspension of the
rating of the Certificates.
Section 1.08. Persons Deemed Owners. Prior to due presentment of a
Certificate for registration of transfer, the Escrow Agent and the Paying Agent
may treat the Person in whose name any Escrow Receipt is registered (as of the
day of determination) as the owner of such Escrow Receipt for the purpose of
receiving distributions pursuant to this Agreement and for all other purposes
whatsoever, and neither the Escrow Agent nor the Paying Agent shall be affected
by any notice to the contrary.
Section 1.09. Further Assurances. The Escrow Agent agrees to take such
actions, and execute such other documents, as may be reasonably requested by the
Pass Through Trustee in order to effectuate the purposes of this Agreement and
the performance by the Escrow Agent of its obligations hereunder.
SECTION 2. Paying Agent.
Section 2.01. Appointment of Paying Agent. The Escrow Agent hereby
irrevocably appoints and authorizes the Paying Agent to act as its paying agent
hereunder, for the benefit of the Investors, for such specific purposes and with
such powers as are specifically delegated to the Paying Agent by the terms of
this Agreement, together with such other powers as are reasonably incidental
thereto. Any and all money received and held by the Paying Agent under this
Agreement or the Deposit Agreement shall be held in the Paying Agent Account for
the benefit of the Investors. The Paying Agent (which term as used in this
sentence shall include reference to its affiliates and its own and its
affiliates' officers, directors, employees and agents): (a) shall have no duties
or responsibilities except those expressly set forth in this Agreement, and
shall not by reason of this Agreement be a trustee for the Escrow Agent; (b)
shall not be responsible to the Escrow Agent for any recitals, statements,
representations or warranties of any person other then itself contained in this
Agreement or for the failure by the Escrow Agent or any other person or entity
(other than the Paying Agent) to perform any of its obligations hereunder
(whether or not the Paying Agent shall have any knowledge thereof); and (c)
shall not be responsible for any action taken or omitted to be taken by it
hereunder or provided for herein or in connection herewith, except for its own
willful misconduct or gross negligence (or simple negligence in connection with
the handling of funds).
Section 2.02. Establishment of Paying Agent Account. The Paying Agent shall
establish a deposit account (the "Paying Agent Account") at Wilmington Trust
Company in the name of the Escrow Agent. It is expressly understood by the
parties hereto that the Paying Agent is acting as the paying agent of the Escrow
Agent hereunder and that no amounts on deposit in the Paying Agent Account
constitute part of the Trust Property.
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Section 2.03. Payments from Paying Agent Account. The Escrow Agent hereby
irrevocably instructs the Paying Agent, and the Paying Agent agrees to act, as
follows:
(a) On each Interest Payment Date (as defined in the Deposit
Agreement) or as soon thereafter as the Paying Agent has confirmed receipt
in the Paying Agent Account from the Depositary of any amount in respect of
accrued interest on the Deposits, the Paying Agent shall distribute out of
the Paying Agent Account the entire amount deposited therein by the
Depositary. There shall be so distributed to each Receiptholder of record
on the 15th day (whether or not a Business Day) preceding such Interest
Payment Date by check mailed to such Receiptholder, at the address
appearing in the Register, such Receiptholder's pro rata share (based on
the Escrow Interest in the Account Amounts held by such Receiptholder) of
the total amount of interest deposited by the Depositary in the Paying
Agent Account on such date, except that, with respect to Escrow Receipts
registered on the record date in the name of a nominee of the Depository
Trust Company ("DTC"), such distribution shall be made by wire transfer in
immediately available funds to the account designated by DTC.
(b) Upon the confirmation by the Paying Agent of receipt in the Paying
Agent Account from the Depositary of any amount in respect of the Final
Withdrawal, the Paying Agent shall forthwith distribute the entire amount
of the Final Withdrawal deposited therein by the Depositary. There shall be
so distributed to each Receiptholder of record on the 15th day (whether or
not a Business Day) preceding the Final Withdrawal Date by check mailed to
such Receiptholder, at the address appearing in the Register, such
Receiptholder's pro rata share (based on the Escrow Interest in the Account
Amounts held by such Receiptholder) of the total amount in the Paying Agent
Account on account of such Final Withdrawal, except that, with respect to
Escrow Receipts registered on the record date in the name of a nominee of
DTC, such distribution shall be made by wire transfer in immediately
available funds to the account designated by DTC.
(c) If any payment of interest or principal in respect of the Final
Withdrawal is not received by the Paying Agent within five days of the
applicable date when due, then it shall be distributed to Receiptholders
after actual receipt by the Paying Agent on the same basis as a Special
Payment is distributed under the Pass Through Trust Agreement.
(d) Upon the confirmation by the Paying Agent of receipt in the Paying
Agent Account from the Depositary of any amount in respect of a Prepayment
Withdrawal, the Paying Agent shall forthwith distribute the entire amount
of such Prepayment Withdrawal upon not less than 15 days prior notice to
the Receiptholders. There shall be distributed to each Receiptholder of
record on the 15th day (whether or not a Business Day) preceding such date
of distribution by check mailed to such Receiptholder, at the address
appearing in the Register, such Receiptholder's pro rata
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share (based on the Escrow Interest in the Account Amounts held by such
Receiptholder) of the total amount in the Paying Agent Account on account
of such Prepayment Withdrawal, except that, with respect to the Escrow
Receipts registered on such record date in the name of a nominee of DTC,
such distribution shall be made by wire transfer in immediately available
funds to the account designated by DTC.
(e) The Paying Agent shall include with any check mailed pursuant to
this Section any notice required to be distributed under the Pass Through
Trust Agreement that is furnished to the Paying Agent by the Pass Through
Trustee.
Section 2.04. Withholding Taxes. The Paying Agent shall exclude and
withhold from each distribution of accrued interest on the Deposits (as defined
in the Deposit Agreement) and any amount in respect of any Prepayment Withdrawal
and the Final Withdrawal any and all withholding taxes applicable thereto as
required by law. The Paying Agent 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 Deposits (as defined in the Deposit Agreement) or the escrow amounts, to
withhold such amounts and timely pay the same to the appropriate authority in
the name of and on behalf of the Receiptholders, 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 Receiptholder
appropriate documentation showing the payment thereof, together with such
additional documentary evidence as such Receiptholder may reasonably request
from time to time. The Paying Agent agrees to file any other information reports
as it may be required to file under United States law.
Section 2.05. Resignation or Removal of Paying Agent. Subject to the
appointment and acceptance of a successor Paying Agent as provided below, the
Paying Agent may resign at any time by giving 30 days' prior written notice
thereof to the Escrow Agent, but may not otherwise be removed except for cause
by the Escrow Agent. Upon any such resignation or removal, the Escrow Agent
shall have the right to appoint a successor Paying Agent. If no successor Paying
Agent shall have been so appointed and shall have accepted such appointment
within 30 days after the retiring Paying Agent's giving of notice of resignation
or the removal of the retiring Paying Agent, then the retiring Paying Agent may
appoint a successor Paying Agent. Any Successor Paying Agent shall be a bank
which has an office in the United States with a combined capital and surplus of
at least $100,000,000. Upon the acceptance of any appointment as Paying Agent
hereunder by a successor Paying Agent, such successor Paying Agent shall enter
into such documents as the Escrow Agent shall require and shall thereupon
succeed to and become vested with all the rights, powers, privileges and duties
of the retiring Paying Agent, and the retiring Paying Agent shall be discharged
from its duties and obligations hereunder.
Section 2.06. Notice of Prepayment Withdrawal and Final Withdrawal.
Promptly after receipt by the Paying Agent of notice that the Escrow Agent has
requested a
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Prepayment Withdrawal or a Final Withdrawal or that a Prepayment Withdrawal or a
Final Withdrawal will be made, the Paying Agent shall cause notice of such
distribution to be mailed to each of the Receiptholders at its address as it
appears in the Register. Such notice shall be mailed not less than 15 days prior
to the distribution date of such Prepayment Withdrawal (the "Prepayment
Withdrawal Date") or of the Final Withdrawal Date, as the case may be. Such
notice shall set forth:
(i) the Prepayment Withdrawal or the Final Withdrawal Date, as the case may
be, and the date for determining Receiptholders of record who shall be
entitled to receive distributions in respect of the Prepayment Withdrawal
or Final Withdrawal,
(ii) the amount of the payment in respect of the Prepayment Withdrawal
or Final Withdrawal, as the case may be, for each $1,000 face amount
Certificate (based on information provided by the Pass Through Trustee) and
the amount thereof constituting unused Deposits (as defined in the Deposit
Agreement) and interest thereon, and
(iii) if the Prepayment Withdrawal Date or Final Withdrawal Date is
the same date as a Regular Distribution Date, the total amount to be
received on such date for each $1,000 face amount Certificate (based on
information provided by the Pass Through Trustee).
Such mailing may include any notice required to be given to
Certificateholders in connection with such distribution pursuant to the Pass
Through Trust Agreement.
SECTION 3. Payments. If, notwithstanding the instructions in Section 4 of
the Deposit Agreement that all amounts payable to the Escrow Agent under the
Deposit Agreement be paid by the Depositary directly to the Paying Agent or the
Pass Through Trustee (depending on the circumstances), the Escrow Agent receives
any payment thereunder, then the Escrow Agent shall forthwith pay such amount in
Dollars and in immediately available funds by wire transfer to (a) in the case
of a payment of accrued interest on the Deposits (as defined in the Deposit
Agreement), any Prepayment Withdrawal or any Final Withdrawal, directly to the
Paying Agent Account and (b) in the case of any Purchase Withdrawal, directly to
the Pass Through Trustee or its designee as specified and in the manner provided
in the Applicable Notice of Purchase Withdrawal. The Escrow Agent hereby waives
any and all rights of set-off, combination of accounts, right of retention or
similar right (whether arising under applicable law, contract or otherwise) it
may have against amounts payable to the Paying Agent howsoever arising.
SECTION 4. Other Actions. The Escrow Agent shall take such other actions
under or in respect of the Deposit Agreement (including, without limitation, the
enforcement
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of the obligations of the Depositary thereunder) as the Investors, by an Action
of Investors, may from time to time request.
SECTION 5. Representations and Warranties of the Escrow Agent. The Escrow
Agent represents and warrants to Atlas, the Investors, the Paying Agent and the
Pass Through Trustee as follows:
(i) it is a national banking association duly organized and validly
existing in good standing under the laws of the United States of America;
(ii) it has full power, authority and legal right to conduct its
business and operations as currently conducted and to enter into and
perform its obligations under this Agreement and the Deposit Agreement;
(iii) the execution, delivery and performance of each of this
Agreement and the Deposit Agreement have been duly authorized by all
necessary corporate action on the part of it and do not require any
stockholder approval, or approval or consent of any trustee or holder of
any indebtedness or obligations of it, and each such document has been duly
executed and delivered by it and constitutes its legal, valid and binding
obligations enforceable against it in accordance with the terms hereof or
thereof except as such enforceability may be limited by bankruptcy,
insolvency, moratorium, reorganization or other similar laws or equitable
principles of general application to or affecting the enforcement of
creditors' rights generally (regardless of whether such enforceability is
considered in a proceeding in equity or at law);
(iv) no authorization, consent or approval of or other action by, and
no notice to or filing with, any United States federal or state
governmental authority or regulatory body is required for the execution,
delivery or performance by it of this Agreement or the Deposit Agreement;
(v) neither the execution, delivery or performance by it of this
Agreement or the Deposit Agreement, nor compliance with the terms and
provisions hereof or thereof, conflicts or will conflict with or results or
will result in a breach or violation of any of the terms, conditions or
provisions of, or will require any consent or approval under, any law,
governmental rule or regulation or the charter documents, as amended, or
bylaws, as amended, of it or any similar instrument binding on it or any
order, writ, injunction or decree of any court or governmental authority
against it or by which it or any of its properties is bound or any
indenture, mortgage or contract or other agreement or instrument to which
it is a party or by which it or any of its properties is bound, or
constitutes or will constitute a default thereunder or results or will
result in the imposition of any lien upon any of its properties; and
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(vi) there are no pending or, to its knowledge, threatened actions,
suits, investigations or proceedings (whether or not purportedly on behalf
of it) against or affecting it or any of its property before or by any
court or administrative agency which, if adversely determined, (A) would
adversely affect the ability of it to perform its obligations under this
Agreement or the Deposit Agreement or (B) would call into question or
challenge the validity of this Agreement or the Deposit Agreement or the
enforceability hereof or thereof in accordance with the terms hereof or
thereof, nor is the Escrow Agent in default with respect to any order of
any court, governmental authority, arbitration board or administrative
agency so as to adversely affect its ability to perform its obligations
under this Agreement or the Deposit Agreement.
SECTION 6. Representations and Warranties of the Paying Agent. The Paying
Agent represents and warrants to Atlas, the Investors, the Escrow Agent and the
Pass Through Trustee as follows:
(i) it is a Delaware banking company duly organized and validly
existing in good standing under the laws of its jurisdiction of
incorporation;
(ii) it has full power, authority and legal right to conduct its
business and operations as currently conducted and to enter into and
perform its obligations under this Agreement;
(iii) the execution, delivery and performance of this Agreement has
been duly authorized by all necessary corporate action on the part of it
and does not require any stockholder approval, or approval or consent of
any trustee or holder of any indebtedness or obligations of it, and such
document has been duly executed and delivered by it and constitutes its
legal, valid and binding obligations enforceable against it in accordance
with the terms hereof except as such enforceability may be limited by
bankruptcy, insolvency, moratorium, reorganization or other similar laws or
equitable principles of general application to or affecting the enforcement
of creditors' rights generally (regardless of whether such enforceability
is considered in a proceeding in equity or at law);
(iv) no authorization, consent or approval of or other action by, and
no notice to or filing with, any United States federal or state
governmental authority or regulatory body is required for the execution,
delivery or performance by it of this Agreement;
(v) neither the execution, delivery or performance by it of this
Agreement, nor compliance with the terms and provisions hereof, conflicts
or will conflict with or results or will result in a breach or violation of
any of the
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terms, conditions or provisions of, or will require any consent or approval
under, any law, governmental rule or regulation or the charter documents,
as amended, or bylaws, as amended, of it or any similar instrument binding
on it or any order, writ, injunction or decree of any court or governmental
authority against it or by which it or any of its properties is bound or
any indenture, mortgage or contract or other agreement or instrument to
which it is a party or by which it or any of its properties is bound, or
constitutes or will constitute a default thereunder or results or will
result in the imposition of any lien upon any of its properties; and
(vi) there are no pending or, to its knowledge, threatened actions,
suits, investigations or proceedings (whether or not purportedly on behalf
of it) against or affecting it or any of its property before or by any
court or administrative agency which, if adversely determined, (A) would
adversely affect the ability of it to perform its obligations under this
Agreement or (B) would call into question or challenge the validity of this
Agreement or the enforceability hereof in accordance with the terms hereof,
nor is the Paying Agent in default with respect to any order of any court,
governmental authority, arbitration board or administrative agency so as to
adversely affect its ability to perform its obligations under this
Agreement.
SECTION 7. Indemnification. Except for actions expressly required of the
Escrow Agent or the Paying Agent hereunder, each of the Escrow Agent and the
Paying Agent shall in all cases be fully justified in failing or refusing to act
hereunder unless it shall have been indemnified by the party requesting such
action in a manner reasonably satisfactory to it against any and all liability
and expense which may be incurred by it by reason of taking or continuing to
take any such action. In the event Atlas requests any amendment to any Operative
Agreement (as defined in the Note Purchase Agreement), the Pass Through Trustee
agrees to pay all reasonable fees and expenses (including, without limitation,
fees and disbursements of counsel) of the Escrow Agent and the Paying Agent in
connection therewith.
SECTION 8. Amendment, Etc. Upon request of the Pass Through Trustee and
approval by an Action of Investors, the Escrow Agent shall enter into an
amendment to this Agreement, so long as such amendment does not adversely affect
the rights or obligations of the Escrow Agent or the Paying Agent, provided that
upon request of the Pass Through Trustee and without any consent of the
Investors, the Escrow Agent shall enter into an amendment to this Agreement for
any of the following purposes:
(1) to correct or supplement any provision in this Agreement which may
be defective or inconsistent with any other provision herein or to cure any
ambiguity or correct any mistake or to modify any other provision with
respect to matters or questions arising under this Agreement, provided that
any such action shall not materially adversely affect the interests of the
Investors; or
12
<PAGE>
(2) to comply with any requirement of the SEC, applicable law, rules
or regulations of any exchange or quotation system on which the
Certificates are listed or any regulatory body; or
(3) to evidence and provide for the acceptance of appointment under
this Agreement of a successor Escrow Agent, successor Paying Agent or
successor Pass Through Trustee.
SECTION 9. Notices. Unless otherwise expressly provided herein, any notice
or other communication under this Agreement shall be in writing (including by
facsimile) and shall be deemed to be given and effective upon receipt thereof.
All notices shall be sent to
(i) if to the Investors, as their respective names shall appear in
the Register;
(ii) if to the Escrow Agent, addressed to at its office at:
FIRST SECURITY BANK, NATIONAL ASSOCIATION 79 South
Main Street Salt Lake City, UT 84111
Attention: Corporate Trust Department
Telecopier: 801-246-5053
(iii) if to the Pass Through Trustee, addressed to it at its office
at:
WILMINGTON TRUST COMPANY
One Rodney Square
1100 N. Market Street
Wilmington, DE 19890-0001
Attention: Corporate Trust Administration
Telecopier: 302-651-8882
(iv) if to the Paying Agent, addressed to it at its office at:
WILMINGTON TRUST COMPANY
One Rodney Square
1100 N. Market Street
Wilmington, DE 19890-0001
Attention: Corporate Trust Administration
Telecopier: 302-651-8882
13
<PAGE>
(v) in each case with a copy to Atlas, addressed to it at its office
at:
ATLAS AIR, INC.
538 Commons Drive
Golden, CO 80401
Attention: Chief Financial Officer
Telecopier: 303-526-5051
(or at such other address as any such party may specify from time to time in a
written notice to the other parties). On or prior to the execution of this
Agreement, the Pass Through Trustee has delivered to the Escrow Agent a
certificate containing specimen signatures of the representatives of the Pass
Through Trustee who are authorized to give notices and instructions with respect
to this Agreement. The Escrow Agent may conclusively rely on such certificate
until the Escrow Agent receives written notice from the Pass Through Trustee to
the contrary.
SECTION 10. Transfer. No party hereto shall be entitled to assign or
otherwise transfer this Agreement (or any interest herein) other than (in the
case of the Escrow Agent) to a successor escrow agent under Section 1.07 hereof
or (in the case of the Paying Agent) to a successor paying agent under Section
2.05 hereof, and any purported assignment in violation thereof shall be void.
This Agreement shall be binding upon the parties hereto and their respective
successors and (in the case of the Escrow Agent and the Paying Agent) their
respective permitted assigns.
SECTION 11. Entire Agreement. This Agreement sets forth all of the
promises, covenants, agreements, conditions and understandings among the Escrow
Agent, the Paying Agent, the Underwriters and the Pass Through Trustee with
respect to the subject matter hereof, and supersedes all prior and
contemporaneous agreements and undertakings, inducements or conditions, express
or implied, oral or written.
SECTION 12. Governing Law. This Agreement shall be governed by, and
construed in accordance with, the laws of the State of New York.
SECTION 13. Waiver of Jury Trial Right. EACH OF THE ESCROW AGENT, THE
PAYING AGENT, THE INVESTORS AND THE PASS THROUGH TRUSTEE ACKNOWLEDGES AND
ACCEPTS THAT IN ANY SUIT, ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO
THIS AGREEMENT SUCH PARTY IRREVOCABLY WAIVES ITS RIGHT TO A TRIAL BY JURY.
SECTION 14. Counterparts. This Agreement may be executed in one or more
counterparts, all of which taken together shall constitute one instrument.
<PAGE>
IN WITNESS WHEREOF, the Escrow Agent, the Paying Agent, the Underwriters
and the Pass Through Trustee have caused this Escrow and Paying Agent Agreement
(Class B) to be duly executed as of the day and year first above written.
FIRST SECURITY BANK, NATIONAL ASSOCIATION,
as Escrow Agent
By /s/ C. Scott Nielsen
-------------------------------------
Name: C. Scott Nielsen
Title: Vice President
<PAGE>
MORGAN STANLEY & CO. INCORPORATED;
BT ALEX. BROWN INCORPORATED;
CIBC OPPENHEIMER CORP.
ING BARING FURMAN SELZ LLC,
as Underwriters
By: MORGAN STANLEY & CO.
INCORPORATED
By /s/ Christopher Chaput
-------------------------------------
Name: Christopher Chaput
Title: Vice President
WILMINGTON TRUST COMPANY, not
in its individual capacity,
but solely as Pass Through
Trustee for and on behalf of
Atlas Air Pass Through Trust
1999-1B
By /s/ James P. Lawler
-------------------------------------
Name: James P. Lawler
Title: Vice President
WILMINGTON TRUST COMPANY,
as Paying Agent
By /s/ James P. Lawler
-------------------------------------
Name: James P. Lawler
Title: Vice President
<PAGE>
EXHIBIT A
ATLAS AIR, INC. 1999-1B ESCROW RECEIPT
No. __
This Escrow Receipt evidences a fractional undivided interest in amounts
("Account Amounts") from time to time deposited into a certain paying agent
account (the "Paying Agent Account") described in the Escrow and Paying Agent
Agreement (Class B) dated as of April 13, 1999 (as amended, modified or
supplemented from time to time, the "Escrow and Paying Agent Agreement") among
First Security Bank, National Association, as Escrow Agent (in such capacity,
together with its successors in such capacity, the "Escrow Agent"), Morgan
Stanley & Co. Incorporated, BT Alex. Brown Incorporated, CIBC Oppenheimer Corp.
and ING Baring Furman Selz, LLC, as Underwriters, Wilmington Trust Company as
Pass Through Trustee (in such capacity, together with its successors in such
capacity, the "Pass Through Trustee") and Wilmington Trust Company, as paying
agent (in such capacity, together with its successors in such capacity, the
"Paying Agent"). Capitalized terms not defined herein shall have the meanings
assigned to them in the Escrow and Paying Agent Agreement.
This Escrow Receipt is issued under and is subject to the terms, provisions
and conditions of the Escrow and Paying Agent Agreement. By virtue of its
acceptance hereof the holder of this Escrow Receipt assents and agrees to be
bound by the provisions of the Escrow and Paying Agent Agreement and this Escrow
Receipt.
This Escrow Receipt represents a fractional undivided interest in amounts
deposited from time to time in the Paying Agent Account, and grants or
represents no rights, benefits or interests of any kind in respect of any assets
or property other than such amounts. This Escrow Receipt evidences the same
percentage interest in the Account Amounts as the Fractional Undivided Interest
in the Pass Through Trust evidenced by the Certificate to which this Escrow
Receipt is affixed.
All payments and distributions made to Receiptholders in respect of the
Escrow Receipt shall be made only from Account Amounts deposited in the Paying
Agent Account. The holder of this Escrow Receipt, by its acceptance of this
Escrow Receipt, agrees that it will look solely to the Account Amounts for any
payment or distribution due to it pursuant to this Escrow Receipt and that it
will not have any recourse to Atlas, the Pass Through Trustee, the Paying Agent
or the Escrow Agent, except as expressly provided herein or in the Pass Through
Trust Agreement. No Receiptholder of this Escrow Receipt shall have any right to
vote or in any manner otherwise control the operation and management of the
Paying Agent Account, nor shall anything set forth herein, or contained in the
terms of this Escrow Receipt, be construed so as to constitute the
Receiptholders from time to time as partners or members of an association.
<PAGE>
This Escrow Receipt may not be assigned or transferred except in connection
with the assignment or transfer of the Certificate to which this Escrow Receipt
is affixed. After payment to the holder hereof of its Escrow Interest in the
Final Distribution, upon the request of the Pass Through Trustee, the holder
hereof will return this Escrow Receipt to the Pass Through Trustee.
The Paying Agent may treat the person in whose name the Certificate to
which this Escrow Receipt is attached as the owner hereof for all purposes, and
the Paying Agent shall not be affected by any notice to the contrary.
THIS ESCROW RECEIPT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH
THE LAWS OF THE STATE OF NEW YORK.
IN WITNESS WHEREOF, the Escrow Agent has caused this Escrow Receipt to be
duly executed.
Dated: ______________, ____
FIRST SECURITY BANK, NATIONAL ASSOCIATION,
as Escrow Agent
By:__________________________
Name:
Title:
2
<PAGE>
EXHIBIT B
WITHDRAWAL CERTIFICATE
(Class B)
First Security Bank, National Association,
as Escrow Agent
79 South Main Street
Salt Lake City, UT 84111
Attention: Corporate Trust Services
Dear Sirs:
Reference is made to the Escrow and Paying Agent Agreement, dated as of
April 13, 1999 (the "Agreement"). We hereby certify to you that the conditions
to the obligations of the undersigned to execute a Participation Agreement
pursuant to the Note Purchase Agreement have been satisfied. Pursuant to Section
1.02(c) of the Agreement, please execute the attached Notice of Purchase
Withdrawal and immediately transmit by facsimile to the Depositary, at
_________, Attention: ____________________________.
Very truly yours,
WILMINGTON TRUST COMPANY,
not in its individual capacity but
solely as Pass Through Trustee
By:__________________________
Name:
Dated: ____________
<PAGE>
EXHIBIT C
PREPAYMENT WITHDRAWAL CERTIFICATE
(Class B)
First Security Bank, National Association,
as Escrow Agent
79 South Main Street
Salt Lake City, UT 84111
Attention: Corporate Trust Services
Dear Sirs:
Reference is made to the Escrow and Paying Agent Agreement, dated as of
April 13, 1999 (the "Agreement"). The undersigned has been notified by Atlas
Air, Inc. that it has received written notice from The Boeing Company that the
delivery date for the Aircraft in respect of which the attached Notice of
Prepayment Withdrawal is to be given will be delayed beyond the Delivery Period
Termination Date. Pursuant to Section 1.02(d) of the Agreement, please execute
the attached Notice of Prepayment Withdrawal and immediately transmit by
facsimile to the Depositary, at ____________, Attention: _________.
Very truly yours,
WILMINGTON TRUST COMPANY,
not in its individual capacity but
solely as Pass Through Trustee
By __________________________
Name
EXECUTION COPY
ESCROW AND PAYING AGENT AGREEMENT
(Class C)
Dated as of April 13, 1999
among
FIRST SECURITY BANK, NATIONAL ASSOCIATION
as Escrow Agent
MORGAN STANLEY & CO. INCORPORATED
BT ALEX. BROWN INCORPORATED
CIBC OPPENHEIMER CORP.
ING BARING FURMAN SELZ LLC
as Underwriters
WILMINGTON TRUST COMPANY
not in its individual capacity,
but solely as Pass Through Trustee
for and on behalf of
Atlas Air Pass Through Trust 1999-1C
as Pass Through Trustee
and
WILMINGTON TRUST COMPANY
as Paying Agent
<PAGE>
TABLE OF CONTENTS
Page
SECTION 1. Escrow Agent ............................................ 2
Section 1.01. Appointment of Escrow Agent ............................. 2
Section 1.02. Instruction; Etc ........................................ 3
Section 1.03. Initial Escrow Amount; Issuance of Escrow Receipts ...... 3
Section 1.04. Payments to Receiptholders .............................. 4
Section 1.05. Mutilated, Destroyed, Lost or Stolen Escrow Receipt ..... 4
Section 1.06. Additional Escrow Amounts ............................... 5
Section 1.07. Resignation or Removal of Escrow Agent .................. 5
Section 1.08. Persons Deemed Owners ................................... 6
Section 1.09. Further Assurances ...................................... 6
SECTION 2. Paying Agent ............................................ 6
Section 2.01. Appointment of Paying Agent ............................. 6
Section 2.02. Establishment of Paying Agent Account ................... 6
Section 2.03. Payments from Paying Agent Account ...................... 7
Section 2.04. Withholding Taxes ....................................... 8
Section 2.05. Resignation or Removal of Paying Agent .................. 8
Section 2.06. Notice of Prepayment Withdrawal and Final Withdrawal .... 8
SECTION 3. Payments ................................................ 9
SECTION 4. Other Actions ........................................... 9
SECTION 5. Representations and Warranties of the Escrow Agent ...... 10
i
<PAGE>
SECTION 6. Representations and Warranties of the Paying Agent ...... 11
SECTION 7. Indemnification ......................................... 12
SECTION 8. Amendment, Etc. ......................................... 12
SECTION 9. Notices ................................................. 13
<PAGE>
Page
SECTION 10. Transfer ................................................ 14
SECTION 11. Entire Agreement ........................................ 14
SECTION 12. Governing Law ........................................... 14
SECTION 13. Waiver of Jury Trial Right .............................. 14
SECTION 14. Counterparts ............................................ 14
Exhibit A Escrow Receipt
Exhibit B Withdrawal Certificate
Exhibit C Prepayment Withdrawal Certificate
ii
<PAGE>
ESCROW AND PAYING AGENT AGREEMENT (Class C) dated as of April 13, 1999 (as
amended, modified or supplemented from time to time, this "Agreement") among
FIRST SECURITY BANK, NATIONAL ASSOCIATION, a national banking association, as
Escrow Agent (in such capacity, together with its successors in such capacity,
the "Escrow Agent"); MORGAN STANLEY & CO. INCORPORATED, BT ALEX. BROWN
INCORPORATED, CIBC OPPENHEIMER CORP. and ING BARING FURMAN SELZ LLC, as
Underwriters of the Certificates referred to below (the "Underwriters" and
together with their respective transferees and assigns as registered owners of
the Certificates, the "Investors") under the Underwriting Agreement referred to
below; WILMINGTON TRUST COMPANY, a Delaware banking corporation, not in its
individual capacity, but solely as trustee (in such capacity, together with its
successors in such capacity, the "Pass Through Trustee") under the Pass Through
Trust Agreement referred to below; and WILMINGTON TRUST COMPANY, a Delaware
banking corporation, as paying agent hereunder (in such capacity, together with
its successors in such capacity, the "Paying Agent").
W I T N E S S E T H
WHEREAS, Atlas Air, Inc. ("Atlas") and the Pass Through Trustee have
entered into a Trust Supplement dated the date hereof to the Pass Through Trust
Agreement, dated as of April 1, 1999 (together, as amended, modified or
supplemented from time to time in accordance with the terms thereof, the "Pass
Through Trust Agreement") relating to Atlas Air Pass Through Trust 1999-1C (the
"Pass Through Trust") pursuant to which the Atlas Air Pass Through Trust, Series
1999-1C Certificates referred to therein (the "Certificates") are being issued;
WHEREAS, Atlas and the Underwriters have entered into an Underwriting
Agreement dated as of April 5, 1999 (as amended, modified or supplemented from
time to time in accordance with the terms thereof, the "Underwriting Agreement")
pursuant to which the Pass Through Trustee will issue and sell the Certificates
to the Underwriters;
WHEREAS, Atlas, the Pass Through Trustee, certain other pass through
trustees and certain other persons concurrently herewith are entering into the
Note Purchase Agreement, dated as of the date hereof (the "Note Purchase
Agreement"), pursuant to which the Pass Through Trustee has agreed to acquire
from time to time on or prior to the Cut-Off Date (as defined in the Note
Purchase Agreement) equipment notes (the "Equipment Notes") issued to finance
the acquisition of aircraft by Atlas, as lessee or as owner, utilizing a portion
of the proceeds from the sale of the Certificates (the "Net Proceeds");
WHEREAS, the Underwriters and the Pass Through Trustee intend that the Net
Proceeds be held in escrow by the Escrow Agent on behalf of the Investors,
subject to withdrawal upon request by the Pass Through Trustee and satisfaction
of the conditions set forth in the Note Purchase Agreement for the purpose of
purchasing Equipment Notes, and that pending such withdrawal the Net Proceeds be
deposited on behalf of the Escrow Agent with
<PAGE>
Credit Suisse First Boston, acting through its New York Branch, as Depositary
(the "Depositary") under the Deposit Agreement, dated as of the date hereof
between the Depositary and the Escrow Agent relating to the Pass Through Trust
(as amended, modified or supplemented from time to time in accordance with the
terms thereof, the "Deposit Agreement"), pursuant to which, among other things,
the Depositary will pay interest for distribution to the Investors and establish
accounts from which the Escrow Agent shall make withdrawals upon request of and
proper certification by the Pass Through Trustee;
WHEREAS, the Escrow Agent wishes to appoint the Paying Agent to pay amounts
required to be distributed to the Investors in accordance with this Agreement;
and
WHEREAS, capitalized terms used but not defined herein shall have the
meanings ascribed to such terms in the Pass Through Trust Agreement.
NOW, THEREFORE, in consideration of the obligations contained herein, and
for other good and valuable consideration, the receipt and sufficiency of which
is hereby acknowledged, the parties hereto hereby agree as follows:
SECTION 1. Escrow Agent.
Section 1.01. Appointment of Escrow Agent. Each of the Underwriters, for
and on behalf of each of the Investors, hereby irrevocably appoints, authorizes
and directs the Escrow Agent to act as escrow agent and fiduciary hereunder and
under the Deposit Agreement for such specific purposes and with such powers as
are specifically delegated to the Escrow Agent by the terms of this Agreement,
together with such other powers as are reasonably incidental thereto. Any and
all money received and held by the Escrow Agent under this Agreement or the
Deposit Agreement shall be held in escrow by the Escrow Agent in accordance with
the terms of this Agreement. This Agreement is irrevocable and the Investors'
rights with respect to any monies received and held in escrow by the Escrow
Agent under this Agreement or the Deposit Agreement shall only be as provided
under the terms and conditions of this Agreement and the Deposit Agreement. The
Escrow Agent (which term as used in this sentence shall include reference to its
affiliates and its own and its affiliates' officers, directors, employees and
agents): (a) shall have no duties or responsibilities except those expressly set
forth in this Agreement; (b) shall not be responsible to the Pass Through
Trustee or the Investors for any recitals, statements, representations or
warranties of any person other then itself contained in this Agreement or the
Deposit Agreement or for the failure by the Pass Through Trustee, the Investors
or any other person or entity (other than the Escrow Agent) to perform any of
its obligations hereunder (whether or not the Escrow Agent shall have any
knowledge thereof); and (c) shall not be responsible for any action taken or
omitted to be taken by it hereunder or provided for herein or in connection
herewith, except for its own willful misconduct or gross negligence (or simple
negligence in connection with the handling of funds).
2
<PAGE>
Section 1.02. Instruction; Etc. The Underwriters, for and on behalf of each
of the Investors, hereby irrevocably instruct the Escrow Agent, and the Escrow
Agent agrees, (a) to enter into the Deposit Agreement, (b) to appoint the Paying
Agent as provided in this Agreement, (c) upon receipt at any time and from time
to time prior to the Delivery Period Termination Date (as defined in the Note
Purchase Agreement) of a certificate substantially in the form of Exhibit B
hereto (a "Withdrawal Certificate") executed by the Pass Through Trustee,
together with an attached Notice of Purchase Withdrawal in substantially the
form of Exhibit A to the Deposit Agreement duly completed by the Pass Through
Trustee (the "Applicable Notice of Purchase Withdrawal" and the withdrawal to
which it relates, a "Purchase Withdrawal"), immediately to execute the
Applicable Notice of Purchase Withdrawal as Escrow Agent and transmit it to the
Depositary by facsimile transmission in accordance with the Deposit Agreement;
provided that, upon the request of the Pass Through Trustee after such
transmission, the Escrow Agent shall cancel such Applicable Notice of Purchase
Withdrawal, (d) upon receipt at any time and from time to time prior to the
Delivery Period Termination Date of a certificate substantially in the form of
Exhibit C hereto (a "Prepayment Withdrawal Certificate") executed by the Pass
Through Trustee, together with an attached Notice of Prepayment Withdrawal in
substantially the form of Exhibit B to the Deposit Agreement duly completed by
the Pass Through Trustee (the "Applicable Notice of Prepayment Withdrawal" and
the withdrawal to which it relates, a "Prepayment Withdrawal"), immediately to
execute the Applicable Notice of Prepayment Withdrawal as Escrow Agent and
transmit it to the Depositary by facsimile transmission in accordance with the
Deposit Agreement; provided that, upon the request of the Pass Through Trustee
after such transmission, the Escrow Agent shall cancel such Applicable Notice of
Prepayment Withdrawal, and (e) if there are any undrawn Deposits (as defined in
the Deposit Agreement) on the earlier of (i) the Delivery Period Termination
Date and (ii) the date on which the Escrow Agent receives notice from the Pass
Through Trustee that the Pass Through Trustee's obligation to purchase Equipment
Notes under the Note Purchase Agreement has terminated, to give notice to the
Depositary (with a copy to the Paying Agent) substantially in the form of
Exhibit C to the Deposit Agreement requesting a withdrawal of all of the
remaining Deposits, together with accrued and unpaid interest on such Deposits
to the date of withdrawal, on the 15th day after the date that such notice of
withdrawal is given to the Depositary (or, if not a Business Day, on the next
succeeding Business Day) (a "Final Withdrawal"), provided that if the day
scheduled for the Final Withdrawal in accordance with the foregoing is within 10
days before a Regular Distribution Date, then the Escrow Agent shall request
that such requested Final Withdrawal be made on such Regular Distribution Date
(the date of such requested withdrawal, the "Final Withdrawal Date"). If for any
reason the Escrow Agent shall have failed to give the Final Withdrawal Notice to
the Depositary on or before May 31, 2000 (provided, that if a labor strike or
work stoppage occurs at The Boeing Company prior to such date, such date shall
be extended by adding thereto the number of days that each such labor strike or
work stoppage continues in effect), and there are unwithdrawn Deposits on such
date, the Final Withdrawal Date shall be deemed to be June 15, 2000 (or, if the
May 31, 2000 date has been extended as provided in this sentence, the fifteenth
day after the Delivery Period Termination Date).
3
<PAGE>
Section 1.03. Initial Escrow Amount; Issuance of Escrow Receipts. The
Escrow Agent hereby directs the Underwriters to, and the Underwriters hereby
acknowledge that on the date hereof they shall, irrevocably deliver to the
Depositary on behalf of the Escrow Agent, an amount in U.S. dollars ("Dollars")
and immediately available funds equal to $119,904,000 for deposit on behalf of
the Escrow Agent with the Depositary in accordance with Section 2.1 of the
Deposit Agreement. The Underwriters hereby instruct the Escrow Agent, upon
receipt of such sum from the Underwriters, to confirm such receipt by executing
and delivering to the Pass Through Trustee an Escrow Receipt in the form of
Exhibit A hereto (an "Escrow Receipt"), (a) to be affixed by the Pass Through
Trustee to each Certificate and (b) to evidence the same percentage interest
(the "Escrow Interest") in the Account Amounts (as defined below) as the
Fractional Undivided Interest in the Pass Through Trust evidenced by the
Certificate to which it is to be affixed. The Escrow Agent shall provide to the
Pass Through Trustee for attachment to each Certificate newly issued under and
in accordance with the Pass Through Trust Agreement an executed Escrow Receipt
as the Pass Through Trustee may from time to time request of the Escrow Agent.
Each Escrow Receipt shall be registered by the Escrow Agent in a register (the
"Register") maintained by the Escrow Agent in the same name and same manner as
the Certificate to which it is attached and may not thereafter be detached from
such Certificate to which it is to be affixed prior to the distribution of the
Final Withdrawal (the "Final Distribution"). After the Final Distribution, no
additional Escrow Receipts shall be issued and the Pass Through Trustee shall
request the return to the Escrow Agent for cancellation of all outstanding
Escrow Receipts.
Section 1.04. Payments to Receiptholders. All payments and distributions
made to holders of an Escrow Receipt (collectively "Receiptholders") in respect
of the Escrow Receipt shall be made only from amounts deposited in the Paying
Agent Account (as defined below) ("Account Amounts"). Each Receiptholder, by its
acceptance of an Escrow Receipt, agrees that (a) it will look solely to the
Account Amounts for any payment or distribution due to such Receiptholder
pursuant to the terms of the Escrow Receipt and this Agreement and (b) it will
have no recourse to Atlas, the Pass Through Trustee, the Paying Agent or the
Escrow Agent, except as expressly provided herein or in the Pass Through Trust
Agreement. No Receiptholder shall have any right to vote or in any manner
otherwise control the operation and management of the Paying Agent Account or
the obligations of the parties hereto, nor shall anything set forth herein, or
contained in the terms of the Escrow Receipt, be construed so as to constitute
the Receiptholders from time to time as partners or members of an association.
Section 1.05. Mutilated, Destroyed, Lost or Stolen Escrow Receipt. If (a)
any mutilated Escrow Receipt is surrendered to the Escrow Agent or the Escrow
Agent receives evidence to its satisfaction of the destruction, loss or theft of
any Escrow Receipt and (b) there is delivered to the Escrow Agent and the Pass
Through Trustee such security, indemnity or bond, as may be required by them to
hold each of them harmless, then, absent notice to the Escrow Agent or the Pass
Through Trustee that such destroyed, lost or stolen Escrow Receipt has been
acquired by a bona fide purchaser, and provided that the requirements of Section
8-405 of the Uniform Commercial Code in effect in any applicable jurisdiction
are met,
4
<PAGE>
the Escrow Agent shall execute, authenticate and deliver, in exchange for or in
lieu of any such mutilated, destroyed, lost or stolen Escrow Receipt, a new
Escrow Receipt or Escrow Receipts and of like Escrow Interest in the Account
Amounts and bearing a number not contemporaneously outstanding.
In connection with the issuance of any new Escrow Receipt under this
Section 1.05, the Escrow Agent may 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 Pass
Through Trustee and the Escrow Agent) connected therewith.
Any duplicate Escrow Receipt issued pursuant to this Section 1.05 shall
constitute conclusive evidence of the appropriate Escrow Interest in the Account
Amounts, as if originally issued, whether or not the lost, stolen or destroyed
Escrow Receipt shall be found at any time.
The provisions of this Section 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 Escrow Receipts.
Section 1.06. Additional Escrow Amounts. On the date of any Purchase
Withdrawal, the Pass Through Trustee may re-deposit with the Depositary some or
all of the amounts so withdrawn in accordance with Section 2.4 of the Deposit
Agreement.
Section 1.07. Resignation or Removal of Escrow Agent. Subject to the
appointment and acceptance of a successor Escrow Agent as provided below, the
Escrow Agent may resign at any time by giving 30 days' prior written notice
thereof to the Investors, but may not otherwise be removed except for cause by
the written consent of the Investors with respect to Investors representing
Escrow Interests aggregating not less than a majority in interest in the Account
Amounts (an "Action of Investors"). Upon any such resignation or removal, the
Investors, by an Action of Investors, shall have the right to appoint a
successor Escrow Agent. If no successor Escrow Agent shall have been so
appointed and shall have accepted such appointment within 30 days after the
retiring Escrow Agent's giving of notice of resignation or the removal of the
retiring Escrow Agent, then the retiring Escrow Agent may appoint a successor
Escrow Agent. Any successor Escrow Agent shall be a bank which has an office in
the United States with a combined capital and surplus of at least $100,000,000.
Upon the acceptance of any appointment as Escrow Agent hereunder by a successor
Escrow Agent, such successor Escrow Agent shall enter into such documents as the
Pass Through Trustee shall require and shall thereupon succeed to and become
vested with all the rights, powers, privileges and duties of the retiring Escrow
Agent, and the retiring Escrow Agent shall be discharged from its duties and
obligations hereunder. No resignation or removal of the Escrow Agent shall be
effective unless a written confirmation shall have been obtained from each of
Moody's Investors Service, Inc. and Standard & Poor's Rating Group, a division
of McGraw- Hill Inc. that the replacement of the Escrow Agent with the successor
Escrow Agent will not
5
<PAGE>
result in (a) a reduction of the rating for the Certificates below the then
current rating for the Certificates or (b) a withdrawal or suspension of the
rating of the Certificates.
Section 1.08. Persons Deemed Owners. Prior to due presentment of a
Certificate for registration of transfer, the Escrow Agent and the Paying Agent
may treat the Person in whose name any Escrow Receipt is registered (as of the
day of determination) as the owner of such Escrow Receipt for the purpose of
receiving distributions pursuant to this Agreement and for all other purposes
whatsoever, and neither the Escrow Agent nor the Paying Agent shall be affected
by any notice to the contrary.
Section 1.09. Further Assurances. The Escrow Agent agrees to take such
actions, and execute such other documents, as may be reasonably requested by the
Pass Through Trustee in order to effectuate the purposes of this Agreement and
the performance by the Escrow Agent of its obligations hereunder.
SECTION 2. Paying Agent.
Section 2.01. Appointment of Paying Agent. The Escrow Agent hereby
irrevocably appoints and authorizes the Paying Agent to act as its paying agent
hereunder, for the benefit of the
Investors, for such specific purposes and with such powers as are specifically
delegated to the Paying Agent by the terms of this Agreement, together with such
other powers as are reasonably incidental thereto. Any and all money received
and held by the Paying Agent under this Agreement or the Deposit Agreement shall
be held in the Paying Agent Account for the benefit of the Investors. The Paying
Agent (which term as used in this sentence shall include reference to its
affiliates and its own and its affiliates' officers, directors, employees and
agents): (a) shall have no duties or responsibilities except those expressly set
forth in this Agreement, and shall not by reason of this Agreement be a trustee
for the Escrow Agent; (b) shall not be responsible to the Escrow Agent for any
recitals, statements, representations or warranties of any person other then
itself contained in this Agreement or for the failure by the Escrow Agent or any
other person or entity (other than the Paying Agent) to perform any of its
obligations hereunder (whether or not the Paying Agent shall have any knowledge
thereof); and (c) shall not be responsible for any action taken or omitted to be
taken by it hereunder or provided for herein or in connection herewith, except
for its own willful misconduct or gross negligence (or simple negligence in
connection with the handling of funds).
Section 2.02. Establishment of Paying Agent Account. The Paying Agent shall
establish a deposit account (the "Paying Agent Account") at Wilmington Trust
Company in the name of the Escrow Agent. It is expressly understood by the
parties hereto that the Paying Agent is acting as the paying agent of the Escrow
Agent hereunder and that no amounts on deposit in the Paying Agent Account
constitute part of the Trust Property.
6
<PAGE>
Section 2.03. Payments from Paying Agent Account. The Escrow Agent hereby
irrevocably instructs the Paying Agent, and the Paying Agent agrees to act, as
follows:
(a) On each Interest Payment Date (as defined in the Deposit
Agreement) or as soon thereafter as the Paying Agent has confirmed receipt
in the Paying Agent Account from the Depositary of any amount in respect of
accrued interest on the Deposits, the Paying Agent shall distribute out of
the Paying Agent Account the entire amount deposited therein by the
Depositary. There shall be so distributed to each Receiptholder of record
on the 15th day (whether or not a Business Day) preceding such Interest
Payment Date by check mailed to such Receiptholder, at the address
appearing in the Register, such Receiptholder's pro rata share (based on
the Escrow Interest in the Account Amounts held by such Receiptholder) of
the total amount of interest deposited by the Depositary in the Paying
Agent Account on such date, except that, with respect to Escrow Receipts
registered on the record date in the name of a nominee of the Depository
Trust Company ("DTC"), such distribution shall be made by wire transfer in
immediately available funds to the account designated by DTC.
(b) Upon the confirmation by the Paying Agent of receipt in the Paying
Agent Account from the Depositary of any amount in respect of the Final
Withdrawal, the Paying Agent shall forthwith distribute the entire amount
of the Final Withdrawal deposited therein by the Depositary. There shall be
so distributed to each Receiptholder of record on the 15th day (whether or
not a Business Day) preceding the Final Withdrawal Date by check mailed to
such Receiptholder, at the address appearing in the Register, such
Receiptholder's pro rata share (based on the Escrow Interest in the Account
Amounts held by such Receiptholder) of the total amount in the Paying Agent
Account on account of such Final Withdrawal, except that, with respect to
Escrow Receipts registered on the record date in the name of a nominee of
DTC, such distribution shall be made by wire transfer in immediately
available funds to the account designated by DTC.
(c) If any payment of interest or principal in respect of the Final
Withdrawal is not received by the Paying Agent within five days of the
applicable date when due, then it shall be distributed to Receiptholders
after actual receipt by the Paying Agent on the same basis as a Special
Payment is distributed under the Pass Through Trust Agreement.
(d) Upon the confirmation by the Paying Agent of receipt in the Paying
Agent Account from the Depositary of any amount in respect of a Prepayment
Withdrawal, the Paying Agent shall forthwith distribute the entire amount
of such Prepayment Withdrawal upon not less than 15 days prior notice to
the Receiptholders. There shall be distributed to each Receiptholder of
record on the 15th day (whether or not a Business Day) preceding such date
of distribution by check mailed to such Receiptholder, at the address
appearing in the Register, such Receiptholder's pro rata
7
<PAGE>
share (based on the Escrow Interest in the Account Amounts held by such
Receiptholder) of the total amount in the Paying Agent Account on account
of such Prepayment Withdrawal, except that, with respect to the Escrow
Receipts registered on such record date in the name of a nominee of DTC,
such distribution shall be made by wire transfer in immediately available
funds to the account designated by DTC.
(e) The Paying Agent shall include with any check mailed pursuant to
this Section any notice required to be distributed under the Pass Through
Trust Agreement that is furnished to the Paying Agent by the Pass Through
Trustee.
Section 2.04. Withholding Taxes. The Paying Agent shall exclude and
withhold from each distribution of accrued interest on the Deposits (as defined
in the Deposit Agreement) and any amount in respect of any Prepayment Withdrawal
and the Final Withdrawal any and all withholding taxes applicable thereto as
required by law. The Paying Agent 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 Deposits (as defined in the Deposit Agreement) or the escrow amounts, to
withhold such amounts and timely pay the same to the appropriate authority in
the name of and on behalf of the Receiptholders, 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 Receiptholder
appropriate documentation showing the payment thereof, together with such
additional documentary evidence as such Receiptholder may reasonably request
from time to time. The Paying Agent agrees to file any other information reports
as it may be required to file under United States law.
Section 2.05. Resignation or Removal of Paying Agent. Subject to the
appointment and acceptance of a successor Paying Agent as provided below, the
Paying Agent may resign at any time by giving 30 days' prior written notice
thereof to the Escrow Agent, but may not otherwise be removed except for cause
by the Escrow Agent. Upon any such resignation or removal, the Escrow Agent
shall have the right to appoint a successor Paying Agent. If no successor Paying
Agent shall have been so appointed and shall have accepted such appointment
within 30 days after the retiring Paying Agent's giving of notice of resignation
or the removal of the retiring Paying Agent, then the retiring Paying Agent may
appoint a successor Paying Agent. Any Successor Paying Agent shall be a bank
which has an office in the United States with a combined capital and surplus of
at least $100,000,000. Upon the acceptance of any appointment as Paying Agent
hereunder by a successor Paying Agent, such successor Paying Agent shall enter
into such documents as the Escrow Agent shall require and shall thereupon
succeed to and become vested with all the rights, powers, privileges and duties
of the retiring Paying Agent, and the retiring Paying Agent shall be discharged
from its duties and obligations hereunder.
Section 2.06. Notice of Prepayment Withdrawal and Final Withdrawal.
Promptly after receipt by the Paying Agent of notice that the Escrow Agent has
requested a
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<PAGE>
Prepayment Withdrawal or a Final Withdrawal or that a Prepayment Withdrawal or a
Final Withdrawal will be made, the Paying Agent shall cause notice of such
distribution to be mailed to each of the Receiptholders at its address as it
appears in the Register. Such notice shall be mailed not less than 15 days prior
to the distribution date of such Prepayment Withdrawal (the "Prepayment
Withdrawal Date") or of the Final Withdrawal Date, as the case may be. Such
notice shall set forth:
(i) the Prepayment Withdrawal or the Final Withdrawal Date, as the
case may be, and the date for determining Receiptholders of record who
shall be entitled to receive distributions in respect of the Prepayment
Withdrawal or Final Withdrawal,
(ii) the amount of the payment in respect of the Prepayment Withdrawal
or Final Withdrawal, as the case may be, for each $1,000 face amount
Certificate (based on information provided by the Pass Through Trustee) and
the amount thereof constituting unused Deposits (as defined in the Deposit
Agreement) and interest thereon, and
(iii) if the Prepayment Withdrawal Date or Final Withdrawal Date is
the same date as a Regular Distribution Date, the total amount to be
received on such date for each $1,000 face amount Certificate (based on
information provided by the Pass Through Trustee).
Such mailing may include any notice required to be given to
Certificateholders in connection with such distribution pursuant to the Pass
Through Trust Agreement.
SECTION 3. Payments. If, notwithstanding the instructions in Section 4 of
the Deposit Agreement that all amounts payable to the Escrow Agent under the
Deposit Agreement be paid by the Depositary directly to the Paying Agent or the
Pass Through Trustee (depending on the circumstances), the Escrow Agent receives
any payment thereunder, then the Escrow Agent shall forthwith pay such amount in
Dollars and in immediately available funds by wire transfer to (a) in the case
of a payment of accrued interest on the Deposits (as defined in the Deposit
Agreement), any Prepayment Withdrawal or any Final Withdrawal, directly to the
Paying Agent Account and (b) in the case of any Purchase Withdrawal, directly to
the Pass Through Trustee or its designee as specified and in the manner provided
in the Applicable Notice of Purchase Withdrawal. The Escrow Agent hereby waives
any and all rights of set-off, combination of accounts, right of retention or
similar right (whether arising under applicable law, contract or otherwise) it
may have against amounts payable to the Paying Agent howsoever arising.
SECTION 4. Other Actions. The Escrow Agent shall take such other actions
under or in respect of the Deposit Agreement (including, without limitation, the
enforcement
9
<PAGE>
of the obligations of the Depositary thereunder) as the Investors, by an Action
of Investors, may from time to time request.
SECTION 5. Representations and Warranties of the Escrow Agent. The Escrow
Agent represents and warrants to Atlas, the Investors, the Paying Agent and the
Pass Through Trustee as follows:
(i) it is a national banking association duly organized and validly
existing in good standing under the laws of the United States of America;
(ii) it has full power, authority and legal right to conduct its
business and operations as currently conducted and to enter into and
perform its obligations under this Agreement and the Deposit Agreement;
(iii) the execution, delivery and performance of each of this
Agreement and the Deposit Agreement have been duly authorized by all
necessary corporate action on the part of it and do not require any
stockholder approval, or approval or consent of any trustee or holder of
any indebtedness or obligations of it, and each such document has been duly
executed and delivered by it and constitutes its legal, valid and binding
obligations enforceable against it in accordance with the terms hereof or
thereof except as such enforceability may be limited by bankruptcy,
insolvency, moratorium, reorganization or other similar laws or equitable
principles of general application to or affecting the enforcement of
creditors' rights generally (regardless of whether such enforceability is
considered in a proceeding in equity or at law);
(iv) no authorization, consent or approval of or other action by, and
no notice to or filing with, any United States federal or state
governmental authority or regulatory body is required for the execution,
delivery or performance by it of this Agreement or the Deposit Agreement;
(v) neither the execution, delivery or performance by it of this
Agreement or the Deposit Agreement, nor compliance with the terms and
provisions hereof or thereof, conflicts or will conflict with or results or
will result in a breach or violation of any of the terms, conditions or
provisions of, or will require any consent or approval under, any law,
governmental rule or regulation or the charter documents, as amended, or
bylaws, as amended, of it or any similar instrument binding on it or any
order, writ, injunction or decree of any court or governmental authority
against it or by which it or any of its properties is bound or any
indenture, mortgage or contract or other agreement or instrument to which
it is a party or by which it or any of its properties is bound, or
constitutes or will constitute a default thereunder or results or will
result in the imposition of any lien upon any of its properties; and
10
<PAGE>
(vi) there are no pending or, to its knowledge, threatened actions,
suits, investigations or proceedings (whether or not purportedly on behalf
of it) against or affecting it or any of its property before or by any
court or administrative agency which, if adversely determined, (A) would
adversely affect the ability of it to perform its obligations under this
Agreement or the Deposit Agreement or (B) would call into question or
challenge the validity of this Agreement or the Deposit Agreement or the
enforceability hereof or thereof in accordance with the terms hereof or
thereof, nor is the Escrow Agent in default with respect to any order of
any court, governmental authority, arbitration board or administrative
agency so as to adversely affect its ability to perform its obligations
under this Agreement or the Deposit Agreement.
SECTION 6. Representations and Warranties of the Paying Agent. The Paying
Agent represents and warrants to Atlas, the Investors, the Escrow Agent and the
Pass Through Trustee as follows:
(i) it is a Delaware banking company duly organized and validly
existing in good standing under the laws of its jurisdiction of
incorporation;
(ii) it has full power, authority and legal right to conduct its
business and operations as currently conducted and to enter into and
perform its obligations under this Agreement;
(iii) the execution, delivery and performance of this Agreement has
been duly authorized by all necessary corporate action on the part of it
and does not require any stockholder approval, or approval or consent of
any trustee or holder of any indebtedness or obligations of it, and such
document has been duly executed and delivered by it and constitutes its
legal, valid and binding obligations enforceable against it in accordance
with the terms hereof except as such enforceability may be limited by
bankruptcy, insolvency, moratorium, reorganization or other similar laws or
equitable principles of general application to or affecting the enforcement
of creditors' rights generally (regardless of whether such enforceability
is considered in a proceeding in equity or at law);
(iv) no authorization, consent or approval of or other action by, and
no notice to or filing with, any United States federal or state
governmental authority or regulatory body is required for the execution,
delivery or performance by it of this Agreement;
(v) neither the execution, delivery or performance by it of this
Agreement, nor compliance with the terms and provisions hereof, conflicts
or will conflict with or results or will result in a breach or violation of
any of the
11
<PAGE>
terms, conditions or provisions of, or will require any consent or approval
under, any law, governmental rule or regulation or the charter documents, as
amended, or bylaws, as amended, of it or any similar instrument binding on it or
any order, writ, injunction or decree of any court or governmental authority
against it or by which it or any of its properties is bound or any indenture,
mortgage or contract or other agreement or instrument to which it is a party or
by which it or any of its properties is bound, or constitutes or will constitute
a default thereunder or results or will result in the imposition of any lien
upon any of its properties; and
(vi) there are no pending or, to its knowledge, threatened actions,
suits, investigations or proceedings (whether or not purportedly on behalf
of it) against or affecting it or any of its property before or by any
court or administrative agency which, if adversely determined, (A) would
adversely affect the ability of it to perform its obligations under this
Agreement or (B) would call into question or challenge the validity of this
Agreement or the enforceability hereof in accordance with the terms hereof,
nor is the Paying Agent in default with respect to any order of any court,
governmental authority, arbitration board or administrative agency so as to
adversely affect its ability to perform its obligations under this
Agreement.
SECTION 7. Indemnification. Except for actions expressly required of the
Escrow Agent or the Paying Agent hereunder, each of the Escrow Agent and the
Paying Agent shall in all cases be fully justified in failing or refusing to act
hereunder unless it shall have been indemnified by the party requesting such
action in a manner reasonably satisfactory to it against any and all liability
and expense which may be incurred by it by reason of taking or continuing to
take any such action. In the event Atlas requests any amendment to any Operative
Agreement (as defined in the Note Purchase Agreement), the Pass Through Trustee
agrees to pay all reasonable fees and expenses (including, without limitation,
fees and disbursements of counsel) of the Escrow Agent and the Paying Agent in
connection therewith.
SECTION 8. Amendment, Etc. Upon request of the Pass Through Trustee and
approval by an Action of Investors, the Escrow Agent shall enter into an
amendment to this Agreement, so long as such amendment does not adversely affect
the rights or obligations of the Escrow Agent or the Paying Agent, provided that
upon request of the Pass Through Trustee and without any consent of the
Investors, the Escrow Agent shall enter into an amendment to this Agreement for
any of the following purposes:
(1) to correct or supplement any provision in this Agreement which may
be defective or inconsistent with any other provision herein or to cure any
ambiguity or correct any mistake or to modify any other provision with
respect to matters or questions arising under this Agreement, provided that
any such action shall not materially adversely affect the interests of the
Investors; or
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<PAGE>
(2) to comply with any requirement of the SEC, applicable law, rules
or regulations of any exchange or quotation system on which the
Certificates are listed or any regulatory body; or
(3) to evidence and provide for the acceptance of appointment under
this Agreement of a successor Escrow Agent, successor Paying Agent or
successor Pass Through Trustee.
SECTION 9. Notices. Unless otherwise expressly provided herein, any notice
or other communication under this Agreement shall be in writing (including by
facsimile) and shall be deemed to be given and effective upon receipt thereof.
All notices shall be sent to
(i) if to the Investors, as their respective names shall appear in the
Register;
(ii) if to the Escrow Agent, addressed to at its office at:
FIRST SECURITY BANK, NATIONAL ASSOCIATION 79 South
Main Street Salt Lake City, UT 84111
Attention: Corporate Trust Department
Telecopier: 801-246-5053
(iii) if to the Pass Through Trustee, addressed to it at its office at:
WILMINGTON TRUST COMPANY
One Rodney Square
1100 N. Market Street
Wilmington, DE 19890-0001
Attention: Corporate Trust Administration
Telecopier: 302-651-8882
(iv) if to the Paying Agent, addressed to it at its office at:
WILMINGTON TRUST COMPANY
One Rodney Square
1100 N. Market Street
Wilmington, DE 19890-0001
Attention: Corporate Trust Administration
Telecopier: 302-651-8882
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<PAGE>
(v) in each case with a copy to Atlas, addressed to it at its office at:
ATLAS AIR, INC.
538 Commons Drive
Golden, CO 80401
Attention: Chief Financial Officer
Telecopier: 303-526-5051
(or at such other address as any such party may specify from time to time in a
written notice to the other parties). On or prior to the execution of this
Agreement, the Pass Through Trustee has delivered to the Escrow Agent a
certificate containing specimen signatures of the representatives of the Pass
Through Trustee who are authorized to give notices and instructions with respect
to this Agreement. The Escrow Agent may conclusively rely on such certificate
until the Escrow Agent receives written notice from the Pass Through Trustee to
the contrary.
SECTION 10. Transfer. No party hereto shall be entitled to assign or
otherwise transfer this Agreement (or any interest herein) other than (in the
case of the Escrow Agent) to a successor escrow agent under Section 1.07 hereof
or (in the case of the Paying Agent) to a successor paying agent under Section
2.05 hereof, and any purported assignment in violation thereof shall be void.
This Agreement shall be binding upon the parties hereto and their respective
successors and (in the case of the Escrow Agent and the Paying Agent) their
respective permitted assigns.
SECTION 11. Entire Agreement. This Agreement sets forth all of the
promises, covenants, agreements, conditions and understandings among the Escrow
Agent, the Paying Agent, the Underwriters and the Pass Through Trustee with
respect to the subject matter hereof, and supersedes all prior and
contemporaneous agreements and undertakings, inducements or conditions, express
or implied, oral or written.
SECTION 12. Governing Law. This Agreement shall be governed by, and
construed in accordance with, the laws of the State of New York.
SECTION 13. Waiver of Jury Trial Right. EACH OF THE ESCROW AGENT, THE
PAYING AGENT, THE INVESTORS AND THE PASS THROUGH TRUSTEE ACKNOWLEDGES AND
ACCEPTS THAT IN ANY SUIT, ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO
THIS AGREEMENT SUCH PARTY IRREVOCABLY WAIVES ITS RIGHT TO A TRIAL BY JURY.
SECTION 14. Counterparts. This Agreement may be executed in one or more
counterparts, all of which taken together shall constitute one instrument.
<PAGE>
IN WITNESS WHEREOF, the Escrow Agent, the Paying Agent, the Underwriters
and the Pass Through Trustee have caused this Escrow and Paying Agent Agreement
(Class C) to be duly executed as of the day and year first above written.
FIRST SECURITY BANK, NATIONAL ASSOCIATION,
as Escrow Agent
By /s/ C. Scott Nielsen
-------------------------------------
Name: C. Scott Nielsen
Title: Vice President
<PAGE>
MORGAN STANLEY & CO. INCORPORATED;
BT ALEX. BROWN INCORPORATED;
CIBC OPPENHEIMER CORP.
ING BARING FURMAN SELZ LLC,
as Underwriters
By: MORGAN STANLEY & CO.
INCORPORATED
By /s/ Christopher Chaput
-------------------------------------
Name: Christopher Chaput
Title: Vice President
WILMINGTON TRUST COMPANY, not
in its individual capacity,
but solely as Pass Through
Trustee for and on behalf of
Atlas Air Pass Through Trust
1999-1C
By /s/ James P. Lawler
-------------------------------------
Name: James P. Lawler
Title: Vice President
WILMINGTON TRUST COMPANY,
as Paying Agent
By /s/ James P. Lawler
-------------------------------------
Name: James P. Lawler
Title: Vice President
<PAGE>
EXHIBIT A
ATLAS AIR, INC. 1999-1C ESCROW RECEIPT
No. __
This Escrow Receipt evidences a fractional undivided interest in amounts
("Account Amounts") from time to time deposited into a certain paying agent
account (the "Paying Agent Account") described in the Escrow and Paying Agent
Agreement (Class C) dated as of April 13, 1999 (as amended, modified or
supplemented from time to time, the "Escrow and Paying Agent Agreement") among
First Security Bank, National Association, as Escrow Agent (in such capacity,
together with its successors in such capacity, the "Escrow Agent"), Morgan
Stanley & Co. Incorporated, BT Alex. Brown Incorporated, CIBC Oppenheimer Corp.
and ING Baring Furman Selz, LLC, as Underwriters, Wilmington Trust Company as
Pass Through Trustee (in such capacity, together with its successors in such
capacity, the "Pass Through Trustee") and Wilmington Trust Company, as paying
agent (in such capacity, together with its successors in such capacity, the
"Paying Agent"). Capitalized terms not defined herein shall have the meanings
assigned to them in the Escrow and Paying Agent Agreement.
This Escrow Receipt is issued under and is subject to the terms, provisions
and conditions of the Escrow and Paying Agent Agreement. By virtue of its
acceptance hereof the holder of this Escrow Receipt assents and agrees to be
bound by the provisions of the Escrow and Paying Agent Agreement and this Escrow
Receipt.
This Escrow Receipt represents a fractional undivided interest in amounts
deposited from time to time in the Paying Agent Account, and grants or
represents no rights, benefits or interests of any kind in respect of any assets
or property other than such amounts. This Escrow Receipt evidences the same
percentage interest in the Account Amounts as the Fractional Undivided Interest
in the Pass Through Trust evidenced by the Certificate to which this Escrow
Receipt is affixed.
All payments and distributions made to Receiptholders in respect of the
Escrow Receipt shall be made only from Account Amounts deposited in the Paying
Agent Account. The holder of this Escrow Receipt, by its acceptance of this
Escrow Receipt, agrees that it will look solely to the Account Amounts for any
payment or distribution due to it pursuant to this Escrow Receipt and that it
will not have any recourse to Atlas, the Pass Through Trustee, the Paying Agent
or the Escrow Agent, except as expressly provided herein or in the Pass Through
Trust Agreement. No Receiptholder of this Escrow Receipt shall have any right to
vote or in any manner otherwise control the operation and management of the
Paying Agent Account, nor shall anything set forth herein, or contained in the
terms of this Escrow Receipt, be construed so as to constitute the
Receiptholders from time to time as partners or members of an association.
<PAGE>
This Escrow Receipt may not be assigned or transferred except in connection
with the assignment or transfer of the Certificate to which this Escrow Receipt
is affixed. After payment to the holder hereof of its Escrow Interest in the
Final Distribution, upon the request of the Pass Through Trustee, the holder
hereof will return this Escrow Receipt to the Pass Through Trustee.
The Paying Agent may treat the person in whose name the Certificate to
which this Escrow Receipt is attached as the owner hereof for all purposes, and
the Paying Agent shall not be affected by any notice to the contrary.
THIS ESCROW RECEIPT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH
THE LAWS OF THE STATE OF NEW YORK.
IN WITNESS WHEREOF, the Escrow Agent has caused this Escrow Receipt to be
duly executed.
Dated: ______________, ____
FIRST SECURITY BANK, NATIONAL ASSOCIATION,
as Escrow Agent
By:__________________________
Name:
Title:
2
<PAGE>
EXHIBIT B
WITHDRAWAL CERTIFICATE
(Class C)
First Security Bank, National Association,
as Escrow Agent
79 South Main Street
Salt Lake City, UT 84111
Attention: Corporate Trust Services
Dear Sirs:
Reference is made to the Escrow and Paying Agent Agreement,
dated as of April 13, 1999 (the "Agreement"). We hereby certify to you that the
conditions to the obligations of the undersigned to execute a Participation
Agreement pursuant to the Note Purchase Agreement have been satisfied. Pursuant
to Section 1.02(c) of the Agreement, please execute the attached Notice of
Purchase Withdrawal and immediately transmit by facsimile to the Depositary, at
_________, Attention: ____________________________.
Very truly yours,
WILMINGTON TRUST COMPANY,
not in its individual capacity but
solely as Pass Through Trustee
By:__________________________
Name:
Dated: ____________
<PAGE>
EXHIBIT C
PREPAYMENT WITHDRAWAL CERTIFICATE
(Class C)
First Security Bank, National Association,
as Escrow Agent
79 South Main Street
Salt Lake City, UT 84111
Attention: Corporate Trust Services
Dear Sirs:
Reference is made to the Escrow and Paying Agent Agreement, dated as of
April 13, 1999 (the "Agreement"). The undersigned has been notified by Atlas
Air, Inc. that it has received written notice from The Boeing Company that the
delivery date for the Aircraft in respect of which the attached Notice of
Prepayment Withdrawal is to be given will be delayed beyond the Delivery Period
Termination Date. Pursuant to Section 1.02(d) of the Agreement, please execute
the attached Notice of Prepayment Withdrawal and immediately transmit by
facsimile to the Depositary, at ____________, Attention: _________.
Very truly yours,
WILMINGTON TRUST COMPANY,
not in its individual capacity but
solely as Pass Through Trustee
By __________________________
Name
EXECUTION COPY
NOTE PURCHASE AGREEMENT
Dated as of April 13, 1999
Among
ATLAS AIR, INC.,
WILMINGTON TRUST COMPANY,
as Pass Through Trustee under each of the
Pass Through Trust Agreement
WILMINGTON TRUST COMPANY,
as Subordination Agent
FIRST SECURITY BANK, NATIONAL ASSOCIATION,
as Escrow Agent
and
WILMINGTON TRUST COMPANY,
as Paying Agent
<PAGE>
INDEX TO NOTE PURCHASE AGREEMENT
Page
SECTION 1. Financing of Aircraft.............................................3
SECTION 2. Conditions Precedent..............................................7
SECTION 3. Representations and Warranties....................................7
SECTION 4. Covenants........................................................10
SECTION 5. Notices..........................................................11
SECTION 6. Expenses.........................................................12
SECTION 7. Further Assurances...............................................12
SECTION 8. Miscellaneous....................................................12
SECTION 9. Governing Law....................................................13
Schedules
Schedule I Aircraft and Scheduled Delivery Months
Schedule II Pass Through Trust Agreements
Schedule III Deposit Agreements
Schedule IV Escrow and Paying Agent Agreements
Schedule V Mandatory Document Terms
Schedule VI Mandatory Economic Terms
Schedule VII Aggregate Amortization Schedule
Annex
Annex A..Definitions
Exhibits
Exhibit A-1 Form of Leased Aircraft Participation Agreement
Exhibit A-2 Form of Lease
Exhibit A-3 Form of Leased Aircraft Indenture
Exhibit A-4 Form of Aircraft Purchase Agreement Assignment
Exhibit A-5 Form of Leased Aircraft Trust Agreement
Exhibit B Form of Delivery Notice
Exhibit C-1 Form of Owned Aircraft Participation Agreement
Exhibit C-2 Form of Owned Aircraft Indenture
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NOTE PURCHASE AGREEMENT
This NOTE PURCHASE AGREEMENT, dated as of April 13, 1999, among (i) ATLAS
AIR, INC., a Delaware corporation (the "Company"), (ii) WILMINGTON TRUST COMPANY
("WTC"), a Delaware banking corporation, not in its individual capacity except
as otherwise expressly provided herein, but solely as trustee (in such capacity
together with its successors in such capacity, the "Pass Through Trustee") under
each of the four separate Pass Through Trust Agreements, (iii) WILMINGTON TRUST
COMPANY, a Delaware banking corporation, as subordination agent and trustee (in
such capacity together with its successors in such capacity, the "Subordination
Agent") under the Intercreditor Agreement (as defined below), (iv) FIRST
SECURITY BANK, NATIONAL ASSOCIATION, a national banking association, as Escrow
Agent (in such capacity together with its successors in such capacity, the
"Escrow Agent") under each of the Escrow Agreements (as defined below), and (v)
WILMINGTON TRUST COMPANY, a Delaware banking corporation, as Paying Agent (in
such capacity together with its successors in such capacity, the "Paying Agent")
under each of the Escrow Agreements.
W I T N E S S E T H:
WHEREAS, capitalized terms used but not defined herein shall have the
meanings ascribed to such terms in Annex A hereto;
WHEREAS, the Company has obtained commitments from the
Manufacturer pursuant to the Purchase Agreement for the delivery of the five
aircraft listed in Schedule I hereto (together with any aircraft substituted
therefor in accordance with the Purchase Agreement and this Agreement prior to
the delivery thereof, the "Aircraft");
WHEREAS, pursuant to the Pass Through Trust Agreements set forth
in Schedule II hereto, and concurrently with the execution and delivery of this
Agreement, separate grantor trusts (collectively, the "Pass Through Trusts" and,
individually, a "Pass Through Trust") have been created to facilitate certain of
the transactions contemplated hereby, including, without limitation, the
issuance and sale of pass through certificates pursuant thereto (collectively,
the "Certificates") to provide for all or a portion of the financing of the
Aircraft;
WHEREAS, the Company has entered into the Underwriting Agreement
dated April 5, 1999 (the "Underwriting Agreement") with the several underwriters
(the "Underwriters") named therein, which provides that the Company will cause
each Pass Through Trustee to issue and sell the Certificates to the
Underwriters;
WHEREAS, concurrently with the execution and delivery of this
Agreement, (i) the Escrow Agents and the Depositary entered into the Deposit
Agreements set forth in Schedule III hereto (the "Deposit Agreements") whereby
the applicable Escrow Agent agreed to direct the Underwriters to make certain
deposits referred to therein on the Issuance Date (the "Initial Deposits") and
to permit the applicable Pass Through Trustee to make additional deposits from
time to time thereafter (the Initial Deposits together with such additional
deposits are collectively
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referred to as the "Deposits"), (ii) the Company and the Depositary entered into
the Indemnity Agreement, dated as of the date hereof (the "Indemnity Agreement")
and (iii) the Pass Through Trustees, the Underwriters, the Paying Agents and the
Escrow Agents entered into the Escrow and Paying Agent Agreements set forth in
Schedule IV hereto (the "Escrow Agreements") whereby, among other things, (a)
the Underwriters agreed to deliver an amount equal to the amount of the Initial
Deposits to the Depositary on behalf of the applicable Escrow Agent and (b) the
applicable Escrow Agent, upon the Depositary receiving such amount, has agreed
to deliver escrow receipts to be affixed to each Certificate;
WHEREAS, prior to the delivery of each Aircraft, the Company will
determine whether to enter into a leveraged lease transaction as lessee with
respect to such Aircraft (a "Leased Aircraft") or to purchase as owner such
Aircraft (an "Owned Aircraft") and, in the case of an Owned Aircraft, whether
Series A-2 Equipment Notes will be issued with respect to such Aircraft, and
will give to the Pass Through Trustee a Delivery Notice (as defined below)
specifying its election;
WHEREAS, upon receipt of a Delivery Notice with respect to an
Aircraft, subject to the terms and conditions of this Agreement, the applicable
Pass Through Trustees will enter into the applicable Financing Agreements
relating to such Aircraft;
WHEREAS, upon the delivery of each Aircraft, each Pass Through
Trustee will fund its purchase of Equipment Notes with the proceeds of one or
more Deposits withdrawn by the applicable Escrow Agent under the related Deposit
Agreement bearing the same interest rate as the Certificates issued by such Pass
Through Trust; and
WHEREAS, concurrently with the execution and delivery of this
Agreement, (i) ABN AMRO Bank N.V., acting through its Chicago Branch, a bank
organized under the laws of the Netherlands, entered into two revolving credit
agreements for the benefit of the Certificateholders of the Class A-1 Pass
Through Trust and the Class A-2 Pass Through Trust and Morgan Stanley Capital
Services, Inc. entered into two revolving credit agreements for the benefit of
the Certificateholders of the Class B Pass Through Trust and the Class C Pass
Through Trust, in each case with the Subordination Agent, as agent for the Pass
Through Trustee on behalf of each such Pass Through Trust (ABN AMRO Bank N.V.,
Chicago Branch, and Morgan Stanley Capital Services, Inc. are collectively
referred to herein as the "Liquidity Providers", and the revolving credit
agreements as the "Liquidity Facilities") and (ii) the Pass Through Trustee, the
Liquidity Providers and the Subordination Agent entered into the Intercreditor
Agreement, dated as of the date hereof (the "Intercreditor Agreement");
NOW, THEREFORE, in consideration of the foregoing premises and
the mutual agreements herein contained and other good and valuable
consideration, the receipt and adequacy of which are hereby acknowledged, the
parties hereto agree as follows:
SECTION 1. Financing of Aircraft. (a) The Company confirms that it has
entered into the Purchase Agreement with the Manufacturer pursuant to which the
Company has agreed to purchase, and the Manufacturer has agreed to deliver, the
Aircraft, all on and subject to terms and conditions specified in the Purchase
Agreement. The currently scheduled delivery dates for the Aircraft are set forth
in Schedule 1. The Company agrees to finance the Aircraft in
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the manner provided herein, all on and subject to the terms and conditions
hereof and of the relevant Financing Agreements.
(b) In furtherance of the foregoing, the Company agrees to give
the parties hereto, the Depositary and each of the Rating Agencies not less than
two Business Days' prior notice (a "Delivery Notice") of the scheduled delivery
date (the "Scheduled Delivery Date") (or, in the case of a substitute Delivery
Notice under Section 1(d) or (e) hereof, one Business Day's prior notice) in
respect of each Aircraft under the Purchase Agreement, which notice shall:
(i) specify whether the Company has elected to treat such Aircraft as
a Leased Aircraft or an Owned Aircraft;
(ii) specify the Scheduled Delivery Date of such Aircraft (which shall
be a Business Day before the Cut-off Date and, except as provided in
Section 1(e) hereof, the date (the "Funding Date") on which the financing
therefor in the manner provided herein shall be consummated);
(iii) instruct the Pass Through Trustee to instruct the relevant
Escrow Agent to provide a Notice of Purchase Withdrawal to the Depositary
with respect to the Equipment Notes to be issued in connection with the
financing of such Aircraft;
(iv) instruct the Pass Through Trustee to enter into the Participation
Agreement included in the Financing Agreements with respect to such
Aircraft in such form and at such a time on or before the Funding Date
specified in such Delivery Notice and to perform its obligations
thereunder;
(v) specify the aggregate principal amount of each series of Equipment
Notes to be issued, and purchased by the Pass Through Trustee, in
connection with the financing of such Aircraft scheduled to be delivered on
such Funding Date (which shall in all respects comply with the Mandatory
Economic Terms); and
(vi) if such Aircraft is to be a Leased Aircraft, certify that the
related Owner Participant (A) is not an Affiliate of the Company (unless
prior Rating Agency Confirmation permitting the use of an Affiliate has
been obtained) and (B) based on the representations of such Owner
Participant, is either (1) a Qualified Owner Participant or (2) any other
person the obligations of which under the Owner Participant Agreements (as
defined in the applicable Participation Agreement) are guaranteed by a
Qualified Owner Participant.
(c) Upon receipt of a Delivery Notice, the Pass Through Trustees shall, and
shall cause the Subordination Agent to, enter into and perform their obligations
under the Participation Agreement specified in such Delivery Notice, provided
that, (i) the relevant Financing Agreements as executed and delivered shall not
vary the Mandatory Economic Terms and shall contain the Mandatory Document Terms
and (ii) subject to the next two succeeding sentences, such Participation
Agreement and the other Lease Financing Agreements or Owner
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Financing Agreements to be entered into pursuant to such Participation Agreement
shall be in the forms thereof annexed hereto in all material respects. The
Leased Aircraft Participation Agreements and other Lease Financing Agreements
may contain modifications, provided, however, that with respect to any material
modifications (other than modifications affecting only the Owner Participant), a
Rating Agency Confirmation shall have been obtained from each Rating Agency by
the Company and delivered by the Company to the applicable Pass Through Trustee
on or before the relevant Delivery Date. If Rating Agency Confirmation shall
have been received with respect to any Financing Agreements and such Financing
Agreements are utilized for subsequent Aircraft (or Substitute Aircraft) without
material modifications, no additional Rating Agency Confirmation shall be
required. Notwithstanding the foregoing, if any Financing Agreement annexed
hereto shall not have been reviewed by either Rating Agency prior to the
Issuance Date, then, prior to the use thereof in connection with the financing
of any Aircraft hereunder, the Company shall obtain from each Rating Agency a
confirmation that the use of such Financing Documents would not result in (x) a
reduction of the rating for any Class of Certificates below the then current
rating for such Class of Certificates or (y) a withdrawal or suspension of the
rating of any Class of Certificates. With respect to each Aircraft, the Company
shall cause Wilmington Trust Company (or such other person that meets the
eligibility requirements to act as loan trustee under the Leased Aircraft
Indenture or Owned Aircraft Indenture) to execute as Loan Trustee the Financing
Agreements relating to such Aircraft to which such Loan Trustee is intended to
be a party, and shall concurrently therewith execute such Financing Agreements
to which the Company is intended to be a party and perform its respective
obligations thereunder. Upon the request of either Rating Agency or of Fitch
IBCA, Inc. or Duff & Phelps Credit Rating Co., the Company shall deliver or
cause to be delivered to such requesting entity a true and complete copy of each
Financing Agreement relating to the financing of each Aircraft together with a
true and complete set of the closing documentation (including legal opinions)
delivered to the related Loan Trustee, Subordination Agent and Pass Through
Trustee under the related Participation Agreement.
(d) If after giving any Delivery Notice, there shall be a delay in the
delivery of an Aircraft, or if on the Scheduled Delivery Date of an Aircraft the
financing thereof in the manner contemplated hereby shall not be consummated for
whatever reason, the Company shall give the parties hereto prompt notice
thereof. Concurrently with the giving of such notice of postponement or
subsequently, the Company shall give the parties hereto a substitute Delivery
Notice specifying the date to which such delivery and related financing shall
have been re-scheduled (which shall be a Business Day before the Cut-off Date on
which the Escrow Agents shall be entitled to withdraw one or more Deposits under
each of the applicable Deposit Agreements to enable each applicable Pass Through
Trustee to fund its purchase of the related Equipment Notes). Upon receipt of
any such notice of postponement, each applicable Pass Through Trustee shall
comply with its obligations under Section 5.01 of each of the Trust Supplements
and thereafter the financing of the relevant Aircraft shall take place on the
re-scheduled Delivery Date therefor (all on and subject to the terms and
conditions of the relevant Financing Agreements) unless further postponed as
provided herein.
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(e) Anything in this Section 1 to the contrary notwithstanding, the Company
shall have the right at any time on or before the Scheduled Delivery Date of any
Aircraft, and subsequent to its giving a Delivery Notice therefor, to postpone
the Scheduled Delivery Date of such Aircraft so as to enable the Company to
change its election to treat such Aircraft as a Leased Aircraft or an Owned
Aircraft by written notice of such postponement to the other parties hereto. The
Company shall subsequently give the parties hereto a substitute Delivery Notice
complying with the provisions of Section 1(b) hereof and specifying the new
Funding Date for such postponed Aircraft (which shall be a Business Day
occurring before the Cut-off Date and on which the Escrow Agents shall be
entitled to withdraw Deposits under each of the applicable Deposit Agreements
sufficient to enable each applicable Pass Through Trustee to fund its purchase
of the related Equipment Notes). In addition, the Company shall have the further
right, anything in this Section 1 to the contrary notwithstanding, to accept
delivery of an Aircraft under the Purchase Agreement on the Delivery Date
thereof by utilization of bridge financing of such Aircraft and promptly
thereafter give the parties hereto a Delivery Notice specifying a Funding Date
not later than 60 days after the Delivery Date of such Aircraft and no later
than the Cut-off Date and otherwise complying with the provisions of Section
1(b) hereof. All other terms and conditions of this Note Purchase Agreement
shall apply to the financing of any such Aircraft on the re-scheduled Funding
Date therefor except (i) the re-scheduled Funding Date shall be deemed the
Delivery Date of such Aircraft for all purposes of this Section 1 and (ii) the
related Financing Agreements shall be amended to reflect the original delivery
of such Aircraft to the Company.
(f) If the Scheduled Delivery Date for any Aircraft is delayed (a) more
than 30 days beyond the last day of the month set forth opposite such Aircraft
under the heading "Scheduled Delivery Months" in Schedule I hereto or (b) beyond
the Delivery Period Termination Date, the Company may identify for delivery a
substitute aircraft therefor meeting the following conditions (a "Substitute
Aircraft"): (i) a Substitute Aircraft must be a Boeing 747-400F aircraft
manufactured after 1993, so long as after giving effect thereto such
substitution does not vary the Mandatory Economic Terms, and (ii) the Company
shall be obligated to obtain Rating Agency Confirmation in respect of the
replacement of any Aircraft by Substitute Aircraft. Upon the satisfaction of the
conditions set forth above with respect to a Substitute Aircraft, the Aircraft
to be replaced shall cease to be subject to this Agreement and all rights and
obligations of the parties hereto concerning such Aircraft shall cease, and such
Substitute Aircraft shall become and thereafter be subject to the terms and
conditions of this Agreement to the same extent as such Aircraft.
(g) The Company shall have no liability for the failure of any Pass Through
Trustee to purchase Equipment Notes with respect to any Aircraft or Substitute
Aircraft, other than the Company's obligation, if any, to pay the Deposit
Make-Whole Premium pursuant to Section 4(a)(i) of this Agreement.
(h) The parties agree that if, in connection with the delivery of an
Aircraft or Substitute Aircraft, any Owner Participant who is to be a party to
any Lease Financing Agreement shall not be a "Citizen of the United States"
within the meaning of Section 40102(a)(15) of the Act, then the applicable Lease
Financing Agreements shall be modified, consistent with the Mandatory Document
Terms, to require such Owner Participant to enter into
<PAGE>
a voting trust, voting powers, control rights or similar arrangement
satisfactory to the Company that (A) enables such Aircraft or Substitute
Aircraft to be registered in the United States and (B) complies with the FAA
regulations issued under the Act applicable thereto.
(i) Anything herein to the contrary notwithstanding, the Company shall not
have the right, and shall not be entitled, at any time to request the issuance
of Equipment Notes of any series to any Pass Through Trustee in an aggregate
principal amount in excess of the amount of the Deposits then available for
withdrawal by the Escrow Agent under and in accordance with the provisions of
the related Deposit Agreement.
SECTION 2. Conditions Precedent. The obligation of the Pass Through
Trustees to enter into, and to cause the Subordination Agent to enter into, any
Participation Agreement as directed pursuant to a Delivery Notice and to perform
its obligations under such Participation Agreement is subject to satisfaction of
the following conditions:
(a) no Triggering Event shall have occurred; and
(b) the Company shall have delivered to each such Pass Through
Trustee and each Liquidity Provider a certificate stating that (i)
such Participation Agreement and the other Financing Agreements to be
entered into pursuant to such Participation Agreement do not vary the
Mandatory Economic Terms and contain the Mandatory Document Terms and
(ii) any substantive modification of such Financing Agreements from
the forms thereof attached to this Agreement do not materially and
adversely affect the Certificateholders, and such certification shall
be true and correct.
Anything herein to the contrary notwithstanding, the obligation
of each Pass Through Trustee to purchase Equipment Notes shall
terminate on the Cut-off Date.
SECTION 3. Representations and Warranties. (a) The Company represents and
warrants that:
(i) the Company is duly incorporated, validly existing and in
good standing under the laws of the State of Delaware and is a
"citizen of the United States" as defined in 49 U.S.C. Section 40102
and a U.S. Air Carrier, and has the full corporate power, authority
and legal right under the laws of the State of Delaware to execute and
deliver this Agreement and each Financing Agreement to which it will
be a party and to carry out the obligations of the Company under this
Agreement and each Financing Agreement to which it will be a party;
(ii) the execution and delivery by the Company of this Agreement
and the performance by the Company of its obligations under this
Agreement have been duly authorized by the Company and will not
violate its Certificate of Incorporation or by-laws or the provisions
of any indenture, mortgage, contract or other agreement to which it is
a party or by which it is bound; and
<PAGE>
(iii) this Agreement constitutes the legal, valid and binding
obligation of the Company, enforceable against it in accordance with
its terms, except as the same may be limited by applicable bankruptcy,
insolvency, reorganization, moratorium or similar laws affecting the
rights of creditors generally and by general principles of equity,
whether considered in a proceeding at law or in equity.
(b) WTC represents and warrants that:
(i) WTC is duly incorporated, validly existing and in good
standing under the laws of the State of Delaware and is a "citizen of
the United States" as defined in 49 U.S.C. Section 40102, and has the
full corporate power, authority and legal right under the laws of the
State of Delaware and the United States pertaining to its banking,
trust and fiduciary powers to execute and deliver this Agreement and
each Financing Agreement to which it will be a party and to carry out
the obligations of WTC, in its capacity as Subordination Agent, Pass
Through Trustee or Paying Agent, as the case may be, under this
Agreement and each Financing Agreement to which it will be a party;
(ii) the execution and delivery by WTC, in its capacity as
Subordination Agent, Pass Through Trustee or Paying Agent, as the case
may be, of this Agreement and the performance by WTC, in its capacity
as Subordination Agent, Pass Through Trustee or Paying Agent, as the
case may be, of its obligations under this Agreement have been duly
authorized by WTC, in its capacity as Subordination Agent, Pass
Through Trustee or Paying Agent, as the case may be, and will not
violate its articles of association or by-laws or the provisions of
any indenture, mortgage, contract or other agreement to which it is a
party or by which it is bound; and
(iii) this Agreement constitutes the legal, valid and binding
obligations of WTC, in its capacity as Subordination Agent, Pass
Through Trustee or Paying Agent, as the case may be, enforceable
against it in accordance with its terms, except as the same may be
limited by applicable bankruptcy, insolvency, reorganization,
moratorium or similar laws affecting the rights of creditors generally
and by general principles of equity, whether considered in a
proceeding at law or in equity.
(c) The Pass Through Trustee hereby confirms to each of the other parties
hereto that its representations and warranties set forth in Section 7.15 of the
Basic Pass Through Trust Agreement and Section 5.04 of each Trust Supplement are
true and correct as of the date hereof.
(d) The Subordination Agent represents and warrants that:
(i) the Subordination Agent is duly incorporated, validly
existing and in good standing under the laws of the State of Delaware,
and has the full corporate power, authority and legal right under the
laws of the State of Delaware and the United States pertaining to its
banking, trust and fiduciary powers to execute and deliver this
Agreement and each Financing Agreement to which it is or will be a
party and to perform
<PAGE>
its obligations under this Agreement and each Financing Agreement to
which it is or will be a party;
(ii) this Agreement has been duly authorized, executed and
delivered by the Subordination Agent; this Agreement constitutes the
legal, valid and binding obligations of the Subordination Agent
enforceable against it in accordance with its terms, except as the
same may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium or similar laws affecting the rights of
creditors generally and by general principles of equity, whether
considered in a proceeding at law or in equity;
(iii) none of the execution, delivery and performance by the
Subordination Agent of this Agreement contravenes any law, rule or
regulation of the State of Delaware or any United States governmental
authority or agency regulating the Subordination Agent's banking,
trust or fiduciary powers or any judgment or order applicable to or
binding on the Subordination Agent and do not contravene the
Subordination Agent's articles of association or by-laws or result in
any breach of, or constitute a default under, any agreement or
instrument to which the Subordination Agent is a party or by which it
or any of its properties may be bound;
(iv) neither the execution and delivery by the Subordination
Agent of this Agreement nor the consummation by the Subordination
Agent of any of the transactions contemplated hereby requires the
consent or approval of, the giving of notice to, the registration
with, or the taking of any other action with respect to, any Delaware
governmental authority or agency or any federal governmental authority
or agency regulating the Subordination Agent's banking, trust or
fiduciary powers;
(v) there are no Taxes payable by the Subordination Agent imposed
by the State of Delaware or any political subdivision or taxing
authority thereof in connection with the execution, delivery and
performance by the Subordination Agent of this Agreement (other than
franchise or other taxes based on or measured by any fees or
compensation received by the Subordination Agent for services rendered
in connection with the transactions contemplated by the Intercreditor
Agreement or any of the Liquidity Facilities), and there are no Taxes
payable by the Subordination Agent imposed by the State of Delaware or
any political subdivision thereof in connection with the acquisition,
possession or ownership by the Subordination Agent of any of the
Equipment Notes (other than franchise or other taxes based on or
measured by any fees or compensation received by the Subordination
Agent for services rendered in connection with the transactions
contemplated by the Intercreditor Agreement or any of the Liquidity
Facilities); and
(vi) there are no pending or threatened actions or proceedings
against the Subordination Agent before any court or administrative
agency which individually or in the aggregate, if determined adversely
to it, would materially adversely affect the ability of the
Subordination Agent to perform its obligations under this Agreement.
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(e) The Escrow Agent represents and warrants that:
(i) the Escrow Agent is a national banking association duly
organized, validly existing and in good standing under the laws of the
United States and has the full corporate power, authority and legal
right under the laws of the United States pertaining to its banking,
trust and fiduciary powers to execute and deliver this Agreement, each
Deposit Agreement and each Escrow Agreement and to carry out the
obligations of the Paying Agent under each of the Escrow Agreements;
(ii) the execution and delivery by the Escrow Agent of each of
the Escrow Agreements and the performance by the Escrow Agent of its
obligations hereunder and thereunder have been duly authorized by the
Escrow Agent and will not violate its articles of association or
by-laws or the provisions of any indenture, mortgage, contract or
other agreement to which it is a party or by which it is bound; and
(iii) each of the Escrow Agreements constitutes the legal, valid
and binding obligations of the Escrow Agent enforceable against it in
accordance with its terms, except as the same may be limited by
applicable bankruptcy, insolvency, reorganization, moratorium or
similar laws affecting the rights of creditors generally and by
general principles of equity, whether considered in a proceeding at
law or in equity.
(f) The Paying Agent represents and warrants that:
(i) the Paying Agent is duly incorporated, validly existing and
in good standing under the laws of the State of Delaware and has the
full corporate power, authority and legal right under the laws of the
United States pertaining to its banking, trust and fiduciary powers to
execute and deliver this Agreement and each Escrow Agreement and to
carry out the obligations of the Paying Agent under each of the Escrow
Agreements;
(ii) the execution and delivery by the Paying Agent of each of
the Escrow Agreements and the performance by the Paying Agent of its
obligations hereunder and thereunder have been duly authorized by the
Paying Agent and will not violate its articles of association or
by-laws or the provisions of any indenture, mortgage, contract or
other agreement to which it is a party or by which it is bound; and
(iii) each of the Escrow Agreements constitutes the legal, valid
and binding obligations of the Paying Agent enforceable against it in
accordance with its terms, except as the same may be limited by
applicable bankruptcy, insolvency, reorganization, moratorium or
similar laws affecting the rights of creditors generally and by
general principles of equity, whether considered in a proceeding at
law or in equity.
SECTION 4. Covenants. (a) The Company covenants with each of the other
parties hereto that:
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(i) on the date that the Depositary is obligated to pay the
amount of the Final Withdrawal to the Paying Agent pursuant to a
Deposit Agreement relating to any Trust, the Company shall pay to the
Pass Through Trustee of such Trust no later than 12:30 p.m. (New York
time) an amount equal to the Deposit Make-Whole Premium, if any,
required to be paid in respect of such Final Withdrawal amount;
(ii) subject to Section 4(a)(iv) of this Agreement, the Company
shall at all times maintain its corporate existence and shall not wind
up, liquidate or dissolve or take any action, or fail to take any
action, that would have the effect of any of the foregoing;
(iii) the Company shall at all times remain a U.S. Air Carrier
(as defined in the Financing Agreements) and shall at all times be
otherwise certificated and registered to the extent necessary to
entitle (i) in the case of Leased Aircraft, the Owner Trustee (and the
Loan Trustee as assignee of the Owner Trustee's rights under each
Lease) to the rights afforded to lessors of aircraft equipment under
Section 1110 and (ii) in the case of Owned Aircraft, the Loan Trustee
to the rights afforded to secured parties of aircraft equipment under
Section 1110;
(iv) Section 13.2.1 of the form of each Lease is hereby
incorporated by reference herein;
(v) the Company agrees to provide written notice to each of the
parties hereto of the occurrence of the Cut-off Date no later than one
Business Day after the date thereof; and
(vi) the Company shall not issue Series D Equipment Notes
pursuant to any Owned Aircraft Indenture unless it shall have obtained
written confirmation from each Rating Agency that the issuance of such
Series D Equipment Notes will 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.
(b) WTC, in its individual capacity, covenants with each of the other
parties to this Agreement that it will, immediately upon obtaining knowledge of
any facts that would cast doubt upon its continuing status as a "citizen of the
United States" as defined in 49 U.S.C. Section 40102 and promptly upon public
disclosure of negotiations in respect of any transaction which would or might
adversely affect such status, notify in writing all parties hereto of all
relevant matters in connection therewith. Upon WTC giving any such notice, WTC
shall, subject to Section 8.02 of any Indenture then entered into, resign as
Loan Trustee in respect of such Indenture.
SECTION 5. Notices. Unless otherwise specifically provided herein, all
notices required or permitted by the terms of this Agreement shall be in English
and in writing, and any such notice shall become effective upon being delivered
personally or, if promptly confirmed by mail, when dispatched by facsimile or
other written telecommunication, addressed to such party
<PAGE>
hereto at its address or facsimile number set forth below the signature of such
party at the foot of this Agreement.
SECTION 6. Expenses. (a) The Company agrees to pay to the Subordination
Agent when due an amount or amounts equal to the fees payable to the relevant
Liquidity Provider under Section 2.03 of each Liquidity Facility and the related
Fee Letter (as defined in the Intercreditor Agreement) multiplied by a fraction
the numerator of which shall be the then outstanding aggregate amount of the
Deposits under the Deposit Agreements and the denominator of which shall be the
sum of (x) the then outstanding aggregate principal amount of the Series A-1
Equipment Notes, Series A-2 Equipment Notes, Series B Equipment Notes and Series
C Equipment Notes issued under all of the Indentures and (y) the then
outstanding aggregate amount of the Deposits under the Deposit Agreements.
(b) So long as no Equipment Notes have been issued in respect of any
Aircraft, the Company agrees to pay (i) to the Subordination Agent when due (A)
the amount equal to interest on any Downgrade Advance payable under Section 3.07
of each Liquidity Facility minus Investment Earnings while such Downgrade
Advance shall be outstanding, (B) the amount equal to interest on any
Non-Extension Advance payable under Section 3.07 of each Liquidity Facility
minus Investment Earnings while such Non-Extension Advance shall be outstanding
and (C) any other amounts owed to the Liquidity Provider by the Subordination
Agent as borrower under each Liquidity Facility (other than amounts due as
repayment of advances thereunder or as interest on such advances, except to the
extent payable pursuant to clause (A) or (B)), (ii) all compensation and
reimbursement of expenses, disbursements and advances payable by the Company
under the Pass Through Trust Agreements, (iii) all compensation and
reimbursement of expenses and disbursements payable to the Subordination Agent
under the Intercreditor Agreement except with respect to any income or franchise
taxes incurred by the Subordination Agent in connection with the transactions
contemplated by the Intercreditor Agreement and (iv) in the event the Company
requests any amendment to any Operative Agreement, all reasonable fees and
expenses (including, without limitation, fees and disbursements of counsel) of
the Escrow Agent and/or the Paying Agent in connection therewith. For purposes
of this Section 6(b), the terms "Applied Downgrade Advance", "Downgrade
Advance", "Investment Earnings", "Non-Extension Advance" and "Applied
Non-Extension Advance" shall have the meanings specified in each Liquidity
Facility.
SECTION 7. Further Assurances. Each party hereto shall duly execute,
acknowledge and deliver, or shall cause to be executed, acknowledged and
delivered, all such further agreements, instruments, certificates or documents,
and shall do and cause to be done such further acts and things, in any case, as
any other party hereto shall reasonably request in connection with its
administration of, or to carry out more effectually the purposes of, or to
better assure and confirm unto it the rights and benefits to be provided under,
this Agreement.
SECTION 8. Miscellaneous. (a) Provided that the transactions contemplated
hereby have been consummated, and except as otherwise provided for herein, the
representations, warranties and agreements herein of the Company, the
Subordination Agent, the Escrow Agent, the Paying Agent and the Pass Through
Trustee, and the Company's, the Subordination Agent's,
<PAGE>
the Escrow Agent's, the Paying Agent's and the Pass Through Trustee's
obligations under any and all thereof, shall survive the expiration or other
termination of this Agreement and the other agreements referred to herein.
(b) This Agreement 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 Agreement, including a signature page 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. Neither this
Agreement nor any of the terms hereof may be terminated, amended, supplemented,
waived or modified orally, but only by an instrument in writing signed by the
party against which the enforcement of the termination, amendment, supplement,
waiver or modification is sought. The index preceding this Agreement and the
headings of the various Sections of this Agreement are for convenience of
reference only and shall not modify, define, expand or limit any of the terms or
provisions hereof. The terms of this Agreement shall be binding upon, and shall
inure to the benefit of, the Company and its successors and permitted assigns,
the Pass Through Trustee and its successors as Pass Through Trustee (and any
additional trustee appointed) under any of the Pass Through Trust Agreements,
the Escrow Agent and its successors as Escrow Agent under the Escrow Agreements,
the Paying Agent and its successors as Paying Agent under the Escrow Agreements
and the Subordination Agent and its successors as Subordination Agent under the
Intercreditor Agreement.
(c) This Agreement is not intended to, and shall not, provide any person
not a party hereto (other than the Underwriters and each of the beneficiaries of
Section 6 hereof) with any rights of any nature whatsoever against any of the
parties hereto, and no person not a party hereto (other than the Underwriters
and each of the beneficiaries of Section 6 hereof) shall have any right, power
or privilege in respect of, or have any benefit or interest arising out of, this
Agreement.
SECTION 9. Governing Law. THIS AGREEMENT SHALL BE GOVERNED BY, AND
CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK. THIS AGREEMENT
IS BEING DELIVERED IN THE STATE OF NEW YORK.
[SIGNATURE PAGES FOLLOW]
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed by their respective officers thereunto duly authorized as of the
day and year first above written.
ATLAS AIR, INC.
By: /s/ Richard H. Shuyler
-----------------------------------
Name: Richard H. Shuyler
Title: Executive Vice President,
Treasurer and Director
Address: 538 Commons Drive
Golden, Colorado 80401
Attention: Chief Financial Officer
Facsimile: (303) 526-5051
WILMINGTON TRUST COMPANY,
not in its individual capacity,
except as otherwise expressly
provided herein, but solely as
Pass Through Trustee, Loan
Trustee, Subordination Agent
and Paying Agent, as applicable
By: /s/ James P. Lawler
-----------------------------------
Name: James P. Lawler
Title: Vice President
Address: One Rodney Square
1100 North Market Street
Wilmington, Delaware
19890-0001
Attention: Corporate Trust Admin.
<PAGE>
FIRST SECURITY BANK, NATIONAL ASSOCIATION,
as Escrow Agent
By: /s/ C. Scott Nielsen
-------------------------------------
Name: C. Scott Nielsen
Title: Vice President
Address: 79 South Main Street
Salt Lake City, Utah 84111
Attention: Corporate Trust Department
<PAGE>
<TABLE>
<CAPTION>
SCHEDULE I to
Note Purchase Agreement
AIRCRAFT AND SCHEDULED DELIVERY MONTHS
Scheduled Expected Manufacturer's
Delivery Registration Serial Number
Aircraft Type Month Number
<S> <C> <C> <C>
Boeing 747-400F April 1999 N495 MC 29256
Boeing 747-400F June 1999 N496 MC 29257
Boeing 747-400F July 1999 N497 MC 29258
Boeing 747-400F August 1999 N498 MC 29259
Boeing 747-400F February 2000 N499 MC 29260
</TABLE>
<PAGE>
SCHEDULE II to
Note Purchase Agreement
TRUST SUPPLEMENTS
Trust Supplement dated as of the Issuance Date between the Company and the Pass
Through Trustee in respect of Atlas Air Pass Through Trust, Series 1999-1A-1.
Trust Supplement dated as of the Issuance Date between the Company and the Pass
Through Trustee in respect of Atlas Air Pass Through Trust, Series 1999-1A-2.
Trust Supplement dated as of the Issuance Date between the Company and the Pass
Through Trustee in respect of Atlas Air Pass Through Trust, Series 1999-1B.
Trust Supplement dated as of the Issuance Date between the Company and the Pass
Through Trustee in respect of Atlas Air Pass Through Trust, Series 1999-1C.
<PAGE>
SCHEDULE III to
Note Purchase Agreement
DEPOSIT AGREEMENTS
Deposit Agreement (Class A-1) dated as of the Issuance Date between the
Depositary and the Escrow Agent.
Deposit Agreement (Class A-2) dated as of the Issuance Date between the
Depositary and the Escrow Agent.
Deposit Agreement (Class B) dated as of the Issuance Date between the Depositary
and the Escrow Agent.
Deposit Agreement (Class C) dated as of the Issuance Date between the Depositary
and the Escrow Agent.
<PAGE>
SCHEDULE IV to
Note Purchase Agreement
ESCROW AND PAYING AGENT AGREEMENTS
Escrow and Paying Agent Agreement (Class A-1) dated as of the Issuance Date
among the Escrow Agent, the Underwriters, the Pass Through Trustee and the
Paying Agent.
Escrow and Paying Agent Agreement (Class A-2) dated as of the Issuance Date
among the Escrow Agent, the Underwriters, the Pass Through Trustee and the
Paying Agent.
Escrow and Paying Agent Agreement (Class B) dated as of the Issuance Date among
the Escrow Agent, the Underwriters, the Pass Through Trustee and the Paying
Agent.
Escrow and Paying Agent Agreement (Class C) dated as of the Issuance Date among
the Escrow Agent, the Underwriters, the Pass Through Trustee and the Paying
Agent.
<PAGE>
SCHEDULE V to
Note Purchase Agreement
MANDATORY DOCUMENT TERMS FOR LEASE FINANCING AGREEMENTS
o May not modify in any material adverse respect the Granting Clause of the
Trust Indenture Form so as to deprive the Note Holders, the Loan
Participants or the Indenture Indemnitees of a first priority security
interest in and mortgage lien on the Aircraft and the Lease or to eliminate
any of the obligations secured thereby or otherwise modify in any material
adverse respect as regards the interests of the Note Holders, the
Subordination Agent, the Liquidity Providers or the Mortgagee the
provisions of Article II or III or Section 4.02, 4.03, 4.04, 5.02, 5.06,
9.01(b), 10.04, 10.11 or 10.12 of the Trust Indenture Form.
o May not modify in any material adverse respect as regards the interests of
the Note Holders, the Subordination Agent, the Liquidity Providers or the
Mortgagee the provisions of Section 3.2.1(e), 3.3(c), 4.7, the final
sentence of 7.1.1, 10.3.1(d)(ii), 13.3, 16, 18.3 or 18.7(a) or Clause D of
Annex D of the Lease Form or otherwise modify the terms of the Lease Form
so as to deprive the Mortgagee of rights expressly granted to the
"Mortgagee" therein.
o May not modify in any material adverse respect as regards the interests of
the Note Holders, the Subordination Agent, the Liquidity Providers or the
Mortgagee the provisions of Section 5.1.9, 5.1.10, 5.1.11, 5.1.12, 7.5, 12,
15.8(a) or 15.9 of the Participation Agreement Form or of the provisions of
Section 5.1.2(xxiii) or 10.1.1(a)(iv) of the Participation Agreement Form
so as to eliminate the requirement to deliver to the Loan Participant or
the Mortgagee, as the case may be, the legal opinions to be provided to
such Persons thereunder (recognizing that the lawyers rendering such
opinions may be changed) or of the provisions of Section 7.6.11(a)(ii) of
the Participation Agreement Form as regards the rights of the Mortgagee
thereunder or otherwise modify the terms of the Participation Agreement
Form to deprive the Trustees, the Subordination Agent, the Liquidity
Providers or the Mortgagee of any indemnity or right of reimbursement in
its favor for Expenses or Taxes.
o May not modify, in any material adverse respect as regards the interests of
the Note Holders, the Subordination Agent, the Liquidity Providers or the
Mortgagee, the definition of "Make Whole Amount" in Annex A to the
Participation Agreement Form.
Notwithstanding the foregoing, any such Mandatory Document Term may be modified
to correct or supplement any such provision which may be defective or to cure
any ambiguity or correct any mistake, provided that any such action shall not
materially adversely affect the interests of the Note Holders, the Subordination
Agent, the Liquidity Providers, the Mortgagee or the Certificateholders.
<PAGE>
SCHEDULE VI to
Note Purchase Agreement
MANDATORY ECONOMIC TERMS
Equipment Notes
Obligor: Atlas Air or an Owner Trust
Maximum Principal Amount:
The aggregate principal amount of all Equipment Notes issued with respect to
an Aircraft shall not exceed the maximum principal amount of Equipment Notes
indicated for such Aircraft as set forth in the Prospectus Supplement in
"Prospectus Supplement Summary--Equipment Notes and the Aircraft" under the
column "Maximum Principal Amount of Equipment Notes".
Aggregate Maximum Principal Amount:
For all Boeing 747-400F Aircraft $543,566,000
The aggregate original principal amount of all Equipment Notes for all Aircraft
shall not exceed the aggregate face amount of all Certificates issued on the
Issuance Date.
The aggregate original principal amount of all Equipment Notes of any series
shall not exceed the aggregate face amount of all Certificates of the related
Class issued on the Issuance Date.
Initial Loan to Aircraft Value with respect to an Aircraft (with the value of
any Aircraft equal to the value (the "Assumed Appraised Value") for such
Aircraft set forth in the Prospectus Supplement in "Prospectus Supplement
Summary--Equipment Notes and the Aircraft" under the column "Appraised Base
Value"):
<PAGE>
Series A-1: not in excess of 39.0%
Series A-2: not in excess of 39.0%
Series B: not in excess of 53.0%
Series C: not in excess of 68.0%
Loan to Aircraft Value for each series of Equipment Notes issued in respect of
each Aircraft (computed as of the date of issuance thereof on the basis of the
Assumed Appraised Value of such Aircraft and the Depreciation Assumption, as
defined in the Prospectus Supplement) as of any Regular Distribution Date
(assuming no default in the payment of the Equipment Notes):
Series A-1: not in excess of 39.0%
Series A-2: not in excess of 39.0%
Series B: not in excess of 53.0%
Series C: not in excess of 68.0%
Initial Average Life (in years) of each series of Equipment Notes for each
Boeing 747-400F Aircraft from the Issuance Date:
Series A-1: not extend beyond 15.0 years
Series B: not extend beyond 12.0 years
Series C: not extend beyond 7.5 years
Average Life (in years):
As of the Delivery Period Termination Date, the average life of the Class A-1
Certificates, the Class B Certificates and the Class C Certificates shall not
be more than, respectively, 13.5 years, 11.0 years and 6.5 years from the
Issuance Date (computed without regard to the acceleration of any Equipment
Notes and after giving effect to any special distribution on the Certificates
thereafter required in respect of unused Deposits).
Final Expected Regular Distribution Date:
Series A-1: January 2, 2019
Series A-2: July 2, 2009, with no scheduled amortization
Series B: January 2, 2015
Series C: January 2, 2011
As of the Delivery Period Termination Date (assuming that Equipment Notes are
acquired by the Pass Through Trusts for all of the Aircraft), the aggregate
principal amount of the Series A-2 Equipment Notes shall equal the original face
amount of the Class A-2 Certificates.
Debt Rate (computed on the basis of a 360-day year consisting of twelve 30-day
months, payable semi-annually in arrears):
<PAGE>
Series A-1: 7.20%
Series A-2: 6.88%
Series B: 7.63%
Series C: 8.77%
The interest rate applicable to each Series of Equipment Notes must be equal to
the rate applicable to the Certificates issued by the corresponding Pass Through
Trust.
Past Due Rates: Debt Rate plus 2% per annum
Payment Dates: January 2 and July 2
Make-Whole Amounts: As provided in Article II of the form of Trust
Indenture marked as Exhibit A-3 of the Note Purchase
Agreement (the "Trust Indenture Form") or the Owned
Aircraft Indenture marked as Exhibit C-2 of
the Note Purchase Agreement
Redemption and
Purchase: As provided in Article II of the Trust Indenture Form
Lease
Term: The Base Lease Term shall expire by its terms on or
after final maturity date of the related
Series A-1 Equipment Notes
Lease Payment Dates: January 2 and July 2,
provided that rent under a Lease may also be
paid at the election of Atlas Air upon the
commencement of such Lease and on any other
date agreed between Atlas Air and the Owner
Participant that occurs after the latest
maturity date of the Equipment Notes issued
in connection with the acquisition of the
Aircraft to which such Lease relates.
Minimum Rent: [Basic] Rent due and payable on each
Lease Payment Date shall be at least
sufficient to pay in full, as of such Lease
Payment Date (assuming timely payment of the
related Equipment Notes prior to such Date),
the aggregate principal amount of scheduled
installments due on the related Equipment
Notes outstanding on such Lease Payment
Date, together with accrued and unpaid
interest thereon
Supplemental Rent: Sufficient to cover the sums described in clauses
(a) through (d) of such term as defined in Annex
A to the form of Lease (the "Lease Form") marked as
Exhibit A-2 of the Note Purchase Agreement
<PAGE>
Stipulated Loss
Value: At all times equal to or greater than the then
outstanding principal amount of the related
Equipment Notes together with accrued interest
thereon
Termination Value: At all times equal to or greater than the then
outstanding principal amount of the related
Equipment Notes together with accrued interest
thereon
All-risk Hull
Insurance: Not less than the Stipulated Loss Value or,
in the case of an Owned Aircraft, not less
than the unpaid principal amount of the
related Equipment Notes, subject to Lessees
right to self-insure on terms no more
favorable to Lessee in any material respect
than those set forth in Section G of Annex D
to the Lease Form
Minimum Liability
Insurance Amount: As set forth in Schedule 1 to the Lease Form
Past Due Rate: As set forth in Schedule 1 to the Lease Form
SLV Rate: As set forth in Schedule 1 to the Lease Form
Participation Agreement
Mortgagee, Subordination Agent, Liquidity Providers, Guarantor, Pass
Through Trustees, Escrow Agents and Note Holders shall be indemnified
against Expenses and Taxes to the extent set forth in Section 9 of the
form of the Participation Agreement marked as Exhibit A-1 to the Note
Purchase Agreement (the "Participation Form"), Lease Form and Trust
Indenture Form.
<PAGE>
SCHEDULE VII to
Note Purchase Agreement
AGGREGATE AMORTIZATION SCHEDULE
Date 1999-1A-1 Trust 1999-1B Trust 1999-1C Trust
Scheduled Principal Scheduled Principal Scheduled Principal
Payment Payment Payment
<PAGE>
ANNEX A to
Note Purchase Agreement
DEFINITIONS
"ABN AMRO Liquidity Facility" means the Liquidity Facility between ABN AMRO
Bank N.V., Chicago Branch, and the Subordination Agent.
"Act" means 49 U.S.C. Section 40101-46507.
"Adjusted Treasury Yield" means the Treasury Yield plus, in the case of a
distribution to holders of (i) Class A-1 Certificates, 192 basis points, (ii)
Class A-2 Certificates, 160 basis points, (iii) Class B Certificates, 235 basis
points and, (iv) Class C Certificates, 337.5 basis points.
"Affiliate" means, with respect to any person, any other person directly or
indirectly controlling, controlled by or under common control with such person.
For purposes of this definition, "control" 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 "controlling," "controlled by" and "under common control with"
have correlative meanings.
"Aircraft" has the meaning set forth in the second recital to the Note
Purchase Agreement.
"Aircraft Purchase Agreement Assignment" means a Purchase Agreement and
Engine Warranties Assignment substantially in the form of Exhibit A-4 to the
Note Purchase Agreement.
"Assumed Amortization Schedule" means Schedule VII to the Note Purchase
Agreement.
"Average Life Date" means, for any Equipment Note, the date which follows
the time of determination by a period equal to the Remaining Weighted Average
Life of such Equipment Note.
"Bankruptcy Code" means the United States Bankruptcy Code, 11 U.S.C.
Section 102 et seq.
"Basic Pass Through Trust Agreement" means the Pass Through Trust Agreement
dated as of April 1, 1999 between the Company and the Pass Through Trustee, as
such agreement may be supplemented, amended or modified, but does not include
any Trust Supplement.
"Business Day" means any day, other than a Saturday, Sunday or other day on
which commercial banks are authorized or required by law to close in New York,
New York, Denver, Colorado, Wilmington, Delaware, Salt Lake City, Utah or
Chicago, Illinois.
<PAGE>
"Certificateholder" means the Person in whose name a Certificate is
registered in the Register.
"Certificates" has the meaning set forth in the third recital to the Note
Purchase Agreement.
"Class" means the class of Certificates issued by each Pass Through Trust.
"Class A-1 Pass Through Trust" means the Atlas Air Pass Through Trust,
1999-1A-1.
"Class A-2 Pass Through Trust" means the Atlas Air Pass Through Trust,
1999-1A-2.
"Class B Pass Through Trust" means the Atlas Air Pass Through Trust,
1999-1B.
"Class C Pass Through Trust" means the Atlas Air Pass Through Trust,
1999-1C.
"Company" means Atlas Air, Inc., a Delaware corporation.
"Corporate Trust Office" with respect to any Pass Through Trustee or any
Loan Trustee, means 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 the earlier of (a) the day after the Delivery Period
Termination Date and (b) the date on which a Triggering Event occurs.
"Delivery Date" means the Business Day on which an Aircraft is delivered to
and accepted by the Company.
"Delivery Period Termination Date" means the earlier of (a) May 31, 2000
provided that, if a labor strike occurs at the Manufacturer on or prior to such
date, such date shall be extended by adding thereto the number of days that such
strike continued in effect and (b) the date on which Equipment Notes issued with
respect to all of the Aircraft (or Substitute Aircraft in lieu thereof) have
been purchased by the Pass Through Trustees in accordance with the Note Purchase
Agreement.
"Deposit Agreements" has the meaning set forth in the fifth recital to the
Note Purchase Agreement.
"Deposit Make-Whole Premium" means, with respect to the distribution of
unused Deposits to holders of any Class of Certificates, as of any date of
determination, an amount equal to the excess, if any, of (a) the present value
of the excess of (i) the scheduled payment of principal and interest to maturity
of the related series of Equipment Notes, assuming the maximum principal amount
thereof (the "Maximum Amount") minus the sum of (x) such
<PAGE>
Class of Certificates' proportionate share (in the same proportion that the
amount of unused Deposits with respect to such Class of Certificates bears to
the unused Deposits with respect to all Classes of Certificates, disregarding
for this purpose unused Deposits attributable to any Non-Delivery Redemption
Amount) of the Par Redemption Amount and (y) the portion of the Non-Delivery
Redemption Amount attributable to such Class, were issued, on each remaining
Regular Distribution Date for such Class under the Assumed Amortization Schedule
over (ii) the scheduled payment of principal and interest to maturity of the
Equipment Notes actually acquired by the Pass Through Trustee for such Class on
each such Regular Distribution Date, such present value computed by discounting
such excess on a semiannual basis on each Regular Distribution Date (assuming a
360-day year of twelve 30-day months) using a discount rate equal to the
Adjusted Treasury Yield over (b) the amount of such unused Deposits to be (and
that have been) distributed to the holders of such Certificates minus the sum of
(x) such Class of Certificates' proportionate share of the Par Redemption Amount
and (y) the portion of the Non-Delivery Redemption Amount attributable to such
Class, plus accrued and unpaid interest on such net amount to but excluding such
date of determination from and including the preceding Regular Distribution Date
(or if such date of determination precedes the first Regular Distribution Date,
the Issuance Date).
"Depositary" means Credit Suisse First Boston, a banking institution
organized under the laws of Switzerland, acting through its New York Branch.
"Deposits" has the meaning set forth in the fifth recital to the Note
Purchase Agreement.
"Equipment Notes" means and includes any equipment notes issued under any
Indenture in the form specified in Section 2.01 thereof (as such form may be
varied pursuant to the terms of such Indenture) and any Equipment Note issued
under any Indenture in exchange for or replacement of any other Equipment Note.
"Escrow Agent" has the meaning set forth in the first paragraph of the Note
Purchase Agreement.
"Escrow Agreements" has the meaning set forth in the fifth recital to the
Note Purchase Agreement.
"FAA" means the Federal Aviation Administration of the United States.
"Final Withdrawal" with respect to each Escrow Agreement, has the meaning
set forth in Section 1.02 thereof.
"Financing Agreements" means, collectively, the Lease Financing Agreements
and the Owner Financing Agreements.
"Funding Date" has the meaning set forth in the Section 1(b) of the Note
Purchase Agreement.
<PAGE>
"Government Entity" means (a) any federal, state, provincial or similar
government, and any body, board, department, commission, court, tribunal,
authority, agency or other instrumentality of any such government or otherwise
exercising any executive, legislative, judicial, administrative or regulatory
functions of such government or (b) any other government entity having
jurisdiction over any matter contemplated by the Operative Agreements or
relating to the observance or performance of the obligations of any of the
parties to the Operative Agreements.
"Guarantee Agreement" has the meaning set forth in the Intercreditor
Agreement.
"Guarantor" has the meaning set forth in the Intercreditor Agreement.
"H.15(519)" means the weekly statistical release designated as such, or any
successor publication, published by the Board of Governors of the Federal
Reserve System.
"Indentures" means, collectively, the Leased Aircraft Indentures and the
Owned Aircraft Indentures.
"Intercreditor Agreement" has the meaning set forth in the ninth recital to
the Note Purchase Agreement.
"Issuance Date" means the date of the original issuance of the
Certificates.
"Law" means (a) any constitution, treaty, statute, law, decree, regulation,
order, rule or directive of any Government Entity, and (b) any judicial or
administrative interpretation or application of, or decision under, any of the
foregoing.
"Lease" means a Lease Agreement substantially in the form of Exhibit A-2 to
the Note Purchase Agreement.
"Lease Financing Agreements" means, collectively, the Aircraft Purchase
Agreement Assignment, the Leased Aircraft Participation Agreement, the Lease,
the Leased Aircraft Indenture, the Equipment Notes issued thereunder and the
Trust Agreement relating to the financing of a Leased Aircraft. "Leased
Aircraft" means an Aircraft subject to a Lease.
"Leased Aircraft Indenture" means a Trust Indenture and Mortgage
substantially in the form of Exhibit A-3 to the Note Purchase Agreement.
"Leased Aircraft Participation Agreement" means a Participation Agreement
substantially in the form of Exhibit A-1 to the Note Purchase Agreement.
"Liquidity Facilities" has the meaning set forth in the ninth recital to
the Note Purchase Agreement.
<PAGE>
"Liquidity Providers" has the meaning set forth in the ninth recital to the
Note Purchase Agreement.
"Loan Trustee" means the "Mortgagee" as defined in the Financing
Agreements.
"Mandatory Document Terms" means the terms set forth on Schedule V to the
Note Purchase Agreement.
"Mandatory Economic Terms" means the terms set forth on Schedule VI to the
Note Purchase Agreement.
"Manufacturer" means The Boeing Company, a Delaware corporation, solely in
its capacity as manufacturer of seller of the Aircraft.
"Non-Delivery Redemption Amount" means the aggregate amount of Deposits
relating to Aircraft that are or will not be delivered by the Manufacturer prior
to the Delivery Period Termination Date due to any reason not occasioned by the
Company's fault or negligence.
"Note Purchase Agreement" means the Note Purchase Agreement to which this
Annex A is attached.
"Notice of Purchase Withdrawal" with respect to each Deposit Agreement, has
the meaning set forth in Section 2.3 thereof.
"Operative Agreements" means, collectively, the Pass Through Trust
Agreements, the Escrow Agreements, the Deposit Agreements, the Liquidity
Facilities, the Guarantee Agreements, the Intercreditor Agreement, the Trust
Agreements, the Equipment Notes, the Certificates and the Financing Agreements.
"Owned Aircraft" means an Aircraft subject to an Owned Aircraft Indenture.
"Owned Aircraft Indenture" means a Trust Indenture and Mortgage
substantially in the form of Exhibit C-2 to the Note Purchase Agreement.
"Owned Aircraft Participation Agreement" means a Participation Agreement
substantially in the form of Exhibit C-1 to the Note Purchase Agreement.
"Owner Financing Agreements" means, collectively, the Owned Aircraft
Participation Agreement, the Owned Aircraft Indenture and the Equipment Notes
issued thereunder.
"Owner Participant" means, with respect to any Leased Aircraft, the Person
named as the Owner Participant in the Participation Agreement with respect to
such Leased Aircraft.
<PAGE>
"Owner Trust" means with respect to any Leased Aircraft, the trust created
by the "Trust Agreement" referred to in the Leased Aircraft Indenture related
thereto.
"Owner Trustee" means with respect to any Leased Aircraft, the "Owner
Trustee" party to the "Trust Agreement" referred to in the Leased Aircraft
Indenture related thereto.
"Par Redemption Amount" means $10 million.
"Participation Agreements" means, collectively, the Leased Aircraft
Participation Agreements and the Owned Aircraft Participation Agreements.
"Pass Through Trust" has the meaning set forth in the third recital to the
Note Purchase Agreement.
"Pass Through Trust Agreement" means each of the four separate Trust
Supplements, together in each case with the Basic Pass Through Trust Agreement,
each dated as of the Issuance Date, by and between the Company and the Pass
Through Trustee.
"Pass Through Trustee" has the meaning set forth in the first paragraph of
the Note Purchase Agreement.
"Paying Agent" has the meaning set forth in the first paragraph of the Note
Purchase Agreement.
"Person" means any individual, firm, partnership, joint venture, trust,
trustee, Government Entity, organization, association, corporation, government
agency, committee, department, authority and other body, corporate or
incorporate, whether having distinct legal status or not, or any member of any
of the same.
"Prospectus Supplement" means the Prospectus Supplement dated April 5, 1999
relating to the Certificates.
"Purchase Agreement" means the Purchase Agreement dated June 9, 1997
between the Company and the Manufacturer (including all exhibits thereto,
together with all letter agreements entered into that by their terms constitute
part of any such Purchase Agreement).
"Qualified Owner Participant" means any bank, trust company, insurance
company, financial institution or corporation (other than, without the Company's
consent, a commercial air carrier, a commercial aircraft operator, a freight
forwarder or Affiliate of any of the foregoing), in each case with a combined
capital and surplus or net worth of at least $50,000,000.
"Rating Agencies" means Moody's Investors Service, Inc. and Standard &
Poor's Ratings Services, a division of The McGraw-Hill Companies, Inc.
<PAGE>
"Rating Agency Confirmation" means, with respect to any Financing Agreement
that has been modified in any material respect from the forms thereof attached
to the Note Purchase Agreement (other than modifications affecting only the
Owner Participant) or with respect to Substitute Aircraft, a written
confirmation from each Rating Agency that the use of such Financing Agreement
with such modifications or the substituting of such Substitute Aircraft for an
Aircraft, whichever of the foregoing shall in a particular case require
confirmation from such rating agencies, 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.
"Register" means the register maintained pursuant to Sections 3.04 and 7.12
of the Basic Pass Through Trust Agreement with respect to each Pass Through
Trust.
"Regular Distribution Dates" shall mean January 2 and July 2 of each year,
commencing January 2, 2000.
"Remaining Weighted Average Life" means, on a given date with respect to
any Equipment Note, the number of days equal to the quotient obtained by
dividing (a) the sum of each of the products obtained by multiplying (i) the
amount of each then remaining scheduled payment of principal of such Equipment
Note by (ii) the number of days from and including such determination date to
but excluding the date on which such payment of principal is scheduled to be
made, by (b) the then outstanding principal amount of such Equipment Note.
"Section 1110" means 11 U.S.C. Section 1110 of the Bankruptcy Code or any
successor or analogous Section of the federal bankruptcy Law in effect from time
to time.
"Series A-1 Equipment Notes" means Equipment Notes issued under an
Indenture and designated as "Series A-1" thereunder.
"Series A-2 Equipment Notes" means Equipment Notes issued under an Owned
Aircraft Indenture and designated as "Series A-2" thereunder.
"Series B Equipment Notes" means Equipment Notes issued under an Indenture
and designated as "Series B" thereunder.
"Series C Equipment Notes" means Equipment Notes issued under an Indenture
and designated as "Series C" thereunder.
"Series D Equipment Notes" means Equipment Notes issued under an Owned
Aircraft Indenture and designated as "Series D" thereunder.
"Subordination Agent" has the meaning set forth in the first paragraph of
the Note Purchase Agreement.
<PAGE>
"Substitute Aircraft" has the meaning set forth in Section 1(f) of the Note
Purchase Agreement.
"Taxes" means all license, recording, documentary, registration and other
similar fees and all taxes, levies, imposts, duties, charges, assessments or
withholdings of any nature whatsoever imposed by any Taxing Authority, together
with any penalties, additions to tax, fines or interest thereon or additions
thereto.
"Taxing Authority" means any federal, state or local government or other
taxing authority in the United States, any foreign government or any political
subdivision or taxing authority thereof, any international taxing authority or
any territory or possession of the United States or any taxing authority
thereof.
"Treasury Yield" means, at the date of determination, with respect to any
Equipment Note, the interest rate (expressed as a decimal and, in the case of
United States Treasury bills, converted to a bond equivalent yield) determined
to be the per annum rate equal to the semi-annual yield to maturity for United
States Treasury securities maturing on the Average Life Date of such Equipment
Note and trading in the public securities markets either as determined by
interpolation between the most recent weekly average yield to maturity for two
series of United States Treasury securities trading in the public securities
markets, (A) one maturing as close as possible to, but earlier than, the Average
Life Date of such Equipment Note and (B) the other maturing as close as possible
to, but later than, the Average Life Date of such Equipment Note, in each case
as published in the most recent H.15(519) or, if a weekly average yield to
maturity for United States Treasury securities maturing on the Average Life Date
of such Equipment Note is reported on the most recent H.15(519), such weekly
average yield to maturity as published in such H.15(519).
"Triggering Event" has the meaning assigned to such term in the
Intercreditor Agreement.
"Trust Agreement" means a Trust Agreement substantially in the form of
Exhibit A-5 to the Note Purchase Agreement.
"Trust Supplement" means an agreement supplemental to the Basic Pass
Through Trust Agreement pursuant to which (i) a separate trust is created for
the benefit of the holders of the Pass Through Certificates of a class, (ii) the
issuance of the Pass Through Certificates of such class representing fractional
undivided interests in such trust is authorized and (iii) the terms of the Pass
Through Certificates of such class are established.
"WTC" has the meaning set forth in the first paragraph of the Note Purchase
Agreement.
<PAGE>
EXHIBIT A-1 to
Note Purchase Agreement
FORM OF LEASED AIRCRAFT PARTICIPATION AGREEMENT
<PAGE>
EXHIBIT A-2 to
Note Purchase Agreement
FORM OF LEASE
<PAGE>
EXHIBIT A-3 to
Note Purchase Agreement
FORM OF LEASED AIRCRAFT INDENTURE
<PAGE>
EXHIBIT A-4 to
Note Purchase Agreement
FORM OF AIRCRAFT PURCHASE AGREEMENT ASSIGNMENT
<PAGE>
EXHIBIT A-5 to
Note Purchase Agreement
FORM OF LEASED AIRCRAFT TRUST AGREEMENT
<PAGE>
EXHIBIT B to
Note Purchase Agreement
FORM OF DELIVERY NOTICE
[DATE]
Wilmington Trust Company
One Rodney Square
1100 North Market Street
Wilmington, Delaware 19890-0001
Attention: Corporate Trust Administration
First Security Bank, National Association
79 South Main Street
Salt Lake City, Utah 84111
Attention: Corporate Trust Department
Moody's Investors Service, Inc.
99 Church Street
New York, N.Y. 10007
Attention:
Standard & Poor's Ratings Services
26 Broadway, 14th Floor
New York, N.Y. 10004
Attention:
Re: Atlas Air, Inc.
Gentlemen:
Reference is made to the Note Purchase Agreement dated as of April 13, 1999
(the "Note Purchase Agreement") among Atlas Air, Inc. ("Atlas"), Wilmington
Trust Company, as Pass Through Trustee under each of the Pass Through Trust
Agreements, as Subordination Agent and as Paying Agent, and First Security Bank,
National Association, as Escrow Agent.
In accordance with Section 1(b) of the Note Purchase Agreement, the
undersigned hereby notifies you as follows:
(i) Delivery of an Aircraft, and the consummation of the
financing therefor, will take place on _________, which is a Business
Day before the Cut-off Date.
(ii) Atlas will treat the Aircraft as a [Leased] [Owned] Aircraft
[in respect of which a Series A-2 Equipment Note will [not] be
issued].
<PAGE>
(iii) [The Owner Participant (a) is not an Affiliate of the
Company and (b) based on the representations of the Owner Participant,
is a Qualified Owner Participant or is a person the obligations of
which under the Owner Participant Agreements are guaranteed by a
Qualified Owner Participant].(1)
(iv) The aggregate principal amount of Series A-1 Equipment Notes
to be issued and purchased by the Pass Through Trustee is $[_______].
(v) The aggregate principal amount of Series B Equipment Notes to
be issued and purchased by the Pass Through Trustee is $[_______].
(vi) The aggregate amount of Series C Equipment Notes to be
issued and purchased by the Pass Though Trustee is $[-------].
[(vii) The aggregate amount of Series A-2 Equipment Notes to be
issued and purchased by the Pass Though Trustee is $-------.]
The undersigned hereby directs the Pass Through Trustee to (a) instruct the
Escrow Agent to provide Notices of Purchase Withdrawal to the Depositary in
respect of the Equipment Notes to be issued as specified above and (b) enter
into the Participation Agreement included in the Financing Agreements with
respect to the Aircraft on the date specified in clause (i) above and to perform
its obligations thereunder.
ATLAS AIR, INC.
By:
-------------------------------
Name:
Title:
- ----------
1 Include for Leased Aircraft only.
<PAGE>
EXHIBIT C-1 to
Note Purchase Agreement
FORM OF OWNED AIRCRAFT PARTICIPATION AGREEMENT
<PAGE>
EXHIBIT C-2 to
Note Purchase Agreement
FORM OF OWNED AIRCRAFT INDENTURE
EXHIBIT A-1 to
Note Purchase Agreement
FORM OF LEASED AIRCRAFT PARTICIPATION AGREEMENT
<PAGE>
================================================================================
PARTICIPATION AGREEMENT
Dated as of _______
Among
ATLAS AIR, INC.,
Lessee,
[ ],
Owner Participant,
FIRST SECURITY BANK, NATIONAL ASSOCIATION,
Not in its individual capacity
except as expressly provided herein,
but solely as Owner Trustee
and
WILMINGTON TRUST COMPANY,
Not in its individual capacity
except as expressly provided herein,
but solely as Mortgagee under the Trust
Indenture, Subordination Agent under the
Intercreditor Agreement and Pass Through Trustee
under each of the Pass Through Trust Agreements
----------------------------
One Boeing Model 747-47UF Aircraft
Bearing Manufacturer's Serial No.
and U.S. Registration No. ______
================================================================================
<PAGE>
TABLE OF CONTENTS
Page
SECTION 1. DEFINITIONS AND CONSTRUCTION.......................................2
SECTION 2. PARTICIPATION IN LESSOR'S COST; ISSUANCE OF EQUIPMENT
NOTES; TERMINATION OF OBLIGATION TO PARTICIPATE .................3
2.1 Participation in Lessor's Cost.....................................3
2.2 Nature of Obligations of Participants..............................3
2.3 Termination of Obligation to Participate...........................3
SECTION 3. COMMITMENT TO LEASE AIRCRAFT.......................................4
SECTION 4. PROCEDURE FOR PARTICIPATION IN PAYMENT OF LESSOR'S COST;
POSTPONEMENT OF SCHEDULED DELIVERY DATE ..........................4
4.1 Notices of Scheduled Delivery Date.................................4
4.2 Payment of Lessor's Cost...........................................4
4.3 Postponement of Scheduled Delivery Date............................5
4.4 Closing ...........................................................6
SECTION 5. CONDITIONS PRECEDENT...............................................6
5.1 Conditions Precedent to Obligations of Participants................6
5.2 Conditions Precedent to Obligations of Owner Trustee..............14
5.3 Conditions Precedent to Obligations of Mortgagee..................15
5.4 Conditions Precedent to Obligations of Lessee.....................15
5.5 Post-Registration Opinion.........................................16
SECTION 6. REPRESENTATIONS AND WARRANTIES....................................17
6.1 Lessee's Representations and Warranties...........................17
6.2 Owner Participant's Representations and Warranties................21
6.3 First Security's Representations and Warranties...................24
6.4 WTC's Representations and Warranties..............................27
SECTION 7. COVENANTS, UNDERTAKINGS AND AGREEMENTS............................31
7.1 Covenants of Lessee...............................................31
7.2 Covenants of Owner Participant....................................33
7.3 Covenants of First Security and Owner Trustee.....................36
7.4 Covenants of WTC..................................................38
7.5 Covenants of Note Holders.........................................40
7.6 Agreements .......................................................41
-i-
<PAGE>
Page
SECTION 8. CONFIDENTIALITY...................................................49
SECTION 9. INDEMNIFICATION AND EXPENSES......................................50
9.1 General Indemnity.................................................50
9.2 Expenses .........................................................58
9.3 General Tax Indemnity.............................................59
9.4 Payments .........................................................72
9.5 Interest .........................................................72
9.6 Benefit of Indemnities............................................72
SECTION 10. ASSIGNMENT OR TRANSFER OF INTERESTS..............................73
10.1 Participants, Owner Trustee and Note Holders.....................73
10.2 Effect of Transfer...............................................78
SECTION 11 REFUNDING AND CERTAIN OTHER MATTERS..............................79
11.1 Refunding Generally..............................................79
11.2 Limitations on Obligation to Refund..............................81
11.3 Execution of Certain Documents...................................81
11.4 ERISA .......................................................... 81
11.5 Consent to Optional Redemptions..................................82
SECTION 12. SECTION 1110 ....................................................82
SECTION 13 CHANGE OF CITIZENSHIP............................................82
13.1 Generally .......................................................82
13.2 Owner Participant................................................83
13.3 Owner Trustee....................................................83
13.4 Mortgagee .......................................................83
SECTION 14. CONCERNING OWNER TRUSTEE.........................................84
SECTION 15. MISCELLANEOUS ...................................................84
15.1 Amendments ......................................................84
15.2 Severability ....................................................85
15.3 Survival ........................................................85
15.4 Reproduction of Documents........................................85
15.5 Counterparts ....................................................86
15.6 No Waiver .......................................................86
15.7 Notices ........................................................ 86
15.8 GOVERNING LAW; SUBMISSION TO JURISDICTION; VENUE.................87
15.9 Third-Party Beneficiary..........................................88
15.10 Entire Agreement................................................88
15.11 Further Assurances..............................................88
ANNEX, SCHEDULES AND EXHIBITS
ANNEX A - Definitions
-ii-
<PAGE>
SCHEDULE 1 - Accounts; Addresses
SCHEDULE 2 - Commitments
SCHEDULE 3 - Certain Terms
EXHIBIT A - Opinion of special counsel to Lessee
EXHIBIT B - Opinion of corporate counsel to Lessee
EXHIBIT C - Opinion of corporate counsel to Airframe Manufacturer
EXHIBIT D - Opinion of special counsel to Owner Trustee
EXHIBIT E - Opinion of special counsel to Mortgagee and the
Loan Participants
EXHIBIT F - Opinion of special counsel to Owner
Participant
EXHIBIT G-1- Opinion of special counsel in Oklahoma City, Oklahoma EXHIBIT G-2-
Opinion of special counsel in Oklahoma City, Oklahoma EXHIBIT H - Form of
Assignment and Assumption Agreement EXHIBIT I - Form of Opinion EXHIBIT J - Form
of Guaranty Agreement
-iii-
<PAGE>
PARTICIPATION AGREEMENT
PARTICIPATION AGREEMENT, dated as of , (this "Agreement"), among (a) ATLAS
AIR, INC., a Delaware corporation ("Lessee"), (b) [ ] ("Owner Participant"), (c)
FIRST SECURITY BANK, NATIONAL ASSOCIATION, a national banking association, not
in its individual capacity, except as expressly provided herein, but solely as
Owner Trustee (this and all other capitalized terms used but not defined herein
shall have the respective meanings ascribed thereto in Section 1) (in its
capacity as Owner Trustee, "Owner Trustee" or "Lessor," and in its individual
capacity, "First Security"), (d) WILMINGTON TRUST COMPANY, a Delaware banking
corporation, not in its individual capacity, except as expressly provided
herein, but solely as Mortgagee under the Trust Indenture (in its capacity as
Mortgagee, "Mortgagee" and in its individual capacity, "WTC"), (e) WILMINGTON
TRUST COMPANY, not in its individual capacity, except as expressly provided
herein, but solely as Pass Through Trustee under each of the Pass Through Trust
Agreements, (each, a "Pass Through Trustee") and (f) WILMINGTON TRUST COMPANY,
not in its individual capacity, except as expressly provided herein, but solely
as Subordination Agent under the Intercreditor Agreement ("Subordination
Agent").
RECITALS
A. Owner Participant and First Security, concurrently herewith, are
entering into the Trust Agreement, pursuant to which, among other things, Owner
Trustee agrees to hold the Trust Estate for the use and benefit of Owner
Participant upon and subject to the terms and conditions set forth therein.
B. Lessee and Airframe Manufacturer have entered into the Purchase
Agreement, pursuant to which, among other things, Airframe Manufacturer has
agreed to manufacture and sell to Lessee and Lessee has agreed to purchase from
Airframe Manufacturer, certain aircraft, including the Aircraft.
C. On the Delivery Date, Lessee and Owner Trustee will enter into the
Purchase Agreement Assignment, pursuant to which, among other things, Lessee
will assign to Owner Trustee its right to purchase the Aircraft from Airframe
Manufacturer upon and subject to the terms and conditions set forth in the
Purchase Agreement and the Purchase Agreement Assignment.
<PAGE>
-2-
D. Pursuant to each of the Pass Through Trust Agreements, on the Issuance
Date the Pass Through Trusts were created and the Pass Through Certificates were
issued and sold.
E. Pursuant to the Note Purchase Agreement, each Pass Through Trustee has
agreed to use a portion of the proceeds from the issuance and sale of the Pass
Through Certificates issued by each Pass Through Trust to purchase from the
Owner Trustee, on behalf of the related Pass Through Trust, the Equipment Note
bearing the same interest rate as the Pass Through Certificates issued by such
Pass Through Trust.
F. Owner Trustee and Mortgagee, concurrently with the execution and
delivery hereof, have entered into the Trust Indenture for the benefit of the
Note Holders, pursuant to which, among other things, Owner Trustee agrees (1) to
issue Equipment Notes, in the amounts and otherwise as provided in the Trust
Indenture, the proceeds of which will be used to pay a portion of Lessor's Cost
and (2) to mortgage, pledge and assign to Mortgagee all of Owner Trustee's
right, title and interest in the Trust Indenture Estate to secure the Secured
Obligations, including, without limitation, Owner Trustee's obligations under
the Equipment Notes.
G. On the Delivery Date, Lessor and Lessee will enter into the Lease,
pursuant to which, among other things, Lessor shall lease the Aircraft to Lessee
and Lessee shall lease the Aircraft from Lessor upon and subject to the terms
and conditions set forth therein.
H. The parties hereto wish to set forth in this Agreement the terms and
conditions upon and subject to which the aforesaid transactions shall be
effected.
NOW, THEREFORE, in consideration of the premises and the mutual agreements
contained herein and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereto agree as
follows:
SECTION 1. DEFINITIONS AND CONSTRUCTION
Capitalized terms used but not defined herein shall have the respective
meanings set forth or incorporated by reference, and shall be construed and
interpreted in the manner described, in Annex A.
<PAGE>
-3-
SECTION 2. PARTICIPATION IN LESSOR'S COST; ISSUANCE OF EQUIPMENT NOTES;
TERMINATION OF OBLIGATION TO PARTICIPATE
2.1 Participation in Lessor's Cost
Subject to the terms and conditions of this Agreement, on the Delivery
Date, Owner Participant and each Pass Through Trustee shall participate in the
payment of Lessor's Cost as follows:
(a) Owner Participant shall participate in the payment of
Lessor's Cost for the Aircraft by making an equity investment in the
beneficial ownership of the Aircraft in the amount in Dollars equal to
Owner Participant's Percentage multiplied by Lessor's Cost; and
(b) Each Pass Through Trustee shall make a non-recourse
secured loan to Owner Trustee to finance, in part, the Owner Trustee's
payment of Lessor's Cost in the amount in Dollars equal to such Pass
Through Trustee's PTT Percentage multiplied by Lessor's Cost, such loan
to be evidenced by one or more Equipment Notes, dated the Delivery
Date, issued to the Subordination Agent as the registered holder on
behalf of each such Pass Through Trustee for the related Pass Through
Trust by Owner Trustee in accordance with this Agreement and the Trust
Indenture, in an aggregate principal amount equal to the Commitment of
each such Pass Through Trustee.
2.2 Nature of Obligations of Participants
The obligations hereunder of each Participant are several, and not joint,
and a Participant shall have no obligation to make available to Owner Trustee
any portion of any amount not paid hereunder by any other Participant. The
failure by any Participant to perform its obligations hereunder shall not affect
the obligations of Lessee toward the other Participants, except to the extent
provided in Section 5.4.
2.3 Termination of Obligation to Participate
Notwithstanding any other provision of this Agreement, if the Closing does
not occur on or before the Commitment Termination Date, the Commitment of each
Participant and its obligation to participate in the payment of Lessor's Cost
shall expire and be of no further force and effect; provided, that
<PAGE>
-4-
the liability of any Participant that has defaulted in the payment of its
Commitment shall not be released.
SECTION 3. COMMITMENT TO LEASE AIRCRAFT
Subject to the terms and conditions of this Agreement, concurrently with
the issuance of the Equipment Notes on the Delivery Date, Owner Trustee shall
purchase and accept delivery of the Aircraft under and pursuant to the Purchase
Agreement and the Purchase Agreement Assignment, and thereupon Owner Trustee
shall lease the Aircraft to Lessee, and Lessee shall lease the Aircraft from
Owner Trustee, under the Lease.
SECTION 4. PROCEDURE FOR PARTICIPATION IN PAYMENT OF LESSOR'S COST; POSTPONEMENT
OF SCHEDULED DELIVERY DATE
4.1 Notices of Scheduled Delivery Date
Without limiting its obligations to the Loan Participants under Section
1(b) of the Note Purchase Agreement, Lessee agrees to give Participants, Owner
Trustee, and Mortgagee at least one Business Day's written notice of the
Scheduled Delivery Date, which notice shall set forth Lessor's Cost and the
amount of each Participant's Commitment. Each Participant agrees that making
available its respective Commitment shall constitute a waiver of such notice.
Owner Trustee and Mortgagee shall be deemed to have waived such notice if WTC
shall have received from each Participant funds in the full amount of its
respective Commitment.
4.2 Payment of Lessor's Cost
(a) Each Participant agrees, subject to the terms and conditions
of this Agreement, to make the Dollar amount of its respective
Commitment available, by wire transfer of immediately available funds
to WTC's account no. [ ] at Wilmington Trust Company, Wilmington,
Delaware ABA # 031100092 (contact: Robert P. Hines), reference Atlas
Lease, at or before 12:00 Noon, New York City time, on the Scheduled
Delivery Date. All such funds made available by each Participant to
WTC shall, until payment thereof to Airframe Manufacturer as provided
in Section 4.2(b)(ii) or return thereof to the respective Participant
as provided in Section 4.3.2, be held by WTC in trust for the benefit
of the respective Participant, as
<PAGE>
-5-
the sole and exclusive property of the respective Participant and not
as part of the Trust Estate or the Trust Indenture Estate.
(b) Subject to the satisfaction, or waiver by the applicable
party, of the conditions precedent set forth in Section 5, and
simultaneously with the receipt by the parties hereto of all amounts
to be paid to them on the Delivery Date pursuant to this Section 4.2,
Owner Trustee shall:
(i) purchase, take title to, and accept delivery of, the
Aircraft;
(ii) in consideration of the transfer of title to the Aircraft to
Owner Trustee, direct WTC to pay the funds made available to WTC
hereunder by the Participants to Airframe Manufacturer, which payments
in the aggregate shall be equal to Manufacturer's Purchase Price, by
wire transfer of immediately available funds to Airframe
Manufacturer's account set forth in Schedule 1;
(iii) execute an application for registration of the Aircraft
with the FAA and Lease Supplement No. 1, in each case with respect to
the Aircraft;
(iv) execute the Trust Indenture and the initial Trust Indenture
Supplement and issue the Equipment Notes to the Subordination Agent in
accordance with Section 2.1(b);
(v) lease the Aircraft to Lessee, pursuant to the Lease; and
(vi) take such other action as may be required to be taken by the
Owner Trustee on the Delivery Date by the terms of any Operative
Agreement.
4.3 Postponement of Scheduled Delivery Date
4.3.1 Postponement
If for any reason whatsoever the Closing is not consummated on the
Scheduled Delivery Date, Lessee may, subject to the provisions of Section 1(e)
of the Note Purchase Agreement, by telephonic notice, given by 5:00 p.m., New
York City time (such telephonic notice to be promptly confirmed in writing by
personal delivery or facsimile), on the Scheduled Delivery Date
<PAGE>
-6-
to each Participant, Owner Trustee and Mortgagee, designate a Delayed Delivery
Date, in which case each Participant shall comply with its obligations under
Section 4.2(a) on such Delayed Delivery Date.
4.3.2 Return of Funds
WTC shall on the Scheduled Delivery Date or the Delayed Delivery Date
promptly return to each Participant that makes funds available to it in
accordance with Section 4.2(a) such funds, together with interest or income
earned thereon, if the Closing fails to occur on the Scheduled Delivery Date or
Delayed Delivery Date, as applicable, provided that any funds made available by
the Loan Participant shall be returned on such Scheduled Delivery Date.
4.4 Closing
The Closing shall occur at the offices of Cahill Gordon & Reindel, 80 Pine
Street, New York, New York 10005, or such other place as the parties shall
agree.
SECTION 5. CONDITIONS PRECEDENT
5.1 Conditions Precedent to Obligations of Participants
The obligation of each Participant to make the Dollar amount of its
respective Commitment available for payment as directed by the Owner Trustee on
the Delivery Date is subject to satisfaction or waiver by each such Participant,
on or prior to the Delivery Date, of the conditions precedent set forth below in
this Section 5.1; provided, that it shall not be a condition precedent to the
obligation of any Participant that any document be produced or action taken that
is to be produced or taken by such Participant or by a Person within such
Participant's control; provided, further, that Sections 5.1.2(iii), (xv) and
(xxiii) (H) shall not be conditions precedent to the obligation of Loan
Participant and Sections 5.1.15 and 5.1.16 shall not be conditions precedent to
the obligation of Owner Participant.
5.1.1 Notice
Such Participant shall have received the notice described in Section 4.1
or, in the case of a Delayed Delivery
<PAGE>
-7-
Date, 4.3, when and as required thereby, or shall have waived such notice.
5.1.2 Delivery of Documents
Such Participant shall, except as noted below, have received executed
counterparts of the following agreements, instruments, certificates or
documents, and such counterparts (a) shall have been duly authorized, executed
and delivered by the respective party or parties thereto, (b) shall be
reasonably satisfactory in form and substance to such Participant and (c) shall
be in full force and effect:
(i) the Lease; provided, that only Mortgagee shall receive the
sole executed chattel paper original thereof;
(ii) Lease Supplement No. 1; provided, that only Mortgagee shall
receive the sole executed chattel paper original thereof;
(iii) the Tax Indemnity Agreement; provided, that only Owner
Participant and Lessee shall receive copies of the Tax Indemnity
Agreement;
(iv) the Trust Agreement;
(v) the Trust Indenture;
(vi) the initial Trust Indenture Supplement;
(vii) the Purchase Agreement Assignment;
(viii) the Consent and Agreement and the Engine Consent and
Agreement;
(ix) the Equipment Notes dated the Delivery Date; provided, that
only the Subordination Agent shall receive the authenticated Equipment
Notes;
(x) an excerpted copy of the Purchase Agreement to the extent
relating to Airframe Manufacturer's or Engine Manufacturer's
respective warranties or related obligations or any right in the
Purchase Agreement assigned to Owner Trustee pursuant to the Purchase
Agreement Assignment; provided, that only Owner Trustee and Mortgagee
shall receive copies of such agreements (copies of which may be
inspected by Participants and their respective special counsel on the
Delivery Date, but after the Delivery
<PAGE>
-8-
Date such copies shall be retained by Owner Trustee and Mortgagee and
may be inspected and reviewed by Owner Participant or Loan Participant
or their respective counsel if and only if there shall have occurred
and be continuing a Lease Default or Lease Event of Default);
(xi) the Bills of Sale;
(xii) an invoice from Airframe Manufacturer to Owner Trustee in
respect of the Aircraft in the amount of Lessor's Cost of the
Aircraft;
(xiii) an appointment of authorized representatives by Owner
Trustee to accept delivery of the Aircraft, and an acceptance thereof
by such representatives in each case, dated the Delivery Date;
(xiv) the broker's report and insurance certificates required by
Section 11 of the Lease;
(xv) an appraisal or appraisals from an Appraiser, which
appraisal or appraisals shall be reasonably satisfactory in form and
substance to Owner Participant; provided, that only Owner Participant
and Lessee shall receive copies of such appraisal or appraisals;
(xvi) (A) a copy of the Certificate of Incorporation and By-Laws
of Lessee and resolutions of the board of directors of Lessee and/or
the executive committee thereof, in each case certified as of the
Delivery Date, by the Secretary or an Assistant Secretary of Lessee,
duly authorizing the execution, delivery and performance by Lessee of
the Lessee Operative Agreements required to be executed and delivered
by Lessee on or prior to the Delivery Date in accordance with the
provisions hereof and thereof; (B) an incumbency certificate of
Lessee, Owner Participant, First Security and WTC as to the person or
persons authorized to execute and deliver the relevant Operative
Agreements on behalf of such party; and (C) a copy of the Certificate
of Incorporation or Articles of Incorporation and By-Laws and general
authorizing resolutions of the boards of directors (or executive
committees) or other satisfactory evidence of authorization of Owner
Participant, First Security and WTC, certified as of the Delivery Date
by the Secretary or an Assistant or Attesting Secretary of Owner
Participant, First Security and WTC,
<PAGE>
-9-
respectively, which authorize the execution, delivery and performance
by Owner Participant, First Security and WTC, respectively, of each of
the Operative Agreements to which it is a party, together with such
other documents and evidence with respect to it as Lessee or any
Participant may reasonably request in order to establish the
consummation of the transactions contemplated by this Agreement and
the taking of all corporate proceedings in connection therewith;
(xvii) an Officer's Certificate of Lessee, dated as of the
Delivery Date, stating that its representations and warranties set
forth in this Agreement are true and correct as of the Delivery Date
(or, to the extent that any such representation and warranty expressly
relates to an earlier date, true and correct as of such earlier date);
(xviii) an Officer's Certificate of First Security, dated as of
the Delivery Date, stating that its representations and warranties, in
its individual capacity and as Owner Trustee, set forth in this
Agreement are true and correct as of the Delivery Date (or, to the
extent that any such representation and warranty expressly relates to
an earlier date, true and correct as of such earlier date);
(xix) an Officer's Certificate of Owner Participant, dated as of
the Delivery Date, stating that its representations and warranties set
forth in this Agreement are true and correct as of the Delivery Date
(or, to the extent that any such representation and warranty expressly
relates to an earlier date, true and correct as of such earlier date);
(xx) an Officer's Certificate of WTC, dated as of the Delivery
Date, stating that its representations and warranties, in its
individual capacity or as Mortgagee, a Pass Through Trustee or
Subordination Agent, as the case may be, set forth in this Agreement
are true and correct as of the Delivery Date (or, to the extent that
any such representation and warranty expressly relates to an earlier
date, true and correct as of such earlier date);
(xxi) an application for registration of the Aircraft with the
FAA in the name of Owner Trustee; provided, that only special counsel
in Oklahoma City, Oklahoma shall receive the sole executed copy
thereof for filing with the FAA;
(xxii) the Financing Statements;
<PAGE>
-10-
(xxiii) the following opinions of counsel, in each case dated the
Delivery Date:
(A) an opinion of Cahill Gordon & Reindel, special counsel
to Lessee, substantially in the form of Exhibit A;
(B) an opinion of Lessee's Legal Department, substantially
in the form of Exhibit B;
(C) an opinion of corporate counsel to Airframe
Manufacturer, substantially in the form of Exhibit C;
(D) an opinion of Ray, Quinney & Nebeker, special counsel to
Owner Trustee, substantially in the form of Exhibit D;
(E) an opinion of Morris, James, Hitchens & Williams,
special counsel to Mortgagee and the Loan Participants,
substantially in the form of Exhibit E;
(F) an opinion of , special counsel to Owner Participant,
substantially in the form of ___________ Exhibit F;
(G) an opinion of Crowe & Dunlevy, special counsel in
Oklahoma City, Oklahoma, substantially in the form of Exhibit
G-1; and
(H) an opinion of ___________, special tax counsel to Owner
Participant, with respect to certain tax consequences of the
transactions contemplated hereby; provided, that only Owner
Participant shall receive such opinion;
(xxiv) a copy of a current, valid Standard Certificate of
Airworthiness for the Aircraft duly issued by the FAA;
(xxv) the Participants and their respective counsel shall have
received copies of such documents and papers as such Participants may
reasonably request, other than (A) in the case of any Loan
Participant, excerpted copies of the Purchase Agreement, provided that
special counsel for any Loan Participant may inspect the Purchase
Agreement in connection with the transactions contemplated hereby or
as a basis for such counsel's closing opinion, and (B) in the case of
parties other than Owner Participant and its special counsel, the Tax
Indemnity Agreement.
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5.1.3 Other Commitments
Each other Participant shall have made available the Dollar amount of its
Commitment as directed by Owner Trustee in accordance with Section 4.
5.1.4 Violation of Law
No change shall have occurred after the date of this Agreement in any
applicable Law that makes it a violation of Law for (a) Lessee, any Participant,
Subordination Agent, Owner Trustee or Mortgagee to execute, deliver and perform
the Operative Agreements to which any of them is a party or (b) any Participant
to make the Dollar amount of its Commitment available or, in the case of any
Loan Participant, to acquire an Equipment Note or to realize the benefits of the
security afforded by the Trust Indenture.
5.1.5 Tax Law Change
In respect of Owner Participant, no Adverse Change in Tax Law shall have
been enacted, promulgated or issued on or prior to the Delivery Date. Owner
Participant agrees to consider promptly, and to consult with Lessee concerning
any such Adverse Change in Tax Law and to advise Lessee and Loan Participant
promptly if Owner Participant determines that an Adverse Change in Tax Law which
has been enacted or promulgated or, if proposed, has a substantial likelihood of
becoming effective, would cause Owner Participant to elect not to close with
respect to the Aircraft. At any time on or before the Delivery Date, Owner
Participant may notify Lessee and Loan Participant that Owner Participant elects
not to close as a result of the enactment, promulgation or issuance of any
Adverse Change in Tax Law on or before the Delivery Date, specifying such
Adverse Change in Tax Law; and failure to give such notice on or before the
Delivery Date shall preclude Owner Participant from not closing with respect to
such Aircraft as a result of any Adverse Change in Tax Law.
5.1.6 Representations, Warranties and Covenants
The representations and warranties of each other party to this Agreement
made, in each case, in this Agreement and in any other Operative Agreement to
which it is a party, shall be true and accurate in all material respects as of
the Delivery Date (unless any such representation and warranty shall have been
made with reference to a specified date, in which case such representation and
warranty shall be true and
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accurate as of such specified date) and each other party to this Agreement shall
have performed and observed, in all material respects, all of its covenants,
obligations and agreements in this Agreement and in any other Operative
Agreement to which it is a party to be observed or performed by it as of the
Delivery Date.
5.1.7 No Event of Default
On the Delivery Date, no event shall have occurred and be continuing, or
would result from the sale, mortgage or lease of the Aircraft, which constitutes
a Lease Default or Lease Event of Default, or a Default or Event of Default.
5.1.8 No Event of Loss
No Event of Loss with respect to the Airframe or any Engine shall have
occurred and no circumstance, condition, act or event that, with the giving of
notice or lapse of time or both, would give rise to or constitute an Event of
Loss with respect to the Airframe or any Engine shall have occurred.
5.1.9 Title
Owner Trustee shall have good title (subject to filing and recordation of
the FAA Bill of Sale with the FAA) to the Aircraft, free and clear of Liens,
except (a) the rights of Lessee under the Lease and Lease Supplement No. 1, (b)
the Lien created by the Trust Indenture and the initial Trust Indenture
Supplement, (c) the beneficial interest of Owner Participant created by the
Trust Agreement, (d) Liens permitted by clause (d) (solely for taxes not yet
due) of Section 6 of the Lease and (e) Liens permitted by clause (e) (solely for
amounts not yet due) of Section 6 of the Lease.
5.1.10 Certification
The Aircraft shall have been duly certificated by the FAA as to type and
airworthiness in accordance with the terms of the Purchase Agreement.
5.1.11 Section 1110
Owner Trustee, as lessor under the Lease (and Mortgagee, as assignee of
Owner Trustee under the Trust Indenture), shall be entitled to the benefits of
Section 1110 (as currently in effect) with respect to the right to take
possession of the Airframe and Engines as provided in the Lease in the event of
a
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case under Chapter 11 of the Bankruptcy Code in which Lessee is a debtor.
5.1.12 Filing
On the Delivery Date (a) the FAA Filed Documents shall have been duly filed
for recordation (or shall be in the process of being so duly filed for
recordation) with the FAA in accordance with the Act and (b) each Financing
Statement shall have been duly filed (or shall be in the process of being so
duly filed) in the appropriate jurisdiction.
5.1.13 No Proceedings
No action or proceeding shall have been instituted, nor shall any action be
threatened in writing, before any Government Entity, nor shall any order,
judgment or decree have been issued or proposed to be issued by any Government
Entity, to set aside, restrain, enjoin or prevent the completion and
consummation of this Agreement or any other Operative Agreement or the
transactions contemplated hereby or thereby.
5.1.14 Governmental Action
All appropriate action required to have been taken prior to the Delivery
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 shall have been taken, and all orders, permits,
waivers, authorizations, exemptions and approvals of such entities required to
be in effect on the Delivery Date in connection with the transactions
contemplated by this Agreement shall have been issued.
5.1.15 Note Purchase Agreement
The conditions precedent to the obligations of the Loan Participants and
the other requirements relating to the Aircraft and the Equipment Notes set
forth in the Note Purchase Agreement shall have been satisfied.
5.1.16 Perfected Security Interest
On the Delivery Date, after giving effect to the filing of the FAA Filed
Documents and the Financing Statements, Mortgagee shall have received a duly
perfected first priority security interest in all of Owner Trustee's right,
title and
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interest in the Aircraft and the Lease, subject only to Permitted Liens.
5.1.17 No Lessee Material Adverse Change
Since , , there shall not have been any event, condition or circumstance
that could materially and adversely affect Lessee's business or consolidated
financial condition or its ability to observe or perform its obligations,
liabilities and agreements under the Lessee Operative Agreements.
5.2 Conditions Precedent to Obligations of Owner Trustee
The obligation of Owner Trustee to direct the WTC to apply the Commitments
to pay Lessor's Cost on the Delivery Date is subject to satisfaction or waiver
by Owner Trustee, on or prior to the Delivery Date, of the conditions precedent
set forth below in this Section 5.2.
5.2.1 Notice
Owner Trustee shall have received the notice described in Section 4.1 or,
in the case of a Delayed Delivery Date, 4.3, when and as required thereby, or
shall have waived such notice.
5.2.2 Documents
Executed originals of the agreements, instruments, certificates or
documents described in Section 5.1.2 shall have been received by Owner Trustee,
except as specifically provided therein, unless the failure to receive any such
agreement, instrument, certificate or document is the result of any action or
inaction by Owner Trustee.
5.2.3 Other Conditions Precedent
Each of the conditions set forth in Sections 5.1.4, 5.1.6, 5.1.7 and 5.1.11
shall have been satisfied unless the failure of any such condition to be
satisfied is the result of any action or inaction by Owner Trustee.
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5.3 Conditions Precedent to Obligations of Mortgagee
The obligation of Mortgagee to authenticate the Equipment Notes on the
Delivery Date is subject to the satisfaction or waiver by Mortgagee, on or prior
to the Delivery Date, of the conditions precedent set forth below in this
Section 5.3.
5.3.1 Notice
Mortgagee shall have received the notice described in Section 4.1 or, in
the case of a Delayed Delivery Date, 4.3, when and as required thereby, or shall
have waived such notice.
5.3.2 Documents
Executed originals of the agreements, instruments, certificates or
documents described in Section 5.1.2 shall have been received by Mortgagee,
except as specifically provided therein, unless the failure to receive any such
agreement, instrument, certificate or document is the result of any action or
inaction by Mortgagee.
5.3.3 Other Conditions Precedent
Each of the conditions set forth in Sections 5.1.4, 5.1.6, 5.1.7 and 5.1.11
shall have been satisfied unless the failure of any such condition to be
satisfied is the result of any action or inaction by Mortgagee.
5.4 Conditions Precedent to Obligations of Lessee
The obligation of Lessee to lease the Aircraft on the Delivery Date is
subject to the satisfaction or waiver by Lessee, on or prior to the Delivery
Date, of the conditions precedent set forth below in this Section 5.4.
5.4.1 Documents
Executed originals of the agreements, instruments, certificates or
documents described in Section 5.1.2 shall have been received by Lessee, except
as specifically provided therein, and shall be satisfactory to Lessee, unless
the failure to receive any such agreement, instrument, certificate or document
is the result of any action or inaction by Lessee.
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5.4.2 Sales Tax
Lessee shall be satisfied that no sales, use, value added, goods and
services or like tax, and no stamp tax duty, is payable with respect to the
delivery of the Aircraft on the Delivery Date to the extent that Lessee has
liability therefor under Section 9.3.
5.4.3 Other Conditions Precedent
Each of the conditions set forth in Sections 5.1.3 (as to all
Participants), 5.1.4, 5.1.5, 5.1.6, 5.1.7 (as to Defaults or Events of Default
not constituting Lease Defaults or Lease Events of Default, respectively),
5.1.8, 5.1.9, 5.1.10, 5.1.11, 5.1.12, 5.1.13 and 5.1.14 shall have been
satisfied or waived by Lessee, unless the failure of any such condition to be
satisfied is the result of any action or inaction by Lessee.
5.4.4 Tax Law Change
No Adverse Change in Tax Law shall have been enacted, promulgated or
proposed on or prior to the Delivery Date. Lessee agrees to consider promptly,
and to consult with Owner Participant concerning, any such Adverse Change in Tax
Law and to advise Owner Participant and Loan Participant promptly if Lessee
determines that an Adverse Change in Tax Law which has been enacted or
promulgated or, if proposed, has a substantial likelihood of becoming effective,
would cause Lessee to elect not to close the transactions contemplated by the
Lease and this Agreement. At any time on or before the Delivery Date, Lessee may
notify Owner Participant and Loan Participant that Lessee elects not to close
the transactions contemplated by the Lease and this Agreement as a result of the
enactment, promulgation or proposal of any Adverse Change in Tax Law on or
before the Delivery Date, specifying such Adverse Change in Tax Law.
5.5 Post-Registration Opinion
Promptly upon the registration of the Aircraft and the recordation of the
FAA Filed Documents pursuant to the Act, Lessee will cause Crowe & Dunlevy,
special counsel in Oklahoma City, Oklahoma, to deliver to Lessee, each
Participant, Owner Trustee and Mortgagee a favorable opinion or opinions
addressed to each of them with respect to such registration and recordation.
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SECTION 6. REPRESENTATIONS AND WARRANTIES
6.1 Lessee's Representations and Warranties
Lessee represents and warrants to each Participant, Subordination Agent,
Owner Trustee and Mortgagee that:
6.1.1 Organization; Qualification
Lessee is a corporation duly incorporated, validly existing and in good
standing under the Laws of the State of Delaware and has the corporate power and
authority to conduct the business in which it is currently engaged and to own or
hold under lease its properties and to enter into and perform its obligations
under the Lessee Operative Agreements. Lessee is duly qualified to do business
as a foreign corporation in good standing in each jurisdiction in which the
nature and extent of the business conducted by it, or the ownership of its
properties, requires such qualification, except where the failure to be so
qualified would not give rise to a Material Adverse Change to Lessee.
6.1.2 Corporate Authorization
Lessee has taken, or caused to be taken, all necessary corporate action
(including, without limitation, the obtaining of any consent or approval of
stockholders required by its Certificate of Incorporation or By-Laws) to
authorize the execution and delivery of each of the Lessee Operative Agreements,
and the performance of its obligations thereunder.
6.1.3 No Violation
The execution and delivery by Lessee of the Lessee Operative Agreements,
the performance by Lessee of its obligations thereunder and the consummation by
Lessee on the Delivery Date of the transactions contemplated thereby, do not and
will not (a) violate any provision of the Certificate of Incorporation or
By-Laws of Lessee, (b) violate any Law applicable to or binding on Lessee or (c)
violate or constitute any default under (other than any violation or default
that would not result in a Material Adverse Change to Lessee), or result in the
creation of any Lien (other than as permitted under the Lease) upon the Aircraft
under, any indenture, mortgage, chattel mortgage, deed of trust, conditional
sales contract, lease, loan or other material agreement, instrument or document
to which Lessee is a party or by which Lessee or any of its properties is bound.
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6.1.4 Approvals
The execution and delivery by Lessee of the Lessee Operative Agreements,
the performance by Lessee of its obligations thereunder and the consummation by
Lessee on the Delivery Date of the transactions contemplated thereby do not and
will not require the consent or approval of, or the giving of notice to, or the
registration with, or the recording or filing of any documents with, or the
taking of any other action in respect of, (a) any trustee or other holder of any
Debt of Lessee and (b) any Government Entity, other than the filing of (x) the
FAA Filed Documents and the Financing Statements (and continuation statements
periodically) and (y) filings, recordings, notices or other ministerial actions
pursuant to any routine recording, contractual or regulatory requirements
applicable to it.
6.1.5 Valid and Binding Agreements
The Lessee Operative Agreements have been duly authorized, executed and
delivered by Lessee and, assuming the due authorization, execution and delivery
thereof by the other party or parties thereto, constitute the legal, valid and
binding obligations of Lessee and are enforceable against Lessee in accordance
with the respective terms thereof, except as such enforceability may be limited
by bankruptcy, insolvency, reorganization, receivership, moratorium and other
similar Laws affecting the rights of creditors generally and general principles
of equity, whether considered in a proceeding at law or in equity.
6.1.6 Litigation
Except as set forth in Lessee's most recent Annual Report on Form 10-K, as
amended, filed by Lessee with the SEC on or prior to the Delivery Date, or in
any Quarterly Report on Form 10-Q or Current Report on Form 8-K filed by Lessee
with the SEC subsequent to such Form 10-K and on or prior to the Delivery Date,
no action, claim or proceeding is now pending or, to the Actual Knowledge of
Lessee, threatened, against Lessee, before any court, governmental body,
arbitration board, tribunal or administrative agency, which is reasonably likely
to be determined adversely to Lessee and if determined adversely to Lessee would
result in a Material Adverse Change.
6.1.7 Financial Condition
The audited consolidated balance sheet of Lessee with respect to Lessee's
most recent fiscal year included in Les-
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see's most recent Annual Report on Form 10-K, as amended, filed by Lessee with
the SEC, and the related consolidated statements of operations and cash flows
for the period then ended have been prepared in accordance with GAAP and fairly
present in all material respects the financial condition of Lessee and its
consolidated subsidiaries as of such date and the results of its operations and
cash flows for such period, and since the date of such balance sheet, there has
been no material adverse change in such financial condition or operations of
Lessee, except for matters disclosed in (a) the financial statements referred to
above or (b) any subsequent Quarterly Report on Form 10-Q or Current Report on
Form 8-K filed by Lessee with the SEC on or prior to the date hereof.
6.1.8 Registration and Recordation
Except for (a) the registration of the Aircraft with the FAA pursuant to
the Act in the name of Owner Trustee, (b) the filing for recordation (and
recordation) of the FAA Filed Documents, (c) the filing of the Financing
Statements (and continuation statements relating thereto at periodic intervals),
(d) the taking of possession and retention by Mortgagee of the original
counterparts of the Lease and Lease Supplement No. 1 and (e) the affixation of
the placards referred to in Section 7.1.3 of the Lease, no further action,
including any filing or recording of any document (including any financing
statement in respect thereof under Article 9 of the UCC) is necessary in order
to establish and perfect the right, title or interest of Owner Trustee, and the
Mortgagee's security interest, in the Aircraft and the Lease, as against Lessee
and any other Person, in each case, in any applicable jurisdictions in the
United States.
6.1.9 Chief Executive Office
The chief executive office (as such term is defined in Article 9 of the
UCC) of Lessee is located at 538 Commons Drive, Golden, Colorado 80401.
6.1.10 No Default
No event which, if the Aircraft were subject to the Lease, would constitute
a Lease Default or Lease Event of Default has occurred and is continuing.
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6.1.11 No Event of Loss
No Event of Loss has occurred with respect to the Airframe or any Engine,
and, to the Actual Knowledge of Lessee, no circumstance, condition, act or event
has occurred that, with the giving of notice or lapse of time or both would give
rise to or constitute an Event of Loss with respect to the Airframe or any
Engine.
6.1.12 Compliance With Laws
(a) Lessee is a Citizen of the United States and a U.S. Air
Carrier.
(b) Lessee holds all licenses, permits and franchises from the
appropriate Government Entities necessary to authorize Lessee to
lawfully engage in air transportation and to carry on commercial air
cargo service as currently conducted, except where the failure to so
hold any such license, permit or franchise would not give rise to a
Material Adverse Change to Lessee. (c) Lessee is not an "investment
company" or a company controlled by an "investment company" within the
meaning of the Investment Company Act of 1940, as amended.
6.1.13 Securities Laws
Neither Lessee 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 the Lease or any interest in the Trust Estate and
Trust Agreement, or any of the Equipment Notes or any other interest in or
security under the Trust 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 or any applicable
state securities laws.
6.1.14 Broker's Fees
No Person acting on behalf of Lessee is or will be entitled to any broker's
fee, commission or finder's fee in connection with the Transactions, except for
fees payable to Lessee's Advisor, if any.
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6.1.15 Section 1110
Owner Trustee, as lessor under the Lease (and Mortgagee, as assignee under
the Trust Indenture), is entitled to the benefits of Section 1110 (as currently
in effect) with respect to the right to take possession of the Airframe and
Engines as provided in the Lease in the event of a case under Chapter 11 of the
Bankruptcy Code in which Lessee is a debtor.
6.2 Owner Participant's Representations and Warranties
Owner Participant represents and warrants to Lessee, Loan Participant,
Subordination Agent, Owner Trustee and Mortgagee that:
6.2.1 Organization, Etc.
Owner Participant is a corporation duly incorporated, validly existing and
in good standing under the Laws of the OP Jurisdiction, has the corporate power
and authority to conduct the business in which it is currently engaged and to
own or hold under lease its properties and to enter into, and perform its
obligations under the Owner Participant Agreements, and has a tangible Net Worth
(exclusive of goodwill) greater than $75,000,000.
6.2.2 Corporate Authorization
Owner Participant has taken, or caused to be taken, all necessary corporate
action (including, without limitation, the obtaining of any consent or approval
of stockholders required by its Certificate of Incorporation or By-Laws) to
authorize the execution and delivery of each of the Owner Participant
Agreements, and the performance of its obligations thereunder.
6.2.3 No Violation
The execution and delivery by Owner Participant of the Owner Participant
Agreements, the performance by Owner Participant of its obligations thereunder
and the consummation by Owner Participant on the Delivery Date of the
transactions contemplated thereby, do not and will not (a) violate any provision
of the Certificate of Incorporation or By-Laws of Owner Participant, (b) violate
any Law applicable to or binding on Owner Participant or (c) violate or
constitute any default under (other than any violation or default that would not
result
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in a Material Adverse Change to Owner Participant), or result in the creation of
any Lien (other than as provided for or otherwise permitted in the Operative
Agreements) upon the Trust Estate under, any indenture, mortgage, chattel
mortgage, deed of trust, conditional sales contract, lease, loan or other
material agreement, instrument or document to which Owner Participant is a party
or by which Owner Participant or any of its properties is bound.
6.2.4 Approvals
The execution and delivery by Owner Participant of the Owner Participant
Agreements, the performance by Owner Participant of its obligations thereunder
and the consummation by Owner Participant on the Delivery Date of the
transactions contemplated thereby do not and will not require the consent or
approval of, or the giving of notice to, or the registration with, or the
recording or filing of any documents with, or the taking of any other action in
respect of, (a) any trustee or other holder of any Debt of Owner Participant and
(b) any Government Entity, other than the filing of the FAA Filed Documents and
the Financing Statements.
6.2.5 Valid and Binding Agreements
The Owner Participant Agreements have been duly authorized, executed and
delivered by Owner Participant and, assuming the due authorization, execution
and delivery by the other party or parties thereto, constitute the legal, valid
and binding obligations of Owner Participant and are enforceable against Owner
Participant in accordance with the respective terms thereof, except as such
enforceability may be limited by bankruptcy, insolvency, reorganization,
receivership, moratorium and other similar Laws affecting the rights of
creditors generally and general principles of equity, whether considered in a
proceeding at law or in equity.
6.2.6 Citizenship
On the Delivery Date, Owner Participant is a Citizen of the United States.
6.2.7 No Liens
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On the Delivery Date, there are no Lessor Liens attributable to Owner
Participant in respect of all or any part of the Trust Estate.
6.2.8 Investment by Owner Participant
Owner Participant's beneficial interest in the Trust Estate is being
acquired by it for its own account, for investment and not with a view to any
resale or distribution thereof, except that, subject to the restrictions on
transfer set forth in Section 10, the disposition by Owner Participant of its
beneficial interest in the Trust Estate shall at all times be within its
control.
6.2.9 ERISA
No part of the funds to be used by Owner Participant to acquire or hold its
interests in the Trust Estate to be acquired by it under this Agreement directly
or indirectly constitutes assets of a Plan.
6.2.10 Litigation
There are no pending or, to the Actual Knowledge of Owner Participant,
threatened actions or proceedings against Owner Participant before any court,
governmental body, arbitration board, administrative agency or tribunal which,
if determined adversely to Owner Participant, would materially adversely affect
the ability of Owner Participant to perform its obligations under the Owner
Participant Agreements.
6.2.11 Securities Laws
Neither Owner Participant nor any person Owner Participant has authorized
to act on its behalf has directly or indirectly offered any beneficial interest
in or Security relating to the ownership of the Aircraft or any interest in the
Trust Estate, or any of the Equipment Notes or any other interest in or Security
under the Trust Indenture for sale to, or solicited any offer to acquire any of
the same from, any Person in violation of the Securities Act or applicable state
securities Laws.
6.2.12 Broker's Fees
No Person acting on behalf of Owner Participant is or will be entitled to
any broker's fee, commission or finder's fee in connection with the
Transactions.
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6.3 First Security's Representations and Warranties
First Security represents and warrants to Lessee, Owner Participant, Loan
Participant, Subordination Agent and Mortgagee that:
6.3.1 Organization, Etc.
First Security is a national banking association duly organized, validly
existing and in good standing under the Laws of the United States, holding a
valid certificate to do business as a national banking association with banking
authority to execute and deliver, and perform its obligations under, the Owner
Trustee Agreements.
6.3.2 Corporate Authorization
First Security has taken, or caused to be taken, all necessary corporate
action (including, without limitation, the obtaining of any consent or approval
of stockholders required by Law or by its Articles of Association or By-Laws) to
authorize the execution and delivery by First Security, in its individual
capacity and as Owner Trustee, of each of the Owner Trustee Agreements, and the
performance of its obligations thereunder.
6.3.3 No Violation
The execution and delivery by First Security, in its individual capacity
and as Owner Trustee of the Owner Trustee Agreements, the performance by First
Security, in its individual capacity and as Owner Trustee, of its obligations
thereunder and the consummation by First Security in its individual capacity and
as Owner Trustee on the Delivery Date of the transactions contemplated thereby,
do not and will not (a) violate any provision of the Articles of Association or
By-Laws of First Security, (b) violate any Law of the State of Utah or federal
banking law applicable to or binding on Owner Trustee or First Security
governing its banking and trust powers or (c) violate or constitute any default
under(other than any violation or default that would not result in a Material
Adverse Change to First Security, in its individual capacity or as Owner
Trustee), or result in the creation of any Lien (other than the Lien of the
Trust Indenture) upon any property of First Security, in its individual capacity
and as Owner Trustee, or any of its subsidiaries under, any indenture, mortgage,
chattel mortgage, deed of trust, conditional sales contract, lease, loan or
other material agreement, instrument or document
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to which First Security, in its individual capacity and as Owner Trustee, is a
party or by which First Security, in its individual capacity and as Owner
Trustee, or any of its properties is or may be bound or affected in any material
respect.
6.3.4 Approvals
The execution and delivery by First Security, in its individual capacity
and as Owner Trustee, of the Owner Trustee Agreements, the performance by First
Security, in its individual capacity and as Owner Trustee, of its obligations
thereunder and the consummation by First Security, in its individual capacity
and as Owner Trustee, on the Delivery Date of the transactions contemplated
thereby do not and will not require the consent, approval or authorization of,
or the giving of notice to, or the registration with, or the recording or filing
of any documents with, or the taking of any other action in respect of, (a) any
trustee or other holder of any Debt of First Security or (b) any Government
Entity governing its banking and trust powers, other than the filing of the FAA
Filed Documents and the Financing Statements.
6.3.5 Valid and Binding Agreements
The Owner Trustee Agreements have been duly authorized, executed and
delivered by First Security, in its individual capacity or as Owner Trustee, as
the case may be, and constitute the legal, valid and binding obligations of
First Security, in its individual capacity and as Owner Trustee, and, assuming
the due authorization, execution and delivery thereof by the other party or
parties thereto, are enforceable against First Security, in its individual
capacity and as Owner Trustee, in accordance with the respective terms thereof,
except as such enforceability may be limited by bankruptcy, insolvency,
reorganization, receivership, moratorium and other similar Laws affecting the
rights of creditors generally and general principles of equity, whether
considered in a proceeding at law or in equity.
6.3.6 Citizenship
On the Delivery Date, First Security is a Citizen of the United States.
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6.3.7 Chief Executive Office
The chief executive office (as such term is defined in Article 9 of the
UCC) of Owner Trustee is located at 79 South Main Street, Salt Lake City, Utah
84111.
6.3.8 Title
On the Delivery Date, Owner Trustee shall have received whatever title to
the Aircraft as was conveyed to it by Airframe Manufacturer.
6.3.9 No Liens; Financing Statements
On the Delivery Date, there are no Lessor Liens attributable to First
Security or Owner Trustee in respect of all or any part of the Aircraft, Trust
Estate or the Trust Indenture Estate. Except for the Financing Statements, it
has not, either in its individual capacity or as Owner Trustee, executed any UCC
financing statements relating to the Aircraft or the Lease.
6.3.10 Litigation
There are no pending or, to the Actual Knowledge of First Security,
threatened actions or proceedings against First Security or Owner Trustee before
any court, governmental body, arbitration board, administrative agency or
tribunal which, if determined adversely to First Security, would materially
adversely affect the ability of First Security or Owner Trustee to perform its
obligations under the Owner Trustee Agreements.
6.3.11 Securities Laws
Neither First Security, 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 interest in the Trust Estate or any of the
Equipment Notes or any other interest in or security under the Trust 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 other than the
Participants, except for the offering and sale of the Pass Through Certificates.
<PAGE>
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6.3.12 Expenses and Taxes
There are no Expenses or Taxes that may be imposed on or asserted against
the Trust, the Trust Estate or any part thereof or any interest therein, the
Trust Indenture Estate, Lessee, Owner Participant, any Pass Through Trustee,
Subordination Agent, Owner Trustee or Mortgagee (except, as to Owner Trustee,
Taxes imposed on the fees payable to Owner Trustee) under the laws of the State
of Utah in connection with the execution, delivery or performance of any
Operative Agreement by Owner Trustee or in connection with the issuance of the
Equipment Notes, which Expenses or Taxes would not have been imposed if Owner
Trustee had not (x) had its principal place of business in, (y) performed (in
its individual capacity or as Owner Trustee) any or all of its duties under the
Operative Agreements in or (z) engaged in any activities unrelated to the
transactions contemplated by the Operative Agreements in, the State of Utah.
6.4 WTC's Representations and Warranties
WTC represents and warrants (with respect to Section 6.4.10, solely in its
capacity as Subordination Agent) to Lessee, Owner Participant and Owner Trustee
that:
6.4.1 Organization, Etc.
WTC is a Delaware banking corporation duly organized, validly existing and
in good standing under the Laws of the State of Delaware, holding a valid
certificate to do business as a Delaware banking corporation with banking
authority to execute and deliver, and perform its obligations under, the
Mortgagee Agreements, the Pass Through Trustee Agreements and the Subordination
Agent Agreements.
6.4.2 Corporate Authorization
WTC has taken, or caused to be taken, all necessary corporate action
(including, without limitation, the obtaining of any consent or approval of
stockholders required by Law or by its Certificate of Incorporation or By-Laws)
to authorize the execution and delivery by WTC, in its individual capacity or as
Mortgagee, as a Pass Through Trustee or as Subordination Agent, as the case may
be, of the Mortgagee Agreements, the Pass Through Trustee Agreements and the
Subordination Agent Agreements and the performance of its obligations
thereunder.
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6.4.3 No Violation
The execution and delivery by WTC, in its individual capacity or as
Mortgagee, as a Pass Through Trustee or as Subordination Agent, as the case may
be, of the Mortgagee Agreements, the Pass Through Trustee Agreements and the
Subordination Agent Agreements, the performance by WTC, in its individual
capacity or as Mortgagee, as a Pass Through Trustee or as Subordination Agent,
as the case may be, of its obligations thereunder and the consummation on the
Delivery Date of the transactions contemplated thereby, do not and will not (a)
violate any provision of the Certificate of Incorporation or By-Laws of WTC, (b)
violate any Law applicable to or binding on WTC, in its individual capacity or
(except in the case of any Law relating to any Plan) as Mortgagee, as a Pass
Through Trustee or as Subordination Agent, or (c) violate or constitute any
default under (other than any violation or default that would not result in a
Material Adverse Change to WTC, in its individual capacity or as Mortgagee, as a
Pass Through Trustee or as Subordination Agent), or result in the creation of
any Lien (other than the Lien of the Trust Indenture) upon any property of WTC,
in its individual capacity or as Mortgagee, as a Pass Through Trustee or as
Subordination Agent, or any of WTC's subsidiaries under, any indenture,
mortgage, chattel mortgage, deed of trust, conditional sales contract, lease,
loan or other agreement, instrument or document to which WTC, in its individual
capacity or as Mortgagee, as a Pass Through Trustee or as Subordination Agent,
is a party or by which WTC, in its individual capacity or as Mortgagee, as a
Pass Through Trustee or as Subordination Agent, or any of their respective
properties is bound or may be affected in any material respect.
6.4.4 Approvals
The execution and delivery by WTC, in its individual capacity or as
Mortgagee, as a Pass Through Trustee or as Subordination Agent, as the case may
be, of the Mortgagee Agreements, the Pass Through Trustee Agreements and the
Subordination Agent Agreements, the performance by WTC, in its individual
capacity or as Mortgagee, as a Pass Through Trustee or as Subordination Agent,
as the case may be, of its obligations thereunder and the consummation on the
Delivery Date by WTC, in its individual capacity or as Mortgagee, as a Pass
Through Trustee or as Subordination Agent, as the case may be, of the
transactions contemplated thereby do not and will not require the consent,
approval or authorization of, or the giving of notice to, or the registration
with, or the recording or filing of any documents with, or the taking of any
other action in re-
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spect of, (a) any trustee or other holder of any Debt of WTC or (b) any
Government Entity, other than the filing of the FAA Filed Documents and the
Financing Statements.
6.4.5 Valid and Binding Agreements
The Mortgagee Agreements, the Pass Through Trustee Agreements and the
Subordination Agent Agreements have been duly authorized, executed and delivered
by WTC and, assuming the due authorization, execution and delivery by the other
party or parties thereto, constitute the legal, valid and binding obligations of
WTC, in its individual capacity or as Mortgagee, a Pass Through Trustee or
Subordination Agent, as the case may be, and are enforceable against WTC, in its
individual capacity or as Mortgagee, a Pass Through Trustee or Subordination
Agent, as the case may be, in accordance with the respective terms thereof,
except as such enforceability may be limited by bankruptcy, insolvency,
reorganization, receivership, moratorium or other similar Laws affecting the
rights of creditors generally and general principles of equity, whether
considered in a proceeding at law or in equity.
6.4.6 Citizenship
WTC is a Citizen of the United States.
6.4.7 No Liens
On the Delivery Date, there are no Lessor Liens attributable to WTC in
respect of all or any part of the Trust Estate or the Trust Indenture Estate.
6.4.8 Litigation
There are no pending or, to the Actual Knowledge of WTC, threatened actions
or proceedings against WTC, in its individual capacity or as Mortgagee, a Pass
Through Trustee or Subordination Agent, before any court, administrative agency
or tribunal which, if determined adversely to WTC, in its individual capacity or
as Mortgagee, a Pass Through Trustee or Subordination Agent, as the case may be,
would materially adversely affect the ability of WTC, in its individual capacity
or as Mortgagee, a Pass Through Trustee or Subordination Agent, as the case may
be, to perform its obligations under any of the Mortgagee Agreements, the Pass
Through Trustee Agreements or the Subordination Agent Agreements.
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6.4.9 Securities Laws
Neither WTC 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 interest in the Trust Indenture Estate or any of the
Equipment Notes or any other interest in or security under the Trust 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 other than the
Participants, except for the offering and sale of the Pass Through Certificates.
6.4.10 Investment
The Equipment Notes to be acquired by the Subordination Agent are being
acquired by it for the account of the Pass Through Trustees, for investment and
not with a view to any resale or distribution thereof, except that, subject to
the restrictions on transfer set forth in Section 10.1.3, the disposition by it
of its Equipment Notes shall at all times be within its control.
6.4.11 Taxes
There are no Taxes payable by any Pass Through Trustee or WTC, as the case
may be, imposed by the State of Delaware or any political subdivision or taxing
authority thereof in connection with the execution, delivery and performance by
such Pass Through Trustee or WTC, as the case may be, of this Agreement or any
of the Pass Through Trustee Agreements (other than franchise or other taxes
based on or measured by any fees or compensation received by any such Pass
Through Trustee or WTC, as the case may be, for services rendered in connection
with the transactions contemplated by any of the Pass Through Trust Agreements),
and there are no Taxes payable by any Pass Through Trustee or WTC, as the case
may be, imposed by the State of Delaware or any political subdivision thereof in
connection with the acquisition, possession or ownership by any 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 any such Pass
Through Trustee or WTC, as the case may be, for services rendered in connection
with the transactions contemplated by any of the Pass Through Trust Agreements),
and, assuming that the trusts created by the Pass Through Trust Agreements will
not be taxable as corporations, but, rather, will be classified as grantor
trusts under subpart E, Part I of Subchapter J of the Code or as a partnership
under Subchapter K of the Code, and assuming that the as-
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sets of the trusts will be treated as held for investment purposes as provided
in each Pass Through Trust Agreement, such trusts will not be subject to any
taxes (including, without limitation, net or gross income, tangible or
intangible property, net worth, capital, franchise or doing business tax) fee or
other governmental charge under the laws of the State of Delaware or any
political subdivision thereof;
6.4.12 Control
WTC is not an Affiliate of the Owner Participant or the Owner Trustee.
6.4.13 Broker's Fees
No Person acting on behalf of WTC, in its individual capacity or as
Mortgagee, any Pass Through Trustee or Subordination Agent, is or will be
entitled to any broker's fee, commission or finder's fee in connection with the
Transactions.
SECTION 7. COVENANTS, UNDERTAKINGS AND AGREEMENTS
7.1 Covenants of Lessee
Lessee covenants and agrees, at its own cost and expense, with Owner
Participant, Loan Participants, Owner Trustee and Mortgagee as follows:
7.1.1 Corporate Existence; U.S. Air Carrier
Lessee shall at all times maintain its corporate existence, except as
permitted by Section 13.2 of the Lease, and shall at all times remain a U.S. Air
Carrier.
7.1.2 Notice of Change of Chief Executive Office
Lessee will give Owner Participant, Owner Trustee and Mortgagee timely
written notice (but in any event within 30 days prior to the expiration of the
period of time specified under applicable Law to prevent lapse of perfection) of
any relocation of its chief executive office (as such term is defined in Article
9 of the UCC) from its then present location and will promptly take any action
required by Section 7.1.3(c) as a result of such relocation.
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7.1.3 Certain Assurances
(a) Lessee shall duly execute, acknowledge and deliver, or shall
cause to be executed, acknowledged and delivered, all such further
agreements, instruments, certificates or documents, and shall do and
cause to be done such further commercially reasonable acts and things,
in any case, as Owner Participant, Owner Trustee or Mortgagee shall
reasonably request for accomplishing the purposes of this Agreement
and the other Operative Agreements; provided that any instrument or
other document so executed by Lessee will not expand any obligations
or limit any rights of Lessee in respect of the transactions
contemplated by any Operative Agreement.
(b) Lessee shall promptly take such action with respect to the
recording, filing, re-recording and refiling of the Lease, the Trust
Agreement and the Trust Indenture and the respective supplements
thereto, including, without limitation, Lease Supplement No. 1 and the
initial Trust Indenture Supplement, as shall be necessary to
establish, perfect and protect the interests and rights of Owner
Trustee in and to the Aircraft and under the Lease and the perfection
and priority of the Lien created by the Trust Indenture. Lessee shall
furnish to Owner Participant or Owner Trustee such information (other
than with respect to the citizenship of Owner Participant and Owner
Trustee) in Lessee's possession or otherwise reasonably available to
Lessee as may be required to enable Owner Participant or Owner Trustee
to make application for registration of the Aircraft under the Act
(subject to Lessee's rights under Section 7.1.2 of the Lease) and
shall pay or cause to be paid all out-of-pocket costs and expenses
thereof (including, without limitation, reasonable attorneys' fees and
disbursements).
(c) Lessee, at its sole cost and expense, will cause the FAA
Filed Documents, the Financing Statements and all continuation
statements (and any amendments necessitated by any combination,
consolidation or merger pursuant to Section 13.2 of the Lease, or any
relocation of its chief executive office) in respect of the Financing
Statements to be prepared and, subject only to the execution and
delivery thereof by Owner Trustee and Mortgagee, as applicable, duly
and timely filed and recorded, or filed for recordation, to the extent
permitted under the Act (with respect to the FAA Filed Documents) or
the UCC or similar
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law of any other applicable jurisdiction (with respect to such other
documents).
(d) If the Aircraft has been registered in a country other than
the United States pursuant to Section 7.1.2 of the Lease, Lessee will
furnish to Owner Trustee, Mortgagee and each Participant annually
after such registration, commencing with the calendar year after such
registration is effected, an opinion of special counsel reasonably
satisfactory to Owner Participant and Mortgagee stating that, in the
opinion of such counsel, either that (i) such action has been taken
with respect to the recording, filing, rerecording and refiling of the
Operative Agreements and any supplements and amendments thereto as is
necessary to establish, perfect and protect Owner Trustee's and
Mortgagee's respective right, title and interest in and to the
Aircraft and the Operative Agreements, reciting the details of such
actions, or (ii) no such action is necessary to maintain the
perfection of such right, title and interest.
7.1.4 Securities Laws
Neither Lessee nor any person authorized to act on its behalf will directly
or indirectly offer any beneficial interest or Security relating to the
ownership of the Aircraft or the Lease or any interest in the Trust Estate and
Trust Agreement or any of the Equipment Notes or any other interest in or
security under the Trust Indenture, for sale to, or solicit any offer to acquire
any such interest or security from, or sell any such interest or security to,
any person in violation of the Securities Act or applicable state or foreign
securities Laws.
7.2 Covenants of Owner Participant
Owner Participant covenants and agrees with Lessee, and, except with
respect to Section 7.2.4, Loan Participants, Owner Trustee and Mortgagee as
follows:
7.2.1 Liens
Owner Participant (a) will not directly or indirectly create, incur, assume
or suffer to exist any Lessor Lien attributable to it on or with respect to all
or any part of the Trust Estate, the Trust Indenture Estate or the Aircraft, (b)
will, at its own cost and expense, promptly take such action as may be necessary
to discharge any Lessor Lien attributable to
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Owner Participant on all or any part of the Trust Estate, the Trust Indenture
Estate or the Aircraft and (c) will hold harmless and indemnify Lessee, Owner
Trustee, each Note Holder, Mortgagee, each of their respective Affiliates,
successors and permitted assigns, the Trust Estate and the Trust Indenture
Estate from and against (i) any and all Expenses, (ii) any reduction in the
amount payable out of the Trust Estate or the Trust Indenture Estate and (iii)
any interference with the possession, operation or other use of all or any part
of the Aircraft imposed on, incurred by or asserted against any of the foregoing
as a consequence of any such Lessor Lien.
7.2.2 Revocation of Trust Agreement
(a) Owner Participant will comply with the provisions of the
Trust Agreement applicable to it, and will not terminate or revoke the
Trust Agreement or the trusts created thereunder without the prior
written consent of Lessee and Mortgagee and will not amend, modify or
supplement the Trust Agreement, or waive any of the provisions
thereof, if such amendment, modification, supplement or waiver would
have a material adverse effect on Lessee, without the consent of
Lessee, or on Mortgagee or any Note Holder, without the consent of
Mortgagee.
(b) Notwithstanding Section 7.2.2(a), Owner Participant may at
any time remove Owner Trustee pursuant to Section 9.1 of the Trust
Agreement or terminate the Trust Agreement pursuant to Section 11.2 of
the Trust Agreement.
7.2.3 Change of Situs of Owner Trust
If, at any time, any Tax Indemnitee or the Trust Estate becomes subject to
any Taxes for which it is indemnified pursuant to Section 9.3 of this Agreement
and if, as a consequence thereof, Lessee should request that the situs of the
Trust be moved to another state in the United States from the state in which it
is then located, the situs of the Trust may be moved with the written consent of
Owner Participant (which consent shall not be unreasonably withheld) and Owner
Participant will take whatever action may be reasonably necessary to accomplish
such relocation; provided, that, in any event, (a) Lessee shall provide such
additional tax indemnification as Owner Participant and the Note Holders or the
Pass Through Trustees may reasonably request to cover any additional
unindemnified Taxes or loss of Tax benefits described in the assumptions in the
Tax Indemnity Agreement resulting from such change in the situs of the Trust,
(b) the rights and obliga-
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tions under the Operative Agreements of Owner Participant, the Note Holders,
Pass Through Trustees and Mortgagee shall not be adversely affected as a result
of the taking of such action, (c) the Lien of the Trust Indenture on the Trust
Indenture Estate shall not be adversely affected by such action, and Lessee and
Owner Trustee shall execute and deliver such documents as may reasonably be
requested by Mortgagee to protect and maintain the perfection and priority of
such Lien, (d) Owner Participant, Pass Through Trustees and Mortgagee shall have
received an opinion or opinions of counsel (which counsel is reasonably
satisfactory to Owner Participant, Pass Through Trustees and Mortgagee) in
scope, form and substance reasonably satisfactory to Owner Participant, Pass
Through Trustees and Mortgagee to the effect that (i) the Trust, as thus
relocated, shall remain a validly established trust, (ii) any amendments to the
Trust Agreement necessitated by such relocation shall have been duly authorized,
executed and delivered by the parties thereto and shall constitute the valid and
binding obligations of such parties, enforceable in accordance with their terms,
(iii) covering such other matters as Owner Participant, Pass Through Trustees or
Mortgagee may reasonably request, (e) if such relocation involves the
replacement of Owner Trustee, then Owner Participant, Pass Through Trustees and
Mortgagee shall have received an opinion of counsel to such successor Owner
Trustee in form and substance reasonably satisfactory to Owner Participant, Pass
Through Trustees and Mortgagee covering the matters described in the opinion
delivered pursuant to Section 5.1.2(xxiii)(D) and (f) Lessee shall indemnify and
hold harmless Owner Participant, Note Holders, Pass Through Trustees and First
Security, in its individual capacity and as Owner Trustee, on a net after-tax
basis against any and all reasonable out-of-pocket costs and expenses including
attorneys' fees and disbursements, fees and expenses of any new owner trustee,
registration, recording or filing fees and taxes incurred by Owner Participant,
Note Holders, Pass Through Trustees or Owner Trustee in connection with such
change of situs. Owner Participant agrees with Lessee that it will not consent
to or direct a change in the situs of the Trust Estate without the prior written
consent of Lessee.
7.2.4 Compliance with Lease Provisions
Owner Participant will, solely for the benefit of Lessee, comply with the
provisions expressly applicable to it contained in the Lease.
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7.2.5 Securities Act
Owner Participant will not directly or indirectly offer any beneficial
interest or security relating to the ownership of the Aircraft or any interest
in the Trust Estate or any of the Equipment Notes or any other interest in or
security under the Trust Indenture for sale to, or solicit any offer to acquire
any such interest or security from, or sell any such interest or security to,
any Person in violation of the Securities Act or applicable state or foreign
securities Laws, provided that the foregoing shall not be deemed to impose on
Owner Participant any responsibility with respect to any such offer, sale or
solicitation by any other party hereto.
7.2.6 Regarding the Owner Trustee
Owner Participant will cause Owner Trustee to perform its obligations under
each Owner Trustee Agreement.
7.3 Covenants of First Security and Owner Trustee
First Security, in its individual capacity and/or as Owner Trustee, as
provided below, covenants and agrees with Lessee, Owner Participant, each Note
Holder and Mortgagee as follows:
7.3.1 Liens
First Security (a) will not directly or indirectly create, incur, assume or
suffer to exist any Lessor Lien attributable to it or Owner Trustee with respect
to all or any part of the Trust Estate, the Trust Indenture Estate or the
Aircraft, (b) will, at its own cost and expense, promptly take such action as
may be necessary to discharge any Lessor Lien attributable to First Security or
Owner Trustee on all or any part of the Trust Estate, the Trust Indenture Estate
or the Aircraft and (c) will personally hold harmless and indemnify Lessee,
Owner Participant, each Note Holder, Mortgagee, each of their respective
Affiliates, successors and permitted assigns, the Trust Estate and the Trust
Indenture Estate from and against (i) any and all Expenses, (ii) any reduction
in the amount payable out of the Trust Estate or the Trust Indenture Estate and
(iii) any interference with the possession, operation or other use of all or any
part of the Aircraft imposed on, incurred by or asserted against any of the
foregoing as a consequence of any such Lessor Lien.
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7.3.2 Other Business
Owner Trustee will not enter into any business or other activity except as
contemplated by the Operative Agreements.
7.3.3 Notice of Change of Chief Executive Office
First Security, in its individual capacity and as Owner Trustee, will give
Lessee, each Participant and Mortgagee 30 days' prior written notice of any
relocation of its chief executive office (as such term is defined in Article 9
of the UCC) from its then present location and will promptly take any action
required by Section 7.3.8 as a result of such relocation.
7.3.4 Securities Act
First Security, in its individual capacity and as Owner Trustee, will not
directly or indirectly offer any beneficial interest or Security relating to the
ownership of the Aircraft or any interest in the Trust Estate or any of the
Equipment Notes or any other interest in or security under the Trust Indenture
for sale to, or solicit any offer to acquire any such interest or security from,
or sell any such interest or security to, any Person in violation of the
Securities Act or applicable state or foreign securities Laws, provided that the
foregoing shall not be deemed to impose on First Security in its individual
capacity or as Owner Trustee, any responsibility with respect to any such offer,
sale or solicitation by any other party hereto.
7.3.5 Performance of Agreements
Owner Trustee shall perform its obligations under the Owner Trustee
Agreements in accordance with the terms thereof.
7.3.6 Release of Lien of Trust Indenture
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Owner Trustee, in each instance referred to in the Lease in which a
transfer of any property is required to be made by Owner Trustee to Lessee or
any other Person (other than Mortgagee or Owner Participant), shall, at Lessee's
request and expense, use its reasonable efforts to procure from Mortgagee the
prompt release of the Lien of the Trust Indenture with respect to such property.
7.3.7 Notices; Documents
In the event any claim with respect to any liabilities is filed against the
Owner Trustee in its capacity as such and Owner Trustee shall have Actual
Knowledge thereof, the Owner Trustee shall promptly notify Lessee in writing
thereof. Owner Trustee further agrees to provide to Lessee promptly any
documents (including the certificate of aircraft registration) that it receives
from the FAA with respect to the Aircraft.
7.3.8 Filings
After the Delivery Date, Owner Trustee shall duly execute and deliver to
Lessee all filings and recordings (including, without limitation, all filings
and UCC financing statements under the Act and the UCC and any amendments to UCC
financing statements necessitated by any relocation of its chief executive
office), prepared and delivered to it by Lessee required to perfect Owner
Trustee's title to the Aircraft and the liens of and security interests granted
by the Trust Indenture (or to maintain such perfection) and to make such title,
liens and security interests valid and enforceable.
7.3.9 Trust Agreement
Each of First Security and Owner Trustee hereby (i) agrees with Lessee,
Loan Participants and Mortgagee not to amend, supplement, terminate or otherwise
modify any provision of the Trust Agreement in such a manner as to adversely
affect the rights of any such party without the prior written consent of such
party and (ii) agrees with Lessee, Loan Participants and Mortgagee not to revoke
the trust created by the Trust Agreement so long as the Trust Indenture remains
undischarged or if such revocation would have an adverse effect on the Lessee.
Nothing contained in this Agreement shall impair any right under the Trust
Agreement of First Security to resign as Owner Trustee in accordance with the
provisions of the Trust Agreement.
7.4 Covenants of WTC
WTC in its individual capacity or as Mortgagee, each Pass Through Trustee
or Subordination Agent, as the case may be, covenants and agrees with Lessee,
Owner Participant and Owner Trustee as follows:
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7.4.1 Liens
WTC (a) will not directly or indirectly create, incur, assume or suffer to
exist any Lessor Lien attributable to it on or with respect to all or any part
of the Trust Estate, the Trust Indenture Estate or the Aircraft, (b) will, at
its own cost and expense, promptly take such action as may be necessary to
discharge any Lessor Lien attributable to WTC on all or any part of the Trust
Estate, the Trust Indenture Estate or the Aircraft and (c) will personally hold
harmless and indemnify Lessee, Owner Participant, each Note Holder, Owner
Trustee, each of their respective Affiliates, successors and permitted assigns,
the Trust Estate and the Trust Indenture Estate from and against (i) any and all
Expenses, (ii) any reduction in the amount payable out of the Trust Estate or
the Trust Indenture Estate and (iii) any interference with the possession,
operation or other use of all or any part of the Aircraft, imposed on, incurred
by or asserted against any of the foregoing as a consequence of any such Lessor
Lien.
7.4.2 Securities Act
WTC in its individual capacity or as Mortgagee, a Pass Through Trustee or
Subordination Agent, will not offer any beneficial interest or Security relating
to the ownership of the Aircraft or any interest in the Trust Indenture Estate,
or any of the Equipment Notes or any other interest in or security under the
Trust Indenture for sale to, or solicit any offer to acquire any such interest
or security from, or sell any such interest or security to, any Person in
violation of the Securities Act or applicable state or foreign securities Laws,
provided that the foregoing shall not be deemed to impose on WTC any
responsibility with respect to any such offer, sale or solicitation by any other
party hereto.
7.4.3 Performance of Agreements
WTC, in its individual capacity and as Mortgagee, a Pass Through Trustee or
Subordination Agent, as the case may be, shall perform its obligations under the
Indenture Agreements, the Pass Through Trustee Agreements and the Subordination
Agent Agreements in accordance with the terms thereof.
7.4.4 Withholding Taxes
WTC shall indemnify (on an after-tax basis) and hold harmless Lessee,
Lessor and Owner Participant against any United States withholding taxes (and
related interest, penal-
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ties and additions to tax) as a result of the failure by WTC to withhold on
payments to any Note Holder if such Note Holder failed to provide to Mortgagee
necessary certificates or forms to substantiate the right to exemption from such
withholding tax.
7.5 Covenants of Note Holders
Each Note Holder (including Subordination Agent) as to itself only
covenants and agrees with Lessee, Owner Participant, Owner Trustee and Mortgagee
as follows:
7.5.1 Withholding Taxes
Such Note Holder (if it is a Non-U.S. Person) agrees to indemnify (on an
after-tax basis) and hold harmless Lessee, Lessor, Owner Participant and
Mortgagee against any United States withholding taxes (and related interest,
penalties and additions to tax) as a result of the inaccuracy or invalidity of
any certificate or form provided by such Note Holder to Mortgagee in connection
with such withholding taxes. Any amount payable hereunder shall be paid within
30 days after receipt by a Note Holder of a written demand therefor.
7.5.2 Transfer; Compliance
(a) Such Note Holder will (i) not transfer any Equipment Note or
interest therein in violation of the Securities Act or applicable
state or foreign securities Law; provided, that the foregoing
provisions of this section shall not be deemed to impose on such Note
Holder any responsibility with respect to any such offer, sale or
solicitation by any other party hereto, and (ii) perform and comply
with the obligations specified to be imposed on it (as a Note Holder)
under each of the Trust Indenture and the form of Equipment Note set
forth in the Trust Indenture.
(b) Except as otherwise required by the terms of Section 2.13 of
the Trust Indenture or Section 11 hereof, each Note Holder will not
sell, assign, convey, exchange or otherwise transfer any Equipment
Note or any interest in, or represented by, any Equipment Note (it
being understood that this provision is not applicable to the Pass
Through Certificates) unless the proposed transferee thereof first
provides Lessee and Owner Participant with both of the following:
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(i) a written representation and covenant that either (a) no
portion of the funds it uses to purchase, acquire and hold such
Equipment Note or interest directly or indirectly constitutes, or
may be deemed under the Code or ERISA or any rulings, regulations
or court decisions thereunder to constitute, the assets of any
Plan or (b) the transfer, and subsequent holding, of such
Equipment Note or interest shall not involve or give rise to a
transaction that constitutes a prohibited transaction within the
meaning of Section 406 of ERISA or Section 4975(c)(1) of the Code
involving Lessee, Owner Participant, a Pass Through Trustee, the
Subordination Agent or the proposed transferee (other than a
transaction that is exempted from the prohibitions of such
sections by applicable provisions of ERISA or the Code or
administrative exemptions or regulations issued thereunder); and
(ii) a written covenant that it will not transfer any
Equipment Note or any interest in, or represented by, any
Equipment Note unless the subsequent transferee also makes the
representation described in clause (i) above and agrees to comply
with this clause (ii).
7.6 Agreements
7.6.1 Owner Trustee Is Owner and Lessor for All Purposes
Lessee, the Owner Participant and Owner Trustee agree that for all
purposes, after the Closing, Owner Trustee will be the owner and lessor of the
Aircraft (except that Owner Participant will be the owner and lessor for income
tax purposes) and Lessee will be the lessee thereof. No transfer, by operation
of Law or otherwise, of the beneficial interest of Owner Participant in and to
the Trust Estate shall operate to transfer legal title to any part of the Trust
Estate to any transferee thereof.
7.6.2 Commencement of Bankruptcy Proceedings
Lessee, each Participant, each Note Holder, First Security, Owner Trustee,
WTC and Mortgagee agree for the benefit of each of the others that it will not
commence or join in any proceeding under the Bankruptcy Code to commence a case
under Section 303 of the Bankruptcy Code against the Trust Estate. Nothing
contained herein shall be deemed to preclude any Participant, any Note Holder,
First Security, Owner Trustee, WTC
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or Mortgagee from filing any claim against the Trust Estate in any case
commenced against the Trust Estate.
7.6.3 Certain Bankruptcy Matters
If (a) all or any part of the Trust Estate becomes the property of, or
Owner Trustee or Owner Participant becomes, a debtor subject to the
reorganization provisions of the Bankruptcy Code, (b) pursuant to such
reorganization provisions, including Section 1111(b) of the Bankruptcy Code,
First Security or Owner Participant is required, by reason of First Security or
Owner Participant being held to have recourse liability to any Note Holder or
Mortgagee directly or indirectly (other than the recourse liability of First
Security or Owner Participant under this Agreement, the Trust Indenture or by
separate agreement), to make payment on account of any amount payable as
principal, Make-Whole Amount, if any, interest or other amounts on the Equipment
Notes, and (c) any Note Holder or Mortgagee actually receives any Excess Amount,
as defined below, which reflects any payment by First Security or Owner
Participant on account of (b) above, then such Note Holder or Mortgagee, as the
case may be, shall promptly refund to First Security or Owner Participant
(whichever shall have made such payment) such Excess Amount.
For purposes of this Section 7.6.3, "Excess Amount" means the
amount by which such payment exceeds the amount that would have been received by
a Note Holder or Mortgagee if First Security or Owner Participant had not become
subject to the recourse liability referred to in clause (b) above. Nothing
contained in this Section 7.6.3 shall prevent a Note Holder or Mortgagee from
enforcing any personal recourse obligation (and retaining the proceeds thereof)
of First Security or Owner Participant under this Agreement (other than as
referred to in clause (b) above) or the Trust Indenture (and any exhibits or
annexes thereto) or from retaining any amount paid by Owner Participant under
Sections 2.13 or 4.03 of the Trust Indenture.
7.6.4 Quiet Enjoyment; Sale by Owner Trustee Binding
(a) Owner Participant, each Pass Through Trustee, Subordination Agent,
each Note Holder, Owner Trustee and Mortgagee each agrees as to itself with
Lessee that, so long as no Lease Event of Default shall have occurred and
be continuing, such Person shall not (and shall not permit any Affiliate or
other Person claiming by, through or under it to) interfere with Lessee's
or any Permitted Sub-
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lessee's rights in accordance with the Lease to the quiet enjoyment,
possession and use of the Aircraft during the Term.
(b) Any assignment, sale, transfer or other conveyance of the Aircraft
by Owner Trustee made pursuant to the terms of this Agreement or the Lease
shall bind Owner Participant and shall be effective to transfer or convey
all right, title and interest of Owner Trustee and Owner Participant in and
to the Aircraft. No purchaser or other grantee shall be required to inquire
as to the authorization, necessity, expediency or regularity of such
assignment, sale, transfer or conveyance, or as to the application of any
sale or other proceeds with respect thereto by Owner Trustee, as regards
Owner Participant.
7.6.5 Release of Lien of Trust Indenture
Each of Lessee, Lessor and Mortgagee agrees that in each instance referred
to in the Lease in which a transfer of any property is required to be made by
Lessor to Lessee or any other Person (other than Mortgagee), Mortgagee shall,
upon request of Lessor and compliance with the applicable provisions of the
Lease and the Trust Indenture, including payment of all amounts then due and
payable to each Liquidity Provider as Supplemental Rent, promptly execute (at
Lessee's cost and expense) such instruments as Lessor or Lessee may reasonably
request to evidence the release of the Lien of the Trust Indenture with respect
to such property.
7.6.6 Non-Recourse
Each Loan Participant and Mortgagee agrees that (a) obligations of Owner
Trustee under the Trust Indenture or any other Operative Agreement and with
respect to the Equipment Notes shall be non-recourse to Owner Participant and to
First Security and (b) they will look solely to the income and proceeds from the
Trust Estate and the Trust Indenture Estate to the extent available for
distribution to Note Holder or Mortgagee as provided in the Trust Indenture and
that neither Owner Participant nor First Security will be personally liable to
Loan Participant or Mortgagee for any amounts payable by Owner Trustee under the
Trust Indenture or any other Operative Agreement; provided, however, that the
foregoing is not intended nor shall it be construed to limit any recourse
liability of Owner Participant or First Security to the extent that such
liability is expressly set forth in this Agreement or in any of the Operative
Agreements or arises by reason of the breach of any
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representation or warranty or covenant given by such Person (in the case of
First Security, in its individual capacity).
7.6.7 Other Documents; Amendment
(a) So long as the Lease has not been terminated or expired, each
Participant, the Mortgagee and the Owner Trustee hereby agree for the
benefit of Lessee that without the consent of Lessee they will not amend,
supplement or otherwise modify (i) Article III, Article IX or Section 2.05
of the Trust Indenture, (ii) any provision of any Operative Agreement that
will affect the stated principal amount of or premium or interest on the
Equipment Notes or (iii) any other provision of the Trust Indenture or
Equipment Notes in a manner that would adversely affect Lessee. Mortgagee
and Owner Trustee agree to promptly furnish to Lessee copies of any
supplement, amendment, waiver or modification of any of the Operative
Agreements to which Lessee is not a party; provided that Mortgagee or Owner
Trustee, as the case may be, has in its possession a copy of such
supplement, amendment, waiver or modification. Each Loan Participant agrees
that it will not take any action in respect of the Trust Indenture Estate
except through the Mortgagee pursuant to the Trust Indenture or as
otherwise permitted by Trust Indenture or other Operative Agreement.
(b) Owner Trustee agrees to join with Lessee to the extent that action
on the part of Owner Trustee is necessary or appropriate (i) to cause the
following to be duly accomplished in accordance with applicable United
States federal Law by the time the Aircraft is delivered under this
Agreement and the Lease: (A) the application for registration of the
Aircraft in the name of Owner Trustee and (B) all related action necessary
in order for Lessee to have temporary or permanent authority to operate the
Aircraft as contemplated by the Lease and (ii) forthwith upon delivery of
the Aircraft under this Agreement and the Lease, to cause all necessary
documents to be duly filed for recording in accordance with applicable
United States federal Law.
7.6.8 Consents
Each of Owner Participant, each Pass Through Trustee, Subordination Agent,
Owner Trustee and Mortgagee covenants and agrees, for the benefit of Lessee,
that it shall not unreasonably withhold its consent to any consent or approval
requested
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of it or of Owner Trustee or Mortgagee under the terms of any of the
Operative Agreements which by its terms is not to be unreasonably withheld.
7.6.9 Insurance
Each of Owner Participant, the Pass Through Trustees, the Subordination
Agent and the Owner Trustee agrees not to obtain or maintain insurance for its
own account as permitted by Section 11.2 of the Lease if such insurance would
limit or otherwise adversely affect the coverage of any insurance required to be
obtained or maintained by Lessee pursuant to Section 11 and Annex D of the
Lease.
7.6.10 Extent of Interest of Note Holders
A Note Holder shall not, as such, have any further interest in, or other
right with respect to, the Trust Estate or the Trust Indenture Estate when and
if the principal and Make-Whole Amount, if any, of and interest on the Equipment
Note held by such Note Holder, and all other sums, then due and payable to such
Note Holder hereunder and under any other Operative Agreement, shall have been
paid in full.
7.6.11 Foreign Registration
Each Participant, Owner Trustee and Mortgagee hereby agree, for the benefit
of Lessee but subject to the provisions of Section 7.1.2 of the Lease:
(a) that Lessee shall be entitled to register the Aircraft or cause
the Aircraft to be registered in a country other than the United States
subject to compliance with the following:
(i) each of the following requirements is satisfied:
(A) such registration shall be made only after the close of
the Tax Attribute Period, unless Lessee prepays to the Owner
Participant on a lump sum basis any indemnity due under the Tax
Indemnity Agreement as a result of such registration based upon
the assumption that such registration would continue for the
remainder of the term of the Permitted Sublease described in
clause (C) below;
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(B) no Lease Event of Default shall have occurred and be
continuing at the time of such registration;
(C) such proposed change of registration is made in
connection with a Permitted Sublease to a Permitted Air Carrier;
(D) such country is a Permitted Country with which the
United States then maintains normal diplomatic relations or, if
Taiwan, the United States then maintains diplomatic relations at
least as good as those in effect on the Delivery Date;
(ii) the Owner Trustee and Mortgagee shall have received an
opinion of counsel (subject to customary exceptions) reasonably
satisfactory to the Owner Participant addressed to each such party as
to the effect that:
(A) such country would recognize the Owner Trustee's
ownership interest in the Aircraft;
(B) the obligations of Lessee, and the rights and remedies
of Owner Trustee, under the Lease are valid, binding and
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);
(C) after giving effect to such change in registration, the
Lien of the Trust Indenture on the Owner Trustee's right, title
and interest in and to the Aircraft and the Lease shall continue
as a valid and duly perfected first priority security interest
and all filing, recording or other action necessary to protect
the same shall have been accomplished (or, if such opinion cannot
be given at the time of such proposed change in registration
because such change in registration is not yet effective, (1) the
opinion shall detail what filing, recording or other action is
necessary and (2) the Owner Trustee and the Mortgagee shall have
received a certificate from Lessee that all possible preparations
to accomplish such filing, recording and other action shall have
been done, and such filing, recording and other action shall be
accomplished and a supplemental opinion to that effect shall be
delivered to the Owner Trustee
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and the Mortgagee on or prior to the effective date of such
change in registration);
(D) it is not necessary, solely as a consequence of such
change in registration and without giving effect to any other
activity of the Owner Trustee, the Owner Participant or the
Mortgagee (or any Affiliate thereof), as the case may be, for the
Owner Trustee, the Owner Participant or the Mortgagee to qualify
to do business in such jurisdiction as a result of such
reregistration in order to exercise any rights or remedies with
respect to the Aircraft pursuant to the Lease;
(E) there is no tort liability of the owner or lessor of an
aircraft not in possession thereof under the laws of such
jurisdiction (it being agreed that, in the event such opinion
cannot be given in a form satisfactory to the Owner Participant,
such opinion shall be waived if insurance reasonably satisfactory
to the Owner Participant is provided to cover such risk); and
(F) unless Lessee shall have agreed to provide insurance
covering the risk of requisition of use of the Aircraft by the
government of such country (so long as the Aircraft is registered
under the laws of such country), the laws of such country require
fair compensation by the government of such country payable in
currency freely convertible into Dollars and freely removable
from such country (without license or permit, unless Lessee prior
to such proposed reregistration has obtained such license or
permit) for the taking or requisition by such government of such
use;
(b) In addition, as a condition precedent to any change in
registration Lessee shall have given to Lessor and Mortgagee assurances
reasonably satisfactory to each of them:
(i) to the effect that the provisions of Section 11 of the Lease
will have been complied with after giving effect to such change of
registration;
(ii) of the payment by Lessee of all reasonable out-of-pocket
expenses of Lessor, each Participant and Mortgagee in connection with
such change of registry, including,
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without limitation (1) the reasonable fees and disbursements of
counsel to Lessee, Lessor and Mortgagee, (2) any filing or recording
fees, Taxes or similar payments incurred in connection with the change
of registration of the Aircraft and the creation and perfection of the
security interest therein in favor of Mortgagee for the benefit of
Note Holders, and (3) all costs and expenses incurred in connection
with any filings necessary to continue in the United States the
perfection of the security interest in the Aircraft and the Lease in
favor of Mortgagee for the benefit of Note Holders; and
(iii) to the effect that the tax and other indemnities in favor
of each person named as an indemnitee under any other Operative
Agreement afford each such person substantially the same protection as
provided prior to such change of registration (or Lessee shall have
agreed upon additional indemnities that, together with such original
indemnities, in the reasonable judgment of Lessor and Mortgagee,
afford such protection).
7.6.12 Other Commercial Relations Unaffected
Notwithstanding anything to the contrary set forth in any Operative
Agreement:
(a) Except as set forth in the Purchase Agreement Assignment, nothing
contained in the Operative Agreements shall constitute or be deemed to be a
waiver by Lessee of any rights, remedies or claims it may have against
Airframe Manufacturer or Engine Manufacturer or any subcontractor or
supplier of either; and the Operative Agreements do not and shall not be
construed or deemed to create any rights, waivers, immunities or
indemnities in favor of Airframe Manufacturer, Engine Manufacturer or any
subcontractor or supplier of either with respect to any such rights,
remedies or claims of Lessee; and
(b) None of Airframe Manufacturer, by its execution and delivery of
the Consent and Agreement, and Engine Manufacturer, by its execution and
delivery of the Engine Consent and Agreement, shall be deemed to have
waived any rights, remedies or claims which Airframe Manufacturer or Engine
Manufacturer (or any subcontractor or supplier of either), as the case may
be, may have against Lessee; and the Operative Agreements do not and shall
not be construed or deemed to create any rights, waivers, immunities or
indemnities in favor of Lessee with respect to any such
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rights, remedies or claims of Airframe Manufacturer or Engine Manufacturer
(or any subcontractor or supplier of either).
7.6.13 Interest in Certain Engines
Each Participant, Owner Trustee, and Mortgagee agree, for the benefit of
each of the lessor, conditional seller, mortgagee or secured party of any
airframe or engine leased to, or purchased by, Lessee or any Permitted Sublessee
subject to a lease, conditional sale, trust indenture or other security
agreement that it will not acquire or claim, as against such lessor, conditional
seller, mortgagee or secured party, any right, title or interest in any engine
as the result of such engine being installed on the Airframe at any time while
such engine is subject to such lease, conditional sale, trust indenture or other
security agreement and owned by such lessor or conditional seller or subject to
a trust indenture or security interest in favor of such mortgagee or secured
party.
SECTION 8. CONFIDENTIALITY
Lessee, Owner Participant, Note Holders, Owner Trustee and Mortgagee shall
keep Annexes B, C and D and Schedules 1, 2, 3 and 4 to the Lease, the
Participation Agreement, the Purchase Agreement Assignment and the Tax Indemnity
Agreement confidential and shall not disclose, or cause to be disclosed, the
same to any Person, except (A) to prospective and permitted transferees of
Lessee's, Owner Participant's, a Note Holder's, a Liquidity Provider's, Owner
Trustee's, Mortgagee's or other Indenture Indemnitee's interest or their
respective counsel or special counsel, independent insurance brokers, auditors,
or other agents who agree to hold such information confidential, (B) to
Lessee's, Owner Participant's, a Note Holder's, a Liquidity Provider's, a Pass
Through Trustee's, Owner Trustee's, Mortgagee's or other Indenture Indemnitee's
counsel or special counsel, independent insurance brokers, auditors, or other
agents, Affiliates or investors who agree to hold such information confidential,
(C) as may be required by any statute, court or administrative order or decree,
legal process or governmental ruling or regulation, including those of any
applicable insurance regulatory bodies (including, without limitation, the
National Association of Insurance Commissioners ("NAIC")), federal or state
banking examiners, Internal Revenue Service auditors or any stock exchange, (D)
with respect to Lessee and Owner Participant, by mutual agreement of such
parties, (E) with respect to a Note Holder or any Pass
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Through Trustee, to a nationally recognized rating agency for the purpose of
obtaining a rating on the Equipment Notes or the Pass Through Trust Certificates
or to support an NAIC rating for the Equipment Notes or (F) such other Persons
as are reasonably deemed necessary by the disclosing party in order to protect
the interests of such party or for the purposes of enforcing such documents by
such party; provided, that any and all disclosures permitted by clauses (C),
(D), (E) or (F) above shall be made only to the extent necessary to meet the
specific requirements or needs of the Persons making such disclosures.
SECTION 9. INDEMNIFICATION AND EXPENSES
9.1 General Indemnity
9.1.1 Indemnity
Whether or not any of the transactions contemplated hereby are consummated,
Lessee shall indemnify, protect, defend and hold harmless each Indemnitee from,
against and in respect of, and shall pay on a net after-tax basis, any and all
Expenses of any kind or nature whatsoever that may be imposed on, incurred by or
asserted against any Indemnitee, relating to, resulting from, or arising out of
or in connection with, any one or more of the following:
(a) The Operative Agreements, the Pass Through Agreements, or the
enforcement of any of the terms of any of the Operative Agreements or the
Pass Through Agreements;
(b) The Aircraft, the Airframe, any Engine or any Part, including,
without limitation, with respect thereto, (i) the manufacture, design,
purchase, acceptance, nonacceptance or rejection, ownership, registration,
reregistration, deregistration, delivery, nondelivery, lease, sublease,
assignment, possession, use or non-use, operation, maintenance, testing,
repair, overhaul, condition, alteration, modification, addition,
improvement, storage, airworthiness, replacement, repair, sale,
substitution, return, abandonment, redelivery or other disposition of the
Aircraft, any Engine or any Part, (ii) any claim or penalty arising out of
violations of applicable Laws by Lessee (or any Permitted Sublessee), (iii)
tort liability, whether or not arising out of the negligence of any
Indemnitee (whether active, passive or imputed), (iv) death or property
damage of passengers, shippers or others, (v) en-
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vironmental control, noise or pollution and (vi) any Liens in respect of
the Aircraft, any Engine or any Part;
(c) The offer, sale, or delivery of any Equipment Notes, Pass Through
Certificates or any interest therein or represented thereby; and
(d) Any breach of or failure to perform or observe, or any other
noncompliance with, any covenant or agreement or other obligation to be
performed by Lessee under any Lessee Operative Agreement or any Pass
Through Agreement or the falsity of any representation or warranty of
Lessee in any Lessee Operative Agreement or any Pass Through Agreement
other than in the Tax Indemnity Agreement.
9.1.2 Exceptions
Notwithstanding anything contained in Section 9.1.1, Lessee shall not be
required to indemnify, protect, defend and hold harmless any Indemnitee pursuant
to Section 9.1.1 in respect of any Expense of such Indemnitee:
(a) For any Taxes or a loss of Tax benefit, whether or not Lessee is
required to indemnify therefor pursuant to Section 9.3 or the Tax Indemnity
Agreement;
(b) Except to the extent attributable to acts or events occurring
prior thereto, acts or events (other than acts or events related to the
performance by Lessee of its obligations pursuant to the terms of the
Lessee Operative Agreements) that occur after the earliest of: (i) with
respect to the Airframe, any Engine or any Part, the return of possession
(it being understood that the date of the placement of the Aircraft in
storage as provided in Section 5 of the Lease constitutes the date of
return of the Aircraft under the Lease) of such Airframe, Engine or Part
pursuant to the terms of and in compliance with the Lease (other than
pursuant to Section 15 thereof, in which case Lessee's liability under this
Section 9.1 shall survive for so long as Lessor shall be entitled to
exercise remedies under such Section 15) or (ii) the termination of the
Term in accordance with the Lease;
(c) To the extent attributable to any Transfer (voluntary or
involuntary) by or on behalf of such Indemnitee of any Equipment Note or
interest therein, except (i) for out-of-pocket costs and expenses incurred
as a result of any such Transfer pursuant to the exercise of
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remedies under any Operative Agreement resulting from a Lease Event of
Default and (ii) as otherwise required by the terms of Section 2.13 of the
Trust Indenture or Section 11 hereof;
(d) To the extent attributable to any Transfer (voluntary or
involuntary) by or on behalf of Owner Participant of any interest in the
Aircraft, or the Trust Estate except for out-of-pocket costs and expenses
incurred as a result of such Transfer, if, at the time of such Transfer, a
Lease Event of Default shall have occurred and be continuing;
(e) To the extent attributable to the gross negligence or willful
misconduct of such Indemnitee or any related Indemnitee (as defined below)
(other than gross negligence or willful misconduct imputed to such person
by reason of its interest in the Aircraft or any Operative Agreement);
(f) In the case of First Security, to the extent attributable to
matters enumerated in the proviso to Section 14;
(g) To the extent attributable to the incorrectness or breach of any
representation or warranty of such Indemnitee or any related Indemnitee
contained in or made pursuant to any Operative Agreement or any Pass
Through Agreement;
(h) To the extent attributable to the failure by such Indemnitee or
any related Indemnitee to perform or observe any agreement, covenant or
condition on its part to be performed or observed in any Operative
Agreement or any Pass Through Agreement;
(i) To the extent attributable to the offer or sale by such Indemnitee
or any related Indemnitee of any interest in the Aircraft, the Equipment
Notes, the Pass Through Trust Certificates, the Trust Estate or the Trust
Agreement or any similar interest, in violation of the Securities Act or
other applicable federal, state or foreign securities Laws (other than any
thereof caused by the acts or omissions of Lessee);
(j) (i) With respect to any Indemnitee (other than Mortgagee), to the
extent attributable to the failure of the Mortgagee to distribute funds
received and distribut-
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able by it in accordance with the Trust Indenture, (ii) with respect to any
Indemnitee (other than the Owner Trustee), to the extent attributable to
the failure of the Owner Trustee to distribute funds received and
distributable by it in accordance with the Trust Agreement, (iii) with
respect to any Indemnitee (other than the Subordination Agent), to the
extent attributable to the failure of the Subordination Agent to distribute
funds received and distributable by it in accordance with the Intercreditor
Agreement, (iv) with respect to any Indemnitee (other than the Pass Through
Trustees), to the extent attributable to the failure of a Pass Through
Trustee to distribute funds received and distributable by it in accordance
with the Pass Through Trust Agreements, (v) with respect to any Indemnitee
(other than the Escrow Agent), to the extent attributable to the failure of
the Escrow Agent to pay funds received and payable by it in accordance with
any Escrow Agreement, (vi) with respect to any Indemnitee (other than the
Paying Agent), to the extent attributable to the failure of the Paying
Agent to distribute funds received and distributable by it in accordance
with any Escrow Agreement, (vii) to the extent attributable to the failure
of the Depositary to pay funds payable by it in accordance with any Deposit
Agreement, (viii) with respect to Mortgagee, to the extent attributable to
the negligence or willful misconduct of Mortgagee in the distribution of
funds received and distributable by it in accordance with the Trust
Indenture, (ix) with respect to Owner Trustee, to the extent attributable
to the negligence or willful misconduct of Owner Trustee in the
distribution of funds received and distributable by it in accordance with
the Trust Agreement, (x) with respect to the Subordination Agent, to the
extent attributable to the negligence or willful misconduct of the
Subordination Agent in the distribution of funds received and distributable
by it in accordance with the Intercreditor Agreement, (xi) with respect to
the Pass Through Trustees, to the extent attributable to the negligence or
willful misconduct of a Pass Through Trustee in the distribution of funds
received and distributable by it in accordance with the Pass Through Trust
Agreements, (xii) with respect to the Escrow Agent, to the extent
attributable to the negligence or willful misconduct of the Escrow Agent in
the payment of funds received and payable by it in accordance with any
Escrow Agreement, and (xiii) with respect to the Paying Agent, to the
extent attributable to the negligence or willful misconduct of the Paying
Agent in the distribution
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of funds received and distributable by it in accordance with any Escrow
Agreement;
(k) Other than during the continuation of a Lease Event of Default, to
the extent attributable to the authorization or giving or withholding of
any future amendments, supplements, waivers or consents with respect to any
Operative Agreement or Pass Through Agreement other than such as have been
requested by Lessee or as are required by or made pursuant to the terms of
the Operative Agreements or Pass Through Agreements (unless such
requirement results from the actions of an Indemnitee not required by or
made pursuant to the Operative Agreements or the Pass Through Agreements);
(l) To the extent attributable to any amount which such Indemnitee
expressly agrees to pay or such Indemnitee expressly agrees shall not be
paid by or be reimbursed by Lessee;
(m) To the extent that such Expense is a loss of future profits of, a
cost or expense unreasonably incurred by, or an ordinary and usual
operating or overhead expense of, such Indemnitee;
(n) With respect to the Owner Participant or the Owner Trustee, or any
related Indemnitee, to the extent attributable to the deregistration of the
Aircraft under the Act as a result of Owner Participant's or Owner
Trustee's (or any related Indemnitee of either) not being a Citizen of the
United States as a result of any act (other than reregistration of the
Aircraft pursuant to Section 7.1.2 of the Lease) of Owner Participant or
Owner Trustee, or any related Indemnitee of either of the foregoing (not
taken at the request of the Lessee);
(o) With respect to the Owner Trustee or any related Indemnitee, to
the extent attributable to the deregistration of the Aircraft under the Act
as a result of Owner Trustee or any related Indemnitee not being a Citizen
of the United States as a result of any act (other than re-registration of
the Aircraft pursuant to Section 7.1.2 of the Lease) of the Owner Trustee
or any related Indemnitee (not taken at the request of the Lessee);
(p) For any Lessor Lien attributable to such Indemnitee or any related
Indemnitee;
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(q) If another provision of an Operative Agreement or a Pass Through
Agreement specifies the extent of Lessee's responsibility or obligation
with respect to such Expense, to the extent Lessee has complied with such
specified responsibility or obligation;
(r) To the extent constituting principal, Make-Whole Amount or
interest on the Equipment Notes attributable solely to an Event of Default
not constituting a Lease Event of Default;
(s) To the extent incurred by or asserted against an Indemnitee as a
result of any "prohibited transaction", within the meaning of Section 406
of ERISA or Section 4975(c)(1) of the Code; or
(t) For any loss attributable to, arising from or in connection with
any inspections or inspection rights arising from or in connection with any
of the Operative Documents or the Transactions.
For purposes of this Section 9.1, a Person shall be considered a
"related" Indemnitee with respect to an Indemnitee if such Person is an
Affiliate or employer of such Indemnitee, a director, officer, employee,
agent, or servant of such Indemnitee or any such Affiliate or a successor
or permitted assignee of any of the foregoing.
9.1.3 Separate Agreement
This Agreement constitutes a separate agreement with respect to each
Indemnitee and is enforceable directly by each such Indemnitee.
9.1.4 Notice
If a claim for any Expense that an Indemnitee shall be indemnified against
under this Section 9.1 is made, such Indemnitee shall give prompt written notice
thereof to Lessee. Notwithstanding the foregoing, the failure of any Indemnitee
to notify Lessee as provided in this Section 9.1.4, or in Section 9.1.5, shall
not release Lessee from any of its obligations to indemnify such Indemnitee
hereunder, except to the extent that such failure results in an additional
Expense to Lessee (in which event Lessee shall not be responsible for such
additional expense) or materially impairs Lessee's ability to contest such
claim.
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9.1.5 Notice of Proceedings; Defense of Claims; Limitations
(a) In case any action, suit or proceeding shall be brought against
any Indemnitee for which Lessee is responsible under this Section 9.1, such
Indemnitee shall notify Lessee of the commencement thereof and Lessee may,
at its expense, participate in and to the extent that it shall wish
(subject to the provisions of the following paragraph), assume and control
the defense thereof and, subject to Section 9.1.5(c), settle or compromise
the same.
(b) Lessee or its insurer(s) shall have the right, at its or their
expense, to investigate or, if Lessee or its insurer(s) shall agree not to
dispute liability to the Indemnitee giving notice of such action, suit or
proceeding under this Section 9.1.5 for indemnification hereunder or under
any insurance policies pursuant to which coverage is sought, control the
defense of, any action, suit or proceeding, relating to any Expense for
which indemnification is sought pursuant to this Section 9.1, and each
Indemnitee shall cooperate with Lessee or its insurer(s) with respect
thereto; provided, that Lessee shall not be entitled to control the defense
of any such action, suit, proceeding or compromise any such Expense during
the continuance of any Lease Event of Default arising under Section 14.1 of
the Lease. In connection with any such action, suit or proceeding being
controlled by Lessee, such Indemnitee shall have the right to participate
therein, at its sole cost and expense, with counsel reasonably satisfactory
to Lessee; provided, that such Indemnitee's participation does not, in the
reasonable opinion of the independent counsel appointed by the Lessee or
its insurers to conduct such proceedings, interfere with the defense of
such case.
(c) In no event shall any Indemnitee enter into a settlement or other
compromise with respect to any Expense without the prior written consent of
Lessee, which consent shall not be unreasonably withheld or delayed. Any
settlement or compromise without such consent of Lessee shall be deemed a
waiver by such Indemnitee of its right to be indemnified with respect to
such Expense under this Section 9.1.
(d) In the case of any Expense indemnified by the Lessee hereunder
which is covered by a policy of insurance maintained by Lessee pursuant to
Section 11 of the Lease,
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at Lessee's expense, each Indemnitee agrees to cooperate with the insurers
in the exercise of their rights to investigate, defend or compromise such
Expense as may be required to retain the benefits of such insurance with
respect to such Expense.
(e) If an Indemnitee is not a party to this Agreement, Lessee may
require such Indemnitee to agree in writing to the terms of this Section 9
and Section 15.8 prior to making any payment to such Indemnitee under this
Section 9.
(f) Nothing herein shall be deemed to be an assumption by Lessee of
obligations of Owner Trustee with respect to, or a guarantee by Lessee of,
any amounts payable by Owner Trustee upon Equipment Notes or a guarantee of
any residual value of the Aircraft.
(g) Nothing contained in this Section 9.1.5 shall be deemed to require
an Indemnitee to contest any Expense or to assume responsibility for or
control of any judicial proceeding with respect thereto.
9.1.6 Information
Lessee will provide the relevant Indemnitee with such information not
within the control of such Indemnitee, as is in Lessee's control or is
reasonably available to Lessee, which such Indemnitee may reasonably request and
will otherwise cooperate with such Indemnitee so as to enable such Indemnitee to
fulfill its obligations under Section 9.1.5. The Indemnitee shall supply Lessee
with such information not within the control of Lessee, as is in such
Indemnitee's control or is reasonably available to such Indemnitee, which Lessee
may reasonably request to control or participate in any proceeding to the extent
permitted by Section 9.1.5.
9.1.7 Effect of Other Indemnities; Subrogation;
Further Assurances
Upon the payment in full by Lessee of any indemnity provided for under this
Agreement, Lessee, without any further action and to the full extent permitted
by Law, will be subrogated to all rights and remedies of the person indemnified
(other than with respect to any of such Indemnitee's insurance policies or in
connection with any indemnity claim such Indemnitee may have under Section 5.03
or Article VII of the Trust Indenture or Section 5.3 or 7 of the Trust
Agreement) in re-
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spect of the matter as to which such indemnity was paid. Each Indemnitee will
give such further assurances or agreements and cooperate with Lessee to permit
Lessee to pursue such claims, if any, to the extent reasonably requested by
Lessee and at Lessee's expense.
9.1.8 Refunds
If an Indemnitee receives any refund, in whole or in part, with respect to
any Expense paid by Lessee hereunder, it will promptly pay the amount refunded
(but not an amount in excess of the amount Lessee or any of its insurers has
paid in respect of such Expense) over to Lessee unless a Lease Event of Default
shall have occurred and be continuing, in which case such amounts shall be paid
over to Owner Trustee (or, so long as the Trust Indenture shall not have been
discharged, to Mortgagee) to hold as security for Lessee's obligations under the
Lessee Operative Agreements or, if requested by Lessee, applied to satisfy such
obligations.
9.2 Expenses
9.2.1 Invoices and Payment
Each of the Owner Trustee, Mortgagee, the Owner Participant, Lessee, the
Pass Through Trustees, and the Subordination Agent shall promptly submit to
Lessee for its prompt approval (which shall not be unreasonably withheld) copies
of invoices in reasonable detail of the Transaction Expenses for which it is
responsible for providing information as they are received (but in no event
later than the 90th day after the Delivery Date). If so submitted and approved,
the Owner Participant agrees promptly, but in any event no later than the 105th
day after the Delivery Date, to pay (but not in excess of [ ]% of Lessor's Cost)
Transaction Expenses. Notwithstanding the foregoing, Lessee at its sole option
shall have the right to pay directly any and all Transaction Expenses. Lessee
shall be obligated to pay directly any and all Transaction Expenses which are in
excess of [ ]% of Lessor's Cost. If Owner Participant shall fail to pay any
Transaction Expense that it is obligated to pay hereunder, Lessee shall pay such
Transaction Expense. Any such payment by Lessee shall not affect Owner
Participant's obligations or Lessee's rights against Owner Participant for its
failure to make any such payment.
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9.2.2 Payment of Other Expenses
Lessee shall pay (i) the ongoing fees and expenses of Owner Trustee and
Mortgagee, and (ii) all reasonable out-of-pocket costs and expenses (including
the reasonable fees and disbursements of counsel) incurred by any Participant
attributable to (A) any transfer of title to the Aircraft or any Engine
contemplated by Section 4.5 of the Lease or (B) any waiver, amendment or
modification of any Operative Agreement to the extent requested by Lessee.
9.2.3 Payments if Transactions Do Not Close
In the event that the transaction contemplated by this Agreement fails to
close as a result of the Owner Participant's failure to comply with its
obligations under this Agreement or any breach of a representation or warranty
of Owner Participant made in or pursuant to any Operative Agreement,
notwithstanding any other rights and remedies that the parties hereto shall have
against Owner Participant, the Owner Participant will be responsible for all of
its fees and expenses, including but not limited to the fees, expenses and
disbursements of its special counsel and the fees of the Appraiser referred to
in Section 5.1.2(xv).
9.3 General Tax Indemnity
9.3.1 General
Except as provided in Section 9.3.2, Lessee agrees that each payment of
Rent paid by Lessee pursuant to the Lease, and any other payment or indemnity
paid by Lessee to a Tax Indemnitee under any Operative Agreement, shall be free
of all withholdings or deductions with respect to Taxes of any nature (other
than U.S. federal, state or local withholding taxes on, based on or measured by
gross or net income), and in the event that Lessee shall be required by
applicable law to make any such withholding or deduction for any such payment
(x) Lessee shall make all such withholdings or deductions, (y) the amount
payable by Lessee shall be increased so that after making all required
withholdings or deductions such Tax Indemnitee receives the same amount that it
would have received had no such withholdings or deductions been made, and (z)
Lessee shall pay the full amount withheld or deducted to the relevant Taxing
Authority in accordance with applicable law. Lessee further agrees that, in the
event it is required to withhold from any payment of Basic Rent, Stipulated Loss
Value (and amounts determined by reference thereto), and amounts payable upon
exer-
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cise of Lessee's purchase option pursuant to Section 17.3 of the Lease, any
Tax imposed upon Owner Participant or Owner Trustee (including any withholding
Tax based on income or receipts of Owner Participant or Owner Trustee) and such
Tax is excluded from indemnification pursuant to Section 9.3.2, Lessee shall pay
such additional amount, if any, required so that the total amount paid by Lessee
(after making all required withholdings) is equal to (assuming timely payment of
the Equipment Notes prior to the relevant Payment Date) the aggregate principal
amount of scheduled installments due on the Equipment Notes outstanding on the
relevant Payment Date, together with accrued and unpaid interest, due on the
Equipment Notes; Owner Participant or Owner Trustee, as the case may be, shall
reimburse Lessee for any such additional amounts within two Business Days after
demand therefor. Except as provided in Section 9.3.2 and whether or not any of
the transactions contemplated hereby are consummated, Lessee shall pay,
indemnify, protect, defend and hold each Tax Indemnitee harmless from all Taxes
imposed by any Taxing Authority that may from time to time be imposed on or
asserted against any Tax Indemnitee or the Aircraft, the Airframe, any Engine or
any Part or any interest in any of the foregoing (whether or not indemnified
against by any other Person), upon or with respect to the Operative Agreements
or the transactions or payments contemplated thereby, including but not limited
to any Tax imposed upon or with respect to (x) the Aircraft, the Airframe, any
Engine, any Part, any Operative Agreement (including without limitation any
Equipment Notes) or any data or any other thing delivered or to be delivered
under an Operative Agreement, (y) the purchase, manufacture, acceptance,
rejection, sale, transfer of title, return, ownership, mortgaging, delivery,
transport, charter, rental, lease, re-lease, sublease, assignment, possession,
repossession, presence, use, condition, storage, preparation, maintenance,
modification, alteration, improvement, operation, registration, transfer or
change of registration, reregistration, repair, replacement, overhaul, location,
control, the imposition of any Lien (other than a Lessor Lien), financing,
refinancing requested by the Lessee, abandonment or other disposition of the
Aircraft, the Airframe, any Engine, any Part, any data or any other thing
delivered or to be delivered under an Operative Agreement or (z) rent, interest,
fees or any other income, proceeds, receipts or earnings, whether actual or
deemed, arising upon, in connection with, or in respect of, any of the Operative
Agreements (including the property or income or other proceeds with respect to
property held as part of the Trust Estate) or the transactions contemplated
thereby.
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9.3.2 Certain Exceptions
The provisions of Section 9.3.1 shall not apply to, and Lessee shall have
no liability hereunder for, Taxes:
(a) imposed on a Tax Indemnitee by the federal government of the
United States or any Taxing Authority or governmental subdivision of the
United States or therein (including any state or local Taxing Authority)
(i) on, based on, or measured by, gross or net income or gross or net
receipts, including capital gains taxes, excess profits taxes, minimum
taxes from tax preferences, alternative minimum taxes, branch profits
taxes, accumulated earnings taxes, personal holding company taxes,
succession taxes and estate taxes, and any withholding taxes on, based on
or measured by gross or net income or receipts or (ii) on, or with respect
to, or measured by, capital or net worth or in the nature of a franchise
tax or a tax for the privilege of doing business (other than, in the case
of clause (i) or (ii), sales, use, license or property Taxes);
(b) imposed on a Tax Indemnitee by any Taxing Authority or
governmental subdivision thereof or therein outside of the United States
(including any Taxing Authority in or of a territory, possession or
commonwealth of the United States) (i) on, based on, or measured by, gross
or net income or gross or net receipts, including capital gains taxes,
excess profits taxes, minimum taxes from tax preferences, alternative
minimum taxes, branch profits taxes, accumulated earnings taxes, personal
holding company taxes, succession taxes and estate taxes, and any
withholding taxes on, based on or measured by gross or net income or
receipts or (ii) on, or with respect to, or measured by, capital or net
worth or in the nature of a franchise tax or a tax for the privilege of
doing business (other than, in the case of clause (i) or (ii), (A) sales,
use, license or property Taxes, or (B) any Taxes imposed by any Taxing
Authority (other than a Taxing Authority within whose jurisdiction such Tax
Indemnitee is incorporated or organized or maintains its principal place of
business) if such Tax Indemnitee would not have been subject to Taxes of
such type by such jurisdiction but for (I) the location, use or operation
of the Aircraft, the Airframe, any Engine or any Part thereof by a Lessee
Person within the jurisdiction of the Taxing Authority imposing such Tax,
or (II) the activities of any Lessee Person (except for activities of a
Lessee Person that is not an
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Affiliate, successor or assign of the Lessee, which activities are
unrelated to the transactions contemplated by the Operative Agreements) in
such jurisdiction, including, but not limited to, use of any other aircraft
by Lessee in such jurisdiction, (III) the status of any Lessee Person as a
foreign entity or as an entity owned in whole or in part by foreign
persons, (IV) Lessee having made (or having been deemed to have made)
payments to such Tax Indemnitee from the relevant jurisdiction or (V) in
the case of the Pass Through Trustees, any Participant or any related Tax
Indemnitee, the Lessee being incorporated, organized, maintaining a place
of business or conducting activities in such jurisdiction);
(c) on, or with respect to, or measured by, any trustee fees,
commissions or compensation received by Owner Trustee, Pass Through
Trustee, Subordination Agent or Mortgagee;
(d) on the Trust or the Trust Estate that result from treatment of the
Trust or the Trust Estate as an entity, such as a corporation, separate and
apart from the Owner Participant;
(e) that are being contested as provided in Section 9.3.4 hereof;
(f) imposed on any Tax Indemnitee to the extent that such Taxes result
from the gross negligence or willful misconduct of such Tax Indemnitee or
any Affiliate thereof;
(g) imposed on or with respect to a Tax Indemnitee (including the
transferee in those cases in which the Tax on transfer is imposed on, or is
collected from, the transferee) as a result of a transfer or other
disposition (including a deemed transfer or disposition) by such Tax
Indemnitee or a related Tax Indemnitee (or, in the case of the Owner
Participant, by Owner Trustee, or, in the case of Taxes imposed on a
transferee, by the transferor) of any interest in the Aircraft, the
Airframe, any Engine or any Part, the Rent (other than the assignment of
Rent to the Loan Trustee pursuant to the Trust Indenture), the Trust, the
Trust Estate, the Trust Indenture Estate, the Lease or any interest arising
under the Operative Agreements or any Equipment Note or a transfer or
disposition (including a deemed transfer or disposition) of any interest in
a Tax Indemnitee (other than (A) a substitution or
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replacement of the Aircraft, the Airframe, any Engine or any Part by a
Lessee Person that is treated for Tax purposes as a transfer or
disposition, (B) a transfer pursuant to an exercise of remedies upon a
Lease Event of Default that shall have occurred and have been continuing,
or (C) a transfer to Lessee pursuant to Section 17.3 of the Lease);
(h) Taxes in excess of those that would have been imposed had there
not been a transfer or other disposition by or to such Tax Indemnitee or a
related Tax Indemnitee described in paragraph (g) above;
(i) imposed on the Owner Participant and indemnified by Lessee
pursuant to the Tax Indemnity Agreement;
(j) imposed with respect to any period after the expiration or earlier
termination of the Term and, if required pursuant to the terms of the
Lease, the return of possession of the Aircraft to Lessor or placement in
storage at the request of Lessor in accordance with the Lease (provided
that this exclusion (j) shall not apply to Taxes imposed after such period
arising as a result of payments by Lessee under the Operative Agreements
after such period);
(k) consisting of any interest, penalties or additions to tax imposed
on a Tax Indemnitee as a result of (in whole or in part) failure of such
Tax Indemnitee or a related Tax Indemnitee to file any return properly and
timely, unless such failure shall be caused by the failure of Lessee to
fulfill its obligations, if any, under Section 9.3.6 with respect to such
return;
(l) resulting from, or that would not have been imposed but for, any
Lessor Liens arising as a result of claims against, or acts or omissions
of, or otherwise attributable to such Tax Indemnitee or a related Tax
Indemnitee;
(m) imposed on any Tax Indemnitee as a result of the breach by such
Tax Indemnitee or a related Tax Indemnitee of any covenant of such Tax
Indemnitee or any Affiliate thereof contained in any Operative Agreement or
the inaccuracy of any representation or warranty by such Tax Indemnitee or
any Affiliate thereof in any Operative Agreement;
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(n) in the nature of an intangible or similar Tax (i) upon or with
respect to the value or principal amount of the interest of Loan
Participant or any Note Holder in any Equipment Note or the loan evidenced
thereby or (ii) upon or with respect to the value of the interest of the
Owner Participant in the Trust Estate or the Trust, in each case only if
such Taxes are in the nature of franchise Taxes or result from the Tax
Indemnitee doing business in the taxing jurisdiction and are imposed
because of the place of incorporation or the activities unrelated to the
transactions contemplated by the Operative Agreements in the taxing
jurisdiction of such Tax Indemnitee;
(o) that is included in Lessor's Cost and paid to the appropriate
Taxing Authority;
(p) imposed on a Tax Indemnitee by a Taxing Authority of a
jurisdiction outside the United States to the extent that such Taxes would
not have been imposed but for a connection between the Tax Indemnitee or a
related Tax Indemnitee and such jurisdiction imposing such Tax unrelated to
the transactions contemplated by the Operative Agreements; or
(q) Taxes relating to ERISA or Section 4975 of the Code.
For purposes hereof, a Tax Indemnitee and any other Tax Indemnitees that
are successors, assigns, agents, servants or Affiliates of such Tax Indemnitee
shall be related Tax Indemnitees.
9.3.3 Payment
(a) Lessee's indemnity obligation to a Tax Indemnitee under this
Section 9.3 shall equal the amount which, after taking into account any Tax
imposed upon the receipt or accrual of the amounts payable under this
Section 9.3 and any tax benefits actually recognized by such Tax Indemnitee
as a result of the indemnifiable Tax (including, without limitation, any
benefits recognized as a result of an indemnifiable Tax being utilized by
such Tax Indemnitee as a credit against Taxes not indemnifiable under this
Section 9.3), shall equal the amount of the Tax indemnifiable under this
Section 9.3.
(b) At Lessee's request, the computation of the amount of any
indemnity payment owed by Lessee or any
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amount owed by a Tax Indemnitee to Lessee pursuant to this Section 9.3
shall be verified and certified by an independent public accounting firm
selected by such Tax Indemnitee and reasonably satisfactory to Lessee. Such
verification shall be binding. The costs of such verification (including
the fee of such public accounting firm) shall be borne by Lessee unless
such verification shall result in an adjustment in Lessee's favor of 5% or
more of the net present value of the payment as computed by such Tax
Indemnitee, in which case the costs shall be paid by such Tax Indemnitee.
(c) Each Tax Indemnitee shall provide Lessee with such certifications,
information and documentation as shall be in such Tax Indemnitee's
possession and as shall be reasonably requested by Lessee to minimize any
indemnity payment pursuant to this Section 9.3; provided, that
notwithstanding anything to the contrary contained herein, no Tax
Indemnitee shall be required to provide Lessee with any Tax returns.
(d) Each Tax Indemnitee shall promptly forward to Lessee any written
notice, bill or advice received by it from any Taxing Authority concerning
any Tax for which it seeks indemnification under this Section 9.3. Lessee
shall pay any amount for which it is liable pursuant to this Section 9.3
directly to the appropriate Taxing Authority if legally permissible or upon
demand of a Tax Indemnitee, to such Tax Indemnitee within 30 days of such
demand (or, if a contest occurs in accordance with Section 9.3.4, within 30
days after a Final Determination (as defined below)), but in no event more
than one Business Day prior to the date the Tax to which such amount
payable hereunder relates is due. If requested by a Tax Indemnitee in
writing, Lessee shall furnish to the appropriate Tax Indemnitee the
original or a certified copy of a receipt for Lessee's payment of any Tax
paid by Lessee or such other evidence of payment of such Tax as is
acceptable to such Tax Indemnitee. Lessee shall also furnish promptly upon
written request such data as any Tax Indemnitee may reasonably require to
enable such Tax Indemnitee to comply with the requirements of any taxing
jurisdiction unless such data is not reasonably available to Lessee or,
unless such data is specifically requested by a Taxing Authority, is not
customarily furnished by domestic air carriers under similar circumstances.
For purposes of this Section 9.3, a "Final Determination" shall mean (i) a
decision, judgment, decree or other order by any court of
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competent jurisdiction that occurs pursuant to the provisions of Section
9.3.4, which decision, judgment, decree or other order has become final and
unappealable, (ii) a closing agreement or settlement agreement entered into
in accordance with Section 9.3.4 that has become binding and is not subject
to further review or appeal (absent fraud, misrepresentation, etc.), or
(iii) the termination of administrative proceedings and the expiration of
the time for instituting a claim in a court proceeding.
(e) If any Tax Indemnitee shall actually realize a tax savings by
reason of any Tax paid or indemnified by Lessee pursuant to this Section
9.3 (whether such tax savings shall be by means of a foreign tax credit,
depreciation or cost recovery deduction or otherwise) and such savings is
not otherwise taken into account in computing such payment or indemnity
such Tax Indemnitee shall pay to Lessee an amount equal to the lesser of
(i) the amount of such tax savings, plus any additional tax savings
recognized as the result of any payment made pursuant to this sentence,
when, as, if, and to the extent, realized or (ii) the amount of all
payments pursuant to this Section 9.3 by Lessee to such Tax Indemnitee
(less any payments previously made by such Tax Indemnitee to Lessee
pursuant to this Section 9.3.3 (e)) (and the excess, if any, of the amount
described in clause (i) over the amount described in clause (ii) shall be
carried forward and applied to reduce pro tanto any subsequent obligations
of Lessee to make payments to such Tax Indemnitee pursuant to this Section
9.3); provided, that such Tax Indemnitee shall not be required to make any
payment pursuant to this sentence so long as a Lease Event of Default of a
monetary nature has occurred and is continuing. If a tax benefit is later
disallowed or denied, the disallowance or denial shall be treated as a Tax
indemnifiable under Section 9.3.1 without regard to the provisions of
Section 9.3.2 (other than Section 9.3.2 (f)). Each such Tax Indemnitee
shall in good faith use reasonable efforts in filing its tax returns and in
dealing with Taxing Authorities to seek and claim any such tax benefit.
9.3.4 Contest
(a) If a written claim is made against a Tax Indemnitee for Taxes with
respect to which Lessee could be liable for payment or indemnity hereunder,
or if a Tax Indemnitee makes a determination that a Tax is due for which
Lessee could have an indemnity obligation hereunder, such
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Tax Indemnitee shall promptly give Lessee notice in writing of such claim
(provided, that failure to so notify Lessee shall not relieve Lessee of its
indemnity obligations hereunder unless such failure to notify effectively
forecloses Lessee's rights to require a contest of such claim) and shall
take no action with respect to such claim without the prior written consent
of Lessee for 30 days following the receipt of such notice by Lessee;
provided, that, in the case of a claim made against a Tax Indemnitee, if
such Tax Indemnitee shall be required by law to take action prior to the
end of such 30-day period, such Tax Indemnitee shall, in such notice to
Lessee, so inform Lessee, and such Tax Indemnitee shall take no action for
as long as it is legally able to do so (it being understood that a Tax
Indemnitee shall be entitled to pay the Tax claimed and sue for a refund
prior to the end of such 30-day period if (i)(A) the failure to so pay the
Tax would result in substantial penalties (unless immediately reimbursed by
Lessee) and the act of paying the Tax would not materially prejudice the
right to contest or (B) the failure to so pay would result in criminal
penalties and (ii) such Tax Indemnitee shall take any action so required in
connection with so paying the Tax in a manner that is the least prejudicial
to the pursuit of the contest). In addition, such Tax Indemnitee shall
(provided, that Lessee shall have agreed to keep such information
confidential other than to the extent necessary in order to contest the
claim) furnish Lessee with copies of any requests for information from any
Taxing Authority relating to such Taxes with respect to which Lessee may be
required to indemnify hereunder. If requested by Lessee in writing within
30 days after its receipt of such notice, such Tax Indemnitee shall, at the
expense of Lessee (including, without limitation, all reasonable costs,
expenses and reasonable attorneys' and accountants' fees and
disbursements), in good faith contest (or, if permitted by applicable law,
allow Lessee to contest) through appropriate administrative and judicial
proceedings the validity, applicability or amount of such Taxes by (I)
resisting payment thereof, (II) not paying the same except under protest if
protest is necessary and proper or (III) if the payment is made, using
reasonable efforts to obtain a refund thereof in an appropriate
administrative and/or judicial proceeding. If requested to do so by Lessee,
the Tax Indemnitee shall appeal any adverse administrative or judicial
decision, except that the Tax Indemnitee shall not be required to pursue
any appeals to the United States Supreme Court. If and to the extent the
Tax Indemnitee is able to separate
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the contested issue or issues from other issues arising in the same
administrative or judicial proceeding that are unrelated to the
transactions contemplated by the Operative Agreements without, in the good
faith judgment of such Tax Indemnitee, adversely affecting such Tax
Indemnitee, such Tax Indemnitee shall permit Lessee to control the conduct
of any such proceeding and shall provide to Lessee (at Lessee's cost and
expense) with such information or data that is in such Tax Indemnitee's
control or possession that is reasonably necessary to conduct such contest.
In the case of a contest controlled by a Tax Indemnitee, such Tax
Indemnitee shall consult with Lessee in good faith regarding the manner of
contesting such claim and shall keep Lessee reasonably informed regarding
the progress of such contest. A Tax Indemnitee shall not fail to take any
action expressly required by this Section 9.3.4 (including, without
limitation, any action regarding any appeal of an adverse determination
with respect to any claim) or settle or compromise any claim without the
prior written consent of the Lessee (except as contemplated by Section
9.3.4(b) or (c)).
(b) Notwithstanding the foregoing, in no event shall a Tax Indemnitee
be required to pursue any contest (or to permit Lessee to pursue any
contest) unless (i) Lessee shall have agreed to pay such Tax Indemnitee on
demand all reasonable costs and expenses incurred by such Tax Indemnitee in
connection with contesting such Taxes, including, without limitation, all
reasonable out of pocket costs and expenses and reasonable attorneys' and
accountants' fees and disbursements, (ii) if such contest shall involve the
payment of the claim, Lessee shall advance the amount thereof (to the
extent indemnified hereunder) plus interest, penalties and additions to tax
with respect thereto that are required to be paid prior to the commencement
of such contest on an interest-free after-Tax basis to such Tax Indemnitee
(and such Tax Indemnitee shall promptly pay to the Lessee any net realized
tax benefits resulting from such advance including any tax benefits
resulting from making such payment), (iii) such Tax Indemnitee shall have
reasonably determined that the action to be taken will not result in any
material risk of forfeiture, sale or loss of the Aircraft (unless Lessee
shall have made provisions to protect the interests of any such Tax
Indemnitee in a manner reasonably satisfactory to such Tax Indemnitee)
(provided, that such Tax Indemnitee agrees to notify Lessee in writing
promptly after it becomes aware of any such risk), (iv) no Lease Event of
Default shall have occurred
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and be continuing unless Lessee has provided security for its obligations
hereunder by advancing to such Tax Indemnitee before proceeding or
continuing with such contest, the amount of the Tax being contested, plus
any interest and penalties and an amount estimated in good faith by such
Tax Indemnitee for expenses, and (v) prior to commencing any judicial
action controlled by Lessee, Lessee shall have acknowledged its liability
for such claim hereunder, provided that Lessee shall not be bound by its
acknowledgment if the Final Determination articulates conclusions of law
and fact that demonstrate that Lessee has no liability for the contested
amounts hereunder. Notwithstanding the foregoing, if any Tax Indemnitee
shall release, waive, compromise or settle any claim which may be
indemnifiable by Lessee pursuant to this Section 9.3 without the written
permission of Lessee, Lessee's obligation to indemnify such Tax Indemnitee
with respect to such claim (and all directly related claims and claims
based on the outcome of such claim) shall terminate, subject to Section
9.3.4(c), and subject to Section 9.3.4(c), such Tax Indemnitee shall repay
to Lessee any amount previously paid or advanced to such Tax Indemnitee
with respect to such claim, plus interest at the rate that would have been
payable by the relevant Taxing Authority with respect to a refund of such
Tax.
(c) Notwithstanding anything contained in this Section 9.3, a Tax
Indemnitee will not be required to contest the imposition of any Tax and
shall be permitted to settle or compromise any claim without Lessee's
consent if such Tax Indemnitee (i) shall waive its right to indemnity under
this Section 9.3 with respect to such Tax (and any directly related claim
and any claim the outcome of which is determined based upon the outcome of
such claim), (ii) shall pay to Lessee any amount previously paid or
advanced by Lessee pursuant to this Section 9.3 with respect to such Tax,
plus interest at the rate that would have been payable by the relevant
Taxing Authority with respect to a refund of such Tax, and (iii) shall
agree to discuss with Lessee the views or positions of any relevant Taxing
Authority with respect to the imposition of such Tax.
9.3.5 Refund
If any Tax Indemnitee shall receive a refund of, or be entitled to a credit
against other liability for, all or any part of any Taxes paid, reimbursed or
advanced by Lessee, such Tax Indemnitee shall pay to Lessee within 30 days of
such re-
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ceipt an amount equal to the lesser of (a) the amount of such refund or
credit plus any net tax benefit (taking into account any Taxes incurred by such
Tax Indemnitee by reason of the receipt of such refund or realization of such
credit) actually realized by such Tax Indemnitee as a result of any payment by
such Tax Indemnitee made pursuant to this sentence (including this clause (a))
and (b) such tax payment, reimbursement or advance by Lessee to such Tax
Indemnitee theretofore made pursuant to this Section 9.3 (and the excess, if
any, of the amount described in clause (a) over the amount described in clause
(b) shall be carried forward and applied to reduce pro tanto any subsequent
obligation of Lessee to make payments to such Tax Indemnitee pursuant to this
Section 9.3). If, in addition to such refund or credit, such Tax Indemnitee
shall receive (or be credited with) an amount representing interest on the
amount of such refund or credit, such Tax Indemnitee shall pay to Lessee within
30 days of such receipt or realization of such credit that proportion of such
interest that shall be fairly attributable to Taxes paid, reimbursed or advanced
by Lessee prior to the receipt of such refund or realization of such credit.
9.3.6 Tax Filing
If any report, return or statement is required to be filed with respect to
any Tax which is subject to indemnification under this Section 9.3, Lessee shall
timely file the same (except for any such report, return or statement which a
Tax Indemnitee has timely notified the Lessee in writing that such Tax
Indemnitee intends to file, or for which such Tax Indemnitee is required by law
to file, in its own name); provided, that the relevant Tax Indemnitee shall
furnish Lessee with any information in such Tax Indemnitee's possession or
control that is reasonably necessary to file any such return, report or
statement and is reasonably requested in writing by Lessee (it being understood
that the Tax Indemnitee shall not be required to furnish copies of its actual
tax returns, although it may be required to furnish relevant information
contained therein). Lessee shall either file such report, return or statement
and send a copy of such report, return or statement to such Tax Indemnitee, and
Owner Trustee if the Tax Indemnitee is not Owner Trustee, or, where Lessee is
not permitted to file such report, return or statement, it shall notify such Tax
Indemnitee of such requirement and prepare and deliver such report, return or
statement to such Tax Indemnitee in a manner satisfactory to such Tax Indemnitee
within a reasonable time prior to the time such report, return or statement is
to be filed.
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9.3.7 Forms
Each Tax Indemnitee agrees to furnish from time to time to Lessee or Loan
Trustee or to such other person as Lessee or Loan Trustee may designate, at
Lessee's or Loan Trustee's request, such duly executed and properly completed
forms as may be necessary or appropriate in order to claim any reduction of or
exemption from any withholding or other Tax imposed by any Taxing Authority, if
(x) such reduction or exemption is available to such Tax Indemnitee and (y)
Lessee has provided such Tax Indemnitee with any information necessary to
complete such form not otherwise reasonably available to such Tax Indemnitee.
9.3.8 Non-Parties
If a Tax Indemnitee is not a party to this Agreement, Lessee may require
the Tax Indemnitee to agree in writing, in a form reasonably acceptable to
Lessee, to the terms of this Section 9.3 and Section 15.8 prior to making any
payment to such Tax Indemnitee under this Section 9.3.
9.3.9 Subrogation
Upon payment of any Tax or other amount computed by reference to the amount
of any Tax by Lessee pursuant to this Section 9.3 to or on behalf of a Tax
Indemnitee or any Affiliate thereof, Lessee, without any further action, shall
be subrogated to any claims that such Tax Indemnitee or Affiliate may have
relating thereto. Such Tax Indemnitee or Affiliate shall cooperate with Lessee
(to the extent such cooperation does not result in any unreimbursed cost,
expense or liability to such Tax Indemnitee or Affiliate) to permit Lessee to
pursue such claims.
9.3.10 Foreign Tax On Loan Payments
If an Owner Participant is incorporated or organized, or maintains a place
of business or conducts activities in, a country other than the United States or
in a territory, possession or commonwealth of the United States (within the
meaning of the tax law of that foreign jurisdiction) and if as a result thereof
any foreign Taxes (including withholding Taxes) are imposed on the Pass Through
Trustees, Pass Through Trusts, or Note Holders, then Owner Participant shall
reimburse Lessee for any payments Lessee is required to make to or on behalf of
any Pass Through Trustee, Pass Through Trust, or Note Holder under this Section
9.3 as a result of the imposition of such Taxes.
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The amount payable by Owner Participant to Lessee shall be an amount which,
after taking into account any such Taxes, any Tax imposed upon the receipt or
accrual by Lessee of such payment by Owner Participant and any tax benefits or
tax savings realized by Lessee with respect to the payment of such withholding
Tax or the payment hereunder, shall equal the amount of Lessee's payment to or
on behalf of such Pass Through Trustee, or Note Holder.
9.4 Payments
Any payments made pursuant to Section 9.1 or 9.3 shall be due on the 60th
day after demand therefor and shall be made directly to the relevant Indemnitee
or Tax Indemnitee or to Lessee, in immediately available funds at such bank or
to such account as specified by such Indemnitee or Tax Indemnitee or Lessee, as
the case may be, in written directives to the payor, or, if no such direction
shall have been given, by check of the payor payable to the order of, and mailed
to, such Indemnitee or Tax Indemnitee or Lessee, as the case may be, by
certified mail, postage prepaid, at its address as set forth in this Agreement.
9.5 Interest
If any amount, payable by Lessee, any Indemnitee or any Tax Indemnitee
under Section 9.1 or 9.3 is not paid when due, the person obligated to make such
payment shall pay on demand, to the extent permitted by Law, to the person
entitled thereto, interest on any such amount for the period from and including
the due date for such amount to but excluding the date the same is paid, at the
Payment Due Rate. Such interest shall be paid in the same manner as the unpaid
amount in respect of which such interest is due.
9.6 Benefit of Indemnities
The obligations of Lessee in respect of all indemnities, obligations,
adjustments and payments in Section 9.1 or 9.3 are expressly made for the
benefit of, and shall be enforceable by, the Indemnitee or Tax Indemnitee
entitled thereto, without declaring the Lease to be in default or taking other
action thereunder, and notwithstanding any provision of the Trust Indenture.
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SECTION 10. ASSIGNMENT OR TRANSFER OF INTERESTS
10.1 Participants, Owner Trustee and Note Holders
10.1.1 Owner Participant
(a) During the Term, Owner Participant shall not Transfer any or all
of its right, title or interest in the Trust Estate or the Trust Agreement
and to this Agreement unless such transfer is a Transfer of the entire
interest held by Owner Participant, and:
(i) The Transferee shall have full power, authority and legal
right to execute and deliver and to perform the obligations of Owner
Participant under this Agreement and the other Owner Participant
Agreements and shall provide reasonably satisfactory evidence of such
power and authority to Lessee, Owner Trustee and Mortgagee;
(ii) The Transferee shall enter into an agreement substantially
in the form of Exhibit H hereto (or otherwise in form and substance
reasonably satisfactory to Lessee and Mortgagee);
(iii) Lessee shall not be obligated to pay any greater amount or
incur any greater obligation than that which it would have been
obliged to pay or incur under the Lease or other Lessee Operative
Agreement if no transfer or assignment had taken place, and the terms
and conditions of this Lease and the other Lessee Operative Agreements
insofar as they relate to the rights and obligations of Lessee or the
Loan Participant shall not be altered;
(iv) Owner Participant shall deliver to Lessee, Owner Trustee and
Mortgagee an opinion of counsel substantially in the form of Exhibit I
hereto (or otherwise in form and substance reasonably satisfactory to
Lessee and Mortgagee) to the effect that such agreement or agreements
referred to in Section 10.1.1(a)(ii) and, if applicable, 10.1.1(a)(vi)
are legal, binding and enforceable in accordance with its or their
terms and that such transfer will not violate the Act, the
registration provisions of the Securities Act, or any other applicable
Federal law;
(v) The Transferee is a Citizen of the United States (it being
understood that the existence of any such requirement is to be
determined without giving consideration to Section 47.9 of the FAA
Regulations or any other provi-
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sion that may restrict Lessee's use or operation of the Aircraft), or
shall use a voting powers trust or similar arrangement in order to
hold an interest in the Trust Estate such that the Aircraft can be
registered in the United States (without giving consideration to
Section 47.9 of the FAA Regulations); and
(vi) The Transferee shall be a single person and shall be either
(A) a Permitted Institution or (B) any other person (other than,
without Lessee's consent, a commercial air carrier, a commercial
aircraft operator, a freight forwarder or an Affiliate of any of the
foregoing) the obligations of which under the Owner Participant
Agreements are guaranteed by a Permitted Institution in any case,
pursuant to a written guaranty, in form and substance reasonably
satisfactory to Lessee, Owner Trustee and Mortgagee.
(b) Owner Participant shall give written notice to Lessee, Mortgagee
and Owner Trustee at least 10 days prior to any such Transfer, specifying
the name and address of the proposed Transferee, and providing financial
statements of the proposed Transferee evidencing satisfaction of the
requirements described in Section 10.1.1(a)(vi)(A) or (B) above.
(c) Any fees, charges and expenses, including the reasonable legal
fees, charges and expenses incurred by Lessee, Owner Participant,
Mortgagee, any Note Holder or Owner Trustee in connection with any Transfer
by Owner Participant permitted by this Section 10.1.1, or by the Transferee
in any such case, will be paid for by Owner Participant.
10.1.2 Owner Trustee
Owner Trustee may transfer its interests in the Trust Agreement pursuant to
Section 9 thereof.
10.1.3 Note Holders
Subject to Section 7.5.2 hereof and Section 2.07 of the Trust Indenture,
any Note Holder may, at any time and from time to time, Transfer or grant
participations in all or any portion of the Equipment Notes and/or all or any
portion of its beneficial interest in its Equipment Notes and the Trust
Indenture Estate to any person (it being understood that the sale or issuance of
Pass Through Certificates by a Pass Through Trustee
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shall not be considered a Transfer or participation); provided, that any
participant in any such participations shall not have any direct rights under
the Operative Agreements or any Lien on all or any part of the Aircraft or Trust
Indenture Estate and Lessee shall not have any increased liability or
obligations as a result of any such participation. In the case of any such
Transfer, the Transferee, by acceptance of Equipment Notes in connection with
such Transfer, shall be deemed to be bound by all of the covenants of Note
Holders contained in the Operative Agreements.
10.1.4 Lessee's Assumption of the Certificates
(a) Subject to compliance by the Lessee with all of its obligations
under the Operative Agreements, each of the Owner Participant, the Owner
Trustee, the Mortgagee, the Pass Through Trustee and the Lessee covenants
and agrees that if the Lessee elects to purchase the Aircraft pursuant to
Section 17.3 of the Lease, then, upon compliance with the applicable
provisions of the Lease and the other Operative Agreements, each of the
parties will execute and deliver appropriate documentation transferring to
Lessee all right, title and interest in and to the Aircraft (including,
without limitation, such bills of sale and other instruments and documents
as Lessee shall reasonably request to evidence (on the public record or
otherwise) such transfer and the vesting in Lessee of all right, title and
interest in and to the Aircraft), such transfer to be without recourse or
warranty (except as to the absence of Lessor's Liens attributable to the
Owner Trustee) but subject to the Lien of the Indenture, and if the Lessee,
in connection with such purchase, elects to assume the obligations of the
Owner Trustee to the Mortgagee and the Note Holders under the Indenture,
the Equipment Notes, and hereunder, then the Lessee shall so notify the
Mortgagee, and each of the parties shall execute and deliver appropriate
documentation permitting the Lessee to assume such obligations on the basis
of full recourse to the Lessee, maintaining for the benefit of the Note
Holders and the other Indenture Indemnitees the security interest in the
Aircraft created by the Indenture, and upon compliance with the provisions
of this Section 10.1.4 releasing the Owner Participant and the Owner
Trustee from all obligations in respect of the Equipment Notes, the
Indenture, this Agreement, and the other Operative Agreements, except any
obligations relating to the period prior to such assumption and take all
such other actions, at the
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Lessee's expense, as are reasonably necessary to permit such assumption of
the Lessee.
(b) In connection with such assumption:
(i) the Lessee shall execute and deliver an instrument (A)
pursuant to which the Lessee irrevocably and unconditionally assumes
and undertakes, with full recourse to the Lessee, to pay, satisfy, and
discharge when and as due (at the stated maturity thereof, by
acceleration or otherwise) the principal of, Make-Whole Amount, if
any, interest, and all other sums owing on all outstanding Equipment
Notes (or on the Lessee's substituted obligations) or otherwise
payable under the Indenture in accordance with their terms, and
punctually to perform and observe all of the covenants and obligations
hereunder and under the Indenture and the Equipment Notes (as the same
may be amended in connection with such assumption) to be performed or
observed by the Owner Trustee, and (B) which contains amendments to
the Trust Indenture, in form and substance as reasonably satisfactory
to the Mortgagee, that incorporate therein such provisions from the
Lease and this Agreement as may be appropriate, including, without
limitation, events of default substantially identical in scope and
effect to those set forth in the Lease and covenants substantially
identical to the covenants of the Lessee hereunder and under the
Lease;
(ii) the instrument referred to in paragraph (i) of this Section
10.1.4(b), any Uniform Commercial Code financing statements relating
thereto, and any other documents which shall be necessary (or
reasonably requested by the Mortgagee) to establish the Lessee's title
to and interest in the Aircraft or to reflect the substitution of the
Lessee for the Owner Trustee under the Operative Agreements or to
continue the perfection of the security interests in the Aircraft and
the other rights, property, and interests included in the Trust
Indenture Estate for the benefit of the Note Holders and the other
Indenture Indemnitees (or the Lessee's substituted obligations) shall
be filed in such form, manner, and places as are necessary or, in the
reasonable opinion of the Indenture Trustee, advisable for such
purpose;
(iii) the Mortgagee shall have received an insurance report dated
the effective date of such assumption of an independent insurance
broker and certificates of insurance, each in form and substance
satisfactory to the Mort-
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gagee, as to the due compliance as of the effective date of such
assumption with the terms of Section 11 of the Lease (as it relates to
the Mortgagee) relating to the insurance with respect to the Aircraft;
(iv) the Mortgagee shall have received evidence that as of the
effectiveness of the assignment on the date of such assumption the
Aircraft is free and clear of all Liens other than the Lien of the
Indenture and other Permitted Liens;
(v) the Mortgagee shall have received a certificate from the
Lessee that no Event of Default exists as of the effective date of
such assumption; and
(vi) the Mortgagee shall have received (A) from counsel for the
Lessee (who may be an attorney in Lessee's legal department) a legal
opinion, in form and substance as reasonably satisfactory to the
Mortgagee: (w) with respect to the compliance of the assumption
contemplated hereby with the terms hereof, (x) with respect to the due
authorization, execution, delivery, validity, and enforceability of
the instrument referred to in paragraph (i) of this Section 10.1.4(b),
(y) with respect to the continued perfection of the first and prior
Lien and security interest in the Aircraft for the benefit of the
Holders of the Equipment Notes and the other Indenture Indemnitees (or
the Lessee's substituted obligations) referred to in paragraph (ii) of
this Section 10.1.4(b), and (z) with respect to the continued
availability of the benefits of Section 1110 of the Bankruptcy Code to
the Mortgagee for the benefit of the Holders with respect to the
Aircraft after giving effect to such assumption, provided, that the
opinion required by subclause (z) need only be given if immediately
prior to such assumption the Owner Trustee should have been entitled
to the benefits of Section 1110 of the Bankruptcy Code, (B) from
counsel to the Mortgagee and special counsel in Oklahoma City, a legal
opinion comparable to the respective opinions delivered on the
Issuance Date or the Delivery Date, as the case may be, with such
changes therein as may be appropriate in light of such assumption, and
(C) in the case of each opinion described in clause (A) or (B) above,
covering such additional matters as the Mortgagee shall reasonably
request.
(c) The Lessee shall pay all reasonable expenses (including reasonable
fees and expenses of counsel) of the Mortgagee, the Owner Trustee, the Pass
Through Trustee,
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the Subordination Agent, each Liquidity Provider and the Owner Participant
in connection with such assumption.
(d) Such assumption may occur only if, the Lessee has (i) provided an
opinion of counsel to the effect that holders of such Equipment Notes will
not recognize income, gain or loss for U.S. federal income tax purposes as
a result of such assumption and will be subject to U.S. federal income tax
on the same amount and in the same manner and at the same time as would
have been the case if such assumption had not occurred or (ii) indemnified
the then existing beneficial owners of certificates against any incremental
U.S. federal income taxes that may be imposed on them as a direct
consequence of such assumption (including any taxes that may be imposed as
a result of the payment of such indemnification).
10.2 Effect of Transfer
Upon any Transfer in accordance with Section 10.1.1, 10.1.2 or 10.1.3
(other than any Transfer by any Note Holder, to the extent it only grants
participations in Equipment Notes or in its beneficial interest therein),
Transferee shall be deemed an "Owner Participant," "Owner Trustee" or a "Note
Holder," respectively, for all purposes of this Agreement and the other
Operative Agreements and, in the case of a Transferee of any Participant or Note
Holder, shall be deemed to have paid its ratable portion of Lessor's Cost
previously made by Owner Participant or Loan Participant, respectively, making
such conveyance and represented by the interest being conveyed, and each
reference herein to Owner Participant, Owner Trustee or Note Holder,
respectively, shall thereafter be deemed a reference to such Transferee for all
purposes, and the transferring Owner Participant, Owner Trustee, Loan
Participant or Note Holder shall be released (except, in the case of Owner
Participant, to the extent of any guaranty provided by it under Section
10.1.1(a)(vi)) from all of its liabilities and obligations under this Agreement
and any other Operative Agreements to the extent such liabilities and
obligations arise after such Transfer and, in each case, to the extent such
liabilities and obligations are assumed by the Transferee; provided, that such
transferring Owner Participant, Owner Trustee or Note Holder (and its respective
Affiliates, successors, assigns, agents, servants, representatives, directors
and officers) will continue to have the benefit of any rights or indemnities
under any Operative Agreement vested or relating to circumstances, conditions,
acts or events prior to such Transfer.
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SECTION 11. REFUNDING AND CERTAIN OTHER MATTERS
11.1 Refunding Generally
Subject to Sections 11.2 and 11.4, in the event that at any time Lessee
shall have given written notice to Owner Participant, Owner Trustee, and
Mortgagee that Lessee is requesting a voluntary redemption of all, but not less
than all, of the outstanding Equipment Notes (in compliance with the provisions
of Sections 2.11 and 2.12 of the Trust Indenture) by Owner Trustee as part of a
refunding transaction, Owner Participant agrees to negotiate in good faith and
to promptly conclude an agreement with Lessee as to the terms of such refunding
transaction in form and substance reasonably satisfactory to Owner Participant
(including the terms of any debt to be issued in connection with such refunding
transaction and the documentation to be executed in connection therewith), and
after Lessee and Owner Participant shall have concluded such an agreement:
11.1.1 Refunding Certificate
Within 10 Business Days after reaching such agreement, Owner Participant
will deliver to Lessee a Refunding Certificate. Within 10 Business Days of its
receipt of the Refunding Certificate, Lessee may demand a verification pursuant
to Section 3.2.1(d) of the Lease of the information set forth in the Refunding
Certificate. Upon the acceptance by Lessee of the accuracy of the information
set forth in the Refunding Certificate or the determination pursuant to such
verification procedures of the Refunding Information, the appropriate parties
will take the actions specified in Sections 11.1.2 through 11.1.7 below.
11.1.2 Financing Agreements
The appropriate parties will enter into appropriate documentation (which
may include an underwriting agreement or similar private placement agreement)
with the institution or institutions to be named therein providing for (a) the
issuance and sale by Owner Trustee to such institution or institutions on the
Refunding Date of the New Debt and (b) the application of the proceeds of the
sale of the New Debt to the redemption of all such Equipment Notes on the
Refunding Date. Lessee, acting on behalf of Owner Trustee, shall give Mortgagee
at least 20 days revocable prior written notice of the proposed date of the
optional redemption.
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11.1.3 Lease Amendments
As a condition to the closing of the refunding transaction, Lessee and
Owner Trustee will amend the Lease, as contemplated by Section 3.2.1(b) of the
Lease, to provide that (a) Basic Rent in respect of the period from and after
the Refunding Date shall be as provided in the Refunding Information and (b)
amounts payable in respect of Stipulated Loss Value and Termination Value and,
if applicable, the EBO Price and the EBO Date, from and after the Refunding Date
shall be as provided in the Refunding Information.
11.1.4 Security Agreements
Owner Trustee will enter into an agreement to provide for the securing
thereunder of the New Debt in like manner as the Equipment Notes and will enter
into such amendments and supplements to the Trust Indenture (or such new
indenture or other security agreement) and the other Operative Agreements as may
be necessary to effect such refunding.
11.1.5 Expenses
Whether or not such refunding transaction is consummated, Lessee shall pay
or reimburse all of the reasonable out-of-pocket expenses of all parties to such
refunding transaction, including, without limitation, any underwriting or
placement fees and the reasonable fees and expenses of such parties' counsel and
any related loan or commitment fees.
11.1.6 Make Whole Amount
At the closing of such refunding, Owner Trustee shall pay, upon receipt of
the same from Lessee (which Lessee shall pay as Supplemental Rent as a condition
to the closing to the refunding transaction), to the Mortgagee for the account
of each Note Holder, the Make-Whole Amount, if any, payable to such Note Holder
under Section 2.11 of the Trust Indenture.
11.1.7 Return of Equipment Notes
Subject to compliance by Owner Trustee and Lessee with all applicable terms
and conditions for voluntary prepayment under the Trust Indenture and this
Agreement, each Note Holder will transfer to Owner Trustee the Equipment Notes
held by it for cancellation (and Owner Trustee shall cancel the same), against
receipt by such Note Holder of the then-outstanding principal amount of such
Equipment Notes, accrued
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and unpaid interest and Make-Whole Amount, if any, thereon, together with
payment in full of all other amounts then payable to such Note Holder and
Mortgagee hereunder or under the Trust Indenture.
11.2 Limitations on Obligation to Refund
Notwithstanding the foregoing, Owner Participant shall have no obligation
to proceed with any refunding transaction as contemplated by this Section 11:
(a) If such transaction would have, or creates a material risk of, an
adverse tax consequence to Owner Participant unless Lessee agrees to
indemnify Owner Participant against such adverse tax consequence;
(b) Unless Lessee indemnifies Owner Participant for any liability,
obligation (other than the obligation to pay principal and interest and
related payments in respect of the New Debt), cost or expense (including,
without limitation, reasonable attorneys' fees) related to or arising out
of any such refunding transaction;
(c) If a Lease Event of Default shall have occurred and be continuing;
or
(d) If there shall have previously been consummated three refunding
transactions at Lessee's request pursuant to this Section 11.
11.3 Execution of Certain Documents
Lessee, Owner Participant, Owner Trustee and Mortgagee each agree to
execute any document necessary or advisable to implement this Section 11
(including, without limitation, the execution, delivery and/or provision of any
appropriate additional or modified amendment, representation, warranty,
certificate, opinion or other document that may reasonably be requested by
Lessee or any other person).
11.4 ERISA
Owner Participant shall not be obligated to conclude the proposed refunding
transaction unless the agreements utilized to effect such refunding contain an
agreement by the initial holders of the New Debt substantially the same as
Section 7.5.2(b) of this Agreement, except in the case of any refunding
transaction where the New Debt is sold in a public of-
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fering under the Securities Act or a private placement intended for resale
pursuant to Rule 144A under the Securities Act, in which case the holders of the
New Debt shall be subject to the restrictions relating to ERISA substantially
the same as those applicable to the purchasers of the Pass Through Certificates,
as described in the Prospectus Supplement relating to the initial issuance and
sale of the Pass Through Certificates.
11.5 Consent to Optional Redemptions
Each of Owner Participant, Owner Trustee and Mortgagee agrees with Lessee
not to cause an optional redemption of the Equipment Notes without Lessee's
consent except as set forth in Section 2.12 of the Trust Indenture.
SECTION 12. SECTION 1110
It is the intention of each of Lessee, Owner Participant, Loan Participant,
the Note Holders (such intention being evidenced by each of their acceptance of
an Equipment Note), Owner Trustee and Mortgagee that Owner Trustee, as lessor
under the Lease (and Mortgagee as assignee of Owner Trustee under the Trust
Indenture), shall be entitled to the benefits of Section 1110 in the event of a
case under Chapter 11 of the Bankruptcy Code in which Lessee is a debtor.
SECTION 13. CHANGE OF CITIZENSHIP
13.1 Generally
Without prejudice to the representations, warranties or covenants regarding
the status of any party hereto as a Citizen of the United States:
(a) Each of Lessee, First Security, WTC and Mortgagee agrees that it
will, immediately upon obtaining knowledge of any facts that would cast
doubt upon its continuing status as a Citizen of the United States and
promptly upon public disclosure of negotiations in respect of any
transaction which would or might adversely affect such status, notify in
writing all parties hereto of all relevant matters in connection therewith;
and
(b) Owner Participant agrees that, in the event its status is to
change or has changed as a Citizen of the United States, or it makes public
disclosure of circum-
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stances as a result of which it believes that such status is likely to
change, it will notify all the other parties to this Participation
Agreement of (i) such change in status promptly after obtaining Actual
Knowledge thereof or (ii) such belief as soon as practicable after such
public disclosure but in any event within ten Business Days after such
public disclosure.
13.2 Owner Participant
Owner Participant agrees, solely for the benefit of Lessee and the Note
Holders that if, during such time as the Aircraft is registered in the United
States, (a) it shall not be a Citizen of the United States and (b) the Aircraft
shall be, or would therefore become, ineligible for registration in the name of
Owner Trustee under the Act and regulations then applicable thereunder (without
giving consideration to Section 47.9 of the FAA Regulations or any other
provision that may restrict Lessee's use or operation of the Aircraft), then
Owner Participant shall as soon as is reasonably practicable, but in any event
within 30 days after obtaining Actual Knowledge of such ineligibility and of
such loss of citizenship, (y) effect voting trust or other similar arrangements
(in which case any provisions contained in the Operative Agreements restricting
Owner Participant's or Owner Trustee's ability to amend the Trust Agreement
shall not apply to the extent necessary to permit the use of such a voting trust
or other similar arrangement) or take any other action as may be necessary to
prevent any deregistration or maintain the United States registration of the
Aircraft or (z) transfer in accordance with the terms of this Agreement all its
right, title and interest in and to this Agreement, the Trust Estate and the
Trust Agreement in accordance with Section 10.1.
13.3 Owner Trustee
Upon First Security giving any notice in accordance with Section 13.1(a),
Owner Trustee shall, subject to Section 9.1.1 of the Trust Agreement, resign as
Owner Trustee. Upon its receipt of such notice, Owner Participant shall as
promptly as practicable appoint a Citizen of the United States as successor
Owner Trustee pursuant to Section 9.1 of the Trust Agreement.
13.4 Mortgagee
Upon WTC giving any notice in accordance with Section 13.1(a), Mortgagee
shall (if and so long as such citizen-
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ship is necessary under the Act as in effect at such time or, if it is not
necessary, if and so long as Mortgagee's citizenship could have any adverse
effect on Lessee, any Participant or any Note Holder), subject to Section 8.02
of the Trust Indenture, resign as Mortgagee promptly upon its ceasing to be such
a citizen.
SECTION 14. CONCERNING OWNER TRUSTEE
It is understood and agreed that, except as otherwise expressly provided
herein or in the Trust Agreement or the Trust Indenture, Owner Trustee is
entering into this Agreement solely in its capacity as trustee as provided in
the Trust Agreement and not in its individual capacity and in no case whatsoever
will it be liable or accountable in its individual capacity for any of the
statements, representations, warranties, agreements or obligations of Owner
Trustee hereunder, or for any loss in respect thereof, as to all of which the
parties agree to look solely to the Trust Estate; provided, that nothing in this
Section 14 shall be deemed to limit in scope or substance the personal liability
of First Security (a) to Owner Participant as expressly set forth in the Trust
Agreement, (b) in respect of the representations, warranties and agreements of
First Security expressly made as such herein or in any other Operative Agreement
to which it is a party, and (c) for the consequences of its own gross
negligence, willful misconduct, and, in receiving, handling or remitting of
funds only, its willful misconduct or simple negligence as a trustee.
SECTION 15. MISCELLANEOUS
15.1 Amendments
No provision of this Agreement may be amended, supplemented, waived,
modified, discharged, terminated or otherwise varied orally, but only by an
instrument in writing that specifically identifies the provision of this
Agreement that it purports to amend, supplement, waive, modify, discharge,
terminate or otherwise vary and is signed by the party against which the
enforcement of the amendment, supplement, waiver, modification, discharge,
termination or variance is sought. Each such amendment, supplement, waiver,
modification, discharge, termination or variance shall be effective only in the
specific instance and for the specific purpose for which it is given. No
provision of this Agreement shall be varied or contradicted by oral
communication, course of dealing or performance or other
<PAGE>
-85-
manner not set forth in an agreement, document or instrument in writing and
signed by the party against which enforcement of the same is sought.
15.2 Severability
If any provision hereof shall be held invalid, illegal or unenforceable in
any respect in any jurisdiction, then, to the extent permitted by Law, (a) all
other provisions hereof shall remain in full force and effect in such
jurisdiction and (b) such invalidity, illegality or unenforceability shall not
affect the validity, legality or enforceability of such provision in any other
jurisdiction. If, however, any Law pursuant to which such provisions are held
invalid, illegal or unenforceable may be waived, such Law is hereby waived by
the parties hereto to the full extent permitted, to the end that this Agreement
shall be deemed to be a valid and binding agreement in all respects, enforceable
in accordance with its terms.
15.3 Survival
The representations, warranties, covenants and indemnities set forth herein
shall survive the delivery or return of the Aircraft, the Transfer of any
interest of Owner Participant in this Agreement, the Trust Estate and the Trust
Agreement, the Transfer of any interest by any Note Holder of its Equipment Note
and the expiration or other termination of this Agreement or any other Operative
Agreement.
15.4 Reproduction of Documents
This Agreement, all annexes, schedules and exhibits hereto and all
agreements, instruments and documents relating hereto, including, without
limitation, (a) consents, waivers and modifications that may hereafter be
executed and (b) financial statements, certificates and other information
previously or hereafter furnished to any party hereto, may be reproduced by such
party by any photographic, photostatic, microfilm, micro-card, miniature
photographic or other similar process, and such party may destroy any original
documents so reproduced. Any such reproduction shall be as admissible in
evidence as the original itself in any judicial or administrative proceeding
(whether or not the original is in existence and whether or not such
reproduction was made by such party in the regular course of business) and any
enlargement, facsimile or further reproduction of such reproduction likewise is
admissible in evidence.
<PAGE>
-86-
15.5 Counterparts
This Agreement and any amendments, waivers, consents or supplements hereto
may be executed in any number of counterparts (or upon separate signature pages
bound together into one or more counterparts), each of which when so executed
shall be deemed to be an original, and all of which counterparts, taken
together, shall constitute one and the same instrument.
15.6 No Waiver
No failure on the part of any party hereto to exercise, and no delay by any
party hereto in exercising, any of its respective rights, powers, remedies or
privileges under this Agreement or provided at Law, in equity or otherwise shall
impair, prejudice or constitute a waiver of any such right, power, remedy or
privilege or be construed as a waiver of any breach hereof or default hereunder
or as an acquiescence therein nor shall any single or partial exercise of any
such right, power, remedy or privilege preclude any other or further exercise
thereof by it or the exercise of any other right, power, remedy or privilege by
it. No notice to or demand on any party hereto in any case shall, unless
otherwise required under this Agreement, entitle such party to any other or
further notice or demand in similar or other circumstances or constitute a
waiver of the rights of any party hereto to any other or further action in any
circumstances without notice or demand.
15.7 Notices
Unless otherwise expressly permitted by the terms hereof, all notices,
requests, demands, authorizations, directions, consents, waivers and other
communications required or permitted to be made, given, furnished or filed
hereunder shall be in writing (it being understood that the specification of a
writing in certain instances and not in others does not imply an intention that
a writing is not required as to the latter), shall refer specifically to this
Agreement or other applicable Operative Agreement, and shall be personally
delivered, sent by facsimile (followed by overnight courier service for next
Business Day receipt) or telecommunication transmission (which in either case
provides written confirmation to the sender of its delivery), sent by registered
mail or certified mail, return receipt requested, postage prepaid, or sent by
overnight courier service, in each case to the respective address, or facsimile
number set forth for such party in Schedule 1, or to such other address,
facsimile or other number as each party
<PAGE>
-87-
hereto may hereafter specify by notice to the other parties hereto. Each such
notice, request, demand, authorization, direction, consent, waiver or other
communication shall be effective when received or, if made, given, furnished or
filed (a) by facsimile or telecommunication transmission, when confirmed;
provided there is receipt of such notice the next Business Day from an overnight
courier service or (b) by registered or certified mail, three Business Days
after being deposited, properly addressed, with the U.S. Postal Service.
15.8 GOVERNING LAW; SUBMISSION TO JURISDICTION; VENUE
(a) THIS AGREEMENT SHALL IN ALL RESPECTS BE GOVERNED BY THE LAWS OF
THE STATE OF NEW YORK, INCLUDING ALL MATTERS OF CONSTRUCTION, VALIDITY AND
PERFORMANCE. THIS AGREEMENT IS BEING DELIVERED IN THE STATE OF NEW YORK.
(b) EACH PARTY HERETO HEREBY IRREVOCABLY AGREES, ACCEPTS AND SUBMITS
ITSELF TO THE NON-EXCLUSIVE JURISDICTION OF THE COURTS OF THE STATE OF NEW
YORK IN THE CITY AND COUNTY OF NEW YORK AND OF THE UNITED STATES FOR THE
SOUTHERN DISTRICT OF NEW YORK, IN CONNECTION WITH ANY LEGAL ACTION, SUIT OR
PROCEEDING WITH RESPECT TO ANY MATTER RELATING TO OR ARISING OUT OF OR IN
CONNECTION WITH THIS AGREEMENT.
(c) EACH PARTY HERETO HEREBY IRREVOCABLY CONSENTS AND AGREES THAT THE
SERVICE OF ANY AND ALL LEGAL PROCESS, SUMMONS, NOTICES AND DOCUMENTS OF ANY
OF THE AFOREMENTIONED COURTS IN ANY SUCH SUIT, ACTION OR PROCEEDING MAY BE
MADE BY MAILING COPIES THEREOF BY REGISTERED OR CERTIFIED MAIL, POSTAGE
PREPAID, AT THE ADDRESS SET FORTH PURSUANT TO SECTION 15.7. EACH PARTY
HERETO HEREBY AGREES THAT SERVICE UPON IT, OR ANY OF ITS AGENTS, IN EACH
CASE IN ACCORDANCE WITH THIS SECTION 15.8(c), SHALL CONSTITUTE VALID AND
EFFECTIVE PERSONAL SERVICE UPON SUCH PARTY, AND EACH PARTY HERETO HEREBY
AGREES THAT THE FAILURE OF ANY OF ITS AGENTS TO GIVE ANY NOTICE OF SUCH
SERVICE TO ANY SUCH PARTY SHALL NOT IMPAIR OR AFFECT IN ANY WAY THE
VALIDITY OF SUCH SERVICE ON SUCH PARTY OR ANY JUDGMENT RENDERED IN ANY
ACTION OR PROCEEDING BASED THEREON.
(d) EACH PARTY HERETO HEREBY IRREVOCABLY WAIVES, TO THE EXTENT
PERMITTED BY APPLICABLE LAW, AND AGREES NOT TO ASSERT, BY WAY OF MOTION, AS
A DEFENSE, OR OTHERWISE, IN
<PAGE>
-88-
ANY LEGAL ACTION OR PROCEEDING BROUGHT HEREUNDER IN ANY OF THE ABOVE-NAMED
COURTS, THAT SUCH ACTION OR PROCEEDING IS BROUGHT IN AN INCONVENIENT FORUM,
THAT VENUE FOR THE ACTION OR PROCEEDING IS IMPROPER OR THAT THIS AGREEMENT
OR ANY OTHER OPERATIVE AGREEMENT MAY NOT BE ENFORCED IN OR BY SUCH COURTS.
(e) EACH PARTY HERETO HEREBY WAIVES ITS RESPECTIVE RIGHTS TO A JURY
TRIAL OF ANY CLAIM OR CAUSE OF ACTION IN ANY COURT IN ANY JURISDICTION
BASED UPON OR ARISING OUT OF OR RELATING TO THIS AGREEMENT.
15.9 Third-Party Beneficiary
This Agreement is not intended to, and shall not, provide any person not a
party hereto (other than the Liquidity Provider, the Depositary, the Escrow
Agent and the Paying Agent, each of which is an intended third party beneficiary
with respect to the provisions of Section 9.1) with any rights of any nature
whatsoever against any of the parties hereto and no person not a party hereto
(other than the Liquidity Provider, the Depositary, the Escrow Agent and the
Paying Agent, with respect to the provisions of Section 9.1) shall have any
right, power or privilege in respect of any party hereto, or have any benefit or
interest, arising out of this Agreement.
15.10 Entire Agreement
This Agreement, together with the other Operative Agreements, on and as of
the date hereof, constitutes the entire agreement of the parties hereto with
respect to the subject matter hereof, and all prior or contemporaneous
understandings or agreements, whether written or oral, among any of the parties
hereto with respect to such subject matter are hereby superseded in their
entireties.
15.11 Further Assurances
Each party hereto shall execute, acknowledge and deliver or shall cause to
be executed, acknowledged and delivered, all such further agreements,
instruments, certificates or documents, and shall do and cause to be done such
further commercially reasonable acts and things, in any case, as any other party
hereto shall reasonably request in connection with the administration of, or to
carry out more effectively the purposes of, or to better assure and confirm into
such other party the rights and benefits to be provided under this Agreement and
the other Operative Agreements.
<PAGE>
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[This space intentionally left blank]
<PAGE>
IN WITNESS WHEREOF, each of the parties has caused this Participation
Agreement to be duly executed and delivered as of the day and year first above
written.
ATLAS AIR, INC.,
Lessee
By:
--------------------------------
Name:
Title:
-------------------------------------,
Owner Participant
By:
--------------------------------
Name:
Title:
FIRST SECURITY BANK, NATIONAL ASSOCIATION,
not in its individual capacity, except as
expressly provided herein, but
solely as Owner Trustee
By:
--------------------------------
Name:
Title:
WILMINGTON TRUST COMPANY,
not in its individual capacity, except as
expressly provided herein, but
solely as Mortgagee
By:
--------------------------------
Name:
Title:
<PAGE>
WILMINGTON TRUST COMPANY,
not in its individual capacity, except as
expressly provided herein, but
solely as Pass Through Trustee under the
Pass Through Trust Agreement for the
Atlas Air, Inc. Pass Through Trust, 1999-
By:
--------------------------------
Name:
Title:
WILMINGTON TRUST COMPANY,
not in its individual capacity, except as
expressly provided herein, but
solely as Pass Through Trustee under the
Pass Through Trust Agreement for the
Atlas Air, Inc. Pass Through Trust, 1999-
By:
--------------------------------
Name:
Title:
WILMINGTON TRUST COMPANY,
not in its individual capacity, except as
expressly provided herein, but
solely as Pass Through Trustee under the
Pass Through Trust Agreement for the
Atlas Air, Inc. Pass Through Trust, 1999-
By:
--------------------------------
Name:
Title:
<PAGE>
WILMINGTON TRUST COMPANY,
not in its individual capacity, except as
expressly provided herein, but
solely as Subordination Agent
By:
--------------------------------
Name:
Title:
<PAGE>
Schedule 1 to
Participation Agreement
<TABLE>
<CAPTION>
ACCOUNTS; ADDRESSES
- -------------------------------------------------------------------------------------------------------------------
Account for Payments Address For Notices
- -------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
ATLAS AIR, INC. [ Atlas Air, Inc.
538 Commons Drive
Golden, CO 80401
] Attention: Chief Financial
Officer
Facsimile:
FIRST SECURITY BANK, First Security Bank, First Security Bank,
NATIONAL ASSOCIATION National Association National Association
79 South Main Street 79 South Main Street
Salt Lake City, Utah 84111 Salt Lake City, Utah 84111
Account No.: Attention: Corporate Trust
Corporate Trust Department Department
ABA#: Facsimile:
Reference: Atlas Lease
WILMINGTON TRUST COMPANY, AS MORTGAGEE The Chase Manhattan Bank Wilmington Trust Company
New York, New York 10081 One Rodney Square
Account No.: 1100 North Market Street
ABA#: Wilmington, Delaware 19890
Attention: Corporate Trust Attention: Corporate Trust
Administration Administration
Reference: Atlas Lease Facsimile:
WILMINGTON TRUST COMPANY, AS The Chase Manhattan Bank Wilmington Trust Company
SUBORDINATION AGENT New York, New York 10081 One Rodney Square
Account No.: 1100 North Market Street
ABA#: Wilmington, Delaware 19890
Attention: Corporate Trust Attention: Corporate Trust
Administration Administration
Reference: Atlas Lease Facsimile:
WILMINGTON TRUST COMPANY, AS PASS The Chase Manhattan Bank Wilmington Trust Company
THROUGH TRUSTEE FOR THE 1999- PASS New York, New York 10081 One Rodney Square
THROUGH TRUST Account No.: 1100 North Market Street
ABA# Wilmington, Delaware 19890
Attention: Corporate Trust Attention: Corporate Trust
Administration Administration
Reference: Atlas Lease Facsimile:
WILMINGTON TRUST COMPANY, AS PASS The Chase Manhattan Bank Wilmington Trust Company
THROUGH TRUSTEE FOR THE 1999- PASS New York, New York 10081 One Rodney Square
THROUGH TRUST Account No.: 1100 North Market Street
ABA# Wilmington, Delaware 19890
Attention: Corporate Trust Attention: Corporate Trust
Administration Administration
Reference: Atlas Lease Facsimile:
WILMINGTON TRUST COMPANY, AS PASS The Chase Manhattan Bank Wilmington Trust Company
THROUGH TRUSTEE FOR THE 1999- PASS New York, New York 10081 One Rodney Square
THROUGH TRUST Account No.: 1100 North Market Street
ABA# Wilmington, Delaware 19890
Attention: Corporate Trust Attention: Corporate Trust
Administration Administration
Reference: Atlas Lease Facsimile:
</TABLE>
<PAGE>
Schedule 2 to
Participation Agreement
<TABLE>
<CAPTION>
COMMITMENTS
PARTICIPANT PERCENTAGE OF LESSOR'S COST DOLLAR AMOUNT
OWNER PARTICIPANT OWNER PARTICIPANT'S PERCENTAGE
<S> <C> <C>
PASS THROUGH TRUSTEE LOAN PARTICIPANT'S PTT PERCENTAGE
Tranche A-1 ___%
Tranche B ___%
Tranche C ___%
TOTAL 100%
</TABLE>
<PAGE>
Schedule 3 to
Participation Agreement
CERTAIN TERMS
DEFINED TERM DEFINITION
Commitment Termination Date
Lessor's Cost
Counsel to the Owner Participant
OP Jurisdiction
<PAGE>
Exhibit A
FORM OF OPINION OF SPECIAL COUNSEL TO LESSEE
[ ], 1998
To the Persons Listed
on Schedule I Attached Hereto
Re: Lease of Boeing Model 747-47UF Aircraft
with Manufacturer's Serial Number [ ]
and U.S. Registration Number [ ]
Gentlemen:
We have been requested by Atlas Air, Inc., a Delaware corporation (the
"Company"), to act as special counsel with respect to, and to render this
opinion letter as required by Section 5.1.2(xxiii)(A) of the Participation
Agreement, dated as of [ ], 199[ ] (the "Participation Agreement"), among [ ],
as Owner Participant (the "Owner Participant"), First Security Bank, National
Association ("First Security"), a national banking association, as Owner Trustee
(the "Owner Trustee"), Wilmington Trust Company, a Delaware banking corporation
("WTC"), as Mortgagee under the Trust Indenture, as Subordination Agent under
the Intercreditor Agreement and as Pass Through Trustee under the Pass Through
Trust Agreements and the Company, as Lessee. Capitalized terms used herein and
not otherwise defined herein have the respective meanings given those terms in
the Participation Agreement.
In connection with this opinion letter, we have examined, among other
things, originals or copies certified or otherwise identified to our
satisfaction of the following documents:
(i) Participation Agreement;
(ii) Lease;
(iii) Lease Supplement No. 1;
(iv) ax Indemnity Agreement;
(v) Trust Agreement;
(vi) Trust Indenture;
(vii) Trust Indenture Supplement No. 1;
<PAGE>
-2-
(viii) Purchase Agreement Assignment;
(ix) Airframe Manufacturer Consent and Agreement;
(x) Engine Manufacturer Consent and Agreement;
(xi) Forms of the Equipment Notes; and
(xii) Bills of Sale
We have also examined and relied upon such other documents and such other
corporate records, certificates and other statements of governmental officials
and corporate officers and other representatives of the Company as we have
deemed necessary or appropriate for the purposes of this opinion. As to certain
facts material to the opinions expressed herein, we have relied upon
representations and warranties contained in the Operative Agreements. The
opinions expressed herein are subject to the following exceptions, assumptions,
qualifications and limitations:
(A) The opinions set forth below are limited to the laws of the State of
New York, the federal laws of the United States of America and the General
Corporation Law of the State of Delaware, except that we express no opinion with
respect to (i) the laws, regulations or ordinances of any county, town or
municipality or governmental subdivision or agency thereof, (ii) state
securities or blue sky laws or federal securities laws, including the Securities
Act of 1933, as amended, and the Investment Company Act of 1940, (iii) federal
or state tax, antitrust or fraudulent transfer or conveyance laws, (iv) the
Employee Retirement Income Security Act of 1974, as amended, or (v) part A of
subtitle VII of Title 49, United States Code (the "Federal Aviation Act"), or
any other laws, rules or regulations governing, regulating or relating to the
acquisition, ownership, registration, use or sale of an aircraft, airframe or
aircraft engine or to the particular nature of the equipment to be acquired by
the Owner Trustee. In addition, our opinions are based upon a review of those
laws, statutes, rules and regulations which, in our experience, are normally
applicable to transactions of the type contemplated by the Participation
Agreement.
(B) The opinions set forth in paragraphs 3 and 6 below are subject to (i)
limitations on enforceability arising from applicable bankruptcy, insolvency,
reorganization, moratorium, receivership, fraudulent conveyance, fraudulent
transfer, preferential transfer and similar laws relating to or affecting the
rights and remedies of creditors or lessors generally and the effect of general
principles of equity, including, without limitation, laches and estoppel as
equitable defenses and con-
<PAGE>
-3-
cepts of materiality, reasonableness, good faith and fair dealing (regardless of
whether such enforceability is considered or applied in a proceeding in equity
or at law) and considerations of impracticability or impossibility of
performance, and defenses based upon unconscionability of otherwise enforceable
obligations in the context of the factual circumstances under which enforcement
thereof is sought, (ii) the qualification that the remedy of specific
performance and injunctive and other forms of equitable relief may be subject to
equitable defenses and to the discretion of the court before which any
proceeding therefor may be brought and (iii) the requirements of Section 9-306
of the Uniform Commercial Code of the State of New York (the "UCC") with respect
to the continuation of perfection of a security interest in "proceeds" of
collateral. In addition, certain remedial and procedural provisions of the
Company Documents (as defined in paragraph 2 below) and the Trust Indenture are
or may be unenforceable in whole or in part, but the inclusion of such
provisions does not affect the validity of those agreements and does not, in our
opinion, make the remedies provided in those agreements, or otherwise available
under applicable law, inadequate for the practical realization of the
substantive benefits purported to be provided thereby, except for the economic
consequences resulting from any delay imposed by, or any procedure required by,
applicable laws, rules, regulations and by constitutional requirements. We
express no opinion as to (i) any provision contained in any Operative Agreement
(a) providing for indemnification or exculpation of any Person for such Person's
gross negligence, willful misconduct, recklessness or unlawful conduct or in
respect of liabilities under the Securities Act, (b) providing for late payment
charges or an increase in interest rate upon delinquency in payment or the
occurrence of a default or other specified event but only to the extent such
provision is deemed to constitute a penalty or liquidated damages provision, (c)
as such provision relates to the subject matter jurisdiction of federal courts
or the waiver of inconvenient forum with respect to proceedings in federal
courts, (d) that purports to establish (or may be construed to establish)
evidentiary standards or (e) providing for the waiver of any statutory right or
any broadly or vaguely stated rights or unknown future rights, or any waiver
which is against public policy considerations or (ii) Section 15.8 of the
Participation Agreement or any comparable provision of any other Operative
Agreement. Under certain circumstances the requirement that the provisions of an
Operative Agreement may be modified or waived only in writing or only in a
specific instance and provisions to the effect that failure or delay in
exercising any right, remedy, power and/or privilege will not impair or waive
such right, remedy,
<PAGE>
-4-
power and/or privilege may be unenforceable to the extent
that an oral agreement has been effected or a course of dealing has occurred
modifying such provisions. A court may modify or limit contractual agreements
regarding attorneys' fees.
(C) To the extent that our opinions expressed herein involve conclusions as
to the matters set forth in the opinions dated the date hereof of Crowe &
Dunlevy being delivered to you on the date hereof, we have assumed, without
independent investigation, the correctness of the matters set forth in such
opinions and have relied with your permission on such opinions.
(D) We have assumed the due authorization, execution and delivery of the
Operative Agreements by each of the parties thereto, that each of such parties
(other than the Company) has the power and authority to execute, deliver and
perform each such Operative Agreement and has obtained or made all necessary
consents, approvals, filings and registrations in connection therewith, that
such execution, delivery and performance does not violate its charter, by-laws
or similar instrument, that the Trust Agreement constitutes the valid, binding
and enforceable obligations of the parties thereto and duly creates the trust it
purports to create, that the Owner Trustee for purposes of Section 9-103(3) of
the UCC is located in New York and that, under applicable law, the Owner Trustee
would be deemed to be the owner of the Trust Estate and Trust Indenture Estate,
that First Security has the legal ability to exercise its trust powers with
respect to the Trust Estate in the State of New York, that value has been given
by the Loan Participants to the Owner Trustee under the Trust Indenture, that
the Owner Trustee has rights in the Trust Indenture Estate, that each of First
Security and WTC is duly organized, validly existing and in good standing in its
jurisdiction of organization and qualified to transact business in each other
jurisdiction where such qualification is required.
(E) We have assumed the due authorization, execution and issuance of the
Equipment Notes by the Owner Trustee and the due authentication of the Equipment
Notes by the Mortgagee and the delivery thereof against payment therefor, all in
accordance with the Participation Agreement and the Trust Indenture, and that
the Equipment Notes conform to the forms thereof examined by us.
(F) We have assumed that all signatures on documents examined by us are
genuine, that all persons signing such documents have legal capacity, that all
documents submitted to us as originals are authentic and that all documents
submitted to
<PAGE>
-5-
us as copies or specimens conform with the originals, which facts we have not
independently verified.
(G) We express no opinion as to (i) any provision in any Operative
Agreement that is contrary to Section 2A-303, Section 9-311, or Part V of
Article 9, of the UCC, or (ii) whether or not the Lease constitutes a "security
interest" within the meaning of Section 1-201(37) of the UCC. We express no
opinion as to whether or not the Lease constitutes a "Finance Lease" within the
meaning of Section 2A-103(g) of the UCC and we express no opinion as to the
enforceability of any provision of any Operative Agreement which purports to
categorize the Lease as such.
(H) We have not made any examination of, and express no opinion with
respect to (and to the extent relevant have assumed the accuracy and sufficiency
of), (i) descriptions of, the legal or beneficial ownership of, or the title or
condition of title to, the Trust Estate or the Trust Indenture Estate or any
other property covered by any of the Operative Agreements, (ii) except as
expressly set forth in paragraphs 5 and 8 below, the existence, creation,
validity or attachment of any Lien thereon, (iii) except as expressly set forth
in paragraph 5 below, the perfection of any Lien thereon and (iv) the priority
or enforcement of any Lien thereon.
(I) We have assumed the continuous presence in the State of New York of all
collateral constituting "chattel paper" for purposes of the UCC.
(J) In giving an opinion regarding the valid existence and good standing of
the Company, we have relied solely upon certificates of public officials.
(K) In giving the opinion set forth in paragraph 7, we have relied upon a
certificate from an officer of the Company (i) that the Aircraft and Engines
constitute "aircraft equipment" for purposes of the Federal Aviation Act and
(ii) that the Airframe and Engines have not been placed in service prior to
October 22, 1994.
(L) The opinions expressed herein are given as of the date hereof. We
assume no obligation to advise you of any facts or circumstance that may come to
our attention, or any changes in law that may occur after the date hereof, which
may affect the opinion expressed herein.
<PAGE>
-6-
Based on and subject to the foregoing, we are of the opinion that:
1. The Company is a corporation duly incorporated, validly existing
and in good standing under the laws of the State of Delaware.
2. The Company has all necessary corporate power to execute, deliver
and perform its obligations under the Participation Agreement, the Lease,
the Lease Supplement No. 1, the Purchase Agreement Assignment, and the Tax
Indemnity Agreement (collectively, the "Company Documents"). Neither the
execution nor delivery of the Company Documents by the Company nor the
consummation of the transactions contemplated thereby will result in any
violation of (a) its Certificate of Incorporation or By-laws or (b) any
law, governmental rule or regulation known to us to be applicable to, or
binding on, the Company, or which requires the approval of the stockholders
of the Company.
3. Each Company Document constitutes the valid and binding obligation
of the Company and is enforceable against the Company in accordance with
its terms.
4. Except for the matters referred to in clauses (i) through (iv) of
paragraph 5 below, no approval, authorization or other action by or filing
with any governmental authority is required for the execution and delivery
by the Company of the Company Documents or the consummation of the
transactions contemplated thereby to occur at the Closing.
5. Except for (i) the registration of the Aircraft with the FAA
pursuant to the Federal Aviation Act, (ii) the filing and recordation in
accordance with the Federal Aviation Act of the FAA Filed Documents, and
assuming that at the time of such filing no other unrecorded document
relating to the Aircraft has been filed pursuant to the Federal Aviation
Act, (iii) the filing of Financing Statements referred to in Section 5.1.12
of the Participation Agreement, and the filing of periodic continuation
statements with respect thereto, and (iv) the taking of possession by the
Mortgagee of the original counterparts of the Lease and Lease Supplement
No. 1, (a) no further filing or recording of any document is necessary (x)
to establish the Owner Trustee's title to the Airframe and Engines, and (y)
to create a valid security interest in the Owner Trustee's interest as
owner of the Airframe and
<PAGE>
-7-
Engines, the Lease and the Lease Supplement No. 1 covering the Aircraft,
the Purchase Agreement (to the extent assigned by the Purchase Agreement
Assignment) and the Purchase Agreement Assignment in favor of the Mortgagee
pursuant to the Trust Indenture and (b) no further filing or recording of
any document in the State of New York or under the Federal Aviation Act is
required to perfect a security interest in the Owner Trustee's interest as
owner of the Airframe and Engines, the Lease and Lease Supplement No. 1
covering the Aircraft, the Purchase Agreement (to the extent assigned by
the Purchase Agreement Assignment) and the Purchase Agreement Assignment in
favor of the Mortgagee pursuant to the Trust Indenture.
6. Each of the Participation Agreement, the Trust Indenture, the Lease
and the Equipment Notes constitutes the valid and binding obligation of
First Security, in its individual capacity (but only to the extent
expressly stated in such document that First Security is entering into such
document in its individual capacity) and otherwise solely as Owner Trustee,
enforceable against First Security in its individual capacity (but only to
the extent expressly stated in such document that First Security is
entering into such document in its individual capacity) and otherwise
solely as Owner Trustee in accordance with its terms.
7. So long as the Company continues to be a "citizen of the United
States", as defined in section 40102 of Title 49 of the United States Code,
holding an air carrier operating certificate issued by the Secretary of
Transportation pursuant to Chapter 447 of Title 49 of the United States
Code for aircraft capable of carrying 10 or more individuals or 6,000
pounds or more of cargo, the Owner Trustee, as lessor under the Lease, and
the Mortgagee, as assignee of Owner Trustee's rights under the Lease
pursuant to the Trust Indenture (upon completion of foreclosure upon its
interest), will be entitled to the benefits of Section 1110 of Title 11 of
the United States Code with respect to the Airframe and Engines delivered
on the date hereof in connection with any case commenced by or against the
Company under Chapter 11 of Title 11 of the United States Code. We call to
your attention that the U.S. District Court for the District of Colorado
recently issued an opinion regarding Section 1110, In re Western Pacific
Airlines, Inc., 219 B.R. 305, (D. Colo. 1998) and 221 B.R. 1 (D. Colo.
1998), which opinion, we are informed, has been appealed to the United
States Court of Appeals for
<PAGE>
-96-
the Tenth Circuit. The decision, reversing an order of the bankruptcy
court, held that once a debtor air carrier agrees to perform its
obligations and cures its defaults under an aircraft lease within the
prescribed period in accordance with Section 1110, the lessor under such
lease is not entitled to repossess the aircraft under Section 1110 if the
airline subsequently defaults under such lease. We are of the opinion that
the District Court opinion was incorrectly decided because it is contrary
to prior treatment of this issue by the courts and is contrary to the
intent of Congress in enacting Section 1110. We do not express any opinion
with respect to the outcome of any appeal of this decision.
8. Upon issuance, execution, authentication and delivery of the
Equipment Notes at the Closing, the Trust Indenture creates the security
interest in favor of the Mortgagee, as trustee for the benefit of the
holders of the Equipment Notes, in the Trust Indenture Estate it purports
to create to the extent that the UCC applies to a security interest in such
property.
This opinion may be relied upon by you (and any permitted Transferee under
Section 10.1.1(a) or 10.1.3 of the Participation Agreement) in connection with
the matters set forth
<PAGE>
-9-
herein and, without our prior written consent, may not be relied upon for any
other purpose and may not be furnished to any other Person for any purpose.
Very truly yours,
<PAGE>
Schedule I
[ ], as Owner Participant
First Security Bank, National Association, not in its individual capacity, but
solely as Owner Trustee
Wilmington Trust Company, not in its individual capacity, but solely as
Mortgagee, Subordination Agent and Pass Through Trustee
Standard & Poor's Ratings Services
<PAGE>
FORM OF OPINION OF CORPORATE COUNSEL TO LESSEE
To the Persons Listed
on Schedule I Hereto
Re: Lease of Boeing Model 747-47UF Aircraft
with Manufacturer's Serial Number _____
and U.S. Registration Number
Ladies and Gentlemen:
This opinion letter is being delivered by Atlas Air, Inc., a Delaware
corporation ("Atlas"), through its Legal Department in connection with the
transactions contemplated by the Participation Agreement dated as of _______,
199_, among __________________________, as Owner Participant, First Security
Bank, National Association, a national banking corporation, as Owner Trustee,
Wilmington Trust Company, a Delaware banking corporation, as Mortgagee under the
Trust Indenture, Subordination Agent under the Intercreditor Agreement and as
Pass Through Trustee under the Pass Through Trust Agreements and Atlas, as
Lessee (the "Participation Agreement"). All capitalized terms used herein and
not otherwise defined herein shall have the respective meanings given those
terms in the Participation Agreement. This opinion letter is being furnished to
you pursuant to Section 5.1.2(xxiii)(B) of the Participation Agreement.
In giving the following opinions, members of Atlas's Legal Department or
lawyers retained by Atlas's Legal Department have reviewed the Participation
Agreement and the other Operative Agreements to which Atlas is a party and have
relied upon originals, or copies certified or otherwise identified to our
satisfaction, of such records, documents, certificates and other instruments as
in our judgment are necessary or appropriate to enable us to render the opinions
expressed below. In addition, Atlas's Legal Department has assumed and has not
verified the accuracy as to factual matters of each document reviewed. As used
herein, the phrase "to our knowledge" or words of similar import shall mean to
the actual knowledge of Atlas's Legal Department after reasonable investigation,
but shall not be interpreted to impute knowledge of others (other than members
of Atlas's Legal Department).
<PAGE>
-2-
Based on the foregoing, and subject to the assumptions and limitations
contained herein, Atlas's Legal Department is of the opinion that:
(a) Atlas is an "air carrier" within the meaning of Section 40102 of the
Act, operating under a certificate issued pursuant to Chapter 447 of the Act, is
a "citizen of the United States" as such term is defined in Section 40102 of
such Act and holds all authority, necessary licenses and certificates under such
Act and the rules and regulations promulgated thereunder necessary for the
conduct of its business and to perform its obligations under the Participation
Agreement, the Lease, the Lease Supplement No. 1, the Purchase Agreement
Assignment and the Tax Indemnity Agreement (collectively, the "Agreements").
(b) The execution, delivery and performance by Atlas of each of the
Agreements do not, to our knowledge, breach or result in a default under any
indenture, mortgage, deed of trust, credit agreement, conditional sale contract
or other agreement to which Atlas is a party or by which Atlas or its property
may be bound.
(c) The execution, delivery and performance of each of the Agreements has
been duly authorized by all necessary corporate action on the part of Atlas, and
each of the Agreements has been duly executed and delivered by Atlas.
(d) There are no pending or, to our knowledge, threatened actions, suits or
proceedings before any court or administrative agency or arbitrator that
question the validity of any of the Agreements or that would have been required
to be disclosed in Atlas's Annual Report on Form 10-K filed for the year ended
December 31, 1998, on any subsequent Quarterly Report on Form 10-Q or Current
Report on Form 8-K, except such as are therein disclosed.
<PAGE>
-3-
The foregoing opinions are limited to the federal law of the United States
of America (other than (i) the Act (except as expressly provided in paragraph
(a) above) or any other laws, rules or regulations governing, regulating or
relating to the acquisition, ownership, registration, use or sale of an
aircraft, airframe or aircraft engine or to the particular nature of the
equipment to be acquired by Atlas, (ii) state securities or blue sky laws, or
federal securities laws, (iii) federal or state tax, antitrust or fraudulent
transfer or conveyance laws, as to which we express no opinion), and the General
Corporation Law of the State of Delaware.
This opinion letter is furnished to you for the purpose indicated above,
and may not be relied upon by any other Person (except any permitted Transferee
under Sections 10.1.1(a) or 10.1.3 of the Participation Agreement) or for any
other purpose without our written consent.
Very truly yours,
ATLAS AIR, INC.
David N. Brictson, Esq.
Legal Counsel
<PAGE>
Schedule I
[ ], as Owner Participant
First Security Bank, National Association, not in its individual capacity, but
solely as Owner Trustee
Wilmington Trust Company, not in its individual capacity, but solely as
Mortgagee, Subordination Agent and Pass Through Trustee
Standard & Poor's Ratings Services
<PAGE>
Exhibit C
FORM OF BOEING OPINION
To the Addressees Listed [ ]
in the Attached Schedule
Subject: One Boeing Model 747-47UF Aircraft
Bearing Manufacturer's Serial No. [ ]
Ladies and Gentlemen:
I am an attorney employed by The Boeing Company ("Boeing") and I am
licensed to practice law in the State of Washington, United States of America.
As such, I have represented Boeing in connection with the sale of the Boeing
Model 747-47UF aircraft bearing Manufacturer's Serial No. [ ] (including the
engines installed thereon but excluding equipment furnished by Atlas Air, Inc.
("Atlas") therefor, said aircraft herein called the "Aircraft"), pursuant to
Purchase Agreement No. 2021 between Boeing and Atlas, dated June 6, 1997, as
subsequently amended (the "Purchase Agreement") and as assigned by the Purchase
Agreement and Engine Warranties Assignment between Atlas, as Assignor, and First
Security Bank, National Association, not in its individual capacity but solely
as Owner Trustee under the Trust Agreement dated as of [ ], 199[ ] with [ ] as
Owner Participant, as Assignee (and referred to in the Bill of Sale (as
hereinafter defined) and in this opinion as "Buyer").
For the purpose of this opinion, I have examined and relied upon originals,
or copies certified to my satisfaction, of the Purchase Agreement and of the
following documents:
1. The Manufacturer Consent and Agreement to the Purchase Agreement
and Engine Warranties Assignment dated as of [ ], 199[ ] executed by Boeing
(the "Consent and Agreement");
2. The Bill of Sale executed by Boeing in favor of Buyer dated as of [
], 199[ ] (the "Bill of Sale"); and
3. The FAA Bill of Sale executed by Boeing in favor of Buyer dated as
of [ ], 199[ ] (the "FAA Bill of Sale").
<PAGE>
-2-
I have also examined such other documents and records as I have deemed
relevant or necessary for the purpose of giving this opinion. Based upon such
examination, I am of the opinion that:
(a) Boeing is a corporation duly incorporated, validly existing, and in
good standing under the laws of the State of Delaware.
(b) The Purchase Agreement, the Consent and Agreement, the Bill of Sale and
the FAA Bill of Sale have been duly authorized, executed and delivered by, and
constitute the legal, valid, and binding obligations of Boeing enforceable
against it in accordance with the respective terms thereof except as may be
limited by bankruptcy, insolvency, reorganization, moratorium, or other similar
laws affecting the enforcement of creditors' rights in general and except as the
enforceability of such obligations may be subject to general principles of
equity.
(c) Boeing has the full power, authority, and legal right to enter into and
perform its obligations under the Purchase Agreement, the Consent and Agreement,
the Bill of Sale, and the FAA Bill of Sale and Boeing's execution, performance,
and delivery of such documents have been duly authorized by all necessary
corporate action.
(d) Good title to the Aircraft was at the time of delivery to Buyer vested
in Boeing free and clear of all liens, claims, encumbrances, and rights of
others; and good title to the Aircraft has been duly conveyed by Boeing to
Buyer, free and clear of all liens, claims, encumbrances, and rights of others.
(e) Each of the Bill of Sale and the FAA Bill of Sale constitutes an
effective instrument for the conveyance of good title to the Aircraft to Buyer,
assuming the filing for recordation of the FAA Bill of Sale for the Aircraft in
accordance with the provisions of Title 49 of the United States Code, as
amended.
For the purpose of this opinion, I have assumed that Buyer has the power
and authority to accept title to and delivery of the Aircraft and that the
representative acting on behalf of Buyer was duly authorized to accept title to
and delivery of the Aircraft on its behalf.
<PAGE>
-3-
With respect to the conclusions set forth herein, I express no opinion as
to any laws other than the laws of the State of Washington, the corporate laws
of the State of Delaware, and the federal laws of the United States.
Very truly yours,
Marilyn D. Sloan
Counsel
<PAGE>
SCHEDULE
ATLAS AIR, INC.
FIRST SECURITY BANK NATIONAL ASSOCIATION
Not in its individual capacity but solely as Owner Trustee under the
Trust Agreement dated as of [ ], 199[ ] with
[ ] as Owner Participant.
WILMINGTON TRUST COMPANY
Not in its individual capacity but solely as Mortgagee,
Pass Through Trustee and Subordination Agent
[ ]
As Owner Participant
STANDARD & POOR'S RATINGS SERVICES
<PAGE>
Exhibit D
FORM OF OPINION OF SPECIAL COUNSEL
TO OWNER TRUSTEE
[ ], 199[ ]
To Each of the Parties Set Forth
in Schedule A Hereto
Re: Lease of One (1) Boeing Model 747-47UF Freighter Aircraft
with Manufacturer's Serial Number [ ] and U.S.
Registration Number [ ] by Atlas Air, Inc.
Dear Sir or Madam:
We have acted as special counsel for First Security Bank, National
Association, a national banking association, in its individual capacity ("First
Security") and in its capacity as trustee (the "Owner Trustee") under Trust
Agreement dated as of [ ], 199[ ] (the "Trust Agreement"), between it and [ ],
as beneficiary (the "Owner Participant"), in connection with the transactions
contemplated by the Participation Agreement (as defined below). Except as
otherwise defined herein, the terms used herein shall have the meanings set
forth in Annex A to Participation Agreement dated as of [ ], 199[ ] among Atlas
Air, Inc., as Lessee, the Owner Participant, First Security, not in its
individual capacity except as provided therein, and as Owner Trustee, and
Wilmington Trust Company, not in its individual capacity except as expressly
provided therein, but solely as Mortgagee under the Trust Indenture,
Subordination Agent under the Intercreditor Agreement and as Pass Through
Trustee under each of the Pass Through Trust Agreements (the "Participation
Agreement"). This opinion is furnished pursuant to Section 5.1.2(xiii)(D) of the
Participation Agreement.
We have examined originals or copies, certified or otherwise identified to
our satisfaction, of such documents, corporate records and other instruments as
we have deemed necessary or advisable for the purpose of rendering this opinion.
Based upon the foregoing, we are of the opinion that:
<PAGE>
-2-
(1) First Security is a national banking association duly organized,
validly existing and in good standing under the laws of the United States, is a
"citizen of the United States" within the meaning of Section 40102(a)(15) of the
Act and has the full power and authority to enter into and perform its
obligations under the Trust Agreement and each other Operative Agreement to
which it, in its individual capacity or as Owner Trustee, as the case may be, is
a party and, as Owner Trustee, to issue, execute, and deliver and perform the
Equipment Notes.
(2) The Owner Trustee is the duly appointed trustee under the Trust
Agreement and the Trust Agreement creates a legal and valid trust under the laws
of the State of Utah; the trust created by the Trust Agreement has been duly
created and exists for the benefit of the Owner Participant, and the Trust
Agreement creates for the benefit of the Owner Participant the rights and
interests in the Trust Estate which the Trust Agreement by its terms purports to
create; and assuming the Trust Agreement was properly authorized, executed and
delivered by the Owner Participant and that the terms of the Trust Agreement are
not in violation of any laws, documents, judgments, regulations or other
provisions applicable to the Owner Participant, the Trust Agreement constitutes,
under the laws of the State of Utah, a legal, valid and binding obligation of
the Owner Participant enforceable against the Owner Participant in accordance
with its terms.
(3) The Trust Agreement, the Participation Agreement, and each other
Operative Agreement to which First Security or the Owner Trustee, as the case
may be, is a party, and the Equipment Notes, have been duly authorized, executed
and delivered by First Security, or the Owner Trustee, as the case may be, and
assuming due authorization, execution and delivery by the other parties thereto
is a legal, valid and binding obligation of First Security, or the Owner
Trustee, as the case may be, enforceable in accordance with their respective
terms.
(4) The execution and delivery by First Security of the Trust Agreement and
the Participation Agreement and the execution and delivery by the Owner Trustee
of the Operative Agreements to which it is a party is not, and the performance
by First Security, or the Owner Trustee, as the case may be, of its respective
obligations under each such agreements will not be, inconsistent with the
articles of association or by-laws of First Security, do not and will not
contravene any federal law or law of the State of Utah, or any rule or
regulation of the State of Utah or the federal governmental rule, or any
judgment or order of which we have knowledge and which is applicable to
<PAGE>
-3-
it and do not and will not contravene any provision of, or result in the
creation of any lien upon any property of First Security, or constitute a
default under, any indenture, mortgage, contract or other instrument of which we
have knowledge and to which First Security or the Owner Trustee is a party or by
which either is bound or require the consent or approval of, the giving of
notice to, or the registration with, or the taking of any action in respect of,
or under federal law or the laws of the State of Utah or any subdivision or
agency thereof.
(5) There are no fees, taxes or other charges, except taxes imposed on fees
payable to First Security, required to be paid under the laws, ordinances or
regulations of the State of Utah or any political subdivision thereof,
including, without limitation, Salt Lake City, in connection with the execution,
delivery or performance by the Lessee, Owner Trustee, Mortgagee or any
Participant of the Operative Agreements solely because First Security, or the
Owner Trustee as the case may be, performs certain of its obligations under the
Operative Documents in the State of Utah.
(6) There are no pending or threatened actions or proceedings against or
affecting First Security or the Owner Trustee, as the case may be, before any
court, governmental authority or administrative agency which, if adversely
determined, could materially adversely affect the right, power or ability,
either in its individual capacity or as Owner Trustee, or both, as the case may
be, to enter into or perform its obligations under the Operative Agreements.
(7) The Trust Indenture (or financing statements or other notices with
respect thereto) has been filed for record or recorded with the Division of
Corporations and Commercial Code in the State of Utah and such offices are all
the places in the State of Utah wherein such filing or recordation is necessary
and no other actions or filings are necessary in the State of Utah to perfect
the lien and security interest of the Mortgagee in the Trust Estate as against
creditors of or purchasers from the Owner Trustee or the Lessee, or both.
(8) The Owner Trustee has received such right, title and interest in and to
the Aircraft as was conveyed to the Owner Trustee on the date hereof, subject to
(i) the rights of the Lessee under the Lease and the Lease Supplement; (ii) the
beneficial interest of the Owner Participant in the Aircraft; and (iii) the Lien
created pursuant to the Trust Indenture and the Trust Indenture Supplement; and
to our knowledge there exist no Liens affecting the right, title or interest of
the
<PAGE>
-4-
Owner Trustee in and to the Trust Estate resulting from claims against First
Security, not related to the ownership of the Trust Estate or the administration
of the Trust Estate or any other transaction contemplated by the Operative
Agreements.
(9) Assuming that (i) the Aircraft is not physically located in the State
of Utah at the commencement or termination of the Term, (ii) in connection with
any sale of the Aircraft, such Aircraft will not be physically delivered in the
State of Utah to a buyer, and (iii) the trust created by the Trust Agreement is
treated as a grantor trust for federal income tax purposes in accordance with
Sections 671 through 678 of the Internal Revenue Code of 1986, as amended, there
are no fees, taxes or other charges (except taxes imposed on fees payable to the
Owner Trustee) payable to the State of Utah or any political subdivision thereof
in connection with the execution, delivery or performance by the Owner Trustee,
the Mortgagee, the Lessee or any Participant of the Operative Agreements or in
connection with the making by the Owner Participant of its investment in the
Aircraft or its acquisition of the beneficial interest in the Trust Estate or in
connection with the issuance and acquisition of the Equipment Notes, and neither
the Owner Trustee, the Trust Estate nor the trust created by the Trust Agreement
will be subject to any fee, tax or other governmental charge (except taxes on
fees payable to the Owner Trustee) under the laws of the State of Utah or any
political subdivision thereof on, based on or measured by, directly or
indirectly, the gross receipts, net income or value of the Trust Estate by
reason of the creation or continued existence of the trust under the terms of
the Trust Agreement pursuant to the laws of the State of Utah or the Owner
Trustee's performance of its duties under the Trust Agreement within such State.
(10) Neither a Utah court nor a federal court applying Utah law or federal
law, if properly presented with the issue and after having properly considered
such issue, would permit the Owner Participant to terminate the Trust Agreement,
except in accordance with its terms.
(11) Although there is no Utah case directly on point, under the laws of
the State of Utah, so long as the Trust Agreement has not been terminated in
accordance with its terms, creditors of any person that is an Owner Participant,
holders of a lien against the assets of any such person that is an Owner
Participant, such as trustees, receivers or liquidators (whether or not an
insolvency proceeding has been commenced) (collectively the "Creditors") may
acquire valid claims and liens, as to the Trust Estate, only against the rights
of
<PAGE>
-5-
such Owner Participant under the Trust Agreement or in the Trust Estate, and
do not have, and may not through the enforcement of such Creditors' rights
acquire, any greater rights than such Owner Participant with respect to the
Trust Agreement or the Trust Estate.
The foregoing opinions are subject to the following assumptions, exceptions
and qualifications:
A. The foregoing opinions are limited to the laws of the State of Utah and
the federal laws of the United States of America governing the banking and trust
powers of First Security and Title 11 of the United States Code entitled
"Bankruptcy". In addition, we express no opinion with respect to (i) federal
securities laws, including the Securities Act of 1933, as amended, the
Securities Exchange Act of 1934, as amended, and the Trust Indenture Act of
1939, as amended; (ii) the Federal Aviation Act of 1958, as amended (except with
respect to the opinion set forth in paragraph l above concerning the citizenship
of First Security); or (iii) state securities or blue sky laws. Insofar as the
foregoing opinions relate to the legality, validity, binding effect and
enforceability of the documents involved in these transactions, which by their
terms are governed by the laws of a state other than Utah, we have assumed that
such documents constitute legal, valid, binding and enforceable agreements under
the laws of such state, as to which we express no opinion.
B. The foregoing opinions regarding enforceability of any document or
instrument are subject (i) except as otherwise set forth in the opinions in
paragraphs 10 and l1, to applicable bankruptcy, insolvency, moratorium,
reorganization, receivership and similar laws affecting the rights and remedies
of creditors generally, and (ii) general principles of equity, regardless of
whether such enforceability is considered in a proceeding in equity or at law.
We call to your attention that bankruptcy courts are courts in equity with wide
discretion in applying the provisions of the Bankruptcy Code.
C. As to the documents involved in these transactions, we have assumed that
each is a legal, valid and binding obligation of each party thereto, other than
First Security or the Owner Trustee, and is enforceable against each such party
in accordance with their respective terms.
D. The opinion in paragraph l above concerning the citizenship of First
Security is based upon the facts contained
<PAGE>
-6-
in an affidavit of First Security, made by its authorized officer, which facts
we have not independently verified.
E. We have assumed that all signatures, other than those of the Owner
Trustee or First Security, on documents and instruments involved in these
transactions are genuine, that all documents and instruments submitted to us as
originals are authentic, and that all documents and instruments submitted to us
conform with the originals, which facts we have not independently verified.
F. We do not purport to be experts in respect of, or express any opinion
concerning laws, rules or regulations applicable to the particular nature of the
equipment involved in these transactions.
G. We have made no investigation of, and express no opinion concerning, the
nature of the title to any part of the equipment involved in these transactions
or the priority of any mortgage or security interest.
H. We have assumed that the Participation Agreement and the transactions
contemplated thereby are not within the prohibitions of Section 406 of the
Employee Retirement Income Security Act of 1974.
I. In addition to any other limitation by operation of law upon the scope,
meaning or purpose of this opinion, this opinion speaks only as of the date
hereof. We have no obligation to advise the recipients of this opinion (or any
third party) of changes of law or fact that may occur after the date hereof,
even though the change may effect the legal analysis, a legal conclusion or any
information contained herein.
<PAGE>
-7-
J. The opinions expressed in this letter are solely for the use of the
parties which it is addressed in matters directly related to the Participation
Agreement and the transactions contemplated thereunder and these opinions may
not be relied on by any other persons or for any other purpose without our prior
written approval. The opinions expressed in this letter are limited to the
matters set forth in this letter and no other opinions should be inferred beyond
the matters expressly stated.
Very truly yours,
RAY, QUINNEY & NEBEKER
<PAGE>
SCHEDULE A
First Security Bank, National Association
Atlas Air, Inc.
Wilmington Trust Company, individually and as
Mortgagee
[ ]
Standard & Poor's Ratings Services
Moody's Investors Service, Inc.
<PAGE>
Exhibit E
FORM OF OPINION OF SPECIAL COUNSEL
TO MORTGAGEE AND LOAN PARTICIPANTS
[ ], 199[ ]
To Each of the Persons
Listed on Schedule A
Attached Hereto
Re: Atlas Air, Inc.
Ladies and Gentlemen:
We have acted as counsel to Wilmington Trust Company, a Delaware banking
corporation ("Wilmington Trust"), in connection with the Trust Indenture and
Mortgage, dated as of [ ], 199[ ] (the "Trust Indenture"), between Wilmington
Trust, as Mortgagee (the "Mortgagee"), and First Security Bank, National
Association (the "Owner Trustee"). Pursuant to the Participation Agreement,
dated as of [ ], 199[ ] (the "Participation Agreement"), among Atlas Air, Inc.,
as Lessee, [ ], as Owner Participant, the Owner Trustee, and Wilmington Trust,
as Mortgagee under the Trust Indenture, Subordination Agent under the
Intercreditor Agreement (as defined in the Participation Agreement), and Pass
Through Trustee (as defined in the Participation Agreement), financing is being
provided for the acquisition of one Boeing Model 747-47UF Aircraft bearing U.S.
Registration Mark [ ]. This opinion is furnished pursuant to Section
5.1.2(xxiii)(E) of the Participation Agreement. Capitalized terms used herein
and not otherwise defined are used as defined in the Participation Agreement or
as defined in the Trust Indenture, except that reference herein to any
instrument shall mean such instrument as in effect on the date hereof.
We have examined executed counterparts, forms or copies otherwise
identified to our satisfaction of the following documents:
(a) The Participation Agreement;
<PAGE>
-2-
(b) The Trust Indenture and the Trust Indenture Supplement (the documents
in paragraphs (a) and (b) above being collectively referred to as the "Mortgagee
Documents"); and
(c) The Equipment Notes being issued today and authenticated by the
Mortgagee (the "Equipment Notes").
We have also examined originals or copies of such other documents, such
corporate records, certificates and other statements of governmental officials
and corporate officers and other representatives of the corporations or entities
referred to herein and such other instruments as we have deemed necessary or
appropriate for the purposes of this opinion. Moreover, as to certain facts
material to the opinions expressed herein, we have relied upon representations
and warranties contained in the Mortgagee Documents.
Based upon the foregoing and upon an examination of such questions of law
as we have considered necessary or appropriate, and subject to the assumptions,
exceptions and qualifications set forth herein, we advise you that, in our
opinion:
1. Wilmington Trust has been duly incorporated and is validly
existing as a Delaware banking corporation in good standing under the
laws of the State of Delaware, is a citizen of the United States of
America within the meaning of Section 40102(a)(15)(C) of Title 49,
U.S.C., as amended, and has full corporate power, authority and legal
right in its individual capacity, as Mortgagee, Pass Through Trustee,
or Subordination Agent, as the case may be, to execute, deliver and
perform the Mortgagee Documents, and to authenticate the Equipment
Notes.
2. Each of Wilmington Trust, the Mortgagee, the Pass Through
Trustee and the Subordination Agent, as the case may be, has duly
authorized, executed and delivered each Mortgagee Document to which it
is a party; each such document constitutes a legal, valid and binding
obligation of Wilmington Trust, the Mortgagee, the Pass Through Trustee
or the Subordination Agent, as the case may be, enforceable against
Wilmington Trust, the Mortgagee, the Pass Through Trustee or the
Subordination Agent, as the case may be, in accordance with its terms.
3. The execution, delivery and performance by Wilmington
Trust, the Mortgagee, the Pass Through Trustee or the Subordination
Agent, as the case may be, of the Mortgagee Documents to which each is
a party, the authentica-
<PAGE>
-3-
tion by the Mortgagee of the Equipment Notes and the consummation by
Wilmington Trust, the Mortgagee, the Pass Through Trustee or the
Subordination Agent, as the case may be, of any of the transactions
contemplated thereby are not in violation of the charter or by-laws of
Wilmington Trust or of any law, governmental rule, or regulation of
the State of Delaware or of any law, governmental rule, or regulation
of the United States of America governing the banking or trust powers
of Wilmington Trust or, to our knowledge, of any indenture, mortgage,
bank credit agreement, note or bond purchase agreement, long-term
lease, license or other agreement or instrument to which it is a party
or by which it is bound or, to our knowledge, of any judgment or order
of the State of Delaware or the United States of America relating to
the banking or trust powers of Wilmington Trust.
4. Neither the execution and delivery by Wilmington Trust, the
Mortgagee, the Pass Through Trustee or the Subordination Agent, as the
case may be, of the Mortgagee Documents to which each is a party, the
authentication of the Equipment Notes, nor the consummation of any of
the transactions by Wilmington Trust, the Mortgagee, the Pass Through
Trustee or the Subordination Agent, as the case may be, contemplated
thereby requires the consent or approval of, the giving of notice to,
the registration with, or the taking of any other action in respect of,
any governmental authority or agency of the State of Delaware or the
United States of America governing the banking or trust powers of
Wilmington Trust or under any Delaware law.
5. There are no taxes, fees or other charges (other than taxes
payable by Wilmington Trust on or measured by any compensation received
by Wilmington Trust for its services as Mortgagee, Subordination Agent
or Pass Through Trustee) payable under the laws of the State of
Delaware or any political subdivision thereof in respect of the
execution and delivery by Wilmington Trust (in its individual capacity,
as Mortgagee, Pass Through Trustee or Subordination Agent, as the case
may be) of the Mortgagee Documents and the Equipment Notes, which
taxes, fees or other charges would not have been imposed if Wilmington
Trust were not a Delaware banking corporation and did not perform its
obligations as Mortgagee under the Trust Indentures in the State of
Delaware.
<PAGE>
-4-
6. The Equipment Notes have been duly and validly
authenticated by the Mortgagee in accordance with the Trust Indentures.
7. To the best of our knowledge, there are no proceedings
pending or threatened against or affecting Wilmington Trust, the
Mortgagee, the Pass Through Trustee or the Subordination Agent in any
court or before any governmental authority, agency or arbitration board
or tribunal which, if adversely determined, individually or in the
aggregate, would materially and adversely affect the right, power and
authority of Wilmington Trust, the Mortgagee, the Pass Through Trustee,
or the Subordination Agent, as the case may be, to enter into or
perform its obligations under the Mortgagee Documents to which it is a
party.
The foregoing opinions are subject to the following assumptions, exceptions
and qualifications:
A. The foregoing opinions are limited to the laws of the State of Delaware
and the federal laws of the United States of America governing the banking and
trust powers of Wilmington Trust. In addition, we express no opinion with
respect to (i) federal securities laws, including the Securities Act of 1933, as
amended, the Securities Exchange Act of 1934, as amended, the Investment Company
Act of 1940, as amended, and the Trust Indenture Act of 1939, as amended, (ii)
Part A of Subtitle VII of Title 49 of the United States Code, as amended (except
with respect to the opinion set forth in paragraph l above concerning the
citizenship of Wilmington Trust), (iii) the Federal Communications Act of 1934,
as amended, or (iv) state securities or blue sky laws. Insofar as the foregoing
opinions relate to the validity and enforceability in Delaware of the Mortgagee
Documents which are expressed to be governed by the laws of any state other than
the State of Delaware, we have assumed that such Mortgagee Documents constitute
legal, valid, binding and enforceable documents under such laws (as to which we
express no opinion).
B. The foregoing opinions regarding enforceability of any document are
subject to (i) applicable bankruptcy, insolvency, moratorium, reorganization,
fraudulent conveyance, receivership and similar laws affecting the rights and
remedies of creditors generally, and (ii) general principles of equity
(regardless of whether such enforceability is considered in a proceeding in
equity or at law).
<PAGE>
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C. We have assumed the due authorization, execution and delivery by each of
the parties thereto (other than Wilmington Trust, the Mortgagee, the Pass
Through Trustee and the Subordination Agent) of the Mortgagee Documents to which
each is a party and that each of such parties has the full power, authority and
legal right to execute and deliver each such document.
D. The opinion set forth in paragraph l above concerning the citizenship of
Wilmington Trust is based upon an affidavit of Wilmington Trust, made by its
Vice President, the facts set forth in which we have not independently verified.
E. We have assumed that all signatures (other than those of Wilmington
Trust, the Mortgagee, the Pass Through Trustee and the Subordination Agent) on
documents and instruments examined by us are genuine, that all documents and
instruments submitted to us as originals are authentic, and that all documents
and instruments submitted to us as copies conform with the originals, which
facts we have not independently verified.
F. We have made no investigation of, and we express no opinion concerning
the priority of any mortgage or security interest.
G. We have assumed that the Participation Agreements and the transactions
contemplated thereby are not within the prohibitions of Section 406 of the
Employee Retirement Income Security Act of 1974.
This opinion may be relied upon by you in connection with the matters set
forth herein. This opinion may also be relied upon by any transferee of a Note
Holder, subject to the understanding that the opinions expressed herein are
rendered as of the date hereof and only with respect to the laws, rules and
regulations in effect as of such date. Otherwise, without our prior written
consent, this opinion may not be relied upon by any person or entity for any
purpose.
Very truly yours,
<PAGE>
SCHEDULE A
Lessee
Atlas Air, Inc.
Owner Participant
[ ]
Owner Trustee
First Security Bank, National Association
Mortgagee, Pass Through Trustee and Subordination Agent
Wilmington Trust Company
Standard & Poor's Ratings Services
<PAGE>
Exhibit F
FORM OF OPINION OF SPECIAL
COUNSEL TO OWNER PARTICIPANT
[ ], 199[ ]
To Each of the Persons
Listed on Schedule A
Attached Hereto
Re: Acquisition and Lease of one Boeing 747-47UF
Aircraft with FAA Registration Number [ ]
Ladies and Gentlemen:
We have acted as special counsel to [ ], a Delaware corporation (the "Owner
Participant"), in connection with the transactions contemplated by the
Participation Agreement dated as of [ ], 199[ ] (the "Participation Agreement")
among Atlas Air, Inc., as Lessee, [ ], as Owner Participant, First Security
Bank, National Association, as Owner Trustee, and Wilmington Trust Company, as
Mortgagee, Subordination Agent, and Pass Through Trustee. Capitalized terms used
but not defined in this opinion letter shall have the meanings set forth in the
Participant Agreement.
We have examined the Owner Participant Agreements. In our examination, we
have assumed the genuineness of all signatures, the authenticity of all
documents submitted to us as originals, the conformity to original documents of
all documents submitted to us as facsimile, certified or photostatic copies and
the authenticity of the originals of such copies.
The opinions contained in this opinion letter are subject to the following
assumptions, limitations and qualifications:
A. We have assumed (i) the due organization, existence and good standing of
all parties to the Owner Participant Agreements (the "Parties"), (ii) the power
and full legal right of the Parties under all applicable laws and regulations,
without approvals, authorizations, consents or other orders of any public body
or board, to execute, deliver and perform under the Owner Participant
Agreements, (iii) the due authorization, execution and delivery by the Parties
of the Owner Participant Agreements, (iv) that the Parties are not subject to
any judg-
<PAGE>
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ment, order, writ, injunction or decree of any court, arbitrator or governmental
agency or instrumentality that prohibits or enjoins the execution, delivery or
performance of any of the Owner Participant Agreements or any of the
transactions contemplated by the Owner Participant Agreements and (v) the
accuracy of the representations set forth in Section 6.2 of the Participation
Agreement.
B. The enforceability of the Owner Participant Agreements against Owner
Participant may be limited by applicable bankruptcy, insolvency, reorganization,
moratorium or similar laws affecting the rights of creditors generally and
general principles of equity (regardless of whether such enforceability is
considered in a proceeding in equity or at law) and, in the case of indemnity
provisions contained therein, as limited by public policy considerations, and
except that certain of the remedial provisions in the Lease and the Trust
Indenture may be limited or rendered unenforceable by applicable laws, which
laws, however, do not in our opinion make the remedies provided in such document
inadequate for the practical realization of the benefits provided thereby.
C. We express no opinion as to the availability of specific performance
and/or injunctive relief or other equitable or provisional remedies in relation
to enforcement of the Owner Participant Agreements.
D. We express no opinion as to the priority of any security interests or as
to title to any part of the Trust Estate.
E. This opinion is given based on states of law, documentation and fact as
they exist on the date hereof and we do not undertake to advise you of any
changes which hereafter may be brought to our attention.
F. The enforcement of any rights of any party is subject to any implied
duty to act reasonably and in good faith.
G. We express no opinions as to matters governed by (i) any Federal or
state securities law, (ii) any Federal or state tax laws, or (iii) the Federal
Aviation Act.
Based on our examination described above, relying upon statements of fact
contained in the documents we have examined and subject to the assumptions,
limitations and qualifications expressed in this letter, we are of the opinion
that:
<PAGE>
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1. The Owner Participant Agreements constitute the legal, valid and
binding obligations of Owner Participant, enforceable against Owner
Participant in accordance with their respective terms.
2. Neither the execution and delivery by Owner Participant of the
Owner Participant Agreements nor the consummation of any of the
transactions by Owner Participant contemplated thereby requires the consent
or approval of, the giving of notice to, the registration with, or the
taking of any other action in respect to any governmental authority or
agency of the United States or the State of Delaware (except for filings
pursuant to the Uniform Commercial Code, and except for compliance with the
requirements of the Federal Aviation Act, as to which we express no
opinion).
We are licensed to practice law in the State of New York, and the opinions
set forth in this opinion letter are limited to the application of the laws of
the United States of America and the State of New York to the matters expressly
covered by such opinions. This letter is furnished by us to you on the date
hereof only in connection with the transactions contemplated by the
Participation Agreement and may not be relied upon by any other person or
entity.
Very truly yours,
<PAGE>
SCHEDULE 1
First Security Bank, National Association, as Owner Trustee
Atlas Air, Inc., as Lessee
Wilmington Trust Company, as Mortgagee
Wilmington Trust Company, as Subordination Agent
Wilmington Trust Company, as Pass Through Trustee
Standard & Poor's Ratings Services
<PAGE>
Exhibit G-1
FORM OF OPINIONS OF SPECIAL COUNSEL
IN OLKLAHOMA CITY, OK
[ ], 199[ ]
To the Addressees Listed on
Exhibit A Attached Hereto
Re: Atlas Air, Inc. (the "Lessee")
Ladies and Gentlemen:
Pursuant to Section 5.1.2(xxiii)(G) of the Participation Agreement dated as
of [ ], 199[ ] (the "Participant Agreement") among the Lessee, [ ] as Owner
Participant (the "Owner Participant"), the Loan Participants named therein (the
"Loan Participants"), First Security Bank, National Association, as Owner
Trustee (the "Owner Trustee") under Trust Agreement dated as of [ ], 199[ ] (the
"Trust Agreement") with the Owner Participant, and Wilmington Trust Company, not
in its individual capacity, except as expressly provided therein but solely as
Mortgagee under the Trust Indenture (the "Mortgagee"), which provides for the
financing of the purchase today by the Owner Trustee of the Boeing model
747-47UF aircraft with manufacturer's serial number [ ] and United States
nationality and registration marks [ ] (the "Aircraft") and four General
Electric model CF6-80C2B1F aircraft engines with manufacturer's serial numbers
_______, _______, _______ and ________ (the "Engines") and the leasing of the
Aircraft and the Engines by the Owner Trustee to the Lessee, this opinion is
rendered with respect to matters arising under that portion of Title 49 of the
United States Code (the "Transportation Code") relating to the recordation of
the instruments hereinafter described and the registration of the Aircraft
pursuant to the Transportation Code. As contemplated by the Participant
Agreement, title to the Aircraft has been conveyed by The Boeing Company to the
Owner Trustee by an AC Form 8050-2 Aircraft Bill of Sale dated [ ], 199[ ] (the
"FAA Bill of Sale"), the registration of the Aircraft will be accomplished by
the filing with the Federal Aviation Administration (the "FAA") of an AC Form
8050-1 Aircraft Registration Application in the name of the Owner Trustee (the
"Aircraft Registration Application"), the leasing of the Aircraft and the
<PAGE>
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Engines is pursuant to Lease Agreement dated as [ ], 199[ ] (the "Lease")
between the Owner Trustee as lessor and the Lessee, as supplemented by Lease
Supplement No. 1 dated [ ], 199[ ] (the "Lease Supplement"), and the creation of
a security interest in the Aircraft and the Engines is pursuant to Trust
Indenture and Mortgage dated as of [ ], 199[ ] (the "Trust Indenture") between
the Owner Trustee and the Mortgagee, as supplemented by Trust Indenture and
Mortgage Supplement dated [ ], 199[ ] (the "Trust Supplement").
Based upon our examination of the above described instruments and of such
records of the FAA as we deemed necessary to render this opinion and as were
made available to us by the FAA, it is our opinion that:
(a) the FAA Bill of Sale, the Trust Indenture with the Trust
Supplement attached and the Lease with the Lease Supplement, the Trust
Indenture and the Trust Supplement attached are in due form for
recordation by and have been duly filed for recordation with the FAA
pursuant to and in accordance with the provisions of the
Transportation Code today at ______ P.M., C.D.T., ____ P.M., C.D.T.
and _____ P.M., C.D.T., respectively;
(b) the Aircraft Registration Application, to which were attached
the Affidavits of the Owner Trustee and the Owner Participant required
by Section 47.7(c)(2)(ii) of Part 47 of the Federal Aviation
Regulations, and the Trust Agreement were duly filed with the FAA
today at ______ P.M., C.D.T.;
(c) the Owner Trustee is the owner of legal title to the
Aircraft, and the Aircraft and the Engines are free and clear of all
Liens (as such term is defined in the Lease) except the security
interest created by the Trust Indenture, as supplemented by the Trust
Supplement, and the interests of the parties created by the Lease, as
supplemented by the Lease Supplement;
(d) the Aircraft is eligible for registration in the name of the
Owner Trustee under the Transportation Code, and the Aircraft will be
duly registered by the FAA in the name of the Owner Trustee in due
course pursuant to and in accordance with the provisions of the
Transportation Code;
(e) the rights of the Owner Trustee and the Lessee under the
Lease, as supplemented by the Lease Supplement,
<PAGE>
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with respect to the Aircraft and the Engines are perfected;
(f) the Trust Indenture, as supplemented by the Trust Supplement,
constitutes a valid, duly perfected first priority mortgage and
security interest in favor of the Mortgagee in the Aircraft and the
Engines and a valid, duly perfected first priority security interest
in and collateral assignment of all of the right, title and interest
of the Owner Trustee in, to and under the Lease, as supplemented by
the Lease Supplement (insofar as such security interest and collateral
assignment affect an interest covered by the recording system
established by the FAA pursuant to Section 44107 of the Transportation
Code), subject only to the Lease, as supplemented by the Lease
Supplement;
(g) none of the Trust Indenture, the Trust Agreement, the Trust
Supplement, the Lease or the Lease Supplement is required to be
re-filed with the FAA or filed or recorded in any other place within
the United States in order to perfect and maintain the perfection of
the mortgage and security interest in the Aircraft and the Engines or
the security interest in and collateral assignment of the Lease, as
supplemented by the Lease Supplement created by the Trust Indenture,
as supplemented by the Trust Supplement (insofar as such security
interest and collateral assignment affect an interest covered by the
recording system established by the FAA pursuant to Section 44107 of
the Transportation Code) under the applicable laws of any jurisdiction
within the United States;
(h) no other registration of the Aircraft and no filings or
recordings (other than the filings and recordings with the FAA which
have been effected) are necessary to perfect in any jurisdiction
within the United States the Owner Trustee's title to the Aircraft,
the first priority mortgage and security interest created by the Trust
Indenture, as supplemented by the Trust Supplement, in the Aircraft
and the Engines or the first priority security interest and collateral
assignment created by the Trust Indenture, as supplemented by the
Trust Supplement, in all right, title and interest of the Owner
Trustee in and to the Lease, as supplemented by the Lease Supplement
(insofar as such security interest and collateral assignment affect an
interest covered by the recording system established by the FAA
pursuant to Section 44107 of the Transportation Code); and
<PAGE>
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(i) no authorization, approval, consent, license or order of, or
registration or filing with, or the giving of notice to the FAA
Aircraft Registry is required for the valid authorization, delivery or
performance of the Lease, the Lease Supplement, the Trust Agreement,
the Trust Indenture and the Trust Supplement except for such
authorizations, approvals, consents, licenses, orders, registrations
and notices as have been affected.
No opinion is herein expressed as to: (i) laws other than the federal laws
of the United States; (ii) the validity or enforceability under local law of the
Trust Indenture, as supplemented by the Trust Supplement; or (iii) the
recognition of the perfection of the mortgage, security interest and collateral
assignment created by the Trust Indenture, as supplemented by the Trust
Supplement, as against third parties in any legal proceedings outside the United
States. In rendering this opinion, we were subject to the accuracy of FAA
personnel in the filing, indexing and recording of instruments filed with the
FAA and in the search for encumbrance cross-reference index cards for the
Engines. Since our examination was limited to records maintained by the FAA
Aircraft Registry, our opinion does not cover liens which are perfected without
the filing of notice thereof with the FAA, such as federal tax liens, liens
arising under Section 1368(a) of Title 29 of the United States Code and
possessory artisans' liens. In rendering this opinion, we have relied upon the
opinion of the Aeronautical Center Counsel dated July 22, 1998 (a copy of which
is attached hereto) and upon the past practice of the FAA which is consistent
with said opinion.
Although this opinion is not addressed to special counsel for the Loan
Participants, special counsel for the Owner Participant or counsel for the
Lessee, they may rely upon it as though addressed to them.
Very truly yours,
PRESTON G. GADDIS II
For the Firm
<PAGE>
EXHIBIT A
Atlas Air, Inc.,
as Lessee
Loan Participants named in the Participation Agreement
First Security Bank, National Association,
as Owner Trustee
[ ]
as Owner Participant
Wilmington Trust Company,
as Mortgagee
Standard & Poor's Ratings Services
<PAGE>
Exhibit G-2
___________, 199[ ]
To the Addresses Listed on
Exhibit A Attached Hereto
Re: Atlas Air, Inc. (the "Lessee")
Ladies and Gentlemen:
This letter confirms that the following described instruments were recorded
by the Federal Aviation Administration (the "FAA") on ______________, 199_, and
assigned the Conveyance Numbers noted below:
(a) AC Form 8050-2 Aircraft Bill of Sale dated [ ], 199[ ] (the
"FAA Bill of Sale") by The Boeing Company to First Security Bank,
National Association, as Owner Trustee (the "Owner Trustee") under the
Trust Agreement dated as of [ ], 199[ ], with [ ] as Owner
Participant, covering the Boeing model 747-47UF aircraft with
manufacturer's serial number [ ] and United States nationality and
registration marks [ ] (the "Aircraft") was recorded as Conveyance No.
P____________;
(b) Trust Indenture and Mortgage dated as of [ ], 199[ ] (the
"Trust Indenture") between the Owner Trustee and Wilmington Trust
Company, not in its individual capacity except as expressly stated
therein but solely as Mortgagee (the "Mortgagee"), to which was
attached the Trust Indenture and Mortgage Supplement dated [ ], 199[ ]
(the "Trust Supplement") of the Owner Trustee covering the Aircraft
and the General Electric model CF6-80C2B1F aircraft engines with
manufacturer's serial numbers ________, ________, _______ and ________
(the "Engines"), was recorded as Conveyance No. P________; and
(c) Lease Agreement dated as of [ ], 199[ ] (the "Lease") between
the Owner Trustee as lessor and the Lessee, to which were attached
Lease Supplement No. 1 dated [ ], 199[ ] (the "Lease Supplement")
covering the Aircraft and the Engines, the Trust
<PAGE>
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Indenture and the Trust Supplement, was recorded as Conveyance No.
P____________.
Subsequent to the recordations mentioned above, we examined the records
maintained by the FAA with respect to the Aircraft and the Engines. Based upon
such examination, it is our opinion that:
<PAGE>
(a) the FAA Bill of Sale, the Trust Indenture with the Trust
Supplement attached and the Lease with the Lease Supplement, the Trust
Indenture and the Trust Supplement attached have been duly recorded by
the FAA pursuant to and in accordance with the provisions of Section
44107 of Title 49 of the United States Code;
(b) the Owner Trustee is the owner of legal title to the
Aircraft;
(c) the Aircraft is duly registered in the name of the Owner
Trustee pursuant to and in accordance with the provisions of Sections
44102 and 44103 of Title 49 of the United States Code; and
(d) the Aircraft and the Engines are free and clear of all Liens
(as such term is defined in Annex A to the Lease) except the security
interest created by the Trust Indenture, as supplemented by the Trust
Supplement, and the interests of the parties created by the Lease, as
supplemented by the Lease Supplement.
This opinion is subject to the same limitations and exceptions as were set
forth in our opinion letter date [ ], 199[ ], covering the Aircraft and the
Engines.
Very truly, yours,
PRESTON G. GADDIS II
For the Firm
<PAGE>
EXHIBIT A
Atlas Air, Inc.,
as Lessee
Loan Participants named in the Participation Agreement
First Security Bank, National Association,
as Owner Trustee
[ ],
as Owner Participant
Wilmington Trust Company,
as Mortgagee
Standard & Poor's Ratings Services
EXHIBIT A-2 to
Note Purchase Agreement
FORM OF LEASE
<PAGE>
LEASE AGREEMENT
Dated as of _______________
Between
FIRST SECURITY BANK, NATIONAL ASSOCIATION
Not in its Individual Capacity,
except as expressly provided herein,
but solely as Owner Trustee,
Lessor
and
ATLAS AIR, INC.,
Lessee
- ------------------------------------------------------------------------------
One Boeing Model 747-47UF Aircraft Bearing
United States Registration No. N______
and Bearing Manufacturer's Serial No. ______
with four GE Model __ Engines
Bearing Engine Manufacturer's Serial
Nos. ______, ______, ______ and ______
===============================================================================
The right, title and interest of Lessor in and to, among other things, this
Lease Agreement has been assigned to and is subject to a security interest in
favor of Wilmington Trust Company, a Delaware banking corporation, as Mortgagee,
under the Trust Indenture and Mortgage, dated as of , , for the benefit of the
holders of the Equipment Notes referred to in such Trust Indenture, all to the
extent provided in such Trust Indenture. This Lease Agreement has been executed
in multiple counterparts; to the extent, if any, that this Lease Agreement
constitutes chattel paper (as defined in the Uniform Commercial Code as in
effect in any applicable jurisdiction), no security interest in Lessor's right,
title and interest in and to this Lease Agreement may be perfected through the
delivery or possession of any counterpart of this Lease Agreement other than the
counterpart of this Lease Agreement that contains the original receipt executed
by Wilmington Trust Company, as Mortgagee.
<PAGE>
TABLE OF CONTENTS
SECTION 1. DEFINITIONS AND CONSTRUCTION.....................................1
SECTION 2. DELIVERY AND ACCEPTANCE..........................................1
2.1 Delivery and Lease of Aircraft.......................................1
2.2 Acceptance by Lessee.................................................2
SECTION 3. TERM AND RENT....................................................2
3.1 Term ............................................................... 2
3.2 Rent ............................................................... 2
3.3 Payments.............................................................6
SECTION 4. DISCLAIMER; CERTAIN AGREEMENTS OF LESSOR;
SECTION 1110 MATTERS...........................................7
4.1 Disclaimer...........................................................7
4.2 Certain Agreements of Lessor.........................................8
4.3 Quiet Enjoyment......................................................8
4.4 Investment of Funds Held as Security.................................8
4.5 Title Transfers by Lessor............................................9
4.6 Lessor's Interest in Certain Engines................................10
4.7 Lease for U.S. Federal Income Tax Law Purposes;
Section 1110 of Bankruptcy Code...................................10
SECTION 5. RETURN OF AIRCRAFT..............................................10
5.1 Compliance with Annex B.............................................10
5.2 Storage and Related Matters.........................................10
5.3 Return of Other Engines.............................................11
5.4 Fuel ...............................................................11
SECTION 6. LIENS ..........................................................11
SECTION 7. REGISTRATION, OPERATION, POSSESSION, SUBLEASING AND RECORDS.....13
7.1 Registration and Operation..........................................13
7.2 Possession..........................................................15
7.3 Certain Limitations on Subleasing or Other Relinquishment
of Possession.....................................................19
SECTION 8. MAINTENANCE; REPLACEMENT AND POOLING OF PARTS; ALTERATIONS,
MODIFICATIONS AND ADDITIONS; OTHER
LESSEE COVENANTS..............................................20
8.1 Maintenance; Replacement and Pooling of Parts; Alterations,
Modifications and Additions.......................................20
8.2 Information, Certificates, Notices and Reports......................20
-i-
<PAGE>
SECTION 9. VOLUNTARY TERMINATION UPON OBSOLESCENCE.........................22
9.1 Right of Termination................................................22
9.2 Election by Lessor to Sell..........................................23
9.3 Retention of Aircraft by Lessor.....................................26
SECTION 10. LOSS, DESTRUCTION, REQUISITION, ETC............................27
10.1 Event of Loss With Respect to Aircraft.............................27
10.2 Event of Loss With Respect to an Engine............................30
10.3 Conditions to any Replacement......................................30
10.4 Conveyance to Lessee...............................................33
10.5 Application of Payments............................................33
10.6 Requisition of Aircraft for Use....................................34
10.7 Requisition of an Engine for Use...................................34
10.8 Application of Payments............................................35
10.9 Application of Payments During Existence of a Special Default......35
SECTION 11. INSURANCE 36
11.1 Lessee's Obligation to Insure......................................36
11.2 Insurance for Own Account..........................................36
11.3 Indemnification by Government in Lieu of Insurance.................36
11.4 Application of Insurance Proceeds..................................36
11.5 Application of Payments During Existence of a Special Default......37
SECTION 12. INSPECTION 37
SECTION 13. ASSIGNMENT; MERGER; SUCCESSOR OWNER TRUSTEE....................38
13.1 In General.........................................................38
13.2 Merger of Lessee...................................................38
13.3 Assignment Security for Lessor's Obligations.......................39
13.4 Successor Owner Trustee............................................40
SECTION 14. LEASE EVENTS OF DEFAULT........................................40
14.1 Payments...........................................................40
14.2 Insurance..........................................................41
14.3 Other Covenants....................................................41
14.4 Representations and Warranties.....................................41
14.5 Bankruptcy and Insolvency..........................................41
SECTION 15. REMEDIES AND WAIVERS...........................................42
15.1 Remedies...........................................................42
15.2 Limitations Under CRAF.............................................46
15.3 Right to Perform for Lessee........................................46
15.4 Determination of Fair Market Rental Value and Fair Market
Sales Value......................................................47
-ii-
<PAGE>
15.5 Remedies Cumulative................................................47
SECTION 16. LESSEE'S OBLIGATIONS; NO SETOFF, COUNTERCLAIM, ETC.............48
SECTION 17. RENEWAL AND PURCHASE OPTIONS...................................49
17.1 Preliminary Notices................................................49
17.2 Renewal Options....................................................49
17.3 Purchase Option....................................................51
17.4 Appraisals.........................................................52
SECTION 18. MISCELLANEOUS..................................................53
18.1 Amendments.........................................................53
18.2 Severability.......................................................54
18.3 Third-Party Beneficiary............................................54
18.4 Reproduction of Documents..........................................54
18.5 Counterparts.......................................................55
18.6 Notices............................................................55
18.7 GOVERNING LAW; SUBMISSION TO JURISDICTION; VENUE...................56
18.8 Survival...........................................................57
18.9 No Waiver..........................................................57
18.10 Entire Agreement...................................................57
EXHIBITS, SCHEDULES AND ANNEXES
EXHIBIT A Form of Lease Supplement
EXHIBIT B Form of Return Acceptance Supplement
SCHEDULE 1 Certain Terms
SCHEDULE 2 Basic Rent
SCHEDULE 3 Stipulated Loss Value Schedule
SCHEDULE 4 Termination Value Schedule
SCHEDULE 5 Permitted Countries
SCHEDULE 6 Placards
ANNEX A Definitions
ANNEX B Return Conditions
ANNEX C Maintenance
ANNEX D Insurance
-iii-
<PAGE>
LEASE AGREEMENT
LEASE AGREEMENT dated as of _______________ (this "Agreement" or "Lease"),
between (a) FIRST SECURITY BANK, NATIONAL ASSOCIATION, a national banking
association, not in its individual capacity, except as expressly provided
herein, but solely as Owner Trustee (this and all other capitalized terms used
but not defined herein shall have the respective meanings ascribed thereto in
Section 1 below) ("Lessor" or "Owner Trustee"), and (b) ATLAS AIR, INC., a
Delaware corporation ("Lessee").
RECITALS
A. Lessor and Lessee are parties to the Participation Agreement, pursuant
to which, among other things, Lessor and Lessee have agreed to enter into this
Agreement.
B. Pursuant to the Trust Agreement, Owner Participant has authorized Lessor
to enter into this Agreement.
NOW, THEREFORE, for and in consideration of the premises and the mutual
agreements contained herein and for other good and valuable consideration, the
sufficiency and receipt of which are hereby acknowledged, the parties hereto
agree as follows:
SECTION 1. DEFINITIONS AND CONSTRUCTION
Capitalized terms used but not defined herein shall have the respective
meanings set forth or incorporated by reference, and shall be construed and
interpreted in the manner described, in Annex A.
SECTION 2. DELIVERY AND ACCEPTANCE
2.1 Delivery and Lease of Aircraft
Lessor hereby agrees (subject to the satisfaction or waiver of the
conditions set forth in Section 5 of the Participation Agreement) to lease to
Lessee for the Term and Lessee hereby agrees (subject to the satisfaction or
waiver of the conditions set forth in Section 5 of the Participation Agreement)
to lease from Lessor for the Term, the Aircraft, commenc-
<PAGE>
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ing immediately upon acquisition of the Aircraft by Lessor pursuant to the
Purchase Agreement Assignment.
2.2 Acceptance by Lessee
(a) By executing and delivering Lease Supplement No. 1, Lessee confirms to
Lessor that Lessee has duly and irrevocably accepted delivery of the Aircraft
for all purposes of this Agreement.
(b) Lessor has authorized one or more employees of Lessee, designated by
Lessee in writing, as the authorized representative or representatives of Lessor
to accept delivery of the Aircraft on behalf of Lessor pursuant to the Purchase
Agreement Assignment and the Participation Agreement. Lessee hereby agrees that
if delivery of the Aircraft shall be accepted by an employee or employees of
Lessee pursuant to such authorization by Lessor, such acceptance of delivery by
such employee or employees on behalf of Lessor shall, without further act,
irrevocably constitute acceptance by Lessee of the Aircraft for all purposes of
this Agreement.
SECTION 3. TERM AND RENT
3.1 Term
The Aircraft shall be leased hereunder for the Term, unless this Agreement
or the leasing of the Aircraft is earlier terminated in accordance with any
provision of this Agreement. Lessee shall have the option to renew the leasing
of the Aircraft hereunder pursuant to, and subject to the terms and conditions
of, Section 17.
3.2 Rent
3.2.1 Basic Rent; Adjustments to Basic Rent and Certain Other Amounts
(a) During the Base Lease Term, Lessee shall pay to Lessor, on each Payment
Date, Basic Rent in the amount equal to the percentage of Lessor's Cost
specified in Schedule 2 for such Payment Date, which shall be allocated to the
Payment Period ending on such Payment Date, if designated as a payment in
arrears, or allocated to the Payment Period commencing on such Payment Date, if
designated as a payment in advance, in each case as specified in Schedule 2, as
such amount may be adjusted pursuant to Section 3.2.1(b).
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(b) Basic Rent, Stipulated Loss Values and Termination Values, the EBO
Price and the EBO Date shall be subject to adjustment as follows:
(i) In the event that Transaction Expenses paid by Lessor pursuant to
Section 9.2 of the Participation Agreement are determined to be other than
[ ]% of Lessor's Cost, then in each case the Basic Rent percentages set
forth in Schedule 2, the Stipulated Loss Value percentages set forth in
Schedule 3, the Termination Value percentages set forth in Schedule 4 and
the EBO Price and the EBO Date set forth in Schedule 1 shall be
recalculated (upwards or downwards) by the Owner Participant, on or prior
to the 120th day after the Delivery Date using the same methods and
assumptions used to calculate the original Basic Rent, Stipulated Loss
Value and Termination Value percentages and the EBO Price and the EBO Date
in order to (1) maintain the Owner Participant's Net Economic Return and
(2) minimize the Net Present Value of Rents and the EBO Price to Lessee to
the extent possible consistent with clause (1) hereof.
(ii) In the event of a refinancing as contemplated by Section 11 of
the Participation Agreement, then the Basic Rent percentages set forth in
Schedule 2, the Stipulated Loss Value percentages set forth in Schedule 3,
the Termination Value percentages set forth in Schedule 4 and the EBO Price
and the EBO Date set forth in Schedule 1 shall be recalculated (upwards or
downwards) by the Owner Participant using the same methods and assumptions
used to calculate the original Basic Rent, Stipulated Loss Value and
Termination Value percentages and the EBO Price and the EBO Date to (1)
maintain the Owner Participant's Net Economic Return and (2) to the extent
possible consistent with clause (1) hereof, minimize the Net Present Value
of Rents and the EBO Price to Lessee.
(iii) In the event that Lessee is required to indemnify the Owner
Participant under the Tax Indemnity Agreement, then (A) in the event that
Lessee agrees to satisfy such indemnity obligation pursuant to Section __
of the Tax Indemnity Agreement, the Basic Rent percentages set forth in
Schedule 2, and (B) in any case, the Stipulated Loss Value percentages set
forth in Schedule 3 and the Termination Value percentages set forth in
Schedule 4 shall be recalculated (upwards or downwards) by Owner
Participant, using the same methods and assumptions (except to the extent
such assumptions shall be varied to take
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into account the Tax Loss [or Foreign Tax Credit Loss] (as each such term
is defined in the Tax Indemnity Agreement) that is the subject of such
indemnification and any prior or contemporaneous Tax Loss [or Foreign Tax
Credit Loss]) used to calculate the Basic Rent percentages, the Stipulated
Loss Value percentages and the Termination Value percentages in order to
(1) maintain the Owner Participant's Net Economic Return and (2) to the
extent possible consistent with clause (1) hereof, minimize the Net Present
Value of Rents and the EBO Price to Lessee.
(c) All adjustments pursuant to Section 3.2.1(b) shall be made as promptly
as practicable after either Owner Participant or Lessee gives notice to the
other that an event has occurred that requires an adjustment. Owner Participant
and Lessee shall give prompt notice to the other of any event requiring an
adjustment. Any recalculation of the percentages of Basic Rent, the EBO Price
and the EBO Date (which may change only at the election of Lessee), Stipulated
Loss Value and Termination Value shall be prepared by Owner Participant, subject
to verification by Lessee in accordance with Section 3.2.1(d), using the same
methodology and assumptions used by Owner Participant in determining the
percentages of Basic Rent, Stipulated Loss Value and Termination Value and the
EBO Price and the EBO Date as of the Delivery Date, except as such methodologies
and assumptions have been modified to reflect the events giving rise to
adjustments hereunder. Promptly after an adjustment is made hereunder, Owner
Participant shall deliver to Lessee a description of such adjustment, setting
forth in reasonable detail the calculation thereof. All adjustments shall (i) be
made so as to avoid characterization of the Lease as a "disqualified leaseback
or long-term agreement" within the meaning of Section 467 of the Code and/or
regulations thereunder (or any successor or relevant code provision or
regulations) and (ii) be in compliance with the requirements of Sections
4.02(5), 4.07(l) and, on a prospective basis, 4.08(1) of Revenue Procedure 75-28
(or any successor or relevant procedure), except to the extent that on the
Delivery Date the Lease constituted a "disqualified leaseback or long-term
agreement" or was not in compliance with the revenue procedure referred to in
clause (ii). All adjustments required pursuant to Section 3.2.1(b) shall be set
forth in a Lease Supplement or in an amendment to this Lease, and , promptly
after execution thereof by Lessor and Lessee, Lessee shall give a copy thereof
to Mortgagee.
(d) If Lessee believes that any calculations by Owner Participant pursuant
to Section 3.2.1(c) are in error,
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and if, after consultation, Lessee and Owner Participant are unable to agree on
an adjustment, then Babcock & Brown Inc. or any other nationally recognized
certified public accounting or lease advisory firm selected by Lessee and
reasonably satisfactory to Owner Participant shall verify such calculations.
Owner Participant will make available to such firm, but not, in any
circumstances, to Lessee or any representative of Lessee, the methodology and
assumptions referred to in Section 3.2.1(b) and any modifications thereto made
to reflect the events giving rise to adjustments hereunder (subject to the
execution by such firm of a confidentiality agreement, reasonably acceptable to
Owner Participant, prohibiting disclosure of such methodology and assumptions to
any third party). The determination by such firm shall be final. Lessee will pay
the reasonable costs and expenses of such further verification by such firm,
provided that if such verification results in a decrease in Basic Rent which
decreases the remaining Net Present Value of Rents and/or the EBO Price by
$10,000 or more from the remaining Net Present Value of Rents and/or the EBO
Price as recalculated by the Owner Participant, then the Owner Participant will
pay such costs and expenses.
(e) Notwithstanding anything to the contrary in any Operative Agreement,
the amount of the payment of Basic Rent due and payable on each Payment Date
shall be at least sufficient to pay in full, as of such Payment Date (assuming
timely payment of the Equipment Notes prior to such Payment Date), the aggregate
principal amount of scheduled installments due on the Equipment Notes
outstanding on such Payment Date, together with the accrued and unpaid interest
thereon, due on such Payment Date in respect of the Equipment Notes; provided,
however, that no installment of Basic Rent shall be increased to the extent such
increase would be based upon (i) any attachment or diversion of Basic Rent on
account of Lessor Liens attributable to Lessor or Owner Participant, (ii) any
modification of the payment terms of the Equipment Notes, other than as required
or permitted by any Operative Agreement (including, without limitation, as
permitted upon the occurrence of a Lease Event of Default) or (iii) the
acceleration of any Equipment Note or Equipment Notes due solely to the
occurrence of an Event of Default that does not constitute a Lease Event of
Default.
3.2.2 Supplemental Rent
Lessee shall pay to Lessor, or to whosoever shall be entitled thereto, any
and all Supplemental Rent when and as the same shall become due and owing.
Lessee will also pay to Lessor, or to whosoever shall be entitled thereto as
Supplemental
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Rent, to the extent permitted by applicable Law, interest at the Payment Due
Rate on any part of any amount of Rent (including, without limitation,
Supplemental Rent) not paid by 12:30 p.m., New York time, on the date when due
(so long as, in the case of any person not a party to the Participation
Agreement, Lessee had received timely notice of the account to which such
payment was required to be made), for the period from and including the date on
which the same was due to, but excluding, the date of payment in full.
3.3 Payments
(a) Payments of Rent by Lessee shall be paid by wire transfer of
immediately available Dollars, not later than 12 noon, New York time, on the
date when due, to the account of Lessor specified in Schedule 1 to the
Participation Agreement or to such other account in the United States as
directed by Lessor to Lessee in writing at least 10 Business Days prior to the
date such payment of Rent is due or, in the case of any payment of Supplemental
Rent expressly payable to a person other than Lessor, to the person that shall
be entitled thereto to such account in the United States as such person may
specify from time to time to Lessee at least 10 Business Days prior to the date
such payment of Rent is due.
(b) Except as otherwise expressly provided herein, whenever any payment of
Rent shall be due on a day that is not a Business Day, such payment shall be
made on the next day that is a Business Day, and, if such payment is made on
such next Business Day, no interest shall accrue on the amount of such payment
during such extension.
(c) So long as Lessee has not received written notice from the Mortgagee
that the Lien of the Trust Indenture has been discharged, and notwithstanding
Section 3.3(a), Lessor hereby directs, and Lessee agrees, that all payments of
Rent and all other amounts payable by Lessee hereunder, other than Excluded
Payments, shall be paid directly to Mortgagee on behalf of Lessor by wire
transfer of immediately available Dollars to the account of Mortgagee specified
in Schedule 1 to the Participation Agreement, or to such other account in the
United States as Mortgagee may specify by written notice to Lessor and Lessee at
least 10 Business Days prior to the date such payment of Rent is due.
(d) Excluded Payments shall be paid by wire transfer to the person entitled
thereto pursuant to the Operative Agreements of immediately available Dollars to
the account of such
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person specified in the Participation Agreement or, if not so specified, to such
account in the United States as may be specified by such person by written
notice to Lessor and Lessee from time to time at least 10 Business Days prior to
the date such payment is required to be made.
(e) All computations of interest under this Agreement shall be made on the
basis of a year of 360 days comprised of twelve 30-day months.
SECTION 4. DISCLAIMER; CERTAIN AGREEMENTS OF LESSOR; SECTION 1110 MATTERS
4.1 Disclaimer
LESSOR LEASES AND LESSEE TAKES THE AIRCRAFT "AS-IS, WHERE-IS." LESSEE
ACKNOWLEDGES AND AGREES THAT AS BETWEEN LESSEE AND EACH OF LESSOR, MORTGAGEE AND
ANY PARTICIPANT (i) LESSEE HAS SELECTED THE AIRCRAFT AND THE MANUFACTURER
THEREOF AND (ii) NONE OF LESSOR, MORTGAGEE AND ANY PARTICIPANT MAKES, HAS MADE
OR SHALL BE DEEMED TO HAVE MADE, AND EACH WILL BE DEEMED TO HAVE EXPRESSLY
DISCLAIMED, ANY REPRESENTATION OR WARRANTY, EXPRESS OR IMPLIED, AS TO:
(v) THE AIRWORTHINESS, VALUE, CONDITION, DESIGN, OPERATION, ANY
IMPLIED WARRANTY OF MERCHANTABILITY OR FITNESS FOR USE OR FOR ANY
PARTICULAR PURPOSE OF THE AIRFRAME, ANY ENGINE OR ANY PART THEREOF;
(w) THE QUALITY OF THE MATERIAL OR WORKMANSHIP WITH RESPECT TO THE
AIRFRAME, ANY ENGINE OR ANY PART THEREOF;
(x) THE ABSENCE OF LATENT OR ANY OTHER DEFECT IN THE AIRFRAME, ANY
ENGINE OR ANY PART THEREOF, WHETHER OR NOT DISCOVERABLE;
(y) THE ABSENCE OF ANY INFRINGEMENT OF ANY PATENT, TRADEMARK OR
COPYRIGHT OR THE LIKE; OR
(z) THE ABSENCE OF OBLIGATIONS BASED ON STRICT LIABILITY IN TORT, OR
ANY OTHER REPRESENTATION OR WARRANTY WHATSOEVER (OTHER THAN REPRESENTATIONS
AND WARRANTIES OF THE OWNER TRUSTEE AND ANY OWNER PARTICIPANT WITH RESPECT
TO LESSOR LIENS IN EXISTENCE ON THE DELIVERY DATE), EXPRESS OR IMPLIED,
WITH RESPECT TO THE AIRFRAME, ANY ENGINE OR ANY PART THEREOF.
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4.2 Certain Agreements of Lessor
Unless a Lease Event of Default shall have occurred and be continuing,
Lessor agrees to make available to Lessee such rights as Lessor may have under
any warranty with respect to the Aircraft made, or made available, by Airframe
Manufacturer or Engine Manufacturer or any of their respective subcontractors or
suppliers, as the case may be, pursuant to and in accordance with the terms of
the Purchase Agreement Assignment.
4.3 Quiet Enjoyment
So long as no Lease Event of Default shall have occurred and be continuing,
Lessor shall not take or cause to be taken or permit any Person lawfully
claiming by or through it to take any action to interfere with Lessee's (or any
Permitted Sublessee's) rights hereunder to continued possession, use and
operation of, and quiet enjoyment of the Aircraft, the Airframe, any Engine or
any Part and other rights with respect to the Aircraft hereunder during the
Term.
4.4 Investment of Funds Held as Security
4.4.1 Investment
Any moneys held by Lessor as security for Lessee's obligations under the
Operative Agreements, shall, until paid to Lessee as provided herein or applied
as provided herein, be invested by Lessor from time to time as directed in
writing by Lessee (or, if Lessee fails to so direct, as directed by Lessor in
its sole discretion) and at the expense and risk of Lessee in Cash Equivalents
so long as such Cash Equivalents specified by Lessee or Lessor, as the case may
be, can be acquired by Lessor using its best efforts; provided, that so long as
the Lien of the Trust Indenture shall not have been discharged, such moneys
shall be invested and held by Mortgagee, as assignee of Lessor, in accordance
with this Lease and upon discharge of such Lien, Mortgagee shall pay any such
money held by it to Lessor to be held and invested in accordance with this
Section.
4.4.2 Payment of Gain or Loss
Any net gain (including interest received) realized as the result of
investments pursuant to Section 4.4.1 (net of any fees, commissions and other
reasonable expenses, if any, incurred in connection with such investment) shall
be held and applied in the same manner as the principal amount is to be
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held and applied hereunder. Lessee will promptly pay to Lessor, on demand, the
amount of any loss realized as the result of any such investment (together with
any fees, commissions and other reasonable expenses, if any, incurred in
connection with such investment), such amount so paid to be held and applied by
Lessor as contemplated in Section 4.4.1 above.
4.4.3 Limitation of Liability
All investments under this Section 4.4 shall be at the expense and risk of
Lessee, and Lessor and Mortgagee shall not be liable for any loss resulting from
any investment made under this Section 4.4 other than by reason of its willful
misconduct or gross negligence. Any such investment may be sold (without regard
to its maturity) by Lessor, or by Mortgagee as assignee of Lessor, without
instructions whenever such sale is necessary to make a distribution required by
this Lease.
4.5 Title Transfers by Lessor
If Lessor shall be required to transfer title to the Aircraft, Airframe or
any Engine to Lessee or any other person pursuant to this Lease, then (a) Lessor
shall (1) transfer to Lessee or such other person, as the case may be, all of
Lessor's right, title and interest in and to the Aircraft, Airframe or such
Engine, as the case may be, free and clear of all Lessor Liens attributable to
Lessor or Owner Participant, (2) so long as the Lien of the Trust Indenture has
not been discharged, comply with the terms of the Trust Indenture relating to
the release of the Aircraft, Airframe or such Engine, (3) assign to Lessee or
such other person, as the case may be, if and to the extent permitted under the
Purchase Agreement, all warranties of Airframe Manufacturer and Engine
Manufacturer with respect to the Aircraft, Airframe or such Engine, and (4)
assign to Lessee or such other person, as the case may be, if and to the extent
permitted, all claims, if any, for damage to the Aircraft, Airframe or such
Engine, in each case free of Lessor Liens attributable to Lessor or Owner
Participant, and without recourse or warranty of any kind whatsoever (except as
to the transfer described in clause (1) above and as to the absence of such
Lessor Liens, as aforesaid), and (b) Lessor shall promptly deliver to Lessee or
such other person, as the case may be, a bill of sale and agreements of
assignment, evidencing such transfer and assignment, and such other instruments
of transfer, all in form and substance reasonably satisfactory to Lessee (or
such other person, as the case may be), as Lessee (or such other person, as the
case may be) may reasonably request.
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4.6 Lessor's Interest in Certain Engines
Lessor hereby agrees for the benefit of each lessor, conditional seller,
indenture trustee or secured party of any engine leased to, or purchased by,
Lessee or any Permitted Sublessee subject to a lease, conditional sale, trust
indenture or other security agreement that Lessor, its successors and assigns
will not acquire or claim, as against such lessor, conditional seller, indenture
trustee or secured party, any right, title or interest in any engine as the
result of such engine being installed on the Airframe at any time while such
engine is subject to such lease, conditional sale, trust indenture or other
security agreement and owned by such lessor or conditional seller or subject to
a trust indenture or security interest in favor of such indenture trustee or
secured party.
4.7 Lease for U.S. Federal Income Tax Law Purposes; Section 1110 of
Bankruptcy Code
(a) Lessee and Lessor agree that this Lease is, and shall be treated as, a
lease for U.S. federal income tax purposes of the Aircraft, Airframe, Engines
and Parts.
(b) It is the intention of each of Lessee and Lessor that Lessor (and
Mortgagee as assignee of Lessor under the Trust Indenture) shall be entitled to
the benefits of Section 1110 with respect to the right to take possession of the
Aircraft, Airframe, Engines and Parts as provided in this Lease.
SECTION 5. RETURN OF AIRCRAFT
5.1 Compliance with Annex B
Lessee shall comply with each of the provisions of Annex B hereto, which
provisions are hereby incorporated by this reference as if set forth in full
herein.
5.2 Storage and Related Matters
If Lessor gives written notice to Lessee not less than 60 days nor more
than 120 days prior to the end of the Term requesting outdoor parking of the
Aircraft upon its return hereunder, Lessee will assist Lessor in arranging
outdoor parking facilities for the Aircraft for a period up to 30 days,
commencing on the date of such return, and upon request of Lessor to Lessee made
at least 10 days prior to the end of such initial 30 day period, for an
additional 30 day period commenc-
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ing upon expiration of such initial period, at such outdoor parking facility in
the 48 contiguous states of the United States as Lessee may select. Lessee
shall, at Lessor's written request, maintain insurance (if available) for the
Aircraft during such outdoor parking period, provided that Lessor shall
reimburse Lessee for Lessee's out-of-pocket cost of providing such insurance.
Such outdoor parking shall be at Lessor's risk, and Lessor shall pay all
applicable outdoor parking fees; provided that Lessee's obligation to assist
Lessor in arranging parking shall be subject to Lessor entering into an
agreement prior to the commencement of the outdoor parking period with the
outdoor parking facility providing, among other things, that Lessor shall bear
all maintenance charges (other than maintenance required as a direct result of
Lessee's failure to comply with the provisions of Annex B) and other costs
incurred.
5.3 Return of Other Engines
In the event that any Engine owned by Lessor shall not be installed on the
Airframe at the time of return hereunder, Lessee shall be required to return the
Airframe hereunder with a Replacement Engine meeting the requirements of, and in
accordance with, Section 10 hereof and Annex B hereto. Thereupon, Lessor will
transfer to Lessee the Engine constituting part of such Aircraft but not
installed on such Airframe at the time of the return of the Airframe.
5.4 Fuel
Upon the return of the Airframe upon any termination of this Lease, Lessor
shall pay Lessee, as compensation for any fuel or oil contained in the fuel or
oil tanks of such Airframe, the value of such fuel or oil at the price paid by
Lessee for such fuel or oil, provided that if the Aircraft is being returned in
connection with the exercise of remedies pursuant to Section 15, Lessor shall
have no obligation to make such payment to Lessee until Lessor shall have been
paid all amounts due to it pursuant to Section 15.
SECTION 6. LIENS
Lessee shall not, directly or indirectly, create, incur, assume or suffer
to exist any Lien on or with respect to the Aircraft, the Airframe, any Engine
or any Part, title to any of the foregoing or any interest of Lessee therein, or
the Lessee's rights in and to this Lease or any Permitted Sublease,
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except (a) the respective rights of Lessor, Mortgagee, the Participants or
Lessee under the Operative Agreements, or of any Permitted Sublessee under any
Permitted Sublease; (b) Lessor Liens; (c) the rights of others under agreements
or arrangements to the extent permitted by the terms of Sections 7.2 and 7.3;
(d) Liens for Taxes of Lessee or any Permitted Sublessee (and their respective
U.S. federal tax law consolidated groups), or Liens for Taxes of any Tax
Indemnitee (and its U.S. federal tax law consolidated group) for which Lessee is
obligated to indemnify such Tax Indemnitee under any of the Lessee Operative
Agreements, in any such case either not yet due or being contested in good faith
by appropriate proceedings so long as such Liens and such proceedings do not
involve any material risk of the sale, forfeiture or loss of the Aircraft, the
Airframe, any Engine or the interest of any Participant therein or impair the
lien of the Trust Indenture; (e) materialmen's, mechanics', workers',
repairers', employees' or other like Liens arising in the ordinary course of
business for amounts the payment of which is either not yet delinquent for more
than 60 days or is being contested in good faith by appropriate proceedings, so
long as such Liens and such proceedings do not involve any material risk of the
sale, forfeiture or loss of the Aircraft, the Airframe, any Engine or the
interest of any Participant therein or impair the lien of the Trust Indenture;
(f) Liens arising out of any judgment or award against Lessee (or against any
Permitted Sublessee), so long as such judgment shall, within 60 days after the
entry thereof, have been discharged or vacated, or execution thereof stayed
pending appeal or shall have been discharged, vacated or reversed within 60 days
after the expiration of such stay, and so long as during any such 60-day period
there is not, or any such judgment or award does not involve, any material risk
of the sale, forfeiture or loss of the Aircraft, the Airframe, any Engine or the
interest of any Participant therein or impair the lien of the Trust Indenture,
and (g) any other Lien with respect to which Lessee (or any Permitted Sublessee)
shall have provided a bond, cash collateral or other security adequate in the
reasonable opinion of Lessor. Lessee shall promptly take (or cause to be taken)
such action as may be necessary duly to discharge (by bonding or otherwise) any
Lien not excepted above if the same shall at any time arise in respect of the
Aircraft, the Airframe, any Engine or any Part during the Term.
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SECTION 7. REGISTRATION, OPERATION, POSSESSION, SUBLEASING AND RECORDS
7.1 Registration and Operation
7.1.1 Registration and Recordation
Subject to the compliance by Lessor and Owner Participant with their
respective obligations under Section 13 of the Participation Agreement, Lessee
shall cause the Aircraft to be, and at all times during the Term to remain, duly
registered with the FAA under the Act or with such other country of registry as
shall be permitted under Section 7.1.2 below, in the name of Lessor as owner and
lessor (except to the extent that such registration under the Act cannot be
effected with the FAA because of Lessor's or Owner Participant's failure to
comply with the citizenship requirements for registration of the Aircraft under
the Act). Lessor shall execute and deliver all such documents as Lessee (or any
Permitted Sublessee) may reasonably request for the purpose of effecting and
continuing such registration. Unless Mortgagee has given Lessee notice that the
Trust Indenture has been discharged, Lessee shall also cause the Trust Indenture
to be duly recorded and at all times maintained of record as a first-priority
perfected mortgage (subject to Permitted Liens) on the Aircraft, the Airframe
and each of the Engines (except to the extent such perfection or priority cannot
be maintained solely as a result of the failure by Lessor or Mortgagee to
execute and deliver any necessary documents).
7.1.2 Reregistration
So long as no Lease Event of Default shall have occurred and be continuing,
Lessee may, by written notice to Lessor, request to change the country of
registration of the Aircraft. Any such change in registration shall be effected
only in compliance with, and subject to all of the conditions set forth in,
Section 7.6.11 of the Participation Agreement.
7.1.3 Markings
If permitted by applicable Law, on or reasonably promptly after the
Delivery Date, Lessee will cause to be affixed to, and maintained in, the
cockpit of the Airframe and on each Engine, in each case, in a clearly visible
location (it being understood that the location of such placards, as identified
to the Owner Participant prior to the Delivery Date, shall be deemed to be in
compliance with this requirement), a placard
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of a reasonable size and shape bearing the legend, in English, set forth in
Schedule 6. Such placards may be removed temporarily, if necessary, in the
course of maintenance of the Airframe or Engines. If any such placard is
destroyed or becomes illegible, Lessee shall promptly replace it with a placard
complying with the requirements of this Section 7.1.3.
7.1.4 Compliance With Laws
Lessee shall not, and shall not allow any other person to, operate, use,
maintain, service, repair or overhaul the Aircraft (a) in violation of any Law
binding on or applicable to the Aircraft, the Airframe or any Engine, or (b) in
violation of any airworthiness certificate, license or registration of any
Government Entity relating to the Aircraft, the Airframe or any Engine, except
(1) immaterial or non-recurring violations with respect to which corrective
measures are taken promptly by Lessee or a Permitted Sublessee, as the case may
be, upon discovery thereof, and (2) to the extent Lessee or any Permitted
Sublessee is contesting the validity or application of any such Law or
requirement relating to any such certificate, license or registration in good
faith in any reasonable manner which does not involve any material risk of the
sale, forfeiture or loss of the Aircraft, the Airframe, any Engine or the
interest of any Participant therein, any material risk of criminal liability or
of material risk of civil penalty against Lessor, Mortgagee or any Participant
or impair the lien of the Trust Indenture.
7.1.5 Operation
Lessee agrees not to operate, use or locate the Aircraft, the Airframe or
any Engine, or allow the Aircraft, the Airframe or any Engine to be operated,
used or located (a) in any area excluded from coverage by any insurance required
by the terms of Section 11, except in the case of a requisition by or transfer
to the U.S. Government where Lessee obtains an indemnity in lieu of such
insurance from the U.S. Government, or insurance from the U.S. Government,
covering such area, in accordance with Section 11.3 or (b) in any recognized
area of hostilities unless fully covered in accordance with Annex D by war-risk
insurance as required by the terms of Section 11 (including, without limitation,
Section 11.3), unless in any case referred to in this Section 7.1.5 the Aircraft
is only temporarily operated, used or located in such area as a result of an
emergency, equipment malfunction, navigational error, hijacking, weather
condition or other similar unforeseen circum-
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stances, so long as Lessee diligently and in good faith proceeds to remove the
Aircraft from such area.
7.2 Possession
Lessee will not, without the prior written consent of Lessor, sublease or
otherwise in any manner deliver, transfer or relinquish possession of the
Aircraft, the Airframe or any Engine or install any Engine, or permit any Engine
to be installed, on any airframe other than the Airframe; provided, however,
subject to the provisions of Section 7.3, Lessee may, without such prior written
consent:
7.2.1 Interchange and Pooling
Subject or permit any Permitted Sublessee to subject any Engine to normal
interchange agreements or pooling agreements or arrangements, in each case
customary in the commercial air cargo industry and entered into by Lessee or
such Permitted Sublessee, as the case may be, in the ordinary course of
business; provided, however, that if Lessor's title to any such Engine is
divested under any such agreement or arrangement, then such Engine shall be
deemed to have suffered an Event of Loss as of the date of such divestiture,
with the effect that Lessee shall be required to replace such Engine with a
Replacement Engine meeting the requirements of, and in accordance with, Section
10.
7.2.2 Testing and Service
Deliver or permit any Permitted Sublessee to deliver possession of the
Aircraft, Airframe, any Engine or any Part (i) to the manufacturer thereof or to
any third-party maintenance provider, for testing, service, repair, maintenance
or overhaul work on the Aircraft, Airframe, any Engine or any Part, or, to the
extent required or permitted by the terms of Annex C, for alterations or
modifications in or additions to the Aircraft, Airframe or any Engine or (ii) to
any Person for the purpose of transport to a Person referred to in the preceding
clause (i).
7.2.3 Transfer to U.S. Government
Transfer or permit any Permitted Sublessee to transfer possession of the
Aircraft, Airframe or any Engine to the U.S. Government, in which event Lessee
shall promptly notify Lessor and Mortgagee in writing of any such transfer of
possession and, in the case of any transfer pursuant to CRAF, in such
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notification shall identify by name, address and telephone numbers the
Contracting Office Representative or Representatives for the Military Airlift
Command of the United States Air Force to whom notices must be given and to whom
requests or claims must be made to the extent applicable under CRAF.
7.2.4 Installation of Engines on Owned Aircraft
Install or permit any Permitted Sublessee to install an Engine on an
airframe owned by Lessee or such Permitted Sublessee, as the case may be, free
and clear of all Liens, except (a) Permitted Liens and those that do not apply
to the Engines and (b) the rights of third parties under normal interchange or
pooling agreements and arrangements of the type that would be permitted under
Section 7.2.1.
7.2.5 Installation of Engines on Other Airframes
Install or permit any Permitted Sublessee to install an Engine on an
airframe leased to Lessee or such Permitted Sublessee, or purchased by Lessee or
such Permitted Sublessee subject to a mortgage, security agreement, conditional
sale or other secured financing arrangement, but only if (a) such airframe is
free and clear of all Liens, except (i) the rights of the parties to such lease,
or any such secured financing arrangement, covering such airframe and (ii) Liens
of the type permitted by clauses (a) and (b) of Section 7.2.4 and (b) Lessee or
Permitted Sublessee, as the case may be, shall have received from the lessor,
mortgagee, secured party or conditional seller, in respect of such airframe, a
written agreement (which may be a copy of the lease, mortgage, security
agreement, conditional sale or other agreement covering such airframe), whereby
such Person agrees that it will not acquire or claim any right, title or
interest in, or Lien on, such Engine by reason of such Engine being installed on
such airframe at any time while such Engine is subject to this Lease or is owned
by Lessor.
7.2.6 Installations of Engines on Financed Aircraft
Install or permit any Permitted Sublessee to install an Engine on an
airframe owned by Lessee or such Permitted Sublessee, leased to Lessee or such
Permitted Sublessee, or purchased by Lessee or such Permitted Sublessee subject
to a conditional sale or other security agreement under circumstances where
neither Section 7.2.4 or 7.2.5 is applicable; provided, however, that any such
installation shall be deemed an Event of Loss with respect to such Engine, and
Lessee shall comply with
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Section 10.2 hereof in respect thereof. Until Section 10.2 has been fully
complied with, Lessor's interest in any such Engine shall continue in full force
and effect.
7.2.7 Subleasing
With respect to the Aircraft, Airframe or any Engine, so long as no Lease
Event of Default shall have occurred and is continuing, enter into a sublease
with any Permitted Air Carrier, but only if:
(a) Lessee shall provide written notice to Lessor and Mortgagee (such
notice in the event of a sublease to a U.S. Air Carrier to be given
promptly after entering into any such sublease or, in the case of a
sublease to any other Permitted Air Carrier, 10 days in advance of entering
into such sublease);
(b) At the time that Lessee enters into such sublease, such Permitted
Air Carrier shall not be 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;
(c) Any such sublease (i) shall not extend beyond the expiration of
the Base Lease Term or any Renewal Lease Term then in effect unless Lessee
shall have irrevocably committed to purchase the Aircraft, (ii) shall
include provisions for the maintenance, operation, possession, inspection
and insurance of the Aircraft that are the same in all material respects as
the applicable provisions of this Lease and (iii) shall be expressly
subject and subordinate to all the terms of this Agreement and to the
rights, powers and remedies of Lessor hereunder, including, without
limitation, Lessor's rights under Section 15 to repossess the Aircraft,
Airframe and Engines and to terminate such sublease upon the occurrence of
a Lease Event of Default;
(d) In connection with a sublease to a Permitted Foreign Air Carrier
or a Permitted Foreign Manufacturer, (1) the United States maintains
diplomatic relations with the country of domicile of such Permitted Foreign
Air Carrier or Permitted Foreign Manufacturer (or, in the case of Taiwan,
diplomatic relations at least as good as those in effect on the Delivery
Date) and (2) Lessee shall have furnished Lessor, Owner Participant and
Mortgagee a favor-
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able opinion of counsel, reasonably satisfactory to Lessor and Owner
Participant, in the country of domicile of such Permitted Foreign Air
Carrier or Permitted Foreign Manufacturer, that (i) the terms of such
sublease are the legal, valid and binding obligations of the parties
thereto enforceable under the laws of such jurisdiction, (ii) it is not
necessary for Owner Participant, Lessor or Mortgagee to register or qualify
to do business in such jurisdiction, if not already so registered or
qualified, as a result, in whole or in part, of the proposed sublease,
(iii) Lessor's title to, and Mortgagee's Lien in respect of, the Aircraft,
Airframe and Engines will be recognized in such jurisdiction, (iv) the Laws
of such jurisdiction of domicile require fair compensation by the
government of such jurisdiction, payable in a currency freely convertible
into Dollars, for the loss of title to the Aircraft, Airframe or Engines in
the event of the requisition by such government of such title (unless
Lessee shall provide insurance in the amounts required with respect to hull
insurance under Section 11 covering the requisition of title to the
Aircraft, Airframe or Engines by the government of such jurisdiction so
long as the Aircraft, Airframe or Engines are subject to such sublease) and
(v) the agreement of such Permitted Foreign Air Carrier or Permitted
Foreign Manufacturer that its rights under the sublease are subject and
subordinate to all the terms of this Lease is enforceable against such
Permitted Foreign Air Carrier or Permitted Foreign Manufacturer under
applicable law;
(e) Lessee shall furnish to Lessor, Mortgagee and Owner Participant
evidence reasonably satisfactory to Lessor that the insurance required by
Section 11 remains in effect;
(f) All necessary documents shall have been duly filed, registered or
recorded in such public offices as may be required fully to preserve the
title of Lessor, and the first priority security interest (subject to
Permitted Liens) of Mortgagee, in the Aircraft, Airframe and Engines;
(g) Lessee shall reimburse Lessor, Mortgagee and Owner Participant for
all of their reasonable out-of-pocket fees and expenses, including, without
limitation, reasonable fees and disbursements of counsel, incurred by
Lessor, Mortgagee and Owner Participant in connection with any such
sublease;
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(h) For all purposes of this Section 7.2.7, the term "sublease" shall
be deemed to include interchange agreements with respect to the Aircraft or
Airframe; and
(i) No such sublease shall be made to a Permitted Foreign Air Carrier
or a Permitted Foreign Manufacturer prior to the close of the Tax Attribute
Period, unless Lessee prepays on a lump-sum basis any liability due under
the Tax Indemnity Agreement as a result of such sublease based upon the
assumption that such sublease were to continue for the remainder of the
term of such sublease; provided, however, that such sublease shall not be
restricted under this paragraph (i) if it would not have the effect of
lengthening the "recovery period" (as defined in Section 168 of the Code)
then applicable to the Aircraft.
7.3 Certain Limitations on Subleasing or Other Relinquishment of Possession
Notwithstanding anything to the contrary in Section 7.2:
(a) The rights of any person that receives possession of the Aircraft
in accordance with Section 7.2 shall be subject and subordinate to all the
terms of this Lease, and to Lessor's rights, powers and remedies hereunder,
including, without limitation (i) Lessor's right to repossess the Aircraft
pursuant to Section 15, (ii) Lessor's right to terminate and avoid such
sublease, delivery, transfer or relinquishment of possession upon the
occurrence of a Lease Event of Default and (iii) the right to require such
person to forthwith deliver the Aircraft, the Airframe and Engines subject
to such transfer upon the occurrence of a Lease Event of Default;
(b) Lessee shall remain primarily liable hereunder for the performance
of all the terms of this Lease to the same extent as if such transfer had
not occurred, and no transfer of possession of the Aircraft, the Airframe,
any Engine or any Part shall in any way discharge or diminish any of
Lessee's obligations to Lessor hereunder or under any Operative Agreement;
(c) Lessee shall ensure that no sublease, delivery, transfer or
relinquishment permitted under Section 7.2 shall affect the United States
registration of the Aircraft, unless also made in accordance with the
provisions of Section 7.1.2;
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(d) Any event that constitutes or would, with the passage of time,
constitute an Event of Loss under paragraph (c), (d), or (e) of the
definition of such term (as set forth in Annex A) shall not be deemed to
violate the provisions of Section 7.2; and
(e) Any Wet Lease or ACMI Contract shall not constitute a delivery,
transfer or relinquishment of possession for purposes of Section 7.2 and
shall not be prohibited by the terms hereof, but shall be subject and
subordinate to the terms of this Lease. Neither a Wet Lease nor an ACMI
contract shall be deemed to be a "sublease", and the counterparty of a Wet
Lease or an ACMI Contract shall not be deemed to be a sublessee for any
purposes under this Lease. Any contract that is part of the United States
Civil Reserve Air Fleet Program shall not be deemed to be a sublease for
any purposes under this Lease.
SECTION 8. MAINTENANCE; REPLACEMENT AND POOLING OF PARTS; ALTERATIONS,
MODIFICATIONS AND ADDITIONS; OTHER LESSEE COVENANTS
8.1 Maintenance; Replacement and Pooling of Parts; Alterations,
Modifications and Additions
At all times during the Term, Lessee shall comply with, or cause to be
complied with, each of the provisions of Annex C, which provisions are hereby
incorporated by this reference as if set forth in full herein.
8.2 Information, Certificates, Notices and Reports
8.2.1 Financial Information
Lessee will furnish to Lessor:
(a) Within 90 days after the end of each of the first three fiscal
quarters in each fiscal year of Lessee, a consolidated balance sheet of
Lessee as of the end of such quarter and related statements of income and
cash flows for the period commencing at the end of the previous fiscal year
and ending with the end of such quarter, setting forth in each case in
comparative form the corresponding figures for the corresponding period in
the preceding fiscal year, prepared in accordance with GAAP; provided that
so long as Lessee is subject to the reporting requirements of the
Securities Exchange Act of 1934, a
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copy of Lessee's report on Form 10-Q for such fiscal quarter (excluding
exhibits) will satisfy this paragraph (a).
(b) Within 120 days after the end of each fiscal year of Lessee, a
consolidated balance sheet of Lessee as of the end of such fiscal year and
related statements of income and cash flows of Lessee for such fiscal year,
in comparative form with the preceding fiscal year, prepared in accordance
with GAAP, together with a report of Lessee's independent certified public
accountants with respect to their audit of such financial statements;
provided that so long as Lessee is subject to the reporting requirements of
the Securities Exchange Act of 1934, a copy of Lessee's report on Form 10-K
for such fiscal year (excluding exhibits) will satisfy this paragraph (b).
8.2.2 Annual Certificate
Within 120 days after the close of each fiscal year of Lessee, Lessee shall
deliver to Lessor and Mortgagee an Officer's Certificate of Lessee to the effect
that such officer is familiar with or has reviewed or caused to be reviewed the
relevant terms of this Lease and the other Lessee Operative Agreements and that
such officer does not have knowledge of the existence as of the date of such
certificate of any Lease Event of Default.
8.2.3 Information for Filings
Lessee shall promptly furnish to Owner Participant or Lessor such
information (other than with respect to the citizenship of Owner Participant and
Lessor) within Lessee's or any Permitted Sublessee's possession, or reasonably
available to or obtainable by Lessee or such Permitted Sublessee, as may be
required to enable Lessor timely to file any reports required to be filed by it
as lessor under the Lease or to enable Owner Participant to timely file any
reports required to be filed by it, as the beneficiary of the Trust Estate, in
either case, with any Government Entity because of, or in connection with, the
interest of Owner Participant or Lessor in the Aircraft, Airframe or Engines,
this Lease or any other part of the Trust Estate; provided, however, that with
respect to any such information which Lessee or such Permitted Sublessee
reasonably deems commercially sensitive or confidential, Owner Participant or
Lessor, as the case may be, shall afford Lessee or such Permitted Sublessee a
reasonable opportunity to seek from any such Government Entity a waiver of the
obligation of Owner Participant or Lessor to file any such information, or shall
consent
<PAGE>
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to the filing of such information directly by Lessee or such Permitted Sublessee
in lieu of filing by Owner Participant or Lessor, and if any such waiver or
consent is evidenced to the reasonable satisfaction of Owner Participant or
Lessor, as the case may be, then Lessee shall not be required to furnish such
information to Owner Participant or Lessor.
8.2.4 Other
Lessee shall furnish annually any such opinions as may be required pursuant
to Section 7.1.3(d) of the Participation Agreement.
SECTION 9. VOLUNTARY TERMINATION UPON OBSOLESCENCE
9.1 Right of Termination
(a) Lessee shall have the right at its option to terminate this Lease
during the Base Lease Term, effective only on a Termination Date occurring on or
after the fifth anniversary of the Delivery Date, if:
(i) Lessee makes a good faith determination that the Aircraft either
has become economically obsolete or is surplus to Lessee's requirements and
the Chief Financial Officer or Treasurer of Lessee so certifies in writing
to Lessor; or
(ii) the Aircraft is to be disposed of pursuant to a program of fleet
renewal.
Lessee shall give to Lessor written notice of Lessee's exercise of its
option to terminate this Agreement not less than 90 days prior to the proposed
Termination Date specified in such notice.
(b) Lessor shall notify Lessee and Mortgagee of Lessor's intention to sell
or retain the Aircraft, as provided in this Section 9, within 30 days of receipt
by Lessor of the written notice from Lessee given pursuant to Section 9.1(a).
Any failure by Lessor to give such notice of its election shall be deemed to be
an election to sell the Aircraft, as provided in this Section 9.
(c) Any termination pursuant to this Section 9 shall become effective on
the date of the sale, if any, pursuant to Section 9.2 or upon the date of
termination and payment by Les-
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see and Lessor in accordance with Section 9.3 if Lessor elects to retain the
Aircraft.
9.2 Election by Lessor to Sell
9.2.1 Bids; Closing of Sale
Unless Lessor has given Lessee notice of Lessor's election to retain the
Aircraft, Lessee (or a person authorized by the Lessee, acting as agent for the
Lessor, for a commercially reasonable commission) shall, until the date 10
Business Days prior to the proposed Termination Date, use commercially
reasonable efforts to obtain bids for a cash purchase of the Aircraft and Lessor
may, if it desires to do so, also seek to obtain such bids. In the event Lessee
receives any bid, Lessee shall promptly, and in any event at least 10 Business
Days prior to the proposed date of sale, certify to Lessor in writing the amount
and terms of such bid, the proposed date of such sale and the name and address
of the person (who shall not be Lessee or any Affiliate of Lessee or any person
with whom Lessee or any such Affiliate has an arrangement for the future use of
the Aircraft by Lessee or any such Affiliate) submitting such bid. In the event
Lessor receives any bid on or prior to the date 10 Business Days prior to the
proposed Termination Date, Lessor shall, at least 10 Business Days prior to the
proposed date of sale, certify to Lessee in writing the amount and terms of such
bid, the proposed date of such sale and the name and address of the person
submitting such bid. Notwithstanding anything in this Section 9.2 to the
contrary, Lessee shall have no liability to Lessor or any other party for
failure to obtain a higher price for the Aircraft than the price actually
obtained, if any, or for the manner in which Lessee solicited bids for the
Aircraft, such manner of soliciting bids to be in the sole discretion of Lessee,
including, without limitation, the decision whether or not to solicit bids
publicly or in any particular market or venue. In addition, Lessee shall have no
obligation to Lessor or any other party to accept any bid solicited pursuant to
this Section 9.2.1 that Lessee, in good faith, believes is unlikely to result in
the consummation of the sale of the Aircraft in accordance with the terms
hereof.
<PAGE>
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9.2.2 Closing of Sale
(a) On the proposed Termination Date (i) Lessee shall deliver the Airframe
and Engines or engines constituting part of the Aircraft to the bidder, if any,
which shall have submitted the highest cash bid (net of any fees, commissions or
expenses of any broker retained by the Lessee) on or before the date 10 Business
Days prior to such Termination Date, in the same manner as if delivery were made
to Lessor pursuant to Section 5 and Annex B and in full compliance with the
terms thereof, and shall duly transfer to Lessor title to any such engines not
owned by Lessor, all in accordance with the terms of Section 5 and Annex B, and
(ii) Lessor shall simultaneously therewith transfer the Airframe and Engines or
engines to such bidder, in the manner described in Section 4.5, against cash
paid by such bidder to Lessor in the amount of such highest bid (net of any
fees, commissions or expenses of any broker retained by the Lessee) and in the
manner and in funds of the type specified in Section 3.3.
(b) The net proceeds of any sale described in Section 9.2.2(a) shall be
paid to and retained by Lessor and, on such Termination Date, and as a condition
precedent to such sale and the delivery of the Aircraft and Engines or engines
to such bidder, Lessee shall pay to Lessor, in the manner and in funds of the
type specified in Section 3.3:
(i) all unpaid Basic Rent due at any time prior to such Termination
Date and all Basic Rent due on such Termination Date to the extent payable
in arrears with respect to the Payment Period then ended; plus
(ii) an amount equal to the excess, if any, of the Termination Value
for the Aircraft, computed as of such Termination Date, over the net
proceeds of any sale described in Section 9.2.2(a); plus
(iii) as provided in Section 3.2.2, interest on the amounts specified
in the foregoing clause (i) at the Payment Due Rate from and including the
date on which any such amount was due to the date of payment of such amount
in full.
As a further condition precedent to such sale and delivery, Lessee shall
pay all Supplemental Rent (other than Termination Value) due by Lessee to
Lessor, Mortgagee or the Participants under this Lease, including, without
limitation, (A) Supplemental Rent in respect of Make-Whole Amount, if any,
pay-
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able pursuant to Section 2.10(b) of the Trust Indenture in connection with a
prepayment of the Equipment Notes upon such sale, (B) all interest charges
provided for hereunder or under any other Lessee Operative Agreement with
respect to the late payment of any amounts so payable and (C) the reasonable
out-of-pocket fees and expenses (including any sales, transfer or similar taxes)
incurred by Lessor, Mortgagee and Owner Participant in connection with such
termination and sale, other than any fees, commissions or expenses payable to
any broker retained by the Lessor.
(c) Upon and subject to any such sale and receipt of proceeds by Lessor,
and full and final payment of all amounts described in Section 9.2.2(b), and
compliance by Lessee with all the other provisions of this Section 9.2,
(i) Lessor will transfer to Lessee, in accordance with Section 4.5,
any Engines constituting part of the Aircraft but which were not then
installed on the Airframe and sold therewith; and
(ii) the obligation of Lessee to pay Basic Rent, on or after the
Payment Date with reference to which Termination Value is computed, shall
cease, and the Term for the Aircraft shall end effective as of the date of
such sale.
(d) A sale of the Aircraft pursuant to this Section 9.2.2 shall take place
only on a Termination Date or any other date within 10 Business Days after a
Termination Date as Lessor may consent to, which consent shall not be withheld
unreasonably; provided that interest shall accrue on each such day of the
aforementioned 10-day extension at the Debt Rate. Subject to Section 9.3, if no
sale shall have occurred on or as of the proposed Termination Date (or such
later date pursuant to the immediately preceding sentence), this Agreement shall
continue in full force and effect, and all of Lessee's obligations shall
continue, including, without limitation, its obligation to pay Rent, in each
case, as if the notice under Section 9.1 shall not have been given and, subject
to Section 9.2.3(b), Lessee may give another notice pursuant to Section 9.1.
9.2.3 Withdrawal of Notice of Termination
(a) Lessee may withdraw any notice given pursuant to Section 9.1 at any
time on or before the date 10 Business Days prior to the proposed Termination
Date, whereupon this Agreement shall continue in full force and effect and all
of Les-
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see's obligations shall continue, including, without limitation, its obligation
to pay Rent, in each case, as if the notice under Section 9.1 shall not have
been given and Lessee may give another notice pursuant to Section 9.1; provided
that Lessee shall not be entitled to give more than five notices pursuant to
Section 9.1.
(b) Lessee shall pay all reasonable out-of-pocket fees and expenses of
Lessor, Mortgagee and Owner Participant in connection with any notice of
termination withdrawn by Lessee or in connection with any notice of termination
pursuant to which a sale of the Aircraft fails to occur.
9.3 Retention of Aircraft by Lessor
(a) If Lessor shall elect to retain the Aircraft in accordance with Section
9.1, on the proposed Termination Date:
(i) Lessor shall pay, or cause to be paid, in the manner and in funds
of the type specified in Section 3.3, to the Mortgagee an amount sufficient
to prepay all outstanding Equipment Notes pursuant to Section 2.10(b) of
the Trust Indenture plus the Make-Whole Amount, if any;
(ii) subject to receipt by Mortgagee of the funds described in
paragraph (i) above, Lessee shall deliver the Airframe and Engines or
engines constituting part of the Aircraft to Lessor pursuant to Section 5
and Annex B and in full compliance with the terms thereof, and shall duly
transfer to Lessor title to any such engines not owned by Lessor, all in
accordance with the terms of Section 5 and Annex B;
(iii) Lessee shall pay to Lessor, in the manner and in funds of the
type specified in Section 3.3:
(1) all unpaid Basic Rent due at any time prior to such
Termination Date (or any later date agreed by the parties pursuant to
Section 9.2.2(d)) and all Basic Rent due on such Termination Date (or
any later date agreed by the parties pursuant to Section 9.2.2(d))to
the extent payable in arrears with respect to the Payment Period then
ended; plus
(2) as provided in Section 3.2.2, interest on the amounts
specified in the foregoing clause (1) at the Payment Due Rate from and
including the date on
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which any such amount was due to the date of payment of such amount in
full; and
(iv) Lessee shall also pay all Supplemental Rent due and payable by
Lessee to Lessor, Mortgagee or the other Participants under this Lease
(other than any Supplemental Rent in respect of Make-Whole Amount, if any,
payable pursuant to Section 2.10(b) of the Trust Indenture in connection
with a prepayment of the Equipment Notes upon such sale), including without
limitation all interest charges provided for hereunder or under any other
Lessee Operative Agreement with respect to the late payment of any amounts,
so payable, and the reasonable out-of-pocket fees and expenses incurred by
Lessor, Mortgagee and Owner Participant in connection with such termination
and sale.
(b) Upon full and final payment to Lessor, Mortgagee and the Participants
of the amounts described in Section 9.3(a), and compliance by Lessee with all
the other applicable provisions of this Section 9.3,
(i) Lessor will transfer to Lessee, in accordance with Section 4.5,
any Engines constituting part of the Aircraft but which were not then
installed on the Airframe and sold therewith; and
(ii) The obligation of Lessee to pay Basic Rent otherwise due on or
after the Termination Date shall cease, and the Term for the Aircraft shall
end effective as of such Termination Date.
SECTION 10. LOSS, DESTRUCTION, REQUISITION, ETC.
10.1 Event of Loss With Respect to Aircraft
10.1.1 Notice and Election
(a) Upon the occurrence of an Event of Loss with respect to the Airframe,
and any Engine or Engines installed thereon at the time of such Event of Loss,
Lessee shall promptly (and in any event within 15 days after such occurrence)
give Lessor and Mortgagee written notice of such Event of Loss. Within 60 days
after such occurrence, Lessee shall give Lessor and Mortgagee written notice of
Lessee's election to make payment in respect of such Event of Loss, as provided
in Section 10.1.2, or to replace the Airframe, and any such Engines, as provided
in Section 10.1.3.
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(b) Any failure by Lessee to give such notice of its election shall be
deemed to be an election of the option set forth in Section 10.1.2.
(c) For purposes of Section 10.1.2, an Event of Loss with respect to the
Airframe shall be deemed to constitute an Event of Loss with respect to the
Aircraft. For purposes of Section 10.1.3, any Engine not actually suffering an
Event of Loss shall not be required to be replaced.
(d) Notwithstanding the foregoing, if an Indenture Event of Default has
occurred and is continuing or a Lease Event of Default under Section 14.1.5 has
occurred and is continuing, Lessee shall be required to make payment in respect
of such Event of Loss pursuant to Section 10.1.2.
10.1.2 Payment of Loss and Termination of Lease
(a) If Lessee elects, in accordance with Section 10.1.1, to make payment in
respect of any such Event of Loss, then Lessee shall pay, in the manner and in
funds of the type specified in Section 3.3, the following amounts:
(i) on the earlier of (x) the first Business Day following the 180th
day after the date of the occurrence of such Event of Loss, and (y) the
Business Day specified by Lessee as the payment date in an irrevocable
notice delivered by Lessee to the applicable Lessor and Mortgagee not less
than 20 days prior to such payment date, Lessee shall pay to Lessor an
amount equal to the Stipulated Loss Value of the Aircraft as of the Loss
Payment Date plus:
(1) any unpaid Basic Rent or Renewal Rent, as the case may be,
payable in advance and due prior to the Loss Payment Date; plus
(2) any unpaid Basic Rent or Renewal Rent, as the case may be,
payable in arrears and due on or before such Loss Payment Date; plus
(3) all other amounts of Supplemental Rent due on or before the
Loss Payment Date (but excluding any Make-Whole Amount) and any
reasonable out-of-pocket fees and expenses incurred in connection with
such Event of Loss by Lessor, Owner Participant or Mortgagee; plus
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(ii) on or before the Loss Payment Date, Lessee shall also pay to
Lessor, Mortgagee and each Participant all other amounts due and payable by
Lessee to Lessor, Mortgagee and such Participant under this Lease, the
Participation Agreement or any other Lessee Operative Agreement.
(b) Upon payment in full of all amounts described in the foregoing
paragraph (a),(i) the obligation of Lessee to pay Basic Rent or Renewal Rent
hereunder with respect to the Aircraft shall terminate, (ii) the Term for the
Aircraft shall end and (iii) Lessor will transfer the Aircraft to Lessee, as-is
and where-is, and subject to any insurer's salvage rights, but otherwise in the
manner described in Section 4.5.
10.1.3 Replacement of Airframe and Engines
(a) If Lessee elects, in accordance with Section 10.1.1, to replace the
Airframe, and any Engines actually suffering the Event of Loss, then Lessee
shall, as promptly as possible and in any event within 180 days after the
occurrence of such Event of Loss, convey or cause to be conveyed to Lessor, in
compliance with Section 10.3 and as replacement for the Airframe, title to a
Replacement Airframe (which shall comply with paragraph (b) below), and for each
such Engine, title to a Replacement Engine, in each case free and clear of all
Liens other than Permitted Liens. If Lessee makes such election, but for any
reason fails or is unable to effect such replacement within such time period and
in compliance with the requirements set forth in Section 10.3, then Lessee shall
be deemed to have initially made the election set forth in Section 10.1.2 with
the effect that Lessee shall immediately pay, in the manner and in funds of the
type specified in Section 3.3, the amounts required under, and in accordance
with, Section 10.1.2.
(b) Any replacement airframe shall be an airframe that is the same model as
the Airframe to be replaced thereby, or an improved model, and that has a value,
utility and remaining useful life (without regard to hours or cycles remaining
until the next regular maintenance check), at least equal to the Airframe to be
replaced thereby (assuming that such Airframe had been maintained in accordance
with this Lease) (a "Replacement Airframe"). Any such Replacement Engine shall
meet the requirements of, and be conveyed by Lessee to Lessor in accordance
with, Section 10.2 (other than the notice requirement set forth in Section
10.2.1).
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10.2 Event of Loss With Respect to an Engine
10.2.1 Notice
Upon the occurrence of an Event of Loss with respect to an Engine under
circumstances in which an Event of Loss with respect to the Airframe has not
occurred, Lessee shall promptly (and in any event within 15 days after such
occurrence) give Lessor written notice of such Event of Loss.
10.2.2 Replacement of Engine
Lessee shall, promptly and in any event within 90 days after the occurrence
of such Event of Loss, convey or cause to be conveyed to Lessor, in compliance
with Section 10.3 and as replacement for the Engine with respect to which any
Event of Loss occurred, title to a Replacement Engine free and clear of all
Liens other than Permitted Liens. Any replacement engine shall be an engine that
is the same or improved make and model as the Engine to be replaced, and that is
suitable for installation and use on the Airframe, and that has a value, utility
and remaining useful life (without regard to hours and cycles remaining until
overhaul) at least equal to the Engine to be replaced thereby (assuming that
such Engine had been maintained in accordance with this Lease) (a "Replacement
Engine").
10.2.3 Engine Exchange
Upon not less than five Business Days' prior written notice to Lessor,
Lessee may replace any Engine leased hereunder with another engine (the
"Exchanged Engine") meeting the requirements of Section 10.2.2. Such Exchanged
Engine shall be deemed to be a "Replacement Engine" and Lessor and Lessee shall
comply with the provisions of Section 10.3 with regard to the Exchanged Engine
and the Engine so replaced.
10.3 Conditions to any Replacement
10.3.1 Documents
Prior to or at the time of conveyance of title to any Replacement Airframe
or Replacement Engine to Lessor, Lessee shall take each of the following
actions:
(a) furnish Lessor with a full warranty bill of sale duly conveying to
Lessor such Replacement Airframe or Replacement Engine, in form and
substance reasonably satis-
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factory to Lessor and cause such Replacement Airframe to be duly registered
in the name of Lessor pursuant to the Act;
(b) cause (i) a Lease Supplement subjecting such Replacement Airframe
or Replacement Engine to this Lease, duly executed by Lessee, to be
delivered to Lessor for execution and, upon such execution, to be filed for
recordation with the FAA pursuant to the Act, (ii) a Trust Indenture
Supplement, subjecting such Replacement Airframe or Replacement Engine to
the Trust Indenture, to be delivered to Lessor for execution and, upon
execution, to be filed for recordation with the FAA pursuant to the Act and
(iii) such Financing Statements and other filings, as Lessor or Mortgagee
may reasonably request, duly executed by Lessee and, to the extent
applicable, Lessor and Mortgagee (and Lessor and Mortgagee shall execute
and deliver the same), to be filed in such locations as any such party may
reasonably request;
(c) furnish such evidence of compliance with the insurance provisions
of Section 11 with respect to such Replacement Airframe or Replacement
Engine as Lessor may reasonably request;
(d) furnish an opinion or opinions of Lessee's counsel (which may be
Lessee's legal department) reasonably satisfactory to Lessor and addressed
to Lessor and Mortgagee to the effect that (i) such full warranty bill of
sale referred to in Section 10.3.1(a) constitutes an effective instrument
for the conveyance of title to the Replacement Airframe or Replacement
Engine and (ii) in the case of a Replacement Airframe, Lessor and
Mortgagee, as assignee of Lessor, will be entitled to the benefits of
Section 1110 with respect to the Replacement Airframe, provided that such
opinion referred to in this clause (ii) need not be delivered to the extent
that immediately prior to such replacement the benefits of Section 1110
were not, solely by reason of a change in law or court interpretation
thereof, available to Lessor or Mortgagee, as assignee of Lessor;
(e) furnish an opinion of Lessee's aviation law counsel reasonably
satisfactory to Lessor and addressed to Lessor and Mortgagee as to the due
registration of any such Replacement Airframe and the due filing for
recordation of each Lease Supplement and Trust Indenture Supplement with
respect to such Replacement Airframe or Replacement Engine under the Act;
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(f) with respect to any Replacement Airframe, furnish an opinion of
tax counsel, selected by Owner Participant and reasonably satisfactory to
Lessee, as to the federal income tax consequences (without any requirement
as to the nature of such Federal income tax consequences) to Lessor and
Owner Participant of any such replacement;
(g) with respect to the replacement of the Airframe, and any Engine
installed thereon at the time of the subject Event of Loss, if requested by
Lessor and at Lessor's expense, furnish a certified report of a qualified
independent aircraft appraiser, reasonably satisfactory to Lessor,
certifying that such Replacement Airframe and any such Replacement Engine
complies with the value, utility and remaining useful life requirements set
forth in Section 10.1.3(b).
Lessor and Lessee understand and agree that if at the time of any
replacement of the Airframe or any Engine, as contemplated in this Section 10,
the Airframe was registered in a jurisdiction other than the United States, then
the requirements set forth above in this Section 10.3.1 relating to compliance
with the requirements of the Act or the FAA, shall be deemed to refer to the
comparable applicable Law of, and the Aviation Authority of, such other
jurisdiction.
10.3.2 Other Obligations
(a) Lessor and Lessee agree that, upon any Replacement Airframe becoming
the Airframe hereunder, and upon any Replacement Engine becoming an Engine
hereunder, this Lease shall continue to be, and shall be treated as, a lease for
U.S. federal income tax purposes of, among other things, such Replacement
Airframe and such Replacement Engine. Without limiting the foregoing, Lessee and
Lessor intend that Lessor shall, in all events, be entitled to the benefits of
Section 1110 with respect to any Replacement Airframe or Replacement Engine and
Lessee and Lessor shall cooperate and take such action as the other may
reasonably request so as to ensure that Lessor shall be entitled to such
benefits; provided that Lessor shall not be entitled to such benefits to the
extent that immediately prior to any Replacement Engine becoming an Engine
hereunder, the benefits of Section 1110 were not, solely by reason of a change
in law or court interpretation thereof, available to Lessor or Mortgagee, as
assignee of Lessor.
(b) No Event of Loss with respect to an Engine, or with respect to an
Airframe, shall result in, or otherwise al-
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low or permit (other than as provided in Section 10.1.2(b)), any reduction,
deferral, discharge or other change in the timing or amount of any Rent payable
by Lessee hereunder, and (subject to such Section 10.1.2(b)) Lessee shall pay
all such Rent and other amounts as though such Event of Loss had not occurred.
10.4 Conveyance to Lessee
Upon compliance by Lessee with the applicable terms of Sections 10.1.3,
10.2 and 10.3.1, Lessor will transfer to Lessee the Airframe or Engine, as the
case may be, with respect to which such Event of Loss occurred, in accordance
with Section 4.5.
10.5 Application of Payments
Any amounts, other than insurance proceeds in respect of damage or loss not
constituting an Event of Loss (the application of which is provided for in
Section 11), received at any time by Lessor, Lessee or any Permitted Sublessee
from any Government Entity or any other Person in respect of any Event of Loss
will be applied as follows:
10.5.1 Replacement of Airframe and Engines
If such amounts are received with respect to the Airframe, and any Engine
installed thereon at the time of such Event of Loss, upon compliance by Lessee
with the applicable terms of Section 10.1.3 with respect to the Event of Loss
for which such amounts are received, such amounts shall be paid over to, or
retained by, Lessee.
10.5.2 Loss of Engine
If such amounts are received with respect to an Engine (other than an
Engine installed on the Airframe at the time such Airframe suffers an Event of
Loss), upon compliance by Lessee with the applicable terms of Section 10.2.2
with respect to the Event of Loss for which such amounts are received, such
amounts shall be paid over to, or retained by, Lessee.
10.5.3 Payment of Loss
If such amounts are received, in whole or in part, with respect to the
Airframe, and Lessee makes, has made or is deemed to have made the election set
forth in Section 10.1.2, such amounts shall be applied as follows:
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(a) first, if the sum described in Section 10.1.2 has not then been
paid in full by Lessee, such amounts shall be paid to Lessor (or to
Mortgagee so long as Mortgagee has not given notice to Lessee that the Lien
of the Trust Indenture has been duly discharged, except with respect to
Excluded Payments) to the extent necessary to pay in full such sum;
(b) second, the remainder, if any, shall be paid to Lessee.
10.6 Requisition of Aircraft for Use
If any Government Entity shall requisition for use the Airframe and the
Engines or engines installed thereon, and if the same does not constitute an
Event of Loss, Lessee shall promptly notify Lessor and Mortgagee of such
requisition and all of Lessee's obligations under this Agreement shall continue
to the same extent as if such requisition had not occurred; provided, however,
that if the Airframe and Engines or engines installed thereon are not returned
to Lessor by Lessee at the end of the Term or within 180 days thereafter, and
Lessor, upon notice given not less than 30 days nor more than 120 days before
the end of the Term, shall have elected to treat such event as constituting an
Event of Loss with respect to the Aircraft, Lessee shall then be deemed to have
made the election set forth in Section 10.1.2 with the effect that Lessee shall
be obligated to pay the Stipulated Loss Value and all other amounts payable
pursuant to Section 10.1.2 with respect to the Aircraft as if an Event of Loss
had occurred as of the end of the Term. If Lessor shall not have elected to
treat such event as an Event of Loss, Lessee shall be obligated to return the
Airframe and Engines or engines to Lessor pursuant to, and in all other respects
to comply with the provisions of, Section 5 promptly upon their return by such
Government Entity, and Lessee shall pay to Lessor upon such return an amount
equal to the average daily Basic Rent or Renewal Rent, as the case may be,
payable by Lessee during the Term for each day after the end of the Term to but
excluding the day of such return, up to a maximum of 30 days.
10.7 Requisition of an Engine for Use
If any Government Entity shall requisition for use any Engine but not the
Airframe, Lessee will, if such requisition continues to the end of the Term,
replace such Engine by complying with the applicable terms of Sections 10.2 and
10.3 to the same extent as if an Event of Loss had occurred with re-
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spect to such Engine, and any payments received by Lessor or Lessee from such
Government Entity with respect to such requisition shall be paid or retained in
accordance with Section 10.5.2.
10.8 Application of Payments
All payments received by Lessor or Lessee, or any Permitted Sublessee, from
any Government Entity for the use of the Airframe and Engines or engines
installed thereon during the Term shall be paid over to, or retained by, Lessee
and all payments received by Lessor or Lessee from any Government Entity for the
use of the Airframe and Engines or engines installed thereon after the Term
shall be paid over to, or retained by, Lessor; provided that, if such
requisition constitutes an Event of Loss, or Lessor has elected under Section
10.6 to treat such requisition as an Event of Loss, then all such payments shall
be paid over to Lessor (or to Mortgagee so long as Mortgagee has not given
notice to Lessee that the Lien of the Trust Indenture has been duly discharged),
and held as provided in Section 10.5.
10.9 Application of Payments During Existence of a Special Default
Any amount described in this Section 10 that is payable or creditable to,
or retainable by, Lessee shall not be paid or credited to, or retained by,
Lessee if at the time such payment, credit or retention would otherwise occur a
Special Default shall have occurred and be continuing, but shall instead be held
by or paid over to Lessor (or to Mortgagee so long as Mortgagee has not given
notice to Lessee that the Trust Indenture has been duly discharged) as security
for the obligations of Lessee under this Lease and the other Lessee Operative
Agreements and shall be invested pursuant to Section 4.4 hereof unless and until
such amount is applied, at the option of Lessor, or upon the written request of
Lessee to Lessor, from time to time during the continuance of a Special Default,
to Lessee's obligations under this Lease as and when due, it being understood
that any such application shall be made to such obligations of Lessee as Lessor
may determine in its sole discretion. At such time as there shall not be
continuing any Special Default, such amount shall be paid to Lessee to the
extent not previously applied in accordance with this Section 10.9.
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SECTION 11. INSURANCE
11.1 Lessee's Obligation to Insure
Lessee shall comply with, or cause to be complied with, each of the
provisions of Annex D, which provisions are hereby incorporated by this
reference as if set forth in full herein.
11.2 Insurance for Own Account
Nothing in Section 11 shall limit or prohibit (a) Lessee from maintaining
the policies of insurance required under Annex D with higher limits than those
specified in Annex D, or (b) Lessor, Mortgagee or Owner Participant from
obtaining insurance for its own account (and any proceeds payable under such
separate insurance shall be payable as provided in the policy relating thereto);
provided, however, that no insurance may be obtained or maintained that would
limit or otherwise adversely affect the coverage of any insurance required to be
obtained or maintained by Lessee pursuant to this Section 11 and Annex D.
11.3 Indemnification by Government in Lieu of Insurance
Lessor agrees to accept, in lieu of insurance against any risk with respect
to the Aircraft described in Annex D, indemnification from, or insurance
provided by, the U.S. Government, or upon the written consent of Lessor, other
Government Entity, against such risk in an amount that, when added to the amount
of insurance (including permitted self-insurance), if any, against such risk
that Lessee (or any Permitted Sublessee) may continue to maintain, in accordance
with this Section 11, during the period of such requisition or transfer, shall
be at least equal to the amount of insurance against such risk otherwise
required by this Section 11.
11.4 Application of Insurance Proceeds
As between Lessor and Lessee, all insurance proceeds received as a result
of the occurrence of an Event of Loss with respect to the Aircraft or any Engine
under policies required to be maintained by Lessee pursuant to this Section 11
will be applied in accordance with Section 10.5. All proceeds of insurance
required to be maintained by Lessee, in accordance with Section 11 and Section B
of Annex D, in respect of any property damage or loss not constituting an Event
of Loss with respect
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to the Aircraft, Airframe or any Engine will be applied in payment (or to
reimburse Lessee) for repairs or for replacement property, and any balance
remaining after such repairs or replacement with respect to such damage or loss
shall be paid over to, or retained by, Lessee.
11.5 Application of Payments During Existence of a Special Default
If a Special Default shall have occurred and be continuing at any time that
an amount described in this Section 11 is payable or creditable to, or
retainable by, Lessee, Lessee shall cause such amount to be paid over to Lessor
(or to Mortgagee so long as Mortgagee has not given notice to Lessee that the
Lien of the Trust Indenture has been duly discharged) as security for the
obligations of Lessee under this Lease and shall be invested pursuant to Section
4.4 hereof unless and until such amount is applied, at the option of Lessor, or
upon the written request of Lessee to Lessor, from time to time during the
continuance of a Special Default, to Lessee's obligations under this Lease and
the other Lessee Operative Agreements as and when due, it being understood that
any such application shall be made to such obligations of Lessee as Lessor may
determine in its sole discretion. At such time as there shall not be continuing
any Special Default, such amount shall be paid to Lessee to the extent not
previously applied in accordance with this Section 11.5.
SECTION 12. INSPECTION
(a) At all reasonable times Lessor, Mortgagee or the Owner Participant, and
their respective authorized representatives (the "Inspecting Parties") may (not
more than once every 12 months unless a Lease Event of Default has occurred and
is continuing in which case such inspection right shall not be so limited)
inspect the Aircraft, the Airframe and the Engines (including, without
limitation, the Aircraft Documents) and any such Inspecting Party may make
copies of such Aircraft Documents not reasonably deemed confidential by Lessee
or such Permitted Sublessee.
(b) Any inspection of the Aircraft hereunder shall be limited to a visual,
walk-around inspection and shall not include the opening of any panels, bays or
other components of the Aircraft (although those otherwise open may be
inspected), and no such inspection shall interfere with Lessee's or any
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Permitted Sublessee's maintenance and operation of the Aircraft, the Airframe
and the Engines.
(c) With respect to such rights of inspection, Lessor, Owner Participant
and Mortgagee shall not have any duty or liability to make, or any duty or
liability by reason of not making, any such visit, inspection or survey.
(d) Each Inspecting Party shall bear its own expenses in connection with
any such inspection (including the cost of any copies made in accordance with
Section 12(a)).
SECTION 13. ASSIGNMENT; MERGER; SUCCESSOR OWNER TRUSTEE
13.1 In General
This Lease and the other Lessee Operative Agreements shall be binding upon
and inure to the benefit of Lessor and Lessee and their respective successors
and permitted assigns. Except as otherwise expressly permitted by the terms of
the Lease or any other Lessee Operative Agreement, Lessee will not, without the
prior written consent of Lessor and Mortgagee, assign any of its rights under
this Lease, such consent not to be unreasonably withheld. Except as otherwise
provided herein (including, without limitation, under the provisions of Section
15 hereof), Lessor and Mortgagee may not assign or convey any of their right,
title and interest in and to this Lease or the Aircraft without the prior
written consent of Lessee, such consent not to be unreasonably withheld.
13.2 Merger of Lessee
13.2.1 In General
Lessee shall not consolidate with or merge into any other Person under
circumstances in which Lessee is not the surviving corporation, or convey,
transfer or lease in one or more transactions all or substantially all of its
assets to any other Person, unless:
(a) such Person is organized, existing and in good standing under the Laws
of the United States, any State of the United States or the District Columbia
and, upon consummation of such transaction, such Person will be a U.S. Air
Carrier;
(b) such Person executes and delivers to Lessor and Mortgagee a duly
authorized, legal, valid, binding and enforce-
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able agreement, reasonably satisfactory in form and substance to Lessor,
containing an effective assumption by such Person of the due and punctual
performance and observance of each covenant, agreement and condition in the
Lessee Operative Agreements to be performed or observed by Lessee;
(c) such Person makes such filings and recordings with the FAA pursuant to
the Act as shall be necessary to evidence such consolidation or merger; and
(d) immediately after giving effect to such consolidation or merger no
Lease Event of Default shall have occurred and be continuing.
13.2.2 Effect of Merger
Upon any such consolidation or merger of Lessee with or into, or the
conveyance, transfer or lease by Lessee of all or substantially all of its
assets to, any Person in accordance with this Section 13.2, such Person will
succeed to, and be substituted for, and may exercise every right and power of,
Lessee under the Lessee Operative Agreements with the same effect as if such
person had been named as "Lessee" therein. No such consolidation or merger, or
conveyance, transfer or lease, shall have the effect of releasing Lessee or such
Person from any of the obligations, liabilities, covenants or undertakings of
Lessee under the Lease.
13.3 Assignment Security for Lessor's Obligations
In order to secure the indebtedness evidenced by the Equipment Notes,
Lessor has agreed in the Trust Indenture, among other things, to assign to
Mortgagee this Lease and to mortgage the Aircraft, the Airframe and the Engines
in favor of Mortgagee, subject to the reservations and conditions therein set
forth. Lessee hereby accepts and consents to the assignment of all Lessor's
right, title and interest in and to this Lease pursuant to the terms of the
Trust Indenture. In accordance with Section 3.3(c), Lessee agrees to pay
directly to Mortgagee (or, after receipt by Lessee of notice from Mortgagee of
the discharge of the Lien of the Trust Indenture, to Lessor), all amounts of
Rent (other than Excluded Payments) due or to become due hereunder and assigned
to Mortgagee and Lessee agrees that Mortgagee's right to such payments hereunder
shall be absolute and unconditional and shall not be affected by any
circumstance, including, without limitation, the circumstances set forth in
Section 16 hereof. Notwithstanding the foregoing assignment of this Lease, the
obligations of Lessee to Lessor
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to perform the terms and conditions of this Lease shall remain in full force and
effect.
13.4 Successor Owner Trustee
Lessee agrees that in the case of the appointment of any successor Owner
Trustee pursuant to the terms of the Participation Agreement and the Trust
Agreement, such successor Owner Trustee shall, upon written notice by such
successor Owner Trustee to Lessee, succeed to all the rights, powers and title
of Lessor hereunder and shall be deemed to be Lessor and the owner of the
Aircraft and the other assets of the Trust Estate for all purposes hereof
without the necessity of any consent or approval by Lessee and without in any
way altering the terms of this Lease or Lessee's obligations hereunder. An
appointment and designation of a successor Owner Trustee shall not exhaust the
right to appoint and designate further successor or additional Owner Trustees
pursuant to the Participation Agreement and the Trust Agreement, and such right
may be exercised repeatedly as long as this Lease shall be in effect.
SECTION 14. LEASE EVENTS OF DEFAULT
The occurrence of any one or more of the following circumstances,
conditions, acts or events, for any reason whatsoever and whether any such
circumstance, condition, act or event shall be voluntary or involuntary or come
about or be effected by operation of Law or pursuant to or in compliance with
any judgment, decree, order, rule or regulation of any Government Entity, shall
constitute a Lease Event of Default so long as it shall not have been remedied:
14.1 Payments
Lessee shall fail to pay any amount of Basic Rent, Renewal Rent, Stipulated
Loss Value or Termination Value when due and such failure shall continue for a
period in excess of 10 Business Days after the same shall have become due;
Lessee shall fail to pay any Supplemental Rent (other than Stipulated Loss Value
or Termination Value or Excluded Payments) when due and such failure shall
continue for a period in excess of 10 Business Days from and after the date of
any written notice to Lessee from Lessor or the Mortgagee of the failure to make
such payment when due; or Lessee shall fail to pay any Excluded Payment when due
and such failure shall continue for a period in excess of 10 Business Days from
and after the date of any writ-
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ten notice to Lessee and Mortgagee from the Owner Paticipant that such failure
constitutes a Lease Event of Default.
14.2 Insurance
Lessee shall fail to carry and maintain, or cause to be carried and
maintained, insurance on and in respect of the Aircraft, Airframe and Engines in
accordance with the provisions of Section 11.
14.3 Other Covenants
Lessee shall fail to observe or perform (or caused to be observed and
performed) in any material respect any other covenant, agreement or obligation
set forth herein or in any other Lessee Operative Agreement (other than the
covenants, agreements and obligations set forth in the Tax Indemnity Agreement),
and such failure shall continue unremedied for a period of 30 days from and
after the date of written notice thereof to Lessee from Lessor or Mortgagee,
unless such failure is capable of being corrected and Lessee shall be diligently
proceeding to correct such failure, in which case there shall be no Lease Event
of Default unless and until such failure shall continue unremedied for a period
of 180 days after receipt of such notice.
14.4 Representations and Warranties
Any representation or warranty made by Lessee herein, in the Participation
Agreement or in any other Lessee Operative Agreement (other than the
representations and warranties of Lessee in the Tax Indemnity Agreement) (a)
shall prove to have been untrue or inaccurate in any material respect as of the
date made, (b) such untrue or inaccurate representation or warranty is material
at the time in question, and (c) the same shall remain uncured (to the extent of
the adverse impact of such incorrectness on the interest of the Participants or
Lessor) for a period in excess of 30 days from and after the date of written
notice thereof from Lessor or Mortgagee to Lessee.
14.5 Bankruptcy and Insolvency
(a) Lessee shall consent to the appointment of or the taking of possession
by a receiver, trustee or liquidator of itself or of substantially all of its
property, or Lessee shall admit in writing its inability to pay its debts
generally as they come due, or does not pay its debts generally as they become
due or shall make a general assignment for the benefit
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of creditors, or Lessee shall file a voluntary petition in bankruptcy or a
voluntary petition or an answer seeking reorganization, liquidation or other
relief in a case under any bankruptcy Laws or other insolvency Laws (as in
effect at such time), or Lessee shall seek relief by voluntary petition, answer
or consent, under the provisions of any other bankruptcy or other similar Law
providing for the reorganization or winding-up of corporations (as in effect at
such time) or Lessee's board of directors shall adopt a resolution authorizing
any of the foregoing; or
(b) an order, judgment or decree shall be entered by any court of competent
jurisdiction appointing, without the consent of Lessee, a receiver, trustee or
liquidator of Lessee or of substantially all of its property, or substantially
all of the property of Lessee shall be sequestered, and any such order, judgment
or decree of appointment or sequestration shall remain in force undismissed,
unstayed and unvacated for a period of 90 days after the date of entry thereof;
or
(c) a petition against Lessee in a case under any 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 which may apply to
Lessee, any court of competent jurisdiction assumes jurisdiction, custody or
control of Lessee or of substantially all of its property and such jurisdiction,
custody or control remains in force unrelinquished, unstayed and unterminated
for a period of 90 days.
SECTION 15. REMEDIES AND WAIVERS
15.1 Remedies
If any Lease Event of Default shall occur and be continuing, Lessor may, at
its option and at any time and from time to time, exercise any one or more of
the following remedies as Lessor in its sole discretion shall elect:
15.1.1 Return and Repossession
Lessor may cause Lessee, upon giving written notice to Lessee, to return
promptly, and Lessee shall return promptly, the Airframe and Engines as Lessor
may so demand, to Lessor or its order in the manner and condition required by,
and otherwise in accordance with, all the provisions of Sec-
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tion 5 as if the Airframe or Engines were being returned at the end of the Base
Lease Term or any Renewal Lease Term or Lessor, at its option, may enter upon
the premises where the Airframe or any Engine, or any Part thereof, are located
and take immediate possession of and remove the same by summary proceedings or
otherwise, all without liability accruing to Lessor for or by reason of such
entry or taking of possession, whether for the restoration of damage to property
caused by such taking or otherwise.
15.1.2 Sale and Use
Lessor may sell the Airframe and/or any Engine at public or private sale,
at such times and places, and to such Persons (including Lessor, Mortgagee or
any Participant), as Lessor may determine; or Lessor may otherwise dispose of,
hold, use, operate, lease to others or keep idle the Airframe and/or any Engine,
as Lessor, in its sole discretion, may determine, all free and clear of any
rights of Lessee and without any duty to account to Lessee with respect to such
action or inaction or for any proceeds with respect thereto, except as
hereinafter set forth in this Section 15, and except to the extent that such
proceeds would constitute, under applicable Law, a mitigation of Lessor's
damages suffered or incurred as a result of the subject Lease Event of Default.
Lessor shall give Lessee at least 15 days prior written notice of the date fixed
for any public sale of the Airframe and/or any Engine or of the date on or after
which will occur the execution of any contract providing for any private sale.
15.1.3 Certain Liquidated Damages
Whether or not Lessor shall have exercised, or shall thereafter at any time
exercise, any of its rights under Section 15.1.1 or 15.1.2 with respect to the
Airframe and/or any Engine, or any Part thereof, Lessor, by written notice to
Lessee specifying a payment date (which shall be the Stipulated Loss Value Date
next occurring not less than 10 days after the date of such notice), may demand
Lessee to pay to Lessor, and Lessee shall pay to Lessor, on the payment date so
specified and in the manner and in funds of the type specified in Section 3.3,
as liquidated damages for loss of a bargain and not as a penalty (in lieu of the
Basic Rent or Renewal Rent, as the case may be, for the Aircraft in respect of
all periods commencing on or after the date specified for payment in such
notice), the following amounts:
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(a) all unpaid Basic Rent or Renewal Rent, as the case may be, due at
any time prior to the Stipulated Loss Value Date specified in such notice;
plus
(b) whichever of the following amounts Lessor, in its sole discretion
shall specify in such notice:
(i) an amount equal to the excess, if any, of the present value,
computed as of the Stipulated Loss Value Date specified in such
notice, discounted to such date at a rate per annum equal to the Debt
Rate, compounded semiannually, of all unpaid Basic Rent during the
then remaining portion of the Base Lease Term or, if a Renewal Lease
Term has commenced, of all unpaid Renewal Rent during the remaining
portion of such Renewal Lease Term, over the Fair Market Rental Value
of the Aircraft for the remainder of the Term, after discounting such
Fair Market Rental Value to its then present value (at a rate per
annum equal to the Debt Rate, compounded semiannually) as of the
Stipulated Loss Value Date specified in such notice, or
(ii) an amount equal to the excess, if any, of the Stipulated
Loss Value for the Aircraft, computed as of the Stipulated Loss Value
Date specified in such notice, over the Fair Market Sales Value of the
Aircraft, as of the Stipulated Loss Value Date specified in such
notice; plus
(c) interest on the amounts specified in the foregoing clause (a) at
the Payment Due Rate from and including the date on which any such amount
was due to the date of payment of such amount; plus
(d) interest on the amount specified in the foregoing clause (b)(i) or
(b)(ii), according to Lessor's election, at the Payment Due Rate from and
including the Stipulated Loss Value Date specified in such notice to the
date of payment of such amount.
15.1.4 Liquidated Damages Upon Sale
If Lessor, pursuant to Section 15.1.2 or applicable Law, shall have sold
the Airframe and/or any Engine, Lessor, in lieu of exercising its rights under
Section 15.1.3 with respect to the Aircraft, Airframe or any Engine, as the case
may be, may, if Lessor shall so elect, upon giving written notice to Lessee,
demand Lessee to pay Lessor, and Lessee shall pay to Lessor, on the date of such
sale and in the manner and in funds of the type specified in Section 3.3, as
liquidated damages for
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loss of a bargain and not as a penalty (in lieu of the Basic Rent or Renewal
Rent, as the case may be, for the Aircraft in respect of all periods commencing
on or after the date of such sale), the following amounts:
(a) all unpaid Basic Rent or Renewal Rent, as the case may be, due at
any time prior to the Stipulated Loss Value Date on or immediately
preceding the date of such sale; plus
(b) an amount equal to the excess, if any, of (i) the Stipulated Loss
Value of the Aircraft, computed as of the Stipulated Loss Value Date used
in the foregoing clause (a) for the computation of unpaid Rent, over (ii)
the proceeds of such sale; plus
(c) all reasonable brokerage and other out-of-pocket fees and expenses
incurred by Lessor and, Mortgagee in connection with such sale; plus
(d) if the date of such sale is not a Stipulated Loss Value Date, an
amount equal to interest on the outstanding principal amount of the
Equipment Notes at the rate per annum borne thereby from and including the
Stipulated Loss Value Date used in the foregoing clause (a) for the
computation of unpaid Rent to the date of such sale; plus
(e) interest on the amounts specified in the foregoing clause (a) at
the Payment Due Rate from and including the date on which any such amount
was due to the date of payment of such amount; plus
(f) interest on the sum of the amounts specified in the foregoing
clause (b) at the Payment Due Rate from and including the date of such sale
to the date of payment of such amounts.
15.1.5 Rescission
Lessor may (i) at its option, rescind or terminate this Lease as to the
Aircraft, Airframe or any Engine, or any Part thereof, or (ii) exercise any
other right or remedy that may be available to it under applicable Law or
proceed by appropriate court action to enforce the terms hereof.
15.1.6 Other Remedies
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(a) In addition to the foregoing remedies (but without duplication of
amounts otherwise paid under this Section 15), Lessee shall be liable for any
and all unpaid Rent due hereunder before, during or after (except as otherwise
provided herein) the exercise of any of the foregoing remedies and for all
reasonable attorneys' fees and other costs and expenses of Lessor, Mortgagee the
Owner Participant and the Note Holders, including, without limitation, interest
on overdue Rent at the rate as herein provided, incurred by reason of the
occurrence of any Lease Event of Default or the exercise of Lessor's remedies
with respect thereto, including all reasonable costs and expenses incurred in
connection with the return of the Airframe or any Engine, in accordance with the
terms of Section 5 or in placing the Airframe or any Engine, in the condition
and airworthiness required by Section 5.
(b) The prevailing party in any dispute between Lessee and Lessor under
this Lease shall be entitled to reimbursement from the other party for all
reasonable attorneys' fees and other costs and expenses of such prevailing
party, incurred by reason of such dispute.
15.2 Limitations Under CRAF
Notwithstanding the provisions of Section 15.1, during any period that the
Aircraft, Airframe or any Engine is subject to CRAF in accordance with the
provisions of Section 7.2.3 and in the possession of the U.S. Government, Lessor
shall not, as a result of any Lease Event of Default, exercise its remedies
hereunder in such manner as to limit Lessee's control under this Lease (or any
Permitted Sublessee's control under any Permitted Sublease) of the Aircraft,
Airframe or such Engine, unless at least 30 days' (or such other period as may
then be applicable under CRAF) written notice of default hereunder shall have
been given by Lessor or Mortgagee by registered or certified mail to Lessee (and
any Permitted Sublessee) with a copy to the Contracting Officer Representative
or Representatives for the Military Airlift Command of the United States Air
Force to whom notices must be given under the contract governing Lessee's (or
any Permitted Sublessee's) participation in CRAF with respect to the Aircraft,
Airframe or any Engine.
15.3 Right to Perform for Lessee
If Lessee (i) fails to make any payment of Rent required to be made by it
hereunder or (ii) fails to perform or comply with any of its agreements
contained herein and such
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failure continues for a period of 30 days after written notice thereof is given
by Lessor or Mortgagee to Lessee, Lessor or Mortgagee may (but shall not be
obligated to) make such payment or perform or comply with such agreement, and
the amount of such payment and the amount of the expenses of Lessor or Mortgagee
incurred in connection with such payment or the performance of or compliance
with such agreement, as the case may be, together with interest thereon at the
Payment Due Rate, shall be deemed Supplemental Rent, payable by Lessee upon
demand by Lessor or Mortgagee, whichever is entitled thereto. No such payment,
performance or compliance shall be deemed to cure any Lease Default or Lease
Event of Default or otherwise relieve Lessee of its obligations with respect
thereto.
15.4 Determination of Fair Market Rental Value and Fair Market Sales Value
For the purpose of this Section 15 only, the "Fair Market Rental Value" or
the "Fair Market Sales Value" of the Aircraft, the Airframe or any Engine, shall
be determined on an "as is, where is" basis and shall take into account
customary brokerage and other out-of-pocket fees and expenses which typically
would be incurred in connection with a re-lease or sale of the Aircraft, the
Airframe or any Engine. Any such determination shall be made by an Appraiser
selected by Lessor and the costs and expenses associated therewith shall be
borne by Lessee, unless Lessor does not obtain possession of the Aircraft, the
Airframe and the Engines pursuant to this Section 15, in which case an Appraiser
shall not be appointed and Fair Market Rental Value and Fair Market Sales Value
for purposes of this Section 15 shall be zero.
15.5 Remedies Cumulative
Nothing contained in this Lease shall be construed to limit in any way any
right, power, remedy or privilege of Lessor hereunder or under any other
Operative Agreement or now or hereafter existing at law or in equity. Each and
every right, power, remedy and privilege hereby given to, or retained by, Lessor
in this Lease shall be in addition to and not in limitation of every other
right, power, remedy and privilege given under the Operative Agreements or now
or hereafter existing at law or in equity. Each and every right, power, remedy
and privilege of Lessor under this Lease and any other Operative Agreement may
be exercised from time to time or simultaneously and as often and in such order
as may be deemed expedient by Lessor. All such rights, powers, remedies and
privileges shall be cumulative and not mutually exclusive, and the exercise of
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one shall not be deemed a waiver of the right to exercise any other. Lessee
hereby waives to the extent permitted by applicable Law any right which it may
have to require Lessor to choose or elect remedies.
SECTION 16. LESSEE'S OBLIGATIONS; NO SETOFF, COUNTERCLAIM, ETC.
(a) Lessee's obligation to pay Rent hereunder shall be absolute and
unconditional, and shall not be affected by any event or circumstance,
including, without limitation: (i) any setoff, counterclaim, recoupment, defense
or other right that Lessee may have against Lessor, Mortgagee, any Participant,
any Note Holder, or any other Person for any reason whatsoever; (ii) any defect
in the title, airworthiness, condition, design, operation or fitness for use of,
or any damage to or loss or destruction of, the Aircraft, Airframe or any
Engine, or any interruption or cessation in the use or possession thereof by
Lessee for any reason whatsoever; (iii) any insolvency, bankruptcy,
reorganization or similar proceedings by or against Lessee or any other Person;
or (iv) any other circumstance, happening or event whatsoever, whether or not
similar to any of the foregoing.
(b) If for any reason whatsoever this Lease shall be terminated in whole or
in part by operation of law or otherwise except as specifically provided herein,
Lessee nonetheless agrees to pay an amount equal to each Rent payment at the
time such payment would have become due and payable in accordance with the terms
hereof had this Agreement not been terminated in whole or in part. Lessee hereby
waives, to the extent permitted by applicable law, any and all rights that it
may now have or that at any time hereafter may be conferred upon it, by statute
or otherwise, to terminate, cancel, quit or surrender this Agreement, except in
accordance with the express terms hereof.
(c) Nothing set forth in this Section 16 shall be construed to prohibit
Lessee from separately pursuing any claim that it may have from time to time
against Lessor or any other Person with respect to any matter (other than the
absolute and unconditional nature of Lessee's obligations hereunder to pay Basic
Rent, Renewal Rent, the Stipulated Loss Value with respect to any Aircraft, and
the Termination Value with respect to any Aircraft and other than the matters
specified in paragraphs (a) and (b) above).
<PAGE>
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SECTION 17. RENEWAL AND PURCHASE OPTIONS
17.1 Preliminary Notices
(a) At least (i) 120 days prior to the Scheduled Expiration Date or a
Renewal Term Expiration Date, as applicable, or (ii) if a Renewal Lease Term of
six months or less is then in effect, 60 days prior to the Renewal Term
Expiration Date, Lessee may provide notice to Lessor that Lessee may exercise
the option to extend the leasing of the Aircraft for a Renewal Lease Term
pursuant to Section 17.2 or the option to purchase the Aircraft on the Scheduled
Expiration Date or Renewal Term Expiration Date of such Renewal Lease Term, as
the case may be, pursuant to Section 17.3 (a "Preliminary Notice").
(b) If any such Preliminary Notice is given by Lessee, then Lessee may
provide a further notice specifying which option it intends to elect, with
respect to the relevant period, pursuant to Section 17.2.1 or 17.3.1, as the
case may be. If Lesser fails to provide such further notice, such Preliminary
Notice shall be deemed revoked.
17.2 Renewal Options
17.2.1 Renewal Notice
(a) If Lessee has given a Preliminary Notice, as specified in Section 17.1,
and subject to the terms and conditions of this Section 17.2, Lessee may
exercise its option to extend the leasing of the Aircraft hereunder until the
applicable Renewal Term Expiration Date, on the same terms, provisions and
conditions (except as contemplated by this Section 17) set forth herein and in
the other Lessee Operative Agreements with respect to the Base Lease Term, by
delivery of a notice (a "Renewal Notice") to Lessor not less than (i) 75 days
prior to the Scheduled Expiration Date or a Renewal Term Expiration Date, as
applicable, or (ii) if a Renewal Lease Term of six months or less is then in
effect, 20 days prior to the Renewal Term Expiration Date.
(b) Notwithstanding anything to the contrary in this Agreement or any other
Operative Agreement:
(i) No Renewal Notice shall be binding on Lessor or oblige Lessor to
extend the leasing of the Aircraft hereunder for a Renewal Lease Term if
any Lease Event of Default shall have occurred and be continuing on and as
of
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the date that such Renewal Lease Term would otherwise commence.
(ii) Any Renewal Notice shall be revocable by Lessee until 10 Business
Days after the Renewal Rent is determined in accordance with Section 17.2.2
and unless revoked by written notice by Lessee to Lessor shall thereafter
become irrevocable and shall constitute an unconditional obligation of
Lessee to extend the leasing of the Aircraft hereunder for the Renewal
Lease Term to which such Renewal Notice relates.
(iii) Lessee shall not be entitled to give any Renewal Notice if it
has (x) not delivered a Preliminary Notice or (y) delivered a Purchase
Notice to Lessor.
17.2.2 Renewal Rent
(a) During the Renewal Lease Term, Lessee shall pay to Lessor on each
Payment Date, in the manner and in the funds of the type specified in Section
3.3, Renewal Rent in arrears.
(b) The Renewal Rent payable by Lessee on each Payment Date during the
First Renewal Lease Term shall be the lower of (i) an amount equal to one-half
of the average of the semiannual Basic Rent amounts payable during the Base
Lease Term and (ii) the Fair Market Rental Value of the Aircraft for such
Renewal Lease Term. The Renewal Rent payable by Lessee on each Payment Date
during any Subsequent Renewal Lease Term shall be the Fair Market Rental Value
of the Aircraft for such Subsequent Renewal Lease Term. Any such Fair Market
Rental Value shall be determined not more than 35 days after delivery of a
Preliminary Notice by mutual agreement of Lessor and Lessee or, if they shall be
unable to agree, by an appraisal in accordance with Section 17.4.
17.2.3 Stipulated Loss and Termination Values
(a) For any Renewal Lease Term, Stipulated Loss Value Dates and Termination
Value Dates shall be extended throughout such Renewal Lease Term on the same day
of each month as during the Base Lease Term, and a new EBO Date shall be
established.
(b) Stipulated Loss Value and Termination Value amounts and the EBO Price
that are payable during any Renewal Lease Term shall be determined at the same
time that the Renewal Rent for such Renewal Lease Term is determined under
Sec-
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tion 17.2.2. Stipulated Loss Values and Termination Values for any such
Renewal Lease Term shall, commencing on the first day of such Renewal Lease
Term, be equal to the Fair Market Sales Value of the Aircraft, computed as of
the first day of such Renewal Lease Term, and shall decline ratably on a monthly
basis to the Fair Market Sales Value of the Aircraft as of the last day of such
Renewal Lease Term.
(c) Any Fair Market Sales Value of the Aircraft, for purposes of
calculating Stipulated Loss Value and Termination Value amounts applicable
during any such Renewal Lease Term, shall be determined 35 days after delivery
of a Preliminary Notice by mutual agreement of Lessor and Lessee or, if they
shall be unable to agree, by an appraisal in accordance with Section 17.4.
17.3 Purchase Option
17.3.1 Purchase Notice
(a) Subject to the terms and conditions of this Section 17.3, Lessee or its
designee may elect to purchase the Aircraft, (A) on any Purchase Date, at a
purchase price equal to the Fair Market Sales Value of the Aircraft, (B) on the
EBO Date at a purchase price equal to the EBO Price or (C) at any time following
the occurrence of a Materially Adverse Tax Event at a purchase price equal to
the Fair Market Sales Value of the Aircraft (or, if greater, the Termination
Value) determined as of the date of purchase. (b) Lessee may exercise its option
to purchase the Aircraft pursuant to clause (A), clause (B) or clause (C) of
Section 17.3.1(a), by delivery of a notice (a "Purchase Notice") to Lessor not
less than (i) in the case of clause (A), 75 days prior to the Purchase Date
specified in such Purchase Notice, or (ii) in the case of Clause (A) if a
Renewal Lease Term of six months or less is then in effect, 20 days prior to the
Purchase Date specified in such Purchase Notice, or (iii) in the case of clause
(B), not less than 30 days prior to the EBO Date, or (iv) in the case of clause
(C) at any time following a Materially Adverse Tax Event.
(c) Notwithstanding anything to the contrary in this Agreement or any other
Operative Agreement:
(i) Any Purchase Notice (whether delivered or deemed to have been
delivered) shall be revocable until 10 Business Days after the
determination of the Fair Market Sales
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Value in accordance with Section 17.3.2 or until 16 days prior to the EBO
Date, and unless revoked by written notice by Lessee to Lessor shall
thereafter become irrevocable and shall constitute an unconditional
obligation of Lessee to purchase the Aircraft under this Section 17.3.
(ii) Lessee shall not be entitled to give any Purchase Notice in
respect of any Purchase Date if it has delivered a Renewal Notice for a
Renewal Lease Term that would commence immediately following such Purchase
Date.
(d) If any purchase option is exercised, upon payment of the applicable
purchase price any Rent otherwise due and payable on the date of purchase or
thereafter with respect to such Aircraft shall not be due and payable.
(e) At the election of the Lessee, any purchase option described in this
Section 17.3 may be exercised by a designee of the Lessee.
17.3.2 Determination of Fair Market Sales Value
The Fair Market Sales Value of the Aircraft shall be determined not more
than 35 days after delivery of a Preliminary Notice by mutual agreement of
Lessor and Lessee or, if they shall be unable to agree, by an appraisal in
accordance with Section 17.4.
17.3.3 Title
Upon full and final payment by Lessee of (a) the applicable purchase price
of the Aircraft, (b) all unpaid Rent due and payable through and including the
Purchase Date, EBO Date or the date of Purchase under clause (C) of Section
17.3.1(a), as the case may be, and (c) all other amounts due and payable by
Lessee under this Agreement, Lessor will transfer to Lessee title to the
Aircraft in accordance with Section 4.5.
17.4 Appraisals
Whenever Fair Market Rental Value or Fair Market Sales Value of the
Aircraft is required to be determined by an appraisal under the foregoing
provisions of this Section 17, Lessee and Lessor shall, within seven days after
the expiration of the 35-day period referred to in Sections 17.2.2(b), 17.2.3(c)
and 17.3.2, appoint a mutually satisfactory Appraiser to complete such appraisal
within seven days of the appointment
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and the determination of such Appraiser shall be final and binding on Lessor and
Lessee. If Lessee and Lessor fail to agree within such 7-day period upon a
satisfactory Appraiser then each shall within one day thereafter appoint a
separate Appraiser and such Appraisers shall within seven days of such
appointment jointly determine such amount and such jointly determined amount
shall be final and binding on Lessor and Lessee. If either Lessee or Lessor
fails to so appoint an Appraiser, the determination of the single Appraiser
appointed shall be final and binding on Lessor and Lessee. If two Appraisers are
appointed and within seven days after the appointment of the latter of such two
Appraisers, they cannot agree upon such amount, such two Appraisers shall,
within two days after such seventh day, appoint a third Appraiser and such
amount shall be determined by such three Appraisers, who shall make their
separate appraisals within seven days following the appointment of the third
Appraiser, and any determination so made shall be conclusive and binding upon
Lessor and Lessee in accordance with the following provisions of this Section
17. If three Appraisers are appointed and the difference between the
determination which is farther from the middle determination and the middle
determination is more than 125% of the difference between the middle
determination and the third determination, then such farther determination shall
be excluded, the remaining two determinations shall be averaged and such average
shall be final and binding upon Lessor and Lessee. Otherwise, the average of all
three determinations shall be final and binding upon Lessor and Lessee. If no
such third Appraiser is appointed within such 2-day period, either Lessor or
Lessee may apply to the American Arbitration Association to make such
appointment, and both parties shall cooperate in making, and be bound by, such
appointment. The fees and expenses of all such Appraisers and such appraisal
procedure shall be borne equally by Lessee and Lessor; provided, that if Lessee
elects not to renew this Lease or purchase the Aircraft following the conclusion
of such appraisal, Lessee shall pay all such fees and expenses of such
appraisal.
SECTION 18. MISCELLANEOUS
18.1 Amendments
No provision of this Agreement may be amended, supplemented, waived,
modified, discharged, terminated or otherwise varied orally, but only by an
instrument in writing that specifically identifies the provision of this
Agreement that it purports to amend, supplement, waive, modify, discharge,
termi-
<PAGE>
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nate or otherwise vary and is signed by Lessor and Lessee. Each such amendment,
supplement, waiver, modification, discharge, termination or variance shall be
effective only in the specific instance and for the specific purpose for which
it is given. No provision of this Agreement shall be varied or contradicted by
oral communication, course of dealing or performance or other manner not set
forth in an agreement, document or instrument in writing and signed by Lessor
and Lessee.
18.2 Severability
If any provision hereof shall be held invalid, illegal or unenforceable in
any respect in any jurisdiction, then, to the extent permitted by Law (a) all
other provisions hereof shall remain in full force and effect in such
jurisdiction and (b) such invalidity, illegality or unenforceability shall not
affect the validity, legality or enforceability of such provision in any other
jurisdiction. If, however, any Law pursuant to which such provisions are held
invalid, illegal or unenforceable may be waived, such Law is hereby waived by
the parties hereto to the full extent permitted, to the end that this Agreement
shall be deemed to be a valid and binding agreement in all respects, enforceable
in accordance with its terms.
18.3 Third-Party Beneficiary
This Agreement is not intended to, and shall not, provide any person not a
party hereto (other than Mortgagee, the Participants, the Indenture Indemnitees
and the Persons referred to in Section 4.6) with any rights of any nature
whatsoever against either of the parties hereto, and no person not a party
hereto (other than Mortgagee, the Participants, the Indenture Indemnitees and
the Persons referred to in Section 4.6) shall have any right, power or privilege
in respect of, or have any benefit or interest arising out of, this Agreement.
18.4 Reproduction of Documents
This Agreement, all annexes, schedules and exhibits hereto and all
agreements, instruments and documents relating hereto, including, without
limitation (a) consents, waivers and modifications that may hereafter be
executed and (b) financial statements, certificates and other information
previously or hereafter furnished to any party hereto, may be reproduced by such
party by any photographic, photostatic, microfilm, micro-card, miniature
photographic or other similar process, and such party may destroy any original
documents so reproduced. Any such reproduction shall be admissible in evidence
as the origi-
<PAGE>
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nal itself in any judicial or administrative proceeding (whether or not the
original is in existence and whether or not such reproduction was made by such
party in the regular course of business) and any enlargement, facsimile or
further reproduction of such reproduction likewise is admissible in evidence.
18.5 Counterparts
This Agreement and any amendments, waivers, consents or supplements hereto
may be executed in any number of counterparts (or upon separate signature pages
bound together into one or more counterparts), each of which when so executed
shall be deemed to be an original, and all of which counterparts, taken
together, shall constitute one and the same instrument.
18.6 Notices
Unless otherwise expressly permitted by the terms hereof, all notices,
requests, demands, authorizations, directions, consents, waivers and other
communications required or permitted to be made, given, furnished or filed
hereunder shall be in writing (it being understood that the specification of a
writing in certain instances and not in others does not imply an intention that
a writing is not required as to the latter), shall refer specifically to this
Agreement and shall be personally delivered, sent by facsimile (followed by
overnight courier service for next Business Day receipt) or telecommunication
transmission (which in either case provides written confirmation to the sender
of its delivery), sent by registered mail or certified mail, return receipt
requested, postage prepaid, or sent by overnight courier service, in each case
to the respective address or facsimile number set forth for such party in
Schedule 1 to the Participation Agreement, or to such other address or number as
either party hereto may hereafter specify by notice to the other party hereto.
Each such notice, request, demand, authorization, direction, consent, waiver or
other communication shall be effective when received or, if made, given,
furnished or filed (a) by facsimile or telecommunication transmission, when
confirmed; provided there is receipt of such notice the next Business Day from
overnight courier service or (b) by registered or certified mail, three Business
Days after being deposited, properly addressed, with the U.S. Postal Service.
<PAGE>
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18.7 GOVERNING LAW; SUBMISSION TO JURISDICTION; VENUE
(a) THIS AGREEMENT SHALL IN ALL RESPECTS BE GOVERNED BY THE LAWS OF THE
STATE OF NEW YORK, INCLUDING ALL MATTERS OF CONSTRUCTION, VALIDITY AND
PERFORMANCE. THIS AGREEMENT IS BEING DELIVERED IN THE STATE OF NEW YORK.
(b) EACH PARTY HERETO HEREBY IRREVOCABLY AGREES, ACCEPTS AND SUBMITS ITSELF
TO THE NON-EXCLUSIVE JURISDICTION OF THE COURTS OF THE STATE OF NEW YORK IN THE
CITY AND COUNTY OF NEW YORK AND OF THE UNITED STATES FOR THE SOUTHERN DISTRICT
OF NEW YORK, IN CONNECTION WITH ANY LEGAL ACTION, SUIT OR PROCEEDING WITH
RESPECT TO ANY MATTER RELATING TO OR ARISING OUT OF OR IN CONNECTION WITH THIS
AGREEMENT.
(c) EACH PARTY HERETO HEREBY IRREVOCABLY CONSENTS AND AGREES TO THE SERVICE
OF ANY AND ALL LEGAL PROCESS, SUMMONS, NOTICES AND DOCUMENTS OF ANY OF THE
AFOREMENTIONED COURTS IN ANY SUCH SUIT, ACTION OR PROCEEDING MAY BE MADE BY
MAILING COPIES THEREOF BY REGISTERED OR CERTIFIED MAIL, POSTAGE PREPAID, AT THE
ADDRESS SET FORTH PURSUANT TO SECTION 18.6. EACH PARTY HERETO HEREBY AGREES THAT
SERVICE UPON IT, OR ANY OF ITS AGENTS, IN EACH CASE IN ACCORDANCE WITH THIS
SECTION 18.7(c), SHALL CONSTITUTE VALID AND EFFECTIVE PERSONAL SERVICE UPON SUCH
PARTY, AND EACH PARTY HERETO HEREBY AGREES THAT THE FAILURE OF ANY OF ITS AGENTS
TO GIVE ANY NOTICE OF SUCH SERVICE TO ANY SUCH PARTY SHALL NOT IMPAIR OR AFFECT
IN ANY WAY THE VALIDITY OF SUCH SERVICE ON SUCH PARTY OR ANY JUDGMENT RENDERED
IN ANY ACTION OR PROCEEDING BASED THEREON.
(d) EACH PARTY HERETO HEREBY IRREVOCABLY WAIVES, TO THE EXTENT PERMITTED BY
APPLICABLE LAW, AND AGREES NOT TO ASSERT, BY WAY OF MOTION, AS A DEFENSE, OR
OTHERWISE, IN ANY LEGAL ACTION OR PROCEEDING BROUGHT HEREUNDER IN ANY OF THE
ABOVE-NAMED COURTS, THAT SUCH ACTION OR PROCEEDING IS BROUGHT IN AN INCONVENIENT
FORUM, THAT VENUE FOR THE ACTION OR PROCEEDING IS IMPROPER OR THAT THIS
AGREEMENT OR ANY OTHER OPERATIVE AGREEMENT MAY NOT BE ENFORCED IN OR BY SUCH
COURTS.
(e) EACH PARTY HERETO HEREBY WAIVES ITS RESPECTIVE RIGHTS TO A JURY TRIAL
OF ANY CLAIM OR CAUSE OF ACTION IN ANY COURT IN ANY JURISDICTION BASED UPON OR
ARISING OUT OF OR RELATING TO THIS AGREEMENT.
<PAGE>
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18.8 Survival
The representations, warranties, indemnities and covenants set forth herein
shall survive the delivery of the Aircraft, the Transfer of any interest of
Owner Participant in this Agreement, the other Operative Agreements, the Trust
Estate and the Trust Agreement, the Transfer or any interest by any Note Holder
of its Equipment Notes, but no such provision other than such indemnities shall
survive the expiration or other termination of this Lease in accordance with its
terms; it being expressly understood and agreed that the foregoing shall not be
construed so as to release Lessee from any obligation theretofore accrued,
including the payment of any Rent then due and payable, provided that the
foregoing shall not be construed to change any provision in the Operative
Agreements in which any such representation, warranty, indemnity or covenant
expires by its terms.
18.9 No Waiver
No failure on the part of Lessor to exercise, and no delay by Lessor in
exercising, any of its rights, powers, remedies or privileges under this
Agreement or provided at Law, in equity or otherwise shall impair, prejudice or
constitute a waiver of any such right, power, remedy or privilege or be
construed as a waiver of any breach hereof or default hereunder or as an
acquiescence therein, nor shall any single or partial exercise of any such
right, power, remedy or privilege preclude any other or further exercise thereof
by Lessor or the exercise of any other right, power, remedy or privilege by
Lessor. No notice to or demand on Lessee in any case shall, unless otherwise
required under this Agreement, entitle Lessee to any other or further notice or
demand in similar or other circumstances or constitute a waiver of the rights of
Lessor to any other or further action in any circumstances without notice or
demand.
18.10 Entire Agreement
This Agreement, together with the other Operative Agreements, on and as of
the date hereof constitutes the entire agreement of the parties hereto with
respect to the subject matter hereof, and all prior or contemporaneous
understandings or agreements, whether written or oral, between the parties
hereto with respect to such subject matter are hereby superseded in their
entireties.
[This space intentionally left blank.]
<PAGE>
IN WITNESS WHEREOF, Lessor and Lessee have each caused this Lease Agreement
to be duly executed as of the day and year first above written.
FIRST SECURITY BANK,
NATIONAL ASSOCIATION,
as Lessor, not in its individual capacity,
except as expressly provided herein, but
solely as Owner Trustee under the Trust
Agreement
By:
-----------------------------------------
Name:
Title:
ATLAS AIR, INC.,
as Lessee
By:
-----------------------------------------
Name:
Title:
<PAGE>
IN WITNESS WHEREOF, Lessor and Lessee have each caused this Lease Agreement
to be duly executed as of the day and year first above written.
FIRST SECURITY BANK,
NATIONAL ASSOCIATION,
as Lessor, not in its individual capacity,
except as expressly provided herein, but
solely as Owner Trustee under the Trust
Agreement
By:
-----------------------------------------
Name:
Title:
ATLAS AIR, INC.,
as Lessee
By:
-----------------------------------------
Name:
Title:
Receipt of this original counterpart of the foregoing Lease Agreement is
hereby acknowledged on this ____ day of ________, ____.
WILMINGTON TRUST COMPANY, not in its individual
capacity, but solely as Mortgagee
By:
-----------------------------------------
Name:
Title:
<PAGE>
Exhibit A - Lease Supplement
Lease Agreement
LEASE SUPPLEMENT NO.__
LEASE SUPPLEMENT No. __, dated ________, ____, between FIRST SECURITY BANK,
NATIONAL ASSOCIATION, a national banking association, not in its individual
capacity, but solely as Owner Trustee under the Trust Agreement _____, dated as
of ___________, ____, with the Owner Participant named therein (such Owner
Trustee, in its capacity as such Owner Trustee being herein called "Lessor"),
and ATLAS AIR, INC., a Delaware corporation, as Lessee ("Lessee").
Lessor and Lessee have heretofore entered into that certain Lease Agreement
______, dated as of ______________, relating to one Boeing Model 747-47UF
aircraft (herein called the "Lease" and the defined terms therein being
hereinafter used with the same meanings). The Lease provides for the execution
and delivery of this Lease Supplement for the purpose of leasing the Airframe
and Engines under the Lease as and when delivered by Lessor to Lessee in
accordance with the terms thereof.
The Lease relates to the Airframe and Engines described below, and a
counterpart of the Lease to which this Lease Supplement is attached and of which
this Lease Supplement is a part, is being filed for recordation on the date
hereof with the Federal Aviation Administration as one document.
NOW, THEREFORE, in consideration of the premises and other good and
sufficient consideration, Lessor and Lessee hereby agree as follows:
1. Lessee has been duly authorized by Lessor to accept, and does hereby
irrevocably accept on behalf of Lessor delivery of the Aircraft from Airframe
Manufacturer under, and for all purposes of, the Aircraft Bill of Sale, the
Participation Agreement and the Purchase Agreement Assignment.
2. Lessor hereby delivers and leases to Lessee under the Lease and Lessee
hereby accepts and leases from Lessor under the Lease the following described
Boeing Model 747-47UF aircraft (the "Aircraft"), which Aircraft as of the date
hereof consists of the following components:
(i) Airframe: U.S. Registration No. ___________; manufacturer's serial
no. ___________; and
(ii) Engines: four (4) _________________________ engines bearing,
respectively, manufacturer's serial nos.
<PAGE>
-2-
___________, __________, _________ and ____________ (each of which engines
has 750 or more rated takeoff horsepower or the equivalent of such
horsepower).
3. The Delivery Date of the Aircraft is the date of this Lease Supplement
set forth in the opening paragraph hereof.
4. Lessee hereby confirms to Lessor that Lessee has duly and irrevocably
accepted the Aircraft under and for all purposes hereof, of the Lease and of the
other Lessee Operative Agreements.
5. All of the terms and provisions of this Lease Supplement are hereby
incorporated by reference in the Lease to the same extent as if fully set forth
therein.
6. This Lease Supplement may be executed by the parties hereto in separate
counterparts, each of which when so executed and delivered shall be an original,
but all such counterparts shall together constitute but one and the same
instrument.
7. To the extent, if any, that this Lease Supplement constitutes chattel
paper (as such term is defined in the Uniform Commercial Code as in effect in
any applicable jurisdiction), no security interest in this Lease Supplement may
be created through the transfer or possession of any counterpart other than the
original executed counterpart, which shall be identified as the counterpart
containing the receipt therefor executed by the Mortgagee on the signature page
thereof.
[This space intentionally left blank.]
<PAGE>
-3-
IN WITNESS WHEREOF, Lessor and Lessee have each caused this Lease
Supplement to be duly executed as of the day and year first above written.
FIRST SECURITY BANK,
NATIONAL ASSOCIATION,
as Lessor, not in its individual capacity,
except as expressly provided herein,
but solely as Owner Trustee
under the Trust Agreement
By:
-----------------------------------------
Name:
Title:
ATLAS AIR, INC.,
as Lessee
By:
-----------------------------------------
Name:
Title:
<PAGE>
-4-
IN WITNESS WHEREOF, Lessor and Lessee have each caused this Lease
Supplement to be duly executed as of the day and year first above written.
FIRST SECURITY BANK,
NATIONAL ASSOCIATION,
as Lessor, not in its individual capacity,
except as expressly provided herein, but
solely as Owner Trustee under the Trust
Agreement
By:
-----------------------------------------
Name:
Title:
ATLAS AIR, INC.,
as Lessee
By:
-----------------------------------------
Name:
Title:
Receipt of this original counterpart of the foregoing Lease Supplement is
hereby acknowledged on this ____ day of ________, ____.
WILMINGTON TRUST COMPANY, not in its individual
capacity, but solely as Mortgagee
By:
-----------------------------------------
Name:
Title:
<PAGE>
Exhibit B - Lease Supplement
Lease Agreement
RETURN ACCEPTANCE SUPPLEMENT
RETURN ACCEPTANCE SUPPLEMENT dated ________, between [Owner Trustee], a
national banking association, not in its individual capacity, but solely as
Owner Trustee under the Trust Agreement _____________, dated as of
________________________, with the Owner Participant named therein (such Owner
Trustee, in its capacity as such Owner Trustee being herein called "Lessor"),
and ATLAS AIR, INC., a Delaware corporation, as Lessee ("Lessee").
Lessor and Lessee have heretofore entered into that certain Lease Agreement
_________________, dated as of _______________, relating to one Boeing Model
___________________ aircraft (herein called the "Lease" and the defined terms
therein being hereinafter used with the same meanings). The Lease relates to the
Airframe and Engines described below.
NOW, THEREFORE, in consideration of the premises and other good and
sufficient consideration, Lessor and Lessee hereby agree as follows:
1. This Return Acceptance Supplement is executed by Lessor and Lessee to
confirm that on the date hereof the following described Airframe and Engines
were returned by Lessee to Lessor:
(i) Airframe: U.S. Registration No. ______________; manufacturer's
serial no. _________________; and
(ii) Engines: four (4) _____________________ engines bearing,
respectively, manufacturer's serial nos. __________________________,
_________________________, __________________________,and
_________________________.
2. This Return Acceptance Supplement is intended to be delivered in
_____________________.
3. Lessor and Lessee agree that the return of the Aircraft is in compliance
with Section 5 and Annex B of the Lease, except as set forth below:
4. Lessor and Lessee agree that the Lease is terminated, except for the
provisions thereof that expressly survive termination.
<PAGE>
-2-
IN WITNESS WHEREOF, Lessor and Lessee have each caused this Return
Acceptance Supplement to be duly executed as of the day and year first above
written.
FIRST SECURITY BANK,
NATIONAL ASSOCIATION,
as Lessor, not in its individual capacity,
except as expressly provided herein,
but solely as Owner Trustee
under the Trust Agreement
By:
-----------------------------------------
Name:
Title:
ATLAS AIR, INC.,
as Lessee
By:
-----------------------------------------
Name:
Title:
<PAGE>
CERTAIN TERMS
<TABLE>
<CAPTION>
Defined Term Definition
- ------------ ----------
<S> <C>
Commencement Date ______________________
EBO Date ______________________
EBO Price [ ]% of Lessor's Cost plus any applicable Make
Whole Amount owing with respect to the Equipment
Notes
Minimum Liability Insurance Amount $___________
Payment Due Rate The lesser of (a) the Debt Rate
plus 2% or (b) the maximum rate
permitted under applicable Law
Net Present Value of Rents The present value, as of the date of
determination, discounted at % per annum,
compounded semiannually to the date of
determination, of all unpaid Basic Rent payments
during the then-remaining portion of the Base
Lease Term, expressed as a percentage of Lessor's
Cost.
Scheduled Expiration Date The Business Day next preceding the __ anniversary
of the Commencement Date
SLV Rate The lesser of (a) the Debt Rate or (b) the maximum
rate permitted under applicable Law
Similar Aircraft Boeing Model 747-47UF aircraft (other than the
Aircraft)
<PAGE>
-2-
Threshold Amount $7.5 million subject, from time to time, to
adjustment for inflation based on the Consumer
Price Index
</TABLE>
<PAGE>
PERCENTAGE OF LESSOR'S COST
Payment
Date Advance Arrears Total
<PAGE>
Schedule 3 - Stipulated Loss Value
Lease Agreement
STIPULATED LOSS VALUE
The Stipulated Loss Value for the Aircraft as of any date set forth below
shall be the amount set forth opposite such date. The Stipulated Loss Value as
of any date not set forth below shall be determined by (a) subtracting (i) the
amount opposite the date set forth below next preceding such date of
determination (less, if such next preceding date is a Payment Date, the amount
of Basic Rent, scheduled to be payable in advance on such date) from (ii) the
amount opposite the date set forth below next succeeding such date of
determination (plus, if such next succeeding date is a Payment Date, the amount
of Basic Rent or Renewal Rent, as the case may be, scheduled to be payable in
arrears on such date), (b) multiplying the result thereof (which may be a
negative number) by a fraction the numerator of which is the number of days from
but excluding such next preceding date to and including such date of
determination and the denominator of which is the number of days from but
excluding such next preceding date to and including such next succeeding date,
and (c) adding the product thereof to the value determined pursuant to clause
(i) above.
Percentage of Percentage of
Date Lessor's Cost Date Lessor's Cost
- ---- ------------- ---- -------------
<PAGE>
Schedule 4 - Termination Value
Lease Agreement
TERMINATION VALUE
The Termination Value for the Aircraft as of any date set forth below shall
be the amount set forth opposite such date. The Termination Value as of any date
not set forth below shall be determined by (a) subtracting (i) the amount
opposite the date set forth below next preceding such date of determination
(less, if such next preceding date is a Payment Date, the amount of Basic Rent,
scheduled to be payable in advance on such date) from (ii) the amount opposite
the date set forth below next succeeding such date of determination (plus, if
such next succeeding date is a Payment Date, the amount of Basic Rent or Renewal
Rent, as the case may be, scheduled to be payable in arrears on such date), (b)
multiplying the result thereof (which may be a negative number) by a fraction
the numerator of which is the number of days from but excluding such next
preceding date to and including such date of determination and the denominator
of which is the number of days from but excluding such next preceding date to
and including such next succeeding date, and (c) adding the product thereof to
the value determined pursuant to clause (i) above.
Percentage of Percentage of
Date Lessor's Cost Date Lessor's Cost
- ---- ------------- ---- -------------
<PAGE>
Schedule 5 - Permitted Countries
Lease Agreement
PERMITTED COUNTRIES
<PAGE>
Argentina Malta
Australia Mexico
Austria Monaco
Bahamas Morocco
Belgium Netherlands
Brazil New Zealand
Canada Norway
Chile Paraguay
Denmark Peoples Republic of China
Egypt Philippines
Ecuador Portugal
Finland Republic of China (Taiwan)
France Singapore
Germany South Africa
Greece South Korea
Hungary Spain
Iceland Sweden
India Switzerland
Indonesia Thailand
Ireland Trinidad and Tobago
Italy United Arab Emirates
Japan United Kingdom
Liechtenstein Uruguay
Luxembourg Venezuela
Malaysia
<PAGE>
PLACARDS
Leased from
First Security Bank, National Association,
not in its individual capacity but solely as
Owner Trustee, Owner and Lessor
and
Mortgaged to
Wilmington Trust Company,
not in its individual capacity but solely as Mortgagee
<PAGE>
ANNEX B
RETURN CONDITIONS
The terms of this Annex B shall apply with respect to the return of the
Aircraft by or on behalf of Lessee under the Lease, whether at the Scheduled
Expiration Date or the end of a Renewal Lease Term or upon the exercise of
Lessee's rights under Section 9 of the Lease, or upon the exercise of Lessor's
remedies following the occurrence of a Lease Event of Default, or otherwise;
provided that the terms of this Annex B shall not apply (i) in the event that an
Event of Loss occurs with respect to the Aircraft or (ii) in the event that
Lessee purchases the Aircraft in accordance with Section 17 of the Lease.
Capitalized terms used but not defined herein shall have the respective
meanings set forth or incorporated by reference in Annex A to the Lease.
A. General Condition upon Return.
Upon the expiration or termination of this Lease, Lessee will return the
Aircraft to Lessor or its designee at such location chosen by Lessee and
reasonably satisfactory to Lessor, and Lessee will give Lessor and, if the
Aircraft is then subject to the Lien of the Trust Indenture, Mortgagee at least
15 days' prior written notice of the place of such return. At the time of return
of the Aircraft to Lessor, Lessor and Lessee shall execute a Return Acceptance
Supplement. At the time of such return, (i) the Aircraft shall be registered
with the FAA (except for a failure caused by the Lessor (or its designee) being
ineligible to be the registered owner of an aircraft registered with the FAA),
(ii) the Aircraft shall have and be in compliance with a currently valid
standard certificate of airworthiness issued by the FAA, (iii) the Aircraft
shall be free and clear of all Liens (other than Lessor Liens) and rights of
persons not party to any Operative Agreement under pooling, interchange,
overhaul, repair or similar agreements or arrangements, (iv) the Aircraft shall
be in as good operating condition as when originally delivered to Lessee,
ordinary wear and tear excepted, and be fully equipped with four Engines or
other engines meeting the requirements of Replacement Engines, (v) the Aircraft
shall have Lessee's logo removed or painted over and shall be clean by major
United States commercial airline operating standards, (vi) the Aircraft will be
in compliance with the maintenance provisions of the Lease, (vii) the Aircraft
shall be returned in a cargo configuration
<PAGE>
-2-
with all Parts installed therein as of the Delivery Date, excepting
modifications, alterations, additions, replacements, substitutions and removals
made in accordance with the terms of the Lease, (viii) the Aircraft shall have
been maintained under the corrosion control program in accordance with the
Maintenance Program and (ix) the Aircraft shall comply with all outstanding
Airworthiness Directives issued by the FAA applicable to the Aircraft that by
their terms require compliance at or before the time of return of the Aircraft.
B. Return of Other Engines.
In the event that any engine not owned by Lessor shall be installed on the
Airframe returned in accordance with Section A of this Annex B, Lessee shall, at
its sole expense, concurrently with such return, take the actions required by
Sections 10.2 and 10.3 to cause such engine to be a Replacement Engine.
Thereupon, Lessor will Transfer to Lessee in accordance with Section 4.5 of the
Lease an Engine constituting part of the Aircraft but not installed on the
Airframe at the time of the return of the Airframe.
C. Hours of Operation.
In the event that Lessee (or any Permitted Sublessee then in possession of
the Aircraft) shall not then be using a continuous maintenance program with
respect to the Airframe, Lessee agrees that during the period of operation of
the Aircraft immediately prior to such return (A) Lessee or such Permitted
Sublessee, as the case may be, shall have been using a block overhaul program
with respect to the Airframe which shall have been approved by the FAA or the
Aviation Authority under the laws of which the Aircraft shall then have been
registered and (B) the Airframe shall have remaining until the next scheduled
full "D" check at least 25% of the allowable hours between "D" checks permitted
under the maintenance program then used by Lessee or such Permitted Sublessee.
In the event that Lessee (or any Permitted Sublessee then in possession of the
Aircraft) during the period of operation of the Aircraft immediately prior to
such return shall not have been using an on-condition maintenance program with
respect to the Engines or engines installed on the Airframe, Lessee agrees that
the average number of hours or cycles of operation (whichever shall be
applicable under the maintenance program then in use with respect to such
Engines or engines) on such Engines or engines remaining until the next
scheduled engine refurbishment shall be at least 25% of the hours or cycles
(whichever shall be applicable) between engine refurbishment allowed under the
maintenance program then
<PAGE>
-3-
in use with respect to such Engines or engines which shall have been approved by
the FAA or the Aviation Authority of the country under the laws of which the
Aircraft shall have then been registered.
D. Deficiency Payment.
If upon return the Airframe or any Engine (including any Replacement
Engine) (each, an "Item of Equipment") is below the minimum standard applicable
thereto specified in Section C (the "Minimum"), Lessor shall accept return of
the Aircraft provided that the other return conditions set forth in this Annex B
have been satisfied or waived by Lessor upon payment to Lessor of the excess, if
any, of (i) the sum of the Deficiency Amounts (as such term is defined below)
for all such Items of Equipment over (ii) the sum of the Credit Amounts (as
defined below) for all such Items of Equipment; provided that if there is no
such excess, Lessor shall accept return of the Aircraft without any payment by
Lessee. For purposes of this Section D, "Performance Costs," with respect to any
Item of Equipment, shall mean the cost of performing the applicable overhaul or
refurbishment on which the Minimum for such Item of Equipment is based at a rate
equal to 110% of the direct cost to Lessee of performing such work or, if Lessee
does not perform such work, at a rate then charged by an outside maintenance
provider to Lessee for performing such work; "Deficiency Amount," with respect
to any Item of Equipment, shall mean the Performance Cost for such Item of
Equipment multiplied by a fraction, the numerator of which shall be the number
of hours or cycles, whichever is applicable, below the Minimum applicable to
such Item of Equipment at the time of return and the denominator of which shall
be the total hours or cycles, whichever is applicable, between such overhaul or
refurbishment under the Maintenance Program; and "Credit Amount," with respect
to any Item of Equipment, shall mean the Performance Cost for such Item of
Equipment multiplied by a fraction, the numerator of which shall be the number
of hours or cycles, whichever is applicable, above the Minimum applicable to
such Item of Equipment at the time of return and the denominator of which shall
be the total hours or cycles, whichever is applicable, between such overhaul or
refurbishment under the Maintenance Program.
E. Aircraft Documents.
At the expiration or termination of this Lease, Lessee shall deliver or
cause to be delivered to Lessor the Aircraft Documents.
<PAGE>
ANNEX C
MAINTENANCE
Capitalized terms used but not defined term shall have the respective
meanings set forth in Annex A to the Lease.
A. Maintenance.
Lessee shall maintain, service, repair and overhaul the Aircraft, the
Airframe and each Engine, or cause the Aircraft, the Airframe and each Engine to
be maintained, serviced, repaired and overhauled in accordance with (1)
maintenance standards required by, or substantially equivalent to those required
by, the FAA or the central civil aviation authority of Canada, France, Germany,
Japan, the Netherlands or the United Kingdom for the Aircraft, Airframe and
Engines (the "Maintenance Program"), so as to (i) keep the Aircraft, the
Airframe and each Engine in as good operating condition as originally delivered
hereunder, ordinary wear and tear excepted, (ii) keep the Aircraft in such
operating condition as may be necessary to enable the applicable airworthiness
certificate of the Aircraft to be maintained under the regulations of the FAA or
other Aviation Authority then having jurisdiction over the operation of the
Aircraft, other than during (x) temporary periods of storage in accordance with
applicable regulations, (y) maintenance and modification permitted hereunder or
(z) periods when the FAA or such other Aviation Authority has revoked or
suspended the airworthiness certificates for Similar Aircraft; and (2) except
during periods when a Permitted Sublease is in effect, the same standards as
Lessee uses with respect to similar aircraft of similar size in its fleet
operated by Lessee in similar circumstances and, during any period in which a
Permitted Sublease is in effect, the same standards used by the Permitted
Sublessee with respect to similar aircraft of similar size in its fleet and
operated by the Permitted Sublessee in similar circumstances. Lessee further
agrees that the Aircraft, Airframe and Engines will be maintained, used,
serviced, repaired, overhauled or inspected in compliance with applicable Laws
with respect to the maintenance of the Aircraft and in compliance with each
applicable airworthiness certificate, license and registration relating to the
Aircraft, Airframe or any Engine issued by the Aviation Authority, other than
minor or nonrecurring violations with respect to which corrective measures are
taken upon discovery thereof and except to the extent Lessee or Permitted
Sublessee is contesting in good faith the validity or application of any such
Law or re-
<PAGE>
-2-
quirement relating to any such certificate, license or registration in any
reasonable manner which does not create a material risk of sale, loss or
forfeiture of the Aircraft, the Airframe or any Engine or the interest of any
Participant therein or material risk of criminal liability or material civil
penalty against Lessor, Owner Participant or Mortgagee. Lessee shall maintain
the Aircraft Documents in English.
B. Replacement of Parts.
Except as otherwise provided herein, Lessee, at its own cost and expense,
will, or will cause a Permitted Sublessee to, at its own cost and expense,
promptly replace (or cause to be replaced) all Parts which may from time to time
be incorporated or installed in or attached to the Aircraft, Airframe or any
Engine and which may from time to time become worn out, lost, stolen, destroyed,
seized, confiscated, damaged beyond repair or permanently rendered unfit for use
for any reason whatsoever. In addition, Lessee may, at its own cost and expense,
or may permit a Permitted Sublessee at its own cost and expense to, remove (or
cause to be removed) 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 permanently rendered unfit for
use; provided, however, that Lessee, except as otherwise provided herein, at its
own cost and expense, will, or will cause a Permitted Sublessee at its own cost
and expense to, replace such Parts as promptly as practicable. All replacement
Parts shall be free and clear of all Liens, except for Permitted Liens and
pooling arrangements to the extent permitted by Section C below (and except in
the case of replacement property temporarily installed on an emergency basis)
and shall be in good operating condition and have a value and utility not less
than the value and utility of the Parts replaced (assuming such replaced Parts
were in the condition required under this Lease). Except as otherwise provided
herein, all Parts at any time removed from the Aircraft, Airframe or any Engine
shall remain the property of Lessor, no matter where located, until such time as
such Parts shall be replaced by Parts which have been incorporated or installed
in or attached to the Aircraft, Airframe or such Engine and which meet the
requirements for replacement Parts specified above. Immediately upon any
replacement Part becoming incorporated or installed in or attached to the
Aircraft, Airframe or such Engine as above provided, without further act, (i)
title to the replaced Part shall thereupon vest in Lessee (or if a Permitted
Sublease is then in effect, in the Permitted Sublessee) free and clear of all
Lessor Liens and all rights of Lessor, and the replaced
<PAGE>
-3-
Part shall no longer be deemed a Part hereunder, (ii) title to such replacement
Part shall thereupon vest in Lessor and subject only to Permitted Liens and
pooling arrangements to the extent permitted by Section C below and except in
the case of replacement property temporarily installed on an emergency basis,
and (iii) such replacement Part shall become subject to this Lease and the Trust
Indenture and be deemed part of the Aircraft, Airframe or such Engine for all
purposes hereof and thereof to the same extent as the Parts originally
incorporated or installed in or attached to such Aircraft, Airframe or Engine.
C. Pooling of Parts.
Any Part removed from the Aircraft, Airframe or any Engine may be subjected
by Lessee or a Permitted Sublessee to a normal pooling arrangement customary in
the airline industry and entered into in the ordinary course of business of
Lessee or such Permitted Sublessee, so long as a Part replacing such removed
Part shall be incorporated or installed in or attached to the Aircraft, Airframe
or such Engine in accordance with Section B of this Annex C 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 Aircraft, Airframe or
any Engine may be owned by any third party subject to such a normal pooling
arrangement, so long as Lessee or Permitted Sublessee, at its own cost and
expense, as promptly thereafter as reasonably possible either (i) causes title
to such replacement Part to vest in Lessor in accordance with Section B of this
Annex C, free and clear of all Liens (except Permitted Liens), or (ii) replaces
(or causes to be replaced) such replacement Part by incorporating or installing
in or attaching to the Aircraft, Airframe or such Engine a further replacement
Part owned by Lessee or a Permitted Sublessee free and clear of all Liens
(except Permitted Liens) and by causing title to such further replacement Part
to vest in Lessor in accordance with Section B of this Annex C.
D. Alterations, Modifications and Additions.
Lessee shall, or shall cause a Permitted Sublessee to, make (or cause to be
made) such alterations and modifications in and additions to the Aircraft,
Airframe and each Engine as may be required from time to time to meet the
applicable standards of the FAA or other Aviation Authority having jurisdiction
over the operation of the Aircraft, to the extent made mandatory in respect of
the Aircraft (a "Mandatory Modification"); provided, however, that Lessee or any
Permitted Sub-
<PAGE>
-4-
lessee may, in good faith and by appropriate procedure, contest the validity or
application of any law, rule, regulation or order in any reasonable manner which
does not materially adversely affect Lessor's interest in the Aircraft or so
long as there are any Equipment Notes outstanding, the Mortgagee and does not
involve any material risk of sale, forfeiture or loss of the Aircraft or the
interest of any Participant therein, any material risk of material civil penalty
or any material risk of criminal liability being imposed on Lessor, Mortgagee or
the holder of any Equipment Note. In addition, Lessee, at its own cost and
expense, may, or may permit a Permitted Sublessee at its own cost and expense
to, from time to time make such alterations and modifications in and additions
to the Aircraft, Airframe or any Engine (each an "Optional Modification") as
Lessee or such Permitted Sublessee may deem desirable in the proper conduct of
its business, including, without limitation, removal of Parts which Lessee deems
are obsolete or no longer suitable or appropriate for use in the Aircraft,
Airframe or such Engine; provided, however, that no such Optional Modification
shall (i) materially diminish the fair market value, utility, or useful life of
the Aircraft or any Engine below its fair market value, utility or useful life
immediately prior to such Optional Modification (assuming the Aircraft or such
Engine was in the condition required by the Lease immediately prior to such
Optional Modification) or (ii) cause the Aircraft to cease to have the
applicable standard certificate of airworthiness. Except as otherwise provided
herein, title to all Parts (other than Removable Parts (as defined below))
incorporated or installed in or attached to the Aircraft, Airframe or such
Engine as the result of such Optional Modification shall, without further act,
vest in Lessor and become subject to this Lease and the Trust Indenture.
Notwithstanding anything to the contrary in this Section D, Lessee or a
Permitted Sublessee may, at any time during the Term, remove any Part (such Part
being referred to herein as a "Removable Part") if (i) such Part is in addition
to, and not in replacement of or substitution for, any Part originally
incorporated or installed in or attached to the Aircraft, Airframe or such
Engine at the time of delivery thereof hereunder or any Part in replacement of,
or substitution for, any such Part, (ii) such Part is not required to be
incorporated or installed in or attached to the Aircraft, Airframe or such
Engine pursuant to the terms of Section A of Annex B to the Lease, and (iii)
such Part can be removed from the Aircraft, Airframe or such Engine without
materially diminishing the fair market value, utility or remaining useful life
which the Airframe or such Engine would have had at the time of removal had such
re-
<PAGE>
-5-
moval not occurred, assuming that such Airframe or Engine was in the condition
and repair required to be maintained by the terms hereof. Removable Parts may be
leased from or financed by third parties other than Lessor. Title to any
Removable Part shall be vested in Lessee or such Permitted Sublessee, and to the
extent such Removable Part is leased from or financed by a third party other
than Lessor, may be vested in such third-party lessor or financing party. Upon
the removal by Lessee or such Permitted Sublessee of any Removable Part as above
provided, title thereto shall remain vested in Lessee or such Permitted
Sublessee or in such third-party lessor or financing party, as the case may be,
and such Part shall no longer be deemed part of the Aircraft, Airframe or such
Engine from which it was removed. Title to any Removable Part not removed as
above provided prior to the return of the Aircraft, Airframe or such Engine to
Lessor hereunder shall, without further act, vest in Lessor.
<PAGE>
ANNEX D
INSURANCE
Capitalized terms used but not defined herein shall have the respective
meanings set forth or incorporated by reference in Annex A to the Lease.
A. Liability Insurance
1. Except as provided in Section A.2 below, Lessee will carry or cause to
be carried at all times, at no expense to Lessor, Owner Participant or
Mortgagee, comprehensive airline legal liability (including, but not limited to
passenger liability insurance for up to ten non-revenue passengers, property
damage, baggage liability, cargo and mail liability, hangarkeeper's liability
and contractual liability insurance) with respect to the Aircraft, the Airframe
and the Engines, which is (i) in an amount not less than the greater of (x) the
amount of comprehensive airline legal liability insurance from time to time
applicable to aircraft owned or leased and operated by Lessee of the same type
and operating on similar routes as the Aircraft and (y) the Minimum Liability
Insurance Amount per occurrence;(ii) of the type and covering the same risks as
from time to time applicable to aircraft operated by Lessee of the same type as
the Aircraft; and (iii) maintained in effect with insurers of nationally or
internationally recognized responsibility (such insurers being referred to
herein as "Approved Insurers").
2. During any period that the Aircraft is on the ground and not in
operation, Lessee may carry or cause to be carried, in lieu of the insurance
required by Section A.1 above, insurance otherwise conforming with the
provisions of said Section A.1 except that (i) the amounts of coverage shall not
be required to exceed the amounts of public liability and property damage
insurance from time to time applicable to aircraft owned or leased and operated
by Lessee of the same type as the Aircraft which are on the ground and not in
operation and (ii) the scope of the risks covered and the type of insurance
shall be the same as from time to time shall be applicable to aircraft owned or
leased and operated by Lessee of the same type which are on the ground and not
in operation.
<PAGE>
-2-
B. Hull Insurance
1. Except as provided in Section B.2 below, Lessee will carry or cause to
be carried at all times, at no expense to Lessor, Owner Participant or
Mortgagee, with Approved Insurers "all-risk" ground and flight aircraft hull
insurance covering the Aircraft (including the Engines when they are installed
on the Airframe or any other airframe) which is of the type as from time to time
applicable to aircraft owned by Lessee of the same type as the Aircraft for an
amount denominated in United States Dollars not less than the Stipulated Loss
Value of the Aircraft.
Any policies of insurance carried in accordance with this Section B.1
covering the Aircraft and any policies taken out in substitution or replacement
for any such policies (i) shall name Lessor or, so long as the Lien of the Trust
Indenture shall be in effect, Mortgagee as sole loss payee for any proceeds to
be paid under such policies up to an amount equal to the Stipulated Loss Value
and (ii) shall provide that (A) in the event of a loss involving proceeds in
excess of the Threshold Amount, the proceeds in respect of such loss up to an
amount equal to the Stipulated Loss Value for the Aircraft shall be payable to
Lessor (or, so long as the Lien of the Trust Indenture shall not have been
discharged, the Mortgagee), and shall be held in accordance with Section 4.4 of
the Lease except in the case of a loss with respect to an Engine installed on an
airframe other than the Airframe, in which case Lessee (or any Permitted
Sublessee) shall endeavor to arrange for any payment of insurance proceeds in
respect of such loss to be held for the account of Lessor (or, so long as the
Lien of the Trust Indenture shall not have been discharged, the Mortgagee)
whether such payment is made to Lessee (or any Permitted Sublessee) or any third
party, it being understood and agreed that in the case of any payment to Lessor
(or the Mortgagee) otherwise than in respect of an Event of Loss, Lessor (or the
Mortgagee) shall, upon receipt of evidence satisfactory to it that the damage
giving rise to such payment shall have been repaired or that such payment shall
then be required to pay for repairs then being made, pay the amount of such
payment to Lessee or its order, and (B) the entire amount of any loss involving
proceeds of the Threshold Amount or less or the amount of any proceeds of any
loss in excess of the Stipulated Loss Value for the Aircraft shall be paid to
Lessee or its order unless a Lease Event of Default shall have occurred and be
continuing and the insurers have been notified thereof by Lessor or the
Mortgagee. In the case of a loss with respect to an engine (other than an
Engine) installed on the Airframe, Lessor
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shall hold any payment to it of any insurance proceeds in respect of such loss
for the account of Lessee or any other third party that is entitled to receive
such proceeds.
2. During any period that the Aircraft is on the ground and not in
operation, Lessee may carry or cause to be carried, in lieu of the insurance
required by Section B.1 above, insurance otherwise conforming with the
provisions of said Section B.1 except that the scope of the risks and the type
of insurance shall be the same as from time to time applicable to aircraft owned
by Lessee of the same type similarly on the ground and not in operation,
provided that Lessee shall maintain insurance against risk of loss or damage to
the Aircraft in an amount equal to the Stipulated Loss Value of the Aircraft
during such period that the Aircraft is on the ground and not in operation.
C. War-Risk, Hijacking and Allied Perils Insurance
If Lessee (or any Permitted Sublessee) shall at any time operate or propose
to operate the Aircraft, Airframe or any Engine (i) in any area of recognized
hostilities or (ii) on international routes and war-risk, hijacking or allied
perils insurance is maintained by Lessee (or any Permitted Sublessee) with
respect to other aircraft owned or operated by Lessee (or any Permitted
Sublessee) on such routes or in such areas, Lessee shall maintain or cause to be
maintained war-risk, hijacking and related perils insurance of substantially the
same type carried by major United States commercial air cargo carriers operating
the same or comparable models of aircraft on similar routes or in such areas and
in no event in an amount less than the Stipulated Loss Value.
D. General Provisions
Any policies of insurance carried in accordance with Sections A, B and C,
including any policies taken out in substitution or replacement for such
policies:
(i) shall name Lessor, each Participant, each Liquidity Provider, the
Depositary and Mortgagee as an additional insured (collectively, the
"Additional Insureds"), as their respective interests may appear;
(ii) shall apply worldwide and have no territorial restrictions or
limitations (except, in the case of war, hijacking and related perils
insurance, as otherwise permitted under Section C);
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(iii) shall provide that, in respect of the interests of the
Additional Insureds in such policies, the insurance shall not be
invalidated or impaired by any act or omission (including misrepresentation
and nondisclosure) by Lessee (or any Permitted Sublessee) or any other
Person and shall insure the Additional Insureds regardless of any breach or
violation of any representation, warranty, declaration, term or condition
contained in such policies by Lessee (or any Permitted Sublessee);
(iv) shall provide that, if the insurers cancel such insurance for any
reason whatsoever, or if the same is allowed to lapse for nonpayment of
premium, or if any material change is made in the insurance which adversely
affects the interest of any of the Additional Insureds, such cancellation,
lapse or change shall not be effective as to the Additional Insureds for 30
(10 days in the case of nonpayment of premium and seven days in the case of
war risk, hijacking and allied perils insurance) days after receipt by the
Additional Insureds of written notice by such insurers of such
cancellation, lapse or change, provided that if any notice period specified
above is not reasonably obtainable, such policies shall provide for as long
a period of prior notice as shall then be reasonably obtainable, provided
further that changes that are substantially the same as contained in the
policies of other major U.S. air cargo carriers shall not be considered
material;
(v) shall waive any rights of recourse, subrogation, setoff (including
for unpaid premiums), recoupment, counterclaim or other deduction, whether
by attachment or otherwise, against each Additional Insured;
(vi) shall be primary without right of contribution from any other
insurance that may be available to any Additional Insured;
(vii) shall provide that all of the liability insurance provisions
thereof, except the limits of liability, shall operate in all respects as
if a separate policy had been issued covering each party insured
thereunder;
(viii) shall provide that none of the Additional Insureds shall be
liable for any insurance premium; and
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(ix) shall contain a 50/50% Clause per Lloyd's Aviation Underwriters'
Association Standard Policy Form AVS 103.
E. Reports and Certificates; Other Information
On or prior to the Delivery Date and on or prior to each renewal date of
the insurance policies required hereunder, Lessee will furnish or cause to be
furnished to Lessor, Owner Participant and Mortgagee insurance certificates
describing in reasonable detail the insurance maintained by Lessee hereunder and
a report, signed by Lessee's regularly retained independent insurance broker
(the "Insurance Broker"), stating the opinion of such Insurance Broker that (a)
all premiums in connection with the insurance then due have been paid and (b)
such insurance complies with the terms of this Annex D. To the extent such
agreement is reasonably obtainable, Lessee will also cause the Insurance Broker
to agree to advise Lessor, Owner Participant and Mortgagee in writing of any
default in the payment of any premium and of any other act or omission on the
part of Lessee of which it has knowledge and which might invalidate or render
unenforceable, in whole or in part, any insurance on the Aircraft or Engines or
cause the cancellation or termination of such insurance, and to advise Lessor,
Owner Participant and Mortgagee in writing at least 30 days (10 days in the case
of nonpayment of premium and seven days in the case of war-risk and allied
perils coverage or such shorter period as may be available in the international
insurance market, as the case may be) prior to the cancellation, lapse or
material adverse change of any insurance maintained pursuant to this Annex D.
F. Right to Pay Premiums
The Additional Insureds shall have the rights but not the obligations of a
named insured. None of Lessor, Owner Participant and Mortgagee and the other
Additional Insureds shall have any obligation to pay any premium, commission,
assessment or call due on any such insurance (including reinsurance).
Notwithstanding the foregoing, in the event of cancellation of any insurance due
to the nonpayment of premiums, each of Lessor, Owner Participant and Mortgagee
shall have the option, in its sole discretion, to pay any such premium in
respect of the Aircraft that is due in respect of the coverage pursuant to the
Lease and to maintain such coverage, as Lessor, Owner Participant or Mortgagee
may require, until the scheduled expiry date of such insurance and, in such
event, Lessee shall, upon demand, reimburse Lessor, Owner Participant and
Mortgagee for amounts so paid by them.
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G. Deductibles; Self-insurance
Lessee may self-insure by way of deductible, premium adjustment or
franchise provisions or otherwise (including, with respect to insurance
maintained pursuant to Section B, insuring for a maximum amount which is less
than the Stipulated Loss Value of the Aircraft) in the insurance covering the
risks required to be insured against pursuant to Section 11 and this Annex D
under a program generally applicable to all aircraft in Lessee's fleet, but in
no case shall the aggregate amount of self-insurance in regard to Section 11 and
this Annex D exceed the lesser of (a) 50% of the largest replacement value of
any single aircraft in Lessee's fleet and (b) 1-1/2% of the average aggregate
insurable value (during the preceding policy year) of all aircraft (including,
without limitation, the Aircraft) on which Lessee carries insurance, unless an
insurance broker of national standing shall certify that the standard among
other major U.S. air cargo carriers is a higher level of self-insurance, in
which case Lessee may self-insure to such higher level. In addition, Lessee (and
any Sublessee) may self-insure to the extent of any applicable deductible per
aircraft that does not exceed industry standards for major U.S. air cargo
carriers.
<PAGE>
ANNEX A
DEFINITIONS
GENERAL PROVISIONS
(a) In each Operative Agreement, unless otherwise expressly provided, a
reference to:
(i) each of "Lessee," "Lessor," "Loan Participant," "Owner Trustee,"
"Owner Participant," "Mortgagee," "Note Holder" or any other person
includes, without prejudice to the provisions of any Operative Agreement,
any successor in interest to it and any permitted transferee, permitted
purchaser or permitted assignee of it;
(ii) words importing the plural include the singular and words
importing the singular include the plural;
(iii) any agreement, instrument or document, or any annex, schedule or
exhibit thereto, or any other part thereof, includes, without prejudice to
the provisions of any Operative Agreement, that agreement, instrument or
document, or annex, schedule or exhibit, or part, respectively, as amended,
modified or supplemented from time to time in accordance with its terms and
in accordance with the Operative Agreements, and any agreement, instrument
or document entered into in substitution or replacement therefor;
(iv) any provision of any Law includes any such provision as amended,
modified, supplemented, substituted, reissued or reenacted prior to the
Delivery Date, and thereafter from time to time;
(v) the words "Agreement," "this Agreement," "hereby," "herein,"
"hereto," "hereof" and "hereunder" and words of similar import when used in
any Operative Agreement refer to such Operative Agreement as a whole and
not to any particular provision of such Operative Agreement;
(vi) the words "including," "including, without limitation,"
"including, but not limited to," and terms or phrases of similar import
when used in any Operative
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Agreement, with respect to any matter or thing, mean including, without
limitation, such matter or thing; and
(vii) a "Section," an "Exhibit," an "Annex" or a "Schedule" in any
Operative Agreement, or in any annex thereto, is a reference to a section
of, or an exhibit, an annex or a schedule to, such Operative Agreement or
such annex, respectively.
(b) Each exhibit, annex and schedule to each Operative Agreement is
incorporated in, and shall be deemed to be a part of, such Operative Agreement.
(c) Unless otherwise defined or specified in any Operative Agreement, all
accounting terms therein shall be construed and all accounting determinations
thereunder shall be made in accordance with GAAP.
(d) Headings used in any Operative Agreement are for convenience only and
shall not in any way affect the construction of, or be taken into consideration
in interpreting, such Operative Agreement.
(e) For purposes of each Operative Agreement, the occurrence and
continuance of a Lease Default or Lease Event of Default referred to in Section
14.5 shall not be deemed to prohibit the Lessee from taking any action or
exercising any right that is conditioned on no Lease Event of Default, Lease
Default or Special Default having occurred and be continuing if such Lease
Default or Lease Event of Default consists of the institution of reorganization
proceedings with respect to Lessee under Chapter 11 of the Bankruptcy Code and
the trustee or debtor-in-possession in such proceedings shall have (i) agreed to
perform its obligations under the Lease with the approval of the applicable
court and thereafter shall have continued to perform such obligations in
accordance with Section 1110 or (ii) shall have assumed the Lease with the
approval of the relevant court and thereafter shall have continued to perform
its obligations under the Lease.
DEFINED TERMS
"ACMI Contract" means (i) any contract entered into by Lessee pursuant to
which Lessee furnishes the aircraft, crew, maintenance and insurance and the
other party to such contract bears all other operating expenses and (ii) any
similar contract in which the other party to such contract provides
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the flight crew, all substantially in accordance with Lessee's historical
practices.
"Act" means part A of subtitle VII of title 49, United States Code.
"Actual Knowledge" means (a) as it applies to Owner Trustee or Mortgagee,
as the case may be, actual knowledge of a responsible officer in the Corporate
Trust Department or the Corporate Trust Office, respectively, and (b) as it
applies to Owner Participant or Lessee, actual knowledge of a Vice President or
more senior officer of Owner Participant or Lessee, respectively, or any other
officer of Owner Participant or Lessee, respectively, having responsibility for
the transactions contemplated by the Operative Agreements; provided that each of
Lessee, Owner Participant, Owner Trustee and Mortgagee shall be deemed to have
"Actual Knowledge" of any matter as to which it has received notice from Lessee,
Owner Participant, any Note Holder, Owner Trustee or Mortgagee, such notice
having been given pursuant to Section 15.7 of the Participation Agreement.
"Additional Insured" is defined in Section E of Annex D to the Lease.
"Adverse Change in Tax Law" means (a) for Lessee, a Change in Tax Law that
Lessee regards as one that could adversely affect the economic consequences of
the transactions contemplated by the Participation Agreement and the other
Operative Agreements that are anticipated by Lessee or (b) for Owner
Participant, any Change in Tax Law that would adversely affect any of the
following tax assumptions:
(i) For federal income tax purposes, the Lease will be a "true" lease
for purposes of the Code and Owner Participant will be treated as the owner
of the Aircraft and Lessee will be treated as the lessee thereof;
(ii) For federal income tax purposes, Owner Participant will be
entitled to depreciation or cost recovery deductions with respect to
Lessor' s Cost of the Aircraft including amortization of Transaction
Expenses; and
(iii) For federal income tax purposes, Owner Participant will be
entitled to deductions for interest payments on the Equipment Notes.
"Affiliate" means, with respect to any person, any other person directly or
indirectly controlling, controlled by
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or under common control with such person. For purposes of this definition,
"control" 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 "controlling,"
"controlled by" and "under common control with" have correlative meanings.
"Aircraft" means, collectively, the Airframe and Engines.
"Aircraft Bill of Sale" means the full warranty bill of sale covering the
Aircraft delivered by Airframe Manufacturer, Atlas or wholly owned subsidiary of
Atlas to Owner Trustee on the Delivery Date.
"Aircraft Documents" means all technical data, manuals and log books, and
all inspection, modification and overhaul records and other service, repair,
maintenance and technical records that are required by the FAA (or the relevant
Aviation Authority), to be maintained with respect to the Aircraft, the
Airframe, each Engine or all Parts; and such term shall include all additions,
renewals, revisions and replacements of any such materials from time to time
made, or required to be made, by the FAA (or other Aviation Authority)
regulations, and in each case in whatever form and by whatever means or medium
(including, without limitation, microfiche, microfilm, paper or computer disk)
such materials may be maintained or retained by or on behalf of Lessee
(provided, that all such materials shall be maintained in, or are
contemporaneously translated into, the English language).
"Airframe" means (a) the aircraft (excluding Engines or engines from time
to time installed thereon) manufactured by Airframe Manufacturer and identified
by Airframe Manufacturer's model number, United States registration number and
Airframe Manufacturer's serial number set forth in Lease Supplement No. 1 and
any Replacement Airframe and (b) any and all Parts incorporated or installed in
or attached or appurtenant to such airframe, and any and all Parts removed from
such airframe, unless title to such Parts shall not be vested in Lessor in
accordance with Section 8.1 and Annex C of the Lease. Upon substitution of a
Replacement Airframe under and in accordance with the Lease, such Replacement
Airframe shall become subject to the Lease and shall be the "Airframe" for all
purposes of the Lease and the other Operative Agreements and thereupon the
Airframe for which the substitution is made shall no longer be subject to the
Lease, and such replaced Airframe shall cease to be the "Airframe."
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"Airframe Manufacturer" means The Boeing Company, a Delaware corporation,
or a wholly owned subsidiary thereof.
"Amortization Amount" means, with respect to any Equipment Note, as of any
Payment Date, the amount determined by multiplying the percentage set forth
opposite such Payment Date on the Amortization Schedule by the Original Amount
of such Equipment Note.
"Amortization Schedule" means, with respect to each Equipment Note, the
amortization schedule for such Equipment Note delivered pursuant to Section 2.02
of the Trust Indenture.
"Appraiser" means a firm of internationally recognized, independent
aircraft appraisers.
"Atlas" means Atlas Air, Inc., a Delaware corporation.
"Average Life Date" for any Equipment Note shall be the date which follows
the time of determination by a period equal to the Remaining Weighted Average
Life of such Equipment Note. "Remaining Weighted Average Life" on a given date
with respect to any Equipment Note shall be the number of days equal to the
quotient obtained by dividing (a) the sum of each of the products obtained by
multiplying (i) the amount of each then remaining scheduled payment of principal
of such Equipment Note by (ii) the number of days from and including such
determination date to but excluding the date on which such payment of principal
is scheduled to be made, by (b) the then outstanding principal amount of such
Equipment Note.
"Aviation Authority" means the FAA or, if the Aircraft is permitted to be,
and is, registered with any other Government Entity under and in accordance with
Section 7.1.2 of the Lease, such other Government Entity.
"Bankruptcy Code" means the United States Bankruptcy Code, 11 U.S.C. ss.
101 et seq.
"Base Lease Term" means the period beginning on and including the
Commencement Date and ending on the Scheduled Expiration Date, or such earlier
date on which the Term terminates in accordance with the provisions of the
Lease.
"Basic Rent" means the rent payable for the Aircraft pursuant to Section
3.2.1(a) of the Lease.
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"Beneficial Owner" when used in relation to an Equipment Note means a
Person that, by reason of direct ownership, contract, share ownership or
otherwise, has the right to receive or participate in receiving, directly or
indirectly, payments of principal, interest and Make-Whole Amount in respect of
such Equipment Note; provided that a Person shall not be deemed to be a
Beneficial Owner of an Equipment Note solely because another Person in which
such a Person owns common stock or other equity securities is a registered
holder or Beneficial Owner of such Equipment Note unless such Person is an
Affiliate of such other Person.
"Bills of Sale" means the FAA Bill of Sale and the Aircraft Bill of Sale.
"Business Day" means any day other than a Saturday, Sunday or other day on
which commercial banks are authorized or required by law to close in New York,
New York, Denver, Colorado, Wilmington, Delaware, Chicago, Illinois or Salt Lake
City, Utah.
"Cash Equivalents" means the following securities (which shall mature
within 90 days of the date of purchase thereof): (a) direct obligations of the
U.S. Government; (b) obligations fully guaranteed by the U.S. Government; (c)
certificates of deposit issued by, or bankers' acceptances of, or time deposits
or a deposit account with, Owner Trustee, Mortgagee or any bank, trust company
or national banking association incorporated or doing business under the laws of
the United States or any state thereof having a combined capital and surplus and
retained earnings of at least $500,000,000 and having a rate of "C" or better
from the Thomson BankWatch Service; or (d) commercial paper of any issuer doing
business under the laws of the United States or one of the states thereof and in
each case having a rating assigned to such commercial paper by Standard & Poor's
or Moody's equal to A1 or P1 or higher.
"Change in Tax Law" means any amendment, modification, addition or change
in or to the provisions of the Code, any other federal tax statutes, the
Treasury Regulations promulgated thereunder, the Internal Revenue Service
Revenue Rulings, Revenue Procedures or other administrative or judicial
interpretations of the Code or the federal tax statutes that affects the tax
assumptions set forth in the Tax Indemnity Agreement or otherwise affects Owner
Participant's anticipated Net Economic Return (other than a change in the
alternative minimum tax or other change that results in Owner Participant
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being subject to alternative minimum tax or unable to fully utilize tax benefits
because of its particular tax situation).
"Citizen of the United States" is defined in Section 40102(a)(15) of the
Act and in the FAA Regulations.
"Class A-1 Pass Through Trust" means the Atlas Air Pass Through Trust
1999-1A-1.
"Class A-2 Pass Through Trust" means the Atlas Air Pass Through Trust
1999-1A-2.
"Class B Pass Through Trust" means the Atlas Air Pass Through Trust
1999-1B.
"Class C Pass Through Trust" means the Atlas Air Pass Through Trust
1999-1C.
"Class D Pass Through Trust" means the Atlas Air Pass Through Trust
1999-1D.
"Closing" means the closing of the transactions contemplated by the
Participation Agreement on the Delivery Date.
"Code" means the Internal Revenue Code of 1986, as amended; provided, that
when used in relation to a Plan, "Code" shall mean the Internal Revenue Code of
1986 and any regulations and rulings issued thereunder, all as amended and in
effect from time to time. "Commencement Date" is defined in Schedule 1 to the
Lease.
"Commitment" means, for any Participant, the amount of its participation in
the payment of Lessor's Cost, which amount shall be determined in accordance
with Section 2.1 of the Participation Agreement.
"Commitment Termination Date" is defined in Schedule 3 to the Participation
Agreement.
"Consent and Agreement" means the Manufacturer Consent and Agreement dated
as of even date with the Participation Agreement, of Airframe Manufacturer.
"Consumer Price Index" shall be the U.S. Department of Labor, Bureau of
Statistics, Consumer Price Index for All Urban Consumers (CPI-U) for the U.S.
City Average for All Items
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(1982-84=100); provided that in the event the Consumer Price Index shall be
converted to a different standard reference base or otherwise revised, the
determination of any increase shall be made with the use of such conversation
factor, formula or table for converting the Consumer Price Index as may be
published by the Bureau of Labor Statistics.
"Continuous Stay Period" is defined in Section 4.04(a) of the Trust
Indenture.
"Corporate Trust Department" or "Trust Office" means the principal
corporate trust office of Owner Trustee located from time to time at Owner
Trustee's address for notices under the Participation Agreement or such other
office at which Owner Trustee's corporate trust business shall be administered
which Owner Trustee shall have specified by notice in writing to Lessee,
Mortgagee and each Note Holder.
"Corporate Trust Office" means the corporate trust administration office of
WTC located at One Rodney Square, 1100 North Market Street, Wilmington, Delaware
19890 or, in the case of any replacement Mortgagee, the principal office of
Mortgagee located at Mortgagee's address for notices under the Participation
Agreement or such other office at which Mortgagee's corporate trust business
shall be administered which Mortgagee shall have specified by notice in writing
to Lessee, Owner Trustee and each Note Holder.
"CRAF" means the Civil Reserve Air Fleet Program established pursuant to 10
U.S.C. ss. 9511-13 or any similar substitute program.
"Cut-Off Date" is defined in Section 2.01 of the Pass Through Trust
Agreement Supplements.
"Debt" means any liability for borrowed money, or any liability for the
payment of money in connection with any letter of credit transaction or any
other liabilities evidenced or to be evidenced by bonds, debentures, notes or
other similar instruments.
"Debt Rate" means, with respect to (i) any Series, the rate per annum
specified for such Series under the heading "Interest Rate" in Schedule I to the
Trust Indenture and (ii) any other purpose, with respect to any period, the
weighted average interest rate per annum during such period borne by the
outstanding Equipment Notes, excluding any interest payable at the Payment Due
Rate.
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"Default" means any event or condition that with the giving of notice or
the lapse of time or both would become an Event of Default.
"Delayed Delivery Date" means a delayed Delivery Date notified to each
Participant, Owner Trustee and Mortgagee by Lessee pursuant to Section 4.3 of
the Participation Agreement, which delayed Delivery Date shall be a Business Day
not later than the Commitment Termination Date.
"Delivery Date" means the Business Day specified in Lease Supplement No. 1
as the date on which, among other things, the Aircraft is delivered to and
accepted by Lessee under the Lease and the Closing occurs.
"Delivery Period Termination Date" is defined in Section 1(b) of the Note
Purchase Agreement.
"Deposit Agreement" means each of the four Deposit Agreements between the
Depositary and the Escrow Agent, dated as of the Issuance Date, each of which
relates to one of the Pass Through Trusts; provided that, for purposes of any
obligation of Lessee, no amendment, modification or supplement to, or
substitution or replacement of, any such Deposit Agreement shall be effective
unless consented to by Lessee.
"Depositary" means Credit Suisse First Boston, acting through its New York
branch, as Depositary under each Deposit Agreement.
"Designated Manufacturer" means The Boeing Company, Airbus Industrie, Rolls
Royce plc, United Technologies Corp., General Electric Company, any of their
respective Affiliates, or any successor thereto.
"Dollars," "United States Dollars" or "$" means the lawful currency of the
United States.
"DOT" means the Department of Transportation of the United States or any
Government Entity succeeding to the functions of such Department of
Transportation.
"EBO Date" is defined in Schedule 1 to the Lease (as adjusted in accordance
with Section 3.2.1 of the Lease).
"EBO Price" is defined in Schedule 1 to the Lease (as adjusted in
accordance with Section 3.2.1 of the Lease).
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"Enforcement Date" is defined in Section 4.03 of the Trust Indenture.
"Engine" means (a) each of the engines manufactured by Engine Manufacturer
and identified by Engine Manufacturer's model number and Engine Manufacturer's
serial number set forth in Lease Supplement No. 1 and originally installed on
the Airframe on delivery thereof pursuant to the Lease, and any Replacement
Engine, in each case whether or not from time to time installed on such Airframe
or installed on any other airframe or aircraft, and (b) any and all Parts
incorporated or installed in or attached or appurtenant to such engine, and any
and all Parts removed from such engine, unless title to such Parts shall not be
vested in Lessor in accordance with Section 8.1 and Annex C of the Lease. Upon
substitution of a Replacement Engine under and in accordance with the Lease,
such Replacement Engine shall become subject to the Lease and shall be an
"Engine" for all purposes of the Lease and the other Operative Agreements and
thereupon the Engine for which the substitution is made shall no longer be
subject to the Lease, and such replaced Engine shall cease to be an "Engine."
"Engine Consent and Agreement" means the Engine Manufacturer Consent and
Agreement dated as of even date with the Participation Agreement, of Engine
Manufacturer.
"Engine Manufacturer" means General Electric Company, a New York
corporation.
"Equipment Note Register" is defined in Section 2.07 of the Trust
Indenture.
"Equipment Notes" means and includes any equipment notes issued under the
Trust Indenture in the form specified in Section 2.01 thereof (as such form may
be varied pursuant to the terms of the Trust Indenture) and any Equipment Note
issued under the Trust Indenture in exchange for or replacement of any Equipment
Note.
"ERISA" means the Employee Retirement Income Security Act of 1974 and any
regulations and rulings issued thereunder all as amended and in effect from time
to time.
"Escrow Agent" means First Security Bank, National Association, as Escrow
Agent under each of the Escrow Agreements.
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"Escrow Agreement" means each of the four Escrow and Paying Agent
Agreements, among the Escrow Agent, the Paying Agent, certain initial purchasers
of the Pass Through Certificates named therein and one of the Pass Through
Trustees, dated as of the Issuance Date, each of which relates to one of the
Pass Through Trusts, provided that, for purposes of any obligation of Lessee, no
amendment, modification or supplement to, or substitution or replacement of, any
such Escrow Agreement shall be effective unless consented to by Lessee.
"Event of Default" is defined in Section 4.02 of the Trust Indenture.
"Event of Loss" means, with respect to the Aircraft, the Airframe or any
Engine, any of the following circumstances, conditions or events with respect to
such property, for any reason whatsoever:
<PAGE>
(a) the destruction of such property, damage to such property beyond
economic repair or rendition of such property permanently unfit for normal
use by Lessee;
(b) the actual or constructive total loss of such property or any
damage to such property, or requisition of title or use of such property,
which results in an insurance settlement with respect to such property on
the basis of a total loss or constructive or compromised total loss;
(c) any theft, hijacking or disappearance of such property for a
period of 180 consecutive days or more;
(d) any seizure, condemnation, confiscation, taking or requisition
(including loss of title) of such property by any Government Entity or
purported Government Entity (other than a requisition of use by a Permitted
Government Entity) for a period exceeding 180 consecutive days or, if
earlier, at the end of the Term;
(e) any seizure, condemnation, confiscation, taking or requisition of
use of such property by any Permitted Government Entity that continues
until the 30th day after the last day of the Term, provided that no such
Event of Loss shall exist if Lessor shall have elected not to treat such
event as an Event of Loss pursuant to Section 10.6 of the Lease; and
(f) as a result of any law, rule, regulation, order or other action by
the Aviation Authority or by any Gov-
<PAGE>
-12-
ernment Entity of the government of registry of the Aircraft or by any
Government Entity otherwise having jurisdiction over the operation or use
of the Aircraft, the use of such property in the normal course of Lessee's
business of cargo air transportation is prohibited for a period of 180
consecutive days, unless Lessee, prior to the expiration of such 180 day
period, shall have undertaken and shall be diligently carrying forward such
steps as may be necessary or desirable to permit the normal use of such
property by Lessee and such normal use shall have been resumed prior to the
expiration of a period of two consecutive years, provided that no Event of
Loss shall be deemed to have occurred after the expiration of such two-year
period if -------- (A) such prohibition has been applicable to Lessee's
entire U.S. fleet of such property and (B) prior to the expiration of such
two-year period, Lessee shall have conformed at least one unit of such
property in its fleet to the requirements of any such law, rule,
regulation, order or other action and commenced regular commercial use of
the same in such jurisdiction and (C) Lessee shall be diligently carrying
forward, in a manner which does not discriminate against such property in
so conforming such property, steps which are necessary or desirable to
permit the normal use of the Aircraft by Lessee and such normal use shall
have resumed prior to the expiration of a period of three years or such use
shall be prohibited at the expiration of the Term.
"Excess Amount" has the meaning specified in Section 2.03(b) of the
Indenture.
"Exchanged Engine" is defined in Section 10.2.3 of the Lease.
"Excluded Payments" means (i) indemnity payments paid or payable by Lessee
to or in respect of Owner Participant, or Owner Trustee in its individual
capacity, their respective Affiliates, successors and permitted assigns and
their directors, officers, employees, servants and agents pursuant to Section 9
of the Participation Agreement or any corresponding payments under the Lease,
(ii) proceeds of public liability insurance paid or payable as a result of
insurance claims made, or losses suffered, by Owner Trustee in its individual
capacity or by Owner Participant, that are payable directly to Owner Trustee in
its individual capacity, or Owner Participant, respectively, for their own
account, (iii) proceeds of insurance maintained with respect to the Aircraft by
Owner Participant or any Affiliate thereof for its or their own account or
benefit
<PAGE>
-13-
(whether directly or through Owner Trustee) and permitted under Section 11.2 of
the Lease, (iv) all payments required to be made under the Tax Indemnity
Agreement by Lessee whether or not denominated as Supplemental Rent, (v) any
Transaction Expenses paid or payable by the Lessee to the Owner Trustee (to the
extent for its sole benefit) or the Owner Participant pursuant to the Lease or
the Participation Agreement, (vi) any amount payable to the Owner Participant by
any transferee as the purchase price of the Owner Participant's interest in the
Trust Estate, (vii) any interest that pursuant to the Operative Agreements may
from time to time accrue in respect of any of the amounts described in clauses
(i) through (vi) above, (viii) any right to enforce, against the primary obligor
or any guarantor or similar party, the payment of any amount described in
clauses (i) through (vii) above (provided, that the rights referred to in this
clause (viii) shall not be deemed to include the exercise of any remedies
provided for in the Lease other than the right to sue for specific performance
of any covenant to make such payment or to sue for damages in respect of the
breach of any such covenant) and (ix) any right to exercise any election or
option or make any decision or determination, or to give or receive any notice,
consent, waiver or approval, or to take any other action in respect of, but in
each case, only to the extent relating to, any Excluded Payments.
"Expenses" means any and all liabilities, obligations, losses, damages,
settlements, penalties, claims, actions, suits, costs, expenses and
disbursements (including, without limitation, reasonable fees and disbursements
of legal counsel, accountants, appraisers, inspectors or other professionals,
and costs of investigation).
"FAA" means the Federal Aviation Administration of the United States or any
Government Entity succeeding to the functions of such Federal Aviation
Administration.
"FAA Bill of Sale" means a bill of sale for the Aircraft on AC Form 8050-2
(or such other form as may be approved by the FAA) delivered to Owner Trustee on
the Delivery Date by Airframe Manufacturer.
"FAA Filed Documents" means the Lease, Lease Supplement No. 1, the Trust
Indenture, the Trust Agreement, the initial Trust Indenture Supplement, the FAA
Bill of Sale and an application for registration of the Aircraft with the FAA in
the name of Owner Trustee.
<PAGE>
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"FAA Regulations" means the Federal Aviation Regulations issued or
promulgated pursuant to the Act from time to time.
"Fair Market Rental Value" means the fair market rental value in Dollars
for the Aircraft that would apply in an arm's-length transaction between an
informed and willing lessee under no compulsion to lease, and an informed and
willing lessor under no compulsion to lease, the Aircraft, for the applicable
Renewal Lease Term, assuming that (a) the Aircraft has been maintained in
accordance with, and is in the condition required by, the Lease, (b) payments of
rent would be made semiannually, and (c) the Aircraft would be leased during any
such Renewal Lease Term on the same terms and conditions as are set forth in the
Lease with respect to the Base Lease Term; provided that for purposes of Section
15 of the Lease, Fair Market Rental Value shall be determined as provided in
Section 15.4 thereof.
"Fair Market Sales Value" means the fair market sales value in Dollars for
the Aircraft that would apply in an arm's-length transaction between an informed
and willing buyer under no compulsion to buy, and an informed and willing seller
under no compulsion to sell, the Aircraft, in a transaction that would close on
or about the relevant time of determination, assuming that (a) the Aircraft has
been maintained in accordance with, and is in the condition required by, the
Lease and (b) the Aircraft would be delivered to such informed and willing buyer
in the return condition required by the Lease; provided that for purposes of
Section 15 of the Lease, Fair Market Sales Value shall be determined as provided
in Section 15.4 thereof.
"Financing Statements" means, collectively, UCC-1 (and, where appropriate,
UCC-3) financing statements (a) covering the Trust Indenture Estate, by Owner
Trustee, as debtor, showing Mortgagee as secured party, for filing in Utah and
each other jurisdiction that, in the opinion of Mortgagee, is necessary or
reasonably desirable to perfect its Lien on the Trust Indenture Estate and (b)
covering the Lease and the Aircraft, as a precautionary matter, by Lessee, as
lessee, showing Owner Trustee as lessor and Mortgagee as assignee of Owner
Trustee, for filing in Colorado and each other jurisdiction that, in the opinion
of Owner Trustee and Mortgagee, is reasonably desirable.
<PAGE>
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"First Renewal Lease Term" means the first term for which the Lease is
extended by Lessee after the Scheduled Expiration Date pursuant to Section 17 of
the Lease.
"First Security" means First Security Bank, National Association, a
national banking association, not in its capacity as Owner Trustee under the
Trust Agreement, but in its individual capacity.
"Fitch" means Fitch IBCA, Inc.
"Funding Date" has the meaning specified in Section 1(b) of the Note
Purchase Agreement.
"GAAP" means generally accepted accounting principles as set forth in the
statements of financial accounting standards issued by the Financial Accounting
Standards Board of the American Institute of Certified Public Accountants, as
such principles may at any time or from time to time be varied by any applicable
financial accounting rules or regulations issued by the SEC and, with respect to
any person, shall mean such principles applied on a basis consistent with prior
periods except as may be disclosed in such person's financial statements.
"Government Entity" means (a) any federal, state, provincial or similar
government, and any body, board, department, commission, court, tribunal,
authority, agency or other instrumentality of any such government or otherwise
exercising any executive, legislative, judicial, administrative or regulatory
functions of such government or (b) any other government entity having
jurisdiction over any matter contemplated by the Operative Agreements or
relating to the observance or performance of the obligations of any of the
parties to the Operative Agreements.
"GTA" means the General Terms Agreement as defined in the Purchase
Agreement Assignment.
"Indemnitee" means (i) First Security and Owner Trustee, (ii) WTC and
Mortgagee, (iii) each separate or additional trustee appointed pursuant to the
Trust Agreement or the Trust Indenture, (iv) each Participant, (v) the Trust
Estate and the Trust Indenture Estate, (vi) each Affiliate of the persons
described in clauses (i) through (iv),
<PAGE>
-16-
inclusive, (vii) the respective directors, officers, employees, agents and
servants of each of the persons described in clauses (i) through (iv) inclusive
and in clause (vi), (viii) the successors and permitted assigns of the persons
described in clauses (i) through (iv), inclusive, and in clauses (vi) and (vii)
and (ix) the Pass Through Indemnitees; provided that the Pass Through
Indemnitees are Indemnitees only for purposes of Section 9.1 of the
Participation Agreement. If any Indemnitee is Airframe Manufacturer or Engine
Manufacturer or any subcontractor or supplier of either thereof, such Person
shall be an Indemnitee only in its capacity as Owner Participant, Loan
Participant or Note Holder.
"Indenture Agreements" means the Participation Agreement, the Lease, the
Purchase Agreement, the Purchase Agreement Assignment, the Consent and
Agreement, the Engine Consent and Agreement, the Bills of Sale and any other
contract, agreement or instrument from time to time assigned or pledged under
the Trust Indenture.
"Indenture Indemnitee" means (i) WTC and the Mortgagee, (ii) each separate
or additional trustee appointed pursuant to the Trust Indenture, (iii) the
Subordination Agent, (iv) each Liquidity Provider, (v) each Pass Through
Trustee, (vi) the Paying Agent, (vii) the Escrow Agent and (viii) each of the
respective directors, officers, employees, agents and servants of each of the
persons described in clauses (i) through (vii) inclusive above.
"Intercreditor Agreement" means that certain Intercreditor Agreement among
the Pass Through Trustees, the Liquidity Providers and the Subordination Agent,
dated as of the Issuance Date, provided that, for purposes of any obligation of
Lessee, no amendment, modification or supplement to, or substitution or
replacement of, such Intercreditor Agreement shall be effective unless consented
to by Lessee.
"IRS" means the Internal Revenue Service of the United States or any
Government Entity succeeding to the functions of such Internal Revenue Service.
"Issuance Date" means April 13, 1999.
"Item of Equipment" is defined in Paragraph D of Annex B to the Lease.
"Law" means (a) any constitution, treaty, statute, law, decree, regulation,
order, rule or directive of any Government Entity, and (b) any judicial or
administrative interpretation or application of, or decision under, any of the
foregoing.
<PAGE>
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"Lease" or "Lease Agreement" means the Lease Agreement, dated as of even
date with the Participation Agreement, between Owner Trustee and Lessee.
"Lease Default" means any condition, circumstance, act or event that, with
the giving of notice, the lapse of time or both, would constitute a Lease Event
of Default.
"Lease Event of Default" means any one or more of the conditions,
circumstances, acts or events set forth in Section 14 of the Lease.
"Lease Supplement" means a supplement to the Lease, in the form of Exhibit
A to the Lease.
"Lease Supplement No. 1" means the initial Lease Supplement, dated the
Delivery Date.
"Lessee" means Atlas Air, Inc., a Delaware corporation.
"Lessee Operative Agreements" means the Participation Agreement, the Lease,
Lease Supplement No. 1, the Tax Indemnity Agreement, the Purchase Agreement
Assignment and each other agreement between Lessee and any other party to the
Participation Agreement, relating to the Transactions, delivered on the Delivery
Date.
"Lessee Person" means Lessee, any sublessee, assignee, successor or other
user or person in possession of the Aircraft, the Airframe or an Engine with or
without color of right, or any Affiliate of any of the foregoing (excluding any
Tax Indemnitee or any related Tax Indemnitee with respect thereto, or any person
using or claiming any rights with respect to the Aircraft, the Airframe or an
Engine directly by or through any of the persons referred to in this
parenthetical phrase, but not excluding any Person claiming directly or
indirectly through or under the Lease).
"Lessee's Advisor" is defined in Schedule 3 to the Participation Agreement.
"Lessor" means Owner Trustee in its capacity as lessor under the Lease.
"Lessor Lien" means, with respect to any person and in respect of any
property (including, without limitation, the Trust Estate, the Trust Indenture
Estate, the Aircraft, Air-
<PAGE>
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frame, Engines, Parts or Aircraft Documents) or any payments, any Lien on such
property or payments which (a) arises from claims against such person (if such
person is a trustee, whether in its individual capacity or in its capacity as a
trustee) not related to any of the transactions contemplated by the Operative
Agreements, (b) results from acts or omissions of such person (if such person is
a trustee, whether in its individual capacity or in its capacity as a trustee)
in violation of such person's obligations under any of the terms of the
Operative Agreements, or not related to the transactions contemplated by the
Operative Agreements, (c) is imposed as a result of Taxes against such person
(if such person is a trustee, whether in its individual capacity or in its
capacity as a trustee) or any of its Affiliates not required to be indemnified
by Lessee under the Participation Agreement, or (d) results from claims against
such person arising out of any transfer by such person of its interest in the
Aircraft, the Trust Estate or the Operative Agreements, other than a Transfer
permitted by the terms of the Operative Agreements or pursuant to the exercise
of remedies set forth in Section 15 of the Lease.
"Lessor's Cost" for the Aircraft means the amount denominated as such in
Schedule 3 to the Participation Agreement.
"Lien" means any mortgage, pledge, lien, charge, claim, encumbrance, lease
or security interest affecting the title to or any interest in property.
"Liquidity Facilities" means (i) the Revolving Credit Agreements between
the Subordination Agent, as borrower, and ABN AMRO Bank, N.V., acting through
its Chicago branch, with respect to the Class A-1 Pass Through Trust and the
Class A-2 Pass Through Trust and (ii) the Revolving Credit Agreements between
the Subordination Agent, as borrower, and Morgan Stanley Capital Services, Inc.
with respect to the Class B Pass Through Trust and the Class C Pass Through
Trust, each dated as of the Issuance Date, provided that, for purposes of any
obligation of Lessee, no amendment, modification or supplement to, or
substitution or replacement of, any such Liquidity Facility shall be effective
unless consented to by Lessee.
"Liquidity Provider" means (i) ABN AMRO Bank, N.V. acting through its
Chicago branch, as the Class A-1 and Class A-2 Liquidity Provider, and (ii)
Morgan Stanley Capital Services, Inc. as the Class B Liquidity Provider and the
Class C Liquidity Provider (as such terms are defined in the Intercreditor
Agreement) under the respective Liquidity Facilities, or any successor thereto.
<PAGE>
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"Loan Participants" mean, until the Closing shall have been consummated,
the Pass Through Trustees, and after the Closing shall have been consummated,
each Note Holder.
"Loss Payment Date" means the date on which payment is due pursuant to
Section 10.1.2(a)(i) of the Lease.
"Maintenance Program" is defined in Annex C to the Lease.
"Majority in Interest of Note Holders" means as of a particular date of
determination, the holders of a majority in aggregate unpaid Original Amount of
all Equipment Notes outstanding as of such date (excluding any Equipment Notes
held by Owner Trustee, Lessee, or Owner Participant or any Affiliate of any such
party or any interests of Owner Trustee or Owner Participant therein by reason
of subrogation pursuant to Section 4.03 of the Trust Indenture (unless all
Equipment Notes then outstanding shall be held by Owner Trustee, Lessee, Owner
Participant or any Affiliate of any thereof)); provided that for the purposes of
directing any action or casting any vote or giving any consent, waiver or
instruction hereunder any Note Holder of an Equipment Note or Equipment Notes
may allocate, in such Note Holder's sole discretion, any fractional portion of
the principal amount of such Equipment Note or Equipment Notes in favor of or in
opposition to any such action, vote, consent, waiver or instruction.
"Make-Whole Amount" means, with respect to any Equipment Note, an amount
(as determined by an independent investment banker of national standing) equal
to the excess, if any, of (a) the present value of the remaining scheduled
payments of principal and interest to maturity of such Equipment Note computed
by discounting such payments on a semiannual basis on each Payment Date
(assuming a 360-day year of twelve 30-day months) using a discount rate equal to
the Treasury Yield over (b) the outstanding principal amount of such Equipment
Note plus accrued interest to the date of determination. For purposes of
determining the Make-Whole Amount, "Treasury Yield" means, at the date of
determination with respect to any Equipment Note, the interest rate (expressed
as a decimal and, in the case of United States Treasury bills, converted to a
bond equivalent yield) determined to be the per annum rate equal to the
semi-annual yield to maturity for United States Treasury securities maturing on
the Average Life Date of such Equipment Note and trading in the public
securities markets either as determined by interpolation between the most recent
weekly average yield to maturity for two series of United States Treasury
<PAGE>
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securities, trading in the public securities markets, (A) one maturing as close
as possible to, but earlier than, the Average Life Date of such Equipment Note
and (B) the other maturing as close as possible to, but later than, the Average
Life Date of such Equipment Note, in each case as published in the most recent
H.15(519) or, if a weekly average yield to maturity for United States Treasury
securities maturing on the Average Life Date of such Equipment Note is reported
on the most recent H.15(519), such weekly average yield to maturity as published
in such H.15(519) "H.15(519)" means the weekly statistical release designated as
such, or any successor publication, published by the Board of Governors of the
Federal Reserve System. The date of determination of a Make-Whole Amount shall
be the third Business Day prior to the applicable payment or redemption date and
the "most recent H.15(519)" means the H.15(519) published prior to the close of
business on the third Business Day prior to the applicable payment or redemption
date.
"Manufacturer's Purchase Price" means the amount required to be paid to the
Airframe Manufacturer to purchase the Aircraft pursuant to the Purchase
Agreement Assignment.
"Material Adverse Change" means, with respect to any person, any event,
condition or circumstance that materially and adversely affects such person's
business or consolidated financial condition, or its ability to observe or
perform its obligations, liabilities and agreements under the Operative
Agreements.
"Materially Adverse Tax Event" means any event (other than excessive
foreign usage of the Aircraft) that makes it more likely than not that the
Lessee will be required to indemnify any Indemnitee for Taxes under any of the
Operative Agreements or the Owner Participant under the Tax Indemnity Agreement,
or both, provided that (i) the estimated aggregate of such indemnity payments
(computed as a hypothetical adjustment of Basic Rent or, if applicable, Renewal
Rent) over the then-remaining Term is equal to at least 5% of Basic Rent (and,
if applicable, Renewal Rent) payable over the remaining Term, and (ii) future
payments of the Taxes giving rise to the indemnity or indemnities will not be
required if the Lessee purchases the Aircraft.
"Minimum" is defined in Paragraph D of Annex B to the Lease.
"Minimum Liability Insurance Amount" is defined in Schedule 1 to the Lease.
<PAGE>
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"Moody's" means Moody's Investors Service, Inc.
"Mortgaged Property" is defined in Section 3.03 of the Trust Indenture.
"Mortgagee" means Wilmington Trust Company, a Delaware banking corporation,
not in its individual capacity but solely as loan trustee under the Trust
Indenture.
"Mortgagee Agreements" means, collectively, the Participation Agreement,
the Trust Indenture and each other agreement between Mortgagee and any other
party to the Participation Agreement, relating to the Transactions, delivered on
the Delivery Date.
"Mortgagee Event" means (i) in the event of a reorganization proceeding
involving the Lessee under Chapter 11 of the Bankruptcy Code, (A) the trustee in
such proceeding or the Lessee not assuming or agreeing to perform its
obligations under the Lease, as contemplated under Section 1110, during the
60-day period under Section 1110(a)(1)(A) of the Bankruptcy Code (or such longer
period as may apply under Section 1110(b) of the Bankruptcy Code) or (B) at any
time after agreeing to perform or assuming such obligations, such trustee or the
Lessee ceasing to perform such obligations with the result that the Continuous
Stay Period comes to an end or (ii) either the Equipment Notes shall have become
due and payable pursuant to Section 4.04(b) of the Trust Indenture or Mortgagee
has taken action or notified Owner Trustee that it intends to take action to
foreclose the Lien of the Trust Indenture or otherwise commence the exercise of
any repossessory remedy in accordance with Section 4.04(a) of the Trust
Indenture.
"NAIC" is defined in Section 8 of the Participation Agreement.
"Net Economic Return" means the Owner Participant's nominal after-tax book
yield (utilizing the multiple investment sinking fund method of analysis) and
aggregate net after-tax cash, computed on the basis of the same methodology and
assumptions as were utilized by the initial Owner Participant in determining
Basic Rent percentages, Stipulated Loss Value percentages, Termination Value
percentages and EBO Price, as of the Delivery Date, as such assumptions may be
adjusted for events that have been the basis for adjustments to Basic Rent
pursuant to Section 3.2.1(b) of the Lease or events giving rise to indemnity
payments pursuant to Section 5 of the Tax Indemnity Agreement; provided, that,
if the initial Owner Partici-
<PAGE>
-22-
pant shall have transferred its interest, Net Economic Return shall be
calculated as if the initial Owner Participant had retained its interest;
provided further, that, notwithstanding the preceding proviso, solely for
purposes of Section 11 of the Participation Agreement and calculating any
adjustments to Basic Rent percentages, Stipulated Loss Values percentages,
Termination Values percentages and EBO Price in connection with a refunding
pursuant to such Section 11 at a time when Owner Participant is a transferee
(other than an Affiliate of the initial Owner Participant), the after-tax yield
(but not the after-tax cash) component of Net Economic Return shall be
calculated on the basis of the methodology and assumptions utilized by the
transferee Owner Participant as of the date on which it acquired its interest.
"Net Present Value of Rents" is defined in Schedule 1 to the Lease.
"Net Worth" means, for any person, the excess of its total assets over its
total liabilities in accordance with GAAP.
"New Debt" means debt securities in an aggregate principal amount specified
in the Refunding Information.
"Non-U.S. Person" means any Person other than a United States person, as
defined in Section 7701(a)(30) of the Code.
"Note Holder" means at any time each registered holder of one or more
Equipment Notes.
"Note Purchase Agreement" means the Note Purchase Agreement, dated as of
the Issuance Date, among Atlas Air, Inc., the Subordination Agent, the Escrow
Agent, the Paying Agent and the Pass Through Trustee under each Pass Through
Trust Agreement providing for, among other things, the issuance and sale of
Equipment Notes.
"Officer's Certificate" means, in respect of any party to the Participation
Agreement, a certificate signed by the Chairman, the President, any Vice
President (including those with varying ranks such as Executive, Senior,
Assistant or Staff Vice President), the Treasurer or the Secretary of such
party.
"Operative Agreements" means, collectively, the Participation Agreement,
the Trust Agreement, the Purchase Agree-
<PAGE>
-23-
ment Assignment, the Consent and Agreement, the Engine Consent and Agreement,
the Lease, Lease Supplement No. 1, the Trust Indenture, the initial Trust
Indenture Supplement, the Bills of Sale, the Tax Indemnity Agreement, Assignment
and Assumption Agreements, if any, executed pursuant to Section 10 of the
Participation Agreement, and the Equipment Notes.
"Operative Indentures" means each of the indentures under which notes have
been issued and purchased by the Pass Through Trustees pursuant to the Note
Purchase Agreement.
"OP Jurisdiction" is defined in Schedule 3 to the Participation Agreement.
"Original Amount," with respect to an Equipment Note, means the stated
original principal amount of such Equipment Note and, with respect to all
Equipment Notes, means the aggregate stated original principal amounts of all
Equipment Notes.
"Owner Participant" means the person executing the Participation Agreement
as "Owner Participant" and its successors and assigns.
"Owner Participant Agreements" means, collectively, the Participation
Agreement, the Tax Indemnity Agreement, the Trust Agreement and each other
agreement between Owner Participant and any other party to the Participation
Agreement relating to the Transactions, delivered on the Delivery Date.
"Owner Participant's Percentage" means the percentage of Lessor's Cost
allocated to the Owner Participant in Schedule 2 to the Participation Agreement.
"Owner Trustee" means First Security Bank, National Association, a national
banking association, not in its individual capacity, except as expressly
provided in any Operative Agreement, but solely as Owner Trustee under the Trust
Agreement.
"Owner Trustee Agreements" means, collectively, the Participation
Agreement, the Lease, Lease Supplement No. 1, the Trust Agreement, the Trust
Indenture, the initial Trust Indenture Supplement, the Equipment Notes, the
Purchase Agreement Assignment, and each other agreement between Owner Trustee
and any other party to the Participation Agreement, relating to the
Transactions, delivered on the Delivery Date.
<PAGE>
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"Participants" means, collectively, Owner Participant and each Loan
Participant and "Participant" means Owner Participant or a Loan Participant,
individually.
"Participation Agreement" means the Participation Agreement dated as of [ ,
] among Lessee, Owner Participant, Owner Trustee, the Pass Through Trustees,
Subordination Agent and Mortgagee.
"Parts" means all appliances, parts, components, instruments,
appurtenances, accessories, furnishings, seats and other equipment of whatever
nature (other than (a) complete Engines or engines, and (b) any items leased by
Lessee from a third party other than Lessor) that may from time to time be
installed or incorporated in or attached or appurtenant to the Airframe or any
Engine.
"Pass Through Agreements" means the Pass Through Trust Agreements, the Note
Purchase Agreement, the Deposit Agreements, the Escrow Agreements, the
Intercreditor Agreement, the Liquidity Facilities and the Fee Letters referred
to in Section 2.03 of each of the Liquidity Facilities, provided, that no
amendment, modification or supplement to, or substitution or replacement of, any
such Fee Letter shall be effective for purposes of any obligation of Lessee,
unless consented to by Lessee.
"Pass Through Certificates" means the pass through certificates issued by
the Pass Through Trusts (and any other pass through certificates for which such
pass through certificates may be exchanged).
"Pass Through Indemnitees" means (i) the Subordination Agent, the Paying
Agent, the Escrow Agent, the Liquidity Providers, the Depositary and the Pass
Through Trustees, (ii) each Affiliate of a person described in the preceding
clause (i), (iii) the respective directors, officers, employees, agents and
servants of each of the persons described in the preceding clauses (i) and (ii)
and (iv) the successors and permitted assigns of the persons described in the
preceding clauses (i), (ii) and (iii).
"Pass Through Trust" means each of the four separate pass through trusts
created under the Pass Through Trust Agreements.
"Pass Through Trust Agreements" means the Pass Through Trust Agreement,
dated as of April 1, 1999, by and
<PAGE>
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between the Lessee and Pass Through Trustee and each of the four supplements
thereto, each dated the Issuance Date, by and between the Lessee and Pass
Through Trustee.
"Pass Through Trustee" means Wilmington Trust Company, a Delaware banking
corporation, in its capacity as trustee under each Pass Through Trust Agreement.
"Pass Through Trustee Agreements" means the Participation Agreement, the
Pass Through Trust Agreements, the Note Purchase Agreement, the Deposit
Agreements, the Escrow Agreements, and the Intercreditor Agreement.
"Payment Date" means, with respect to each Lease, each January 2 or July 2
during the term of such Lease, the Commencement Date of such Lease or any other
date agreed between the Lessee and the Owner Participant that occurs after the
latest maturity date of the Equipment Notes issued in connection with the
acquisition of the Aircraft to which such Lease relates.
"Payment Due Rate" is defined in Schedule 1 to the Lease.
"Payment Period" means each of the consecutive semiannual periods (or, if
applicable, such shorter period ended on (A) the first Payment Date of the Base
Lease Term or any Renewal Lease Term or (B) the Scheduled Expiration Date or
each Renewal Term Expiration Date) during the Term ending on a Payment Date, the
Scheduled Expiration Date or any Renewal Term Expiration Date the first such
period commencing on and including the Commencement Date.
"Paying Agent" means Wilmington Trust Company, as Paying Agent under each
of the Escrow Agreements.
"Permitted Air Carrier" means (i) any Permitted Manufacturer, (ii) any
Permitted Foreign Air Carrier, (iii) any person approved in writing by Lessor or
(iv) any U.S. Air Carrier.
"Permitted Country" means any country listed on Schedule 5 to the Lease.
"Permitted Foreign Air Carrier" means any air carrier with its principal
executive offices in any Permitted Country and which is authorized to conduct
commercial airline opera-
<PAGE>
-26-
tions and to operate jet aircraft similar to the Aircraft under the applicable
Laws of such Permitted Country.
"Permitted Government Entity" means (i) the U.S. Government or (ii) any
Government Entity if the Aircraft is then registered under the laws of the
country of such Government Entity.
"Permitted Foreign Manufacturer" means any Designated Manufacturer
domiciled outside the United States or (ii) any manufacturer of airframes or
aircraft engines, or any Affiliate thereof, which is domiciled in a Permitted
Country.
"Permitted Institution" means (a) any bank, trust company, insurance
company, financial institution or corporation (other than, without Lessee's
consent, a commercial air carrier, a commercial aircraft operator, a freight
forwarder or Affiliate of any of the foregoing), in each case with a combined
capital and surplus or Net Worth of at least $50,000,000.
"Permitted Lien" means any Lien described in clauses (a) through (g),
inclusive, of Section 6 of the Lease.
"Permitted Manufacturer" means (i) any manufacturer of aiframes or aircraft
engines, or any Affiliate thereof, which is domiciled in the United States or
(ii) any Permitted Foreign Manufacturer.
"Permitted Sublease" means a sublease permitted under Section 7.2.7 of the
Lease.
"Permitted Sublessee" means the sublessee under a Permitted Sublease.
"Persons" or "persons" means individuals, firms, partnerships, joint
ventures, trusts, trustees, Government Entities, organizations, associations,
corporations, government agencies, committees, departments, authorities and
other bodies, corporate or incorporate, whether having distinct legal status or
not, or any member of any of the same.
"Plan" means any employee benefit plan within the meaning of Section 3(3)
of ERISA, or any plan within the meaning of Section 4975(e)(1) of the Code.
"Preliminary Notice" is defined in Section 17.1 of the Lease.
<PAGE>
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"PTT Percentage" means, with respect to each Pass Through Trustee, the
percentage of Lessor's Cost allocated to such Pass Through Trustee in Schedule 2
to the Participation Agreement.
"Purchase Agreement" means the Purchase Agreement dated as of June 6, 1997
between Airframe Manufacturer and Lessee (including all exhibits thereto,
together with all letter agreements entered into that by their terms constitute
part of such Purchase Agreement), to the extent assigned pursuant to the
Purchase Agreement Assignment.
"Purchase Agreement Assignment" means the Purchase Agreement and Engine
Warranties Assignment dated as of even date with the Participation Agreement,
between Lessee and Owner Trustee.
"Purchase Date" means the last day, or if such a day is not a Business Day,
the immediately succeeding Business Day, of the Base Lease Term or any Renewal
Lease Term, as specified in any Purchase Notice.
"Purchase Notice" is defined in Section 17.3.1(b) of the Lease.
"QIB" is defined in Section 2.08 of the Trust Indenture.
"Refunding Certificate" means a certificate of an authorized representative
of Owner Participant delivered pursuant to Section 11.1.1 of the Participation
Agreement, setting forth (a) the Refunding Date and (b) the following
information, subject to the limitations set forth in Section 11 of the
Participation Agreement: (i) the principal amount of debt to be issued by Owner
Trustee on the Refunding Date, (ii) the proposed adjusted debt/equity ratio and
(iii) the proposed revised schedules of Basic Rent percentages, Stipulated Loss
Value percentages and Termination Value percentages and, if applicable, the
proposed revised EBO Price and/or EBO Date and the proposed Amortization
Schedules, calculated in accordance with Section 3.2.1 of the Lease.
"Refunding Date" means the proposed date on which the outstanding Equipment
Notes will be redeemed and refinanced pursuant to Section 11 of the
Participation Agreement.
"Refunding Information" means the information set forth in the Refunding
Certificate (other than the Refunding
<PAGE>
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Date) as such information may have been revised by any verification procedures
demanded by Lessee pursuant to Section 3.2.1(d) of the Lease.
"Renewal Lease Term" means the First Renewal Lease Term or any Subsequent
Renewal Lease Term, as the case may be.
"Renewal Notice" is defined in Section 17.2.1 of the Lease.
"Renewal Rent" means the rent payable for the Aircraft in respect of the
applicable Renewal Lease Term determined pursuant to Section 17.2.2 of the
Lease.
"Renewal Term Expiration Date" means, in the case of any Renewal Lease
Term, the date determined by Atlas, which date shall be between three months and
two years from the commencement date of each Renewal Lease Term.
"Rent" means, collectively, Basic Rent, Renewal Rent and Supplemental Rent.
"Replacement Airframe" is defined in Section 10.1.3 of the Lease.
"Replacement Engine" is defined in Section 10.2.2 of the Lease.
"Return Acceptance Supplement" means a Return Acceptance Supplement, dated
as of the date the Aircraft is returned to Lessor pursuant to Section 5 of the
Lease, executed by Lessor and Lessee substantially in the form of Exhibit B to
the Lease.
"Scheduled Delivery Date" means the expected Delivery Date notified to each
Participant, Owner Trustee and Mortgagee by Lessee pursuant to Section 4.1 of
the Participation Agreement, which expected Delivery Date shall be a Business
Day not later than the Commitment Termination Date.
"Scheduled Expiration Date" is defined in Schedule 1 to the Lease.
"SEC" means the Securities and Exchange Commission of the United States, or
any Government Entity succeeding to the functions of such Securities and
Exchange Commission.
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"Section 1110" means 11 U.S.C. ss. 1110 of the Bankruptcy Code or any
successor or analogous section of the federal bankruptcy Law in effect from time
to time.
"Secured Obligations" is defined in Section 2.06 of the Trust Indenture.
"Securities Act" means the Securities Act of 1933, as amended.
"Security" means a "security" as defined in Section 2(1) of the Securities
Act.
"Senior Holder" is defined in Section 2.14(c) of the Trust Indenture.
"Series" means any of Series A-1, Series A-2, Series B or Series C.
"Series A-1" or "Series A-1 Equipment Notes" means Equipment Notes issued
under the Trust Indenture and designated as "Series A-1" thereunder, in the
Original Amount and maturities and bearing interest as specified in Schedule I
to the Trust Indenture under the heading "Series A-1."
"Series A-2" or "Series A-2 Equipment Notes" means Equipment Notes, if any,
issued under the Trust Indenture and designated as "Series A-2" thereunder, in
the Original Amount and maturities and bearing interest as specified in Schedule
I to the Trust Indenture under the heading "Series A-2."
"Series B" or "Series B Equipment Notes" means Equipment Notes issued under
the Trust Indenture and designated as "Series B" thereunder, in the Original
Amount and maturities and bearing interest as specified in Schedule I to the
Trust Indenture under the heading "Series B."
"Series C" or "Series C Equipment Notes" means Equipment Notes issued under
the Trust Indenture and designated as "Series C" thereunder, in the Original
Amount and maturities and bearing interest as specified in Schedule I to the
Trust Indenture under the heading "Series C."
"Similar Aircraft" is defined in Schedule 1 to the Lease.
"SLV Rate" is defined in Schedule 1 to the Lease.
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"Special Default" means (i) the failure by Lessee to pay any amount of
Basic Rent, Renewal Rent, Stipulated Loss Value or Termination Value when due or
(ii) the occurrence of any Lease Default or Lease Event of Default referred to
in Section 14.5 of the Lease.
"Standard & Poor's" means Standard & Poor's Ratings Services.
"Stipulated Loss Value" means, with respect to the Aircraft, (a) during the
Base Lease Term, the amount determined by multiplying (i) the percentage set
forth in Schedule 3 to the Lease (as adjusted from time to time in accordance
with Section 3.2.1 of the Lease) opposite the Stipulated Loss Value Date as of
which the Stipulated Loss Value is required to be computed by (ii) Lessor's Cost
and (b) during any Renewal Lease Term, the amount determined pursuant to Section
17.2.3 of the Lease. Notwithstanding anything to the contrary in any Operative
Agreement, Stipulated Loss Value shall always be sufficient to pay in full, as
of the date of payment thereof (assuming timely payment of the Equipment Notes
prior to such date), the aggregate unpaid principal amount of all Equipment
Notes outstanding as of such date, together with accrued and unpaid interest on
all such Equipment Notes as of such date.
"Stipulated Loss Value Date" means, for any month, the day in such month
specified in Schedule 3 to the Lease.
"Subordination Agent" means Wilmington Trust Company, as subordination
agent under the Intercreditor Agreement.
"Subordination Agent Agreements" means the Participation Agreement, the
Liquidity Facilities and the Intercreditor Agreement.
"Subsequent Renewal Lease Term" means each term for which the Lease is
extended by Lessee, if any, after the First Renewal Lease Term.
"Supplemental Rent" means, without duplication (a) all amounts,
liabilities, indemnities and obligations (other than Basic Rent or Renewal Rent
but including Make-Whole Amount, if any) that Lessee assumes or becomes
obligated to or agrees to pay under any Lessee Operative Agreement to or on
behalf of Lessor or any other Person, including, without limitation, payments of
Stipulated Loss Value, Termination Value and payments of indemnities under
Section 9 of the Participation Agreement, but excluding any amount as to which
Lessee is obli-
<PAGE>
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gated to pay a pro rata share pursuant to clause (e) of this definition, (b) (i)
to the extent not payable (whether or not in fact paid) under Section 6(a) of
the Note Purchase Agreement (as originally in effect or amended with the consent
of the Owner Participant), an amount or amounts equal to the fees paid to the
relevant Liquidity Provider under Section 2.03 of each Liquidity Facility and
the related Fee Letter (as defined in the Intercreditor Agreement) multiplied by
a fraction the numerator of which shall be the then outstanding aggregate
principal amount of the Series A-1 Equipment Notes, Series A-2 Equipment Notes,
Series B Equipment Notes and Series C Equipment Notes and the denominator of
which shall be the then outstanding aggregate principal amount of all "Series
A-1 Equipment Notes", " Series A-2 Equipment Notes", "Series B Equipment Notes"
and "Series C Equipment Notes" (each as defined in the Note Purchase Agreement);
(ii) (x) the amount equal to interest on any Downgrade Advance (other than any
Applied Downgrade Advance) payable under Section 3.07(e) of each Liquidity
Facility minus Investment Earnings from such Downgrade Advance multiplied by (y)
the fraction specified in the foregoing clause (i); (iii) (x) the amount equal
to interest on any Non-Extension Advance (other than any Applied Non-Extension
Advance) payable under Section 3.07(a)(i) of each Liquidity Facility minus
Investment Earnings from such Non-Extension Advance multiplied by (y) the
fraction specified in the forgoing clause (i); (iv) if any payment default shall
have occurred and be continuing with respect to interest on any Series A-1
Equipment Notes, Series A-2 Equipment Notes, Series B Equipment Notes or Series
C Equipment Notes, (x) the excess, if any, of (1) an amount equal to interest on
any Unpaid Advance, Applied Downgrade Advance or Applied Non-Extension Advance
payable under Section 3.07(a) of each Liquidity Facility over (2) the sum of
Investment Earnings from any Final Advance plus any amount of interest at the
Payment Due Rate actually payable (whether or not in fact paid) by Lessee in
respect of the overdue scheduled interest on the Equipment Notes in respect of
which such Unpaid Advance, Applied Downgrade Advance or Applied Non-Extension
Advance was made multiplied by (y) a fraction the numerator of which shall be
the then aggregate overdue amounts of interest on the Series A-1 Equipment
Notes, Series A-2 Equipment Notes, Series B Equipment Notes and Series C
Equipment Notes (other than interest becoming due and payable solely as a result
of acceleration of any such Equipment Notes) and the denominator of which shall
be the then aggregate overdue amounts of interest on all "Series A-1 Equipment
Notes", "Series A-2 Equipment Notes", "Series B Equipment Notes" and "Series C
Equipment Notes" (each as defined in the Note Purchase Agreement) (other than
interest becoming due and payable solely as a
<PAGE>
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result of acceleration of any such "Equipment Notes"); and (v) the Pro Rata
Share of any other amounts owed to the Liquidity Providers by the Subordination
Agent as borrower under each Liquidity Facility (other than amounts due as
repayment of advances thereunder or as interest on such advances), except to the
extent payable pursuant to clause (ii), (iii) or (iv) above, (c) the Pro Rata
Share of all compensation and reimbursement of expenses, disbursements and
advances payable by Lessee under the Pass Through Trust Agreements, (d) the Pro
Rata Share of all compensation and reimbursement of expenses and disbursements
payable to the Subordination Agent under the Intercreditor Agreement except with
respect to any income or franchise taxes incurred by the Subordination Agent in
connection with the transactions contemplated by the Intercreditor Agreement,
(e) the Pro Rata Share of any amount payable under Section 9.1 (and, if
attributable thereto, Section 9.5) of the Participation Agreement to any Pass
Through Indemnitee to the extent such amount relates to, results from or arises
out of or in connection with (i) the Pass Through Agreements or the enforcement
of any of the terms of any of the Pass Through Agreements, (ii) the offer, sale,
or delivery or the Pass Through Certificates or any interest therein or
represented thereby or (iii) any breach of or failure to perform or observe, or
any other noncompliance with, any covenant or agreement or other obligation to
be performed by Lessee under any Pass Through Agreement or the falsity of any
representation or warranty of Lessee in any Pass Through Agreement and (f) in
the event Lessee requests any amendment to any Operative Agreement or Pass
Through Agreement, the Pro Rata Share of all reasonable fees and expenses
(including, without limitation, fees and disbursements of counsel) of the Escrow
Agents and the Paying Agents in connection therewith payable by the Pass Through
Trustees under the Escrow Agreements. As used herein, "Pro Rata Share" means as
of any time a fraction, the numerator of which is the principal balance then
outstanding of Equipment Notes and the denominator of which is the aggregate
principal balance then outstanding of all "Equipment Notes" (as such term is
defined in each of the Operative Indentures). For purposes of this definition,
the terms "Applied Downgrade Advance", "Applied Non-Extension Advance", "Cash
Collateral Account", "Downgrade Advance", "Final Advance", "Investment
Earnings", "Non-Extension Advance" and "Unpaid Advance" shall have the meanings
specified in each Liquidity Facility.
"Tax Attribute Period" is defined in Section 1(e) of the Tax Indemnity
Agreement.
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"Tax Indemnitee" means (a) First Security and Owner Trustee, (b) WTC and
Mortgagee, (c) each separate or additional trustee appointed pursuant to the
Trust Agreement or the Trust Indenture, (d) each Participant, (e) the Trust
Estate and the Trust Indenture Estate and (f) the respective successors,
assigns, agents and servants of the foregoing. For purposes of this definition,
the term "Owner Participant" shall include any member of an affiliated group
(within the meaning of Section 1504 of the Code) of which Owner Participant is,
or may become, a member if consolidated, joint or combined returns are filed for
such affiliated group for federal, state or local income tax purposes.
"Tax Indemnity Agreement" means the Tax Indemnity Agreement, dated as of
even date with the Participation Agreement, between Lessee and Owner
Participant.
"Taxes" means all license, recording, documentary, registration and other
similar fees and all taxes, levies, imposts, duties, charges, assessments or
withholdings of any nature whatsoever imposed by any Taxing Authority, together
with any penalties, additions to tax, fines or interest thereon or additions
thereto.
"Taxing Authority" means any federal, state or local government or other
taxing authority in the United States, any foreign government or any political
subdivision or taxing authority thereof, any international taxing authority or
any territory or possession of the United States or any taxing authority
thereof.
"Term" means the term, commencing on the Delivery Date, for which the
Aircraft is leased pursuant to Section 3 of the Lease, and shall include the
Base Lease Term and, if applicable, any Renewal Lease Term; provided that if at
the scheduled end of the Term the Aircraft or Airframe is being used, or was
within six (6) months prior thereto being used, by the U.S. Government pursuant
to CRAF, the Term shall be deemed extended for the period necessary to
accommodate usage of the Aircraft or Airframe pursuant to CRAF plus six months
thereafter, and Lessee shall be obligated to pay Basic Rent with respect to any
such period of extension at a semiannual rate equal to the average of the Basic
Rent paid during the Base Lease Term or the applicable Renewal Lease Term,
whichever shall have ended immediately prior to such extension.
"Termination Date" means any Payment Date occurring after the fifth
anniversary of the Delivery Date on which the
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Lease shall terminate in accordance with Section 9 of the Lease.
"Termination Value" means, with respect to the Aircraft, the amount
determined by multiplying (a) the percentage set forth in Schedule 4 to the
Lease (as adjusted from time to time in accordance with Section 3.2.1 of the
Lease) opposite the Termination Value Date as of which the Termination Value is
required to be computed by (b) Lessor's Cost. Notwithstanding anything to the
contrary in any Operative Agreement, Termination Value shall always be
sufficient to pay in full, as of the date of payment thereof (assuming timely
payment of the Equipment Notes prior to such date), the aggregate unpaid
principal amount of all Equipment Notes outstanding as of such date, together
with accrued and unpaid interest on all such Equipment Notes as of such date.
"Termination Value Date" means, for any month, the day in such month
specified in Schedule 4 to the Lease.
"Threshold Amount is defined in Schedule 1 to the Lease.
"Transaction Expenses" means: (i) the reasonable and actual fees, expenses
and disbursements incurred in connection with the negotiation, execution and
delivery of the Operative Agreements of (1) Morris, James, Hitchens & Williams,
special counsel for Mortgagee and the Loan Participants, such information to be
furnished by the Subordination Agent, (2) Crowe & Dunlevy, special counsel in
Oklahoma City, Oklahoma, such information to be furnished by Lessee, (3) Cahill
Gordon & Reindel, special counsel to Lessee, such information to be furnished by
Lessee and (4) Ray, Quinney & Nebeker, special counsel to the Owner Trustee,
such information to be provided by the Owner Trustee, (ii) all fees, taxes and
other charges payable in connection with the recording or filing of instruments
and financing statements, such information to be furnished by Lessee, (iii) the
initial fee and reasonable and actual disbursements of Owner Trustee under the
Trust Agreement, such information to be furnished by the Owner Trustee, (iv) the
initial fee and reasonable and actual disbursements of Mortgagee under the Trust
Indenture, such information to be furnished by Mortgagee, (v) the fee of the
Appraiser with respect to the appraisal of the Aircraft referred to in Section
5.1.2(xv) of the Participation Agreement, such information to be furnished by
the Owner Participant, (vi) the reasonable and actual fees, out-of-pocket
expenses and disbursements of special counsel to the Owner Participant (as
defined in Schedule 3 to the Partici-
<PAGE>
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pation Agreement), such information to be furnished by the Owner Participant,
and (vii) the equity placement fee and reasonable disbursements of Lessee's
Advisor, such information to be furnished by Lessee.
"Transactions" means the transactions contemplated by the Participation
Agreement and the other Operative Agreements.
"Transfer" means the direct or indirect transfer, sale, assignment or other
conveyance of all or any interest in any property, right or interest.
"Transferee" means a person to which any Owner Participant, Owner Trustee
or any Loan Participant or Note Holder purports or intends to Transfer any or
all of its right, title or interest in the Trust Estate or in its Equipment Note
and the Trust Indenture Estate, respectively, as described in Section 10.1.1(a),
10.1.2 or 10.1.3 (but excluding participants in any participation referred to in
Section 10.1.3), respectively, of the Participation Agreement.
"Triggering Event" is defined in Section 1.1 of the Intercreditor
Agreement.
"Trust" means the trust created by the Trust Agreement.
"Trust Agreement" means the Trust Agreement dated as of even date with the
Participation Agreement, between Owner Participant and Owner Trustee.
"Trust Estate" means all estate, right, title and interest of Owner Trustee
in and to the Aircraft, the Lease, any Lease Supplement and the Purchase
Agreement including, without limitation, all amounts of Basic Rent and
Supplemental Rent including, without limitation, insurance proceeds and
requisition, indemnity or other payments of any kind for of with respect to the
Aircraft. Notwithstanding the foregoing, "Trust Estate" shall not include any
Excluded Payment.
"Trust Indenture" means the Trust Indenture and Mortgage dated as of even
date with the Participation Agreement, between Owner Trustee and Mortgagee.
"Trust Indenture Estate" is defined in the "Granting Clause" of the Trust
Indenture.
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"Trust Indenture Supplement" means a Trust Indenture and Mortgage
Supplement, substantially in the form of Exhibit A to the Trust Indenture, with
appropriate modifications to reflect the purpose for which it is being used.
"UCC" means the Uniform Commercial Code as in effect in any applicable
jurisdiction.
"United States" or "U.S." means the United States of America; provided,
that for geographic purposes, "United States" means, in aggregate, the 50 states
and the District of Columbia of the United States of America.
"U.S. Air Carrier" means any United States air carrier that is a Citizen of
the United States holding an air carrier operating certificate issued by the
Secretary of Transportation pursuant to chapter 447 of title 49 of the United
States Code for aircraft capable of carrying 10 or more individuals or 6000
pounds or more of cargo, and as to which there is in force an air carrier
operating certificate issued pursuant to Part 121 of the FAA Regulations, or
which may operate as an air carrier by certification or otherwise under any
successor or substitute provisions therefor or in the absence thereof.
"U.S. Person" means any Person described in Section 7701(a)(30) of the
Code.
"U.S. Government" means the federal government of the United States, or any
instrumentality or agency thereof the obligations of which are guaranteed by the
full faith and credit of the federal government of the United States.
"Weighted Average Life to Maturity" means, with respect to any specified
Debt, at the time of the determination thereof the number of years obtained by
dividing the then Remaining Dollar-years of such Debt by the then outstanding
principal amount of such Debt. The term "Remaining Dollar-years" shall mean the
amount obtained by (1) multiplying the amount of each then-remaining principal
payment on such Debt by the number of years (calculated at the nearest
one-twelfth) that will elapse between the date of determination of the Weighted
Average Life to Maturity of such Debt and the date of that required payment and
(2) totaling all the products obtained in clause (1) above.
"Wet Lease" means any arrangement, including, but not limited to an ACMI
Contract, whereby Lessee or a Permitted Sublessee agrees to furnish the
Aircraft, Airframe or any Engine
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to a third party pursuant to which the Aircraft, Airframe or Engine shall at all
times be in the operational control of Lessee or a Permitted Sublessee, provided
that Lessee's obligations under the Lease shall continue in full force and
effect notwithstanding any such arrangement.
"WTC" means Wilmington Trust Company, a Delaware banking corporation, not
in its capacity as Mortgagee under the Trust Indenture, but in its individual
capacity.
EXHIBIT A-3 to
Note Purchase Agreement
FORM OF LEASED AIRCRAFT INDENTURE
<PAGE>
- -------------------------------------------------------------------------------
TRUST INDENTURE AND MORTGAGE
Dated as of ____________, ____
Between
FIRST SECURITY BANK, NATIONAL ASSOCIATION,
not in its individual capacity,
except as expressly stated herein,
but solely as Owner Trustee,
Owner Trustee
and
WILMINGTON TRUST COMPANY,
not in its individual capacity,
except as expressly stated herein,
but solely as Mortgagee,
Mortgagee
- -------------------------------------------------------------------------------
EQUIPMENT NOTES COVERING
ONE BOEING 747-47UF FREIGHTER AIRCRAFT
BEARING U.S. REGISTRATION MARK N_____
LEASED BY ATLAS AIR, INC.
- -------------------------------------------------------------------------------
<PAGE>
TABLE OF CONTENTS
Page
GRANTING CLAUSE...............................................................2
ARTICLE I
DEFINITIONS
ARTICLE II
THE EQUIPMENT NOTES
SECTION 2.01. Form of Equipment Notes........................................8
SECTION 2.02. Issuance and Terms of Equipment Notes.........................13
SECTION 2.03. Payments from Trust Indenture Estate Only.....................16
SECTION 2.04. Method of Payment.............................................17
SECTION 2.05. Application of Payments.......................................20
SECTION 2.06. Termination of Interest in Trust Indenture Estate.............20
SECTION 2.07. Registration Transfer and Exchange of Equipment Notes.........20
SECTION 2.08. Mutilated, Destroyed, Lost or Stolen Equipment Notes..........22
SECTION 2.09. Payment of Expenses on Transfer; Cancellation.................23
SECTION 2.10. Mandatory Redemptions of Equipment Notes......................23
SECTION 2.11. Voluntary Redemptions of Equipment Notes; Assumption of
Equipment Notes.............................................23
SECTION 2.12. Redemptions; Notice of Redemption.............................24
SECTION 2.13. Option to Purchase Equipment Notes............................25
SECTION 2.14. Subordination.................................................27
ARTICLE III
RECEIPT, DISTRIBUTION AND APPLICATION OF
INCOME FROM THE TRUST INDENTURE ESTATE
SECTION 3.01. Basic Rent Distribution.......................................27
SECTION 3.02. Event of Loss; Replacement; Voluntary Termination;
Optional Redemption.........................................29
SECTION 3.03. Payments After Event of Default...............................30
SECTION 3.04. Certain Payments..............................................32
-i-
<PAGE>
SECTION 3.05. Other Payments................................................33
SECTION 3.06. Payments to Owner Trustee.....................................34
ARTICLE IV
COVENANTS OF OWNER TRUSTEE; EVENTS OF DEFAULT;
REMEDIES OF MORTGAGEE
SECTION 4.01. Covenants of Owner Trustee....................................34
SECTION 4.02. Event of Default..............................................35
SECTION 4.03. Certain Rights................................................38
SECTION 4.04. Remedies......................................................39
SECTION 4.05. Return of Aircraft, Etc.......................................42
SECTION 4.06. Remedies Cumulative...........................................44
SECTION 4.07. Discontinuance of Proceedings.................................44
SECTION 4.08. Waiver of Past Defaults.......................................44
SECTION 4.09. Appointment of Receiver.......................................45
SECTION 4.10. Mortgagee Authorized to Execute Bills of Sale, Etc............45
SECTION 4.11. Rights of Note Holders to Receive Payment.....................45
ARTICLE V
DUTIES OF THE MORTGAGEE
SECTION 5.01. Notice of Event of Default....................................46
SECTION 5.02. Action upon Instructions; Certain Rights and Limitations......46
SECTION 5.03. Indemnification...............................................49
SECTION 5.04. No Duties Except as Specified in Trust Indenture
or Instructions.............................................50
SECTION 5.05. No Action Except Under Lease, Trust Indenture
or Instructions.............................................50
SECTION 5.06. Replacement Airframes and Replacement Engines.................51
SECTION 5.07. Indenture Supplements for Replacements........................51
SECTION 5.08. Effect of Replacement.........................................51
SECTION 5.09. Investment of Amounts Held by Mortgagee.......................51
ARTICLE VI
THE OWNER TRUSTEE AND THE MORTGAGEE
SECTION 6.01. Acceptance of Trusts and Duties...............................52
SECTION 6.02. Absence of Duties.............................................53
-ii-
<PAGE>
SECTION 6.03. No Representations or Warranties as to Aircraft
or Documents................................................53
SECTION 6.04. No Segregation of Monies; No Interest.........................54
SECTION 6.05. Reliance; Agreements; Advice of Counsel.......................54
SECTION 6.06. Capacity in Which Acting......................................55
SECTION 6.07. Compensation..................................................55
SECTION 6.08. Instructions from Note Holders................................55
ARTICLE VII
INDEMNIFICATION OF MORTGAGEE BY OWNER TRUSTEE
SECTION 7.01. Scope of Indemnification......................................56
ARTICLE VIII
SUCCESSOR AND SEPARATE TRUSTEES
SECTION 8.01. Notice of Successor Owner Trustee.............................57
SECTION 8.02. Resignation of Mortgagee; Appointment of Successor............57
SECTION 8.03. Appointment of Additional and Separate Trustees...............58
ARTICLE IX
SUPPLEMENTS AND AMENDMENTS TO THIS TRUST
INDENTURE AND OTHER DOCUMENTS
SECTION 9.01. Instructions of Majority; Limitations.........................60
SECTION 9.02. Trustees Protected............................................63
SECTION 9.03. Documents Mailed to Note Holders..............................63
SECTION 9.04. No Request Necessary for Lease Supplement or Trust
Indenture Supplement........................................63
ARTICLE X
MISCELLANEOUS
SECTION 10.01. Termination of Trust Indenture................................63
SECTION 10.02. No Legal Title to Trust Indenture Estate in Note Holders......64
SECTION 10.03. Sale of Aircraft by Mortgagee Is Binding......................64
SECTION 10.04. Trust Indenture for Benefit of Owner Trustee, Mortgagee,
Owner Participant, Note Holders and the Other
Indenture Indemnitees......................................64
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<PAGE>
SECTION 10.05. Notices.......................................................65
SECTION 10.06. Severability..................................................65
SECTION 10.07. No Oral Modification or Continuing Waivers....................65
SECTION 10.08. Successors and Assigns........................................66
SECTION 10.09. Headings......................................................66
SECTION 10.10. Normal Commercial Relations...................................66
SECTION 10.11. Governing Law; Counterpart Form...............................66
SECTION 10.12. Voting By Note Holders........................................67
SECTION 10.13. Bankruptcy....................................................67
EXHIBIT A Form of Trust Indenture and Mortgage Supplement
SCHEDULE I Equipment Notes Amortization and Interest Rates
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<PAGE>
TRUST INDENTURE AND MORTGAGE
TRUST INDENTURE AND MORTGAGE, dated as of ___________, ____ ("Trust
Indenture"), between FIRST SECURITY BANK, NATIONAL ASSOCIATION, a national
banking association, not in its individual capacity, except as expressly stated
herein, but solely as Owner Trustee under the Trust Agreement referred to below
(together with its successors under the Trust Agreement, the "Owner Trustee"),
and WILMINGTON TRUST COMPANY ("WTC"), a Delaware banking corporation, not in its
individual capacity, except as expressly stated herein, but solely as Mortgagee
hereunder (together with its successors hereunder, the "Mortgagee").
W I T N E S S E T H
WHEREAS, all capitalized terms used herein shall have the respective
meanings set forth or referred to in Article I hereof;
WHEREAS, the Owner Participant and the Owner Trustee in its individual
capacity have entered into the Trust Agreement whereby, among other things, (i)
the Owner Trustee has established a certain trust for the use and benefit of the
Owner Participant subject, however, to the Trust Indenture Estate created
pursuant hereto for the use and benefit of, and with the priority of payment to,
the holders of Equipment Notes issued hereunder, and (ii) the Owner Trustee has
been authorized and directed to execute and deliver this Agreement;
WHEREAS, the parties hereto desire by this Trust Indenture, among other
things, (i) to provide for the issuance by the Owner Trustee of the Equipment
Notes and (ii) to provide for the assignment, mortgage and pledge by the Owner
Trustee to the Mortgagee, as part of the Trust Indenture Estate hereunder, among
other things, of all of the Owner Trustee's right, title and interest in and to
the Aircraft and, except as hereinafter expressly provided, all of the Owner
Trustee's right, title and interest in, to and under the Lease and all payments
and other amounts received thereunder and under the Participation Agreement in
accordance with the terms hereof or thereof, as security for, among other
things, the Owner Trustee's and the Lessee's obligations to the Note Holders and
the Indenture Indemnitees;
WHEREAS, all things have been done to make the Equipment Notes, when
executed by the Owner Trustee and authenticated and delivered by the Mortgagee
hereunder, the valid, binding and enforceable obligations of the Owner Trustee;
and
<PAGE>
-2-
WHEREAS, all things necessary to make this Trust Indenture the valid,
binding and legal obligation of the Owner Trustee for the uses and purposes
herein set forth, in accordance with its terms, have been done and performed and
have happened;
GRANTING CLAUSE
NOW, THEREFORE, THIS TRUST INDENTURE AND MORTGAGE WITNESSETH, that, to
secure the prompt payment of the Original Amount of, interest on, Make-Whole
Amount, if any, and all other amounts due with respect to, all Equipment Notes
from time to time outstanding hereunder according to their tenor and effect and
to secure the performance and observance by the Owner Trustee of all the
agreements, covenants and provisions contained herein and in the Participation
Agreement and the Equipment Notes, for the benefit of the Note Holders, the Loan
Participants and each of the Indenture Indemnitees and the prompt payment of all
amounts from time to time owing hereunder, under the Participation Agreement and
the Lease to the Loan Participants, the Note Holders or any Indenture Indemnitee
by the Owner Trustee or the Lessee and for the uses and purposes and subject to
the terms and provisions hereof, and in consideration of the premises and of the
covenants herein contained, and of the acceptance of the Equipment Notes by the
holders thereof, and for other good and valuable consideration the receipt and
adequacy whereof are hereby acknowledged, the Owner Trustee has granted,
bargained, sold, assigned, transferred, conveyed, mortgaged, pledged and
confirmed, and does hereby grant, bargain, sell, assign, transfer, convey,
mortgage, pledge and confirm, unto the Mortgagee, its successors in trust and
assigns, for the security and benefit of the Loan Participants, the Note Holders
and each of the Indenture Indemnitees, a first priority security interest in and
mortgage lien on all right, title and interest of the Owner Trustee in, to and
under the following described property, rights and privileges, whether now or
hereafter acquired, other than Excluded Payments (which, collectively, excluding
Excluded Payments but including all property hereafter specifically subject to
the Lien of this Trust Indenture by the terms hereof or any supplement hereto,
are included within, and are referred to as, the "Trust Indenture Estate"), to
wit:
(1) The Airframe which is one Boeing 747-47UF aircraft with the FAA
Registration number of N________ and the manufacturer's serial number of and
four Engines, each of which Engines is a General Electric CF6-80C2B5FG04 engine
with the manufacturer's serial numbers _____, _____, _____ and _____, is of 750
or more rated takeoff horsepower or the equivalent of such horsepower (such
Airframe and Engines more particularly described in the Indenture Supplement
executed and delivered as provided herein) as the same is now and will hereafter
be constituted, whether now owned by the Owner Trustee or hereafter acquired,
leased or intended to be leased under the Lease, and in the case of such
Engines, whether or not any such Engine shall be installed in or attached to the
Airframe or any other airframe, together with (a) all Parts of whatever nature,
which
<PAGE>
-3-
are from time to time included within the definitions of "Airframe" or
"Engines," whether now owned or hereafter acquired, including all substitutions,
renewals and replacements of and additions, improvements, accessions and
accumulations to the Airframe and Engines (other than additions, improvements,
accessions and accumulations which constitute appliances, parts, instruments,
appurtenances, accessories, furnishings or other equipment excluded from the
definition of Parts) and (b) all Aircraft Documents;
(2) Subject to Section 5.02 hereof, all right, title, interest, claims and
demands of the Owner Trustee, as Lessor, in, to and under the Lease, together
with all rights, powers, privileges, options and other benefits of the Owner
Trustee as lessor under the Lease, including the immediate and continuing right
to receive and collect all Rent, income, revenues, issues, profits, insurance
proceeds, condemnation awards and other payments, tenders and security now or
hereafter payable to or receivable by the Lessor under the Lease pursuant
thereto, and, subject to Section 5.02 hereof, the right to make all waivers and
agreements, to give and receive copies of all notices and other instruments or
communications, and to accept surrender or redelivery of the Aircraft or any
part thereof, as well as all the rights, powers and remedies on the part of the
Owner Trustee as Lessor under the Lease, to take such action upon the occurrence
of a Lease Event of Default thereunder, including the commencement, conduct and
consummation of legal, administrative or other proceedings, as shall be
permitted by the Lease or by Law, and to do any and all other things whatsoever
which the Owner Trustee or any lessor is or may be entitled to do under or in
respect of the Lease and any right to restitution from the Lessee or any other
Person in respect of any determination of invalidity of the Lease;
(3) All right, title, interest, claims and demands of the Owner Trustee in,
to and under:
(a) the Purchase Agreement and the GTA (to the extent assigned by the
Purchase Agreement Assignment);
(b) the Purchase Agreement Assignment, with the Consent and Agreement
and the Engine Consent and Agreement attached thereto;
(c) the Bills of Sale; and
(d) any and all other contracts, agreements and instruments (other
than the Participation Agreement, except to the extent provided in clause
(6) below) relating to the Airframe and Engines or any rights or interests
therein to which the Owner Trustee is now or may hereafter be a party;
<PAGE>
-4-
together with, but subject to Section 5.02, all rights, powers, privileges,
licenses, easements, options and other benefits of the Owner Trustee under each
contract, agreement and instrument (other than the Participation Agreement,
except to the extent provided in clause (6) below) referred to in this clause
(3), including the right to receive and collect all payments to the Owner
Trustee thereunder now or hereafter payable to or receivable by the Owner
Trustee pursuant thereto and, subject to Section 5.02 hereof, the right to make
all waivers and agreements, to give and receive notices and other instruments or
communications, or to take any other action under or in respect of any thereof
or to take such action upon the occurrence of a default thereunder, including
the commencement, conduct and consummation of legal, administrative or other
proceedings, as shall be permitted thereby or by Law, and to do any and all
other things which the Owner Trustee is or may be entitled to do thereunder and
any right to restitution from the Lessee, the Owner Participant or any other
Person in respect of any determination of invalidity of any thereof;
(4) All rents, issues, profits, revenues and other income (other than
rents, issues, profits, revenues and other income from any ACMI Contract) of the
property subjected or required to be subjected to the Lien of this Trust
Indenture, including all payments or proceeds payable to the Owner Trustee after
termination of the Lease with respect to the Aircraft as the result of the sale,
lease or other disposition thereof, and all estate, right, title and interest of
every nature whatsoever of the Owner Trustee in and to the same (other than
rents, issues, profits, revenues and other income from any ACMI Contract);
(5) Without limiting the generality of the foregoing, all insurance
and requisition proceeds with respect to the Aircraft or any part thereof,
including the insurance required under Section 11 of the Lease but excluding any
insurance maintained by the Lessee and not required under the Lease;
(6) Without limiting the generality of the foregoing, all rights of the
Owner Trustee to amounts paid or payable by Lessee to the Owner Trustee under
the Participation Agreement and all rights of the Owner Trustee to enforce
payments of any such amounts thereunder;
(7) Without limiting the generality of the foregoing, all monies and
securities from time to time deposited or required to be deposited with the
Mortgagee pursuant to any terms of this Trust Indenture or the Lease or required
hereby or by the Lease to be held by the Mortgagee hereunder as security for the
obligations of the Lessee under the Lease or of the Owner Trustee hereunder;
(8) All proceeds of the foregoing; excluding, however, in all events from
each of the foregoing clauses (1) through (8) inclusive all Excluded Payments
and the right
<PAGE>
-5-
to specifically enforce the same or to sue for damages for the breach thereof as
provided in Section 5.02 hereof.
Concurrently with the delivery of this Trust Indenture, the Owner Trustee
will deliver to the Mortgagee the original executed counterpart of the Lease and
the Lease Supplement No. 1 (to each of which a chattel paper receipt is
attached), and executed copies of the Participation Agreement, the Purchase
Agreement and the GTA (to the extent assigned by the Purchase Agreement
Assignment), and the Purchase Agreement Assignment, with the Consent and
Agreement and the Engine Consent and Agreement attached thereto.
TO HAVE AND TO HOLD all and singular the aforesaid property unto the
Mortgagee, and its successors and assigns, in trust for the equal and
proportionate benefit and security of the Loan Participants, the Note Holders
and the Indenture Indemnitees, except as provided in Section 2.14 and Article
III hereof without any preference, distinction or priority of any one Equipment
Note over any other by reason of priority of time of issue, sale, negotiation,
date of maturity thereof or otherwise for any reason whatsoever, and for the
uses and purposes, and in all cases and as to all property specified in
paragraphs (1) through (8) inclusive above, subject to the terms and provisions
set forth in this Trust Indenture.
It is expressly agreed that anything herein contained to the contrary
notwithstanding, the Owner Trustee shall remain liable under the Indenture
Agreements to perform all of the obligations assumed by it thereunder, except to
the extent prohibited or excluded from doing so pursuant to the terms and
provisions thereof, and the Mortgagee, the Loan Participants, the Note Holders
and the Indenture Indemnitees shall have no obligation or liability under the
Indenture Agreements by reason of or arising out of the assignment hereunder,
nor shall the Mortgagee, the Loan Participants, the Note Holders or the
Indenture Indemnitees be required or obligated in any manner to perform or
fulfill any obligations of the Owner Trustee under or pursuant to the Indenture
Agreements, or, except as herein expressly provided, to make any payment, or to
make any inquiry as to the nature or sufficiency of any payment received by it,
or present or file any claim, or take any action to collect or enforce the
payment of any amounts which may have been assigned to it or to which it may be
entitled at any time or times.
The Owner Trustee does hereby constitute the Mortgagee the true and lawful
attorney of the Owner Trustee, irrevocably, granted for good and valuable
consideration and coupled with an interest and with full power of substitution,
and with full power (in the name of the Owner Trustee or otherwise) to ask for,
require, demand, receive, compound and give acquittance for any and all monies
and claims for monies (in each case including insurance and requisition proceeds
but in all cases excluding Excluded Payments) due and to become due under or
arising out of the Indenture Agreements, and all other property
<PAGE>
-6-
which now or hereafter constitutes part of the Trust Indenture Estate, to
endorse any checks or other instruments or orders in connection therewith and to
file any claims or to take any action or to institute any proceedings which the
Mortgagee may deem to be necessary or advisable in the premises. Without
limiting the generality of the foregoing, but subject to the rights of the Owner
Trustee and the Owner Participant under Sections 2.13, 4.03 and 4.04(a) hereof,
during the continuance of any Event of Default under this Trust Indenture, the
Mortgagee shall have the right under such power of attorney to accept any offer
in connection with the exercise of remedies as set forth herein of any purchaser
to purchase the Airframe and Engines and upon such purchase to execute and
deliver in the name of and on behalf of the Owner Trustee an appropriate bill of
sale and other instruments of transfer relating to the Airframe and Engines,
when purchased by such purchaser, and to perform all other necessary or
appropriate acts with respect to any such purchase, and in its discretion to
file any claim or take any other action or proceedings, either in its own name
or in the name of the Owner Trustee or otherwise, which the Mortgagee may deem
necessary or appropriate to protect and preserve the right, title and interest
of the Mortgagee in and to such Rents and other sums and the security intended
to be afforded hereby; provided, however, that no action of the Mortgagee
pursuant to this paragraph shall increase the obligations or liabilities of the
Owner Trustee to any Person beyond those obligations and liabilities
specifically set forth in this Trust Indenture and in the other Operative
Agreements. Under the Lease, Lessee is directed, so long as this Trust Indenture
shall not have been fully discharged, to make all payments of Rent (other than
Excluded Payments) and all other amounts which are required to be paid to or
deposited with the Owner Trustee pursuant to the Lease (other than Excluded
Payments) directly to, or as directed by, the Mortgagee at such address or
addresses as the Mortgagee shall specify, for application as provided in this
Trust Indenture. The Owner Trustee agrees that promptly upon receipt thereof, it
will transfer to the Mortgagee any and all monies from time to time received by
it constituting part of the Trust Indenture Estate, for distribution by the
Mortgagee pursuant to this Trust Indenture, except that the Owner Trustee shall
accept for distribution pursuant to the Trust Agreement any amounts distributed
to it by the Mortgagee under this Trust Indenture.
The Owner Trustee agrees that at any time and from time to time, upon the
written request of the Mortgagee, the Owner Trustee will promptly and duly
execute and deliver or cause to be duly executed and delivered any and all such
further instruments and documents as the Mortgagee may reasonably deem necessary
or desirable to perfect, preserve or protect the mortgage, security interests
and assignments created or intended to be created hereby or to obtain for the
Mortgagee the full benefits of the assignment hereunder and of the rights and
powers herein granted.
The Owner Trustee does hereby warrant and represent that it has not
assigned or pledged, and hereby covenants and agrees that it will not assign or
pledge, so
<PAGE>
-7-
long as the assignment hereunder shall remain in effect, and the Lien hereof
shall not have been released pursuant to Section 10.01 hereof, any of its right,
title or interest hereby assigned, to anyone other than the Mortgagee, and that
it will not, except as otherwise provided in this Trust Indenture and except
with respect to Excluded Payments to which it is entitled, (i) accept any
payment from Lessee under any Indenture Agreement, (ii) enter into any agreement
amending or supplementing any Indenture Agreement, (iii) execute any waiver or
modification of, or consent under, the terms of, or exercise any rights, powers
or privileges under, any Indenture Agreement, (iv) settle or compromise any
claim arising under any Indenture Agreement or (v) submit or consent to the
submission of any dispute, difference or other matter arising under or in
respect of any Indenture Agreement to arbitration thereunder.
The Owner Trustee does hereby agree that it will not without the written
consent of the Mortgagee:
(a) receive or collect or agree to the receipt or collection of any payment
(other than Excluded Payments) of Rent, including Basic Rent, Stipulated Loss
Value, Termination Value or any other payment to be made pursuant to Section 9
or 10 of the Lease prior to the date for the payment thereof provided for by the
Lease or assign, transfer or hypothecate (other than to the Mortgagee hereunder)
any payment of Rent, including Basic Rent, Stipulated Loss Value, Termination
Value or any other payment (other than Excluded Payments) to be made pursuant to
Section 9 or 10 of the Lease, then due or to accrue in the future under the
Lease in respect of the Airframe and Engines; or
(b) except as contemplated by the Trust Agreement in connection with the
appointment of a successor owner trustee, sell, mortgage, transfer, assign or
hypothecate (other than to the Mortgagee hereunder) its interest in the Airframe
and Engines or any part thereof or in any amount to be received by it from the
use or disposition of the Airframe and Engines, other than amounts distributed
to it pursuant to Article III hereof.
It is hereby further agreed that any and all property granted, bargained,
sold, assigned, transferred, conveyed, mortgaged, pledged or confirmed in the
granting clauses hereof which is hereafter acquired by the Owner Trustee shall
ipso facto, and without any other conveyance, assignment or act on the part of
the Owner Trustee or the Mortgagee, become and be subject to the Lien herein
granted as fully and completely as though specifically described herein, but
nothing contained in this paragraph shall be deemed to modify or change the
obligations of the Owner Trustee contained in the foregoing paragraphs.
The Owner Trustee does hereby ratify and confirm the Lease and does hereby
agree that it will not violate any covenant or agreement made by it therein,
herein or in any other Owner Trustee Agreement.
<PAGE>
-8-
Notwithstanding the Granting Clause or any of the preceding paragraphs,
there is hereby excluded from the foregoing grant, bargain, sale, assignment,
transfer, conveyance, mortgage, pledge and security interest all Excluded
Payments. Further, nothing in the Granting Clause or the preceding paragraphs
shall impair any of the rights of the Owner Trustee or the Owner Participant
under Section 2.13, 4.03, 4.04, 4.08, 5.02 or 5.03 hereof.
IT IS HEREBY COVENANTED AND AGREED by and between the parties hereto as
follows:
ARTICLE I
DEFINITIONS
Capitalized terms used but not defined herein shall have the respective
meanings set forth or incorporated by reference, and shall be construed in the
manner described, in Annex A to the Lease.
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. ACCORDINGLY, THIS EQUIPMENT NOTE MAY NOT BE SOLD UNLESS EITHER REGISTERED
UNDER THE ACT AND SUCH APPLICABLE STATE LAWS OR AN EXEMPTION FROM SUCH
REGISTRATIONS IS AVAILABLE.
FIRST SECURITY BANK, NATIONAL ASSOCIATION, AS OWNER TRUSTEE UNDER TRUST
AGREEMENT DATED AS OF _______________, ____. SERIES [_____] LIMITED RECOURSE
EQUIPMENT NOTE DUE [____] ISSUED IN CONNECTION WITH THE BOEING MODEL 747-47UF
FREIGHTER AIRCRAFT BEARING UNITED STATES REGISTRATION NUMBER N_____.
<PAGE>
-9-
No. ____ Date: [__________, ____]
$_____________
INTEREST RATE MATURITY DATE
[_________] [___________]
FIRST SECURITY BANK, NATIONAL ASSOCIATION, not in its individual capacity
but solely as Owner Trustee (herein in such capacity called the "Owner Trustee")
under that certain Trust Agreement, dated as of ____________, ____, between the
Owner Participant named therein and First Security Bank, National Association
(herein as such Trust Agreement may be supplemented or amended from time to time
called the "Trust Agreement"), hereby promises to pay to __________________, or
the registered assignee thereof, the principal sum of $____________ (the
"Original Amount"), together with interest on the amount of the Original Amount
remaining unpaid from time to time (calculated on the basis of a year of 360
days comprised of twelve 30-day months) from the date hereof until paid in full
at a rate per annum equal to the Debt Rate. The Original Amount of this
Equipment Note shall be payable in installments on the dates set forth in
Schedule I hereto equal to the corresponding percentage of the Original Amount
of this Equipment Note set forth in Schedule I hereto. Accrued but unpaid
interest shall be due and payable in arrears in semiannual installments
commencing on _____________, ____, and thereafter on _______ _ and _______ _of
each year, to and including _______________. Notwithstanding the foregoing, the
final payment made on this Equipment Note shall be in an amount sufficient to
discharge in full the unpaid Original Amount and all accrued and unpaid interest
on, and any other amounts due under, this Equipment Note. 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 if such payment is made on such next succeeding
Business Day, no interest shall accrue on the amount of such payment during such
extension.
For purposes hereof, the term "Trust Indenture" means the Trust Indenture
and Mortgage, dated as of _____________, ____, between the Owner Trustee and
Wilmington Trust Company (the "Mortgagee"), as the same may be amended or
supplemented from time to time. All other capitalized terms used in this
Equipment Note and not defined herein shall have the respective meanings
assigned in the Trust Indenture.
This Equipment Note shall bear interest, payable on demand, at the Payment
Due Rate (calculated on the basis of a year of 360 days comprised of twelve
30-day months) on any overdue Original Amount, any overdue Make-Whole Amount, if
any, and (to the extent permitted by applicable Law) any overdue interest and
any other amounts payable
<PAGE>
-10-
hereunder which are overdue, in each case for the period the same is overdue.
Amounts shall be overdue if not paid when due (whether at stated maturity, by
acceleration or otherwise).
All payments of Original Amount, interest, Make-Whole Amount, if any, and
other amounts, if any, to be made by the Owner Trustee hereunder and under the
Trust Indenture or the Participation Agreement shall be payable only from the
income and proceeds from the Trust Estate to the extent included in the Trust
Indenture Estate and only to the extent that the Owner Trustee shall have
sufficient income or proceeds from the Trust Estate to the extent included in
the Trust Indenture Estate to enable the Mortgagee to make such payments in
accordance with the terms of Section 2.03 and Article III of the Trust
Indenture, and each holder hereof, by its acceptance of this Equipment Note,
agrees that it will look solely to the income and proceeds from the Trust
Indenture Estate to the extent available for distribution to the holder hereof
as above provided and that none of the Owner Participant, the Owner Trustee and
the Mortgagee is personally liable or liable in any manner extending to any
assets other than the Trust Indenture Estate to the holder hereof for any
amounts payable or any liability under this Equipment Note or, except as
provided in the Trust Indenture or in the Participation Agreement, for any
liability under the Trust Indenture or the Participation Agreement; provided,
however, that nothing herein contained shall limit, restrict or impair the right
of the Mortgagee, subject always to the terms and provisions of the Trust
Indenture, to accelerate the maturity of this Equipment Note upon occurrence of
an Event of Default under the Trust Indenture in accordance with Section 4.04(b)
of the Trust Indenture, to bring suit and obtain a judgment against the Owner
Trustee on this Equipment Note for purposes of realizing upon the Trust
Indenture Estate and to exercise all rights and remedies provided under the
Trust Indenture or otherwise realize upon the Trust Indenture Estate as provided
under the Trust Indenture.
There shall be maintained an Equipment Note Register for the purpose of
registering transfers and exchanges of Equipment Notes at the Corporate Trust
Office of the Mortgagee or at the office of any successor in the manner provided
in Section 2.07 of the Trust Indenture.
The Original Amount and interest and other amounts due hereunder shall be
payable in Dollars in immediately available funds at the Corporate Trust Office
of the Mortgagee, or as otherwise provided in the Trust Indenture. 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, this Equipment Note shall be
surrendered promptly thereafter to the Mortgagee for cancellation.
<PAGE>
-11-
The holder hereof, by its acceptance of this Equipment Note, agrees that,
except as provided in the Trust Indenture, each payment of the Original Amount,
Make-Whole Amount, if any, and interest received by it hereunder shall be
applied, first, to the payment of accrued interest on this Equipment Note (as
well as any interest on any overdue Original Amount, any overdue Make-Whole
Amount, if any, or, to the extent permitted by Law, any overdue interest and
other amounts hereunder) to the date of such payment, second, to the payment of
the Original Amount of this Equipment Note then due, third, to the payment of
Make-Whole Amount, if any, and any other amount due hereunder or under the Trust
Indenture, and fourth, the balance, if any, remaining thereafter, to the payment
of installments of the Original Amount of this Equipment Note remaining unpaid
in the inverse order of their maturity.
This Equipment Note is one of the Equipment Notes referred to in the Trust
Indenture which have been or are to be issued by the Owner Trustee pursuant to
the terms of the Trust Indenture. The Trust Indenture Estate is held by the
Mortgagee as security, in part, for the Equipment Notes. The provisions of this
Equipment Note are subject to the Trust Indenture. Reference is hereby made to
the Trust Indenture for a complete statement of the rights and obligations of
the holder of, and the nature and extent of the security for, this Equipment
Note and the rights and obligations of the holders of, and the nature and extent
of the security for, any other Equipment Notes executed and delivered under the
Trust Indenture, as well as for a statement of the terms and conditions of the
Trust created by the Trust Indenture, to all of which terms and conditions in
the Trust Indenture each holder hereof agrees by its acceptance of this
Equipment Note.
As provided in the Trust Indenture and subject to certain limitations
therein set forth, this Equipment Note is exchangeable for a like aggregate
Original Amount of Equipment Notes of different authorized denominations, as
requested by the holder surrendering the same.
Prior to due presentment for registration of transfer of this Equipment
Note, the Owner Trustee and the Mortgagee shall treat the person in whose name
this Equipment Note is registered as the owner hereof for all purposes, whether
or not this Equipment Note be overdue, and neither the Owner Trustee nor he
Mortgagee shall be affected by notice to the contrary.
This Equipment Note is subject to redemption as provided in Sections 2.10,
2.11 and 2.12 of the Trust Indenture but not otherwise. This Equipment Note is
also subject to exchange and to purchase by the Owner Participant or the Owner
Trustee as provided in Section 2.13 of the Trust Indenture but not otherwise and
to assumption by the Lessee as provided in Section 2.11(b) of the Trust
Indenture. In addition, this Equipment Note may be accelerated as provided in
Section 4.04 of the Trust Indenture.
<PAGE>
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[The indebtedness evidenced by this Equipment Note is, to the extent and in
the manner provided in the Trust Indenture, subordinate and subject in right of
payment to the prior payment in full of the Secured Obligations (as defined in
the Trust Indenture) in respect of [Series A-1 Equipment Notes](1) [Series A-1
and Series B Equipment Notes],(2) and this Equipment Note is issued subject to
such provisions. The Note Holder of this Equipment Note, by accepting the same,
(a) agrees to and shall be bound by such provisions, (b) authorizes and directs
the Mortgagee on his behalf to take such action as may be necessary or
appropriate to effectuate the subordination as provided in the Trust Indenture
and (c) appoints the Mortgagee his attorney-in-fact for such purpose.](3)
Unless the certificate of authentication hereon has been executed by or on
behalf of the Mortgagee by manual signature, this Equipment Note shall not be
entitled to any benefit under the Trust Indenture or be valid or obligatory for
any purpose.
THIS EQUIPMENT NOTE SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH
THE INTERNAL LAWS OF THE STATE OF NEW YORK.
* * *
IN WITNESS WHEREOF, the Owner Trustee has caused this Equipment Note to be
executed in its corporate name by its officer thereunto duly authorized on the
date hereof.
FIRST SECURITY BANK, NATIONAL
ASSOCIATION,
not in its individual capacity
but solely as Owner Trustee
By
----------------------------------
Name:
Title:
- ----------
1 To be inserted in the case of a Series B Equipment Note.
2 To be inserted in the case of a Series C Equipment Note.
3 To be inserted for each Equipment Note other than any Series A-1 Equipment
Note.
<PAGE>
-13-
MORTGAGEE'S CERTIFICATE OF AUTHENTICATION
This is one of the Equipment Notes referred to in the within-mentioned
Trust Indenture.
WILMINGTON TRUST COMPANY, as
Mortgagee
By
----------------------------------
Name:
Title:
SCHEDULE
EQUIPMENT NOTE AMORTIZATION
Percentage of
Original Amount
Payment Date to Be Paid
------------ ----------
SEE SCHEDULE I TO TRUST INDENTURE THE APPLICABLE
PORTION OF WHICH IS 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 up to three separate series consisting of Series A-1, Series B and
Series C and in the maturities and principal amounts and shall bear interest as
specified in Schedule I hereto. On the date of the consummation of the
Transaction, each Equipment Note shall be issued to the Subordination Agent on
behalf of the Pass Through Trustees under the Pass Through Trust Agreements. The
Equipment Notes shall be issued in registered form only. The Equipment Notes
shall be issued in denominations of $1,000 and integral multiples thereof,
except that one Equipment Note of each Series may be in an amount that is not an
integral multiple of $1,000.
Each Equipment Note shall bear interest at the applicable Debt Rate
(calculated on the basis of a year of 360 days comprised of twelve 30-day
months) on the unpaid Original Amount thereof from time to time outstanding,
payable in arrears in semi-
<PAGE>
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annual installments commencing on _____________, ____, and on each _______ _ and
_______ _thereafter until maturity. The Original Amount of each Equipment Note
shall be payable on the dates and in the installments equal to the corresponding
percentage of the Original Amount as set forth in Schedule I hereto, the
applicable portion of which shall be attached as Schedule I to such Equipment
Notes. Notwithstanding the foregoing, the final payment made under each
Equipment Note shall be in an amount sufficient to discharge in full the unpaid
Original Amount and all accrued and unpaid interest on, and any other amounts
due under, such Equipment Note. Each Equipment Note shall bear interest at the
Payment Due Rate (calculated on the basis of a year of 360 days comprised of
twelve 30-day months) on any part of the Original Amount, Make-Whole Amount, if
any, 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 shall be overdue, in each case for the period the same is overdue. Amounts
shall be overdue if not paid when due (whether at stated maturity, by
acceleration or otherwise). Notwithstanding anything to the contrary contained
herein, if any date on which a payment 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 and if such
payment is made on such next succeeding Business Day, no interest shall accrue
on the amount of such payment during such extension.
The Owner Trustee agrees to pay to the Mortgagee for distribution in
accordance with Section 3.04 hereof: (i) to the extent not payable (whether or
not in fact paid) under Section 6(a) of the Note Purchase Agreement (as
originally in effect or amended with the consent of the Owner Participant), an
amount equal to the fees payable to the relevant Liquidity Provider under
Section 2.03 of each Liquidity Facility and the related Fee Letter (as defined
in the Intercreditor Agreement) multiplied by a fraction the numerator of which
shall be the then outstanding aggregate principal amount of the Series A-1
Equipment Notes, Series B Equipment Notes and Series C Equipment Notes and the
denominator of which shall be the then outstanding aggregate principal amount of
all "Series A-1 Equipment Notes," "Series A-2 Equipment Notes," "Series B
Equipment Notes" and "Series C Equipment Notes" (each as defined in the Note
Purchase Agreement); (ii) (x) the amount equal to interest on any Downgrade
Advance (other than any Applied Downgrade Advance) payable under Section 3.07(e)
of each Liquidity Facility minus Investment Earnings from such Downgrade Advance
multiplied by (y) the fraction specified in the foregoing clause (i); (iii) (x)
the amount equal to interest on any Non-Extension Advance (other than any
Applied Non-Extension Advance) payable under Section 3.07(a)(i) of each
Liquidity Facility minus Investment Earnings from such Non-Extension Advance
multiplied by (y) the fraction specified in the foregoing clause (i); (iv) if
any payment default shall have occurred and be continuing with respect to
interest on any Series A-1 Equipment Note, Series B Equipment Note or Series C
Equipment Note, (x) the excess, if any, of (1) the amount
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equal to interest on any Unpaid Advance, Applied Downgrade Advance or Applied
Non-Extension Advance payable under Section 3.07(a)(i) of each Liquidity
Facility over (2) the sum of Investment Earnings from any Final Advance plus any
amount of interest at the Payment Due Rate actually payable (whether or not in
fact paid) by the Owner Trustee on the overdue scheduled interest on the
Equipment Notes in respect of which such Unpaid Advance, Applied Downgrade
Advance or Applied Non-Extension Advance was made multiplied by (y) a fraction
the numerator of which shall be the then aggregate overdue amounts of interest
on the Series A-1 Equipment Notes, Series B Equipment Notes and Series C
Equipment Notes (other than interest becoming due and payable solely as a result
of acceleration of any such Equipment Notes) and the denominator of which shall
be the then aggregate overdue amounts of interest on all "Series A-1 Equipment
Notes," "Series A-2 Equipment Notes," "Series B Equipment Notes" and "Series C
Equipment Notes" (each as defined in the Note Purchase Agreement) (other than
interest becoming due and payable solely as a result of acceleration of any such
"Equipment Notes") and (v) any other amounts owed to the Liquidity Provider by
the Subordination Agent as borrower under each Liquidity Facility (other than
amounts due as repayment of advances thereunder or as interest on advances)
except to the extent payable pursuant to clause (i), (ii), (iii) or (iv) above
multiplied by the fraction specified in the foregoing clause (i). For purposes
of this paragraph, the terms "Applied Downgrade Advance," "Applied Non-Extension
Advance," "Cash Collateral Account," "Downgrade Advance," "Final Advance,"
"Investment Earnings," "Non-Extension Advance" and "Unpaid Advance" shall have
the meanings specified in each Liquidity Facility.
The Equipment Notes shall be executed on behalf of the Owner Trustee by its
President or one of its Vice Presidents, Assistant Vice Presidents or Assistant
Secretaries or other authorized officer. Equipment Notes bearing the signatures
of individuals who were at any time the proper officers of the Owner Trustee
shall bind the Owner Trustee, notwithstanding that such individuals or any of
them have ceased to hold such offices prior to the authentication and delivery
of such Equipment Notes or did not hold such offices at the respective dates of
such Equipment Notes. The Owner Trustee may from time to time execute and
deliver Equipment Notes with respect to the Aircraft to the Mortgagee for
authentication upon original issue and such Equipment Notes shall thereupon be
authenticated and delivered by the Mortgagee upon the written request of the
Owner Trustee signed by a Vice President or Assistant Vice President or other
authorized officer of the Owner Trustee; provided, however, that each such
request shall specify the aggregate Original Amount of all Equipment Notes to be
authenticated hereunder on original issue with respect to the Aircraft. No
Equipment Note shall be secured by or entitled to any benefit under this Trust
Indenture or be valid or obligatory for any purposes, unless there appears on
such Equipment Note a certificate of authentication in the form provided for
herein executed by the Mortgagee by the manual signature of one of its
authorized officers and such certificate
<PAGE>
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upon any Equipment Notes be conclusive evidence, and the only evidence, that
such Equipment Note has been duly authenticated and delivered hereunder.
The aggregate Original Amount of the Equipment Notes issued hereunder shall
not exceed 80% of Lessor's Cost.
SECTION 2.03. Payments from Trust Indenture Estate Only
(a) Without impairing any of the other rights, powers, remedies,
privileges, liens or security interests of the Note Holders under this Trust
Indenture, each Note Holder, by its acceptance of an Equipment Note, agrees that
as between it and the Owner Trustee, except as expressly provided in this Trust
Indenture, the Participation Agreement or any other Operative Agreement, (i) the
obligation to make all payments of the Original Amount of, interest on,
Make-Whole Amount, if any, and all other amounts due with respect to the
Equipment Notes, and the performance by the Owner Trustee of every obligation or
covenant contained in this Trust Indenture and in the Participation Agreement or
any of the other Operative Agreements, shall be payable only from the income and
proceeds from the Trust Estate to the extent included in the Trust Indenture
Estate and only to the extent that the Owner Trustee shall have sufficient
income or proceeds from the Trust Estate to the extent included in the Trust
Indenture Estate to enable the Mortgagee to make such payments in accordance
with the terms of Article III hereof, and all of the statements,
representations, covenants and agreements made by the Owner Trustee (when made
in such capacity) contained in this Trust Indenture and any agreement referred
to herein other than the Trust Agreement, unless expressly otherwise stated, are
made and intended only for the purpose of binding the Trust Estate and
establishing the existence of rights and remedies which can be exercised and
enforced against the Trust Estate; therefore, anything contained in this Trust
Indenture or such other agreements to the contrary notwithstanding (except for
any express provisions or representations that the Owner Trustee is responsible
for, or is making, in its individual capacity, for which there would be personal
liability of the Owner Trustee), no recourse shall be had with respect to this
Trust Indenture or such other agreements against the Owner Trustee in its
individual capacity or against any institution or person which becomes a
successor trustee or co-trustee or any officer, director, trustee, servant or
direct or indirect parent or controlling Person or Persons of any of them, and
(ii) none of the Owner Trustee, in its individual capacity, the Owner
Participant, the Mortgagee and any officer, director, trustee, servant,
employee, agent or direct or indirect parent or controlling Person or Persons of
any of them shall have any personal liability for any amounts payable hereunder,
under the Participation Agreement or any of the other Operative Agreements or
under the Equipment Notes except as expressly provided herein, in the Lease or
in the Participation Agreement; provided, however, that nothing contained in
this Section 2.03(a) shall be construed to limit the exercise and enforcement in
accordance with
<PAGE>
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the terms of this Trust Indenture or such other agreements of rights and
remedies against the Trust Indenture Estate.
(b) If (i) all or any part of the Trust Estate becomes the property of, or
the Owner Trustee or Owner Participant becomes, a debtor subject to the
reorganization provisions of the Bankruptcy Code, (ii) pursuant to such
reorganization provisions, including Section 1111(b) of the Bankruptcy Code, the
Owner Trustee (in its individual capacity) or the Owner Participant is required,
by reason of the Owner Trustee (in its individual capacity) or the Owner
Participant being held to have recourse liability to any Note Holder or the
Mortgagee, directly or indirectly (other than the recourse liability of the
Owner Trustee (in its individual capacity) or the Owner Participant under the
Participation Agreement, the Lease or this Trust Indenture or by separate
agreement), to make payment on account of any amount payable as principal,
Make-Whole Amount, if any, interest or other amounts on the Equipment Notes and
(iii) any Note Holder or the Mortgagee actually receives any Excess Amount (as
hereinafter defined) which reflects any payment by the Owner Trustee (in its
individual capacity) or the Owner Participant on account of clause (ii) above,
then such Note Holder or the Mortgagee, as the case may be, shall promptly
refund to the Owner Trustee (in its individual capacity) or the Owner
Participant (whichever shall have made such payment) such Excess Amount.
For purposes of this Section 2.03(b), "Excess Amount" means the amount by
which such payment exceeds the amount that would have been received by a Note
Holder or the Mortgagee if the Owner Trustee (in its individual capacity) or the
Owner Participant had not become subject to the recourse liability referred to
in clause (ii) above. Nothing contained in this Section 2.03(b) shall prevent a
Note Holder or the Mortgagee from enforcing any personal recourse obligation
(and retaining the proceeds thereof) of the Owner Trustee (in its individual
capacity) or the Owner Participant under the Participation Agreement, the Lease
or this Trust Indenture (and any exhibits or annexes hereto or thereto) or from
retaining any amount paid by Owner Participant under Section 2.13 or 4.03
hereof.
SECTION 2.04. Method of Payment
(a) The Original Amount of, interest on, Make-Whole Amount, if any, and
other amounts due under each Equipment Note or hereunder will be payable in
Dollars by wire transfer of immediately available funds not later than 12 noon,
New York City time, on the due date of payment to the Mortgagee at the Corporate
Trust Office for distribution among the Note Holders in the manner provided
herein. The Owner Trustee shall not have any responsibility for the distribution
of such payment to any Note Holder. Notwithstanding the foregoing or any
provision in any Equipment Note to the contrary, the Mortgagee will use
reasonable efforts to pay or cause to be paid, if so directed in writing by any
Note Holder (with a copy to the Owner Trustee), all amounts paid by the Owner
Trustee hereun-
<PAGE>
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der and under such holder's Equipment Note or Equipment Notes to such holder or
a nominee therefor (including all amounts distributed pursuant to Article III of
this Trust Indenture) by transferring, or causing to be transferred, by wire
transfer of immediately available funds in Dollars, prior to 12:30 p.m., New
York City time, on the due date of payment, to an account maintained by such
holder with a bank located in the continental United States the amount to be
distributed to such holder, for credit to the account of such holder maintained
at such bank. Any payment made hereunder shall be made without any presentment
or surrender of any Equipment Note, except that, in the case of the final
payment in respect of any Equipment Note, such Equipment Note shall be
surrendered to the Mortgagee for cancellation promptly after such payment.
Notwithstanding any other provision of this Trust Indenture to the contrary, the
Mortgagee shall not be required to make, or cause to be made, wire transfers as
aforesaid prior to the first Business Day on which it is practicable for the
Mortgagee 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 12:30 p.m.,
New York City time, at the place of payment. Prior to the due presentment for
registration of transfer of any Equipment Note, the Owner Trustee and the
Mortgagee shall deem and treat the Person in whose name any Equipment Note is
registered on the Equipment Note Register as the absolute owner and holder 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 none of the
Owner Trustee or the Mortgagee shall be affected by any notice to the contrary.
So long as any signatory to the Participation Agreement or nominee thereof shall
be a registered Note Holder, all payments to it shall be made to the account of
such Note Holder specified in Schedule I thereto and otherwise in the manner
provided in or pursuant to the Participation Agreement unless it shall have
specified some other account or manner of payment by notice to the Mortgagee
consistent with this Section 2.04.
(b) The Mortgagee, as agent for the Owner Trustee, shall exclude and
withhold at the appropriate rate from each payment of Original Amount of,
interest on, Make-Whole Amount, if any, and other amounts due hereunder or under
each Equipment Note (and such exclusion and withholding shall constitute payment
in respect of such Equipment Note) any and all United States withholding taxes
applicable thereto as required by Law. The Mortgagee agrees to act as such
withholding agent and, in connection therewith, whenever any present or future
United States 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 and timely pay the same to the appropriate authority in
the name of and on behalf of the Note Holders, that it will file any necessary
United States withholding tax returns or statements when due, and that as
promptly as possible after the payment thereof it will deliver to each Note
Holder (with a copy to the Owner Trustee and the Lessee) appropriate receipts
showing the payment thereof, together with such additional documentary evidence
as any such Note Holder may reasonably request from time to time.
<PAGE>
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If a Note Holder which is a Non-U.S. Person has furnished to the Mortgagee
a properly completed, accurate and currently effective U.S. Internal Revenue
Service Form 1001 or W-8 (or such successor form or forms as may be required by
the United States Treasury Department) during the calendar year in which the
payment hereunder or under the Equipment Note(s) held by such holder is made
(but prior to the making of such payment), or in either of the two preceding
calendar years, and has not notified the Mortgagee of the withdrawal or
inaccuracy of such form prior to the date of such payment (and the Mortgagee has
no reason to believe that any information set forth in such form is inaccurate),
the Mortgagee shall withhold only the amount, if any, required by Law (after
taking into account any applicable exemptions properly claimed by the Note
Holder) to be withheld from payments hereunder or under the Equipment Notes held
by such holder in respect of United States federal income tax. If a Note Holder
(x) which is a Non-U.S. Person has furnished to the Mortgagee a properly
completed, accurate and currently effective U.S. Internal Revenue Service Form
4224 in duplicate (or such successor certificate, form or forms as may be
required by the United States Treasury Department as necessary in order to
properly avoid withholding of United States federal income tax), for each
calendar year in which a payment is made (but prior to the making of any payment
for such year), and has not notified the Mortgagee of the withdrawal or
inaccuracy of such certificate or form prior to the date of such payment (and
the Mortgagee has no reason to believe that any information set forth in such
form is inaccurate) or (y) which is a U.S. Person has furnished to the Mortgagee
a properly completed, accurate and currently effective U.S. Internal Revenue
Service Form W-9, if applicable, prior to a payment hereunder or under the
Equipment Notes held by such holder, no amount shall be withheld from payments
in respect of United States federal income tax. If any Note Holder has notified
the Mortgagee that any of the foregoing forms or certificates is withdrawn or
inaccurate, or if such holder has not filed a form claiming an exemption from
United States withholding tax or if the Code or the regulations thereunder or
the administrative interpretation thereof is at any time after the date hereof
amended to require such withholding of United States federal income taxes from
payments under the Equipment Notes held by such holder, the Mortgagee agrees to
withhold from each payment due to the relevant Note Holder withholding taxes at
the appropriate rate under Law and will, on a timely basis as more fully
provided above, deposit such amounts with an authorized depository and make such
returns, statements, receipts and other documentary evidence in connection
therewith as required by Law.
Neither the Owner Trustee nor the Owner Participant shall have any
liability for the failure of the Mortgagee to withhold taxes in the manner
provided for herein or for any false, inaccurate or untrue evidence provided by
any Note Holder hereunder.
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SECTION 2.05. Application of Payments
In the case of each Equipment Note, each payment of Original Amount,
Make-Whole Amount, if any, and interest due thereon shall be applied:
First: to the payment of accrued interest on such Equipment Note (as
well as any interest on any overdue Original Amount, any overdue Make-Whole
Amount, if any, and to the extent permitted by Law, any overdue interest
and any other overdue amounts thereunder) to the date of such payment;
Second: to the payment of the Original Amount of such Equipment Note
(or a portion thereof) then due thereunder;
Third: to the payment of Make-Whole Amount, if any, and any other
amount due hereunder or under such Equipment Note; and
Fourth: the balance, if any, remaining thereafter, to the payment of
the Original Amount of such Equipment Note remaining unpaid (provided that
such Equipment Note shall not be subject to redemption except as provided
in Sections 2.10, 2.11 and 2.12 hereof).
The amounts paid pursuant to clause "Fourth" above shall be applied to the
installments of Original Amount of such Equipment Note in the inverse order of
their normal maturity.
SECTION 2.06. Termination of Interest in Trust Indenture Estate
No Note Holder nor any other Indenture Indemnitee shall, as such, have any
further interest in, or other right with respect to, the Trust Indenture Estate
when and if the Original Amount of, Make-Whole Amount, if any, and interest on
and other amounts due under all Equipment Notes held by such Note Holder and all
other sums then due and payable to such Note Holder, such Indenture Indemnitee
or the Mortgagee hereunder (including, without limitation, under the third
paragraph of Section 2.02 hereof) and under the other Operative Agreements by
the Owner Trustee and the Lessee (collectively, the "Secured Obligations") shall
have been paid in full.
SECTION 2.07. Registration Transfer and Exchange of Equipment Notes
The Mortgagee shall keep a register (the "Equipment Note Register") in
which the Mortgagee shall provide for the registration of Equipment Notes and
the regis-
<PAGE>
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tration of transfers of Equipment Notes. No such transfer shall be given effect
unless and until registration hereunder shall have occurred. The Equipment Note
Register shall be kept at the Corporate Trust Office of the Mortgagee. The
Mortgagee is hereby appointed "Equipment Note Registrar" for the purpose of
registering Equipment Notes and transfers of Equipment Notes as herein provided.
A holder of any Equipment Note intending to exchange such Equipment Note shall
surrender such Equipment Note to the Mortgagee at the Corporate Trust Office,
together with a written request from the registered holder thereof for the
issuance of a new Equipment Note, 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, the Owner Trustee shall execute,
and the Mortgagee shall authenticate and deliver, in the name of the designated
transferee or transferees, one or more new Equipment Notes of a like aggregate
Original Amount and of the same series. At the option of the Note Holder,
Equipment Notes may be exchanged for other Equipment Notes of any authorized
denominations of a like aggregate Original Amount, upon surrender of the
Equipment Notes to be exchanged to the Mortgagee at the Corporate Trust Office.
Whenever any Equipment Notes are so surrendered for exchange, the Owner Trustee
shall execute, and the Mortgagee shall authenticate and deliver, the Equipment
Notes which the Note Holder 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 hereof or
otherwise under this Trust Indenture) shall be the valid obligations of the
Owner Trustee evidencing the same respective obligations, and entitled to the
same security and benefits under this Trust Indenture, as the Equipment Notes
surrendered upon such registration of transfer or exchange. Every Equipment Note
presented or surrendered for registration of transfer shall (if so required by
the Mortgagee) be duly endorsed, or be accompanied by a written instrument of
transfer in form satisfactory to the Mortgagee duly executed by the Note Holder
or such holder's attorney duly authorized in writing, and the Mortgagee shall
require evidence satisfactory to it as to the compliance of any such transfer
with the Securities Act, and the securities Laws of any applicable state. The
Mortgagee shall make a notation on each new Equipment Note of the amount of all
payments of Original 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. Interest shall be deemed to have been paid on such new Equipment Note to
the date on which interest shall have been paid on such old Equipment Note, and
all payments of the Original Amount marked on such new Equipment Note, as
provided above, shall be deemed to have been made thereon. The Owner Trustee
shall not be required to exchange any surrendered Equipment Notes as provided
above during the ten-day period preceding the due date of any payment on such
Equipment Note. The Owner Trustee shall in all cases deem the Person in whose
name any Equipment Note shall have been issued and registered as the absolute
owner and holder of such Equipment Note for the purpose of receiving payment of
all
<PAGE>
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amounts payable by the Owner Trustee with respect to such Equipment Note and
for all purposes until a notice stating otherwise is received from the Mortgagee
and such change is reflected on the Equipment Note Register. The Mortgagee will
promptly notify the Owner Trustee and the Lessee of each registration of a
transfer of an Equipment Note. Any such transferee of an Equipment Note, by its
acceptance of an Equipment Note, agrees to the provisions of the Participation
Agreement applicable to Note Holders, and shall be deemed to have covenanted to
the parties to the Participation Agreement as to the matters covenanted by the
original Loan Participant in the Participation Agreement. Subject to compliance
by the Note Holder and its transferee (if any) of the requirements set forth in
this Section 2.07, Mortgagee and Owner Trustee shall use all reasonable efforts
to issue new Equipment Notes upon transfer or exchange within 10 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 shall become mutilated, destroyed, lost or stolen,
the Owner Trustee shall, upon the written request of the holder of such
Equipment Note, execute and the Mortgagee shall authenticate and deliver in
replacement thereof a new Equipment Note, payable in the same Original Amount
dated the same date and captioned as issued in connection with the Aircraft. If
the Equipment Note being replaced has become mutilated, such Equipment Note
shall be surrendered to the Mortgagee and a photocopy thereof shall be furnished
to the Owner Trustee. If the Equipment Note being replaced has been destroyed,
lost or stolen, the holder of such Equipment Note shall furnish to the Owner
Trustee and the Mortgagee such security or indemnity as may be required by them
to save the Owner Trustee and the Mortgagee harmless and evidence satisfactory
to the Owner Trustee and the Mortgagee of the destruction, loss or theft of such
Equipment Note and of the ownership thereof. If a "qualified institutional
buyer" of the type referred to in paragraph (a)(1)(i)(A), (B), (D) or (E) of
Rule 144A under the Securities Act (a "QIB") is the holder of any such
destroyed, lost or stolen Equipment Note, then the written indemnity of such
QIB, signed by an authorized officer thereof, in favor of, delivered to and in
form reasonably satisfactory to Lessee, Owner Trustee and Mortgagee shall be
accepted as satisfactory indemnity and security and no further indemnity or
security shall be required as a condition to the execution and delivery of such
new Equipment Note. Subject to compliance by the Note Holder of the requirements
set forth in this Section 2.08, Mortgagee and Owner Trustee shall use all
reasonable efforts to issue new Equipment Notes within 10 Business Days of the
date of the written request therefor from the Note Holder.
<PAGE>
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SECTION 2.09. Payment of Expenses on Transfer; Cancellation
(a) No service charge shall be made to a Note Holder for any registration
of transfer or exchange of Equipment Notes, but the Mortgagee, as Equipment Note
Registrar, may require payment of a sum sufficient to cover any tax or other
governmental charge that may be imposed in connection with any registration of
transfer or exchange of Equipment Notes.
(b) The Mortgagee shall cancel all Equipment Notes surrendered for
replacement, redemption, transfer, exchange, payment or cancellation and shall
destroy the canceled Equipment Notes.
SECTION 2.10. Mandatory Redemptions of Equipment Notes
(a) On the date on which Lessee is required pursuant to Section 10.1.2 or
Section 10.1.3 of the Lease to make payment for an Event of Loss with respect to
the Aircraft, all of the Equipment Notes shall be redeemed in whole at a
redemption price equal to 100% of the unpaid Original Amount thereof, together
with all accrued interest thereon to the date of redemption and all other
Secured Obligations owed or then due and payable to the Note Holders but without
Make-Whole Amount.
(b) If the Lease is terminated with respect to the Aircraft by Lessee
pursuant to Section 9 or Section 17.3.1 thereof, and Lessee shall not have
assumed all of the obligations of the Owner Trustee hereunder pursuant to
Section 2.11(b) and to Section 10.1.4 of the Participation Agreement, on the
date the Lease is so terminated, all the Equipment Notes shall be redeemed in
whole at a redemption price equal to 100% of the unpaid Original Amount thereof,
together with accrued interest thereon to the date of redemption and all other
amounts then due and payable hereunder and under the Participation Agreement and
all other Operative Agreements to the Note Holders plus the Make-Whole Amount,
if any.
SECTION 2.11. Voluntary Redemptions of Equipment Notes; Assumption of
Equipment Notes
(a) All (but not less than all) of the Equipment Notes may be redeemed by
the Owner Trustee in connection with a transaction described in, and subject to
the terms and conditions of, Section 11 of the Participation Agreement, or
otherwise, with the prior written consent of Lessee, upon in either case at
least 20 days revocable prior written notice to the Mortgagee and the Note
Holders and the Equipment Notes shall, as provided in Section 11 of the
Participation Agreement, be redeemed in whole at a redemption price equal to
100% of the unpaid Original Amount thereof, together with accrued interest
thereon to the date of redemption and all other Secured Obligations owed or then
due and payable to
<PAGE>
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the Note Holders plus (except as provided in Section 11 of the Participation
Agreement) the Make-Whole Amount, if any.
(b) If, in accordance with Section 10.1.4 of the Participation Agreement,
Lessee shall assume (on a full recourse basis) all of the obligations of the
Owner Trustee hereunder, under the Equipment Notes and all other Operative
Agreements by supplemental indenture satisfactory to the Mortgagee (which shall
contain (i) the provisions substantially similar to Sections 6, 7, 8, 10, 11, 12
and 13.2 of the Lease and (ii) other provisions necessary or advisable, in the
reasonable discretion of the Mortgagee, to effectuate such assumption), then
upon delivery of such supplemental indenture, payment by Lessee of all expenses
(including reasonable fees and expenses of counsel) of the Owner Trustee, the
Owner Participant and each Indenture Indemnitee and delivery of an opinion of
counsel for Lessee that such assumption has been duly and validly effected, the
Owner Trustee shall be released and discharged from any further obligations
hereunder and under the Equipment Notes and all other Operative Agreements and
the Owner Participant shall be released and discharged from any further
obligations hereunder and under the Equipment Notes and any other Operative
Agreement to which it is a party, except with respect to any such obligations
that accrued prior thereto.
SECTION 2.12. Redemptions; Notice of Redemption
(a) Neither any redemption of any Equipment Note nor any purchase by the
Owner Trustee of any Equipment Note may be made except to the extent and in the
manner expressly permitted by this Trust Indenture. No purchase of any Equipment
Note may be made by the Mortgagee.
(b) Notice of redemption or purchase with respect to the Equipment Notes
shall be given by the Mortgagee by first-class mail, postage prepaid, mailed not
less than 15 nor more than 60 days prior to the applicable redemption date and
purchase date, as applicable, to each Note Holder of such Equipment Notes to be
redeemed or purchased, at such Note Holder's address appearing in the Equipment
Note Register; provided that, in the case of a redemption to be made pursuant to
Section 2.10(b) or Section 2.11(a), such notice shall be revocable and shall be
deemed revoked in the event that the Lease does not in fact terminate on the
specified termination date or if notice of such redemption shall have been given
in connection with a refinancing of Equipment Notes and the Mortgagee receives
written notice of such revocation from the Lessee or the Owner Trustee not later
than three days prior to the redemption date; provided, further, that, in the
case of a redemption where the Lessee is terminating the Lease pursuant to
Section 9 thereof, the specified redemption date may be postponed up to 10
Business Days. All notices of redemption or purchase, as applicable, shall
state: (1) the redemption or purchase date, (2) the applicable basis for
determining the redemption or purchase price, (3) whether or not such notice is
revocable or the
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redemption date may be postponed and, if so, the conditions under which the
notice may be revoked or the redemption date may be postponed, (4) that on the
redemption or purchase date, the redemption or purchase 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 or purchase date, and (5) the place or places where
such Equipment Notes are to be surrendered for payment of the redemption or
purchase price.
(c) On or before the redemption or purchase date, (unless, if a redemption
date, the notice with respect thereto shall have been revoked pursuant to
Section 2.12(b)), as applicable, the Owner Trustee or the Owner Participant (or
any person on behalf of the Owner Trustee or Owner Participant), as the case may
be, shall, to the extent an amount equal to the redemption or purchase price for
the Equipment Notes to be redeemed or purchased on the redemption or purchase
date shall not then be held in the Trust Indenture Estate, deposit or cause to
be deposited with the Mortgagee by 12:00 noon on the redemption or purchase date
in immediately available funds the redemption or purchase price of the Equipment
Notes to be redeemed or purchased.
(d) Notice of redemption or purchase having been given as aforesaid (and
not revoked or deemed revoked as contemplated in the proviso to Section
2.12(b)), the Equipment Notes to be redeemed or purchased shall, on the
redemption date, postponed redemption date or purchase date, as applicable,
become due and payable at the Corporate Trust Office of the Mortgagee or at any
office or agency maintained for such purposes pursuant to Section 2.07, and from
and after such redemption date, postponed redemption date or purchase date
(unless there shall be a default in the payment of the redemption or purchase
price) any such Equipment Notes then outstanding shall cease to bear interest.
Upon surrender of any such Equipment Note for redemption or purchase in
accordance with said notice, such Equipment Note shall be redeemed or purchased
at the redemption or purchase price, as applicable. If any Equipment Note called
for redemption or purchase shall not be so paid upon surrender thereof for
redemption or purchase, the principal amount thereof shall, until paid, continue
to bear interest from the applicable redemption or purchase date at the interest
rate in effect for such Equipment Note as of such redemption or purchase date.
SECTION 2.13. Option to Purchase Equipment Notes
The Owner Trustee and the Owner Participant may, upon the events and
subject to the terms and conditions and for the price set forth in this Section
2.13, purchase all but not less than all of the Equipment Notes outstanding
hereunder, and each Note Holder agrees that it will, upon such events and
subject to such terms and conditions and upon receipt of such price, sell,
assign, transfer and convey to such purchaser or its nominee (without recourse
or warranty of any kind except against Liens on such Equipment Notes arising by,
through or under such holder), all of the right, title and interest of such Note
Holder in and to the Equipment Notes held by it, and such purchaser or its
nomi-
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nee shall assume all of such holder's obligations under the Participation
Agreement and hereunder.
Such option to purchase the Equipment Notes may be exercised by the Owner
Trustee or the Owner Participant at any time following the occurrence of any of
the following events, and in any such event the purchase price thereof shall
equal for each Equipment Note, the aggregate unpaid Original Amount thereof,
plus accrued and unpaid interest thereon to, but not including, the date of
purchase and all other Secured Obligations owed, or then due and payable
hereunder, to the holder thereof (including under the third paragraph of Section
2.02 hereof). Such option to purchase the Equipment Notes may be exercised (x)
upon a Mortgagee Event described in clause (i) of the definition thereof or (y)
in the event there shall have occurred and be continuing a Lease Event of
Default or (z) upon either the Equipment Notes becoming due and payable pursuant
to Section 4.04(b) hereof or the Mortgagee taking action or notifying the Owner
Trustee that it intends to take action to foreclose the Lien of this Trust
Indenture or otherwise commence the exercise of any significant remedy under
this Trust Indenture or the Lease, provided that if such option is exercised
pursuant to clause (y) when there shall have occurred and be continuing for less
than 180 days a Lease Event of Default, the purchase price thereof shall equal
the price provided in the preceding sentence plus the Make-Whole Amount, if any.
Such option to purchase the Equipment Notes may be exercised by the Owner
Trustee or the Owner Participant giving irrevocable written notice of its
election of such option to the Mortgagee, which notice shall specify a date for
such purchase within 15 days of the date of such notice. The Mortgagee shall not
exercise any of the remedies hereunder and, without the consent of the Owner
Trustee or the Owner Participant, under the Lease, during the period from the
date of the giving of such notice until the date on which such purchase is
required to occur pursuant to the terms of the preceding sentence.
If the Owner Trustee or the Owner Participant on or before the date of such
purchase shall so request, the Note Holders will comply with all the provisions
of Section 2.07 to enable new Equipment Notes to be issued to the Owner Trustee
or the Owner Participant or its nominee in such denominations as the Owner
Trustee or the Owner Participant shall request. All taxes, charges and expenses
required pursuant to Section 2.09 in connection with the issuance of such new
Equipment Note shall be borne by the Owner Participant.
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SECTION 2.14. Subordination
(a) The Owner Trustee and, by acceptance of its Equipment Notes of any
Series, each Note Holder of such Series, hereby agree that no payment or
distribution shall be made on or in respect of the Secured Obligations owed to
such Note Holder of such Series, including any payment or distribution of cash,
property or securities after the commencement of a proceeding of the type
referred to in Section 4.02(g) hereof, except as expressly provided in Article
III hereof.
(b) By the acceptance of its Equipment Notes of any Series (other than
Series A-1 and Series A-2), each Note Holder of such Series agrees that in the
event that such Note Holder, in its capacity as a Note Holder, shall receive any
payment or distribution on any Secured Obligations in respect of such Series
which it is not entitled to receive under this Section 2.14 or Article III
hereof, it will hold any amount so received in trust for the Senior Holder (as
defined in Section 2.14(c) hereof) and will forthwith turn over such payment to
the Mortgagee in the form received to be applied as provided in Article III
hereof.
(c) As used in this Section 2.14, the term "Senior Holder" shall mean (i)
the Note Holders of Series A-1 and Series A-2 until the Secured Obligations in
respect of Series A-1 and Series A-2 Equipment Notes have been paid in full and
(ii) after the Secured Obligations in respect of Series A-1 and Series A-2
Equipment Notes have been paid in full, the Note Holders of Series B until the
Secured Obligations in respect of Series B Equipment Notes have been paid in
full.
ARTICLE III
RECEIPT, DISTRIBUTION AND APPLICATION OF
INCOME FROM THE TRUST INDENTURE ESTATE
SECTION 3.01. Basic Rent Distribution
Except as otherwise provided in Sections 3.02 and 3.03 hereof, each
installment of Basic Rent, any payment of interest on overdue installments of
Basic Rent and any payment received by the Mortgagee pursuant to Section 4.03
hereof shall be promptly distributed in the following order of priority:
First, (i) so much of such installment or payment as shall be required to pay in
full the aggregate amount of the payment or payments of Original Amount and
interest (as well as any interest on any overdue Original Amount and, to
the extent permitted by Law, on any overdue interest)
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then due under all Series A-1 and Series A-2 Equipment Notes shall be
distributed to the Note Holders of Series A-1 and Series A-2 ratably,
without priority of one over the other, in the proportion that the
amount of such payment or payments then due under each Series A-1 and
Series A-2 Equipment Note bears to the aggregate amount of the
payments then due under all Series A-1 and Series A-2 Equipment Notes;
(ii) after giving effect to paragraph (i) above, so much of such
installment or payment remaining as shall be required to pay in full
the aggregate amount of the payment or payments of Original Amount and
interest (as well as any interest on any overdue Original Amount and,
to the extent permitted by Law, on interest) then due under all Series
B Equipment Notes shall be distributed to the Note Holders of Series B
ratably, without priority of one over the other, in the proportion
that the amount of such payment or payments then due under each Series
B Equipment Note bears to the aggregate amount of the payments then
due under all Series B Equipment Notes; and
(iii) after giving effect to paragraph (ii) above, so much of such
installment or payment remaining as shall be required to pay in full
the aggregate amount of the payment or payments of Original Amount and
interest (as well as any interest on any overdue Original Amount and,
to the extent permitted by Law, on any overdue interest) then due
under all Series C Equipment Notes shall be distributed to the Note
Holders of Series C ratably, without priority of one over the other,
in the proportion that the amount of such payment or payments then due
under each Series C Equipment Note bears to the aggregate amount of
the payments then due under all Series C Equipment Notes; and
Second, the balance, if any, of such installment remaining thereafter shall be
distributed to the Owner Trustee; provided, however, that if an Event of
Default shall have occurred and be continuing, then such balance as shall
not constitute Excluded Payments shall not be distributed as provided in
this clause "Second" but shall be held by the Mortgagee as part of the
Trust Indenture Estate and invested in accordance with Section 5.09 hereof
until whichever of the following shall first occur: (i) all Events of
Default shall have been cured or waived, in which event such balance shall
be distributed as provided in this clause "Second," (ii) Section 3.03
hereof shall be applicable, in which event such balance shall be
distributed in accordance with the provisions of such Section 3.03, or
(iii) the 120th day after the receipt of such payment in which
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case such payment shall be distributed as provided in this clause
"Second".
SECTION 3.02. Event of Loss; Replacement; Voluntary Termination; Optional
Redemption
Except as otherwise provided in Section 3.03 hereof, any
payments received by the Mortgagee (i) with respect to the Airframe or the
Airframe and one or more Engines as the result of an Event of Loss, (ii)
pursuant to a voluntary termination of the Lease pursuant to Section 9 thereof,
(iii) pursuant to a purchase of the Aircraft by the Lessee pursuant to Section
17.3.1(a) (B) or (C) of the Lease, or (iv) pursuant to an optional redemption of
the Equipment Notes pursuant to Section 2.11 hereof shall be applied to
redemption of the Equipment Notes and to all other Secured Obligations by
applying such funds in the following order of priority:
First, (a) to reimburse the Mortgagee and the Note Holders
for any reasonable costs or expenses incurred in
connection with such redemption for which they are
entitled to reimbursement, or indemnity by Lessee,
under the Operative Agreements and then (b) to pay any
other amounts then due to the Mortgagee, the Note
Holders and the other Indenture Indemnitees under this
Trust Indenture, the Participation Agreement or the
Equipment Notes;
Second, (i) to pay the amounts specified in paragraph (i) of
clause "Third" of Section 3.03 hereof plus Make-Whole
Amount, if any, then due and payable in respect of the
Series A-1 and Series A-2 Equipment Notes;
(ii) after giving effect to paragraph (i) above, to pay the
amounts specified in paragraph (ii) of clause "Third"
of Section 3.03 hereof plus Make-Whole Amount, if any,
then due and payable in respect of the Series B
Equipment Notes; and
(iii) after giving effect to paragraph (ii) above, to pay
the amounts specified in paragraph (iii) of clause
"Third" of Section 3.03 hereof plus Make-Whole Amount,
if any, then due and payable in respect of the Series
C Equipment Notes; and
Third, as provided in clause "Fourth" of Section 3.03 hereof;
provided, however, that if a Replacement Airframe or Replacement Engine shall be
substituted for the Airframe or Engine subject to such Event of Loss as provided
in Section 10 of
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the Lease and in accordance with Section 5.06 hereof, any insurance,
condemnation or similar proceeds which result from such Event of Loss and are
paid over to the Mortgagee shall be held by the Mortgagee as permitted by
Section 6.04 hereof (provided that such moneys shall be invested as provided in
Section 5.09 hereof) as additional security for the obligations of Lessee under
the Lessee Operative Agreements and, unless otherwise applied pursuant to the
Lease, such proceeds (and such investment earnings) shall be released to the
Lessee at the Lessee's written request upon the release of such damaged Airframe
or Engine and the replacement thereof as provided in the Lease.
SECTION 3.03. Payments After Event of Default
Except as otherwise provided in Section 3.04 hereof, all payments received
and amounts held or realized by the Mortgagee (including any amounts realized by
the Mortgagee from the exercise of any remedies pursuant to Section 15 of the
Lease or Article IV hereof) after an Event of Default shall have occurred and be
continuing and after the Equipment Notes shall have become due and payable, as
well as all payments or amounts then held by the Mortgagee as part of the Trust
Indenture Estate, shall be promptly distributed by the Mortgagee in the
following order of priority:
First, so much of such payments or amounts as shall be required to (i) reimburse
the Mortgagee or WTC for any tax (except to the extent resulting from a
failure of the Mortgagee to withhold taxes pursuant to Section 2.04(b)
hereof), expense or other loss (including, without limitation, all amounts
to be expended at the expense of, or charged upon the rents, revenues,
issues, products and profits of, the property included in the Trust
Indenture Estate (all such property being herein called the "Mortgaged
Property") pursuant to Section 4.05(b) hereof) incurred by the Mortgagee or
WTC (to the extent not previously reimbursed), the expenses of any sale, or
other proceeding, reasonable attorneys' fees and expenses, court costs, and
any other expenditures incurred or expenditures or advances made by the
Mortgagee, WTC or the Note Holders in the protection, exercise or
enforcement of any right, power or remedy or any damages sustained by the
Mortgagee, WTC or any Note Holder, liquidated or otherwise, upon such Event
of Default shall be applied by the Mortgagee as between itself, WTC and the
Note Holders in reimbursement of such expenses and any other expenses for
which the Mortgagee, WTC or the Note Holders are entitled to reimbursement
under any Operative Agreement and (ii) all amounts payable to the other
Indenture Indemnitees hereunder and under the Participation Agreement and
the Lease; and in the case the aggregate amount to be so distributed is
insufficient to pay as aforesaid in clauses (i) and (ii), then ratably,
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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 shall be required to
reimburse the then existing or prior Note Holders for payments made
pursuant to Section 5.03 hereof (to the extent not previously reimbursed)
shall be distributed to such then existing or prior Note Holders 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 Note
Holder pursuant to said Section 5.03 hereof;
Third, (i) so much of such payments or amounts remaining as shall be required to
pay in full the aggregate unpaid Original Amount of all Series A-1 and
Series A-2 Equipment Notes, and the accrued but unpaid interest and other
amounts due thereon (other than Make-Whole Amount which shall not be due
and payable) and all other Secured Obligations in respect of the Series A-1
and Series A-2 Equipment Notes (other than Make-Whole Amount) to the date
of distribution, shall be distributed to the Note Holders of Series A-1 and
Series A-2, and in case the aggregate amount so to be distributed shall be
insufficient to pay in full as aforesaid, then ratably, without priority of
one over the other, in the proportion that the aggregate unpaid Original
Amount of all Series A-1 and Series A-2 Equipment Notes held by each holder
plus the accrued but unpaid interest and other amounts due hereunder or
thereunder (other than Make-Whole Amount, if any) to the date of
distribution, bears to the aggregate unpaid Original Amount of all Series
A-1 and Series A-2 Equipment Notes held by all such holders plus the
accrued but unpaid interest and other amounts due thereon (other than
Make-Whole Amount) to the date of distribution;
(ii) after giving effect to paragraph (i) above, so much of such payments
or amount remaining as shall be required to pay in full the aggregate
unpaid Original Amount of all Series B Equipment Notes, and the
accrued but unpaid interest and other amounts due thereon (other than
Make-Whole Amount which shall not be due and payable) and all other
Secured Obligations in respect of the Series B Equipment Notes (other
than Make-Whole Amount) to the date of distribution, shall be
distributed to the Note Holders of Series B, and in case the aggregate
amount so to be distributed shall be insufficient to pay in full as
aforesaid, then ratably, without priority of one over the other, in
the proportion that the aggregate unpaid Original Amount of all Series
B Equipment Notes held by
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each holder plus the accrued but unpaid interest and other amounts due
hereunder or thereunder (other than the Make-Whole Amount, if any) to
the date of distribution, bears to the aggregate unpaid Original
Amount of all Series B Equipment Notes held by all such holders plus
the accrued but unpaid interest and other amounts due thereon (other
than the Make-Whole Amount) to the date of distribution; and
(iii) after giving effect to paragraph (ii) above, so much of such payments
or amounts remaining as shall be required to pay in full the aggregate
unpaid Original Amount of all Series C Equipment Notes, and the
accrued but unpaid interest and other amounts due thereon (other than
Make-Whole Amount which shall not be due and payable) and all other
Secured Obligations in respect of the Series C Equipment Notes (other
than Make-Whole Amount) to the date of distribution, shall be
distributed to the Note Holders of Series C, and in case the aggregate
amount so to be distributed shall be insufficient to pay in full as
aforesaid, then ratably, without priority of one over the other, in
the proportion that the aggregate unpaid Original Amount of all Series
C Equipment Notes held by each holder plus the accrued but unpaid
interest and other amounts due hereunder or thereunder (other than the
Make-Whole Amount, if any) to the date of distribution, bears to the
aggregate unpaid Original Amount of all Series C Equipment Notes held
by all such holders plus the accrued but unpaid interest and other
amounts due thereon (other than the Make-Whole Amount) to the date of
distribution; and
Fourth: the balance, if any, of such payments or amounts remaining thereafter
shall be distributed to the Owner Trustee.
No Make-Whole Amount shall be due and payable on the Equipment Notes as a
consequence of the acceleration of the Equipment Notes as a result of an Event
of Default.
SECTION 3.04. Certain Payments
(a) Any payments received by the Mortgagee for which no provision as to the
application thereof is made in this Trust Indenture and for which such provision
is made in the Lease or the Participation Agreement shall be applied forthwith
to the purpose for which such payment was made in accordance with the terms of
the Lease or the Participation Agreement, as the case may be.
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(b) Notwithstanding anything to the contrary contained in this Article III,
the Mortgagee will distribute promptly upon receipt any indemnity payment
received by it from the Owner Trustee or Lessee in respect of the Mortgagee in
its individual capacity, any Note Holder or any other Indenture Indemnitee, in
each case whether pursuant to Section 9 of the Participation Agreement or as
Supplemental Rent, directly to the Person entitled thereto. Any payment received
by the Mortgagee under the third paragraph of Section 2.02 shall be distributed
to the Subordination Agent to be distributed in accordance with the terms of the
Intercreditor Agreement.
(c) Notwithstanding anything to the contrary contained in this Article III,
any payments received by the Mortgagee which constitute Excluded Payments shall
be distributed promptly upon receipt by the Mortgagee directly to the Person or
Persons entitled thereto.
(d) Notwithstanding any provision of this Trust Indenture to the contrary,
any amounts held by Mortgagee pursuant to the terms of the Lease shall be held
by the Mortgagee as security for the obligations of Lessee under the Lessee
Operative Agreements and, if and when required by the Lease, paid and/or applied
in accordance with the applicable provisions of the Lease.
SECTION 3.05. Other Payments
Any payments received by the Mortgagee for which no provision as to the
application thereof is made in the Lease, the Participation Agreement, elsewhere
in this Trust Indenture or in any other Operative Agreement shall be distributed
by the Mortgagee to the extent received or realized at any time (i) prior to the
payment in full of all Secured Obligations due the Note Holders, in the order of
priority specified in Section 3.01 hereof subject to the proviso thereto, and
(ii) after payment in full of all Secured Obligations, in the following order of
priority:
First, to the extent payments or amounts described in clause "First" of Section
3.03 hereof are otherwise obligations of Lessee under the Operative
Agreements or for which the Lessee is obligated to indemnify against
thereunder, in the manner provided in clause "First" of Section 3.03
hereof, and
Second, in the manner provided in clause "Fourth" of Section 3.03 hereof.
Further, and except as otherwise provided in Sections 3.02, 3.03 and 3.04
hereof, all payments received and amounts realized by the Mortgagee under the
Lease or otherwise with respect to the Aircraft (including, without limitation,
all amounts realized upon the sale or release of the Aircraft after the
termination of the Lease with respect
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thereto), to the extent received or realized at any time after payment in full
of all Secured Obligations due the Note Holders, shall be distributed by the
Mortgagee in the order of priority specified in clause (ii) of the immediately
preceding sentence of this Section 3.05.
SECTION 3.06. Payments to Owner Trustee
Any amounts distributed hereunder by the Mortgagee to the Owner Trustee
shall be paid to the Owner Trustee (within the time limits contemplated by
Section 2.04(a)) by wire transfer of funds of the type received by the Mortgagee
at such office and to such account or accounts of such entity or entities as
shall be designated by notice from the Owner Trustee to the Mortgagee from time
to time. The Owner Trustee hereby notifies the Mortgagee that unless and until
the Mortgagee receives notice to the contrary from the Owner Trustee, all
amounts to be distributed to the Owner Trustee pursuant to clause "Second" of
Section 3.01 or clause "Fourth" of Section 3.03 hereof shall be distributed by
wire transfer of funds of the type received by the Mortgagee to the Owner
Participant's account (within the time limits contemplated by Section 2.04(a))
specified in Schedule 1 to the Participation Agreement.
ARTICLE IV
COVENANTS OF OWNER TRUSTEE; EVENTS OF
DEFAULT; REMEDIES OF MORTGAGEE
SECTION 4.01. Covenants of Owner Trustee
The Owner Trustee hereby covenants and agrees (the covenants and agreements
only in clause (b) below being made by the Owner Trustee in its individual
capacity) as follows:
(a) the Owner Trustee will duly and punctually pay the Original Amount of,
Make-Whole Amount, if any, and interest on and other amounts due under the
Equipment Notes and hereunder in accordance with the terms of the Equipment
Notes and this Trust Indenture and all amounts, if any, payable by it to the
Note Holders under the Participation Agreement or Section 9 of the Lease;
(b) the Owner Trustee in its individual capacity covenants and agrees that
it shall not, directly or indirectly, cause or permit to exist a Lessor Lien
attributable to it in its individual capacity with respect to the Aircraft or
any other portion of the Trust Estate; that it will promptly, at its own
expense, take such action as may be necessary to duly discharge such Lessor Lien
attributable to it in its individual capacity; and that it will make
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restitution to the Trust Indenture Estate for any actual diminution of the
assets of the Trust Estate resulting from such Lessor Liens attributable to it
in its individual capacity;
(c) in the event the Owner Trustee shall have Actual Knowledge of an Event
of Default, a Default or an Event of Loss, the Owner Trustee will give prompt
written notice of such Event of Default, Default or Event of Loss to the
Mortgagee, each Note Holder, Lessee and the Owner Participant;
(d) the Owner Trustee will furnish to the Note Holders and the Mortgagee,
promptly upon receipt thereof, duplicates or copies of all reports, notices,
requests, demands, certificates and other instruments furnished to the Owner
Trustee under the Lease, including, without limitation, a copy of any
Termination Notice and a copy of each report or notice received pursuant to
Section 9 or 8.2 or Annex D, Paragraph E of the Lease to the extent that the
same shall not have been furnished or is not required to be furnished by the
Lessee to the Note Holders or the Mortgagee pursuant to the Lease;
(e) except with the consent of the Mortgagee (acting pursuant to
instructions given in accordance with Section 9.01 hereof) or as provided in
Sections 2 and 11 of the Participation Agreement, the Owner Trustee will not
contract for, create, incur, assume or suffer to exist any Debt, and will not
guarantee (directly or indirectly or by an instrument having the effect of
assuring another's payment or performance on any obligation or capability of so
doing, or otherwise), endorse or otherwise be or become contingently liable,
directly or indirectly, in connection with the Debt of any other person; and
(f) the Owner Trustee will not enter into any business or other activity
other than the business of owning the Aircraft, the leasing thereof to Lessee
and the carrying out of the transactions contemplated hereby and by the Lease,
the Participation Agreement and the Trust Agreement and the other Operative
Agreements.
SECTION 4.02. Event of Default
"Event of Default" means any of the following events (whatever the reason
for such Event of Default and whether such event shall be voluntary or
involuntary or come about or be effected by operation of Law or pursuant to or
in compliance with any judgment, decree or order of any court or any order, rule
or regulation of any administrative or governmental body):
(a) any Lease Event of Default (provided that any such Lease Event of
Default caused solely by a failure of Lessee to pay to the Owner Trustee or the
Owner Participant when due any amount that is included in the definition of
Excluded Payments shall not
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constitute an Event of Default unless notice is given by the Owner Participant
to the Mortgagee that such failure shall constitute an Event of Default); or
(b) the failure of the Owner Trustee to pay when due any payment of
Original Amount of, interest on, Make-Whole Amount, if any, or other amount due
and payable under any Equipment Note or hereunder (other than as a result of a
Lease Event of Default or a Lease Default) and such failure shall have continued
unremedied for ten Business Days in the case of any payment of Original Amount
or interest or Make-Whole Amount, if any, thereon and, in the case of any other
amount, for ten Business Days after the Owner Trustee or the Owner Participant
receives written demand from the Mortgagee or any Note Holder; or
(c) any Lien required to be discharged by the Owner Trustee, in its
individual capacity pursuant to Section 4.01(b) hereof or in its individual or
trust capacity pursuant to Section 7.3.1 of the Participation Agreement, or by
the Owner Participant pursuant to Section 7.2.1 of the Participation Agreement
shall remain undischarged for a period of 30 days after the Owner Trustee or the
Owner Participant, as the case may be, shall have received written notice from
the Mortgagee or any Note Holder of such Lien; or
(d) any representation or warranty made by the Owner Participant or the
Owner Trustee in the Participation Agreement or this Trust Indenture or in any
certificate furnished by the Owner Participant or the Owner Trustee to the
Mortgagee or any Note Holder in connection with the transactions contemplated by
the Operative Agreements shall prove to have been false or incorrect when made
in any material respect and continues to be material and adverse to the
interests of the Mortgagee or the Note Holders; and if such misrepresentation is
capable of being corrected and if such correction is being sought diligently,
such misrepresentation shall not have been corrected within 60 days (or, without
affecting Section 4.02(f) hereof, in the case of the representation made in
Section 6.3.6 or 6.2.6 of the Participation Agreement as to citizenship of the
Owner Trustee in its individual capacity or of the Owner Participant,
respectively, as soon as is reasonably practicable but in any event within 60
days) following notice thereof from the Mortgagee or any Note Holder to the
Owner Trustee or the Owner Participant, as the case may be; or
(e) other than as provided in (c) above or (f) below, any failure by the
Owner Trustee or Owner Participant to observe or perform any other covenant or
obligation of the Owner Trustee or Owner Participant, as the case may be, for
the benefit of the Mortgagee or the Note Holders contained in the Participation
Agreement, Section 4.2.1 of the Trust Agreement, the Equipment Notes or this
Trust Indenture which is not remedied within a period of 60 days after notice
thereof has been given to the Owner Trustee and the Owner Participant; or
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(f) if at any time when the Aircraft is registered under the Laws of the
United States, the Owner Participant shall not be a "citizen of the United
States" within the meaning of Section 40102(a)(15) of Part A of Subtitle VII of
Title 49, United States Code, and as the result thereof the registration of the
Aircraft under the Federal Aviation Act, and regulations then applicable
thereunder, shall cease to be effective; provided that no Event of Default shall
be deemed to have occurred under this paragraph (f) unless such circumstances
continue unremedied for more than 30 days after the Owner Participant has Actual
Knowledge of the state of facts that resulted in such ineffectiveness and of
such loss of citizenship; or
(g) at any time either (i) the commencement of an involuntary case or other
proceeding in respect of the Owner Participant, the Owner Trustee, the Trust or
the Trust Estate under the federal bankruptcy Laws, as now constituted or
hereafter amended, or any other applicable federal or state bankruptcy,
insolvency or other similar Law in the United States or seeking the appointment
of a receiver, liquidator, assignee, custodian, trustee, sequestrator (or
similar official) of the Owner Participant, the Owner Trustee, the Trust or the
Trust Estate or for all or substantially all of its property, or seeking the
winding-up or liquidation of its affairs and the continuation of any such case
or other proceeding undismissed and unstayed for a period of 60 consecutive
days; or (ii) the commencement by the Owner Participant, the Owner Trustee, the
Trust or the Trust Estate of a voluntary case or proceeding under the federal
bankruptcy Laws, as now constituted or hereafter amended, or any other
applicable federal or state bankruptcy, insolvency or other similar Law in the
United States, or the consent by the Owner Participant, the Owner Trustee, the
Trust or the Trust Estate to the appointment of or taking possession by a
receiver, liquidator, assignee, trustee, custodian, sequestrator (or other
similar official) of the Owner Participant, the Owner Trustee, the Trust or the
Trust Estate or for all or substantially all of its property, or the making by
the Owner Participant, the Owner Trustee, the Trust or the Trust Estate of any
assignment for the benefit of creditors or the Owner Participant or the Owner
Trustee shall take any action to authorize any of the foregoing; provided,
however, that an event referred to in this Section 4.02(g) with respect to the
Owner Participant shall not constitute an Event of Default if within 30 days of
the commencement of the case or proceeding a final non-appealable order,
judgment or decree shall be entered in such case or proceeding by a court or a
trustee, custodian, receiver or liquidator, to the effect that, no part of the
Trust Estate (except for the Owner Participant's beneficial interest therein)
and no right, title or interest under the Trust Indenture Estate shall be
included in, or be subject to, any declaration or adjudication of, or
proceedings with respect to, the bankruptcy, insolvency or liquidation of the
Owner Participant referred to in this Section 4.02(g).
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SECTION 4.03. Certain Rights
The Mortgagee shall give the Note Holders, the Owner Trustee and the Owner
Participant prompt written notice of any Event of Default of which the Mortgagee
has Actual Knowledge and shall give the Note Holders, the Owner Trustee and the
Owner Participant not less than ten Business Days prior written notice of the
date (the "Enforcement Date") on or after which the Mortgagee may, subject to
the limitation set forth in Section 4.04(a), commence and consummate the
exercise of any remedy or remedies described in Section 4.04, 4.05 or 4.06
hereof; provided, however, that in the event the Mortgagee shall have validly
terminated the Lease, the Mortgagee shall not sell or lease, or otherwise afford
the use of, the Aircraft or any portion thereof to the Lessee or any Affiliate
thereof. Without limiting the generality of the foregoing, the Mortgagee shall
give the Owner Trustee, the Owner Participant and the Lessee at least ten
Business Days prior written notice (which may be given concurrently with notice
of the Enforcement Date) of any declaration of the Lease to be in default
pursuant to Sections 14 and 15 of the Lease or any termination of the Lease or
of the exercise of any remedy or remedies pursuant to Section 15 of the Lease.
If an Event of Default shall have occurred and be continuing, the Owner Trustee
shall have the rights set forth below, any of which may be exercised directly by
the Owner Participant.
If as a result of the occurrence of an Event of Default in respect of the
nonpayment by Lessee of Basic Rent due under the Lease, the Mortgagee shall have
insufficient funds to make any payment of Original Amount and interest on any
Equipment Note on the day it becomes due and payable, the Owner Trustee may, but
shall not be obligated to pay the Mortgagee prior to the Enforcement Date, in
the manner provided in Section 2.04 hereof, for application in accordance with
Section 3.01 hereof, an amount equal to the portion of the Original Amount and
interest (including interest, if any, on any overdue payments of such portion of
Original Amount and interest) then due and payable on the Equipment Notes, and,
unless the Owner Trustee has cured Events of Default in respect of payments of
Basic Rent on each of the three immediately preceding Basic Rent payment dates,
or the Owner Trustee has cured six previous Events of Default in respect of
payments of Basic Rent, such payment by the Owner Trustee shall, solely for
purposes of this Trust Indenture be deemed to cure any Event of Default which
would otherwise have arisen on account of the nonpayment by Lessee of such
installment of Basic Rent (but not any other Default or Event of Default which
shall have occurred and be continuing).
If any Event of Default (other than in respect of the nonpayment of Basic
Rent by the Lessee) which can be cured by the payment of money has occurred, the
Owner Trustee may, but shall not be obligated to, cure such Event of Default by
making such payment prior to the Enforcement Date as is necessary to accomplish
the observance or per-
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formance of the defaulted covenant, condition or agreement to the party entitled
to the same.
Except as hereinafter in this Section 4.03 provided, the Owner Trustee
shall not, as a result of exercising the right to cure any such Event of
Default, obtain any Lien on any of the Mortgaged Property or any Rent payable
under the Lease for or on account of costs or expenses incurred in connection
with the exercise of such right, nor shall any claim of the Owner Trustee
against Lessee or any other party for the repayment of such costs or expenses
impair the prior right and security interest of the Mortgagee in and to the
Mortgaged Property. Upon any payment by the Owner Trustee pursuant to the first
or second preceding paragraphs of this Section 4.03, the Owner Trustee shall be
subrogated to the rights of the Mortgagee and the Note Holders in respect of the
Basic Rent which was overdue at the time of such payment and interest payable by
the Lessee on account of its being overdue and any Supplemental Rent in respect
of the reimbursement of amounts paid by Owner Trustee pursuant to the
immediately preceding paragraph (but in either case shall have no rights as a
secured party hereunder), and thereafter, the Owner Trustee shall be entitled
(so long as the application thereof shall not give rise to an Event of Default
hereunder) to receive such overdue Basic Rent or Supplemental Rent, as the case
may be, and interest thereon upon receipt thereof by the Mortgagee; provided,
however, that (i) if the Original Amount and interest on the Equipment Notes
shall have become due and payable pursuant to Section 4.04(b) hereof, such
subrogation shall, until the Secured Obligations shall have been paid in full,
be subordinate to the rights of the Mortgagee, the Note Holders and the
Indenture Indemnitees in respect of such payment of overdue Basic Rent,
Supplemental Rent and such interest and (ii) the Owner Trustee shall not
otherwise attempt to recover any such amount paid by it on behalf of the Lessee
pursuant to this Section 4.03 except by demanding of the Lessee payment of such
amount, or by commencing an action at law against the Lessee and obtaining and
enforcing a judgment against the Lessee for the payment of such amount or taking
appropriate action in a pending action at law against the Lessee (provided, that
at no time while an Event of Default shall have occurred and be continuing shall
any such demand be made or shall any such action be commenced (or continued) and
any amounts nevertheless received by the Owner Trustee in respect thereof shall
be held in trust for the benefit of, and promptly paid to, the Mortgagee for
distribution as provided in Section 3.03 hereof).
Neither the Owner Trustee nor the Owner Participant shall have the right to
cure any Lease Event of Default or Lease Default except as specified in this
Section 4.03.
SECTION 4.04. Remedies
(a) If an Event of Default shall have occurred and be continuing and so
long as the same shall continue unremedied, then and in every such case the
Mortgagee may,
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subject to the second and third paragraphs of this Section 4.04(a), exercise any
or all of the rights and powers and pursue any and all of the remedies pursuant
to this Article IV and shall have and may exercise all of the rights and
remedies of a secured party under the Uniform Commercial Code and, in the event
such Event of Default is also a Lease Event of Default, any and all of the
remedies pursuant to Section 15 of the Lease and may take possession of all or
any part of the properties covered or intended to be covered by the Lien created
hereby or pursuant hereto and may exclude the Owner Participant, the Owner
Trustee and Lessee and all persons claiming under any of them wholly or partly
therefrom; provided, that the Mortgagee shall give the Owner Trustee and the
Owner Participant 20 days prior written notice of its intention to sell the
Aircraft, and provided, further, that in the event the Mortgagee shall have
validly terminated the Lease, the Mortgagee shall not sell or lease, or
otherwise afford the use of, the Aircraft or any portion thereof to the Lessee
or any Affiliate thereof. Unless an Event of Default not resulting from or
relating to a Lease Event of Default has occurred and is continuing, the Owner
Participant may bid at the sale and become the purchaser. Without limiting any
of the foregoing, it is understood and agreed that the Mortgagee may exercise
any right of sale of the Aircraft available to it, even though it shall not have
taken possession of the Aircraft and shall not have possession thereof at the
time of such sale.
Anything in this Trust Indenture to the contrary notwithstanding, if the
Event of Default arises solely by reason of one or more circumstances which
constitutes a Lease Event of Default, the Mortgagee shall not be entitled to
exercise any remedy hereunder unless the Mortgagee as security assignee of the
Owner Trustee shall have exercised or concurrently be exercising one or more of
the dispossessory remedies provided for in Section 15 of the Lease with respect
to the Aircraft; provided, however, that such requirement to exercise one or
more of such remedies under the Lease shall not apply in circumstances where the
Mortgagee is, and has been, for a continuous period in excess of 60 days or such
other period as may be specified in Section 1110(a)(1)(A) of the Bankruptcy Code
(such 60-day or other period being the "New Section 1110 Period"), involuntarily
stayed or prohibited by applicable law or court order from exercising such
remedies under the Lease (a "Continuous Stay Period"); provided further,
however, that the requirement to exercise one or more of such remedies under the
Lease shall nonetheless be applicable during a Continuous Stay Period subsequent
to the expiration of the New Section 1110 Period to the extent that the
continuation of such Continuous Stay Period subsequent to the expiration of the
New Section 1110 Period (A) results from an agreement by the trustee or the
debtor-in-possession in such proceeding during the New Section 1110 Period with
the approval of the relevant court to perform the Lease in accordance with
Section 1110(a)(1)(A) of the Bankruptcy Code and continues to perform as
required by Section 1110(a)(1)(A-B) of the Bankruptcy Code or (B) is an
extension of the New Section 1110 Period with the consent of the Mortgagee
pursuant to Section 1110(b) of the Bankruptcy Code or (C) results from the
Les-
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see's assumption during the New Section 1110 Period with the approval of the
relevant court of the Lease pursuant to Section 365 of the Bankruptcy Code and
Lessee's continuous performance of the Lease as so assumed or (D) is the
consequence of the Mortgagee's own failure to give any requisite notice to any
person. In the event that the applicability of Section 1110 of the Bankruptcy
Code to the Aircraft is being contested by Lessee in judicial proceedings, both
of the Mortgagee and the Owner Trustee shall have the right to participate in
such proceedings; provided that any such participation by the Owner Trustee
shall not affect in any way any rights or remedy of the Mortgagee hereunder.
It is expressly understood and agreed that, subject only to the two
preceding paragraphs, the inability, described in such paragraphs, of the
Mortgagee to exercise any right or remedy under the Lease shall in no event and
under no circumstances prevent the Mortgagee from exercising any or all of its
rights, powers and remedies under this Trust Indenture, including, without
limitation, this Article IV.
(b) If an Event of Default shall have occurred and be continuing, then and
in every such case the Mortgagee may (and shall, upon receipt of a written
demand therefor from a Majority in Interest of Note Holders), subject to Section
4.03 hereof, at any time, by delivery of written notice or notices to the Owner
Trustee and the Owner Participant, declare all the Equipment Notes to be due and
payable, whereupon the unpaid Original Amount of all Equipment Notes then
outstanding, together with accrued but unpaid interest thereon (without
Make-Whole Amount) and other amounts due thereunder, 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 clause (g) of
Section 4.02 hereof shall have occurred or a Lease Event of Default under
Section 14.5 of the Lease shall have occurred, then and in every such case the
unpaid Original Amount then outstanding, together with accrued but unpaid
interest and all other amounts due thereunder and hereunder shall immediately
and without further act become due and payable without presentment, demand,
protest or notice, all of which are hereby waived; provided further that in the
event of a reorganization proceeding involving the Lessee instituted under
Chapter 11 of the Bankruptcy Code, if no Lease Event of Default (including any
Lease Event of Default set forth in Section 14.3 of the Lease) and no other
Event of Default (other than the failure to pay the Original Amount of the
Equipment Notes which by such declaration shall have become payable) exists at
any time after the consummation of such proceeding, such declaration shall be
automatically rescinded without any further action on the part of any Note
Holder.
This Section 4.04(b), however, is subject to the condition that, if at any
time after the Original Amount of the Equipment Notes shall have become so due
and payable, and before any judgment or decree for the payment of the money so
due, or any thereof, shall be entered, all overdue payments of interest upon the
Equipment Notes and all other
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amounts payable under the Equipment Notes (except the Original Amount of the
Equipment Notes which by such declaration shall have become payable) shall have
been duly paid, and every other Default and Event of Default with respect to any
covenant or provision of this Trust Indenture shall have been cured, then and in
every such case a Majority in Interest of Note Holders may (but shall not be
obligated to), by written instrument filed with the Mortgagee, rescind and annul
the Mortgagee's declaration (or such automatic acceleration) and its
consequences; but no such rescission or annulment shall extend to or affect any
subsequent Default or Event of Default or impair any right consequent thereon.
Any acceleration pursuant to this Section 4.04(b) shall be automatically
rescinded and any related declaration of an Event of Default annulled in the
event that the Owner Trustee shall have cured, in accordance with Section 4.03
hereof, the Event of Default that resulted in such acceleration or declaration.
(c) The Note Holders shall be entitled, at any sale pursuant to Section 15
of the Lease or this Section 4.04, to credit against any purchase price bid at
such sale by such holder all or any part of the unpaid obligations owing to such
Note Holder and secured by the Lien of this Trust Indenture (but only to the
extent that such purchase price would have been paid to such Note Holder
pursuant to Article III hereof if such purchase price were paid in cash and the
foregoing provisions of this subsection (c) were not given effect).
(d) In the event of any sale of the Trust Indenture Estate, or any part
thereof, pursuant to any judgment or decree of any court or otherwise in
connection with the enforcement of any of the terms of this Trust Indenture, the
unpaid Original Amount of all Equipment Notes then outstanding, together with
accrued interest thereon (without Make-Whole Amount), and other amounts due
thereunder, shall immediately become due and payable without presentment,
demand, protest or notice, all of which are hereby waived.
(e) Notwithstanding anything contained herein, so long as the Pass Through
Trustee under any Pass Through Trust Agreement (or its designee) is a Note
Holder, the Mortgagee will not be authorized or empowered to acquire title to
any Mortgaged Property or take any action with respect to any Mortgaged Property
so acquired by it if such acquisition or action would cause any Trust to fail to
qualify as a "grantor trust" for federal income tax purposes.
SECTION 4.05. Return of Aircraft, Etc.
(a) If an Event of Default shall have occurred and be continuing and the
Equipment Notes have been accelerated, subject to Section 4.03 hereof and unless
the Owner Trustee or the Owner Participant shall have elected to purchase the
Equipment
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Notes, at the request of the Mortgagee, the Owner Trustee shall promptly execute
and deliver to the Mortgagee such instruments of title and other documents as
the Mortgagee may deem necessary or advisable to enable the Mortgagee or an
agent or representative designated by the Mortgagee, at such time or times and
place or places as the Mortgagee may specify, to obtain possession of all or any
part of the Mortgaged Property included in the Trust Indenture Estate to which
the Mortgagee shall at the time be entitled hereunder. If the Owner Trustee
shall for any reason fail to execute and deliver such instruments and documents
after such request by the Mortgagee, the Mortgagee may (i) obtain a judgment
conferring on the Mortgagee the right to immediate possession and requiring the
Owner Trustee to execute and deliver such instruments and documents to the
Mortgagee, to the entry of which judgment the Owner Trustee hereby specifically
consents to the fullest extent permitted by Law, and (ii) pursue all or part of
such Mortgaged Property wherever it may be found and, in the event that a Lease
Event of Default has occurred and is continuing, may enter any of the premises
of Lessee wherever such Mortgaged Property may be or be supposed to be and
search for such Mortgaged Property and take possession of and remove such
Mortgaged Property. All expenses of obtaining such judgment or of pursuing,
searching for and taking such property shall, until paid, be secured by the Lien
of this Trust Indenture.
(b) Upon every such taking of possession, the Mortgagee may, from time to
time, at the expense of the Mortgaged Property, make all such expenditures for
maintenance, use, operation, storage, insurance, leasing, control, management,
disposition, modifications or alterations to and of the Mortgaged Property, as
it may deem proper. In each such case, the Mortgagee shall have the right to
maintain, use, operate, store, insure, lease, control, manage, dispose of,
modify or alter the Mortgaged Property and to carry on the business and to
exercise all rights and powers of the Owner Participant and the Owner Trustee
relating to the Mortgaged Property, as the Mortgagee shall deem best, including
the right to enter into any and all such agreements with respect to the
maintenance, use, operation, storage, insurance, leasing, control, management,
disposition, modification or alteration of the Mortgaged Property or any part
thereof as the Mortgagee may determine, and the Mortgagee shall be entitled to
collect and receive directly all tolls, rents (including Rent), revenues,
issues, income, products and profits of the Mortgaged Property and every part
thereof, except Excluded Payments, without prejudice, however, to the right of
the Mortgagee under any provision of this Trust Indenture to collect and receive
all cash held by, or required to be deposited with, the Mortgagee hereunder
other than Excluded Payments. Such tolls, rents (including Rent), revenues,
issues, income, products and profits shall be applied to pay the expenses of the
maintenance, use, operation, storage, insurance, leasing, control, management,
disposition, improvement, modification or alteration of the Mortgaged Property
and of conducting the business thereof, and to make all payments which the
Mortgagee may be required or may elect to make, if any, for taxes, assessments,
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insurance or other proper charges upon the Mortgaged Property or any part
thereof (including the employment of engineers and accountants to examine,
inspect and make reports upon the properties and books and records of the Owner
Trustee), and all other payments which the Mortgagee may be required or
authorized to make under any provision of this Trust Indenture, as well as just
and reasonable compensation for the services of the Mortgagee, and of all
persons properly engaged and employed by the Mortgagee with respect hereto.
SECTION 4.06. Remedies Cumulative
Each and every right, power and remedy given to the Mortgagee specifically
or otherwise in this Trust Indenture 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 be
exercised from time to time and as often and in such order as may be deemed
expedient by the Mortgagee, and the exercise or the beginning of the exercise of
any power or remedy shall not be construed to be a waiver of the right to
exercise at the same time or thereafter any other right, power or remedy. No
delay or omission by the Mortgagee 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 Owner Trustee
or Lessee or to be an acquiescence therein.
SECTION 4.07. Discontinuance of Proceedings
In case the Mortgagee shall have instituted any proceeding to enforce any
right, power or remedy under this Trust Indenture by foreclosure, entry or
otherwise, and such proceedings shall have been discontinued or abandoned for
any reason or shall have been determined adversely to the Mortgagee, then and in
every such case the Owner Trustee, the Mortgagee and Lessee shall, subject to
any determination in such proceedings, be restored to their former positions and
rights hereunder with respect to the Mortgaged Property, and all rights,
remedies and powers of the Owner Trustee, the Mortgagee or Lessee shall continue
as if no such proceedings had been instituted.
SECTION 4.08. Waiver of Past Defaults
Upon written instruction from a Majority in Interest of Note Holders, the
Mortgagee 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 this
Trust Indenture, but no such waiver shall extend to any subsequent or other
Default or impair any right consequent thereon;
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provided, that in the absence of written instructions from all the Note Holders,
the Mortgagee shall not waive any Default (i) in the payment of the Original
Amount, Make-Whole Amount, if any, and interest and other amounts due under any
Equipment Note then outstanding, or (ii) in respect of a covenant or provision
hereof which, under Article IX hereof, cannot be modified or amended without the
consent of each Note Holder.
SECTION 4.09. Appointment of Receiver
The Mortgagee shall, as a matter of right, be entitled to the appointment
of a receiver (who may be the Mortgagee or any successor or nominee thereof) for
all or any part of the Mortgaged Property, whether such receivership be
incidental to a proposed sale of the Mortgaged Property or the taking of
possession thereof or otherwise, and the Owner Trustee hereby consents to the
appointment of such a receiver and will not oppose any such appointment. Any
receiver appointed for all or any part of the Mortgaged Property shall be
entitled to exercise all the rights and powers of the Mortgagee with respect to
the Mortgaged Property.
SECTION 4.10. Mortgagee Authorized to Execute Bills of Sale, Etc.
Subject to the provisions of this Trust Indenture, the Owner Trustee
irrevocably appoints the Mortgagee the true and lawful attorney-in-fact of the
Owner Trustee (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 Trust Indenture,
whether pursuant to foreclosure or power of sale, assignments and other
instruments as may be necessary or appropriate, with full power of substitution,
the Owner Trustee hereby ratifying and confirming all that such attorney or any
substitute shall do by virtue hereof in accordance with applicable law.
Nevertheless, if so requested by the Mortgagee or any purchaser, the Owner
Trustee shall ratify and confirm any such sale, assignment, transfer or
delivery, by executing and delivering to the Mortgagee or such purchaser all
bills of sale, assignments, releases and other proper instruments to effect such
ratification and confirmation as may be designated in any such request.
SECTION 4.11. Rights of Note Holders to Receive Payment
Notwithstanding any other provision of this Trust Indenture, the right of
any Note Holder 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, or to bring suit for the enforcement of any such payment on
or after such respective dates in accordance with the terms hereof, shall not be
impaired or affected without the consent of such Note Holder.
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ARTICLE V
DUTIES OF THE MORTGAGEE
SECTION 5.01. Notice of Event of Default
If the Mortgagee shall have Actual Knowledge of an Event of Default or of a
Default arising from a failure to pay Rent, the Mortgagee shall give prompt
written notice thereof to the Owner Trustee, the Owner Participant, Lessee, and
each Note Holder. Subject to the terms of Sections 2.13, 4.03, 4.04, 4.08, 5.02
and 5.03 hereof, the Mortgagee shall take such action, or refrain from taking
such action, with respect to such Event of Default or Default (including with
respect to the exercise of any rights or remedies hereunder) as the Mortgagee
shall be instructed in writing by a Majority in Interest of Note Holders.
Subject to the provisions of Section 5.03, if the Mortgagee shall not have
received instructions as above provided within 20 days after mailing notice of
such Event of Default to the Note Holders, the Mortgagee 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, but shall be
under no duty to take or refrain from taking any action, with respect to such
Event of Default or Default as it shall determine advisable in the best
interests of the Note Holders; provided, however, that the Mortgagee may not
sell the Aircraft or any Engine without the consent of a Majority in Interest of
Note Holders. For all purposes of this Trust Indenture, in the absence of Actual
Knowledge on the part of the Mortgagee, the Owner Trustee or the Owner
Participant, the Mortgagee, the Owner Trustee or the Owner Participant, as the
case may be, shall not be deemed to have knowledge of a Default or an Event of
Default (except, in the case of the Mortgagee, the failure of Lessee to pay any
installment of Basic Rent within one Business Day after the same shall become
due, if any portion of such installment was then required to be paid to the
Mortgagee, which failure shall constitute knowledge of a Default) unless
notified in writing by Lessee, the Owner Trustee, the Owner Participant or one
or more Note Holders.
SECTION 5.02. Action upon Instructions; Certain Rights and Limitations
(a) Subject to the terms of Sections 2.13, 4.03, 4.04(a) and (b), 4.08,
5.01 and 5.03 hereof, upon the written instructions at any time and from time to
time of a Majority in Interest of Note Holders, the Mortgagee shall, subject to
the terms of this Section 5.02, take such of the following actions as may be
specified in such instructions: (i) give such notice or direction or exercise
such right, remedy or power hereunder as shall be specified in such
instructions; (ii) give such notice or direction or exercise such right, remedy
or power under the Lease, the Participation Agreement, the Purchase Agreement,
the
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Purchase Agreement Assignment, or any other part of the Trust Indenture Estate
as shall be specified in such instructions; and (iii) approve as satisfactory to
the Mortgagee all matters required by the terms of the Lease to be satisfactory
to the Owner Trustee, it being understood that without the written instructions
of a Majority in Interest of Note Holders, the Mortgagee shall not approve any
such matter as satisfactory to the Mortgagee; provided, that anything contained
in this Trust Indenture, the Lease or the other Operative Agreements to the
contrary notwithstanding, but subject to the next paragraph hereof:
(1) the Owner Trustee or the Owner Participant, may, without the consent of
the Mortgagee, demand, collect, sue for or otherwise obtain all amounts included
in Excluded Payments from Lessee and seek legal or equitable remedies to require
Lessee to maintain the insurance coverage referred to in Section 11 of the Lease
provided, that the rights referred to in this clause (1) shall not be deemed to
include the exercise of any remedies provided for in Section 15 of the Lease
other than the right to proceed by appropriate court action, either at Law or in
equity, to enforce payment by Lessee of such amounts included in Excluded
Payments or performance by Lessee of such insurance covenant or to recover
damages for the breach thereof or for specific performance of any other term of
the Lease;
(2) (A) the Mortgagee shall not, without the consent of the Owner Trustee,
enter into, execute or deliver amendments or modifications in respect of any of
the provisions of the Lease, and (B) unless a Mortgagee Event shall have
occurred and be continuing, the Mortgagee shall not, without the consent of the
Owner Trustee, which consent shall not be withheld if no right or interest of
the Owner Trustee or the Owner Participant shall be diminished or impaired
thereby, (i) enter into, execute or deliver waivers or consents in respect of
any of the provisions of the Lease, or (ii) approve any accountants, engineers,
appraisers or counsel as satisfactory to render services for or issue opinions
to the Owner Trustee pursuant to the Operative Agreements, provided that whether
or not any Mortgagee Event has occurred and is continuing, the Owner Trustee's
consent shall be required with respect to any waivers or consents in respect of
any of the provisions of Section 5, 7 or 11 of the Lease, or of any other
Section of the Lease to the extent such action shall affect (y) the amount or
timing of, or the right to enforce payment of any Excluded Payment or (z) the
amount or timing of any amounts payable by the Lessee under the Lease as
originally executed (or as subsequently modified with the consent of the Owner
Trustee) which, absent the occurrence and continuance of an Event of Default
hereunder, would be distributable to the Owner Trustee under Article III hereof;
(3) whether or not a Default or Event of Default under this Trust Indenture
has occurred and is continuing, the Owner Trustee and the Owner Participant
shall have the right, together with the Mortgagee, (i) to receive from Lessee
certificates and other documents and information which Lessee is required to
give or furnish to the Owner
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Trustee or the Lessor pursuant to any Operative Agreement and (ii) to inspect in
accordance with the Lease the Airframe and Engines and all Aircraft Documents;
(4) whether or not a Default or Event of Default under this Trust Indenture
has occurred and is continuing, the Owner Trustee shall have the right to adjust
upwards Basic Rent, Stipulated Loss Values, Termination Values and the EBO
Price, and to adjust the EBO Date, as provided in Section 3.2.1 of the Lease;
(5) so long as no Mortgagee Event has occurred and is continuing, the Owner
Trustee shall have the right, to the exclusion of the Mortgagee, to adjust Basic
Rent, Stipulated Loss Values, Termination Values, the EBO Price and the EBO Date
as provided in Section 3.2 of the Lease or to adjust downward any installment or
amount of Basic Rent, Stipulated Loss Value or Termination Value, as such
installments and amounts are set forth in Schedules 2, 3 and 4, respectively, to
the Lease, to the extent of the portion of such installment or amount that
would, under Section 3.01, 3.02 or 3.03 hereof, as the case may be, be
distributable to the Owner Trustee or the Owner Participant;
(6) whether or not a Default or Event of Default under the Trust Indenture
has occurred and is continuing, the Owner Trustee may, without the consent of
the Mortgagee, (i) solicit and make bids with respect to the Aircraft under
Section 9 of the Lease in respect of a termination of the Lease by Lessee
pursuant to Section 9 thereof, (ii) determine Fair Market Sales Value and Fair
Market Rental Value under Section 17 of the Lease for all purposes except
following a Mortgagee Event pursuant to Section 15 of the Lease, and (iii) make
an election pursuant to and in accordance with the provisions of Sections
9.1(b), 9.2 and 9.3 of the Lease; and
(7) so long as no Mortgagee Event shall have occurred and be continuing,
all other rights of the "Lessor" under the Lease shall be exercised by the Owner
Trustee to the exclusion of the Mortgagee including, without limitation, the
right to (i) exercise all rights with respect to Lessee's use and operation,
modification or maintenance of the Aircraft and any Engine which the Lease
specifically confers on the Lessor, and (ii) consent to and approve any
assignment pursuant to Section 13 of the Lease; provided that the foregoing
shall not (x) limit (A) any rights separately granted to the Mortgagee under the
Operative Agreements or (B) the right of the Mortgagee to receive any funds to
be delivered to the "Lessor" under the Lease (except with respect to Excluded
Payments) and under the Purchase Agreement or (y) confer upon the Owner Trustee
the right to adversely affect the validity or enforceability of the lien of this
Indenture.
Notwithstanding anything to the contrary contained herein (including this
Section 5.02), the Mortgagee shall have the right, to the exclusion of the Owner
Trustee and the Owner Participant, to (A) declare the Lease to be in default
under Section 15 thereof and (B) subject only to the provisions of Sections
4.03, 4.04(a) and (b) and 2.13 hereof, exercise the remedies set forth in such
Section 15
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(other than in connection with Excluded Payments and provided that each of the
Owner Trustee, Owner Participant and Mortgagee shall independently retain the
rights set forth in clause (ii) of Section 15.1.5 of the Lease) at any time that
a Lease Event of Default shall have occurred and be continuing. Further and for
the avoidance of doubt, and anything to the contrary contained herein (including
this Section 5.02), in no event may the Owner Trustee amend or otherwise modify
the provisions of Section 3.2.1(e) of the Lease or of the final sentence of the
definition of Stipulated Loss Value or Termination Value, in any such case,
without the prior written consent of the Mortgagee.
The Mortgagee will execute and the Owner Trustee will file or cause to be
filed such continuation statements with respect to financing statements relating
to the security interest created hereunder in the Trust Indenture Estate as may
be specified from time to time in written instructions of a Majority in Interest
of Note Holders (which instructions shall be accompanied by the form of such
continuation statement so to be filed). The Mortgagee will furnish to each Note
Holder (and, during the continuation of a Mortgagee Event, to the Owner Trustee
and Owner Participant), promptly upon receipt thereof, duplicates or copies of
all reports, notices, requests, demands, certificates and other instruments
furnished to the Mortgagee under the Lease or hereunder, including, without
limitation, a copy of any Termination Notice (as defined in the Lease) and a
copy of each report or notice received pursuant to Section 9 and Paragraph E of
Annex D of the Lease, respectively to the extent that the same shall not have
been furnished to such holder pursuant hereto or the Lease.
(b) If any Lease Event of Default shall have occurred and be continuing and
the Owner Trustee shall not have cured fully such Lease Event of Default under
and in accordance with Section 4.03 hereof, on request of a Majority in Interest
of Note Holders, the Mortgagee shall declare the Lease to be in default pursuant
to Section 15 thereof and exercise those remedies specified by such Note
Holders. The Mortgagee agrees to provide to the Note Holders, the Owner Trustee
and the Owner Participant concurrently with such declaration by the Mortgagee,
notice of such declaration by the Mortgagee.
SECTION 5.03. Indemnification
The Mortgagee shall not be required to take any action or refrain from
taking any action under Section 5.01 (other than the first sentence thereof),
5.02 or Article IV hereof unless the Mortgagee shall have been indemnified to
its reasonable satisfaction against any liability, cost or expense (including
counsel fees) which may be incurred in connection therewith pursuant to a
written agreement with one or more Note Holders. The Mortgagee agrees that it
shall look solely to the Note Holders for the satisfaction of any in-
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demnity (except expenses for foreclosure of the type referred to in clause
"First" of Section 3.03 hereof) owed to it pursuant to this Section 5.03. The
Mortgagee shall not be under any obligation to take any action under this Trust
Indenture or any other Operative Agreement and nothing herein or therein shall
require the Mortgagee to expend or risk its own funds or otherwise incur the
risk of any financial liability in the performance 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 or liability is not reasonably
assured to it (the written indemnity of any Note Holder who is a QIB, signed by
an authorized officer thereof, in favor of, delivered to and in form reasonably
satisfactory to the Mortgagee shall be accepted as reasonable assurance of
adequate indemnity). The Mortgagee shall not be required to take any action
under Section 5.01 (other than the first sentence thereof) or 5.02 or Article IV
hereof, nor shall any other provision of this Trust Indenture or any other
Operative Agreement be deemed to impose a duty on the Mortgagee to take any
action, if the Mortgagee shall have been advised by counsel that such action is
contrary to the terms hereof or of the Lease or is otherwise contrary to Law.
SECTION 5.04. No Duties Except as Specified in Trust Indenture or
Instructions
The Mortgagee shall not have any duty or obligation to use, operate, store,
lease, control, manage, sell, dispose of or otherwise deal with the Aircraft or
any other part of the Trust Indenture Estate, or to otherwise take or refrain
from taking any action under, or in connection with, this Trust Indenture or any
part of the Trust Indenture Estate, except as expressly provided by the terms of
this Trust Indenture or as expressly provided in written instructions from Note
Holders as provided in this Trust Indenture; and no implied duties or
obligations shall be read into this Trust Indenture against the Mortgagee. The
Mortgagee agrees that it will in its individual capacity and at its own cost and
expense (but without any right of indemnity in respect of any such cost or
expense under Section 7.01 hereof), promptly take such action as may be
necessary duly to discharge all liens and encumbrances on any part of the Trust
Indenture Estate which result from claims against it in its individual capacity
not related to the ownership of the Aircraft or the administration of the Trust
Indenture Estate or any other transaction pursuant to this Trust Indenture or
any document included in the Trust Indenture Estate.
SECTION 5.05. No Action Except Under Lease, Trust Indenture or Instructions
The Owner Trustee and the Mortgagee agree that they will not use, operate,
store, lease, control, manage, sell, dispose of or otherwise deal with the
Aircraft or any other part of the Trust Indenture Estate except (i) as required
or permitted by the terms of the Lease or (ii) in accordance with the powers
granted to, or the authority conferred upon,
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the Owner Trustee and the Mortgagee pursuant to this Trust Indenture and in
accordance with the express terms hereof.
SECTION 5.06. Replacement Airframes and Replacement Engines
At any time an Airframe or Engine is to be replaced under or pursuant to
Section 10 of the Lease by a Replacement Airframe or Replacement Engine, if no
Lease Event of Default is continuing, the Owner Trustee shall direct the
Mortgagee to execute and deliver to the Owner Trustee an appropriate instrument
releasing such Airframe and/or Engine as appropriate from the Lien of this Trust
Indenture and the Mortgagee shall execute and deliver such instrument as
aforesaid, but only upon compliance by Lessee with the applicable provisions of
Section 10 of the Lease.
SECTION 5.07. Indenture Supplements for Replacements
If a Replacement Airframe or Replacement Engine is being substituted as
contemplated by Section 10 of the Lease, the Owner Trustee and the Mortgagee
agree for the benefit of the Note Holders and Lessee, subject to fulfillment of
the conditions precedent and compliance by Lessee with its obligations set forth
in Section 10 of the Lease and the requirements of Section 5.06 hereof with
respect to such Replacement Airframe or Replacement Engine, to execute and
deliver a Lease Supplement and a Trust Indenture Supplement, as applicable, as
contemplated by Section 10 of the Lease.
SECTION 5.08. Effect of Replacement
In the event of the substitution of an Airframe or of a Replacement Engine
pursuant to Section 10 of the Lease, all provisions of this Trust Indenture
relating to the Airframe or Engine or Engines being replaced shall be applicable
to such Replacement Airframe or Replacement Engine or Engines with the same
force and effect as if such Replacement Airframe or Replacement Engine or
Engines were the same airframe or engine or engines, as the case may be, as the
Airframe or Engine or Engines being replaced but for the Event of Loss with
respect to the Airframe or Engine or Engines being replaced and the provisions
of this Trust Indenture shall cease to be applicable to the Airframe or Engine
or Engines being replaced, which shall be released from the Lien of the Trust
Indenture.
SECTION 5.09. Investment of Amounts Held by Mortgagee
Any amounts held by the Mortgagee as assignee of the Owner Trustee's rights
to hold and invest monies for security pursuant to Section 4.4 of the Lease
shall be held in accordance with the terms of such Section and the Mortgagee
agrees, for the benefit
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of Lessee, to perform the duties of the Owner Trustee under such Section. Any
amounts held by the Mortgagee pursuant to the proviso to the first sentence of
Section 3.01, pursuant to Section 3.02, or pursuant to any provision of any
other Operative Agreement providing for amounts to be held by the Mortgagee
which are not distributed pursuant to the other provisions of Article III hereof
shall be invested by the Mortgagee from time to time in Cash Equivalents as
directed by the Owner Trustee so long as the Mortgagee may acquire the same
using its best efforts. Unless otherwise expressly provided in this Trust
Indenture, any income realized as a result of any such investment, net of the
Mortgagee's reasonable fees and expenses in making such investment, shall be
held and applied by the Mortgagee in the same manner as the principal amount of
such investment is to be applied and any losses, net of earnings and such
reasonable fees and expenses, shall be charged against the principal amount
invested. The Mortgagee shall not be liable for any loss resulting from any
investment required to be made by it under this Trust Indenture other than by
reason of its willful misconduct or gross negligence, and any such investment
may be sold (without regard to its maturity) by the Mortgagee without
instructions whenever such sale is necessary to make a distribution required by
this Trust Indenture.
ARTICLE VI
THE OWNER TRUSTEE AND THE MORTGAGEE
SECTION 6.01. Acceptance of Trusts and Duties
The Mortgagee accepts the duties hereby created and applicable to it and
agrees to perform the same but only upon the terms of this Trust Indenture and
agrees to receive and disburse all monies constituting part of the Trust
Indenture Estate in accordance with the terms hereof. The Owner Trustee, in its
individual capacity, and the Mortgagee, in its individual capacity, shall not be
answerable or accountable under any circumstances, except (i) for their own
willful misconduct or gross negligence (other than for the handling of funds,
for which the standard of accountability shall be willful misconduct or
negligence), (ii) in the case of the Mortgagee, as provided in the fourth
sentence of Section 2.04(a) hereof and the last sentence of Section 5.04 hereof,
and (iii) for liabilities that may result, in the case of the Owner Trustee,
from the inaccuracy of any representation or warranty of the Owner Trustee
expressly made in its individual capacity in the Participation Agreement or in
Section 4.01(b) or 6.03 hereof (or in any certificate furnished to the Mortgagee
or any Note Holder in connection with the transactions contemplated by the
Operative Agreements) or, in the case of the Mortgagee, from the inaccuracy of
any representation or warranty of the Mortgagee (expressly made in its
individual capacity) in the Partici-
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pation Agreement or hereunder. Neither the Owner Trustee nor the Mortgagee shall
be liable for any action or inaction of the other or of the Owner Participant.
SECTION 6.02. Absence of Duties
In the case of the Mortgagee, except in accordance with written
instructions furnished pursuant to Section 5.01 or 5.02 hereof, and except as
provided in, and without limiting the generality of, Sections 5.03, 5.04 and
6.08 hereof and, in the case of the Owner Trustee, except as provided in Section
4.01(b) hereof, the Owner Trustee and the Mortgagee shall have no duty (i) to
see to any registration of the Aircraft or any recording or filing of the Lease
or of this Trust Indenture or any other document, or to see to the maintenance
of any such registration, recording or filing, (ii) to see to any insurance on
the Aircraft or to effect or maintain any such insurance, whether or not Lessee
shall be in default with respect thereto, (iii) to see to the payment or
discharge of any lien or encumbrance of any kind against any part of the Trust
Estate or the Trust Indenture Estate, (iv) to confirm, verify or inquire into
the failure to receive any financial statements from Lessee, or (v) to inspect
the Aircraft at any time or ascertain or inquire as to the performance or
observance of any of Lessee's covenants under the Lease with respect to the
Aircraft. The Owner Participant shall not have any duty or responsibility
hereunder, including, without limitation, any of the duties mentioned in clauses
(i) through (v) above; provided, that nothing contained in this sentence shall
limit any obligations of the Owner Participant under the Participation Agreement
or relieve the Owner Participant from any restriction under Section 4.03 hereof.
SECTION 6.03. No Representations or Warranties as to Aircraft or Documents
NEITHER THE MORTGAGEE IN ITS INDIVIDUAL OR TRUST CAPACITY NOR THE OWNER
TRUSTEE IN ITS INDIVIDUAL CAPACITY OR AS OWNER TRUSTEE UNDER THE TRUST AGREEMENT
MAKES OR SHALL BE DEEMED TO HAVE MADE AND EACH HEREBY EXPRESSLY DISCLAIMS ANY
REPRESENTATION OR WARRANTY, EXPRESS OR IMPLIED, AS TO THE TITLE, AIRWORTHINESS,
VALUE, COMPLIANCE WITH SPECIFICATIONS, CONDITION, DESIGN, QUALITY, DURABILITY,
OPERATION, MERCHANTABILITY OR FITNESS FOR USE FOR A PARTICULAR PURPOSE OF THE
AIRCRAFT OR ANY ENGINE, AS TO THE ABSENCE OF LATENT OR OTHER DEFECTS, WHETHER OR
NOT DISCOVERABLE, AS TO THE ABSENCE OF ANY INFRINGEMENT OF ANY PATENT, TRADEMARK
OR COPYRIGHT, AS TO THE ABSENCE OF OBLIGATIONS BASED ON STRICT LIABILITY IN TORT
OR ANY OTHER REPRESENTATION OR WARRANTY WHATSOEVER, except the Owner Trustee in
its individual capacity warrants that (i) the Owner Trustee has received on the
Delivery Date
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whatever title was conveyed to it, and (ii) the Aircraft is free and clear of
Lessor Liens attributable to the Owner Trustee in its individual capacity.
Neither the Owner Trustee, in its individual capacity or as Owner Trustee under
the Trust Agreement, nor the Mortgagee, in its individual or trust capacities,
makes or shall be deemed to have made any representation or warranty as to the
validity, legality or enforceability of this Trust Indenture, the Trust
Agreement, the Participation Agreement, the Equipment Notes, the Lease, the
Purchase Agreement or the Purchase Agreement Assignment with the Consent and
Agreement and the Engine Consent and Agreement attached thereto, or as to the
correctness of any statement contained in any thereof, except for the
representations and warranties of the Owner Trustee made in its individual
capacity and the representations and warranties of the Mortgagee in its
individual capacity, in each case expressly made in this Trust Indenture or in
the Participation Agreement. The Loan Participants, the Note Holders and the
Owner Participant make no representation or warranty hereunder whatsoever.
SECTION 6.04. No Segregation of Monies; No Interest
Any monies paid to or retained by the Mortgagee pursuant to any provision
hereof and not then required to be distributed to the Note Holders, Lessee or
the Owner Trustee as provided in Article III hereof need not be segregated in
any manner except to the extent required by Law or Section 4.4 of the Lease and
Section 5.09 hereof, and may be deposited under such general conditions as may
be prescribed by Law, and the Mortgagee shall not be liable for any interest
thereon (except that the Mortgagee shall invest all monies held in accordance
with Section 5.09 hereof); provided, however, that any payments received, or
applied hereunder, by the Mortgagee shall be accounted for by the Mortgagee so
that any portion thereof paid or applied pursuant hereto shall be identifiable
as to the source thereof.
SECTION 6.05. Reliance; Agreements; Advice of Counsel
Neither the Owner Trustee nor the Mortgagee shall incur any liability to
anyone in acting upon any signature, instrument, notice, resolution, request,
consent, order, certificate, report, opinion, bond or other document or paper
believed by it to be genuine and believed by it to be signed by the proper party
or parties. The Owner Trustee and the Mortgagee may accept a copy of a
resolution of the Board of Directors (or Executive Committee thereof) of any
party to the Participation Agreement, certified by the Secretary or an Assistant
Secretary thereof 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 the aggregate unpaid Original Amount of Equipment Notes
outstanding as of any date, the Owner Trustee may for all purposes hereof rely
on a certificate signed by any Vice President or other authorized corporate
trust officer of the Mortgagee. As to any fact or matter relating to Lessee the
manner of which is not specifically described herein, the
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Owner Trustee and the Mortgagee may for all purposes hereof rely on a
certificate, signed by a duly authorized officer of Lessee, as to such fact or
matter, and such certificate shall constitute full protection to the Owner
Trustee and the Mortgagee for any action taken or omitted to be taken by them in
good faith in reliance thereon. The Mortgagee shall assume, and shall be fully
protected in assuming, that the Owner Trustee is authorized by the Trust
Agreement to enter into this Trust Indenture and to take all action to be taken
by it pursuant to the provisions hereof, and shall not inquire into the
authorization of the Owner Trustee with respect thereto. In the administration
of the trusts hereunder, the Owner Trustee and the Mortgagee each may execute
any of the trusts or powers hereof and perform its powers and duties hereunder
directly or through agents or attorneys and may, at the expense of the Trust
Indenture Estate, advise with counsel, accountants and other skilled persons to
be selected and retained by it, and the Owner Trustee and the Mortgagee shall
not be liable for anything done, suffered or omitted in good faith by them in
accordance with the written advice or written opinion of any such counsel,
accountants or other skilled persons.
SECTION 6.06. Capacity in Which Acting
The Owner Trustee acts hereunder solely as trustee as herein and in the
Trust Agreement provided, and not in its individual capacity, except as
otherwise expressly provided herein, in the Trust Agreement and in the
Participation Agreement.
SECTION 6.07. Compensation
The Mortgagee shall be entitled to reasonable compensation, including
expenses and disbursements (including the reasonable fees and expenses of
counsel), for all services rendered hereunder and shall, on and subsequent to an
Event of Default hereunder, have a priority claim on the Trust Indenture Estate
for the payment of such compensation, to the extent that such compensation shall
not be paid by Lessee, and shall have the right, on and subsequent to an Event
of Default hereunder, to use or apply any monies held by it hereunder in the
Trust Indenture Estate toward such payments. The Mortgagee agrees that it shall
have no right against the Loan Participants, the Note Holders, the Owner Trustee
or the Owner Participant for any fee as compensation for its services as trustee
under this Trust Indenture.
SECTION 6.08. Instructions from Note Holders
In the administration of the trusts created hereunder, the Mortgagee shall
have the right to seek instructions from a Majority in Interest of Note Holders
should any provision of this Trust Indenture appear to conflict with any other
provision herein or should the Mortgagee's duties or obligations hereunder be
unclear, and the Mortgagee shall incur no liability in refraining from acting
until it receives such instructions. The Mortga-
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gee shall be fully protected by the Note Holders for acting in accordance with
any instructions received under this Section 6.08.
ARTICLE VII
INDEMNIFICATION OF MORTGAGEE BY OWNER TRUSTEE
SECTION 7.01. Scope of Indemnification
The Owner Trustee, not in its individual capacity, but solely as Owner
Trustee, hereby agrees, whether or not any of the transactions contemplated
hereby shall be consummated, except as to matters covered by any indemnity
furnished as contemplated by Section 5.03 hereof and except as otherwise
provided in Section 2.03 or 2.04(b) hereof, to assume liability for, and does
hereby indemnify, protect, save and keep harmless the Mortgagee (in its
individual and trust capacities), and its successors, assigns, agents and
servants, from and against any and all liabilities, obligations, losses,
damages, penalties, taxes (excluding any taxes payable by the Mortgagee on or
measured by any compensation received by the Mortgagee for its services under
this Trust Indenture), claims, actions, suits, costs, expenses or disbursements
(including reasonable legal fees and expenses) of any kind and nature
whatsoever, which may be imposed on, incurred by or asserted against the
Mortgagee (whether or not also indemnified against by any other person under any
other document) in any way relating to or arising out of this Trust Indenture or
any other Operative Agreement to which it is a party or the enforcement of any
of the terms of any thereof, or in any way relating to or arising out of the
manufacture, purchase, acceptance, non-acceptance, rejection, ownership,
delivery, lease, possession, use, operation, condition, sale, return or other
disposition of the Aircraft or any Engine (including, without limitation, latent
or other defects, whether or not discoverable, and any claim for patent,
trademark or copyright infringement), or in any way relating to or arising out
of the administration of the Trust Indenture Estate or the action or inaction of
the Mortgagee hereunder except only in the case of willful misconduct or gross
negligence (or negligence in the case of handling funds) of the Mortgagee in the
performance of its duties hereunder or resulting from the inaccuracy of any
representation or warranty of the Mortgagee ( expressly made in its individual
capacity) in or referred to in Section 6.03 hereof, or as provided in Section
6.01 hereof or in the last sentence of Section 5.04 hereof, or as otherwise
excluded by the terms of Section 9.1 or 9.3 of the Participation Agreement from
Lessee's indemnities under such Sections. In addition, if necessary, the
Mortgagee shall be entitled to indemnification from the Trust Indenture Estate
for any liability, obligation, loss, damage, penalty, claim, action, suit, cost,
expense or disbursement indemnified against pursuant to this Section 7.01 to the
extent not reimbursed by Lessee or others, but without releasing any of them
from their re-
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spective agreements of reimbursement; and to secure the same the Mortgagee shall
have a prior Lien on the Trust Indenture Estate. Without limiting the foregoing,
the Mortgagee agrees that, prior to seeking indemnification from the Trust
Indenture Estate, it will demand, and diligently pursue in good faith (but with
no duty to exhaust all legal remedies therefor), indemnification available to
the Mortgagee from Lessee under the Lease or the Participation Agreement.
ARTICLE VIII
SUCCESSOR AND SEPARATE TRUSTEES
SECTION 8.01. Notice of Successor Owner Trustee
In the case of any appointment of a successor to the Owner Trustee pursuant
to the Trust Agreement including upon any merger, conversion, consolidation or
sale of substantially all of the corporate trust business of the Owner Trustee
pursuant to the Trust Agreement, the successor Owner Trustee shall give prompt
written notice thereof to the Mortgagee, Lessee and the Note Holders.
SECTION 8.02. Resignation of Mortgagee; Appointment of Successor
(a) The Mortgagee or any successor thereto may resign at any time without
cause by giving at least 30 days prior written notice to Lessee, the Owner
Trustee, the Owner Participant and each Note Holder, such resignation to be
effective upon the acceptance of the trusteeship by a successor Mortgagee. In
addition, a Majority in Interest of Note Holders may at any time (but only with
the consent of the Lessee, which consent shall not be unreasonably withheld,
except that such consent shall not be necessary if a Lease Event of Default is
continuing) remove the Mortgagee without cause by an instrument in writing
delivered to the Owner Trustee, Lessee, the Owner Participant and the Mortgagee,
and the Mortgagee shall promptly notify each Note Holder thereof in writing,
such removal to be effective upon the acceptance of the trusteeship by a
successor Mortgagee. In the case of the resignation or removal of the Mortgagee,
a Majority in Interest of Note Holders may appoint a successor Mortgagee by an
instrument signed by such holders, which successor, so long as no Lease Event of
Default shall have occurred and be continuing, shall be subject to Lessee's
reasonable approval. If a successor Mortgagee shall not have been appointed
within 30 days after such notice of resignation or removal, the Mortgagee, the
Owner Trustee, the Owner Participant or any Note Holder may apply to any court
of competent jurisdiction to appoint a successor Mortgagee to act until such
time, if any, as a suc-
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cessor shall have been appointed as above provided. The successor Mortgagee so
appointed by such court shall immediately and without further act be superseded
by any successor Mortgagee appointed as above provided.
(b) Any successor Mortgagee, however appointed, shall execute and deliver
to the Owner Trustee, the predecessor Mortgagee and the Lessee an instrument
accepting such appointment and assuming the obligations of the Mortgagee under
the Participation Agreement arising from and after the time of such appointment,
and thereupon such successor Mortgagee, without further act, shall become vested
with all the estates, properties, rights, powers and duties of the predecessor
Mortgagee hereunder in the trust hereunder applicable to it with like effect as
if originally named the Mortgagee herein; but nevertheless upon the written
request of such successor Mortgagee, such predecessor Mortgagee shall execute
and deliver an instrument transferring to such successor Mortgagee, upon the
trusts herein expressed applicable to it, all the estates, properties, rights
and powers of such predecessor Mortgagee, and such predecessor Mortgagee shall
duly assign, transfer, deliver and pay over to such successor Mortgagee all
monies or other property then held by such predecessor Mortgagee hereunder.
(c) Any successor Mortgagee, however appointed, shall be a bank or trust
company having its principal place of business in the Borough of Manhattan, City
and State of New York; Chicago, Illinois; Hartford, Connecticut; Wilmington,
Delaware; or Boston, Massachusetts and having (or whose obligations under the
Operative Agreements are guaranteed by an affiliated entity having) a combined
capital and surplus of at least $100,000,000, if there be such an institution
willing, able and legally qualified to perform the duties of the Mortgagee
hereunder upon reasonable or customary terms.
(d) Any corporation into which the Mortgagee 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 Mortgagee shall be a party, or any
corporation to which substantially all the corporate trust business of the
Mortgagee may be transferred, shall, subject to the terms of paragraph (c) of
this Section 8.02, be a successor Mortgagee and the Mortgagee under this Trust
Indenture without further act.
SECTION 8.03. Appointment of Additional and Separate Trustees
(a) Whenever (i) the Mortgagee shall deem it necessary or desirable in
order to conform to any Law of any jurisdiction in which all or any part of the
Trust Indenture Estate shall be situated or to make any claim or bring any suit
with respect to or in connection with the Trust Indenture Estate, this Trust
Indenture, any other Indenture Agreement, the Equipment Notes or any of the
transactions contemplated by the Participation Agree-
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ment, (ii) the Mortgagee shall be advised by counsel satisfactory to it that it
is so necessary or prudent in the interests of the Note Holders (and the
Mortgagee shall so advise the Owner Trustee and Lessee), or (iii) the Mortgagee
shall have been requested to do so by a Majority in Interest of Note Holders,
then in any such case, the Mortgagee and, upon the written request of the
Mortgagee, the Owner Trustee, shall execute and deliver an indenture
supplemental hereto and such other instruments as may from time to time be
necessary or advisable either (1) to constitute one or more bank or trust
companies or one or more persons approved by the Mortgagee, either to act
jointly with the Mortgagee as additional trustee or trustees of all or any part
of the Trust Indenture Estate, or to act as separate trustee or trustees of all
or any part of the Trust Indenture Estate, in each case with such rights,
powers, duties and obligations consistent with this Trust Indenture as may be
provided in such supplemental indenture or other instruments as the Mortgagee or
a Majority in Interest of Note Holders may deem necessary or advisable, or (2)
to clarify, add to or subtract from the rights, powers, duties and obligations
theretofore granted any such additional or separate trustee, subject in each
case to the remaining provisions of this Section 8.03. If the Owner Trustee
shall not have taken any action requested of it under this Section 8.03(a) that
is permitted or required by its terms within 15 days after the receipt of a
written request from the Mortgagee so to do, or if an Event of Default shall
have occurred and be continuing, the Mortgagee may act under the foregoing
provisions of this Section 8.03(a) without the concurrence of the Owner Trustee,
and the Owner Trustee hereby irrevocably appoints (which appointment is coupled
with an interest) the Mortgagee, its agent and attorney-in-fact to act for it
under the foregoing provisions of this Section 8.03(a) in either of such
contingencies. The Mortgagee 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. In
case any additional or separate trustee appointed under this Section 8.03(a)
shall die, become incapable of acting, resign or be removed, all the assets,
property, rights, powers, trusts, duties and obligations of such additional or
separate trustee shall revert to the Mortgagee until a successor additional or
separate trustee is appointed as provided in this Section 8.03(a).
(b) No additional or separate trustee shall be entitled to exercise any of
the rights, powers, duties and obligations conferred upon the Mortgagee 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
Trust Indenture Estate or otherwise payable under any Operative Agreement to the
Mortgagee shall be promptly paid over by it to the Mortgagee. All other rights,
powers, duties and obligations conferred or imposed upon any additional or
separate trustee shall be exercised or performed by the Mortgagee and such
additional or separate trustee jointly except to the extent that applicable Law
of any juris-
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diction in which any particular act is to be performed renders the Mortgagee
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 Trust Indenture Estate in any such jurisdiction) shall be exercised and
performed by such additional or separate trustee. No additional or separate
trustee shall take any discretionary action except on the instructions of the
Mortgagee or a Majority in Interest of Note Holders. No trustee hereunder shall
be personally liable by reason of any act or omission of any other trustee
hereunder, except that the Mortgagee shall be liable for the consequences of its
lack of reasonable care in selecting, and the Mortgagee's own actions in acting
with, any additional or separate trustee. Each additional or separate trustee
appointed pursuant to this Section 8.03 shall be subject to, and shall have the
benefit of Articles IV through VIII and Article X hereof insofar as they apply
to the Mortgagee. The powers of any additional or separate trustee appointed
pursuant to this Section 8.03 shall not in any case exceed those of the
Mortgagee hereunder.
(c) If at any time the Trustee shall deem it no longer necessary or
desirable or in order to conform to any such Law or take any such action or
shall be advised by such counsel that it is no longer so necessary or desirable
in the interest of the Note Holders, or in the event that the Mortgagee shall
have been requested to do so in writing by a Majority in Interest of Note
Holders, the Mortgagee and, upon the written request of the Mortgagee, the Owner
Trustee, shall execute and deliver an indenture supplemental hereto and all
other instruments and agreements necessary or proper to remove any additional or
separate trustee. The Mortgagee may act on behalf of the Owner Trustee under
this Section 8.03(c) when and to the extent it could so act under Section
8.03(a) hereof.
ARTICLE IX
SUPPLEMENTS AND AMENDMENTS TO THIS TRUST INDENTURE
AND OTHER DOCUMENTS
SECTION 9.01. Instructions of Majority; Limitations
(a) Except as provided in Section 5.02 hereof, the Owner Trustee agrees it
shall not enter into any amendment of or supplement to the Lease, the Purchase
Agreement, the Purchase Agreement Assignment, the Consent and Agreement or the
Engine Consent and Agreement, or execute and deliver any written waiver or
modification of, or consent under, the terms of the Lease, the Purchase
Agreement, the Purchase Agreement Assignment, the Consent and Agreement or the
Engine Consent and Agreement, unless such supplement, amendment, waiver,
modification or consent is consented to in writing by the Mortgagee and a
Majority in Interest of Note Holders. Anything to the contrary contained
<PAGE>
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herein notwithstanding, without the necessity of the consent of any of the Note
Holders or the Mortgagee, (i) any Excluded Payments payable to the Owner
Participant may be modified, amended, changed or waived in such manner as shall
be agreed to by the Owner Participant and Lessee and (ii) the Owner Trustee and
Lessee may enter into amendments of or additions to the Lease to modify Section
5 (except to the extent that such amendment would affect the rights or exercise
of remedies under Section 15 of the Lease) or Section 17 of the Lease so long as
such amendments, modifications and changes do not and would not affect the time
of, or reduce the amount of, Rent payments (except to the extent expressly
permitted by Section 5.02 hereof) until after the payment in full of all Secured
Obligations or otherwise adversely affect the Note Holders.
(b) Without limiting the provisions of Section 9.01(a) hereof, the
Mortgagee agrees with the Note Holders that it shall not enter into any
amendment, waiver or modification of, supplement or consent to this Trust
Indenture, the Lease, the Purchase Agreement, the Purchase Agreement Assignment,
the Consent and Agreement, the Engine Consent and Agreement or the Participation
Agreement, or any other agreement included in the Trust Indenture Estate, unless
such supplement, amendment, waiver, modification or consent is consented to in
writing by a Majority in Interest of Note Holders, but upon the written request
of a Majority in Interest of Note Holders, the Mortgagee shall from time to time
enter into any such supplement or amendment, or execute and deliver any such
waiver, modification or consent, as may be specified in such request and as may
be (in the case of any such amendment, supplement or modification), to the
extent such agreement is required, agreed to by the Owner Trustee and Lessee or,
as may be appropriate, the Airframe Manufacturer or the Engine Manufacturer;
provided, however, that, without the consent of each holder of an affected
Equipment Note then outstanding and of each Liquidity Provider, no such
amendment of or supplement to this Trust Indenture, the Lease, the Purchase
Agreement, the Purchase Agreement Assignment, the Consent and Agreement, the
Engine Consent and Agreement or the Participation Agreement or waiver or
modification of the terms of, or consent under, any thereof, shall (i) modify
any of the provisions of this Section 9.01, or of Article II or III or Section
4.02, 4.04(c), 4.04(d), 5.02 or 5.06 hereof, Section 13.3, 14 (except to add an
Event of Default) or 16 of the Lease, Section 15.1 of the Participation
Agreement, the definitions of "Event of Default," "Default," "Lease Event of
Default," "Lease Default," "Majority in Interest of Note Holders," "Make-Whole
Amount" or "Note Holder," or the percentage of Note Holders required to take or
approve any action hereunder, (ii) reduce the amount, or change the time of
payment or method of calculation of any amount, of Original Amount, Make-Whole
Amount, if any, or interest with respect to any Equipment Note, or alter or
modify the provisions of Article III hereof with respect to the order of
priorities in which distribution thereunder shall be made as among the Note
Holders, the Owner Trustee and Lessee, (iii) reduce, modify or amend any
indemnities in favor of the Owner Trustee, the Mortgagee or the Note Holders
(except that the Owner
<PAGE>
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Trustee (in its individual capacity) or the Mortgagee, as the case may be, may
consent to any waiver or reduction of an indemnity payable to it), (iv) consent
to any change in the Trust Indenture or the Lease which would permit redemption
of Equipment Notes earlier than permitted under Section 2.10 or 2.11 hereof or
the purchase or exchange of the Equipment Notes other than as permitted by
Section 2.13 hereof, (v) except as contemplated by the Lease or the
Participation Agreement, reduce the amount or extend the time of payment of
Basic Rent, Stipulated Loss Value, or Termination Value for the Aircraft in each
case as set forth in the Lease, or modify, amend or supplement the Lease or
consent to any assignment of the Lease, in either case releasing Lessee from its
obligations in respect of the payment of Basic Rent, Stipulated Loss Value or
Termination Value for the Aircraft or altering the absolute and unconditional
character of the obligations of Lessee to pay Rent as set forth in Sections 3
and 16 of the Lease or (vi) permit the creation of any Lien on the Trust
Indenture Estate or any part thereof other than Permitted Liens or deprive any
Note Holder of the benefit of the Lien of this Trust Indenture on the Trust
Indenture Estate, except as provided in connection with the exercise of remedies
under Article IV hereof.
(c) At any time after the date hereof, the Owner Trustee and the Mortgagee
may enter into one or more agreements supplemental hereto without the consent of
any Note Holder for any of the following purposes: (i) (a) to cure any defect or
inconsistency herein or in the Equipment Notes, or to make any change not
inconsistent with the provisions hereof (provided that such change does not
adversely affect the interests of any Note Holder in its capacity solely as Note
Holder) or (b) to cure any ambiguity or correct any mistake; (ii) to evidence
the succession of another party as the Owner Trustee in accordance with the
terms of the Trust Agreement or to evidence the succession of a new trustee
hereunder pursuant hereto, the removal of the trustee hereunder or the
appointment of any co-trustee or co-trustees or any separate or additional
trustee or trustees; (iii) to convey, transfer, assign, mortgage or pledge any
property to or with the Mortgagee or to make any other provisions with respect
to matters or questions arising hereunder so long as such action shall not
adversely affect the interests of the Note Holders in its capacity solely as
Note Holder; (iv) to correct or amplify the description of any property at any
time subject to the Lien of this Trust Indenture or better to assure, convey and
confirm unto the Mortgagee any property subject or required to be subject to the
Lien of this Trust Indenture, the Airframe or Engines or any Replacement
Airframe or Replacement Engine; (v) to add to the covenants of the Owner Trustee
for the benefit of the Note Holders, or to surrender any rights or power herein
conferred upon the Owner Trustee, the Owner Participant or the Lessee; (vi) to
add to the rights of the Note Holders; and (vii) to include on the Equipment
Notes any legend as may be required by Law.
<PAGE>
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SECTION 9.02. Trustees Protected
If, in the opinion of the institution acting as Owner Trustee under the
Trust Agreement or the institution acting as Mortgagee hereunder, any document
required to be executed by it pursuant to the terms of Section 9.01 hereof
affects any right, duty, immunity or indemnity with respect to such institution
under this Trust Indenture or the Lease, such institution may in its discretion
decline to execute such document.
SECTION 9.03. Documents Mailed to Note Holders
Promptly after the execution by the Owner Trustee or the Mortgagee of any
document entered into pursuant to Section 9.01 hereof, the Mortgagee shall mail,
by first class mail, postage prepaid, a copy thereof to Lessee and to each Note
Holder at its address last set forth in the Equipment Note Register, but the
failure of the Mortgagee to mail such copies shall not impair or affect the
validity of such document.
SECTION 9.04. No Request Necessary for Lease Supplement or Trust Indenture
Supplement
No written request or consent of the Mortgagee, the Note Holders or the
Owner Participant pursuant to Section 9.01 hereof shall be required to enable
the Owner Trustee to enter into any Lease Supplement specifically required by
the terms of the Lease or to execute and deliver a Trust Indenture Supplement
specifically required by the terms hereof.
ARTICLE X
MISCELLANEOUS
SECTION 10.01. Termination of Trust Indenture
Upon (or at any time after) payment in full of the Original Amount of,
Make-Whole Amount, if any, and interest on and all other amounts due under all
Equipment Notes and provided that there shall then be no other Secured
Obligations due to the Indenture Indemnitees, the Note Holders and the Mortgagee
hereunder or under the Participation Agreement or any other Operative Agreement,
the Owner Trustee shall direct the Mortgagee to execute and deliver to or as
directed in writing by the Owner Trustee an appropriate instrument releasing the
Aircraft and the Engines from the Lien of this Trust Indenture and releasing the
Lease, the Purchase Agreement, the Purchase Agreement Assignment with the
Consent and Agreement and the Engine Consent and Agreement attached
<PAGE>
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thereto from the assignment and pledge thereof hereunder and the Mortgagee shall
execute and deliver such instrument as aforesaid and give written notice thereof
to Lessee; provided, however, that this Trust Indenture and the trusts created
hereby shall earlier terminate and this Trust Indenture shall be of no further
force or effect upon any sale or other final disposition by the Mortgagee of all
property constituting part of the Trust Indenture Estate and the final
distribution by the Mortgagee of all monies or other property or proceeds
constituting part of the Trust Indenture Estate in accordance with the terms
hereof. Except as aforesaid otherwise provided, this Trust Indenture and the
trusts created hereby shall continue in full force and effect in accordance with
the terms hereof.
SECTION 10.02. No Legal Title to Trust Indenture Estate in Note Holders
No holder of an Equipment Note shall have legal title to any part of the
Trust Indenture Estate. No transfer, by operation of law or otherwise, of any
Equipment Note or other right, title and interest of any Note Holder in and to
the Trust Indenture Estate or hereunder shall operate to terminate this Trust
Indenture or entitle such holder 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
Trust Indenture Estate.
SECTION 10.03. Sale of Aircraft by Mortgagee Is Binding
Any sale or other conveyance of the Trust Indenture Estate, or any part
thereof (including any part thereof or interest therein), by the Mortgagee made
pursuant to the terms of this Trust Indenture shall bind the Note Holders and
shall be effective to transfer or convey all right, title and interest of the
Trustee, the Owner Trustee, the Owner Participant and such holders in and to
such Trust Indenture Estate or part thereof. No purchaser or other grantee shall
be required to inquire as to the authorization, necessity, expediency or
regularity of such sale or conveyance or as to the application of any sale or
other proceeds with respect thereto by the Mortgagee.
SECTION 10.04. Trust Indenture for Benefit of Owner Trustee, Mortgagee,
Owner Participant, Note Holders and the Other Indenture
Indemnitees
Nothing in this Trust Indenture, whether express or implied, shall be
construed to give any person other than the Owner Trustee, the Mortgagee, the
Owner Participant, the Note Holders and the other Indenture Indemnitees, any
legal or equitable right, remedy or claim under or in respect of this Trust
Indenture.
<PAGE>
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SECTION 10.05. Notices
Unless otherwise expressly specified or permitted by the terms hereof, all
notices, requests, demands, authorizations, directions, consents, waivers or
documents provided or permitted by this Trust Indenture to be made, given,
furnished or filed shall be in writing, and shall be personally delivered or
sent by certified mail, postage prepaid, by prepaid courier service or by
facsimile (followed by overnight courier service for next Business Day receipt)
or confirmed telex, and (i) if to the Owner Trustee, addressed to it at 79 South
Main Street, Salt Lake City, Utah 84111 with a copy to the Owner Participant
addressed as provided in clause (iii) below, (ii) if to Mortgagee, addressed to
it at its office at Rodney Square North, 1100 North Market Street, Wilmington,
Delaware 19890-0001, Attention: Corporate Trust Administration, facsimile number
(302) 651-8882, (iii) if to any Participant, Lessee, any Note Holder or any
other Indenture Indemnitee, addressed to such party at such address as such
party shall have furnished by notice to the Owner Trustee and the Mortgagee, or,
until an address is so furnished, addressed to the address of such party (if
any) set forth on Schedule 1 to the Participation Agreement or in the Equipment
Note Register. Whenever any notice in writing is required to be given by the
Owner Trustee, any Participant or the Mortgagee or any Note Holder to any of the
other of them, such notice shall be deemed given and such requirement satisfied
when such notice is received, provided in the case of a facsimile, there is
receipt of such notice the next Business Day from an overnight courier service
or if such notice is mailed by certified mail, postage prepaid, three Business
Days after being mailed, addressed as provided above. Any party hereto may
change the address to which notices to such party will be sent by giving notice
of such change to the other parties to this Trust Indenture.
SECTION 10.06. Severability
Any provision of this Trust Indenture 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. Any such prohibition or unenforceability in any particular
jurisdiction shall not invalidate or render unenforceable such provision in any
other jurisdiction.
SECTION 10.07. No Oral Modification or Continuing Waivers
No term or provision of this Trust Indenture or the Equipment Notes may be
changed, waived, discharged or terminated orally, but only by an instrument in
writing signed by the Owner Trustee and the Mortgagee, in compliance with
Section 9.01 hereof. 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.
<PAGE>
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SECTION 10.08. Successors and Assigns
All covenants and agreements contained herein shall be binding upon, and
inure to the benefit of, each of the parties hereto and the permitted successors
and assigns of each, all as herein provided. Any request, notice, direction,
consent, waiver or other instrument or action by any Note Holder shall bind the
successors and assigns of such holder. This Trust Indenture and the Trust
Indenture Estate shall not be affected by any amendment or supplement to the
Trust Agreement or by any other action taken under or in respect of the Trust
Agreement, except that each reference in this Trust Indenture to the Trust
Agreement shall mean the Trust Agreement as amended and supplemented from time
to time to the extent permitted hereby, thereby and by the Participation
Agreement. Each Note Holder by its acceptance of an Equipment Note agrees to be
bound by this Trust Indenture and all provisions of the Participation Agreement
applicable to a Loan Participant or a Note Holder.
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 Trust Indenture to the contrary notwithstanding,
Owner Trustee, Mortgagee, any Participant or any bank or other Affiliate of such
Participant may conduct any banking or other financial transactions, and have
banking or other commercial relationships, with Lessee [or any Permitted
Sublessee]4, fully to the same extent as if this Trust Indenture were not in
effect, including without limitation the making of loans or other extensions of
credit to Lessee for any purpose whatsoever, whether related to any of the
transactions contemplated hereby or otherwise.
SECTION 10.11. Governing Law; Counterpart Form
THIS TRUST INDENTURE SHALL IN ALL RESPECTS BE GOVERNED BY, AND CONSTRUED IN
ACCORDANCE WITH, THE INTERNAL LAWS OF THE
- ----------
4 Insert bracketed language if the Lease provides for the assignment of a
permitted sublease.
<PAGE>
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STATE OF NEW YORK, INCLUDING ALL MATTERS OF CONSTRUCTION, VALIDITY AND
PERFORMANCE. THIS TRUST INDENTURE IS BEING DELIVERED IN THE STATE OF NEW YORK.
This Trust Indenture may be executed by the parties hereto in separate
counterparts (or upon separate signature pages bound together into one or more
counterparts), each of which when so executed and delivered shall be an
original, but all such counterparts shall together constitute but one and the
same instrument.
SECTION 10.12. Voting By Note Holders
All votes of the Note Holders shall be governed by a vote of a Majority in
Interest of Note Holders, except as otherwise provided herein.
SECTION 10.13. Bankruptcy
It is the intention of the parties that the Owner Trustee, as lessor under
the Lease (and the Mortgagee as assignee of the Owner Trustee hereunder), shall
be entitled to the benefits of Section 1110 with respect to the right to take
possession of the Aircraft, Airframe, Engines and Parts as provided in the Lease
in the event of a case under Chapter 11 of the Bankruptcy Code in which Lessee
is a debtor, and in any instance where more than one construction is possible of
the terms and conditions hereof or any other pertinent Operative Agreement, each
such party agrees that a construction which would preserve such benefits shall
control over any construction which would not preserve such benefits.
<PAGE>
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IN WITNESS WHEREOF, the parties hereto have caused this Trust Indenture and
Mortgage to be duly executed by their respective officers thereof duly
authorized as of the day and year first above written.
FIRST SECURITY BANK,
NATIONAL ASSOCIATION,
not in its individual
capacity, except as
expressly provided
herein, but solely as
Owner Trustee
By:__________________________________
Name:________________________________
Title:_________________________________
WILMINGTON TRUST COMPANY, not in its
individual capacity, except as expressly
provided herein, but solely as Mortgagee
By:__________________________________
Name:________________________________
Title:_________________________________
<PAGE>
EXHIBIT A
TO TRUST INDENTURE AND MORTGAGE
TRUST INDENTURE AND MORTGAGE SUPPLEMENT
This TRUST INDENTURE AND MORTGAGE SUPPLEMENT NO. 1, dated ___________, ____
(herein called this "Trust Indenture Supplement") of FIRST SECURITY BANK,
NATIONAL ASSOCIATION, not in its individual capacity, but solely as Owner
Trustee (herein called the "Owner Trustee") under that certain Trust Agreement
dated as of ___________, ____ (the "Trust Agreement"), between the Owner Trustee
and the Owner Participant named therein.
W I T N E S S E T H:
WHEREAS, the Trust Indenture and Mortgage, dated as of ____________, ____
(as amended and supplemented to the date hereof, the "Trust Indenture") between
the Owner Trustee and Wilmington Trust Company, not in its individual capacity,
but solely as Mortgagee under the Trust Indenture (the "Mortgagee"), provides
for the execution and delivery of a supplement thereto substantially in the form
hereof, which shall particularly describe the Aircraft, and shall specifically
mortgage such Aircraft to the Mortgagee; and
WHEREAS, each of the Trust Agreement and Trust Indenture relates to the
Airframe and Engines described below, and a counterpart of the Trust Indenture
is attached hereto and made a part hereof and this Trust Indenture Supplement,
together with such counterpart of the Trust Indenture, is being filed for
recordation on the date hereof with the FAA as one document;
NOW, THEREFORE, this Trust Indenture Supplement witnesseth that the Owner
Trustee hereby confirms that the Lien of the Trust Indenture on the Trust
Indenture Estate covers all of Owner Trustee's right, title and interest in and
to the following described property:
AIRFRAME
One airframe identified as follows:
FAA
Registration Manufacturer's
Manufacturer Model Number Serial Number
------------ ----- ------ -------------
The Boeing Company 747-47UF
<PAGE>
A-2
together with all of the Owner Trustee's right, title and interest in and to all
Parts of whatever nature, whether now owned or hereinafter acquired and which
are from time to time incorporated or installed in or attached to said airframe.
AIRCRAFT ENGINES
Four aircraft engines, each such engine having 750 or more rated take-off
horsepower or the equivalent thereof, identified as follows:
Manufacturer Manufacturer's Model Serial Number
General Electric CF6-80C2B5FGO4
General Electric CF6-80C2B5FGO4
General Electric CF6-80C2B5FGO4
General Electric CF6-80C2B5FGO4
together with all of Owner Trustee's right, title and interest in and to all
Parts of whatever nature, whether now owned or hereafter acquired and which are
from time to time incorporated or installed in or attached to either of such
engines.
Together with all of Owner Trustee's right, title and interest in and to
(a) all Parts of whatever nature, which from time to time are included within
the definition of "Airframe" or "Engine," whether now owned or hereafter
acquired, including all substitutions, renewals and replacements of and
additions, improvements, accessions and accumulations to the Airframe and
Engines (other than additions, improvements, accessions and accumulations which
constitute appliances, parts, instruments, appurtenances, accessories,
furnishings or other equipment excluded from the definition of Parts) and (b)
all Aircraft Documents.
As further security for the obligations referred to above and secured by
the Trust Indenture and hereby, the Owner Trustee has granted, bargained, sold,
assigned, transferred, conveyed, mortgaged, pledged and confirmed, and does
hereby grant, bargain, sell, assign, transfer, convey, mortgage, pledge and
confirm, unto the Mortgagee, its successors and assigns, for the security and
benefit of the Loan Participants, the Note Holders and the Indenture
Indemnitees, in the trust created by the Trust Indenture, all of the right,
title and interest of the Owner Trustee in, to and under the Lease Supplement of
even date herewith covering the property described above.
<PAGE>
A-3
Notwithstanding any provision hereof, no Excluded Payment shall constitute
security for any of the aforementioned obligations.
TO HAVE AND TO HOLD all and singular the aforesaid property unto the
Mortgagee, its successors and assigns, in trust for the equal and proportionate
benefit and security of the Loan Participants, the Note Holders and the
Indenture Indemnitees, except as provided in Section 2.14 and Article III of the
Trust 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 Trust Indenture.
This Trust Indenture Supplement shall be construed as supplemental to the
Trust Indenture and shall form a part thereof. The Trust Indenture is each
hereby incorporated by reference herein and is hereby ratified, approved and
confirmed.
AND, FURTHER, the Owner Trustee hereby acknowledges that the Aircraft
referred to in this Trust Indenture Supplement and the aforesaid Lease
Supplement has been delivered to the Owner Trustee and is included in the
property of the Owner Trustee covered by all the terms and conditions of the
Trust Agreement, subject to the pledge and mortgage thereof under the Trust
Indenture.
* * *
IN WITNESS WHEREOF, the Owner Trustee has caused this Trust Indenture
Supplement to be duly executed by one of its officers, thereunto duly
authorized, on the day and year first above written.
FIRST SECURITY BANK, NATIONAL ASSOCIATION, not
in its individual capacity, but solely as
Owner Trustee
By:____________________________________
Name:
Title:
<PAGE>
TRUST INDENTURE AND MORTGAGE
SCHEDULE I
Original Amount Interest Rate
Series A-1: %
Series B: %
Series C: %
<PAGE>
Trust Indenture and Mortgage
Equipment Note Amortization
SERIES A-1
Percentage of
Original Amount
Payment Date to Be Paid
<PAGE>
Trust Indenture and Mortgage
Equipment Note Amortization
SERIES B
Percentage of
Original Amount
Payment Date to Be Paid
<PAGE>
Trust Indenture and Mortgage
Equipment Note Amortization
SERIES C
Percentage of
Original Amount
Payment Date to Be Paid
EXHIBIT A-5 to
Note Purchase Agreement
FORM OF LEASED AIRCRAFT TRUST AGREEMENT
<PAGE>
===============================================================================
TRUST AGREEMENT
Dated as of ______________
Between
[OWNER PARTICIPANT]
and
FIRST SECURITY BANK,
NATIONAL ASSOCIATION
One Boeing Model 747-47UF Aircraft
Bearing Manufacturer's Serial No. _____
===============================================================================
<PAGE>
TABLE OF CONTENTS
Page
SECTION 1. DEFINITIONS...................................................1
SECTION 2. DECLARATION OF TRUST..........................................1
SECTION 3. AUTHORIZATION; CONDITIONS PRECEDENT...........................1
3.1 Authorization.................................................1
3.2 Conditions Precedent..........................................3
SECTION 4. RECEIPT, DISTRIBUTION AND APPLICATION OF INCOME FROM
THE TRUST ESTATE.............................................3
4.1 Payments from Trust Estate Only...............................3
4.2 Distribution of Payments......................................4
4.2.1 Payments to Mortgagee.................................4
4.2.2 Payments to Owner Trustee, Other Parties..............4
4.2.3 Certain Distributions to Owner Participant............5
4.2.4 Excluded Payments.....................................5
4.2.5 Multiple Owner Participants...........................5
4.3 Method of Payments............................................5
SECTION 5. DUTIES OF OWNER TRUSTEE.......................................6
5.1 Notice of Event of Default...................................6
5.2 Action upon Instructions.....................................6
5.3 Limitations on Duties........................................7
5.4 No Duties except as Specified; No Action except
as Specified...............................................8
5.4.1 No Duties except as Specified..................8
5.4.2 No Action except as Specified..................8
5.5 Satisfaction of Conditions Precedent.........................8
5.6 Fixed Investment Trust.......................................9
SECTION 6. OWNER TRUSTEE................................................9
6.1 Acceptance of Trusts and Duties..............................9
6.2 Absence of Certain Duties...................................10
6.3 No Representations or Warranties as to Certain Matters......11
6.4 No Segregation of Monies; Interest..........................12
-i-
<PAGE>
6.5 Reliance upon Certificates, Counsel and Agents..............12
6.6 Not Acting in Individual Capacity...........................13
6.7 Fees; Compensation..........................................13
6.8 Tax Returns.................................................13
SECTION 7. INDEMNIFICATION OF FIRST SECURITY
BY OWNER PARTICIPANT........................................14
SECTION 8. TRANSFER OF OWNER PARTICIPANT'S INTEREST....................16
8.1 Transfer of Interest........................................16
8.2 Actions of Owner Participants...............................16
SECTION 9. SUCCESSOR OWNER TRUSTEES; CO-TRUSTEES.......................17
9.1 Resignation of Owner Trustee; Appointment of Successor......17
9.1.1 Resignation or Removal........................17
9.1.2 Execution and Delivery of Documents, Etc......17
9.1.3 Qualifications................................18
9.1.4 Merger, Etc...................................18
9.2 Co-Trustees and Separate Trustees...........................19
SECTION 10. SUPPLEMENTS AND AMENDMENTS TO TRUST AGREEMENT AND
OTHER DOCUMENTS...........................................21
10.1 Supplements and Amendments and Delivery Thereof.............21
10.1.1 Supplements and Amendments....................21
10.1.2 Delivery of Amendments and Supplements
to Certain Parties..........................21
10.2 Discretion as to Execution of Documents.....................22
10.3 Absence of Requirements as to Form..........................22
10.4 Distribution of Documents...................................22
10.5 No Request Needed as to Lease Supplement and Trust
Indenture Supplement......................................22
SECTION 11. MISCELLANEOUS...............................................23
11.1 Termination of Trust Agreement...............................23
11.2 Termination at Option of the Owner Participant...............23
11.3 Owner Participant Has No Legal Title in Trust Estate.........24
11.4 Assignment, Sale, etc. of Aircraft...........................24
-ii-
<PAGE>
11.5 Trust Agreement for Benefit of Certain Parties Only..........24
11.6 Citizenship of Owner Participant.............................25
11.7 Notices......................................................25
11.8 Severability.................................................25
11.9 Waivers, Etc.................................................26
11.10 Counterparts.................................................26
11.11 Binding Effect, Etc..........................................26
11.12 Headings; References.........................................26
11.13 Governing Law................................................26
-iii-
<PAGE>
TRUST AGREEMENT
This TRUST AGREEMENT dated as of ___________, between [_________], a [ ]
corporation ("Owner Participant"), and First Security Bank, National
Association, a national banking association (in its individual capacity, "First
Security" and otherwise not in its individual capacity but solely as trustee
hereunder, "Owner Trustee").
W I T N E S S E T H :
SECTION 1. DEFINITIONS
Capitalized terms used but not defined herein shall have the respective
meanings set forth or incorporated by reference, and shall be construed and
interpreted in the manner described, in Annex A to the Lease.
SECTION 2. DECLARATION OF TRUST
First Security hereby declares that it will hold the Trust Estate as Owner
Trustee upon the trusts hereinafter set forth for the use and benefit of Owner
Participant, subject, however, to the provisions of and the Lien created by the
Trust Indenture and to the provisions of the Lease and the Participation
Agreement.
SECTION 3. AUTHORIZATION; CONDITIONS PRECEDENT
3.1 Authorization
In respect of the Aircraft, Owner Participant hereby authorizes and directs
Owner Trustee to, and Owner Trustee agrees for the benefit of Owner Participant
that it will, on and after the Delivery Date, subject (except with respect to
Section 3.1(a)) to due compliance with the terms of Section 3.2:
(a) execute and deliver the Participation Agreement, the Trust
Indenture, the Lease and the other Owner Trustee Agreements (in the
respective forms in which they are delivered from time to time by Owner
Participant to Owner Trustee);
(b) subject to the terms of this Trust Agreement, exercise (i) its
rights and perform its duties under the
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Participation Agreement, (ii) the rights and perform the duties of Lessor
under the Lease and (iii) its rights and perform its duties under the Trust
Indenture and the other Owner Trustee Agreements;
(c) execute, issue and deliver to Mortgagee for authentication and
further delivery to the Subordination Agent the Equipment Notes in the
amount and as provided in Section 2 of the Participation Agreement;
(d) purchase the Aircraft pursuant to the Purchase Agreement as
assigned to Owner Trustee pursuant to the Purchase Agreement Assignment;
(e) accept from Airframe Manufacturer the delivery of the Aircraft
Bill of Sale, the FAA Bill of Sale and the invoice with respect to such
Aircraft;
(f) effect the registration of the Aircraft with the FAA in the name
of Owner Trustee by filing or causing to be filed with the FAA: (i) the FAA
Bill of Sale; (ii) an Aircraft Registration Application in the name of
Owner Trustee (including, without limitation, an affidavit from Owner
Trustee in compliance with the provisions of Section 47.7(c)(2) of the FAA
Regulations); and (iii) this Trust Agreement;
(g) execute and deliver the Financing Statements referred to in
Section 5.1.2 (xxii) of the Participation Agreement, together with all
other agreements, documents and instruments referred to in Section 5 of the
Participation Agreement to which Owner Trustee is to be a party;
(h) make payment of Lessor's Cost for the Aircraft from the aggregate
amount of the Commitments for the Aircraft of Owner Participant and Loan
Participants, to the extent received by Owner Trustee, in the manner
provided in the Participation Agreement;
(i) execute and deliver Lease Supplement No. 1 covering the Aircraft;
(j) execute and deliver a Trust Indenture Supplement covering the
Aircraft; and
(k) execute and deliver all such other instruments, documents or
certificates and take all such other actions in accordance with the
direction of Owner Participant, as
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Owner Participant may deem necessary or advisable in connection with the
transactions contemplated by this Trust Agreement and the other Operative
Agreements.
3.2 Conditions Precedent
The rights and obligations of Owner Trustee to take the actions required by
Section 3.1 shall be subject to the following conditions precedent:
(a) Owner Trustee shall have received the notice described in Section
4.1 of the Participation Agreement, when and as required thereby, or shall
have been deemed to have waived such notice in accordance with Section
5.1.1 of the Participation Agreement;
(b) Each Participant shall have made the full amount of its Commitment
specified in Section 2.1 of the Participation Agreement available to Owner
Trustee, in immediately available funds, in accordance with Sections 2 and
4 of the Participation Agreement; and
(c) Owner Participant shall have notified Owner Trustee that the terms
and conditions of Section 5 of the Participation Agreement, insofar as they
relate to conditions precedent to performance by Owner Participant of its
obligations thereunder, have been either fulfilled to the satisfaction of,
or waived by, Owner Participant. Owner Participant shall, by instructing
Owner Trustee to release the full amount of its Commitment then held by
Owner Trustee as provided in Section 2 of the Participation Agreement, be
deemed to have found satisfactory to it, or waived, all such conditions
precedent.
SECTION 4. RECEIPT, DISTRIBUTION AND APPLICATION OF INCOME FROM THE TRUST ESTATE
4.1 Payments from Trust Estate Only
Except as provided in Section 7, all payments to be made by Owner Trustee
under this Trust Agreement shall be made only from (a) in the case of funds made
available in accordance with Section 4 of the Participation Agreement, the
Commitments (except as otherwise provided in Section 14 of the Participation
Agreement) and (b) in the case of all other payments, the income from and
proceeds of the Trust Estate to the extent that Owner Trustee shall have
received sufficient income or proceeds from the Trust Estate to make such
payments. Owner Participant
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agrees that it will look solely (y) in the case of funds made available in
accordance with Section 4 of the Participation Agreement, to the Commitments and
any income therefrom (except as otherwise provided in Section 14 of the
Participation Agreement) and (z) in the case of all other payments, to the
income from and proceeds of the Trust Estate to the extent available for
distribution to Owner Participant as provided in this Trust Agreement. Except as
provided in Section 7, Owner Participant agrees that First Security is neither
personally liable to Owner Participant for any amounts payable nor subject to
any other liability under this Trust Agreement.
4.2 Distribution of Payments
4.2.1 Payments to Mortgagee
Until the Trust Indenture shall have been discharged pursuant to Section
10.01 thereof, all Rent, insurance proceeds and requisition or other payments of
any kind included in the Trust Estate (other than Excluded Payments) payable to
Owner Trustee shall be payable directly to Mortgagee (and, if any of the same
are received by Owner Trustee, shall upon receipt be paid over to Mortgagee
without deduction, set-off or adjustment of any kind) for distribution in
accordance with the provisions of Article III of the Trust Indenture; provided,
that any payments received by Owner Trustee from (a) Lessee with respect to
Owner Trustee's fees and disbursements or (b) Owner Participant pursuant to
Section 7 shall not be paid over to Mortgagee but shall be retained by Owner
Trustee and applied toward the purpose for which such payments were made.
4.2.2 Payments to Owner Trustee, Other Parties
After the Trust Indenture shall have been discharged pursuant to Section
10.01 thereof, any payment of the type referred to in Section 4.2.1 (other than
Excluded Payments) received by Owner Trustee, any payment received from
Mortgagee (other than Excluded Payments) and any other amount received as part
of the Trust Estate and for the application or distribution of which no
provision is made in this Trust Agreement shall be distributed forthwith upon
receipt by Owner Trustee in the following order of priority: first, so much of
such payment as shall be required to reimburse Owner Trustee for any expenses
not otherwise reimbursed as to which Owner Trustee is entitled to be so
reimbursed pursuant to the provisions hereof shall be retained by Owner Trustee;
second, so much of the remainder for which provision as to the application
thereof is contained in the Lease or any of the other Operative Agreements
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shall be applied and distributed in accordance with the terms of the Lease or
such other Operative Agreement; and third, the balance, if any, shall be paid to
Owner Participant.
4.2.3 Certain Distributions to Owner Participant
All amounts from time to time distributable by Mortgagee to Owner
Participant pursuant to the Trust Indenture shall, if paid to Owner Trustee, be
distributed by Owner Trustee to Owner Participant in accordance with the
provisions of Article III of the Trust Indenture; provided, that any payments
received by Owner Trustee from (a) Lessee with respect to Owner Trustee's fees
and disbursements or (b) Owner Participant pursuant to Section 7 shall not be
paid over to Owner Participant but shall be retained by Owner Trustee and
applied toward the purpose for which such payments were made.
4.2.4 Excluded Payments
Any Excluded Payments received by Owner Trustee shall be paid by Owner
Trustee to the Person to whom such Excluded Payments are payable under the
provisions of the Participation Agreement, the Tax Indemnity Agreement, the
Lease or the other Operative Documents.
4.2.5 Multiple Owner Participants
If, as a result of a transfer by Owner Participant under Section 8.1, there
is more than one Owner Participant under this Trust Agreement, each such Owner
Participant shall hold in proportion to its respective beneficial interest in
the Trust Estate an undivided beneficial interest in the entire Trust Estate and
is entitled to receive ratably with any other Owner Participant payments
distributable by Owner Trustee under this Trust Agreement. No Owner Participant
shall have legal title to the Aircraft or any other portion of the Trust Estate.
4.3 Method of Payments
Owner Trustee shall make distributions or cause distributions to be made to
Owner Participant pursuant to this Section 4 by transferring the amount to be
distributed by wire transfer in immediately available funds on the day received
(or on the next succeeding Business Day if the funds to be so distributed shall
not have been received by Owner Trustee by 12:00 noon, New York City time, and
which funds Owner Trustee shall not have been reasonably able to distribute to
Owner Participant on the day received) to Owner Participant's account
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set forth in Schedule 1 to the Participation Agreement or to such other account
or accounts of Owner Participant as Owner Participant may designate from time to
time in writing to Owner Trustee; provided, that Owner Trustee shall use
reasonable efforts to invest overnight, in investments that would be permitted
under Section 4.4 of the Lease, all funds received by it at or later than 12:00
noon, New York City time, and which funds Owner Trustee shall not have been
reasonably able to distribute to Owner Participant on the day received).
SECTION 5. DUTIES OF OWNER TRUSTEE
5.1 Notice of Event of Default
(a) If Owner Trustee shall have knowledge of a Lease Default or a Lease
Event of Default or a Default or an Event of Default, Owner Trustee shall give
to Owner Participant, Mortgagee and Lessee prompt telephonic or facsimile notice
thereof followed by prompt confirmation thereof by certified mail, postage
prepaid, provided, that (i) in the case of an event which with the passage of
time would constitute an Event of Default of the type referred to in paragraph
(c) or (e) of Section 4.02 of the Trust Indenture, such notice shall in no event
be furnished later than ten days after Owner Trustee shall first have knowledge
of such event and (ii) in the case of a misrepresentation by Owner Trustee which
with the passage of time would constitute an Event of Default of the type
referred to in paragraph (d) of Section 4.02 of the Trust Indenture, such notice
shall in no event be furnished later than ten days after Owner Trustee shall
first have knowledge of such event.
(b) Subject to the terms of Section 5.3, Owner Trustee shall take such
action or shall refrain from taking such action, not inconsistent with the
provisions of the Trust Indenture, with respect to such Lease Default, Lease
Event of Default, Default or Event of Default or other event as Owner Trustee
shall be directed in writing by Owner Participant. For all purposes of this
Trust Agreement, the Lease and the other Operative Agreements, in the absence of
Actual Knowledge of Owner Trustee, Owner Trustee shall not be deemed to have
knowledge of a Lease Default, Lease Event of Default, Default or Event of
Default unless notified in writing by Mortgagee, Owner Participant or Lessee.
5.2 Action upon Instructions
Subject to the terms of Sections 5.1 and 5.3, upon the written instructions
at any time and from time to time of
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Owner Participant, Owner Trustee will take such of the following actions, not
inconsistent with the provisions of the Lease and the Trust Indenture, as may be
specified in such instructions: (a) give such notice or direction or exercise
such right, remedy or power under this Trust Agreement or any of the other Owner
Trustee Agreements or in respect of all or any part of the Trust Estate, or take
such other action, as shall be specified in such instructions (including
entering into such agreements and instruments as shall be necessary under
Section 10); (b) take such action to preserve or protect the Trust Estate
(including the discharge of Liens) as may be specified in such instructions; (c)
approve as satisfactory to it all matters required by the terms of the Lease or
the other Operative Agreements to be satisfactory to Owner Trustee, it being
understood that without written instructions of Owner Participant, Owner Trustee
shall not approve any such matter as satisfactory to it; (d) subject to the
rights of Lessee under the Operative Agreements, after the expiration or earlier
termination of the Lease, convey all of Owner Trustee's right, title and
interest in and to the Aircraft for such amount, on such terms and to such
purchaser or purchasers as shall be designated in such instructions, or retain,
lease or otherwise dispose of, or from time to time take such other action with
respect to, the Aircraft on such terms as shall be designated in such
instructions; and (e) take or refrain from taking such other action or actions
as may be specified in such instructions.
5.3 Limitations on Duties
Owner Trustee shall not be required to take any action under Section 5.1
(other than the giving of the notices referred to therein) or 5.2 if Owner
Trustee shall reasonably believe such action is not adequately indemnified by
Owner Participant under Section 7, unless Lessee or Owner Participant agrees to
furnish such additional indemnity as shall reasonably be required, in manner and
form satisfactory to Owner Trustee, and, in addition to the extent not otherwise
paid pursuant to the provisions of the Lease or of the Participation Agreement,
to pay the reasonable compensation of Owner Trustee for the services performed
or to be performed by it pursuant to such direction and any reasonable fees and
disbursements of counsel or agents employed by Owner Trustee in connection
therewith. Owner Trustee shall not be required to take any action under Section
5.1 or 5.2 (other than the giving of the notices referred to therein) if Owner
Trustee shall have been advised by counsel that such action is contrary to the
terms of any of the Owner Trustee Agreements or is otherwise contrary to Law and
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Owner Trustee has delivered to Owner Participant written notice of the basis for
its refusal to act.
5.4 No Duties except as Specified; No Action except as Specified
5.4.1 No Duties except as Specified
Owner Trustee shall not have any duty or obligation to manage, control,
use, sell, dispose of or otherwise deal with the Aircraft or any other part of
the Trust Estate or to otherwise take or refrain from taking any action under,
or in connection with, any of the Owner Trustee Agreements, except as expressly
required by the terms of any of the Owner Trustee Agreements, or (to the extent
not inconsistent with the provisions of the Trust Indenture) as expressly
provided by the terms hereof or in a written instruction from Owner Participant
received pursuant to the terms of Section 5.1 or 5.2, and no implied duties or
obligations shall be read into this Trust Agreement against Owner Trustee. First
Security agrees that it will, in its individual capacity and at its own cost or
expense (but without any right of indemnity in respect of any such cost or
expense hereunder or under the Participation Agreement), promptly take such
action as may be necessary to duly discharge and satisfy in full all Lessor
Liens attributable to it in its individual capacity which it is required to
discharge pursuant to Section 7.3.1 of the Participation Agreement and otherwise
comply with the terms of said Section binding upon it.
5.4.2 No Action except as Specified
Owner Trustee shall have no power, right or authority to, and agrees that
it will not, manage, control, use, sell, dispose of or otherwise deal with the
Aircraft or any other part of the Trust Estate except (a) as expressly required
by the terms of any of the Owner Trustee Agreements, (b) as expressly provided
by the terms hereof or (c) as expressly provided in written instructions from
Owner Participant pursuant to Section 5.1 or 5.2.
5.5 Satisfaction of Conditions Precedent
Anything in this Trust Agreement to the contrary notwithstanding, Owner
Trustee shall, subject to the satisfaction of special counsel for Owner Trustee
of the occurrence of all the applicable conditions precedent specified in
Section 3.2, comply with the provisions of Section 3.1.
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5.6 Fixed Investment Trust
Notwithstanding anything in this Trust Agreement to the contrary, Owner
Trustee shall not be authorized and shall have no power to "vary the investment"
of Owner Participant within the meaning of Treasury Regulations Section
301.7701-4(c)(1), it being understood that Owner Trustee shall have the power
and authority to fulfill its obligations under Section 4.3 hereof and Section
4.4 of the Lease.
SECTION 6. OWNER TRUSTEE
6.1 Acceptance of Trusts and Duties
First Security accepts the trusts hereby created and agrees to perform the
same as Owner Trustee but only upon the terms hereof applicable to it. Owner
Trustee also agrees to receive and disburse all monies received by it
constituting part of the Trust Estate pursuant to the terms hereof. First
Security shall not be answerable or accountable under any circumstances, except
for (a) its own willful misconduct or gross negligence (including, without
limitation, in connection with any activities of Owner Trustee in violation of
Section 5.4.2), (b) its failure (in its individual capacity) to perform its
obligations under Section 5.4.1, (c) its or Owner Trustee's failure to use
ordinary care to receive or disburse funds or to comply with the first sentence
of Section 6.8, (d) liabilities that may result from the inaccuracy of any
representation or breach of warranty of it in its individual capacity (or from
the failure by it in its individual capacity to perform any covenant) in this
Trust Agreement, the Trust Indenture, the Lease or the Participation Agreement
or elsewhere in any of the other Operative Agreements, (e) taxes, fees or other
charges on, based on or measured by any fees, commissions or compensation
received by First Security in connection with the transactions contemplated by
this Trust Agreement and the other Operative Agreements to which it (in its
individual capacity or as Owner Trustee) is a party, (f) for its or Owner
Trustee's failure to use ordinary care in receiving or disbursing funds or in
connection with its obligation to invest funds pursuant to Section 4 of the
Participation Agreement, Section 4.4 of the Lease or Section 4.3 hereof, (g) for
any liability on the part of Owner Trustee arising out of its negligence or
willful or negligent misconduct in connection with its obligations under Section
5.1, 6.8 or 9.2 hereof or Section 4.01 of the Trust Indenture. First Security
shall have no obligation to advance its individual funds for any purpose, and
Owner Trustee shall have no obligation to distribute to Owner Participant,
Lessee or any
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third party any amounts to be paid to Owner Trustee until such amounts are
collected by Owner Trustee.
6.2 Absence of Certain Duties
(a) Except in accordance with written instructions furnished pursuant to
Section 5.1 or 5.2 and except as provided in, and without limiting the
generality of, Sections 3.1 and 5.4.1 and the last sentence of Section 9.1.2,
and subject to Section 4.01 of the Trust Indenture, neither Owner Trustee nor
First Security shall have any duty (i) to see to any recording or filing of any
Operative Agreement or of any supplement to any thereof or to see to the
maintenance of any such recording or filing or any other filing of reports with
the FAA or other governmental agencies, except that of First Security to comply
with the FAA reporting requirements set forth in 14 C.F.R. ss. 47.45 and 14
C.F.R. ss. 47.51 or any successor provision, and Owner Trustee shall, to the
extent that information for that purpose is timely supplied by Lessee pursuant
to any of the Operative Agreements, complete and timely submit (and furnish
Owner Participant with a copy of) any and all reports relating to the Aircraft
that may from time to time be required by the FAA or any government or
governmental authority having jurisdiction, (ii) to see to any insurance on the
Aircraft or to effect or maintain any such insurance, whether or not Lessee
shall be in default with respect thereto, other than to forward to Owner
Participant copies of all reports and other written information which Owner
Trustee receives from Lessee pursuant to Section 11 of the Lease, (iii) except
as provided in Section 7.3.1 or 7.3.2 of the Participation Agreement, Section
4.01 of the Trust Indenture or Section 5.4 or 6.1 hereof, to see to the payment
or discharge of any tax, assessment or other governmental charge or any lien or
encumbrance of any kind owing with respect to or assessed or levied against any
part of the Trust Indenture Estate or the Trust Estate, except as provided in
Section 6.3.9 of the Participation Agreement or (iv) to inspect Lessee's books
and records with respect to the Aircraft at any time permitted pursuant to the
Lease.
(b) Notwithstanding clause (a), Owner Trustee will furnish to Mortgagee and
Owner Participant, promptly upon receipt thereof, duplicates or copies of all
reports, notices, requests, demands, certificates, financial statements and
other instruments furnished to Owner Trustee under the Lease or any other
Operative Agreement except to the extent to which a responsible officer of Owner
Trustee reasonably believes (and confirms by telephone call with Owner
Participant) that dupli-
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cates or copies thereof have already been furnished to Owner Participant by some
other person.
6.3 No Representations or Warranties as to Certain Matters
NEITHER FIRST SECURITY NOR OWNER TRUSTEE MAKES OR SHALL BE DEEMED TO HAVE
MADE (a) ANY REPRESENTATION OR WARRANTY, EXPRESS OR IMPLIED, AS TO THE TITLE,
AIRWORTHINESS, VALUE, CONDITION, DESIGN, OPERATION, MERCHANTABILITY OR FITNESS
FOR USE FOR A PARTICULAR PURPOSE OF THE AIRCRAFT OR ANY PART THEREOF, AS TO THE
ABSENCE OF LATENT OR OTHER DEFECTS, WHETHER OR NOT DISCOVERABLE, AS TO THE
ABSENCE OF ANY INFRINGEMENT OF ANY PATENT, TRADEMARK OR COPYRIGHT, THE ABSENCE
OF ANY STRICT LIABILITY OBLIGATION OR ANY OTHER REPRESENTATION OR WARRANTY,
EXPRESS OR IMPLIED, WITH RESPECT TO THE AIRCRAFT OR ANY PART THEREOF WHATSOEVER,
except that First Security warrants to Owner Participant that on the Delivery
Date Owner Trustee shall have received whatever title to the Aircraft that was
conveyed to it and that the Aircraft shall, on the Delivery Date and during the
Term, be free of Lessor Liens attributable to First Security or (b) any
representation or warranty as to the validity, legality or enforceability of
this Trust Agreement or any other Operative Agreement to which First Security,
in its individual capacity or as Owner Trustee, is a party, or any other
document or instrument, or as to the correctness of any statement contained in
any thereof except to the extent that any such statement is expressly made
herein or therein by such party as a representation by First Security, in its
individual capacity or as Owner Trustee, as the case may be, and except that
First Security hereby represents and warrants that it has all corporate power
and authority to execute, deliver and perform this Trust Agreement and that this
Trust Agreement has been, and (assuming due authorization, execution and
delivery by Owner Participant of this Trust Agreement) the other Operative
Agreements to which it or Owner Trustee is a party have been (or at the time of
execution and delivery of any such instrument by it or Owner Trustee under this
Trust Agreement or pursuant to the terms of the Participation Agreement that
such an instrument will be) duly executed and delivered by one of its officers
who is or will be, as the case may be, duly authorized to execute and deliver
such instruments on behalf of itself or Owner Trustee, as the case may be, and
that this Trust Agreement constitutes the legal, valid and binding obligation of
First Security or Owner Trustee, as the case may be, enforceable against First
Security or Owner Trustee, as the case may be, in accordance with its terms.
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6.4 No Segregation of Monies; Interest
Monies received by Owner Trustee under this Trust Agreement need not be
segregated in any manner except to the extent required by Law, or except as
provided in written instructions from Owner Participant, and shall be invested
as provided in Section 4.3 hereof or Section 4.4 of the Lease.
6.5 Reliance upon Certificates, Counsel and Agents
Owner Trustee shall incur no liability to anyone in acting in good faith in
reliance upon and in accordance with any signature, instrument, notice,
resolution, request, consent, order, certificate, report, opinion, bond or other
document or paper reasonably believed by it to be genuine and reasonably
believed by it to be signed by the proper party or parties. Unless other
evidence in respect thereof is specifically prescribed in this Trust Agreement,
any request, direction, order or demand of Owner Participant or Lessee mentioned
in this Trust Agreement or in any of the other Owner Trustee Agreements shall be
sufficiently evidenced by written instruments signed by the Chairman of the
Board, the President, any Vice President or any other officer and in the name of
Owner Participant or Lessee, as the case may be. Owner Trustee may accept a copy
of a resolution of the Board of Directors or Executive Committee of Lessee,
certified by the Secretary or an Assistant Secretary of Lessee as duly adopted
and in full force and effect, as conclusive evidence that such resolution has
been duly adopted by said Board of Directors or Executive Committee and that the
same is in full force and effect. As to any fact or matter the manner of
ascertainment of which is not specifically described in this Trust Agreement,
Owner Trustee may, absent Actual Knowledge to the contrary, for all purposes
rely on a certificate signed by the Chairman of the Board, the President, any
Vice President or any other officer of Lessee, and the Treasurer or an Assistant
Treasurer or the Secretary or an Assistant Secretary of Lessee, as to such fact
or matter, and such certificate shall constitute full protection to Owner
Trustee for any action taken or omitted to be taken by it in good faith in
reliance thereon and in accordance therewith. In the administration of trusts
under this Trust Agreement, Owner Trustee may execute any of the trusts or
powers and perform its powers and duties under this Trust Agreement directly or
through agents or attorneys and may, at the expense of the Trust Estate, consult
with counsel, accountants and other skilled persons to be selected and employed
by it. Owner Trustee shall not be liable for anything done, suffered or omitted
in good
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faith by it in accordance with the advice or opinion of any such counsel,
accountants or other skilled persons.
6.6 Not Acting in Individual Capacity
In acting under this Trust Agreement, First Security acts solely as Owner
Trustee and not in its individual capacity except as otherwise expressly
provided in this Trust Agreement or in the other Operative Agreements to which
it is a party; and, except as may be otherwise expressly provided in this Trust
Agreement, the Lease, the Participation Agreement and the Trust Indenture, all
persons, other than the Owner Participant as provided in this Trust Agreement,
having any claim against Owner Trustee by reason of the transactions
contemplated hereby shall look only to the Trust Estate for payment or
satisfaction thereof except to the extent provided in Section 6.1 or otherwise
as Owner Trustee shall expressly agree otherwise in writing.
6.7 Fees; Compensation
Lessee or Owner Participant shall pay the Transaction Expenses of Owner
Trustee pursuant to Section 9.2 of the Participation Agreement. The Trust Estate
shall not have any liability for any such fees and expenses; provided, that the
foregoing shall not limit the obligations of Owner Participant under Sections
5.3 and 7; provided, that Owner Trustee shall have a Lien upon the Trust Estate
for any such fee not paid by Lessee or Owner Participant, as the case may be, as
contemplated by Section 9.2 of the Participation Agreement and such Lien shall
entitle Owner Trustee to priority as to payment thereof over payment to any
other Person under this Trust Agreement; provided, that such Lien shall be
subject and subordinate in all events to the Lien of the Trust Indenture; and
provided, further, that Owner Trustee shall have no right to exercise, and shall
not exercise, any rights or remedies Owner Trustee may have with respect to such
Lien unless and until the Secured Obligations have been paid and performed in
full.
6.8 Tax Returns
Owner Trustee shall be responsible for the keeping of all appropriate books
and records relating to the receipt and disbursement of all monies under this
Trust Agreement or any agreement contemplated hereby. Owner Participant shall be
responsible for causing to be prepared and filed all income tax returns required
to be filed by Owner Participant. Owner Trustee shall be responsible for causing
to be prepared, at the re-
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quest of Owner Participant and at the expense of Lessee, all income tax returns
required to be filed with respect to the trust created hereby and shall execute
and file such returns; provided, that Owner Trustee shall send promptly a
completed copy of such return to Owner Participant not more than sixty nor less
than fifteen days prior to the due date of the return, provided, that Owner
Trustee shall have timely received all necessary information to complete and
deliver to Owner Participant such return. Owner Participant, upon request, will
furnish Owner Trustee with all such information as may be reasonably required
from Owner Participant in connection with the preparation of such income tax
returns. Owner Trustee shall keep copies of all returns delivered to or filed by
it.
SECTION 7. INDEMNIFICATION OF FIRST SECURITY BY OWNER PARTICIPANT
Owner Participant hereby agrees, whether or not any of the transactions
contemplated hereby shall be consummated, to assume liability for, and hereby
indemnifies, protects, saves and keeps harmless, First Security and its
successors, assigns, agents and servants, from and against any and all
liabilities, obligations, losses, damages, penalties, taxes (excluding any Taxes
which are not required to be indemnified by Lessee pursuant to Section 9.1 or
9.3 of the Participation Agreement and excluding any taxes payable by First
Security on or measured by any compensation received by First Security for its
services under this Trust Agreement), claims, actions, suits, costs, expenses or
disbursements (including, without limitation, reasonable legal fees and
expenses, but excluding internal costs and expenses such as salaries and
overhead, and including, without limitation, any liability of an owner, any
strict liability and any liability without fault) of any kind and nature
whatsoever which may be imposed on, incurred by or asserted against First
Security (whether or not also indemnified against by Lessee under the Lease or
under the Participation Agreement or also indemnified against by any other
Person; provided, that Owner Participant shall be subrogated to the rights of
Owner Trustee against Lessee or any other indemnitor) in any way relating to or
arising out of this Trust Agreement or any of the other Operative Agreements or
the enforcement of any of the terms of any thereof, or in any way relating to or
arising out of the manufacture, purchase, acceptance, nonacceptance, rejection,
ownership, delivery, lease, possession, use, operation, condition, sale, return
or other disposition of the Aircraft (including, without limitation, latent and
other defects, whether or not discoverable, and any claim for patent, trademark
or copyright infringement), or in any way relating to
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or arising out of the administration of the Trust Estate or the action or
inaction of Owner Trustee, under this Trust Agreement, except (a) in the case of
gross negligence or willful misconduct on the part of First Security, in its
individual capacity or as Owner Trustee, in the performance or nonperformance of
its duties under this Trust Agreement or under any of the other Owner Trustee
Agreements or (b) those Expenses resulting from the inaccuracy of any
representation or warranty of First Security (or from the failure of First
Security to perform any of its covenants) in Section 6.3, in Section 6.03 of the
Trust Indenture, in Section 4 of the Lease, in Section 6.3 of the Participation
Agreement or elsewhere in any of the Operative Agreements or (c) as may result
from a breach by First Security of its covenant in the last sentence of Section
5.4.1 or (d) in the case of the failure to use ordinary care on the part of
First Security, in its individual capacity or as Owner Trustee, in the receipt
or disbursement of funds or in connection with its obligation to invest funds
pursuant to Section 4 of the Participation Agreement, Section 4.4 of the Lease
or Section 4.3 hereof or in compliance with the provisions of the first sentence
of Section 6.8 or (e) any liability on the part of Owner Trustee arising out of
its negligence or willful or negligent misconduct in connection with its
obligations under Section 5.1, 6.8 or 9.2 hereof or Section 4.01 of the Trust
Indenture, or (f) those Expenses arising under any circumstances or upon any
terms where Lessee would not have been required to indemnify First Security
pursuant to Section 9.1 or 9.3 of the Participation Agreement (disregarding for
purposes of this Section 7(f), Sections 9.1.2(b) and 9.3.2(j) of the
Participation Agreement); provided, that before asserting its right to
indemnification, if any, pursuant to this Section 7, First Security shall first
demand its corresponding right to indemnification pursuant to Section 9 of the
Participation Agreement (but need not exhaust any or all remedies available
thereunder). The indemnities contained in this Section 7 extend to First
Security only in its individual capacity and shall not be construed as
indemnities of the Trust Indenture Estate or the Trust Estate (except to the
extent, if any, that First Security has been reimbursed by the Trust Indenture
Estate or the Trust Estate for amounts covered by the indemnities contained in
this Section 7). The indemnities contained in this Section 7 shall survive the
termination of this Trust Agreement. In addition, if necessary, First Security
shall be entitled to indemnification from the Trust Estate, subject to the Lien
of the Trust Indenture, for any liability, obligation, loss, damage, penalty,
tax, claim, action, suit, cost, expense or disbursement indemnified against
pursuant to this Section 7 to the extent not reimbursed by Lessee, Owner
<PAGE>
-16-
Participant or others, but without releasing any of them from their respective
agreements of reimbursement; and, to secure the same First Security shall have a
lien on the Trust Estate, subject to the lien of the Trust Indenture and subject
further to the provisions of Section 6.7, which shall be prior to any interest
therein of Owner Participant. The payor of any indemnity under this Section 7
shall be subrogated to any right of the person indemnified in respect of the
matter as to which such indemnity was paid.
SECTION 8. TRANSFER OF OWNER PARTICIPANT'S INTEREST
8.1 Transfer of Interest
All provisions of Section 10 of the Participation Agreement applicable to a
transfer by the Owner Participant shall (with the same force and effect as if
set forth in full in this Section 8.1) be applicable to any assignment,
conveyance or other transfer by Owner Participant of any of its right, title or
interest in and to the Participation Agreement, the Trust Estate or this Trust
Agreement. If there is more than one Owner Participant, no assignment,
conveyance or other transfer by an Owner Participant of any of its right, title
or interest in and to this Trust Agreement or the Trust Estate shall be valid
unless each other Owner Participant's prior written consent (which consent may
be withheld in the sole discretion of such other Owner Participant) is given to
such assignment, conveyance or other transfer.
8.2 Actions of Owner Participants
If at any time prior to the termination of this Trust Agreement there is
more than one Owner Participant, then, subject to Section 11.5, during such
time, if any action is required to be taken by all Owner Participants and
whenever any direction, authorization, approval, consent, instruction or other
action is permitted to be given or taken by Owner Participant, it shall be given
or taken only upon unanimous agreement of all Owner Participants; provided, that
the termination of this Trust Agreement pursuant to Section 11.2 may be effected
upon the election of any Owner Participant.
<PAGE>
-17-
SECTION 9. SUCCESSOR OWNER TRUSTEES; CO-TRUSTEES
9.1 Resignation of Owner Trustee; Appointment of Successor
9.1.1 Resignation or Removal
Owner Trustee or any successor Owner Trustee (a) shall resign if required
to do so pursuant to Section 13.3 of the Participation Agreement or upon
obtaining Actual Knowledge of any facts that would cast doubt upon its
continuing status as a Citizen of the United States and (b) may resign at any
time without cause by giving at least 60 days prior written notice to Owner
Participant, Mortgagee and Lessee, such resignation to be effective upon the
assumption of the trusts hereunder by the successor Owner Trustee under Section
9.1.2. In addition, Owner Participant may at any time remove Owner Trustee, with
or without cause by a notice in writing delivered to Owner Trustee, Mortgagee
and Lessee, such removal to be effective upon the assumption of the trusts
hereunder by the successor Owner Trustee under Section 9.1.2, provided, that, in
the case of a removal without cause, unless a Lease Event of Default shall have
occurred and be continuing, such removal shall be subject to the consent of
Lessee (which consent shall not be unreasonably withheld). In the case of the
resignation or removal of Owner Trustee, Owner Participant may appoint a
successor Owner Trustee by an instrument signed by Owner Participant, with,
unless a Lease Event of Default shall have occurred and be continuing, the
consent of Lessee (which consent shall not be unreasonably withheld). If a
successor Owner Trustee shall not have been appointed within 30 days after such
notice of resignation or removal, Owner Trustee, any Owner Participant, Lessee
or Mortgagee may apply to any court of competent jurisdiction to appoint a
successor Owner Trustee to act until such time, if any, as a successor shall
have been appointed as above provided. Any successor Owner Trustee so appointed
by such court shall immediately and without further act be superseded by any
successor Owner Trustee appointed as above provided within one year from the
date of the appointment by such court.
9.1.2 Execution and Delivery of Documents, Etc.
Any successor Owner Trustee, however appointed, shall execute and deliver
to the predecessor Owner Trustee, with a copy to Owner Participant, Lessee and
Mortgagee, an instrument accepting such appointment and assuming the obligations
of Owner Trustee, in its individual capacity and as Owner Trustee, under the
Owner Trustee Agreements, and thereupon such succes-
<PAGE>
-18-
sor Owner Trustee, without further act, shall become vested with all the
estates, properties, rights, powers, duties and trusts of the predecessor Owner
Trustee in the trusts under this Trust Agreement with like effect as if
originally named Owner Trustee in this Trust Agreement; but nevertheless, upon
the written request of such successor Owner Trustee, such predecessor Owner
Trustee shall execute and deliver an instrument transferring to such successor
Owner Trustee, upon the trusts herein expressed, all the estates, properties,
rights, powers and trusts of such predecessor Owner Trustee, and such
predecessor Owner Trustee shall duly assign, transfer, deliver and pay over to
such successor Owner Trustee all monies or other property then held by such
predecessor Owner Trustee upon the trusts herein expressed. Upon the appointment
of any successor Owner Trustee under this Section 9.1, the predecessor Owner
Trustee will execute such documents as are provided to it by such successor
Owner Trustee and will take such further actions as are requested of it by such
successor Owner Trustee as are required to cause registration of the Aircraft
included in the Trust Estate to be transferred upon the records of the FAA, or
other governmental authority having jurisdiction, into the name of the successor
Owner Trustee.
9.1.3 Qualifications
Any successor Owner Trustee, however appointed, shall be a Citizen of the
United States and shall also be a bank or trust company organized under the Laws
of the United States or any state thereof having a combined capital and surplus
of at least $100,000,000, if there be such an institution willing, able and
legally qualified to perform the duties of Owner Trustee under this Trust
Agreement upon reasonable or customary terms. No such successor Owner Trustee
shall be located in a jurisdiction which creates material adverse consequences
for Lessee (unless such material adverse consequences would be created by
substantially all jurisdictions where major banking or trust institutions are
located).
9.1.4 Merger, Etc.
Any corporation into which First Security may be merged or converted or
with which it may be consolidated, or any corporation resulting from any merger,
conversion or consolidation to which First Security shall be a party, or any
corporation to which substantially all the corporate trust business of First
Security may be transferred, shall, subject to the terms of Section 9.1.3, be
Owner Trustee under this
<PAGE>
-19-
Trust Agreement without further act, provided, that such corporation shall not
also be the Mortgagee.
9.2 Co-Trustees and Separate Trustees
(a) If at any time it shall be necessary or prudent in order to conform to
any Law of any jurisdiction in which all or any part of the Trust Estate is
located, or Owner Trustee being advised by counsel shall determine that it is so
necessary or prudent in the interest of Owner Participant or Owner Trustee, or
Owner Trustee shall have been directed to do so by Owner Participant, Owner
Trustee and Owner Participant shall execute and deliver an agreement
supplemental hereto and all other instruments and agreements necessary or proper
to constitute another bank or trust company or one or more persons (any or all
of which shall be a Citizen of the United States) approved by Owner Trustee and
Owner Participant, either to act as co-trustee, jointly with Owner Trustee, or
to act as separate trustee under this Trust Agreement (any such co-trustee or
separate trustee being herein sometimes referred to as an "additional trustee").
In the event Owner Participant shall not have joined in the execution of such
agreements supplemental hereto within 10 days after the receipt of a written
request from Owner Trustee so to do, or in case a Lease Event of Default or
Event of Default shall occur and be continuing, Owner Trustee may act under the
foregoing provisions of this Section 9.2 without the concurrence of Owner
Participant; and Owner Participant hereby appoints Owner Trustee its agent and
attorney-in-fact to act for it under the foregoing provisions of this Section
9.2 in either of such contingencies.
(b) Every additional trustee under this Trust Agreement shall, to the
extent permitted by Law, be appointed and act, and Owner Trustee and its
successors shall act, subject to the following provisions and conditions:
(i) All powers, duties, obligations and rights conferred upon Owner
Trustee in respect of the custody, control and management of monies, the
Aircraft or documents authorized to be delivered under this Trust Agreement
or under the Participation Agreement shall be exercised solely by Owner
Trustee;
(ii) All other rights, powers, duties and obligations conferred or
imposed upon Owner Trustee shall be conferred or imposed upon and exercised
or performed by Owner Trustee and such additional trustee jointly, except
to the extent that under any Law of any jurisdiction in which any
<PAGE>
-20-
particular act or acts are to be performed (including the holding of title
to the Trust Estate) Owner Trustee shall be incompetent or unqualified to
perform such act or acts, in which event such rights, powers, duties and
obligations shall be exercised and performed by such additional trustee;
(iii) No power given to, or which it is provided hereby may be
exercised by, any such additional trustee shall be exercised under this
Trust Agreement by such additional trustee, except jointly with, or with
the consent in writing of, Owner Trustee;
(iv) No trustee under this Trust Agreement shall be personally liable
by reason of any action or omission of any other trustee under this Trust
Agreement;
(v) Owner Participant, at any time, by an instrument in writing may
remove any such additional trustee. In the event that Owner Participant
shall not have joined in the execution of any such instrument within ten
days after the receipt of a written request from Owner Trustee so to do,
Owner Trustee shall have the power to remove any such additional trustee
without the concurrence of Owner Participant; and Owner Participant hereby
appoints Owner Trustee its agent and attorney-in-fact to act for it in such
connection in such contingency; and
(vi) No appointment of, or action by, any additional trustee will
relieve Owner Trustee of any of its obligations under, or otherwise affect
any of the terms of, the Trust Indenture or affect the interests of
Mortgagee or the Note Holders in the Trust Indenture Estate.
(c) In case any separate trustee under this Section 9.2 shall die, become
incapable of acting, resign or be removed, the title to the Trust Estate and all
rights and duties of such separate trustee shall, so far as permitted by Law,
vest in and be exercised by Owner Trustee, without the appointment of a
successor to such separate trustee.
<PAGE>
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SECTION 10. SUPPLEMENTS AND AMENDMENTS TO TRUST AGREEMENT AND OTHER DOCUMENTS
10.1 Supplements and Amendments and Delivery Thereof
10.1.1 Supplements and Amendments
Subject to Section 7.2.2 of the Participation Agreement, this Trust
Agreement may not be amended, supplemented or otherwise modified except by an
instrument in writing signed by Owner Trustee and Owner Participant. Subject to
Section 10.2, Section 9.01 of the Trust Indenture and Section 7.6.7 of the
Participation Agreement, Owner Trustee will execute any amendment, supplement or
other modification of this Trust Agreement or of any other Owner Trustee
Agreement which it is requested in writing to execute by Owner Participant,
except that Owner Trustee shall not execute any such amendment, supplement or
other modification which, by the express provisions of any of the above
documents, requires the consent of any other party unless such consent shall
have been obtained; and provided, that, without the prior written consent of
Owner Participant, (a) no such supplement, amendment or modification shall (i)
modify any of the provisions of Section 4 or this Section 10.1, (ii) reduce,
modify or amend any indemnities in favor of Owner Participant as set forth in
Section 9 of the Participation Agreement or in the Tax Indemnity Agreement,
(iii) reduce the amount or extend the time of payment of Basic Rent,
Supplemental Rent, Stipulated Loss Value or Termination Value as set forth in
the Lease (except in accordance with Section 3 of the Lease) or (iv) modify any
of the rights of Owner Participant under the Trust Indenture and (b) no such
supplement, amendment or modification shall require Owner Participant to invest
or advance funds or shall entail any additional personal liability or the
surrender of any indemnification, claim or individual right on the part of Owner
Participant with respect to any agreement or obligation.
10.1.2 Delivery of Amendments and Supplements to Certain Parties
A signed copy of each amendment or supplement referred to in Section 10.1.1
to which Lessee is not a party shall be delivered promptly by Owner Trustee to
Lessee, and a signed copy of each amendment or supplement referred to in Section
10.1.1 shall be delivered promptly by Owner Trustee to Mortgagee.
<PAGE>
-22-
10.2 Discretion as to Execution of Documents
Prior to executing any document required to be executed by it pursuant to
the terms of Section 10.1, Owner Trustee shall be entitled to receive an opinion
of its counsel to the effect that the execution of such document is authorized
under this Trust Agreement. If in the opinion of Owner Trustee any such document
adversely affects any right, duty, immunity or indemnity in favor of Owner
Trustee under this Trust Agreement or under any other Owner Trustee Agreement,
Owner Trustee may in its discretion decline to execute such document unless
Owner Trustee is furnished with indemnification from Lessee or any other party
upon terms and in amounts reasonably satisfactory to Owner Trustee to protect
the Trust Estate and the Owner Trustee against any and all liabilities, costs
and expenses arising out of the execution of such documents.
10.3 Absence of Requirements as to Form
It shall not be necessary for any written request furnished pursuant to
Section 10.1 to specify the particular form of the proposed documents to be
executed pursuant to such Section 10.1, but it shall be sufficient if such
request shall indicate the substance thereof.
10.4 Distribution of Documents
Promptly after the execution by Owner Trustee of any document entered into
pursuant to Section 10.1, Owner Trustee shall mail, by certified mail, postage
prepaid, a conformed copy thereof to Owner Participant, but the failure of Owner
Trustee to mail such conformed copy shall not impair or affect the validity of
such document.
10.5 No Request Needed as to Lease Supplement and Trust Indenture
Supplement
No written request pursuant to Section 10.1 shall be required to enable
Owner Trustee to enter into, pursuant to Section 3.1 and the Lease or the Trust
Indenture, as the case may be, the Lease Supplement with Lessee and the Trust
Indenture Supplement.
<PAGE>
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SECTION 11. MISCELLANEOUS
11.1 Termination of Trust Agreement
This Trust Agreement and the trusts created hereby shall be of no further
force or effect upon the earlier of (a) both the final discharge of the Trust
Indenture pursuant to Section 10.01 thereof and the sale or other final
disposition by Owner Trustee of all property constituting part of the Trust
Estate and the final distribution by Owner Trustee of all monies or other
property or proceeds constituting part of the Trust Estate in accordance with
Section 4, provided, that at such time Lessee shall have fully complied with all
of the terms of the Lease and the Participation Agreement or (b) 21 years less
one day after the death of the last survivor of all of the descendants of the
grandparents of David C. Rockefeller living on the date of the earliest
execution of this Trust Agreement by any party hereto, but if this Trust
Agreement and the trusts created hereby shall be or become authorized under
applicable Law to be valid for a period commencing on the 21st anniversary of
the death of such last survivor (or, without limiting the generality of the
foregoing, if legislation shall become effective providing for the validity of
this Trust Agreement and the trusts created hereby for a period in gross
exceeding the period for which this Trust Agreement and the trusts created
hereby are hereinabove stated to extend and be valid), then this Trust Agreement
and the trusts created hereby shall not terminate under this clause (b) but
shall extend to and continue in effect, but only if such nontermination and
extension shall then be valid under applicable Law, until the day preceding such
date as the same shall, under applicable Law, cease to be valid; otherwise this
Trust Agreement and the trusts created hereby shall continue in full force and
effect in accordance with the terms hereof. Except as expressly set forth in
Section 11.2, this Trust Agreement and the trusts created hereby may not be
revoked by Owner Participant.
11.2 Termination at Option of the Owner Participant
Notwithstanding Section 11.1 hereof, this Agreement and trust created
hereby shall terminate and the Trust Estate shall be distributed to the Owner
Participant, and this Agreement shall be of no further force and effect, upon
the election of the Owner Participant by notice to the Owner Trustee, if such
notice shall be accompanied by the written agreement (in form and substance
satisfactory to the Owner Trustee) of the Owner Participant assuming all
obligations of the Owner Trustee under or contemplated by the Operative
Agreements or incurred
<PAGE>
-24-
by it as trustee hereunder and releasing the Owner Trustee therefrom; provided,
however, that such notice may be given only after the time the Lien of the Trust
Indenture is discharged under Section 10.01 of the Trust Indenture and after the
Lease shall no longer be in effect.
11.3 Owner Participant Has No Legal Title in Trust Estate
No Owner Participant shall have legal title to any part of the Trust
Estate. No transfer, by operation of Law or otherwise, of any right, title and
interest of Owner Participant in and to the Trust Estate under this Trust
Agreement shall operate to terminate this Trust Agreement or the trusts under
this Trust Agreement or entitle any successors or transferees of Owner
Participant to an accounting or to the transfer of legal title to any part of
the Trust Estate.
11.4 Assignment, Sale, etc. of Aircraft
Any assignment, sale, transfer or other conveyance of the Aircraft by Owner
Trustee made pursuant to the terms of this Trust Agreement or of the Lease or
the Participation Agreement shall bind Owner Participant and shall be effective
to transfer or convey all right, title and interest of Owner Trustee and Owner
Participant in and to the Aircraft. No purchaser or other grantee shall be
required to inquire as to the authorization, necessity, expediency or regularity
of such assignment, sale, transfer or conveyance or as to the application of any
sale or other proceeds with respect thereto by Owner Trustee.
11.5 Trust Agreement for Benefit of Certain Parties Only
Except for the terms of Section 10 of the Participation Agreement
incorporated in Section 8 and except as otherwise provided in Sections 5.1, 6.7,
9, 10.1 and 11.1, nothing in this Trust Agreement, whether express or implied,
shall be construed to give any person other than Owner Trustee and Owner
Participant any legal or equitable right, remedy or claim under or in respect of
this Trust Agreement; and this Trust Agreement shall be held to be for the sole
and exclusive benefit of Owner Trustee and Owner Participant.
<PAGE>
-25-
11.6 Citizenship of Owner Participant
If at any time there shall be more than one Owner Participant, then any
Owner Participant who shall cease to be a Citizen of the United States shall
have no voting or similar rights under this Trust Agreement and shall have no
right to direct, influence or limit the exercise of, or to prevent the direction
or influence of, or place any limitation on the exercise of, Owner Trustee's
authority or to remove Owner Trustee.
11.7 Notices
Unless otherwise expressly permitted by the terms of this Trust Agreement,
all notices, requests, demands, authorizations, directions, consents, waivers
and other communications required or permitted to be made, given, furnished or
filed under this Trust Agreement shall be in writing, shall refer specifically
to this Trust Agreement and shall be personally delivered, sent by telecopy or
other means of electronic facsimile or telecommunication transmission (followed
by overnight courier service for next Business Day receipt), sent by registered
mail or certified mail, return receipt requested, postage prepaid, or sent by
overnight courier service, in each case to the respective telecopy or other
number or address set forth for such party in Schedule 1 to the Participation
Agreement, or to such other telecopy or other number or address as each party
hereto may hereafter specify by notice to the other parties hereto. Each such
notice, request, demand, authorization, direction, consent, waiver or other
communication shall be effective when received or, if made, given, furnished or
filed (a) by telecopy or other means of electronic facsimile or
telecommunication transmission, when confirmed, provided that such notice or
other communication is received on the following Business Day by overnight
courier service, or (b) by registered or certified mail, three Business Days
after being deposited, properly addressed, in the U.S. mail.
11.8 Severability
If any provision of this Trust Agreement shall be held invalid, illegal or
unenforceable in any respect in any jurisdiction, then, to the extent permitted
by Law, (a) all other provisions hereof shall remain in full force and effect in
such jurisdiction and (b) such invalidity, illegality or unenforceability shall
not affect the validity, legality or enforceability of such provision in any
other jurisdiction. If, however, any Law pursuant to which such provisions are
held invalid, illegal or unenforceable may be waived, such Law is
<PAGE>
-26-
hereby waived by the parties hereto to the full extent permitted, to the end
that this Trust Agreement shall be deemed to be a valid and binding agreement in
all respects, enforceable in accordance with its terms.
11.9 Waivers, Etc.
No term or provision hereof may be changed, waived, discharged or
terminated orally, but only by an instrument in writing entered into in
compliance with the terms of Section 10; and any waiver of the terms hereof
shall be effective only in the specific instance and for the specific purpose
given.
11.10 Counterparts
This Trust Agreement and any amendments, waivers, consents or supplements
hereto may be executed in any number of counterparts, each of which when so
executed shall be deemed to be an original, and all of which counterparts, taken
together, shall constitute one and the same instrument.
11.11 Binding Effect, Etc.
All covenants and agreements contained in this Trust Agreement shall be
binding upon, and inure to the benefit of, Owner Trustee and its successors and
assigns, and Owner Participant and its successors and, to the extent permitted
by Section 8, assigns. Any request, notice, direction, consent, waiver or other
instrument or action by Owner Participant shall bind its successors and assigns.
11.12 Headings; References
The headings and the table of contents used in this Trust Agreement are for
convenience of reference only and shall not define or limit any of the terms or
provisions hereof and shall not in any way affect the construction of, or be
taken into consideration in interpreting, this Trust Agreement.
11.13 Governing Law
THIS TRUST AGREEMENT SHALL IN ALL RESPECTS BE GOVERNED BY THE LAWS OF THE
STATE OF UTAH, INCLUDING ALL MATTERS OF CONSTRUCTION, VALIDITY AND PERFORMANCE,
WITHOUT GIVING EFFECT TO PRINCIPLES OF CONFLICTS OF LAWS.
<PAGE>
-27-
EACH PARTY HERETO HEREBY IRREVOCABLY AGREES, ACCEPTS AND SUBMITS ITSELF TO
THE NON-EXCLUSIVE JURISDICTION OF THE COURTS OF THE STATE OF NEW YORK IN THE
CITY AND COUNTY OF NEW YORK AND OF THE UNITED STATES FOR THE SOUTHERN DISTRICT
OF NEW YORK, IN CONNECTION WITH ANY LEGAL ACTION, SUIT OR PROCEEDING WITH
RESPECT TO ANY MATTER RELATING TO OR ARISING OUT OF OR IN CONNECTION WITH THIS
TRUST AGREEMENT.
EACH PARTY HERETO IRREVOCABLY CONSENTS AND AGREES THAT THE SERVICE OF ANY
AND ALL LEGAL PROCESS, SUMMONS, NOTICES AND DOCUMENTS OF ANY OF THE
AFOREMENTIONED COURTS IN ANY SUCH SUIT, ACTION OR PROCEEDING MAY BE MADE BY
MAILING COPIES THEREOF BY REGISTERED OR CERTIFIED MAIL, POSTAGE PREPAID, AT THE
ADDRESS REFERRED TO IN SECTION 11.7. EACH PARTY HERETO HEREBY AGREES THAT
SERVICE UPON IT IN ACCORDANCE WITH THIS SECTION 11.13 SHALL CONSTITUTE VALID AND
EFFECTIVE PERSONAL SERVICE UPON SUCH PARTY.
EACH PARTY HERETO HEREBY IRREVOCABLY WAIVES, TO THE EXTENT PERMITTED BY
APPLICABLE LAW, AND AGREES NOT TO ASSERT, BY WAY OF MOTION, AS A DEFENSE, OR
OTHERWISE, IN ANY LEGAL ACTION OR PROCEEDING BROUGHT HEREUNDER IN ANY OF THE
ABOVE-NAMED COURTS, THAT SUCH ACTION OR PROCEEDING IS BROUGHT IN AN INCONVENIENT
FORUM, THAT VENUE FOR THE ACTION OR PROCEEDING IS IMPROPER OR THAT THIS TRUST
AGREEMENT OR ANY OTHER OPERATIVE AGREEMENT MAY NOT BE ENFORCED IN OR BY SUCH
COURTS.
[This space intentionally left blank.]
<PAGE>
-28-
IN WITNESS WHEREOF, the parties hereto have caused this Trust Agreement to
be duly executed by their respective officers thereunto duly authorized as of
the day and year first above written.
--------------------------------
By: ____________________________
Name:
Title:
FIRST SECURITY BANK,
NATIONAL ASSOCIATION
By: ____________________________
Name:
Title:
EXHIBIT C-1 to
Note Purchase Agreement
OWNED AIRCRAFT PARTICIPATION AGREEMENT
<PAGE>
===============================================================================
PARTICIPATION AGREEMENT
Dated as of ,
Among
ATLAS AIR, INC.,
Owner,
and
WILMINGTON TRUST COMPANY,
Not in its individual capacity
except as expressly provided herein,
but solely as Mortgagee under the Trust Indenture,
as Subordination Agent under the Intercreditor
Agreement and as a Pass Through Trustee
under each of the Pass Through Trust Agreements
------------------------------
One Boeing Model 747-47UF Aircraft
Bearing Manufacturer's Serial No.
and U.S. Registration No. N MC
===============================================================================
<PAGE>
TABLE OF CONTENTS
Page
SECTION 1. DEFINITIONS AND CONSTRUCTION........................................2
SECTION 2. SECURED LOANS; CLOSING..............................................2
2.1. Making of Loans and Issuance of Equipment Notes....2
2.2. Closing 3
SECTION 3. [Intentionally Omitted].............................................3
SECTION 4. CONDITIONS PRECEDENT................................................3
4.1. Conditions Precedent to the Obligations
of the Pass Through Trustees.....................3
4.2. Conditions Precedent to Obligations of Mortgagee...7
4.3. Conditions Precedent to Obligations of Owner.......7
4.4. Post-Registration Opinion..........................8
SECTION 5. REPRESENTATIONS AND WARRANTIES......................................9
5.1. Owner's Representations and Warranties.............9
5.2. WTC's Representations and Warranties..............12
SECTION 6. COVENANTS, UNDERTAKINGS AND AGREEMENTS.............................15
6.1. Covenants of Owner................................15
6.2. Covenants of WTC..................................17
6.3. Covenants of Note Holders.........................18
6.4. Agreements........................................19
SECTION 7. CONFIDENTIALITY....................................................23
SECTION 8. INDEMNIFICATION AND EXPENSES.......................................23
8.1. General Indemnity.................................23
8.2. Expenses..........................................30
8.3. General Tax Indemnity.............................30
8.4. Payments..........................................40
8.5. Interest..........................................41
8.6. Benefit of Indemnities............................41
-i-
<PAGE>
SECTION 9. ASSIGNMENT OR TRANSFER OF INTEREST.................................41
9.1. Note Holders......................................41
9.2. Effect of Transfer................................41
SECTION 10. SECTION 1110......................................................42
SECTION 11. CHANGE OF CITIZENSHIP.............................................42
11.1. Generally........................................42
11.2. Mortgagee........................................42
SECTION 12. MISCELLANEOUS.....................................................42
12.1. Amendments.......................................43
12.2. Severability.....................................43
12.3. Survival.........................................43
12.4. Reproduction of Documents........................43
12.5. Counterparts.....................................44
12.6. No Waiver........................................44
12.7. Notices..........................................44
12.8. GOVERNING LAW; SUBMISSION TO JURISDICTION; VENUE.45
12.9. Third-Party Beneficiary..........................46
12.10. Entire Agreement................................46
12.11. Further Assurances..............................46
SECTION 13. SALE/LEASEBACK TRANSACTIONS.......................................47
SCHEDULES AND EXHIBITS
SCHEDULE 1 - Accounts; Addresses
SCHEDULE 2 - Commitments
SCHEDULE 3 - Certain Terms
SCHEDULE 4 - Permitted Countries
EXHIBIT A - Opinion of special counsel to Owner
EXHIBIT B - Opinion of corporate counsel to Owner
EXHIBIT C - Opinion of Boeing
EXHIBIT D - Opinion of special counsel to Mortgagee and to
Pass Through Trustees
EXHIBIT E - Opinions of special counsel in Oklahoma City,
Oklahoma
-ii-
<PAGE>
PARTICIPATION AGREEMENT
PARTICIPATION AGREEMENT, dated as of , (this "Agreement") , among (a) ATLAS
AIR, INC., a Delaware corporation ("Owner"), (b) WILMINGTON TRUST COMPANY, a
Delaware banking corporation, not in its individual capacity, except as
expressly provided herein, but solely as Mortgagee under the Trust Indenture (in
its capacity as Mortgagee, "Mortgagee" and in its individual capacity, "WTC"),
(c) WILMINGTON TRUST COMPANY, not in its individual capacity, except as
expressly provided herein, but solely as Pass Through Trustee under each of the
Pass Through Trust Agreements (each, a "Pass Through Trustee") and (d)
WILMINGTON TRUST COMPANY, not in its individual capacity, except as expressly
provided herein, but solely as Subordination Agent under the Intercreditor
Agreement ("Subordination Agent").
RECITALS
A. Owner and Airframe Manufacturer have entered into the Purchase
Agreement, pursuant to which, among other things, Airframe Manufacturer has
agreed to manufacture and sell to Owner and Owner has agreed to purchase from
Airframe Manufacturer, certain aircraft, including the Aircraft.
B. Pursuant to each of the Pass Through Trust Agreements, the Pass Through
Trusts were created and the Pass Through Certificates were issued and sold.
C. Each Pass Through Trustee has agreed to use all or a portion of the
proceeds from the issuance and sale of the Pass Through Certificates issued by
each Pass Through Trust to purchase from Owner, on behalf of the related Pass
Through Trust, the Equipment Note bearing the same interest rate as the Pass
Through Certificates issued by such Pass Through Trust.
D. Owner and Mortgagee, concurrently with the execution and delivery
hereof, have entered into the Trust Indenture for the benefit of the Note
Holders, pursuant to which, among other things, Owner agrees (1) to issue
Equipment Notes, in the amounts and otherwise as provided in the Trust
Indenture, and (2) to mortgage, pledge and assign to Mortgagee all of Owner's
right, title and interest in the Collateral to secure the Secured Obligations,
including, without limitation, Owner's obligations under the Equipment Notes.
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E. The parties hereto wish to set forth in this Agreement the terms and
conditions upon and subject to which the aforesaid transactions shall be
effected.
NOW, THEREFORE, in consideration of the premises and the mutual agreements
contained herein and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereto agree as
follows:
SECTION 1. DEFINITIONS AND CONSTRUCTION
Capitalized terms used but not defined herein (including in the initial
paragraph and Recitals above) shall have the respective meanings set forth or
incorporated by reference, and shall be construed and interpreted in the manner
described, in Annex A to the Trust Indenture.
SECTION 2. SECURED LOANS; CLOSING
2.1. Making of Loans and Issuance of Equipment Notes
Subject to the terms and conditions of this Agreement, on the date hereof
or on such other date agreed to by the parties hereto (the "Closing Date"):
(a) Each Pass Through Trustee listed on Schedule 2 shall make a
secured loan to the Owner in the amount in Dollars opposite
such Pass Through Trustee's name on Schedule 2; and
(b) The Owner shall issue, pursuant to and in accordance with the
provisions of Article II of the Trust Indenture, to the
Subordination Agent as the registered holder on behalf of each
such Pass Through Trustee, one or more Equipment Notes, dated
the Closing Date, of the Series set forth opposite such Pass
Through Trustee's name on Schedule 2, in an aggregate
principal amount equal to the secured loan made by each such
Pass Through Trustee.
In addition, the Owner shall have the option to issue the Series D
Equipment Notes on or after the Closing Date, subject to the terms of the Note
Purchase Agreement. If Series D Equipment Notes are issued after the Closing
Date, each Note Holder of such Equipment Notes shall be entitled to execute a
counterpart to this Agreement and become a party hereto.
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2.2. Closing
(a) The Closing of the transactions contemplated hereby shall take place at
the offices of Cahill Gordon & Reindel, 80 Pine Street, New York, New York
10005, or at such other place as the parties shall agree.
(b) All payments pursuant to this Section 2 shall be made in immediately
available funds to such accounts set forth in Schedule 1 hereto.
SECTION 3. [Intentionally Omitted]
SECTION 4. CONDITIONS PRECEDENT
4.1. Conditions Precedent to the Obligations of the Pass Through Trustees
The obligation of each Pass Through Trustee listed on Schedule 2 to make
the secured loan described in Section 2.1(a) and to participate in the
transactions contemplated by this Agreement on the Closing Date is subject to
the fulfillment, prior to or on the Closing Date, of the following conditions
precedent:
4.1.1 Equipment Notes
The Owner shall have tendered the Equipment Notes to be issued to such Pass
Through Trustees to the Mortgagee for authentication and the Mortgagee shall
have authenticated such Equipment Notes to be issued to such Pass Through
Trustees and shall have tendered the Equipment Notes to the Subordination Agent
on behalf of such Pass Through Trustees, against receipt of the loan proceeds,
in accordance with Section 2.1.
4.1.2 Delivery of Documents
The Subordination Agent on behalf of each Pass Through Trustee shall have
received executed counterparts or conformed copies of the following documents:
(i) this Agreement;
(ii) the Trust Indenture;
(iii) the initial Trust Indenture Supplement;
(iv) the broker's report and insurance certificates required by
Section 4.06 of the Trust Indenture;
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(v) the Consent and Agreement and the Engine Consent and
Agreement;
(vi) the Bills of Sale;
(vii) (A) a copy of the Certificate of Incorporation and By-Laws
of Owner and resolutions of the board of directors of Owner and/or the
executive committee thereof, in each case certified as of the Closing
Date, by the Secretary or an Assistant Secretary of Owner, duly
authorizing the execution, delivery and performance by owner of the
Operative Agreements to which it is party required to be executed and
delivered by Owner on or prior to the Closing Date in accordance with
the provisions hereof and thereof; and (B) an incumbency certificate
of Owner as to the person or persons authorized to execute and deliver
the Operative Agreements on behalf of Owner;
(viii) an Officer's Certificate of Owner, dated as of the Closing
Date, stating that its representations and warranties set forth in
this Agreement are true and correct as of the Closing Date (or, to the
extent that any such representation and warranty expressly relates to
an earlier date, true and correct as of such earlier date);
(ix) the Financing Statements;
(x) the following opinions of counsel, in each case dated the
Closing Date:
(A) an opinion of Cahill Gordon & Reindel, special counsel to Owner,
substantially in the form of Exhibit A;
(B) an opinion of Owner's Legal Department, substantially in the form
of Exhibit B;
(C) an opinion of The Boeing Company, substantially in the form of
Exhibit C;
(D) an opinion of Morris, James, Hitchens & Williams, special counsel
to Mortgagee and to the Pass Through Trustees, substantially in the form of
Exhibit D;
(E) an opinion of Crowe & Dunlevy, special counsel in Oklahoma City,
Oklahoma, substantially in the form of Exhibit E-1; and
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(xi) a copy of a current, valid Standard Certificate of
Airworthiness for the Aircraft duly issued by the FAA, together with a
copy of a duly executed application for registration of the Aircraft
with the FAA in the name of the Owner.
4.1.3 Perfected Security interest
On the Closing Date, after giving effect to the filing of the FAA Filed
Documents and the Financing Statements, Mortgagee shall have received a duly
perfected first priority security interest in all of Owner's right, title and
interest in the Aircraft, subject only to Permitted Liens.
4.1.4 Violation of Law
No change shall have occurred after the date of this Agreement in any
applicable Law that makes it a violation of Law for (a) Owner, any Pass Through
Trustee, Subordination Agent or Mortgagee to execute, deliver and perform the
Operative Agreements to which any of them is a party or (b) any Pass Through
Trustee to make the loan contemplated by Section 2.1 to acquire an Equipment
Note or to realize the benefits of the security afforded by the Trust Indenture.
4.1.5 Representations, Warranties and Covenants
The representations and warranties of each party to this Agreement made, in
each case, in this Agreement and in any other Operative Agreement to which it is
a party, shall be true and accurate in all material respects as of the Closing
Date (unless any such representation and warranty shall have been made with
reference to a specified date, in which case such representation and warranty
shall be true and accurate as of such specified date) and each other party to
this Agreement shall have performed and observed, in all material respects, all
of its covenants, obligations and agreements in this Agreement and in any other
Operative Agreement to which it is a party to be observed or performed by it as
of the Closing Date.
4.1.6 No Event of Default
On the Closing Date, no event shall have occurred and be continuing, or
would result from the mortgage of the Aircraft, which would constitute a Default
or an Event of Default.
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4.1.7 No Event of Loss
No Event of Loss with respect to the Airframe or any Engine shall have
occurred and no circumstance, condition, act or event that, with the giving of
notice or lapse of time or both, would give rise to or constitute an Event of
Loss with respect to the Airframe or any Engine shall have occurred.
4.1.8 Title
Owner shall have good title (subject to filing and recordation of the FAA
Bill of Sale with the FAA) to the Aircraft, free and clear of all Liens, except
Permitted Liens.
4.1.9 Certification
The Aircraft shall have been duly certificated by the FAA as to type and
airworthiness in accordance with the terms of the Purchase Agreement.
4.1.10 Section 1110
Mortgagee shall be entitled to the benefits of Section 1110 (as currently
in effect) with respect to the right to take possession of the Airframe and
Engines as provided in the Trust Indenture in the event of a case under Chapter
11 of the Bankruptcy Code in which Owner is a debtor.
4.1.11 Filing
On the Closing Date (a) the FAA Filed Documents shall have been duly filed
for recordation (or shall be in the process of being so duly filed for
recordation) with the FAA in accordance with the Act and (b) each Financing
Statement shall have been duly filed (or shall be in the process of being so
duly filed) in the appropriate jurisdiction.
4.1.12 No Proceedings
No action or proceeding shall have been instituted, nor shall any action be
threatened in writing, before any Government Entity, nor shall any order,
judgment or decree have been issued or proposed to be issued by any Government
Entity, to set aside, restrain, enjoin or prevent the completion and
consummation of this Agreement or any other Operative Agreement or the
transactions contemplated hereby or thereby.
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4.1.13 Governmental Action
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 shall have 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 shall have been issued.
4.1.14 Note Purchase Agreement
The conditions precedent to the obligations of the Pass Through Trustees
and the other requirements relating to the Aircraft and the Equipment Notes set
forth in the Note Purchase Agreement shall have been satisfied.
4.2. Conditions Precedent to Obligations of Mortgagee
The obligation of Mortgagee to authenticate the Equipment Notes on the
Closing Date is subject to the satisfaction or waiver by Mortgagee, on or prior
to the Closing Date, of the conditions precedent set forth below in this Section
4.2.
4.2.1 Documents
Executed originals of the agreements, instruments, certificates or
documents described in Section 4.1.2 shall have been received by Mortgagee,
except as specifically provided therein, unless the failure to receive any such
agreement, instrument, certificate or document is the result of any action or
inaction by Mortgagee.
4.2.2 Other Conditions Precedent
Each of the conditions set forth in Sections 4.1.4, 4.1.5, 4.1.6 and 4.1.10
shall have been satisfied unless the failure of any such condition to be
satisfied is the result of any action or inaction by Mortgagee.
4.3. Conditions Precedent to Obligations of Owner
The obligation of Owner to participate in the transaction contemplated
hereby on the Closing Date is subject to the satisfaction or waiver by Owner, on
or prior to the Closing Date, of the conditions precedent set forth below in
this Section 4.3.
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4.3.1 Documents
Executed originals of the agreements, instruments, certificates or
documents described in Section 4.1.2 shall have been received by Owner, except
as specifically provided therein, and shall be satisfactory to Owner, unless the
failure to receive any such agreement, instrument, certificate or document is
the result of any action or inaction by Owner. In addition, the Owner shall have
received the following:
(i) (A) an incumbency certificate of WTC as to the person or
persons authorized to execute and deliver the Operative Agreements on
behalf of WTC and (B) a copy of the Certificate of Incorporation and
By-Laws and general authorizing resolution of the board of directors
(or executive committee) or other satisfactory evidence of
authorization of WTC, certified as of the Closing Date by the
Secretary or Assistant or Attesting Secretary of WTC, which authorize
the execution, delivery and performance by WTC of the Operative
Agreements to which it is a party; and
(ii) an Officer's Certificate of WTC, dated as of the Closing
Date, stating that its representations and warranties in its
individual capacity or as Mortgagee, a Pass Through Trustee or
Subordination Agent, as the case may be, set forth in this Agreement
are true and correct as of the Closing Date (or, to the extent that
any such representation and warranty expressly relates to an earlier
date, true and correct as of such earlier date).
4.3.2 Other Conditions Precedent
Each of the conditions set forth in Sections 4.1.4, 4.1.5, 4.1.6, 4.1.7,
4.1.8, 4.1.9, 4.1.10, 4.1.11, 4.1.12 and 4.1.13 shall have been satisfied or
waived by Owner, unless the failure of any such condition to be satisfied is the
result of any action or inaction by Owner.
4.4. Post-Registration Opinion
Promptly upon the registration of the Aircraft and the recordation of the
FAA Filed Documents pursuant to the Act, Owner will cause Crowe & Dunlevy,
special counsel in Oklahoma City, Oklahoma, to deliver to Owner, each Pass
Through Trustee and Mortgagee a favorable opinion or opinions addressed to each
of them with respect to such registration and recordation.
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SECTION 5. REPRESENTATIONS AND WARRANTIES
5.1. Owner's Representations and Warranties
Owner represents and warrants to each Pass Through Trustee, Subordination
Agent and Mortgagee that:
5.1.1 Organization; Qualification
Owner is a corporation duly incorporated, validly existing and in good
standing under the Laws of the State of Delaware and has the corporate power and
authority to conduct the business in which it is currently engaged and to own or
hold under lease its properties and to enter into and perform its obligations
under the Operative Agreements to which it is party. Owner is duly qualified to
do business as a foreign corporation in good standing in each jurisdiction in
which the nature and extent of the business conducted by it, or the ownership of
its properties, requires such qualification, except where the failure to be so
qualified would not give rise to a Material Adverse Change to Owner.
5.1.2 Corporate Authorization
Owner has taken, or caused to be taken, all necessary corporate action
(including, without limitation, the obtaining of any consent or approval of
stockholders required by its Certificate of Incorporation or By-Laws) to
authorize the execution and delivery of each of the Operative Agreements to
which it is party, and the performance of its obligations thereunder.
5.1.3 No Violation
The execution and delivery by Owner of the Operative Agreements to which it
is party, the performance by Owner of its obligations thereunder and the
consummation by Owner on the Closing Date of the transactions contemplated
thereby, do not and will not (a) violate any provision of the Certificate of
Incorporation or By-Laws of Owner, (b) violate any Law applicable to or binding
on Owner or (c) violate or constitute any default under (other than any
violation or default that would not result in a Material Adverse Change to
Owner), or result in the creation of any Lien (other than as permitted under the
Trust Indenture) upon the Aircraft under, any indenture, mortgage, chattel
mortgage, deed of trust, conditional sales contract, lease, loan or other
material agreement, instrument or document to which Owner is a party or by which
Owner or any of its properties is bound.
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5.1.4 Approvals
The execution and delivery by Owner of the Operative Agreements to which
Owner is a party, the performance by Owner of its obligations thereunder and the
consummation by Owner on the Closing Date of the transactions contemplated
thereby do not and will not require the consent or approval of, or the giving of
notice to, or the registration with, or the recording or filing of any documents
with, or the taking of any other action in respect of, (a) any trustee or other
holder of any Debt of Owner and (b) any Government Entity, other than the filing
of (x) the FAA Filed Documents and the Financing Statements (and continuation
statements periodically) and (y) filings, recordings, notices or other
ministerial actions pursuant to any routine recording, contractual or regulatory
requirements applicable to it.
5.1.5 Valid and Binding Agreements
The Operative Agreements to which Owner is a party have been duly
authorized, executed and delivered by Owner and, assuming the due authorization,
execution and delivery thereof by the other party or parties thereto, constitute
the legal, valid and binding obligations of Owner and are enforceable against
Owner in accordance with the respective terms thereof, except as such
enforceability may be limited by bankruptcy, insolvency, reorganization,
receivership, moratorium and other similar Laws affecting the rights of
creditors generally and general principles of equity, whether considered in a
proceeding at law or in equity.
5.1.6 Registration and Recordation
Except for (a) the registration of the Aircraft with the FAA pursuant to
the Act in the name of Owner, (b) the filing for recordation (and recordation)
of the FAA Filed Documents, (c) the filing of the Financing Statements (and
continuation statements relating thereto at periodic intervals), and (d) the
affixation of the nameplates referred to in Section 4.02(f) of the Trust
Indenture, no further action, including any filing or recording of any document
(including any financing statement in respect thereof under Article 9 of the
UCC) is necessary in order to establish and perfect Mortgagee's security
interest in the Aircraft as against Owner and any other Person, in each case, in
any applicable jurisdictions in the United States.
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5.1.7 Chief Executive Office
The chief executive office (as such term is defined in Article 9 of the
UCC) of Owner is located at 538 Commons Drive, Golden, Colorado 80401.
5.1.8 No Event of Loss
No Event of Loss has occurred with respect to the Airframe or any Engine,
and, to the Actual Knowledge of Owner, no circumstance, condition, act or event
has occurred that, with the giving of notice or lapse of time or both would give
rise to or constitute an Event of Loss with respect to the Airframe or any
Engine.
5.1.9 Compliance With Laws
(a) Owner is a Citizen of the United States and a U.S. Air Carrier.
(b) Owner holds all licenses, permits and franchises from the appropriate
Government Entities necessary to authorize Owner to lawfully engage in air
transportation and to carry on commercial air cargo service as currently
conducted, except where the failure to so hold any such license, permit or
franchise would not give rise to a Material Adverse Change to Owner.
(c) Owner 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.
5.1.10 Securities Laws
Neither Owner 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 Trust 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.
5.1.11 Broker's Fees
No Person acting on behalf of Owner is or will be entitled to any broker's
fee, commission or finder's fee in connection with the Transactions, other than
the fees and expenses payable by Owner in connection with the sale of the Pass
Through Certificates.
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5.1.12 Section 1110
Mortgagee is entitled to the benefits of Section 1110 (as currently in
effect) with respect to the right to take possession of the Airframe and Engines
as provided in the Trust Indenture in the event of a case under Chapter 11 of
the Bankruptcy Code in which Owner is a debtor.
5.2. WTC's Representations and Warranties
WTC represents and warrants (with respect to Section 5.2.10, solely in its
capacity as Subordination Agent) to Owner that:
5.2.1 Organization, Etc.
WTC is a Delaware banking corporation duly organized, validly existing and
in good standing under the Laws of the State of Delaware, holding a valid
certificate to do business as a Delaware banking corporation with banking
authority to execute and deliver, and perform its obligations under, the Pass
Through Trustee Agreements and the Operative Agreements to which it is a party.
5.2.2 Corporate Authorization
WTC has taken, or caused to be taken, all necessary corporate action
(including, without limitation, the obtaining of any consent or approval of
stockholders required by Law or by its Certificate of Incorporation or By-Laws)
to authorize the execution and delivery by WTC, in its individual capacity or as
Mortgagee, as a Pass Through Trustee or as Subordination Agent, as the case may
be, of the Pass Through Trustee Agreements and the Operative Agreements to which
it is a party and the performance of its obligations thereunder.
5.2.3 No Violation
The execution and delivery by WTC, in its individual capacity or as
Mortgagee, as a Pass Through Trustee or as Subordination Agent, as the case may
be, of the Pass Through Trustee Agreements and the Operative Agreements to which
it is a party, the performance by WTC, in its individual capacity or as
Mortgagee, as a Pass Through Trustee or as Subordination Agent, as the case may
be, of its obligations thereunder and the consummation on the Closing Date of
the transactions contemplated thereby, do not and will not (a) violate any
provision of the Certificate of Incorporation or By-Laws of WTC, (b) violate any
Law applicable to or binding on WTC, in its individual capacity or (except in
the case
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of any Law relating to any Plan) as Mortgagee, as a Pass Through Trustee or as
Subordination Agent, or (c) violate or constitute any default under (other than
any violation or default that would not result in a Material Adverse Change to
WTC, in its individual capacity or Mortgagee, as a Pass Through Trustee or as
Subordination Agent), or result in the creation of any Lien (other than the Lien
of the Trust Indenture) upon any property of WTC, in its individual capacity or
as Mortgagee, as a Pass Through Trustee or as Subordination Agent, or any of
WTC's subsidiaries under, any indenture, mortgage, chattel mortgage, deed of
trust, conditional sales contract, lease, loan or other agreement, instrument or
document to which WTC, in its individual capacity or as Mortgagee, as a Pass
Through Trustee or as Subordination Agent, is a party or by which WTC, in its
individual capacity or as Mortgagee, as a Pass Through Trustee or as
Subordination Agent, or any of their respective properties is bound.
5.2.4 Approvals
The execution and delivery by WTC, in its individual capacity or as
Mortgagee, as a Pass Through Trustee or as Subordination Agent, as the case may
be, of the Pass Through Trustee Agreements and the Operative Agreements to which
it is a party, the performance by WTC, in its individual capacity or as
Mortgagee, as a Pass Through Trustee or as Subordination Agent, as the case may
be, of its obligations thereunder and the consummation on the Closing Date by
WTC, in its individual capacity or as Mortgagee, as a Pass Through Trustee or as
Subordination Agent, as the case may be, of the transactions contemplated
thereby do not and will not require the consent, approval or authorization of,
or the giving of notice to, or the registration with, or the recording or filing
of any documents with, or the taking of any other action in respect of, (a) any
trustee or other holder of any Debt of WTC or (b) any Government Entity, other
than the filing of the FAA Filed Documents and the Financing Statements.
5.2.5 Valid and Binding Agreements
The Pass Through Trustee Agreements and the Operative Agreements to which
it a party have been duly authorized, executed and delivered by WTC and,
assuming the due authorization, execution and delivery by the other party or
parties thereto, constitute the legal, valid and binding obligations of WTC, in
its individual capacity or as Mortgagee, as a Pass Through Trustee or as
Subordination Agent, as the case may be, and are enforceable against WTC, in its
individual capacity or as Mortgagee, as a Pass Through Trustee or as
Subordination Agent, as the case may be, in accordance with the respective terms
thereof, except as such en-
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forceability may be limited by bankruptcy, insolvency, reorganization,
receivership, moratorium or other similar Laws affecting the rights of creditors
generally and general principles of equity, whether considered in a proceeding
at law or in equity.
5.2.6 Citizenship
WTC is a Citizen of the United States.
5.2.7 No Liens
On the Closing Date, there are no Liens attributable to WTC in respect of
all or any part of the Collateral.
5.2.8 Litigation
There are no pending or, to the Actual Knowledge of WTC, threatened actions
or proceedings against WTC, in its individual capacity or as Mortgagee, as a
Pass Through Trustee or as Subordination Agent, before any court, administrative
agency or tribunal which, if determined adversely to WTC, in its individual
capacity or as Mortgagee, as a Pass Through Trustee or as Subordination Agent,
as the case may be, would materially adversely affect the ability of WTC, in its
individual capacity or as Mortgagee, as a Pass Through Trustee or as
Subordination Agent, as the case may be, to perform its obligations under any of
the Pass Through Trustee Agreements or the Operative Agreements.
5.2.9 Securities Laws
Neither WTC 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 interest in the Collateral or any of the Equipment Notes
or any other interest in or security under the Collateral 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 other than the Subordination Agent
and the Pass Through Trustees, except for the offering and sale of the Pass
Through Certificates.
5.2.10 Investment
The Equipment Notes to be acquired by the Subordination Agent are being
acquired by it for the account of the Pass Through Trustees, for investment and
not with a view to any resale or distribution thereof, except that, subject to
the restrictions on transfer set forth in Section 9, the disposition by it of
its Equipment Notes shall at all times be within its control.
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5.2.11 Taxes
There are no Taxes payable by any Pass Through Trustee or WTC, as the case
may be, imposed by the State of Delaware or any political subdivision or taxing
authority thereof in connection with the execution, delivery and performance by
such Pass Through Trustee or WTC, as the case may be, of this Agreement or any
of the Pass Through Trustee Agreements (other than franchise or other taxes
based on or measured by any fees or compensation received by any such Pass
Through Trustee or WTC, as the case may be, for services rendered in connection
with the transactions contemplated by any of the Pass Through Trust Agreements),
and there are no Taxes payable by any Pass Through Trustee or WTC, as the case
may be, imposed by the State of Delaware or any political subdivision thereof in
connection with the acquisition, possession or ownership by any 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 any such Pass
Through Trustee or WTC, as the case may be, for services rendered in connection
with the transactions contemplated by any of the Pass Through Trust Agreements),
and, assuming that the trusts created by the Pass Through Trust Agreements will
not be taxable as corporations, but, rather, each will be characterized as a
grantor trust under subpart E, Part I of Subchapter J of the Code or as a
partnership under Subchapter K of the Code, such trusts will not be subject to
any Taxes imposed by the State of Delaware or any political subdivision thereof.
5.2.12 Broker's Fees
No Person acting on behalf of WTC, in its individual capacity or as
Mortgagee, any Pass Through Trustee or Subordination Agent, is or will be
entitled to any broker's fee, commission or finder's fee in connection with the
Transactions.
SECTION 6. COVENANTS, UNDERTAKINGS AND AGREEMENTS
6.1. Covenants of Owner
Owner covenants and agrees, at its own cost and expense, with each Note
Holder and Mortgagee as follows:
6.1.1 Corporate Existence; U.S. Air Carrier
Owner shall at all times maintain its corporate existence, except as
permitted by Section 4.07 of the Trust Indenture, and shall at all times remain
a U.S. Air Carrier.
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6.1.2 Notice of Change of Chief Executive Office
Owner will give Mortgagee timely written notice (but in any event within 30
days prior to the expiration of the period of time specified under applicable
Law to prevent lapse of perfection) of any relocation of its chief executive
office (as such term is defined in Article 9 of the UCC) from its then present
location and will promptly take any action required by Section 6.1.3(c) as a
result of such relocation.
6.1.3 Certain Assurances
(a) Owner shall duly execute, acknowledge and deliver, or shall cause to be
executed, acknowledged and delivered, all such further agreements, instruments,
certificates or documents, and shall do and cause to be done such further acts
and things, in any case, as Mortgagee shall reasonably request for accomplishing
the purposes of this Agreement and the other Operative Agreements; provided that
any instrument or other document so executed by Owner will not expand any
obligations or limit any rights of Owner in respect of the transactions
contemplated by any Operative Agreement.
(b) Owner shall promptly take such action with respect to the recording,
filing, re-recording and refiling of the Trust Indenture and any supplements
thereto, including, without limitation, the initial Trust Indenture Supplement,
as shall be necessary to continue the perfection and priority of the Lien
created by the Trust Indenture.
(c) Owner, at its sole cost and expense, will cause the FAA Filed
Documents, the Financing Statements and all continuation statements (and any
amendments necessitated by any combination, consolidation or merger of the
Owner, or any relocation of its chief executive office) in respect of the
Financing Statements to be prepared and, subject only to the execution and
delivery thereof by Mortgagee, duly and timely filed and recorded, or filed for
recordation, to the extent permitted under the Act (with respect to the FAA
Filed Documents) or the UCC or similar law of any other applicable jurisdiction
(with respect to such other documents).
(d) If the Aircraft has been registered in a country other than the United
States pursuant to Section 4.02(e) of the Trust Indenture, Owner will furnish to
Mortgagee annually after such registration, commencing with the calendar year
after such registration is effected, an opinion of special counsel reasonably
<PAGE>
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satisfactory to Mortgagee stating that, in the opinion of such counsel, either
that (i) such action has been taken with respect to the recording, filing,
rerecording and refiling of the Operative Agreements and any supplements and
amendments thereto as is necessary to establish, perfect and protect the Lien
created by the Trust Indenture, reciting the details of such actions, or (ii) no
such action is necessary to maintain the perfection of such Lien.
6.1.4 Securities Laws
Neither Owner nor any person authorized to act on its behalf will directly
or indirectly offer any beneficial interest or Security relating to the
ownership of the Aircraft or any interest in any of the Equipment Notes or any
other interest in or security under the Trust Indenture, for sale to, or solicit
any offer to acquire any such interest or security from, or sell any such
interest or security to, any person in violation of the Securities Act or
applicable state or foreign securities Laws.
6.2. Covenants of WTC
WTC in its individual capacity or as Mortgagee, each Pass Through Trustee
or Subordination Agent, as the case may be, covenants and agrees with Owner as
follows:
6.2.1 Liens
WTC (a) will not directly or indirectly create, incur, assume or suffer to
exist any Lien attributable to it on or with respect to all or any part of the
Collateral or the Aircraft, (b) will, at its own cost and expense, promptly take
such action as may be necessary to discharge any Lien attributable to WTC on all
or any part of the Collateral or the Aircraft and (c) will personally hold
harmless and indemnify Owner, each Note Holder, each of their respective
Affiliates, successors and permitted assigns, and the Collateral from and
against (i) any and all Expenses, and (ii) any interference with the possession,
operation or other use of all or any part of the Aircraft, imposed on, incurred
by or asserted against any of the foregoing as a consequence of any such Lien.
6.2.2 Securities Act
WTC in its individual capacity or as Mortgagee, as a Pass Through Trustee
or as Subordination Agent, will not offer any beneficial interest or Security
relating to the ownership of the Aircraft or any interest in the Collateral, or
any of the Equip-
<PAGE>
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ment Notes or any other interest in or security under the Trust Indenture for
sale to, or solicit any offer to acquire any such interest or security from, or
sell any such interest or security to, any Person in violation of the Securities
Act or applicable state or foreign securities Laws, provided that the foregoing
shall not be deemed to impose on WTC any responsibility with respect to any such
offer, sale or solicitation by any other party hereto.
6.2.3 Performance of Agreements
WTC, in its individual capacity and as Mortgagee, as a Pass Through Trustee
or as Subordination Agent, as the case may be, shall perform its obligations
under the Pass Through Trustee Agreements and the Operative Agreements in
accordance with the terms thereof.
6.2.4 Withholding Taxes
WTC shall indemnify (on an after-tax basis) and hold harmless Owner against
any United States withholding taxes (and related interest, penalties and
additions to tax) as a result of the failure by WTC to withhold on payments to
any Note Holder if such Note Holder failed to provide to Mortgagee necessary
certificates or forms to substantiate the right to exemption from such
withholding tax.
6.3. Covenants of Note Holders
Each Note Holder (including Subordination Agent) as to itself only
covenants and agrees with Owner and Mortgagee as follows:
6.3.1 Withholding Taxes
Such Note Holder (if it is a Non-U.S. Person) agrees to indemnify (on an
after-tax basis) and hold harmless Owner and Mortgagee against any United States
withholding taxes (and related interest, penalties and additions to tax) as a
result of the inaccuracy or invalidity of any certificate or form provided by
such Note Holder to Mortgagee in connection with such withholding taxes. Any
amount payable hereunder shall be paid within 30 days after receipt by a Note
Holder of a written demand therefor.
6.3.2 Transfer; Compliance
(a) Such Note Holder will (i) not transfer any Equipment Note or interest
therein in violation of the Securities Act
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or applicable state or foreign securities Law; provided, that the foregoing
provisions of this section shall not be deemed to impose on such Note Holder any
responsibility with respect to any such offer, sale or solicitation by any other
party hereto, and (ii) perform and comply with the obligations specified to be
imposed on it (as a Note Holder) under each of the Trust Indenture and the form
of Equipment Note set forth in the Trust Indenture.
(b) Such Note Holder will not sell, assign, convey, exchange or otherwise
transfer any Equipment Note or any interest in, or represented by, any Equipment
Note (it being understood that this provision is not applicable to the Pass
Through Certificates) unless the proposed transferee thereof first provides
Owner with both of the following:
(i) a written representation and covenant that either (a) no
portion of the funds it uses to purchase, acquire and hold such
Equipment Note or interest directly or indirectly constitutes, or may
be deemed under the Code or ERISA or any rulings, regulations or court
decisions thereunder to constitute, the assets of any Plan or (b) the
transfer, and subsequent holding, of such Equipment Note or interest
shall not involve or give rise to a transaction that constitutes a
prohibited transaction within the meaning of Section 406 of ERISA or
Section 4975(c)(1) of the Code involving Owner, a Pass Through
Trustee, the Subordination Agent or the proposed transferee (other
than a transaction that is exempted from the prohibitions of such
sections by applicable provisions of ERISA or the Code or
administrative exemptions or regulations issued thereunder); and
(ii) a written covenant that it will not transfer any Equipment
Note or any interest in, or represented by, any Equipment Note unless
the subsequent transferee also makes the representation described in
clause (i) above and agrees to comply with this clause (ii). 6.4.
Agreements
6.4.1 Quiet Enjoyment
Each Pass Through Trustee, Subordination Agent, Mortgagee and each Note
Holder agrees as to itself with Owner that, so long as no Event of Default shall
have occurred and be continuing, such Person shall not (and shall not permit any
Affiliate or other Person claiming by, through or under it to) interfere with
Owner's or any Permitted Lessee's rights in accordance with the Trust In-
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denture to the quiet enjoyment, possession and use of the Aircraft.
6.4.2 Consents
Each Pass Through Trustee, Subordination Agent and Mortgagee covenants and
agrees, for the benefit of Owner, that it shall not unreasonably withhold its
consent to any consent or approval requested of it under the terms of any of the
Operative Agreements which by its terms is not to be unreasonably withheld.
6.4.3 Insurance
Each Pass Through Trustee, Subordination Agent, Mortgagee and each Note
Holder agrees not to obtain or maintain insurance for its own account as
permitted by Section 4.06 of the Trust Indenture if such insurance would limit
or otherwise adversely affect the coverage of any insurance required to be
obtained or maintained by Owner pursuant to Section 4.06 of the Trust Indenture.
6.4.4 Extent of Interest of Note Holders
A Note Holder shall not, as such, have any further interest in, or other
right with respect to, the Collateral when and if the principal and Make-Whole
Amount, if any, of and interest on the Equipment Note held by such Note Holder,
and all other sums, then due and payable to such Note Holder hereunder and under
any other Operative Agreement, shall have been paid in full.
6.4.5 Foreign Registration
Each Note Holder and Mortgagee hereby agrees, for the benefit of Owner but
subject to the provisions of Section 4.02(b) of the Trust Indenture:
(a) that Owner shall be entitled to register the Aircraft or cause the
Aircraft to be registered in a country other than the United States subject to
compliance with the following:
(i) each of the following requirements is satisfied:
(A) no Special Default or Event of Default shall have occurred
and be continuing at the time of such registration;
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(B) such proposed change of registration is made in connection
with a Permitted Lease to a Permitted Air Carrier;
(C) such country is a country with which the United States then
maintains normal diplomatic relations or, if Taiwan, the
United States then maintains diplomatic relations at least
as good as those in effect on the Closing Date;
(ii) the Mortgagee shall have received an opinion of counsel
(subject to customary exceptions) reasonably satisfactory to the
Mortgagee addressed to Mortgagee as to the effect that:
(A) such country would recognize the Owner's ownership interest in the
Aircraft;
(B) after giving effect to such change in registration, the Lien of
the Trust Indenture on the Owner's right, title and interest in and to the
Aircraft shall continue as a valid and duly perfected first priority
security interest and all filing, recording or other action necessary to
protect the same shall have been accomplished (or, if such opinion cannot
be given at the time of such proposed change in registration because such
change in registration is not yet effective, (1) the opinion shall detail
what filing, recording or other action is necessary and (2) the Mortgagee
shall have received a certificate from Owner 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 delivered to the Mortgagee on
or prior to the effective date of such change in registration);
(C) unless Owner or the Permitted Air Carrier shall have agreed to
provide insurance covering the risk of requisition of use of the Aircraft
by the government of such country (so long as the Aircraft is registered
under the laws of such country), the laws of such country require fair
compensation by the government of such country payable in currency freely
convertible into Dollars and freely removable from such country (without
license or permit, unless Owner prior to such proposed reregistration has
obtained such license or permit) for the taking or requisition by such
government of such use; and
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(D) it is not necessary, solely as a consequence of such change in
registration and without giving effect to any other activity of the
Mortgagee (or any Affiliate of the Mortgagee), for the Mortgagee to qualify
to do business in such jurisdiction as a result of such reregistration in
order to exercise any rights or remedies with respect to the Aircraft.
(b) In addition, as a condition precedent to any change in registration
Owner shall have given to Mortgagee assurances reasonably satisfactory to
Mortgagee:
(i) to the effect that the provisions of Section 4.06 of the Trust
Indenture have been complied with after giving effect to such change
of registration;
(ii) of the payment by Owner of all reasonable out-of-pocket expenses of
each Note Holder and Mortgagee in connection with such change of
registry, including, without limitation (1) the reasonable fees and
disbursements of counsel to Mortgagee, (2) any filing or recording
fees, Taxes or similar payments incurred in connection with the change
of registration of the Aircraft and the creation and perfection of the
security interest therein in favor of Mortgagee for the benefit of
Note Holders, and (3) all costs and expenses incurred in connection
with any filings necessary to continue in the United States the
perfection of the security interest in the Aircraft in favor of
Mortgagee for the benefit of Note Holders; and
(iii) to the effect that the tax and other indemnities in favor of each
person named as an indemnitee under any other Operative Agreement
afford each such person substantially the same protection as provided
prior to such change of registration (or Owner shall have agreed upon
additional indemnities that, together with such original indemnities,
in the reasonable judgment of Mortgagee, afford such protection).
6.4.6 Interest in Certain Engines
Each Note Holder and Mortgagee agrees, for the benefit of each of the
lessor, conditional seller, mortgagee or secured party of any airframe or engine
leased to, or purchased by, Owner
<PAGE>
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or any Permitted Lessee subject to a lease, conditional sale, trust indenture or
other security agreement that it will not acquire or claim, as against such
lessor, conditional seller, mortgagee or secured party, any right, title or
interest in any engine as the result of such engine being installed on the
Airframe at any time while such engine is subject to such lease, conditional
sale, trust indenture or other security agreement and owned by such lessor or
conditional seller or subject to a trust indenture or security interest in favor
of such mortgagee or secured party.
SECTION 7. CONFIDENTIALITY
Owner, Note Holders and Mortgagee shall keep the Participation Agreement
and Annex B to the Trust Indenture confidential and shall not disclose, or cause
to be disclosed, the same to any Person, except (A) to prospective and permitted
transferees of Owner's, a Note Holder's, a Liquidity Provider's, Mortgagee's or
other Indenture Indemnitee's interest or their respective counsel or special
counsel, independent insurance brokers, auditors, or other agents who agree to
hold such information confidential, (B) to Owner's, a Note Holder's, a Liquidity
Provider's, a Pass Through Trustee's, Mortgagee's or other Indenture
Indemnitee's counsel or special counsel, independent insurance brokers,
auditors, or other agents, Affiliates or investors who agree to hold such
information confidential, (C) as may be required by any statute, court or
administrative order or decree, legal process or governmental ruling or
regulation, including those of any applicable insurance regulatory bodies
(including, without limitation, the National Association of Insurance
Commissioners ("NAIC")), federal or state banking examiners, the SEC, IRS
auditors or any stock exchange, (D) with respect to a Note Holder or any Pass
Through Trustee, to a nationally recognized rating agency for the purpose of
obtaining a rating on the Equipment Notes or the Pass Through Certificates or to
support an NAIC rating for the Equipment Notes or (E) such other Persons as are
reasonably deemed necessary by the disclosing party in order to protect the
interests of such party or for the purposes of enforcing such documents by such
party; provided, that any and all disclosures permitted by clauses (C), (D), or
(E) above shall be made only to the extent necessary to meet the specific
requirements or needs of the Persons making such disclosures.
SECTION 8. INDEMNIFICATION AND EXPENSES
8.1. General Indemnity
8.1.1 Indemnity
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Whether or not any of the transactions contemplated hereby are consummated,
Owner shall indemnify, protect, defend and hold harmless each Indemnitee from,
against and in respect of, and shall pay on a net after-tax basis, any and all
Expenses of any kind or nature whatsoever that may be imposed on, incurred by or
asserted against any Indemnitee, relating to, resulting from, or arising out of
or in connection with, any one or more of the following:
(a) The Operative Agreements, the Pass Through Agreements, or the
enforcement of any of the terms of any of the Operative Agreements or the Pass
Through Agreements;
(b) The Aircraft, the Airframe, any Engine or any Part, including, without
limitation, with respect thereto, (i) the manufacture, design, purchase,
acceptance, nonacceptance or rejection, ownership, registration, reregistration,
deregistration, delivery, nondelivery, lease, sublease, assignment, possession,
use or non-use, operation, maintenance, testing, repair, overhaul, condition,
alteration, modification, addition, improvement, storage, airworthiness,
replacement, repair, sale, substitution, return, abandonment, redelivery or
other disposition of the Aircraft, any Engine or any Part, (ii) any claim or
penalty arising out of violations of applicable Laws by Owner (or any Permitted
Lessee), (iii) tort liability, whether or not arising out of the negligence of
any Indemnitee (whether active, passive or imputed), (iv) death or property
damage of passengers, shippers or others, (v) environmental control, noise or
pollution and (vi) any Liens in respect of the Aircraft, any Engine or any Part;
(c) The offer, sale, or delivery of any Equipment Notes, Pass Through
Certificates or any interest therein or represented thereby; and
(d) Any breach of or failure to perform or observe, or any other
noncompliance with, any covenant or agreement or other obligation to be
performed by Owner under any Operative Agreement to which it is party or any
Pass Through Agreement or the falsity of any representation or warranty of Owner
in any Operative Agreement to which it is party or any Pass Through Agreement.
8.1.2 Exceptions
Notwithstanding anything contained in Section 8.1.1, Owner shall not be
required to indemnify, protect, defend and hold harmless any Indemnitee pursuant
to Section 8.1.1 in respect of any Expense of such Indemnitee:
<PAGE>
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(a) For any Taxes or a loss of Tax benefit, whether or not Owner is
required to indemnify therefor pursuant to Section 8.3;
(b) Except to the extent attributable to acts or events occurring prior
thereto, acts or events (other than acts or events related to the performance by
Owner of its obligations pursuant to the terms of the Operative Agreements) that
occur after the Trust Indenture is required to be terminated in accordance with
Section 11.01 of the Trust Indenture; provided, that nothing in this clause (b)
shall be deemed to exclude or limit any claim that any Indemnitee may have under
applicable Law by reason of an Event of Default or for damages from Owner for
breach of Owner's covenants contained in the Operative Agreements or to release
Owner from any of its obligations under the Operative Agreements that expressly
provide for performance after termination of the Trust Indenture;
(c) To the extent attributable to any Transfer (voluntary or involuntary)
by or on behalf of such Indemnitee of any Equipment Note or interest therein,
except for out-of-pocket costs and expenses incurred as a result of any such
Transfer pursuant to the exercise of remedies under any Operative Agreement;
(d) [Intentionally Omitted]
(e) To the extent attributable to the gross negligence or willful
misconduct of such Indemnitee or any related Indemnitee (as defined below)
(other than gross negligence or willful misconduct imputed to such person by
reason of its interest in the Aircraft or any Operative Agreement);
(f) [Intentionally Omitted]
(g) To the extent attributable to the incorrectness or breach of any
representation or warranty of such Indemnitee or any related Indemnitee
contained in or made pursuant to any Operative Agreement or any Pass Through
Agreement;
(h) To the extent attributable to the failure by such Indemnitee or any
related Indemnitee to perform or observe any agreement, covenant or condition on
its part to be performed or observed in any Operative Agreement or any Pass
Through Agreement;
(i) To the extent attributable to the offer or sale by such Indemnitee or
any related Indemnitee of any interest in the Aircraft, the Equipment Notes, the
Pass Through Certificates, or any similar interest, in violation of the
Securities Act or other
<PAGE>
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applicable federal, state or foreign securities Laws (other than any thereof
caused by acts or omissions of Owner);
(j) (i) With respect to any Indemnitee (other than Mortgagee), to the
extent attributable to the failure of the Mortgagee to distribute funds received
and distributable by it in accordance with the Trust Indenture, (ii) with
respect to any Indemnitee (other than the Subordination Agent), to the extent
attributable to the failure of the Subordination Agent to distribute funds
received and distributable by it in accordance with the Intercreditor Agreement,
(iii) with respect to any Indemnitee (other than the Pass Through Trustees), to
the extent attributable to the failure of a Pass Through Trustee to distribute
funds received and distributable by it in accordance with the Pass Through Trust
Agreements, (iv) with respect to any Indemnitee (other than the Escrow Agent),
to the extent attributable to the failure of the Escrow Agent to pay funds
received and payable by it in accordance with any Escrow Agreement, (v) with
respect to any Indemnitee (other than the Paying Agent), to the extent
attributable to the failure of the Paying Agent to distribute funds received and
distributable by it in accordance with any Escrow Agreement, (vi) to the extent
attributable to the failure of the Depositary to pay funds payable by it in
accordance with any Deposit Agreement, (vii) with respect to Mortgagee, to the
extent attributable to the negligence or willful misconduct of Mortgagee in the
distribution of funds received and distributable by it in accordance with the
Trust Indenture, (viii) with respect to the Subordination Agent, to the extent
attributable to the negligence or willful misconduct of the Subordination Agent
in the distribution of funds received and distributable by it in accordance with
the Intercreditor Agreement, (ix) with respect to the Pass Through Trustees, to
the extent attributable to the negligence or willful misconduct of a Pass
Through Trustee in the distribution of funds received and distributable by it in
accordance with the Pass Through Trust Agreements, (x) with respect to the
Escrow Agent, to the extent attributable to the negligence or willful misconduct
of the Escrow Agent in the payment of funds received and payable by it in
accordance with any Escrow Agreement, and (xi) with respect to the Paying Agent,
to the extent attributable to the negligence or willful misconduct of the Paying
Agent in the distribution of funds received and distributable by it in
accordance with any Escrow Agreement;
(k) Other than during the continuation of an Event of Default, to the
extent attributable to the authorization or giving or withholding of any future
amendments, supplements, waivers or consents with respect to any Operative
Agreement or Pass Through Agreement other than such as have been requested or
consented to
<PAGE>
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in writing by Owner or as are required by or made pursuant to the terms of the
Operative Agreements or Pass Through Agreements (unless such requirement results
from the actions of an Indemnitee not required by or made pursuant to the
Operative Agreements or the Pass Through Agreements);
(l) To the extent attributable to any amount which any Indemnitee expressly
agrees to pay or such Indemnitee expressly agrees shall not be paid by or be
reimbursed by Owner;
(m) To the extent that such expense is a loss of future profits of, a cost
or expense unreasonably incurred by, or an ordinary and usual operating or
overhead expense of, such Indemnitee;
(n) [Intentionally Omitted]
(o) For any Lien in violation of the Operative Agreements attributable to
such Indemnitee or any related Indemnitee;
(p) If another provision of an Operative Agreement or a Pass Through
Agreement specifies the extent of Owner's responsibility or obligation with
respect to such Expense, to the extent arising from other than failure of Owner
to comply with such specified responsibility or obligation;
(q) To the extent incurred by or asserted against an Indemnitee as a result
of any "prohibited transaction", within the meaning of Section 406 of ERISA or
Section 4975(c)(1) of the Code; or
(r) For any loss attributable to, arising from or in connection with any
inspections or inspection rights arising from or in connection with any of the
Operative Agreements or the Transactions.
For purposes of this Section 8.1, a Person shall be considered a "related"
Indemnitee with respect to an Indemnitee if such Person is an Affiliate or
employer of such Indemnitee, a director, officer, employee, agent, or servant of
such Indemnitee or any such Affiliate or a successor or permitted assignee of
any of the foregoing.
8.1.3 Separate Agreement
This Agreement constitutes a separate agreement with respect to each
Indemnitee and is enforceable directly by each such Indemnitee.
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8.1.4 Notice
If a claim for any Expense that an Indemnitee shall be indemnified against
under this Section 8.1 is made, such Indemnitee shall give prompt written notice
thereof to Owner. Notwithstanding the foregoing, the failure of any Indemnitee
to notify Owner as provided in this Section 8.1.4, or in Section 8.1.5, shall
not release Owner from any of its obligations to indemnify such Indemnitee
hereunder, except to the extent that such failure results in an additional
Expense to Owner (in which event Owner shall not be responsible for such
additional Expense) or materially impairs Owner's ability to contest such claim.
8.1.5 Notice of Proceedings; Defense of Claims; Limitations
(a) In case any action, suit or proceeding shall be brought against any
Indemnitee for which Owner is responsible under this Section 8.1, such
Indemnitee shall notify Owner of the commencement thereof and Owner may, at its
expense, participate in and to the extent that it shall wish (subject to the
provisions of the following paragraph), assume and control the defense thereof
and, subject to Section 8.1.5(c), settle or compromise the same.
(b) Owner or its insurer(s) shall have the right, at its or their expense,
to investigate or, if Owner or its insurer(s) shall agree not to dispute
liability to the Indemnitee giving notice of such action, suit or proceeding
under this Section 8.1.5 for indemnification hereunder or under any insurance
policies pursuant to which coverage is sought, control the defense of, any
action, suit or proceeding, relating to any Expense for which indemnification is
sought pursuant to this Section 8.1, and each Indemnitee shall cooperate with
Owner or its insurer(s) with respect thereto; provided, that Owner shall not be
entitled to control the defense of any such action, suit, proceeding or
compromise any such Expense during the continuance of any Event of Default. In
connection with any such action, suit or proceeding being controlled by Owner,
such Indemnitee shall have the right to participate therein, at its sole cost
and expense, with counsel reasonably satisfactory to Owner; provided, that such
Indemnitee's participation does not, in the reasonable opinion of the
independent counsel appointed by the Owner or its insurers to conduct such
proceedings, interfere with the defense of such case.
(c) In no event shall any Indemnitee enter into a settlement or other
compromise with respect to any Expense without the prior written consent of
Owner, which consent shall not be unreasonably withheld or delayed, unless such
Indemnitee waives its
<PAGE>
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right to be indemnified with respect to such Expense under this Section 8.1.
(d) In the case of any Expense indemnified by the Owner hereunder which is
covered by a policy of insurance maintained by Owner pursuant to Section 4.06 of
the Indenture, at Owner's expense, each Indemnitee agrees to cooperate with the
insurers in the exercise of their rights to investigate, defend or compromise
such Expense as may be required to retain the benefits of such insurance with
respect to such Expense.
(e) If an Indemnitee is not a party to this Agreement, Owner may require
such Indemnitee to agree in writing to the terms of this Section 8 and Section
12.8 prior to making any payment to such Indemnitee under this Section 8.
(f) Nothing contained in this Section 8.1.5 shall be deemed to require an
Indemnitee to contest any Expense or to assume responsibility for or control of
any judicial proceeding with respect thereto.
8.1.6 Information
Owner will provide the relevant Indemnitee with such information not within
the control of such Indemnitee, as is in Owner's control or is reasonably
available to Owner, which such Indemnitee may reasonably request and will
otherwise cooperate with such Indemnitee so as to enable such Indemnitee to
fulfill its obligations under Section 8.1.5. The Indemnitee shall supply Owner
with such information not within the control of Owner, as is in such
Indemnitee's control or is reasonably available to such Indemnitee, which Owner
may reasonably request to control or participate in any proceeding to the extent
permitted by Section 8.1.5.
8.1.7 Effect of Other Indemnities; Subrogation; Further Assurances
Upon the payment in full by Owner of any indemnity provided for under this
Agreement, Owner, without any further action and to the full extent permitted by
Law, will be subrogated to all rights and remedies of the person indemnified
(other than with respect to any of such Indemnitee's insurance policies or in
connection with any indemnity claim such Indemnitee may have under Section 6.03
or 8.01 of the Trust Indenture) in respect of the matter as to which such
indemnity was paid. Each Indemnitee will give such further assurances or
agreements and cooperate with Owner to
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permit Owner to pursue such claims, if any, to the extent reasonably requested
by Owner and at Owner's expense.
8.1.8 Refunds
If an Indemnitee receives any refund, in whole or in part, with respect to
any Expense paid by Owner hereunder, it will promptly pay the amount refunded
(but not an amount in excess of the amount Owner or any of its insurers has paid
in respect of such Expense) over to Owner unless an Event of Default shall have
occurred and be continuing, in which case such amounts shall be paid over to
Mortgagee to hold as security for Owner's obligations under the Operative
Agreements or, if requested by Owner, applied to satisfy such obligations.
8.2. Expenses
8.2.1 Invoices and Payment
The Mortgagee, the Pass Through Trustees and the Subordination Agent shall
promptly submit to Owner for its prompt approval (which shall not be
unreasonably withheld) copies of invoices in reasonable detail of the
Transaction Expenses for which it is responsible for providing information as
they are received (but in no event later than the 90th day after the Closing
Date). If so submitted and approved, the Owner agrees promptly, but in any event
no later than the 105th day after the Closing Date, to pay Transaction Expenses.
8.2.2 Payment of Other Expenses
Owner shall pay (i) the ongoing fees and expenses of Mortgagee, and (ii)
all reasonable out-of-pocket costs and expenses (including the reasonable fees
and disbursements of counsel) incurred by Mortgagee or any Note Holder
attributable to any waiver, amendment or modification of any Operative Agreement
to the extent requested or consented to in writing by Owner.
8.3. General Tax Indemnity
8.3.1 General
Except as provided in Section 8.3.2, Owner agrees that each payment paid by
Owner under the Equipment Notes, and any other payment or indemnity paid by
Owner to a Tax Indemnitee under any Operative Agreement, shall be free of all
withholdings or deductions with respect to Taxes of any nature (other than U.S.
federal, state or local withholding taxes on, based on or measured by
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gross or net income), and in the event that Owner shall be required by
applicable law to make any such withholding or deduction for any such payment
(x) Owner shall make all such withholdings or deductions, (y) the amount payable
by Owner shall be increased so that after making all required withholdings or
deductions such Tax Indemnitee receives the same amount that it would have
received had no such withholdings or deductions been made, and (z) Owner shall
pay the full amount withheld or deducted to the relevant Taxing Authority in
accordance with applicable law. Except as provided in Section 8.3.2 and whether
or not any of the transactions contemplated hereby are consummated, Owner shall
pay, indemnify, protect, defend and hold each Tax Indemnitee harmless from all
Taxes imposed by any Taxing Authority that may from time to time be imposed on
or asserted against any Tax Indemnitee or the Aircraft, the Airframe, any Engine
or any Part or any interest in any of the foregoing (whether or not indemnified
against by any other Person), upon or with respect to the Operative Agreements
or the transactions or payments contemplated thereby, including but not limited
to any Tax imposed upon or with respect to (x) the Aircraft, the Airframe, any
Engine, any Part, any Operative Agreement (including without limitation any
Equipment Notes) or any data or any other thing delivered or to be delivered
under an Operative Agreement, (y) the purchase, manufacture, acceptance,
rejection, sale, transfer of title, return, ownership, mortgaging, delivery,
transport, charter, rental, lease, re-lease, sublease, assignment, possession,
repossession, presence, use, condition, storage, preparation, maintenance,
modification, alteration, improvement, operation, registration, transfer or
change of registration, reregistration, repair, replacement, overhaul, location,
control, the imposition of any Lien, financing, refinancing requested by the
Owner, abandonment or other disposition of the Aircraft, the Airframe, any
Engine, any Part, any data or any other thing delivered or to be delivered under
an Operative Agreement or (z) interest, fees or any other income, proceeds,
receipts or earnings, whether actual or deemed, arising upon, in connection
with, or in respect of, any of the Operative Agreements (including the property
or income or other proceeds with respect to property held as part of the
Collateral) or the transactions contemplated thereby.
8.3.2 Certain Exceptions
The provisions of Section 8.3.1 shall not apply to, and Owner shall have no
liability hereunder for, Taxes:
(a) imposed on a Tax Indemnitee by the federal government of the United
States or any Taxing Authority or governmental subdivision of the United States
or therein (including any state
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or local Taxing Authority) (i) on, based on, or measured by, gross or net income
or gross or net receipts, including capital gains taxes, excess profits taxes,
minimum taxes from tax preferences, alternative minimum taxes, branch profits
taxes, accumulated earnings taxes, personal holding company taxes, succession
taxes and estate taxes, and any withholding taxes on, based on or measured by
gross or net income or receipts or (ii) on, or with respect to, or measured by,
capital or net worth or in the nature of a franchise tax or a tax for the
privilege of doing business (other than, in the case of clause (i) or (ii),
sales, use, license or property Taxes);
(b) imposed on a Tax Indemnitee by any Taxing Authority or governmental
subdivision thereof or therein outside of the United States (including any
Taxing Authority in or of a territory, possession or commonwealth of the United
States) (i) on, based on, or measured by, gross or net income or gross or net
receipts, including capital gains taxes, excess profits taxes, minimum taxes
from tax preferences, alternative minimum taxes, branch profits taxes,
accumulated earnings taxes, personal holding company taxes, succession taxes and
estate taxes, and any withholding taxes on, based on or measured by gross or net
income or receipts or (ii) on, or with respect to, or measured by, capital or
net worth or in the nature of a franchise tax or a tax for the privilege of
doing business (other than, in the case of clause (i) or (ii), (A) sales, use,
license or property Taxes, or (B) any Taxes imposed by any Taxing Authority
(other than a Taxing Authority within whose jurisdiction such Tax Indemnitee is
incorporated or organized or maintains its principal place of business) if such
Tax Indemnitee would not have been subject to Taxes of such type by such
jurisdiction but for (I) the location, use or operation of the Aircraft, the
Airframe, any Engine or any Part thereof by an Owner Person within the
jurisdiction of the Taxing Authority imposing such Tax, or (II) the activities
of any Owner Person in such jurisdiction, including, but not limited to, use of
any other aircraft by Owner in such jurisdiction, (III) the status of any Owner
Person as a foreign entity or as an entity owned in whole or in part by foreign
persons, (IV) Owner having made (or having been deemed to have made) payments to
such Tax Indemnitee from the relevant jurisdiction or (V) in the case of the
Pass Through Trustees, the Note Holders or any related Tax Indemnitee, the Owner
being incorporated or organized or maintaining a place of business or conducting
activities in such jurisdiction);
(c) on, or with respect to, or measured by, any trustee fees, commissions
or compensation received by the Pass Through Trustee, Subordination Agent or
Mortgagee;
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(d) that are being contested as provided in Section 8.3.4 hereof;
(e) imposed on any Tax Indemnitee to the extent that such Taxes result from
the gross negligence or willful misconduct of such Tax Indemnitee or any
Affiliate thereof;
(f) imposed on or with respect to a Tax Indemnitee (including the
transferee in those cases in which the Tax on transfer is imposed on, or is
collected from, the transferee) as a result of a transfer or other disposition
(including a deemed transfer or disposition) by such Tax Indemnitee or a related
Tax Indemnitee of any interest in the Aircraft, the Airframe, any Engine or any
Part, any interest arising under the Operative Agreements or any Equipment Note
or as a result of a transfer or disposition (including a deemed transfer or
disposition) of any interest in a Tax Indemnitee (other than (A) a substitution
or replacement of the Aircraft, the Airframe, any Engine or any Part by an Owner
Person that is treated for Tax purposes as a transfer or disposition, or (B) a
transfer pursuant to an exercise of remedies upon an Event of Default that shall
have occurred and have been continuing);
(g) Taxes in excess of those that would have been imposed had there not
been a transfer or other disposition by or to such Tax Indemnitee or a related
Tax Indemnitee described in paragraph (f) above; (h) consisting of any interest,
penalties or additions to tax imposed on a Tax Indemnitee as a result of (in
whole or in part) failure of such Tax Indemnitee or a related Tax Indemnitee to
file any return properly and timely, unless such failure shall be caused by the
failure of Owner to fulfill its obligations, if any, under Section 8.3.6 with
respect to such return;
(i) resulting from, or that would not have been imposed but for, any Liens
arising as a result of claims against, or acts or omissions of, or otherwise
attributable to such Tax Indemnitee or a related Tax Indemnitee that the owner
is not obligated to discharge under the Operative Agreements;
(j) imposed on any Tax Indemnitee as a result of the breach by such Tax
Indemnitee or a related Tax Indemnitee of any covenant of such Tax Indemnitee or
any Affiliate thereof contained in any Operative Agreement or the inaccuracy of
any representation or warranty by such Tax Indemnitee or any Affiliate thereof
in any Operative Agreement;
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(k) in the nature of an intangible or similar Tax (i) upon or with respect
to the value or principal amount of the interest of any Note Holder in any
Equipment Note or the loan evidenced thereby but only if such Taxes are in the
nature of franchise Taxes or result from the Tax Indemnitee doing business in
the taxing jurisdiction and are imposed because of the place of incorporation or
the activities unrelated to the transactions contemplated by the Operative
Agreements in the taxing jurisdiction of such Tax Indemnitee;
(l) imposed on a Tax Indemnitee by a Taxing Authority of a jurisdiction
outside the United States to the extent that such Taxes would not have been
imposed but for a connection between the Tax Indemnitee or a related Tax
Indemnitee and such jurisdiction imposing such Tax unrelated to the transactions
contemplated by the Operative Agreements; or
(m) Taxes relating to ERISA or Section 4975 of the Code.
For purposes hereof, a Tax Indemnitee and any other Tax Indemnitees that
are successors, assigns, agents, servants or Affiliates of such Tax Indemnitee
shall be related Tax Indemnitees.
8.3.3 Payment
(a) Owner's indemnity obligation to a Tax Indemnitee under this Section 8.3
shall equal the amount which, after taking into account any Tax imposed upon the
receipt or accrual of the amounts payable under this Section 8.3 and any tax
benefits actually recognized by such Tax Indemnitee as a result of the
indemnifiable Tax (including, without limitation, any benefits recognized as a
result of an indemnifiable Tax being utilized by such Tax Indemnitee as a credit
against Taxes not indemnifiable under this Section 8.3), shall equal the amount
of the Tax indemnifiable under this Section 8.3.
(b) At Owner's request, the computation of the amount of any indemnity
payment owed by Owner or any amount owed by a Tax Indemnitee to Owner pursuant
to this Section 8.3 shall be verified and certified by an independent public
accounting firm selected by such Tax Indemnitee and reasonably satisfactory to
Owner. Such verification shall be binding. The costs of such verification
(including the fee of such public accounting firm) shall be borne by Owner
unless such verification shall result in an adjustment in Owner's favor of 5% or
more of the net present value of the payment as computed by such Tax Indemnitee,
in which case the costs shall be paid by such Tax Indemnitee.
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(c) Each Tax Indemnitee shall provide Owner with such certifications,
information and documentation as shall be in such Tax Indemnitee's possession
and as shall be reasonably requested by Owner to minimize any indemnity payment
pursuant to this Section 8.3; provided, that notwithstanding anything to the
contrary contained herein, no Tax Indemnitee shall be required to provide Owner
with any Tax returns.
(d) Each Tax Indemnitee shall promptly forward to Owner any written notice,
bill or advice received by it from any Taxing Authority concerning any Tax for
which it seeks indemnification under this Section 8.3. Owner shall pay any
amount for which it is liable pursuant to this Section 8.3 directly to the
appropriate Taxing Authority if legally permissible or upon demand of a Tax
Indemnitee, to such Tax Indemnitee within 30 days of such demand (or, if a
contest occurs in accordance with Section 8.3.4, within 30 days after a Final
Determination (as defined below)), but in no event more than one Business Day
prior to the date the Tax to which such amount payable hereunder relates is due.
If requested by a Tax Indemnitee in writing, Owner shall furnish to the
appropriate Tax Indemnitee the original or a certified copy of a receipt for
Owner's payment of any Tax paid by Owner or such other evidence of payment of
such Tax as is acceptable to such Tax Indemnitee. Owner shall also furnish
promptly upon written request such data as any Tax Indemnitee may reasonably
require to enable such Tax Indemnitee to comply with the requirements of any
taxing jurisdiction unless such data is not reasonably available to Owner or,
unless such data is specifically requested by a Taxing Authority, is not
customarily furnished by domestic air carriers under similar circumstances. For
purposes of this Section 8.3, a "Final Determination" shall mean (i) a decision,
judgment, decree or other order by any court of competent jurisdiction that
occurs pursuant to the provisions of Section 8.3.4, which decision, judgment,
decree or other order has become final and unappealable, (ii) a closing
agreement or settlement agreement entered into in accordance with Section 8.3.4
that has become binding and is not subject to further review or appeal (absent
fraud, misrepresentation, etc.), or (iii) the termination of administrative
proceedings and the expiration of the time for instituting a claim in a court
proceeding.
(e) If any Tax Indemnitee shall actually realize a tax savings by reason of
any Tax paid or indemnified by Owner pursuant to this Section 8.3 (whether such
tax savings shall be by means of a foreign tax credit, depreciation or cost
recovery deduction or otherwise) and such savings is not otherwise taken into
account in computing such payment or indemnity such Tax Indemnitee shall pay to
Owner an amount equal to the lesser of (i) the amount of such
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tax savings, plus any additional tax savings recognized as the result of any
payment made pursuant to this sentence, when, as, if, and to the extent,
realized or (ii) the amount of all payments pursuant to this Section 8.3 by
Owner to such Tax Indemnitee (less any payments previously made by such Tax
Indemnitee to Owner pursuant to this Section 8.3.3 (e)) (and the excess, if any,
of the amount described in clause (i) over the amount described in clause (ii)
shall be carried forward and applied to reduce pro tanto any subsequent
obligations of Owner to make payments to such Tax Indemnitee pursuant to this
Section 8.3); provided, that such Tax Indemnitee shall not be required to make
any payment pursuant to this sentence so long as a Lease Event of Default of a
monetary nature has occurred and is continuing. If a tax benefit is later
disallowed or denied, the disallowance or denial shall be treated as a Tax
indemnifiable under Section 8.3.1 without regard to the provisions of Section
8.3.2 (other than Section 8.3.2 (f)). Each such Tax Indemnitee shall in good
faith use reasonable efforts in filing its tax returns and in dealing with
Taxing Authorities to seek and claim any such tax benefit.
8.3.4 Contest
(a) If a written claim is made against a Tax Indemnitee for Taxes with
respect to which Owner could be liable for payment or indemnity hereunder, or if
a Tax Indemnitee makes a determination that a Tax is due for which Owner could
have an indemnity obligation hereunder, such Tax Indemnitee shall promptly give
Owner notice in writing of such claim (provided, that failure to so notify Owner
shall not relieve Owner of its indemnity obligations hereunder unless such
failure to notify effectively forecloses Owner's rights to require a contest of
such claim) and shall take no action with respect to such claim without the
prior written consent of Owner for 30 days following the receipt of such notice
by Owner; provided, that, in the case of a claim made against a Tax Indemnitee,
if such Tax Indemnitee shall be required by law to take action prior to the end
of such 30-day period, such Tax Indemnitee shall, in such notice to Owner, so
inform Owner, and such Tax Indemnitee shall take no action for as long as it is
legally able to do so (it being understood that a Tax Indemnitee shall be
entitled to pay the Tax claimed and sue for a refund prior to the end of such
30-day period if (i)(A) the failure to so pay the Tax would result in
substantial penalties (unless immediately reimbursed by Owner) and the act of
paying the Tax would not materially prejudice the right to contest or (B) the
failure to so pay would result in criminal penalties and (ii) such Tax
Indemnitee shall take any action so required in connection with so paying the
Tax in a manner that is the least prejudicial to the pursuit of the contest). In
addition, such Tax Indemnitee shall (provided,
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that Owner shall have agreed to keep such information confidential other than to
the extent necessary in order to contest the claim) furnish Owner with copies of
any requests for information from any Taxing Authority relating to such Taxes
with respect to which Owner may be required to indemnify hereunder. If requested
by Owner in writing within 30 days after its receipt of such notice, such Tax
Indemnitee shall, at the expense of Owner (including, without limitation, all
reasonable costs, expenses and reasonable attorneys' and accountants' fees and
disbursements), in good faith contest (or, if permitted by applicable law, allow
Owner to contest) through appropriate administrative and judicial proceedings
the validity, applicability or amount of such Taxes by (I) resisting payment
thereof, (II) not paying the same except under protest if protest is necessary
and proper or (III) if the payment is made, using reasonable efforts to obtain a
refund thereof in an appropriate administrative and/or judicial proceeding. If
requested to do so by Owner, the Tax Indemnitee shall appeal any adverse
administrative or judicial decision, except that the Tax Indemnitee shall not be
required to pursue any appeals to the United States Supreme Court. If and to the
extent the Tax Indemnitee is able to separate the contested issue or issues from
other issues arising in the same administrative or judicial proceeding that are
unrelated to the transactions contemplated by the Operative Agreements without,
in the good faith judgment of such Tax Indemnitee, adversely affecting such Tax
Indemnitee, such Tax Indemnitee shall permit Owner to control the conduct of any
such proceeding and shall provide to Owner (at Owner's cost and expense) with
such information or data that is in such Tax Indemnitee's control or possession
that is reasonably necessary to conduct such contest. In the case of a contest
controlled by a Tax Indemnitee, such Tax Indemnitee shall consult with Owner in
good faith regarding the manner of contesting such claim and shall keep Owner
reasonably informed regarding the progress of such contest. A Tax Indemnitee
shall not fail to take any action expressly required by this Section 8.3.4
(including, without limitation, any action regarding any appeal of an adverse
determination with respect to any claim) or settle or compromise any claim
without the prior written consent of the Owner (except as contemplated by
Section 8.3.4(b) or (c)).
(b) Notwithstanding the foregoing, in no event shall a Tax Indemnitee be
required to pursue any contest (or to permit Owner to pursue any contest) unless
(i) Owner shall have agreed to pay such Tax Indemnitee on demand all reasonable
costs and expenses incurred by such Tax Indemnitee in connection with contesting
such Taxes, including, without limitation, all reasonable out of pocket costs
and expenses and reasonable attorneys' and accountants' fees and disbursements,
(ii) if such contest shall in-
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volve the payment of the claim, Owner shall advance the amount thereof (to the
extent indemnified hereunder) plus interest, penalties and additions to tax with
respect thereto that are required to be paid prior to the commencement of such
contest on an interest-free after-Tax basis to such Tax Indemnitee (and such Tax
Indemnitee shall promptly pay to the Owner any net realized tax benefits
resulting from such advance including any tax benefits resulting from making
such payment), (iii) such Tax Indemnitee shall have reasonably determined that
the action to be taken will not result in any material risk of forfeiture, sale
or loss of the Aircraft (unless Owner shall have made provisions to protect the
interests of any such Tax Indemnitee in a manner reasonably satisfactory to such
Tax Indemnitee) (provided, that such Tax Indemnitee agrees to notify Owner in
writing promptly after it becomes aware of any such risk), (iv) no Lease Event
of Default shall have occurred and be continuing unless Owner has provided
security for its obligations hereunder by advancing to such Tax Indemnitee
before proceeding or continuing with such contest, the amount of the Tax being
contested, plus any interest and penalties and an amount estimated in good faith
by such Tax Indemnitee for expenses, and (v) prior to commencing any judicial
action controlled by Owner, Owner shall have acknowledged its liability for such
claim hereunder, provided that Owner shall not be bound by its acknowledgment if
the Final Determination articulates conclusions of law and fact that demonstrate
that Owner has no liability for the contested amounts hereunder. Notwithstanding
the foregoing, if any Tax Indemnitee shall release, waive, compromise or settle
any claim which may be indemnifiable by owner pursuant to this Section 8.3
without the written permission of Owner, Owner's obligation to indemnify such
Tax Indemnitee with respect to such claim (and all directly related claims and
claims based on the outcome of such claim) shall terminate, subject to Section
8.3.4(c), and subject to Section 8.3.4(c), such Tax Indemnitee shall repay to
Owner any amount previously paid or advanced to such Tax Indemnitee with respect
to such claim, plus interest at the rate that would have been payable by the
relevant Taxing Authority with respect to a refund of such Tax.
(c) Notwithstanding anything contained in this Section 8.3, a Tax
Indemnitee will not be required to contest the imposition of any Tax and shall
be permitted to settle or compromise any claim without Owner's consent if such
Tax Indemnitee (i) shall waive its right to indemnity under this Section 8.3
with respect to such Tax (and any directly related claim and any claim the
outcome of which is determined based upon the outcome of such claim), (ii) shall
pay to Owner any amount previously paid or advanced by Owner pursuant to this
Section 8.3 with respect to such Tax, plus interest at the rate that would have
been payable by the relevant
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Taxing Authority with respect to a refund of such Tax, and (iii) shall agree to
discuss with Owner the views or positions of any relevant Taxing Authority with
respect to the imposition of such Tax.
8.3.5 Refund
If any Tax Indemnitee shall receive a refund of, or be entitled to a credit
against other liability for, all or any part of any Taxes paid, reimbursed or
advanced by Owner, such Tax Indemnitee shall pay to Owner within 30 days of such
receipt an amount equal to the lesser of (a) the amount of such refund or credit
plus any net tax benefit (taking into account any taxes incurred by such Tax
Indemnitee by reason of the receipt of such refund or realization of such
credit) actually realized by such Tax Indemnitee as a result of any payment by
such Tax Indemnitee made pursuant to this sentence (including this clause (a))
and (b) such tax payment, reimbursement or advance by Owner to such Tax
Indemnitee theretofore made pursuant to this Section 8.3 (and the excess, if
any, of the amount described in clause (a) over the amount described in clause
(b) shall be carried forward and applied to reduce pro tanto any subsequent
obligation of Owner to make payments to such Tax Indemnitee pursuant to this
Section 8.3). If, in addition to such refund or credit, such Tax Indemnitee
shall receive (or be credited with) an amount representing interest on the
amount of such refund or credit, such Tax Indemnitee shall pay to owner within
30 days of such receipt or realization of such credit that proportion of such
interest that shall be fairly attributable to Taxes paid, reimbursed or advanced
by Owner prior to the receipt of such refund or realization of such credit.
8.3.6 Tax Filing
If any report, return or statement is required to be filed with respect to
any Tax which is subject to indemnification under this Section 8.3, Owner shall
timely file the same (except for any such report, return or statement which a
Tax Indemnitee has timely notified the Owner in writing that such Tax Indemnitee
intends to file, or for which such Tax Indemnitee is required by law to file, in
its own name); provided, that the relevant Tax Indemnitee shall furnish Owner
with any information in such Tax Indemnitee's possession or control that is
reasonably necessary to file any such return, report or statement and is
reasonably requested in writing by Owner (it being understood that the Tax
Indemnitee shall not be required to furnish copies of its actual tax returns,
although it may be required to furnish relevant information contained therein).
Owner shall either file such report, return or statement and send a copy of such
report, return or state-
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ment to such Tax Indemnitee, or, where Owner is not permitted to file such
report, return or statement, it shall notify such Tax Indemnitee of such
requirement and prepare and deliver such report, return or statement to such Tax
Indemnitee in a manner satisfactory to such Tax Indemnitee within a reasonable
time prior to the time such report, return or statement is to be filed.
8.3.7 Forms
Each Tax Indemnitee agrees to furnish from time to time to Owner or
Mortgagee or to such other person as Owner or Mortgagee may designate, at
Owner's or Mortgagee's request, such duly executed and properly completed forms
as may be necessary or appropriate in order to claim any reduction of or
exemption from any withholding or other Tax imposed by any Taxing Authority, if
(x) such reduction or exemption is available to such Tax Indemnitee and (y)
Owner has provided such Tax Indemnitee with any information necessary to
complete such form not otherwise reasonably available to such Tax Indemnitee.
8.3.8 Non-Parties
If a Tax Indemnitee is not a party to this Agreement, Owner may require the
Tax Indemnitee to agree in writing, in a form reasonably acceptable to Owner, to
the terms of this Section 8.3 and Section 15.8 prior to making any payment to
such Tax Indemnitee under this Section 8.3.
8.3.9 Subrogation
Upon payment of any Tax by Owner pursuant to this Section 8.3 to or on
behalf of a Tax Indemnitee, Owner, without any further action, shall be
subrogated to any claims that such Tax Indemnitee may have relating thereto.
Such Tax Indemnitee shall cooperate with Owner (to the extent such cooperation
does not result in any unreimbursed cost, expense or liability to such Tax
Indemnitee) to permit Owner to pursue such claims.
8.4. Payments
Any payments made pursuant to Section 8.1 or 8.3 shall be due on the 60th
day after demand therefor and shall be made directly to the relevant Indemnitee
or Tax Indemnitee or to Owner, in immediately available funds at such bank or to
such account as specified by such Indemnitee or Tax Indemnitee or Owner, as the
case may be, in written directives to the payor, or, if no such direction shall
have been given, by check of the payor payable to the order of, and mailed to,
such Indemnitee or Tax Indemnitee or
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Owner, as the case may be, by certified mail, postage prepaid, at its address as
set forth in this Agreement.
8.5. Interest
If any amount, payable by Owner, any Indemnitee or any Tax Indemnitee under
Section 8.1 or 8.3 is not paid when due, the person obligated to make such
payment shall pay on demand, to the extent permitted by Law, to the person
entitled thereto, interest on any such amount for the period from and including
the due date for such amount to but excluding the date the same is paid, at the
Payment Due Rate. Such interest shall be paid in the same manner as the unpaid
amount in respect of which such interest is due.
8.6. Benefit of Indemnities
The obligations of Owner in respect of all indemnities, obligations,
adjustments and payments in Section 8.1 or 8.3 are expressly made for the
benefit of, and shall be enforceable by, the Indemnitee or Tax Indemnitee
entitled thereto, notwithstanding any provision of the Trust Indenture.
SECTION 9. ASSIGNMENT OR TRANSFER OF INTEREST
9.1. Note Holders
Subject to Section 6.3.2 hereof and Section 2.07 of the Trust Indenture,
any Note Holder may, at any time and from time to time, Transfer or grant
participations in all or any portion of the Equipment Notes and/or all or any
portion of its beneficial interest in its Equipment Notes to any person (it
being understood that the sale or issuance of Pass Through Certificates by a
Pass Through Trustee shall not be considered a Transfer or participation);
provided, that any participant in any such participations shall not have any
direct rights under the Operative Agreements or any Lien on all or any part of
the Aircraft or the Collateral and Owner shall not have any increased liability
or obligations as a result of any such participation. In the case of any such
Transfer, the Transferee, by acceptance of Equipment Notes in connection with
such Transfer, shall be deemed to be bound by all of the covenants of Note
Holders contained in the Operative Agreements.
9.2. Effect of Transfer
Upon any Transfer in accordance with Section 9.1 (other than any Transfer
by any Note Holder, to the extent it only grants participations in Equipment
Notes or in its beneficial interest therein) , Transferee shall be deemed a
"Note Holder," for all
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purposes of this Agreement and the other Operative Agreements, and the
transferring Note Holder shall be released from all of its liabilities and
obligations under this Agreement and any other Operative Agreements to the
extent such liabilities and obligations arise after such Transfer and, in each
case, to the extent such liabilities and obligations are assumed by the
Transferee; provided, that such transferring Note Holder (and its respective
Affiliates, successors, assigns, agents, servants, representatives, directors
and officers) will continue to have the benefit of any rights or indemnities
under any Operative Agreement vested or relating to circumstances, conditions,
acts or events prior to such Transfer.
SECTION 10. SECTION 1110
It is the intention of each of the Owner, the Note Holders (such intention
being evidenced by each of their acceptance of an Equipment Note), and Mortgagee
that Mortgagee shall be entitled to the benefits of Section 1110 in the event of
a case under Chapter 11 of the Bankruptcy Code in which Owner is a debtor.
SECTION 11. CHANGE OF CITIZENSHIP
11.1. Generally
Without prejudice to the representations, warranties or covenants regarding
the status of any party hereto as a Citizen of the United States, each of Owner,
WTC and Mortgagee agrees that it will, immediately upon obtaining knowledge of
any facts that would cast doubt upon its continuing status as a Citizen of the
United States and promptly upon public disclosure of negotiations in respect of
any transaction which would or might adversely affect such status, notify in
writing all parties hereto of all relevant matters in connection therewith.
11.2. Mortgagee
Upon WTC giving any notice in accordance with Section 11.1, Mortgagee shall
(if and so long as such citizenship is necessary under the Act as in effect at
such time or, if it is not necessary, if and so long as Mortgagee's citizenship
could have any adverse effect on Owner, or any Note Holder), subject to Section
9.02 of the Trust Indenture, resign as Mortgagee promptly upon its ceasing to be
such a citizen.
SECTION 12. MISCELLANEOUS
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12.1. Amendments
No provision of this Agreement may be amended, supplemented, waived,
modified, discharged, terminated or otherwise varied orally, but only by an
instrument in writing that specifically identifies the provision of this
Agreement that it purports to amend, supplement, waive, modify, discharge,
terminate or otherwise vary and is signed by the party against which the
enforcement of the amendment, supplement, waiver, modification, discharge,
termination or variance is sought. Each such amendment, supplement, waiver,
modification, discharge, termination or variance shall be effective only in the
specific instance and for the specific purpose for which it is given. No
provision of this Agreement shall be varied or contradicted by oral
communication, course of dealing or performance or other manner not set forth in
an agreement, document or instrument in writing and signed by the party against
which enforcement of the same is sought.
12.2. Severability
If any provision hereof shall be held invalid, illegal or unenforceable in
any respect in any jurisdiction, then, to the extent permitted by Law, (a) all
other provisions hereof shall remain in full force and effect in such
jurisdiction and (b) such invalidity, illegality or unenforceability shall not
affect the validity, legality or enforceability of such provision in any other
jurisdiction. If, however, any Law pursuant to which such provisions are held
invalid, illegal or unenforceable may be waived, such Law is hereby waived by
the parties hereto to the full extent permitted, to the end that this Agreement
shall be deemed to be a valid and binding agreement in all respects, enforceable
in accordance with its terms.
12.3. Survival
The indemnities set forth herein shall survive the delivery or return of
the Aircraft, the Transfer of any interest by any Note Holder of its Equipment
Note and the expiration or other termination of this Agreement or any other
Operative Agreement.
12.4. Reproduction of Documents
This Agreement, all schedules and exhibits hereto and all agreements,
instruments and documents relating hereto, including, without limitation, (a)
consents, waivers and modifications that may hereafter be executed and (b)
financial statements, certificates and other information previously or hereafter
furnished to any party hereto, may be reproduced by such party by any
photo-
<PAGE>
-44-
graphic, photostatic, microfilm, micro-card, miniature photographic or other
similar process, and such party may destroy any original documents so
reproduced. Any such reproduction shall be as admissible in evidence as the
original itself in any judicial or administrative proceeding (whether or not the
original is in existence and whether or not such reproduction was made by such
party in the regular course of business) and any enlargement, facsimile or
further reproduction of such reproduction likewise is admissible in evidence.
12.5. Counterparts
This Agreement and any amendments, waivers, consents or supplements hereto
may be executed in any number of counterparts (or upon separate signature pages
bound together into one or more counterparts), each of which when so executed
shall be deemed to be an original, and all of which counterparts, taken
together, shall constitute one and the same instrument.
12.6. No Waiver
No failure on the part of any party hereto to exercise, and no delay by any
party hereto in exercising, any of its respective rights, powers, remedies or
privileges under this Agreement or provided at Law, in equity or otherwise shall
impair, prejudice or constitute a waiver of any such right, power, remedy or
privilege or be construed as a waiver of any breach hereof or default hereunder
or as an acquiescence therein nor shall any single or partial exercise of any
such right, power, remedy or privilege preclude any other or further exercise
thereof by it or the exercise of any other right, power, remedy or privilege by
it. No notice to or demand on any party hereto in any case shall, unless
otherwise required under this Agreement, entitle such party to any other or
further notice or demand in similar or other circumstances or constitute a
waiver of the rights of any party hereto to any other or further action in any
circumstances without notice or demand.
12.7. Notices
Unless otherwise expressly permitted by the terms hereof, all notices,
requests, demands, authorizations, directions, consents, waivers and other
communications required or permitted to be made, given, furnished or filed
hereunder shall be in writing (it being understood that the specification of a
writing in certain instances and not in others does not imply an intention that
a writing is not required as to the latter), shall refer specifically to this
Agreement or other applicable Operative Agree-
<PAGE>
-45-
ment, and shall be personally delivered, sent by facsimile (followed by
overnight courier service by next Business Day receipt) or telecommunication
transmission (which in either case provides written confirmation to the sender
of its delivery), sent by registered mail or certified mail, return receipt
requested, postage prepaid, or sent by overnight courier service, in each case
to the respective address, or facsimile number set forth for such party in
Schedule 1, or to such other address, facsimile or other number as each party
hereto may hereafter specify by notice to the other parties hereto. Each such
notice, request, demand, authorization, direction, consent, waiver or other
communication shall be effective when received or, if made, given, furnished or
filed (a) by facsimile or telecommunication transmission, when confirmed;
provided there is receipt of such notice the next Business Day from an overnight
courier service or (b) by registered or certified mail, three Business Days
after being deposited, properly addressed, with the U.S. Postal Service.
12.8. GOVERNING LAW; SUBMISSION TO JURISDICTION; VENUE
(a) THIS AGREEMENT SHALL IN ALL RESPECTS BE GOVERNED BY THE LAWS OF THE
STATE OF NEW YORK, INCLUDING ALL MATTERS OF CONSTRUCTION, VALIDITY AND
PERFORMANCE. THIS AGREEMENT IS BEING DELIVERED IN THE STATE OF NEW YORK.
(b) EACH PARTY HERETO HEREBY IRREVOCABLY AGREES, ACCEPTS AND SUBMITS ITSELF
TO THE NON-EXCLUSIVE JURISDICTION OF THE COURTS OF THE STATE OF NEW YORK IN THE
CITY AND COUNTY OF NEW YORK AND OF THE UNITED STATES FOR THE SOUTHERN DISTRICT
OF NEW YORK, IN CONNECTION WITH ANY LEGAL ACTION, SUIT OR PROCEEDING WITH
RESPECT TO ANY MATTER RELATING TO OR ARISING OUT OF OR IN CONNECTION WITH THIS
AGREEMENT.
(c) EACH PARTY HERETO HEREBY IRREVOCABLY CONSENTS AND AGREES TO THE SERVICE
OF ANY AND ALL LEGAL PROCESS, SUMMONS, NOTICES AND DOCUMENTS OF ANY OF THE
AFOREMENTIONED COURTS IN ANY SUCH SUIT, ACTION OR PROCEEDING MAY BE MADE BY
MAILING COPIES THEREOF BY REGISTERED OR CERTIFIED MAIL, POSTAGE PREPAID, AT THE
ADDRESS SET FORTH PURSUANT TO SECTION 12.7. EACH PARTY HERETO HEREBY AGREES THAT
SERVICE UPON WTC, OR ANY OF ITS AGENTS, IN EACH CASE IN ACCORDANCE WITH THIS
SECTION 12.8(c), SHALL CONSTITUTE VALID AND EFFECTIVE PERSONAL SERVICE UPON SUCH
PARTY, AND EACH PARTY HERETO HEREBY AGREES THAT THE FAILURE OF ANY OF ITS AGENTS
TO GIVE ANY NOTICE OF SUCH SERVICE TO ANY SUCH PARTY SHALL NOT IMPAIR OR AFFECT
IN ANY WAY THE VALIDITY OF SUCH SERVICE ON SUCH PARTY OR ANY JUDGMENT RENDERED
IN ANY ACTION OR PROCEEDING BASED THEREON.
<PAGE>
-46-
(d) EACH PARTY HERETO HEREBY IRREVOCABLY WAIVES, TO THE EXTENT PERMITTED BY
APPLICABLE LAW, AND AGREES NOT TO ASSERT, BY WAY OF MOTION, AS A DEFENSE, OR
OTHERWISE, IN ANY LEGAL ACTION OR PROCEEDING BROUGHT HEREUNDER IN ANY OF THE
ABOVE-NAMED COURTS, THAT SUCH ACTION OR PROCEEDING IS BROUGHT IN AN INCONVENIENT
FORUM, THAT VENUE FOR THE ACTION OR PROCEEDING IS IMPROPER OR THAT THIS
AGREEMENT OR ANY OTHER OPERATIVE AGREEMENT MAY NOT BE ENFORCED IN OR BY SUCH
COURTS.
(e) EACH PARTY HERETO HEREBY WAIVES ITS RESPECTIVE RIGHTS TO A JURY TRIAL
OF ANY CLAIM OR CAUSE OF ACTION IN ANY COURT IN ANY JURISDICTION BASED UPON OR
ARISING OUT OF OR RELATING TO THIS AGREEMENT.
12.9. Third-Party Beneficiary
This Agreement is not intended to, and shall not, provide any person not a
party hereto (other than the Indenture Indemnitees, each of which is an intended
third party beneficiary with respect to the provisions of Section 8.1 and the
persons referred to in Section 6.4.6, which are intended third party
beneficiaries with respect to such Section) with any rights of any nature
whatsoever against any of the parties hereto and no person not a party hereto
(other than the Indenture Indemnitees, with respect to the provisions of Section
8.1, and the persons referred to in Section 6.4.6 with respect to the provisions
of such Section) shall have any right, power or privilege in respect of any
party hereto, or have any benefit or interest, arising out of this Agreement.
12.10. Entire Agreement
This Agreement, together with the other Operative Agreements, on and as of
the date hereof, constitutes the entire agreement of the parties hereto with
respect to the subject matter hereof, and all prior or contemporaneous
understandings or agreements, whether written or oral, among any of the parties
hereto with respect to such subject matter are hereby superseded in their
entireties.
12.11. Further Assurances
Each party hereto shall execute, acknowledge and deliver or shall cause to
be executed, acknowledged and delivered, all such further agreements,
instruments, certificates or documents, and shall do and cause to be done such
further acts and things, in any case, as any other party hereto shall reasonably
request in connection with the administration of, or to carry out more
effec-
<PAGE>
-47-
tually the purposes of, or to better assure and confirm into such other
party the rights and benefits to be provided under this Agreement and the other
Operative Agreements.
SECTION 13. SALE/LEASEBACK TRANSACTIONS
Notwithstanding anything to the contrary contained herein or any other
Operative Agreement, upon not less than _ days prior written notice to the
parties hereto, the Owner shall have the right to sell the Aircraft and transfer
title to the Aircraft to an owner trustee for the benefit of an owner
participant (which shall be a "Transferee" (as defined in the form of Leased
Aircraft Participation Agreement (as such term is defined in the Note Purchase
Agreement)) in a transaction in which such owner trustee assumes all of the
obligations of the Owner under the Equipment Notes and the Trust Indenture on a
non-recourse basis (with the Owner being released from such obligations, except
to the extent accrued prior thereto), leases the Aircraft to the Owner and
assigns such lease to the Mortgagee pursuant to an amended and restated trust
indenture (a "Sale/Leaseback Transaction"). In connection with such
Sale/Leaseback Transaction, each of the parties hereto and each Note Holder will
execute and deliver appropriate documentation permitting the owner trustee to
assume the obligations of the Owner under the Equipment Notes and the Trust
Indenture on a non-recourse basis, releasing the Owner from all obligations in
respect of the Equipment Notes and the Trust Indenture (except to the extent
accrued prior thereto), and take all other actions as are reasonably necessary
to permit such assumption by the owner trustee. In connection with any such
Sale/Leaseback Transaction, the parties agree that (a) the documents to be
utilized shall be (i) an amended and restated participation agreement amending
and restating the Participation Agreement, such amended and restated
participation agreement to be substantially in the form of the Leased Aircraft
Participation Agreement (as such term is defined in the Note Purchase
Agreement), among the parties hereto, any Note Holder which is not a party
hereto and the owner trustee and owner participant, with (x) such changes to
such form to reflect the assumption of the Equipment Notes by the owner trustee
on a non-recourse basis rather than the issuance thereof by the owner trustee
and purchase thereof by the Pass Through Trustee and also to reflect the release
of the Owner from all obligations under the Equipment Notes and the Trust
Indenture (except to the extent accrued prior thereto) and (y) such other
changes as may be permitted in accordance with the Note Purchase Agreement
applicable to the revision of the Leased Aircraft Participation Agreement in
connection with a leveraged lease transaction, (ii) a lease agreement, such
lease agreement to be substantially in the form of the Lease (as such term is
defined in the
<PAGE>
-48-
Note Purchase Agreement), between the Owner and the owner trustee with such
changes as may be permitted in accordance with the provisions of the Note
Purchase Agreement applicable to the revision of the Lease in connection with a
leveraged lease transaction, (iii) an amended and restated trust indenture
amending and restating the Trust Indenture, such amended and restated trust
indenture to be substantially in the form of the Leased Aircraft Indenture (as
such term is defined in the Note Purchase Agreement), between the owner trustee
and the Indenture Trustee, with (x) such changes to such form to reflect the
assumption of all of the obligations of the Owner under the Equipment Notes and
the Trust Indenture on a non-recourse basis and the release of the obligations
of the Owner under the Equipment Notes and the Trust Indenture and (y) such
other changes as may be permitted in accordance with the Note Purchase Agreement
applicable to the revision of the Leased Aircraft Indenture in connection with a
leveraged lease transaction, a (iv) purchase agreement assignment, such purchase
agreement assignment to be substantially in the form of the Aircraft Purchase
Agreement Assignment (as such term is defined in the Note Purchase Agreement)
between the Owner and the owner trustee with such changes as may be permitted in
accordance with the provisions of the Note Purchase Agreement applicable to the
Aircraft Purchase Agreement Assignment in connection with a leveraged lease
transaction, and (v) a trust agreement, such trust agreement to be substantially
in the form of the Leased Aircraft Trust Agreement (as such term is defined in
the Note Purchase Agreement), between the owner trustee and the owner
participant with such changes as may be permitted in accordance with the
provisions of the Note Purchase Agreement applicable to the Leased Aircraft
Trust Agreement in connection with a leveraged lease transaction and (b) the
Equipment Notes shall be delivered to the Indenture Trustee for cancellation in
exchange for new equipment notes to be issued to the Note Holders by the owner
trustee, such new equipment notes to be substantially in the form contained in
Section 2.01 of the Leased Aircraft Indenture (as such term is defined in the
Note Purchase Agreement). Such new equipment notes will have the same payment
terms except that in the event that the Owner enters into a Sale/Leaseback
Transaction prior to December 31, 1999, Owner shall have the right to reoptimize
the new equipment notes to be issued to the Note Holders by the owner trustee in
compliance with the Mandatory Economic Terms.
Notwithstanding the foregoing, the Owner shall not have the right to enter
into a Sale/Leaseback Transaction unless the Owner causes to be delivered to the
Indenture Trustee an opinion of counsel to the effect that the Note Holders will
not recognize income, gain or loss for Federal income tax purposes as a result
of such assumption and release and will be subject to Federal income tax in the
same amounts, in the same manner and at the same time as would have been the
case if such assumption and release had not occurred and that the Pass Through
Trusts will not be subject to Federal in-
<PAGE>
-49-
come taxation as a result of such assumption and release. In addition, the Owner
agrees to comply with Section 1(c) of the Note Purchase Agreement in connection
with any Sale/Leaseback Transaction.
[This space intentionally left blank]
<PAGE>
-50-
IN WITNESS WHEREOF, each of the parties has caused this Participation
Agreement to be duly executed and delivered as of the day and year first above
written.
ATLAS AIR, INC.,
Owner
By___________________________
Name:
Title:
WILMINGTON TRUST COMPANY,
not in its individual capacity, except as expressly
provided herein, but solely as Mortgagee
By___________________________
Name:
Title:
WILMINGTON TRUST COMPANY,
not in its individual
capacity, except as
expressly provided
herein, but solely as
Pass Through Trustee
under the Pass Through
Trust Agreement for the
Atlas Air Pass Through
Trust, 1999-.
By___________________________
Name:
Title:
<PAGE>
-51-
WILMINGTON TRUST COMPANY,
not in its individual
capacity, except as
expressly provided
herein, but solely as
Pass Through Trustee
under the Pass Through
Trust Agreement for the
Atlas Air Pass Through
Trust, 1999-
By___________________________
Name:
Title:
WILMINGTON TRUST COMPANY,
not in its individual
capacity, except as
expressly provided
herein, but solely as
Pass Through Trustee
under the Pass Through
Trust Agreement for the
Atlas Air Pass Through
Trust, 1999-
By___________________________
Name:
Title:
WILMINGTON TRUST COMPANY,
not in its individual capacity, except as
expressly provided herein, but
solely as Subordination Agent
By___________________________
Name:
Title:
<PAGE>
SCHEDULE 1
TO
PARTICIPATION AGREEMENT
ACCOUNTS; ADDRESSES
<TABLE>
<CAPTION>
Account for Payments Address For Notices
<S> <C> <C>
ATLAS AIR, INC. Atlas Air, Inc.
538 Commons Drive
Golden, CO 80401
Attention: Chief Financial
Officer
Facsimile:
WILMINGTON TRUST COMPANY, AS Wilmington Trust Company
MORTGAGEE One Rodney Square
1100 North Market Street
Wilmington, Delaware 19890
Attention: Corporate Trust
Administration
Facsimile:
WILMINGTON TRUST COMPANY, AS Wilmington Trust Company
SUBORDINATION AGENT One Rodney Square
1100 North Market Street
Wilmington, Delaware 19890
Attention: Corporate Trust
Administration
Facsimile:
WILMINGTON TRUST COMPANY, AS PASS Wilmington Trust Company
THROUGH TRUSTEE FOR THE 1999- PASS One Rodney Square
THROUGH TRUST 1100 North Market Street
Wilmington, Delaware 19890
Attention: Corporate Trust
Administration
Facsimile:
WILMINGTON TRUST COMPANY, AS PASS Wilmington Trust Company
THROUGH TRUSTEE FOR THE 1999- PASS One Rodney Square
THROUGH TRUST 1100 North Market Street
Wilmington, Delaware 19890
Attention: Corporate Trust
Administration
Facsimile:
WILMINGTON TRUST COMPANY, AS PASS Wilmington Trust Company
THROUGH TRUSTEE FOR THE 1999- PASS One Rodney Square
THROUGH TRUST 1100 North Market Street
Wilmington, Delaware 19890
Attention: Corporate Trust
Administration
</TABLE>
Facsimile:
<PAGE>
SCHEDULE 2 - COMMITMENTS
PARTICIPATION AGREEMENT
COMMITMENTS
Pass Through Series of Dollar Amount
Trustee Equipment Notes of Loan
------------------- ------------------- -------------
Wilmington Trust Company Series A-1 $
Wilmington Trust Company Series A-2 $
Wilmington Trust Company Series B $
Wilmington Trust Company Series C $
Wilmington Trust Company Series D $
<PAGE>
SCHEDULE 3 - CERTAIN TERMS
PARTICIPATION AGREEMENT
CERTAIN TERMS
Defined Term Definition
Minimum Liability Insurance Amount $
Threshold Amount $7.5 million, subject, from time to time,
to adjustment for inflation
<PAGE>
SCHEDULE 4 - PERMITTED COUNTRIES
PARTICIPATION AGREEMENT
PERMITTED COUNTRIES
Argentina Malta
Australia Mexico
Austria Monaco
Bahamas Morocco
Belgium Netherlands
Brazil New Zealand
Canada Norway
Chile Paraguay
Denmark People's Republic of China
Egypt Philippines
Ecuador Portugal
Finland Republic of China (Taiwan)
France Singapore
Germany South Africa
Greece South Korea
Hungary Spain
Iceland Sweden
India Switzerland
Indonesia Thailand
Ireland Tobago
Italy Trinidad
Japan United Arab Emirates
Liechtenstein United Kingdom
Luxembourg Uruguay
Malaysia Venezuela
<PAGE>
Exhibit A
FORM OF OPINION OF SPECIAL COUNSEL TO OWNER
,
To the Persons Listed
on Schedule I Attached Hereto
Re: Purchase of Boeing Model 747-47UF Aircraft
with Manufacturer's Serial Number
and U.S. Registration Number N MC
Gentlemen:
We have been requested by Atlas Air, Inc., a Delaware corporation (the
"Company"), to act as special counsel with respect to, and to render this
opinion letter as required by Section 4.1.2(x)(A) of, the Participation
Agreement, dated as of , (the "Participation Agreement"), among the Company,
Wilmington Trust Company, a Delaware banking corporation ("WTC"), as Mortgagee
under the Trust Indenture, WTC, as Subordination Agent under the Intercreditor
Agreement, and WTC, as Pass Through Trustee under the Pass Through Trust
Agreements. Capitalized terms used herein and not otherwise defined herein have
the respective meanings given those terms in the Participation Agreement.
In connection with this opinion letter, we have examined, among other
things, originals or copies certified or otherwise identified to our
satisfaction of the following documents:
(i) Participation Agreement;
(ii) Trust Indenture;
(iii) Trust Indenture Supplement;
(iv) Purchase Agreement Assignment
(v) Consent and Agreement;
(vi) Engine Consent and Agreement;
(vii) Forms of the Equipment Notes; and
(viii) Bills of Sale
We have also examined and relied upon such other documents and such other
corporate records, certificates and other statements of governmental officials
and corporate officers and other representatives of the Company as we have
deemed necessary or appropriate for the purposes of this opinion. As to certain
facts material to the opinions expressed herein, we
<PAGE>
A-2
have relied upon representations and warranties contained in the Operative
Agreements. The opinions expressed herein are subject to the following
exceptions, assumptions, qualifications and limitations:
A. The opinions set forth below are limited to the laws of the State of New
York, the federal laws of the United States of America and the General
Corporation Law of the State of Delaware, except that we express no opinion with
respect to (i) the laws, regulations or ordinances of any county, town or
municipality or governmental subdivision or agency thereof, (ii) state
securities or blue sky laws or federal securities laws, including the Securities
Act of 1933, as amended, and the Investment Company Act of 1940, (iii) federal
or state tax, antitrust or fraudulent transfer or conveyance laws, (iv) the
Employee Retirement Income Security Act of 1974, as amended, or (v) part A of
subtitle VII of Title 49, United States Code (the "Federal Aviation Act"), or
any other laws, rules or regulations governing, regulating or relating to the
acquisition, ownership, registration, use or sale of an aircraft, airframe or
aircraft engine or to the particular nature of the equipment to be acquired by
the Company. In addition, our opinions are based upon a review of those laws,
statutes, rules and regulations which, in our experience, are normally
applicable to transactions of the type contemplated by the Participation
Agreement.
B. The opinions set forth in paragraph 3 below are subject to (i)
limitations on enforceability arising from applicable bankruptcy, insolvency,
reorganization, moratorium, receivership, fraudulent conveyance, fraudulent
transfer, preferential transfer and similar laws relating to or affecting the
rights and remedies of creditors generally and the effect of general principles
of equity, including, without limitation, laches and estoppel as equitable
defenses and concepts of materiality, reasonableness, good faith and fair
dealing (regardless of whether such enforceability is considered or applied in a
proceeding in equity or at law) and considerations of impracticability or
impossibility of performance, and defenses based upon unconscionability of
otherwise enforceable obligations in the context of the factual circumstances
under which enforcement thereof is sought, (ii) the qualification that the
remedy of specific performance and injunctive and other forms of equitable
relief may be subject to equitable defenses and to the discretion of the court
before which any proceeding therefor may be brought and (iii) the requirements
of Section 9-306 of the Uniform Commercial Code of the State of New York (the
"UCC") with respect to the continuation of per-
<PAGE>
A-3
fection of a security interest in "proceeds" of collateral. In addition, certain
remedial and procedural provisions of the Company Documents (as defined in
paragraph 2 below) and the Trust Indenture are or may be unenforceable in whole
or in part, but the inclusion of such provisions does not affect the validity of
those agreements and does not, in our opinion, make the remedies provided in
those agreements, or otherwise available under applicable law, inadequate for
the practical realization of the substantive benefits purported to be provided
thereby, except for the economic consequences resulting from any delay imposed
by, or any procedure required by, applicable laws, rules, regulations and by
constitutional requirements. We express no opinion as to (i) any provision
contained in any Operative Agreement (a) providing for indemnification or
exculpation of any Person for such Person's gross negligence, willful
misconduct, recklessness or unlawful conduct or in respect of liabilities under
the Securities Act, (b) providing for late payment charges or an increase in
interest rate upon delinquency in payment or the occurrence of a default or
other specified event but only to the extent such provision is deemed to
constitute a penalty or liquidated damages provision, (c) as such provision
relates to the subject matter jurisdiction of federal courts or the waiver of
inconvenient forum with respect to proceedings in federal courts, (d) that
purports to establish (or may be construed to establish) evidentiary standards
or (e) providing for the waiver of any statutory right or any broadly or vaguely
stated rights or unknown future rights, or any waiver which is against public
policy considerations or (ii) Section 12.8 of the Participation Agreement or any
comparable provision of any other Operative Agreement. Under certain
circumstances the requirement that the provisions of an Operative Agreement may
be modified or waived only in writing or only in a specific instance and
provisions to the effect that failure or delay in exercising any right, remedy,
power and/or privilege will not impair or waive such right, remedy, power and/or
privilege may be unenforceable to the extent that an oral agreement has been
effected or a course of dealing has occurred modifying such provisions. A court
may modify or limit contractual agreements regarding attorneys' fees.
C. To the extent that our opinions expressed herein involve conclusions as
to the matters set forth in the opinions dated the date hereof of Crowe &
Dunlevy being delivered to you on the date hereof, we have assumed, without
independent investigation, the correctness of the matters set forth in such
opinions and have relied with your permission on such opinions.
<PAGE>
A-4
D. We have assumed the due authorization, execution and delivery of the
Operative Agreements by each of the parties thereto, that each of such parties
(other than the Company) has the power and authority to execute, deliver and
perform each such Operative Agreement and has obtained or made all necessary
consents, approvals, filings and registrations in connection therewith, that
such execution, delivery and performance does not violate its charter, by-laws
or similar instrument, that the Trust Indenture constitutes the valid, binding
and enforceable obligation of the Mortgagee and duly creates the trust it
purports to create, that the Mortgagee for purposes of Section 9-103(3) of the
UCC is located in New York and that, under applicable law, the Company would be
deemed to be the owner of the Trust Indenture Estate, that value has been given
by the Loan Participants to the Company under the Trust Indenture, that the
Company has rights in the Trust Indenture Estate, that WTC is duly organized,
validly existing and in good standing in its jurisdiction of organization and
qualified to transact business in each other jurisdiction where such
qualification is required.
E. We have assumed the due authentication of the Equipment Notes by the
Mortgagee and the delivery thereof against payment therefor, all in accordance
with the Participation Agreement and the Trust Indenture, and that the Equipment
Notes conform to the forms thereof examined by us.
F. We have assumed that all signatures on documents examined by us are
genuine, that all persons signing such documents have legal capacity, that all
documents submitted to us as originals are authentic and that all documents
submitted to us as copies or specimens conform with the originals, which facts
we have not independently verified.
G. We have not made any examination of, and express no opinion with respect
to (and to the extent relevant have assumed the accuracy and sufficiency of),
(i) descriptions of, the legal or beneficial ownership of, or the title or
condition of title to, the Trust Indenture Estate or any other property covered
by any of the Operative Agreements, (ii) except as expressly set forth in
paragraphs 5 and 7 below, the existence, creation, validity or attachment of any
Lien thereon, (iii) except as expressly set forth in paragraph 5 below, the
perfection of any Lien thereon and (iv) the priority or enforcement of any Lien
thereon.
<PAGE>
A-5
H. We have assumed the continuous presence in the State of New York of all
collateral constituting "chattel paper" for purposes of the UCC.
I. In giving an opinion regarding the valid existence and good standing of
the Company, we have relied solely upon certificates of public officials.
J. In giving the opinion set forth in paragraph 6, we have relied upon a
certificate from an officer of the Company (i) that the Aircraft and Engines
constitute "aircraft equipment" for purposes of the Federal Aviation Act and
(ii) that the Airframe and Engines have not been placed in service prior to
October 22, 1994.
K. The opinions expressed herein are given as of the date hereof. We assume
no obligation to advise you of any facts or circumstance that may come to our
attention, or any changes in law that may occur after the date hereof, which may
affect the opinion expressed herein.
Based on, and subject to the foregoing, we are of the opinion that:
1. The Company is a corporation duly incorporated, validly existing
and in good standing under the laws of the State of Delaware.
2. The Company has all necessary corporate power to execute, deliver
and perform its obligations under the Participation Agreement, the Trust
Indenture, Trust Indenture Supplement No. 1 and the Purchase Agreement
Assignment (collectively, the "Company Documents"). Neither the execution
nor delivery of the Company Documents by the Company nor the consummation
of the transactions contemplated thereby will result in any violation of
(a) its Certificate of Incorporation or By-laws or (b) any law,
governmental rule or regulation known to us to be applicable to, or binding
on, the Company, or which requires the approval of the stockholders of the
Company.
3. Each Company Document constitutes the valid and binding obligation
of the Company and is enforceable against the Company in accordance with
its terms.
4. Except for the matters referred to in clauses (i) through (iii) of
paragraph 5 below, no approval, authorization or other action by or filing
with
<PAGE>
A-6
any governmental authority is required for the execution and delivery by
the Company of the Company Documents or the consummation of the
transactions contemplated thereby to occur at the Closing.
5. Except for (i) the registration of the Aircraft with the FAA
pursuant to the Federal Aviation Act, (ii) the filing and recordation in
accordance with the Federal Aviation Act of the FAA Filed Documents, and
assuming that at the time of such filing no other unrecorded document
relating to the Aircraft has been filed pursuant to the Federal Aviation
Act, and (iii) the filing of Financing Statements referred to in Section
4.1.11 of the Participation Agreement, and the filing of periodic
continuation statements with respect thereto, (a) no further filing or
recording of any document is necessary (x) to establish the Company's title
to the Airframe and Engines, and (y) to create a valid security interest in
the Company's interest as owner of the Airframe and Engines, in favor of
the Mortgagee pursuant to the Trust Indenture and (b) no further filing or
recording of any document in the State of New York or under the Federal
Aviation Act is required to perfect a security interest in the Company's
interest as owner of the Airframe and Engines in favor of the Mortgagee
pursuant to the Trust Indenture.
6. So long as the Company continues to be a "citizen of the United
States", as defined in section 40102 of Title 49 of the United States Code,
holding an air carrier operating certificate issued by the Secretary of
Transportation pursuant to Chapter 447 of Title 49 of the United States
Code for aircraft capable of carrying 10 or more individuals or 6,000
pounds or more of cargo, Mortgagee, as holder of a security interest
pursuant to the Trust Indenture, will be entitled to the benefits of
Section 1110 of Title 11 of the United States Code with respect to the
Airframe and Engines delivered on the date hereof in connection with any
case commenced by or against the Company under Chapter 11 of Title 11 of
the United States Code. We call to your attention that the U.S. District
Court for the District of Colorado recently issued an opinion regarding
Section 1110, In re Western Pacific Airlines, Inc., 219 B.R. 305, (D. Colo.
1998) and 221 B.R. 1 (D. Colo. 1998), which opinion, we are informed, has
been appealed to the United States Court of Appeals for the Tenth Circuit.
The decision, reversing an order of the bankruptcy court, held that once a
debtor air carrier agrees to perform its obligations and cures its defaults
<PAGE>
A-7
under an aircraft lease within the prescribed period in accordance with
Section 1110, the lessor under such lease is not entitled to repossess the
aircraft under Section 1110 if the airline subsequently defaults under such
lease. We are of the opinion that the District Court opinion was
incorrectly decided because it is contrary to prior treatment of this issue
by the courts and is contrary to the intent of Congress in enacting Section
1110. We do not express any opinion with respect to the outcome of any
appeal of this decision.
7. Upon issuance, execution, authentication and delivery of the
Equipment Notes at the Closing, the Trust Indenture creates the security
interest in favor of the Mortgagee, as trustee for the benefit of the
holders of the Equipment Notes, in the Trust Indenture Estate it purports
to create to the extent that the UCC applies to a security interest in such
property.
This opinion may be relied upon by you (and any permitted Transferee under
Section 9.1 of the Participation Agreement) in connection with the matters set
forth herein and, without our prior written consent, may not be relied upon for
any other purpose and may not be furnished to any other Person for any purpose.
Very truly yours,
<PAGE>
Schedule I
Wilmington Trust Company, not in its individual capacity, but solely as
Mortgagee, Subordination Agent and Pass Through Trustee
Standard & Poor's Ratings Services
<PAGE>
Exhibit B
FORM OF OPINION OF CORPORATE COUNSEL TO OWNER
To the Persons Listed
on Schedule I Hereto
Re: Purchase of Boeing Model 747-47UF Aircraft
with Manufacturer's Serial Number
and U.S. Registration Number N MC
Ladies and Gentlemen:
This opinion letter is being delivered by Atlas Air, Inc., a Delaware
corporation ("Atlas"), through its Legal Department in connection with the
transactions contemplated by the Participation Agreement dated as of __, , among
Atlas, as Owner, Wilmington Trust Company ("WTC"), a Delaware banking
corporation, as Mortgagee under the Trust Indenture, WTC, as Subordination Agent
under the Intercreditor Agreement, and WTC, as Pass Through Trustee under the
Pass Through Trust Agreements (the "Participation Agreement"). All capitalized
terms used herein and not otherwise defined herein shall have the respective
meanings given those terms in the Participation Agreement. This opinion letter
is being furnished to you pursuant to Section 4.1.2(x)(B) of the Participation
Agreement.
In giving the following opinions, members of Atlas's Legal Department or
lawyers retained by Atlas's Legal Department have reviewed the Participation
Agreement and the other Operative Agreements to which Atlas is a party and have
relied upon originals, or copies certified or otherwise identified to our
satisfaction, of such records, documents, certificates and other instruments as
in our judgment are necessary or appropriate to enable us to render the opinions
expressed below. In addition, Atlas's Legal Department has assumed and has not
verified the accuracy as to factual matters of each document reviewed. As used
herein, the phrase "to our knowledge" or words of similar import shall mean to
the actual knowledge of Atlas's Legal Department after reasonable investigation,
but shall not be interpreted to impute knowledge of others (other than members
of Atlas's Legal Department).
Based on the foregoing, and subject to the assumptions and limitations
contained herein, Atlas's Legal Department is of the opinion that:
<PAGE>
B-2
(a) Atlas is an "air carrier" within the meaning of Section 40102 of the
Act, operating under a certificate issued pursuant to Chapter 447 of the Act, is
a "citizen of the United States" as such term is defined in Section 40102 of
such Act and holds all authority, necessary licenses and certificates under such
Act and the rules and regulations promulgated thereunder necessary for the
conduct of its business and to perform its obligations under the Participation
Agreement, the Trust Indenture, the Trust Indenture Supplement and the Purchase
Agreement Assignment (collectively, the "Agreements").
(b) The execution, delivery and performance by Atlas of each of the
Agreements do not, to our knowledge, breach or result in a default under any
indenture, mortgage, deed of trust, credit agreement, conditional sale contract
or other agreement to which Atlas is a party or by which Atlas or its property
may be bound.
(c) The execution, delivery and performance of each of the Agreements has
been duly authorized by all necessary corporate action on the part of Atlas, and
each of the Agreements has been duly executed and delivered by Atlas.
(d) There are no pending or, to our knowledge, threatened actions, suits or
proceedings before any court or administrative agency or arbitrator that
question the validity of any of the Agreements or that would have been required
to be disclosed in Atlas's Annual Report on Form 10-K filed for the year ended
December 31, 1998, on any subsequent Quarterly Report on Form 10-Q or Current
Report on Form 8-K, except such as are therein disclosed.
The foregoing opinions are limited to the federal law of the United States
of America (other than (i) the Act (except as expressly provided in paragraph
(a) above) or any other laws, rules or regulations governing, regulating or
relating to the acquisition, ownership, registration, use or sale of an
aircraft, airframe or aircraft engine or to the particular nature of the
equipment to be acquired by Atlas, (ii) state securities or blue sky laws, or
federal securities laws, (iii) federal or state tax, antitrust or fraudulent
transfer or conveyance laws, as to which we express no opinion), and the General
Corporation Law of the State of Delaware.
This opinion letter is furnished to you for the purpose indicated above,
and may not be relied upon by any other Person (except any permitted Transferee
under Section 9.1 of
<PAGE>
B-3
the Participation Agreement) or for any other purpose
without our written consent.
Very truly yours,
ATLAS AIR, INC.
David N. Brictson, Esq.
Legal Counsel
<PAGE>
Schedule I
Wilmington Trust Company, not in its individual capacity, but solely as
Mortgagee, Subordination Agent and Pass Through Trustee
Standard & Poor's Ratings Services
<PAGE>
Exhibit C
FORM OF BOEING OPINION
To the Addressees Listed
in the Attached Schedule
Subject: One Boeing Model 747-47UF Aircraft
Bearing Manufacturer's Serial No.
and U.S. Registration Number N MC
Ladies and Gentlemen:
I am an attorney employed by The Boeing Company ("Boeing") and I am
licensed to practice law in the State of Washington, United States of America.
As such, I have represented Boeing in connection with the sale of the Boeing
Model 747-47UF aircraft bearing Manufacturer's Serial No. and U.S. Registration
Number N MC(including the engines installed thereon but excluding equipment
furnished by Atlas Air, Inc. ("Atlas") therefor, said aircraft herein called the
"Aircraft"), pursuant to Purchase Agreement No. 2021 between Boeing and Atlas,
dated June 6, 1997, as subsequently amended (the "Purchase Agreement") and as
assigned by the Purchase Agreement and Engine Warranties Assignment between
Atlas, as Assignor, and Wilmington Trust Company, not in its individual capacity
but solely as Mortgagee under the Trust Indenture dated as of , , as Assignee.
Atlas is sometimes referred to in the Bill of Sale (as hereinafter defined) and
in this opinion as "Buyer").
For the purpose of this opinion, I have examined and relied upon originals,
or copies certified to my satisfaction, of the Purchase Agreement and of the
following documents:
1. The Manufacturer Consent and Agreement to the Purchase Agreement
and Engine Warranties Assignment dated as of , executed by Boeing (the
"Consent and Agreement");
2. The Bill of Sale executed by Boeing in favor of Buyer dated as of ,
(the "Bill of Sale"); __________ __ __________ and
3. The FAA Bill of Sale executed by Boeing in favor of Buyer dated as
of , (the "FAA Bill of _________ __ __________ Sale").
<PAGE>
C-2
I have also examined such other documents and records as I have deemed
relevant or necessary for the purpose of giving this opinion. Based upon such
examination, I am of the opinion that:
(a) Boeing is a corporation duly incorporated, validly existing, and in
good standing under the laws of the State of Delaware.
(b) The Purchase Agreement, the Consent and Agreement, the Bill of Sale and
the FAA Bill of Sale have been duly authorized, executed and delivered by, and
constitute the legal, valid, and binding obligations of Boeing enforceable
against it in accordance with the respective terms thereof, except as may be
limited by bankruptcy, insolvency, reorganization, moratorium, or other similar
laws affecting the enforcement of creditors' rights in general and except as the
enforceability of such obligations may be subject to general principles of
equity.
(c) Boeing has the full power, authority, and legal right to enter into and
perform its obligations under the Purchase Agreement, the Consent and Agreement,
the Bill of Sale, and the FAA Bill of Sale and Boeing's execution, performance,
and delivery of such documents have been duly authorized by all necessary
corporate action.
(d) Good title to the Aircraft was at the time of delivery to Buyer vested
in Boeing free and clear of all liens, claims, encumbrances, and rights of
others; and good title to the Aircraft has been duly conveyed by Boeing to Buyer
free and clear of all liens, claims, encumbrances, and rights of others.
(e) Each of the Bill of Sale and the FAA Bill of Sale constitutes an
effective instrument for the conveyance of good title to the Aircraft to Buyer,
assuming the filing for recordation of the FAA Bill of Sale for the Aircraft in
accordance with the provisions of Title 49 of the United States Code, as
amended.
For the purpose of this opinion, I have assumed that Buyer has the power
and authority to accept title to and delivery of the Aircraft and that the
representative acting on behalf of Buyer was duly authorized to accept title to
and delivery of the Aircraft on its behalf.
With respect to the conclusions set forth herein, I express no opinion as
to any laws other than the laws of the
<PAGE>
C-3
State of Washington, the corporate laws of the State of Delaware, and the
federal laws of the United States.
Very truly yours,
Counsel
<PAGE>
SCHEDULE
ATLAS AIR, INC.
WILMINGTON TRUST COMPANY
Not in its individual capacity but solely as Mortgagee,
Pass Through Trustee and Subordination Agent
STANDARD & POOR'S RATINGS SERVICES
<PAGE>
Exhibit D
FORM OF OPINION OF SPECIAL COUNSEL
TO MORTGAGEE AND LOAN PARTICIPANTS
_____________, _____
To Each of the Persons
Listed on Schedule A
Attached Hereto
Re: Atlas Air, Inc.
Ladies and Gentlemen:
We have acted as counsel to Wilmington Trust Company, a Delaware banking
corporation ("Wilmington Trust"), in connection with the Trust Indenture and
Mortgage, dated as of , (the "Trust Indenture"), between Wilmington Trust, as
Mortgagee (the "Mortgagee"), and Atlas Air, Inc., as Owner (the "Owner").
Pursuant to the Participation Agreement, dated as of , (the "Participation
Agreement"), among Atlas Air, Inc., as Owner, and Wilmington Trust, as Mortgagee
under the Trust Indenture, Wilmington Trust as Subordination Agent under the
Intercreditor Agreement (as defined in the Participation Agreement), and
Wilmington Trust as Pass Through Trustee (as defined in the Participation
Agreement), financing is being provided for the acquisition of one Boeing Model
747-47UF Aircraft bearing U.S. Registration Mark No. N MC. This opinion is
furnished pursuant to Section 4.1.2(x)(D) of the Participation Agreement.
Capitalized terms used herein and not otherwise defined are used as defined in
the Participation Agreement or as defined in the Trust Indenture, except that
reference herein to any instrument shall mean such instrument as in effect on
the date hereof.
We have examined executed counterparts, forms or copies otherwise
identified to our satisfaction of the following documents:
(a) The Participation Agreement;
(b) The Trust Indenture and the Trust Indenture Supplement (the documents
in paragraphs (a) and (b) above being collectively referred to as the "Mortgagee
Documents"); and
<PAGE>
D-2
(c) The Equipment Notes being issued today and authenticated by the
Mortgagee (the "Equipment Notes").
We have also examined originals or copies of such other documents, such
corporate records, certificates and other statements of governmental officials
and corporate officers and other representatives of the corporations or entities
referred to herein and such other instruments as we have deemed necessary or
appropriate for the purposes of this opinion. Moreover, as to certain facts
material to the opinions expressed herein, we have relied upon representations
and warranties contained in the Mortgagee Documents.
Based upon the foregoing and upon an examination of such questions of law
as we have considered necessary or appropriate, and subject to the assumptions,
exceptions and qualifications set forth herein, we advise you that, in our
opinion:
1. Wilmington Trust has been duly incorporated and is validly existing
as a Delaware banking corporation in good standing under the laws of the
State of Delaware, is a citizen of the United States of America within the
meaning of Section 40102(a)(15)(C) of Title 49, U.S.C., as amended, and has
full corporate power, authority and legal right in its individual capacity,
as Mortgagee, as Pass Through Trustee, or as Subordination Agent, as the
case may be, to execute, deliver and perform the Mortgagee Documents, and
to authenticate the Equipment Notes.
2. Each of Wilmington Trust, the Mortgagee, the Pass Through Trustee
and the Subordination Agent, as the case may be, has duly authorized,
executed and delivered each Mortgagee Document to which it is a party; each
such document constitutes a legal, valid and binding obligation of
Wilmington Trust, the Mortgagee, the Pass Through Trustee or the
Subordination Agent, as the case may be, enforceable against Wilmington
Trust, the Mortgagee, the Pass Through Trustee or the Subordination Agent,
as the case may be, in accordance with its terms.
3. The execution, delivery and performance by Wilmington Trust, the
Mortgagee, the Pass Through Trustee or the Subordination Agent, as the case
may be, of the Mortgagee Documents to which each is a party, the
authentication by the Mortgagee of the Equipment Notes and the consummation
by Wilmington Trust, the Mortgagee, the Pass Through Trustee or the
Subordination Agent, as the case may be, of any of the transactions
contemplated thereby
<PAGE>
D-3
are not in violation of the charter or by-laws of Wilmington Trust or of
any law, governmental rule, or regulation of the State of Delaware or of
any law, governmental rule, or regulation of the United States of America
governing the banking or trust powers of Wilmington Trust or, to our
knowledge, of any indenture, mortgage, bank credit agreement, note or bond
purchase agreement, long-term lease, license or other agreement or
instrument to which it is a party or by which it is bound or, to our
knowledge, of any judgment or order of the State of Delaware or the United
States of America relating to the banking or trust powers of Wilmington
Trust.
4. Neither the execution and delivery by Wilmington Trust, the
Mortgagee, the Pass Through Trustee or the Subordination Agent, as the case
may be, of the Mortgagee Documents to which each is a party, the
authentication of the Equipment Notes, nor the consummation of any of the
transactions by Wilmington Trust, the Mortgagee, the Pass Through Trustee
or the Subordination Agent, as the case may be, contemplated thereby
requires the consent or approval of, the giving of notice to, the
registration with, or the taking of any other action in respect of, any
governmental authority or agency of the State of Delaware or the United
States of America governing the banking or trust powers of Wilmington Trust
or under any Delaware law.
5. There are no taxes, fees or other charges (other than taxes payable
by Wilmington Trust on or measured by any compensation received by
Wilmington Trust for its services as Mortgagee, Subordination Agent or Pass
Through Trustee) payable under the laws of the State of Delaware or any
political subdivision thereof in respect of the execution and delivery by
Wilmington Trust (in its individual capacity, as Mortgagee, Pass Through
Trustee or Subordination Agent, as the case may be) of the Mortgagee
Documents and the Equipment Notes, which taxes, fees or other charges would
not have been imposed if Wilmington Trust were not a Delaware banking
corporation and did not perform its obligations as Mortgagee under the
Trust Indenture in the State of Delaware.
6. The Equipment Notes have been duly and validly authenticated by the
Mortgagee in accordance with the Trust Indenture.
<PAGE>
D-4
7. To the best of our knowledge, there are no proceedings pending or
threatened against or affecting Wilmington Trust, the Mortgagee, the Pass
Through Trustee or the Subordination Agent in any court or before any
governmental authority, agency or arbitration board or tribunal which, if
adversely determined, individually or in the aggregate, would materially
and adversely affect the right, power and authority of Wilmington Trust,
the Mortgagee, the Pass Through Trustee, or the Subordination Agent, as the
case may be, to enter into or perform its obligations under the Mortgagee
Documents to which it is a party.
The foregoing opinions are subject to the following assumptions, exceptions
and qualifications:
A. The foregoing opinions are limited to the laws of the State of Delaware
and the federal laws of the United States of America governing the banking and
trust powers of Wilmington Trust. In addition, we express no opinion with
respect to (i) federal securities laws, including the Securities Act of 1933, as
amended, the Securities Exchange Act of 1934, as amended, the Investment Company
Act of 1940, as amended, and the Trust Indenture Act of 1939, as amended, (ii)
Part A of Subtitle VII of Title 49 of the United States Code, as amended (except
with respect to the opinion set forth in paragraph l above concerning the
citizenship of Wilmington Trust), (iii) the Federal Communications Act of 1934,
as amended, or (iv) state securities or blue sky laws. Insofar as the foregoing
opinions relate to the validity and enforceability in Delaware of the Mortgagee
Documents which are expressed to be governed by the laws of any state other than
the State of Delaware, we have assumed that such Mortgagee Documents constitute
legal, valid, binding and enforceable documents under such laws (as to which we
express no opinion).
B. The foregoing opinions regarding enforceability of any document are
subject to (i) applicable bankruptcy, insolvency, moratorium, reorganization,
fraudulent conveyance, receivership and similar laws affecting the rights and
remedies of creditors generally, and (ii) general principles of equity
(regardless of whether such enforceability is considered in a proceeding in
equity or at law).
C. We have assumed the due authorization, execution and delivery by each of
the parties thereto (other than Wilmington Trust, the Mortgagee, the Pass
Through Trustee and the Subordination Agent) of the Mortgagee Documents to which
each is a party and that each of such parties has the full power,
<PAGE>
D-5
authority and legal right to execute and deliver each such document.
D. The opinion set forth in paragraph l above concerning the citizenship of
Wilmington Trust is based upon an affidavit of Wilmington Trust, made by its
Vice President, the facts set forth in which we have not independently verified.
E. We have assumed that all signatures (other than those of Wilmington
Trust, the Mortgagee, the Pass Through Trustee and the Subordination Agent) on
documents and instruments examined by us are genuine, that all documents and
instruments submitted to us as originals are authentic, and that all documents
and instruments submitted to us as copies conform with the originals, which
facts we have not independently verified.
F. We have made no investigation of, and we express no opinion concerning
the priority of any mortgage or security interest.
G. We have assumed that the Participation Agreement and the transactions
contemplated thereby are not within the prohibitions of Section 406 of the
Employee Retirement Income Security Act of 1974.
This opinion may be relied upon by you in connection with the matters set
forth herein. This opinion may also be relied upon by any transferee of a Note
Holder, subject to the understanding that the opinions expressed herein are
rendered as of the date hereof and only with respect to the laws, rules and
regulations in effect as of such date. Otherwise, without our prior written
consent, this opinion may not be relied upon by any person or entity for any
purpose.
Very truly yours,
<PAGE>
SCHEDULE A
Owner
Atlas Air, Inc.
Mortgagee, Pass Through Trustee and Subordination Agent
Wilmington Trust Company
Ratings Agency
Standard & Poor's Ratings Services
<PAGE>
Exhibit E-1
FORM OF OPINIONS OF SPECIAL COUNSEL
IN OKLAHOMA CITY, OK
____________, ____
To the Addressees Listed on
Exhibit A Attached Hereto
Re: Atlas Air, Inc.
Ladies and Gentlemen:
Pursuant to Section 4.1.2(x)(E) of the Participation Agreement dated as of
, (the "Participant Agreement") among Atlas Air, Inc., as Owner (the "Owner"),
and Wilmington Trust Company, not in its individual capacity, except as
expressly provided therein but solely as Mortgagee under the Trust Indenture
(the "Mortgagee"), which provides for the financing of the purchase today by the
Owner of the Boeing model 747-47UF aircraft with manufacturer's serial number
and United States nationality and registration marks N MC (the "Aircraft") and
four General Electric model CF6-80C2B1F aircraft engines with manufacturer's
serial numbers - , - , - and - (the "Engines"), this opinion is rendered with
respect to matters arising under that portion of Title 49 of the United States
Code (the "Transportation Code") relating to the recordation of the instruments
hereinafter described and the registration of the Aircraft pursuant to the
Transportation Code. As contemplated by the Participant Agreement, title to the
Aircraft has been conveyed by The Boeing Company to the Owner by an AC Form
8050-2 Aircraft Bill of Sale dated __, (the "FAA Bill of Sale"), the
registration of the Aircraft will be accomplished by the filing with the Federal
Aviation Administration (the "FAA") of an AC Form 8050-1 Aircraft Registration
Application in the name of the Owner (the "Aircraft Registration Application"),
and the creation of a security interest in the Aircraft and the Engines is
pursuant to Trust Indenture and Mortgage dated as of , (the "Trust Indenture")
between the Owner and the Mortgagee, as supplemented by Trust Indenture and
Mortgage Supplement No. 1 dated , (the "Trust Supplement").
Based upon our examination of the above described instruments and of such
records of the FAA as we deemed necessary
<PAGE>
E-1-2
to render this opinion and as were made available to us by the FAA, it is our
opinion that:
(a) the FAA Bill of Sale, the Trust Indenture with the Trust
Supplement attached and the Trust Supplement are in due form for
recordation by and have been duly filed for recordation with the FAA
pursuant to and in accordance with the provisions of the Transportation
Code today at ______ P.M., C.D.T., ____ P.M., C.D.T. and _____ P.M.,
C.D.T., respectively;
(b) the Aircraft Registration Application, to which were attached the
Affidavit of the Owner required by Section 47.7(c)(2)(ii) of Part 47 of the
Federal Aviation Regulations, was duly filed with the FAA today at ______
P.M., C.D.T.;
(c) the Owner is the owner of legal title to the Aircraft, and the
Aircraft and the Engines are free and clear of all Liens (as such term is
defined in the Trust Indenture) except the security interest created by the
Trust Indenture, as supplemented by the Trust Supplement;
(d) the Aircraft is eligible for registration in the name of the Owner
under the Transportation Code, and the Aircraft will be duly registered by
the FAA in the name of the Owner in due course pursuant to and in
accordance with the provisions of the Transportation Code;
(e) the rights of the Mortgagee, with respect to the Aircraft and the
Engines are perfected;
(f) the Trust Indenture, as supplemented by the Trust Supplement,
constitutes a valid, duly perfected first priority mortgage and security
interest in favor of the Mortgagee in the Aircraft and the Engines (insofar
as such security interest and collateral assignment affect an interest
covered by the recording system established by the FAA pursuant to Section
44107 of the Transportation Code);
(g) neither the Trust Indenture nor the Trust Supplement is required
to be re-filed with the FAA or filed or recorded in any other place within
the United States in order to perfect and maintain the perfection of the
mortgage and security interest in the Aircraft and the Engines created by
the Trust Indenture, as supplemented by the Trust Supplement (insofar as
such security interest af-
<PAGE>
E-1-3
fects an interest covered by the recording system established by the FAA
pursuant to Section 44107 of the Transportation Code) under the applicable
laws of any jurisdiction within the United States;
(h) no other registration of the Aircraft and no filings or recordings
(other than the filings and recordings with the FAA which have been
effected) are necessary to perfect in any jurisdiction within the United
States the Owner's title to the Aircraft, the first priority mortgage and
security interest created by the Trust Indenture, as supplemented by the
Trust Supplement, in the Aircraft and the Engines (insofar as such security
interest and collateral assignment affect an interest covered by the
recording system established by the FAA pursuant to Section 44107 of the
Transportation Code); and
(i) no authorization, approval, consent, license or order of, or
registration or filing with, or the giving of notice to the FAA Aircraft
Registry is required for the valid authorization, delivery or performance
of the Trust Indenture and the Trust Supplement except for such
authorizations, approvals, consents, licenses, orders, registrations and
notices as have been affected.
No opinion is herein expressed as to: (i) laws other than the federal laws
of the United States; (ii) the validity or enforceability under local law of the
Trust Indenture, as supplemented by the Trust Supplement; or (iii) the
recognition of the perfection of the mortgage, security interest and collateral
assignment created by the Trust Indenture, as supplemented by the Trust
Supplement, as against third parties in any legal proceedings outside the United
States. In rendering this opinion, we were subject to the accuracy of FAA
personnel in the filing, indexing and recording of instruments filed with the
FAA and in the search for encumbrance cross-reference index cards for the
Engines. Since our examination was limited to records maintained by the FAA
Aircraft Registry, our opinion does not cover liens which are perfected without
the filing of notice thereof with the FAA, such as federal tax liens, liens
arising under Section 1368(a) of Title 29 of the United States Code and
possessory artisans' liens. In rendering this opinion, we have relied upon the
opinion of the Aeronautical Center Counsel dated , (a copy of which is attached
hereto) and upon the past practice of the FAA which is consistent with said
opinion.
<PAGE>
E-1-4
Although this opinion is not addressed to special counsel for the Loan
Participants, they may rely upon it as though addressed to them.
Very truly yours,
PRESTON G. GADDIS II
For the Firm
<PAGE>
EXHIBIT A
Atlas Air, Inc.,
as Owner
Loan Participants named in the Participation Agreement
Wilmington Trust Company,
as Mortgagee
Standard & Poor's Ratings Services
<PAGE>
Exhibit E-2
___________, ___,___
To the Addresses Listed on
Exhibit A Attached Hereto
Re: Atlas Air, Inc.
Ladies and Gentlemen:
This letter confirms that the following described instruments were recorded
by the Federal Aviation Administration (the "FAA") on ,
, and assigned the Conveyance Numbers noted below:
(a) AC Form 8050-2 Aircraft Bill of Sale dated , (the "FAA Bill of
Sale") by The Boeing Company to Atlas Air, Inc., as Owner (the "Owner"),
covering the Boeing model 747-47UF aircraft with manufacturer's serial
number and United States nationality and registration marks N MC (the
"Aircraft") was recorded as Conveyance No. P____________; and
(b) Trust Indenture and Mortgage dated as of , (the "Trust Indenture")
between the Owner and Wilmington Trust Company, not in its individual
capacity except as expressly stated therein but solely as Mortgagee (the
"Mortgagee"), to which was attached the Trust Indenture and Mortgage
Supplement No. 1 dated , (the "Trust Supplement") of the Owner covering the
Aircraft and the General Electric model CF6-80C2B1F aircraft engines with
manufacturer's serial numbers - , - , - and - (the "Engines"), was recorded
as Conveyance No. P________.
Subsequent to the recordations mentioned above, we examined the records
maintained by the FAA with respect to the Aircraft and the Engines. Based upon
such examination, it is our opinion that:
(a) the FAA Bill of Sale and the Trust Indenture with the Trust
Supplement attached have been duly recorded by the FAA pursuant to and in
accordance with the provisions of Section 44107 of Title 49 of the United
States Code;
<PAGE>
E-2-2
(b) the Owner is the owner of legal title to the Aircraft;
(c) the Aircraft is duly registered in the name of the Owner pursuant
to and in accordance with the provisions of Sections 44102 and 44103 of
Title 49 of the United States Code; and
(d) the Aircraft and the Engines are free and clear of all Liens (as
such term is defined in Annex A to the Trust Indenture) except the security
interest created by the Trust Indenture, as supplemented by the Trust
Supplement.
This opinion is subject to the same limitations and exceptions as were
set forth in our opinion letter dated , , covering the Aircraft and the
Engines.
Very truly yours,
PRESTON G. GADDIS II
For the Firm
PGG/ch
<PAGE>
EXHIBIT A
Atlas Air, Inc.,
as Owner
Loan Participants named in the Participation Agreement
Wilmington Trust Company,
as Mortgagee
Standard & Poor's Ratings Services
EXHIBIT C-2 to
Note Purchase Agreement
FORM OF OWNED AIRCRAFT INDENTURE
<PAGE>
- -------------------------------------------------------------------------------
FORM OF TRUST INDENTURE AND MORTGAGE
Dated as of __________ __, ____
Between
ATLAS AIR, INC.,
Owner
and
WILMINGTON TRUST COMPANY,
not in its individual capacity,
except as expressly stated herein,
but solely as Mortgagee,
Mortgagee
- -------------------------------------------------------------------------------
EQUIPMENT NOTES COVERING
ONE BOEING 747-47UF FREIGHTER AIRCRAFT
BEARING U.S. REGISTRATION MARK N MC
AND MANUFACTURER'S SERIAL NO.
- -------------------------------------------------------------------------------
<PAGE>
TABLE OF CONTENTS
Page
ARTICLE I DEFINITIONS
ARTICLE II THE EQUIPMENT NOTES
SECTION 2.01. Form of Equipment Notes.........................................5
SECTION 2.02. Issuance and Terms of Equipment Notes..........................11
SECTION 2.03. [Intentionally Omitted]........................................14
SECTION 2.04. Method of Payment..............................................14
SECTION 2.05. Application of Payments........................................16
SECTION 2.06. Termination of Interest in Collateral..........................17
SECTION 2.07. Registration Transfer and Exchange of Equipment Notes..........17
SECTION 2.08. Mutilated, Destroyed, Lost or Stolen Equipment Notes...........18
SECTION 2.09. Payment of Expenses on Transfer; Cancellation..................19
SECTION 2.10. Mandatory Redemptions of Equipment Notes.......................19
SECTION 2.11. Voluntary Redemptions of Equipment Notes.......................20
SECTION 2.12. Redemptions; Notice of Redemption..............................20
SECTION 2.13. Subordination..................................................21
SECTION 2.14. Assumption of Equipment Notes..................................22
ARTICLE III RECEIPT, DISTRIBUTION AND APPLICATION OF PAYMENTS
SECTION 3.01. Basic Distributions............................................22
SECTION 3.02. Event of Loss; Replacement; Optional Redemption................23
SECTION 3.03. Payments After Event of Default................................25
SECTION 3.04. Certain Payments...............................................28
SECTION 3.05. Other Payments.................................................28
ARTICLE IV COVENANTS OF THE OWNER
SECTION 4.01. Liens..........................................................29
SECTION 4.02. Possession, Operation and Use, Maintenance and Repair,
Registration and Markings....................................29
SECTION 4.03. Inspection.....................................................35
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SECTION 4.04. Replacement and Pooling of Parts, Alterations,
Modifications and Additions; Substitution of Engines ........36
SECTION 4.05. Loss, Destruction or Requisition...............................40
SECTION 4.06. Insurance......................................................45
SECTION 4.07. Merger of Owner................................................46
ARTICLE V EVENTS OF DEFAULT; REMEDIES OF MORTGAGEE
SECTION 5.01. Event of Default...............................................47
SECTION 5.02. Remedies.......................................................49
SECTION 5.03. Return of Aircraft, Etc........................................50
SECTION 5.04. Remedies Cumulative............................................51
SECTION 5.05. Discontinuance of Proceedings..................................52
SECTION 5.06. Waiver of Past Defaults........................................52
SECTION 5.07. Appointment of Receiver........................................52
SECTION 5.08. Mortgagee Authorized to Execute Bills of Sale, Etc.............53
SECTION 5.09. Rights of Note Holders to Receive Payment......................53
ARTICLE VI DUTIES OF THE MORTGAGEE
SECTION 6.01. Notice of Event of Default.....................................53
SECTION 6.02. Action upon Instructions; Certain Rights and Limitations.......54
SECTION 6.03. Indemnification................................................55
SECTION 6.04. No Duties Except as Specified in Trust Indenture
or Instructions..............................................55
SECTION 6.05. No Action Except Under Trust Indenture or Instructions.........56
SECTION 6.06. Investment of Amounts Held by Mortgagee........................56
ARTICLE VII THE MORTGAGEE
SECTION 7.01. Acceptance of Trusts and Duties................................57
SECTION 7.02. Absence of Duties..............................................57
SECTION 7.03. No Representations or Warranties as to Aircraft or Documents...58
SECTION 7.04. No Segregation of Monies; No Interest..........................58
SECTION 7.05. Reliance; Agreements; Advice of Counsel........................59
SECTION 7.06. Compensation...................................................59
SECTION 7.07. Instructions from Note Holders.................................60
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ARTICLE VIII INDEMNIFICATION
SECTION 8.01. Scope of Indemnification.......................................60
ARTICLE IX SUCCESSOR AND SEPARATE TRUSTEES
SECTION 9.01. Resignation of Mortgagee; Appointment of Successor.............60
SECTION 9.02. Appointment of Additional and Separate Trustees................62
ARTICLE X SUPPLEMENTS AND AMENDMENTS TO THIS
TRUST INDENTURE AND OTHER DOCUMENTS
SECTION 10.01.Instructions of Majority; Limitations..........................64
SECTION 10.02.Mortgagee Protected............................................65
SECTION 10.03.Documents Mailed to Note Holders...............................65
SECTION 10.04.No Request Necessary for Trust Indenture Supplement............66
ARTICLE XI MISCELLANEOUS
SECTION 11.01.Termination of Trust Indenture.................................66
SECTION 11.02.No Legal Title to Collateral in Note Holders...................66
SECTION 11.03.Sale of Aircraft by Mortgagee Is Binding.......................67
SECTION 11.04.Trust Indenture for Benefit of Owner, Mortgagee,
Note Holders and the Other Indenture Indemnitees ............................67
SECTION 11.05.Notices........................................................67
SECTION 11.06.Severability...................................................68
SECTION 11.07.No Oral Modification or Continuing Waivers.....................68
SECTION 11.08.Successors and Assigns.........................................68
SECTION 11.09.Headings.......................................................69
SECTION 11.10.Normal Commercial Relations....................................69
SECTION 11.11.Governing Law; Counterpart Form................................69
SECTION 11.12.Voting by Note Holders.........................................69
SECTION 11.13.Bankruptcy.....................................................70
ANNEX A Definitions
ANNEX B Insurance
EXHIBIT A Form of Trust Indenture and Mortgage Supplement
SCHEDULE I Equipment Notes Amortization and Interest Rates
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<PAGE>
TRUST INDENTURE AND MORTGAGE
TRUST INDENTURE AND MORTGAGE, dated as of ________ __, ____ ("Trust
Indenture"), between ATLAS AIR, INC., a Delaware corporation ("Owner"), and
WILMINGTON TRUST COMPANY, a Delaware banking corporation, not in its individual
capacity, except as expressly stated herein, but solely as Mortgagee hereunder
(together with its successors hereunder, the "Mortgagee").
W I T N E S S E T H
WHEREAS, all capitalized terms used herein shall have the respective
meanings set forth or referred to in Article I hereof;
WHEREAS, the parties hereto desire by this Trust Indenture, among other
things, (i) to provide for the issuance by the Owner of the Equipment Notes and
(ii) to provide for the assignment, mortgage and pledge by the Owner to the
Mortgagee, as part of the Collateral hereunder, among other things, of all of
the Owner's right, title and interest in and to the Aircraft and, except as
hereinafter expressly provided, all payments and other amounts received
hereunder in accordance with the terms hereof, as security for, among other
things, the Owner's obligations to the Note Holders and the Indenture
Indemnitees;
WHEREAS, all things have been done to make the Equipment Notes, when
executed by the Owner and authenticated and delivered by the Mortgagee
hereunder, the valid, binding and enforceable obligations of the Owner; and
WHEREAS, all things necessary to make this Trust Indenture the valid,
binding and legal obligation of the Owner for the uses and purposes herein set
forth, in accordance with its terms, have been done and performed and have
happened;
GRANTING CLAUSE
NOW, THEREFORE, THIS TRUST INDENTURE AND MORTGAGE WITNESSETH, that, to
secure the prompt payment of the Original Amount of, interest on, Make-Whole
Amount, if any, and all other amounts due with respect to, all Equipment Notes
from time to time outstanding hereunder according to their tenor and effect and
to secure the performance and observance by the Owner of all the agreements,
covenants and provisions contained herein and in the Participation Agreement and
in the Equipment Notes, for the benefit of the Note Holders and each of the
Indenture Indemnitees, and in consideration of the premises and of the covenants
herein contained, and of the acceptance of the Equipment Notes by the holders
thereof, and for other good and valuable consideration the receipt and adequacy
whereof are hereby acknowledged, the Owner has granted, bargained,
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sold, assigned, transferred, conveyed, mortgaged, pledged and confirmed, and
does hereby grant, bargain, sell, assign, transfer, convey, mortgage, pledge and
confirm, unto the Mortgagee, its successors in trust and assigns, for the
security and benefit of, the Note Holders and each of the Indenture Indemnitees,
a first priority security interest in and mortgage lien on all right, title and
interest of the Owner in, to and under the following described property, rights
and privileges, whether now or hereafter acquired (which, collectively, together
with all property hereafter specifically subject to the Lien of this Trust
Indenture by the terms hereof or any supplement hereto, are included within, and
are referred to as, the "Collateral"), to wit:
(1) The Airframe which is one Boeing 747-47UF aircraft with the FAA
Registration number of N MC and the manufacturer's serial number of _____
and four Engines, each of which Engines is a General Electric
CF6-80C2B5FG04 engine with the manufacturer's serial numbers ___-___,
___-___, ___-___ and ___-___, is of 750 or more rated takeoff horsepower or
the equivalent of such horsepower (such Airframe and Engines more
particularly described in the Trust Indenture Supplement executed and
delivered as provided herein) as the same are now and will hereafter be
constituted, whether now owned by the Owner or hereafter acquired, and in
the case of such Engines, whether or not any such Engine shall be installed
in or attached to the Airframe or any other airframe, together with (a) all
Parts of whatever nature, which are from time to time included within the
definitions of "Airframe" or "Engines," whether now owned or hereafter
acquired, including all substitutions, renewals and replacements of and
additions, improvements, accessions and accumulations to the Airframe and
Engines (other than additions, improvements, accessions and accumulations
which constitute appliances, parts, instruments, appurtenances,
accessories, furnishings or other equipment excluded from the definition of
Parts) and (b) all Aircraft Documents;
(2) The Purchase Agreement and the Bills of Sale to the extent the
same relate to continuing rights of the Owner in respect of any warranty,
indemnity or agreement, express or implied, as to title, materials,
workmanship, design or patent infringement or related matters with respect
to the Airframe or the Engines (reserving to the Owner, however, all of the
Owner's other rights and interest in and to the Purchase Agreement)
together with all rights, powers, privileges, options and other benefits of
the Owner thereunder (subject to such reservation) with respect to the
Airframe or the Engines, including, without limitation, the right to make
all waivers and agreements, to give and receive all notices and other
instruments or communications, to take such action upon the occurrence of a
default thereunder, including the commencement, conduct and consummation of
legal, administrative or other proceedings, as shall be permitted thereby
or by law, and to do any and all
<PAGE>
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other things which the Owner is or may be entitled to do thereunder
(subject to such reservation), subject, with respect to the Purchase
Agreement, to the terms and conditions of the Consent and Agreement and the
Engine Consent and Agreement;
(3) All proceeds with respect to the requisition of title to or use of
the Aircraft or any Engine by any Government Entity or from the sale or
other disposition of the Aircraft, the Airframe, any Engine or other
property described in any of these Granting Clauses by the Mortgagee
pursuant to the terms of this Trust Indenture, and all insurance proceeds
with respect to the Aircraft, the Airframe, any Engine or any part thereof,
but excluding any insurance maintained by the Owner and not required under
Section 4.06;
(4) All rents, revenues and other proceeds (other than rents, revenues
and proceeds from any ACMI Contract) collected by the Mortgagee pursuant to
Section 5.03(b) and all monies and securities from time to time deposited
or required to be deposited with the Mortgagee by or for the account of the
Owner pursuant to any terms of this Trust Indenture held or required to be
held by the Mortgagee hereunder; 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, (a) the
Mortgagee shall not take or cause to be taken any action contrary to the Owner's
right hereunder to quiet enjoyment of the Airframe and Engines, and to possess,
use, retain and control the Airframe and Engines and all revenues, income and
profits derived therefrom, and (b) the Owner shall have the right, to the
exclusion of the Mortgagee, with respect to the Purchase Agreement, to exercise
in the Owner's name all rights and powers of the buyer under the Purchase
Agreement (other than to amend, modify or waive any of the warranties or
indemnities contained therein, except in the exercise of the Owner's reasonable
business judgment) and to retain any recovery or benefit resulting from the
enforcement of any warranty or indemnity under the Purchase Agreement; and
provided further that, notwithstanding the occurrence or continuation of an
Event of Default, the Mortgagee shall not enter into any amendment of the
Purchase Agreement which would increase the obligations of the Owner thereunder.
TO HAVE AND TO HOLD all and singular the aforesaid property unto the
Mortgagee, and its successors and assigns, in trust for the equal and
proportionate benefit and security of the Note Holders and the Indenture
Indemnitees, except as provided in Section 2.13 and Article III hereof, without
any preference, distinction or priority of any one Equipment Note over any other
by reason of priority of time of issue, sale, negotiation,
<PAGE>
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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 Trust Indenture.
It is expressly agreed that anything herein contained to the contrary
notwithstanding, the Owner shall remain liable under the Indenture Agreements to
perform all of the obligations assumed by it thereunder, except to the extent
prohibited or excluded from doing so pursuant to the terms and provisions
thereof, and the Mortgagee, the Note Holders and the Indenture Indemnitees shall
have no obligation or liability under the Indenture Agreements by reason of or
arising out of the assignment hereunder, nor shall the Mortgagee, the Note
Holders or the Indenture Indemnitees be required or obligated in any manner to
perform or fulfill any obligations of the Owner under or pursuant to the
Indenture Agreements, or, except as herein expressly provided, to make any
payment, or to make any inquiry as to the nature or sufficiency of any payment
received by it, or present or file any claim, or take any action to collect or
enforce the payment of any amounts which may have been assigned to it or to
which it may be entitled at any time or times.
The Owner does hereby constitute the Mortgagee the true and lawful attorney
of the Owner, irrevocably, granted for good and valuable consideration and
coupled with an interest and with full power of substitution, and with full
power (in the name of the Owner or otherwise) to ask for, require, demand,
receive, compound and give acquittance for any and all monies and claims for
monies (in each case including insurance and requisition proceeds) due and to
become due under or arising out of the Indenture Agreements, and all other
property which now or hereafter constitutes part of the Collateral, to endorse
any checks or other instruments or orders in connection therewith and to file
any claims or to take any action or to institute any proceedings which the
Mortgagee may deem to be necessary or advisable in the premises; provided that
the Mortgagee shall not exercise any such rights except upon the occurrence and
during the continuance of an Event of Default hereunder.
The Owner agrees that at any time and from time to time, upon the written
request of the Mortgagee, the Owner will promptly and duly execute and deliver
or cause to be duly executed and delivered any and all such further instruments
and documents (including without limitation UCC continuation statements) as the
Mortgagee may reasonably deem necessary to perfect, preserve or protect the
mortgage, security interests and assignments created or intended to be created
hereby or to obtain for the Mortgagee the full benefits of the assignment
hereunder and of the rights and powers herein granted.
IT IS HEREBY COVENANTED AND AGREED by and between the parties hereto as
follows:
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ARTICLE I definitions
Capitalized terms used but not defined herein shall have the respective
meanings set forth or incorporated by reference, and shall be construed in the
manner described, in Annex A hereto.
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. ACCORDINGLY, THIS EQUIPMENT NOTE MAY NOT BE SOLD UNLESS EITHER REGISTERED
UNDER THE ACT AND SUCH APPLICABLE STATE LAWS OR AN EXEMPTION FROM SUCH
REGISTRATIONS IS AVAILABLE.
ATLAS AIR, INC.
SERIES 1999-1 ____ EQUIPMENT NOTE DUE ISSUED IN CONNECTION WITH THE
BOEING MODEL 747-47UF FREIGHTER AIRCRAFT BEARING UNITED STATES
REGISTRATION NUMBER N MC.
No. Date: ,
<PAGE>
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INTEREST RATE MATURITY DATE
[ ] [ ]
ATLAS AIR, INC., a Delaware corporation ("Owner"), hereby promises to pay
to , or the registered assignee thereof, the principal sum of $ (the "Original
Amount"), together with interest on the amount of the Original Amount remaining
unpaid from time to time (calculated on the basis of a year of 360 days
comprised of twelve 30-day months) from the date hereof until paid in full at a
rate per annum equal to the Debt Rate. The Original Amount of this Equipment
Note shall be [payable in installments on the dates set forth in Schedule I
hereto equal to the corresponding percentage of the Original Amount of this
Equipment Note set forth in Schedule I hereto.](1) [paid in full on __, __.](2)
Accrued but unpaid interest shall be due and payable in arrears in semiannual
installments commencing on , ___ , and thereafter on _______ _ and ____ _ of
each year, to and including . Notwithstanding the foregoing, the final payment
made on this Equipment Note shall be in an amount sufficient to discharge in
full the unpaid Original Amount and all accrued and unpaid interest on, and any
other amounts due under, this Equipment Note. 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 if such payment is made on such next succeeding Business Day, no
interest shall accrue on the amount of such payment during such extension.
For purposes hereof, the term "Trust Indenture" means the Trust Indenture
and Mortgage dated as of , ____, between the Owner and Wilmington Trust Company
(the "Mortgagee"), as the same may be amended or supplemented from time to time.
All other capitalized terms used in this Equipment Note and not defined herein
shall have the respective meanings assigned in the Trust Indenture.
This Equipment Note shall bear interest, payable on demand, at the Payment
Due Rate (calculated on the basis of a year of 360 days comprised of twelve
30-day months) on any overdue Original Amount, any overdue Make-Whole Amount, if
any, and (to the extent permitted by applicable Law) any overdue interest and
any other amounts payable hereunder which are overdue, in each case for the
period the same is overdue. Amounts
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1 Not included in the case of Series A-2 Equipment Notes.
2 To be isnerted in the case of Series A-2 Equipment Notes.
<PAGE>
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shall be overdue if not paid when due (whether at stated maturity, by
acceleration or otherwise).
There shall be maintained an Equipment Note Register for the purpose of
registering transfers and exchanges of Equipment Notes at the Corporate Trust
Office of the Mortgagee or at the office of any successor in the manner provided
in Section 2.07 of the Trust Indenture.
The Original Amount and interest and other amounts due hereunder shall be
payable in Dollars in immediately available funds at the Corporate Trust Office
of the Mortgagee, or as otherwise provided in the Trust Indenture. 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, this Equipment Note shall be
surrendered promptly thereafter to the Mortgagee for cancellation.
The holder hereof, by its acceptance of this Equipment Note, agrees that,
except as provided in the Trust Indenture, each payment of the Original Amount,
Make-Whole Amount, if any, and interest received by it hereunder shall be
applied, first, to the payment of accrued interest on this Equipment Note (as
well as any interest on any overdue Original Amount, any overdue Make-Whole
Amount, if any, or, to the extent permitted by Law, any overdue interest and
other amounts hereunder) to the date of such payment, second, to the payment of
the Original Amount of this Equipment Note then due, third, to the payment of
Make-Whole Amount, if any, and any other amount due hereunder or under the Trust
Indenture, and fourth, the balance, if any, remaining thereafter, to the payment
of installments of the Original Amount of this Equipment Note remaining unpaid
in the inverse order of their maturity.
This Equipment Note is one of the Equipment Notes referred to in the Trust
Indenture which have been or are to be issued by the Owner pursuant to the terms
of the Trust Indenture. The Collateral is held by the Mortgagee as security, in
part, for the Equipment Notes. The provisions of this Equipment Note are subject
to the Trust Indenture. Reference is hereby made to the Trust Indenture for a
complete statement of the rights and obligations of the holder of, and the
nature and extent of the security for, this Equipment Note and the rights and
obligations of the holders of, and the nature and extent of the security for,
any other Equipment Notes executed and delivered under the Trust Indenture, as
well as for a statement of the terms and conditions of the Trust created by the
Trust Indenture, to all of which terms and conditions in the Trust Indenture
each holder hereof agrees by its acceptance of this Equipment Note.
<PAGE>
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As provided in the Trust Indenture and subject to certain limitations
therein set forth, this Equipment Note is exchangeable for a like aggregate
Original Amount of Equipment Notes of different authorized denominations, as
requested by the holder surrendering the same.
Prior to due presentment for registration of transfer of this Equipment
Note, the Owner and the Mortgagee shall treat the person in whose name this
Equipment Note is registered as the owner hereof for all purposes, whether or
not this Equipment Note be overdue, and neither the Owner nor the Mortgagee
shall be affected by notice to the contrary.
This Equipment Note is subject to redemption as provided in Sections 2.10,
2.11 and 2.12 of the Trust Indenture but not otherwise. In addition, this
Equipment Note may be accelerated as provided in Section 5.02 of the Trust
Indenture.
[The indebtedness evidenced by this Equipment Note is, to the extent and in
the manner provided in the Trust Indenture, subordinate and subject in right of
payment to the prior payment in full of the Secured Obligations (as defined in
the Trust Indenture) in respect of [Series A-1 and Series A-2 Equipment
Notes](3) [Series A-1, Series A-2 and Series B Equipment Notes](4) [Series A-1,
Series A-2, Series B and Series C Equipment Notes](5) and this Equipment Note is
issued subject to such provisions. The Note Holder of this Equipment Note, by
accepting the same, (a) agrees to and shall be bound by such provisions, (b)
authorizes and directs the Mortgagee on his behalf to take such action as may be
necessary or appropriate to effectuate the subordination as provided in the
Trust Indenture and (c) appoints the Mortgagee his attorney-in-fact for such
purpose. ](6)
Unless the certificate of authentication hereon has been executed by or on
behalf of the Mortgagee by manual signature, this Equipment Note shall not be
entitled to any benefit under the Trust Indenture or be valid or obligatory for
any purpose.
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3 To be inserted in the case of a Series B Equipment Note.
4 To be inserted in the case of a Series C Equipment Note.
5 To be inserted in the case of a Series D Equipment Note.
6 To be inserted for each Equipment Note other than any Series A-1 and Series
A-2 Equipment Note.
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THIS EQUIPMENT NOTE SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH
THE INTERNAL LAWS OF THE STATE OF NEW YORK.
* * *
IN WITNESS WHEREOF, the Owner has caused this Equipment Note to be executed
in its corporate name by its officer thereunto duly authorized on the date
hereof.
ATLAS AIR, INC.
By:
----------------------------------
Name:
Title:
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MORTGAGEE'S CERTIFICATE OF AUTHENTICATION
This is one of the Equipment Notes referred to in the within-mentioned
Trust
Indenture.
WILMINGTON TRUST COMPANY, not in its
individual capacity but solely as Mortgagee
By:
------------------------------------------
Name:
Title:
SCHEDULE I
EQUIPMENT NOTE AMORTIZATION
Payment Date Percentage of Original Amount to Be Paid
[SEE SCHEDULE I TO TRUST INDENTURE
THE APPLICABLE PORTION OF WHICH IS
INSERTED UPON ISSUANCE](7)
* * *
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7 Not included in the case of Series A-2 Equipment Notes.
<PAGE>
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SECTION 2.02. Issuance and Terms of Equipment Notes
The Equipment Notes shall be dated the date of issuance thereof, shall be
issued in up to four separate series (or if the Series D is issued, five
separate series) consisting of Series A-1, Series A-2, Series B, Series C and,
if issued, Series D and in the maturities and principal amounts and shall bear
interest as specified in Schedule I hereto (or, in the case of the Series D if
issued after the Closing Date, as specified in an amendment to this Trust
Indenture). If the amount specified in Schedule I hereto for the Series A-2
Equipment Notes shall be zero, all references herein to the Series A-2 Equipment
Notes shall be disregarded. On the date thereof, each Series specified in
Schedule I hereto shall be issued to the Subordination Agent on behalf of the
Pass Through Trustee under the applicable Pass Through Trust Agreement. Owner
shall have the option to issue the Series D Equipment Notes at or after the
Closing. The Equipment Notes shall be issued in registered form only. The
Equipment Notes shall be issued in denominations of $1,000 and integral
multiples thereof, except that one Equipment Note of each Series may be in an
amount that is not an integral multiple of $1,000.
Each Equipment Note shall bear interest at the applicable Debt Rate
(calculated on the basis of a year of 360 days comprised of twelve 30-day
months) on the unpaid Original Amount thereof from time to time outstanding,
payable in arrears in semi-annual installments on each January 2 and July 2
until maturity commencing on the first such date after issuance thereof. The
Original Amount of each Equipment Note (i) in the case of Equipment Notes other
than Series A-2, shall be payable on the dates and in the installments equal to
the corresponding percentage of the Original Amount as set forth in Schedule I
hereto the applicable portion of which shall be attached as Schedule I to the
Equipment Notes (or, in the case of the Series D Equipment Notes if issued after
the Closing Date, as set forth in an amendment to this Trust Indenture, which
payment schedule shall be attached as Schedule I to the Series D Equipment
Notes) and (ii) in the case of the Series A-2 Equipment Notes, shall be paid in
full on ___, __. Notwithstanding the foregoing, the final payment made under
each Equipment Note shall be in an amount sufficient to discharge in full the
unpaid Original Amount and all accrued and unpaid interest on, and any other
amounts due under, such Equipment Note. Each Equipment Note shall bear interest
at the Payment Due Rate (calculated on the basis of a year of 360 days comprised
of twelve 30-day months) on any part of the Original Amount, Make-Whole Amount,
if any, 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 shall be overdue, in each case for the period the same is overdue. Amounts
shall be overdue if not paid when due (whether at stated maturity, by
acceleration or otherwise). Notwithstanding anything to the contrary
<PAGE>
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contained herein, if any date on which a payment 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 and if such payment is made on such next succeeding Business Day, no
interest shall accrue on the amount of such payment during such extension.
The Owner agrees to pay to the Mortgagee for distribution in accordance
with Section 3.04 hereof: (i) to the extent not payable (whether or not in fact
paid) under Section 6(a) of the Note Purchase Agreement, an amount equal to the
fees payable to the relevant Liquidity Provider under Section 2.03 of each
Liquidity Facility and the related Fee Letter (as defined in the Intercreditor
Agreement) multiplied by a fraction the numerator of which shall be the then
outstanding aggregate principal amount of the Series A-1 Equipment Notes, Series
A-2 Equipment Notes, Series B Equipment Notes and Series C Equipment Notes and
the denominator of which shall be the then outstanding aggregate principal
amount of all "Series A-1 Equipment Notes," "Series A-2 Equipment Notes,"
"Series B Equipment Notes" and "Series C Equipment Notes" (each as defined in
the Note Purchase Agreement); (ii) (x) the amount equal to interest on any
Downgrade Advance (other than any Applied Downgrade Advance) payable under
Section 3.07(e) of each Liquidity Facility minus Investment Earnings from such
Downgrade Advance multiplied by (y) the fraction specified in the foregoing
clause (i); (iii) (x) the amount equal, to interest on any Non-Extension Advance
(other than any Applied Non-Extension Advance) payable under Section 3.07(a)(i)
of the Class A Liquidity Facility minus Investment Earnings from such
Non-Extension Advance multiplied by (y) the fraction specified in the foregoing
clause (i); (iv) if any payment default shall have occurred and be continuing
with respect to interest on any Series A-1 Equipment Notes, Series A-2 Equipment
Notes, Series B Equipment Notes or Series C Equipment Notes, (x) the excess, if
any, of (1) an amount equal to interest on any Unpaid Advance, Applied Downgrade
Advance or Applied Non-Extension Advance payable under Section 3.07(a)(i) of
each Liquidity Facility over (2) the sum of Investment Earnings from any Final
Advance plus any amount of interest at the Payment Due Rate actually payable
(whether or not in fact paid) by Owner on the overdue scheduled interest on the
Equipment Notes in respect of which such Unpaid Advance, Applied Downgrade
Advance or Applied Non-Extension Advance was made multiplied by (y) a fraction
the numerator of which shall be the then aggregate overdue amounts of interest
on the Series A-1 Equipment Notes, Series A-2 Equipment Notes, Series B
Equipment Notes and Series C Equipment Notes (other than interest becoming due
and payable solely as a result of acceleration of any such Equipment Notes) and
the denominator of which shall be the then aggregate overdue amounts of interest
on all "Series A-1 Equipment Notes," "Series A-2 Equipment Notes," "Series B
Equipment Notes" and "Series C Equipment Notes" (each as defined in the Note
Purchase Agreement) (other than interest becoming due and payable solely as a
result of acceleration of any such "Equipment Notes"); and (v) Owner's
<PAGE>
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pro rata share of any other amounts owed to the Liquidity Providers by the
Subordination Agent as borrower under each Liquidity Facility other than amounts
due as repayment of advances thereunder or as interest on such advances, except
to the extent payable pursuant to clause (ii), (iii) or (iv) above, (c) Owner's
pro rata share of all compensation and reimbursement of expenses, disbursements
and advances payable by Owner under the Pass Through Trust Agreements, (d)
Owner's pro rata share of all compensation and reimbursement of expenses and
disbursements payable to the Subordination Agent under the Intercreditor
Agreement except with respect to any income or franchise taxes incurred by the
Subordination Agent in connection with the transactions contemplated by the
Intercreditor Agreement and (e) in the event Owner requests any amendment to any
Operative Agreement or Pass Through Agreement, Owner's pro rata share of all
reasonable fees and expenses (including, without limitation, fees and
disbursements of counsel) of the Escrow Agents and the Paying Agents in
connection therewith payable by the Pass Through Trustees under the Escrow
Agreements. As used herein, "Owner's pro rata share" means as of any time a
fraction, the numerator of which is the principal balance then outstanding of
Equipment Notes and the denominator of which is the aggregate principal balance
then outstanding of all "Equipment Notes" (as such term is defined in each of
the Operative Indentures). For purposes of this paragraph, the terms "Applied
Downgrade Advance," "Applied Non-Extension Advance," "Cash Collateral Account,"
"Downgrade Advance," "Final Advance," "Investment Earnings," "Non-Extension
Advance" and "Unpaid Advance" shall have the meanings specified in each
Liquidity Facility.
The Equipment Notes shall be executed on behalf of the Owner by one of its
authorized officers. Equipment Notes bearing the signatures of individuals who
were at any time the proper officers of the Owner shall bind the Owner,
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. The Owner
may from time to time execute and deliver Equipment Notes with respect to the
Aircraft to the Mortgagee for authentication upon original issue and such
Equipment Notes shall thereupon be authenticated and delivered by the Mortgagee
upon the written request of the Owner signed by an authorized officer of the
Owner. No Equipment Note shall be secured by or entitled to any benefit under
this Trust Indenture or be valid or obligatory for any purposes, unless there
appears on such Equipment Note a certificate of authentication in the form
provided for herein executed by the Mortgagee by the manual signature of one of
its authorized officers and such certificate upon any Equipment Notes be
conclusive evidence, and the only evidence, that such Equipment Note has been
duly authenticated and delivered hereunder.
The aggregate Original Amount of the Equipment Notes issued hereunder shall
not exceed the amount set forth as the maximum therefor on Schedule I hereto.
<PAGE>
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SECTION 2.03. [Intentionally Omitted]
SECTION 2.04. Method of Payment
(a) The Original Amount of, interest on, Make-Whole Amount, if any, and
other amounts due under each Equipment Note or hereunder will be payable in
Dollars by wire transfer of immediately available funds not later than 12 noon,
New York time, on the due date of payment to the Mortgagee at the Corporate
Trust Office for distribution among the Note Holders in the manner provided
herein. The Owner shall not have any responsibility for the distribution of such
payment to any Note Holder. Notwithstanding the foregoing or any provision in
any Equipment Note to the contrary, the Mortgagee will use reasonable efforts to
pay or cause to be paid, if so directed in writing by any Note Holder (with a
copy to the Owner), all amounts paid by the Owner hereunder and under such
holder's Equipment Note or Equipment Notes to such holder or a nominee therefor
(including all amounts distributed pursuant to Article III of this Trust
Indenture) by transferring, or causing to be transferred, by wire transfer of
immediately available funds in Dollars, prior to 12:30 P.M., New York City time,
on the due date of payment, to an account maintained by such holder with a bank
located in the continental United States the amount to be distributed to such
holder, for credit to the account of such holder maintained at such bank. Any
payment made hereunder shall be made without any presentment or surrender of any
Equipment Note, except that, in the case of the final payment in respect of any
Equipment Note, such Equipment Note shall be surrendered to the Mortgagee for
cancellation promptly after such payment. Notwithstanding any other provision of
this Trust Indenture to the contrary, the Mortgagee shall not be required to
make, or cause to be made, wire transfers as aforesaid prior to the first
Business Day on which it is practicable-for the Mortgagee 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 12 noon, New York time, at the place of payment. Prior
to the due presentment for registration of transfer of any Equipment Note, the
Owner and the Mortgagee shall deem and treat the Person in whose name any
Equipment Note is registered on the Equipment Note Register as the absolute
owner and holder 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 none of the Owner or the Mortgagee shall be affected by any notice
to the contrary. So long as any signatory to the Participation Agreement or
nominee thereof shall be a registered Note Holder, all payments to it shall be
made to the account of such Note Holder specified in Schedule I thereto and
otherwise in the manner provided in or pursuant to the Participation Agreement
unless it shall have specified some other account or manner of payment by notice
to the Mortgagee consistent with this Section 2.04.
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(b) The Mortgagee, as agent for the Owner, shall exclude and withhold at
the appropriate rate from each payment of Original Amount of, interest on,
Make-Whole Amount, if any, and other amounts due hereunder or under each
Equipment Note (and such exclusion and withholding shall constitute payment in
respect of such Equipment Note) any and all United States withholding taxes
applicable thereto as required by Law. The Mortgagee agrees to act as such
withholding agent and, in connection therewith, whenever any present or future
United States 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 and timely pay the same to the appropriate authority in
the name of and on behalf of the Note Holders, that it will file any necessary
United States withholding tax returns or statements when due, and that as
promptly as possible after the payment thereof it will deliver to each Note
Holder (with a copy to the Owner) appropriate receipts showing the payment
thereof, together with such additional documentary evidence as any such Note
Holder may reasonably request from time to time.
If a Note Holder which is a Non-U.S. Person has furnished to the Mortgagee
a properly completed, accurate and currently effective U.S. Internal Revenue
Service Form 1001 or W-8 (or such successor form or forms as may be required by
the United States Treasury Department) during the calendar year in which the
payment hereunder or under the Equipment Note(s) held by such holder is made
(but prior to the making of such payment), or in either of the two preceding
calendar years, and has not notified the Mortgagee of the withdrawal or
inaccuracy of such form prior to the date of such payment (and the Mortgagee has
no reason to believe that any information set forth in such form is inaccurate),
the Mortgagee shall withhold only the amount, if any, required by Law (after
taking into account any applicable exemptions properly claimed by the Note
Holder) to be withheld from payments hereunder or under the Equipment Notes held
by such holder in respect of United States federal income tax. If a Note Holder
(x) which is a Non-U.S. Person has furnished to the Mortgagee a properly
completed, accurate and currently effective U.S. Internal Revenue Service Form
4224 in duplicate (or such successor certificate, form or forms as may be
required by the United States Treasury Department as necessary in order to
properly avoid withholding of United States federal income tax), for each
calendar year in which a payment is made (but prior to the making of any payment
for such year), and has not notified the Mortgagee of the withdrawal or
inaccuracy of such certificate or form prior to the date of such payment (and
the Mortgagee has no reason to believe that any information set forth in such
form is inaccurate) or (y) which is a U.S. Person has furnished to the Mortgagee
a properly completed, accurate and currently effective U.S. Internal Revenue
Service Form W9, if applicable, prior to a payment hereunder or under the
Equipment Notes held by such holder, no amount shall be withheld from payments
in respect of United States federal income tax. If any Note Holder has notified
the Mortgagee that any of the foregoing forms or certificates is withdrawn or
inaccurate, or if such holder has not filed a
<PAGE>
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form claiming an exemption from United States withholding tax or if the Code or
the regulations thereunder or the administrative interpretation thereof is at
any time after the date hereof amended to require such withholding of United
States federal income taxes from payments under the Equipment Notes held by such
holder, the Mortgagee agrees to withhold from each payment due to the relevant
Note Holder withholding taxes at the appropriate rate under Law and will, on a
timely basis as more fully provided above, deposit such amounts with an
authorized depository and make such returns, statements, receipts and other
documentary evidence in connection therewith as required by Law.
Owner shall not have any liability for the failure of the Mortgagee to
withhold taxes in the manner provided for herein or for any false, inaccurate or
untrue evidence provided by any Note Holder hereunder.
SECTION 2.05. Application of Payments
In the case of each Equipment Note, each payment of Original Amount,
Make-Whole Amount, if any, and interest due thereon shall be applied:
First: to the payment of accrued interest on such Equipment Note (as
well as any interest on any overdue Original Amount, any overdue Make-Whole
Amount, if any, and to the extent permitted by Law, any overdue interest
and any other overdue amounts thereunder) to the date of such payment;
Second: to the payment of the Original Amount of such Equipment Note
(or a portion thereof) then due thereunder;
Third: to the payment of Make-Whole Amount, if any, and any other
amount due hereunder or under such Equipment Note: and
Fourth: the balance, if any, remaining thereafter, to the payment of
the Original Amount of such Equipment Note remaining unpaid (provided that
such Equipment Note shall not be subject to redemption except as provided
in Sections 2.10, 2.11 and 2.12 hereof).
The amounts paid pursuant to clause "Fourth" above shall be applied to the
installments of Original Amount of such Equipment Note in the inverse order of
their maturity.
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SECTION 2.06. Termination of Interest in Collateral
No Note Holder nor any other Indenture Indemnitee shall, as such, have any
further interest in, or other right with respect to, the Collateral when and if
the Original Amount of, Make-Whole Amount, if any, and interest on and other
amounts due under all Equipment Notes held by such Note Holder and any other
sums then due and payable to such Note Holder, such Indenture Indemnitee or the
Mortgagee hereunder (including, without limitation, under the third paragraph of
Section 2.02 hereof) and under the other Operative Agreements by the Owner
(collectively, the "Secured Obligations") shall have been paid in full.
SECTION 2.07. Registration Transfer and Exchange of Equipment Notes
The Mortgagee shall keep a register (the "Equipment Note Register") in
which the Mortgagee shall provide for the registration of Equipment Notes and
the registration of transfers of Equipment Notes. No such transfer shall be
given effect unless and until registration hereunder shall have occurred. The
Equipment Note Register shall be kept at the Corporate Trust Office of the
Mortgagee. The Mortgagee is hereby appointed "Equipment Note Registrar" for the
purpose of registering Equipment Notes and transfers of Equipment Notes as
herein provided. A holder of any Equipment Note intending to exchange such
Equipment Note shall surrender such Equipment Note to the Mortgagee at the
Corporate Trust Office, together with a written request from the registered
holder thereof for the issuance of a new Equipment Note, 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, the Owner
shall execute, and the Mortgagor shall authenticate and deliver, in the name of
the designated transferee or transferees, one or more new Equipment Notes of a
like aggregate Original Amount and of the same series. At the option of the Note
Holder, Equipment Notes may be exchanged for other Equipment Notes of any
authorized denominations of a like aggregate Original Amount, upon surrender of
the Equipment Notes to be exchanged to the Mortgagee at the Corporate Trust
Office. Whenever any Equipment Notes are so surrendered for exchange, the Owner
shall execute, and the Mortgagee shall authenticate and deliver, the Equipment
Notes which the Note Holder 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 hereof or
otherwise under this Trust Indenture) shall be the valid obligations of the
Owner evidencing the same respective obligations, and entitled to the same
security
<PAGE>
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and benefits under this Trust Indenture, as the Equipment Notes surrendered upon
such registration of transfer or exchange. Every Equipment Note presented or
surrendered for registration of transfer, shall (if so required by the
Mortgagee) be duly endorsed, or be accompanied by a written instrument of
transfer in form satisfactory to the Mortgagee duly executed by the Note Holder
or such holder's attorney duly authorized in writing, and the Mortgagee shall
require evidence satisfactory to it as to the compliance of any such transfer
with the Securities Act, and the securities Laws of any applicable state. The
Mortgagee shall make a notation on each new Equipment Note of the amount of all
payments of Original 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. Interest shall be deemed to have been paid on such new Equipment Note to
the date on which interest shall have been paid on such old Equipment Note, and
all payments of the Original Amount marked on such new Equipment Note, as
provided above, shall be deemed to have been made thereon. The Owner shall not
be required to exchange any surrendered Equipment Notes as provided above during
the ten-day period preceding the due date of any payment on such Equipment Note.
The Owner shall in all cases deem the Person in whose name any Equipment Note
shall have been issued and registered as the absolute owner and holder of such
Equipment Note for the purpose of receiving payment of all amounts payable by
the Owner with respect to such Equipment Note and for all purposes until a
notice stating otherwise is received from the Mortgagee and such change is
reflected on the Equipment Note Register. The Mortgagee will promptly notify the
Owner of each registration of a transfer of an Equipment Note. Any such
transferee of an Equipment Note, by its acceptance of an Equipment Note, agrees
to the provisions of this Trust Indenture and the Participation Agreement
applicable to Note Holders, including Sections 6.3, 6.4 and 9.1 thereof and
shall be deemed to have covenanted to the parties to the Participation Agreement
as to the matters covenanted by the original Note Holder in the Participation
Agreement. Subject to compliance by the Note Holder and its transferee (if any)
of the requirements set forth in this Section 2.07, Mortgagee and Owner shall
use all reasonable efforts to issue new Equipment Notes upon transfer or
exchange within 10 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 shall become mutilated, destroyed, lost or stolen,
the Owner shall, upon the written request of the holder of such Equipment Note,
execute and the Mortgagee shall authenticate and deliver in replacement thereof
a new Equipment Note,
<PAGE>
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payable in the same Original Amount dated the same date and captioned as issued
in connection with the Aircraft. If the Equipment Note being replaced has become
mutilated, such Equipment Note shall be surrendered to the Mortgagee and a
photocopy thereof shall be furnished to the Owner. If the Equipment Note being
replaced has been destroyed, lost or stolen, the holder of such Equipment Note
shall furnish to the Owner and the Mortgagee such security or indemnity as may
be required by them to save the Owner and the Mortgagee harmless and evidence
satisfactory to the Owner and the Mortgagee of the destruction, loss or theft of
such Equipment Note and of the ownership thereof. If a "qualified institutional
buyer" of the type referred to in paragraph (a)(1)(i)(A), (B), (D) or (E) of
Rule 144A under the Securities Act (a "QIB") is the holder of any such
destroyed, lost or stolen Equipment Note, then the written indemnity of such
QIB, signed by an authorized officer thereof, in favor of, delivered to and in
form reasonably satisfactory to the Owner shall be accepted as satisfactory
indemnity and security and no further indemnity or security shall be required as
a condition to the execution and delivery of such new Equipment Note. Subject to
compliance by the Note Holder with the requirements set forth in this Section
2.08, Mortgagee and Owner shall use all reasonable efforts to issue new
Equipment Notes within 10 Business Days of the date of the written request
therefor from the Note Holder.
SECTION 2.09. Payment of Expenses on Transfer; Cancellation
(a) No service charge shall be made to a Note Holder for any registration
of transfer or exchange of Equipment Notes, but the Mortgagee, as Equipment Note
Registrar, may require payment of a sum sufficient to cover any tax or other
governmental charge that may be imposed in connection with any registration of
transfer or exchange of Equipment Notes.
(b) The Mortgagee shall cancel all Equipment Notes surrendered for
replacement, redemption, transfer, exchange, payment or cancellation and shall
destroy the canceled Equipment Notes.
SECTION 2.10. Mandatory Redemptions of Equipment Notes
On the date on which the Owner is required pursuant to Section 4.05 hereof
to make payment for an Event of Loss with respect to the Airframe, all of the
Equipment Notes shall be redeemed in whole at a redemption price equal to 100%
of the unpaid Origi-
<PAGE>
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nal Amount thereof, together with all accrued interest thereon to the date of
redemption and all other Secured Obligations owed or then due and payable to the
Note Holders but without Make-Whole Amount.
SECTION 2.11. Voluntary Redemptions of Equipment Notes
All (but not less than all) of the Equipment Notes may be redeemed by the
Owner upon at least 20 days revocable prior written notice to the Mortgagee and
the Note Holders, and the Equipment Notes shall be redeemed in whole at a
redemption price equal to 100% of the unpaid Original Amount thereof, together
with accrued interest thereon to the date of redemption and all other Secured
Obligations owed or then-due and payable to the Note Holders plus Make-Whole
Amount, if any.
SECTION 2.12. Redemptions; Notice of Redemption
(a) No redemption of any Equipment Note may be made except to the extent
and in the manner expressly permitted by this Trust Indenture. No purchase of
any Equipment Note may be made by the Mortgagee.
(b) Notice of redemption with respect to the Equipment Notes shall be given
by the Mortgagee by first-class mail, postage prepaid, mailed not less than 15
nor more than 60 days prior to the applicable redemption date, to each Note
Holder of such Equipment Notes to be redeemed, at such Note Holder's address
appearing in the Equipment Note Register; provided that such notice shall be
revocable by written notice from the Owner to Mortgagee given not later than
three days prior to the redemption date. All notices of redemption shall state:
(1) the redemption date, (2) the applicable basis for deter-mining 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 (unless the notice with respect
thereto shall have been revoked pursuant to Section 2.12(b)), the Owner (or any
person on behalf of the Owner) 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 by the Mortgagee, deposit or cause to be deposited with
the Mortgagee by 12:30 PM New York time on the
<PAGE>
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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
contemplated in the proviso to Section 2.12(b)), the Equipment Notes to be
redeemed shall, on the redemption date, become due and payable at the Corporate
Trust Office of the Mortgagee or at any office or agency maintained for such
purposes pursuant to Section 2.07, and from and after such redemption date
(unless there shall be a default in the payment of the redemption price) 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. If any
Equipment Note called for redemption shall not be so paid upon surrender thereof
for redemption, the principal amount thereof shall, until paid, continue to bear
interest from the applicable redemption date at the interest rate in effect for
such Equipment Note as of such redemption date.
SECTION 2.13. Subordination
(a) The Owner and, by acceptance of its Equipment Notes of any Series, each
Note Holder of such Series, hereby agree that no payment or distribution shall
be made on or in respect of the Secured Obligations owed to such Note Holder of
such Series, including any payment or distribution of cash, property or
securities after the commencement of a proceeding of the type referred to in
Section 5.01(e), (f) or (g) hereof, except as expressly provided in Article III
hereof.
(b) By the acceptance of its Equipment Notes of any Series (other than
Series A-1 and Series A-2), each Note Holder of such Series agrees that in the
event that such Note Holder, in its capacity as a Note Holder, shall receive any
payment or distribution on any Secured Obligations in respect of such Series
which it is not entitled to receive under this Section 2.13 or Article III
hereof, it will hold any amount so received in trust for the Senior Holder (as
defined in Section 2.13(c) hereof) and will forthwith turn over such payment to
the Mortgagee in the form received to be applied as provided in Article III
hereof.
(c) As used in this Section 2.13, the term "Senior Holder" shall mean, (i)
the Note Holders of Series A-1 and Series A-2 until the Secured Obligations in
respect of Series A-1 and Series A-2 Equipment Notes have been paid in full,
(ii) after the Secured Obligations in respect of Series A-1 and Series A-2
Equipment Notes have been paid in full, the Note Holders of Series B until the
Secured Obligations in respect of Series B Equipment Notes have been paid in
full and (iii) after the Secured Obligations in respect of Series B Equipment
Notes have been paid in full, the Note Holders of Series C until the Secured
Obligations in respect of Series C Equipment Notes have been paid in full.
<PAGE>
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SECTION 2.14. Assumption of Equipment Notes
Pursuant to the provisions of Section 13 of the Participation Agreement, an
owner trustee shall be entitled to assume on a non-recourse basis all of the
obligations of the Owner hereunder and under the Equipment Notes by an amended
and restated trust indenture, an amended and restated participation agreement,
and the issuance of new equipment notes having substantially the same tenor as
the Equipment Notes. If an owner trustee shall assume such obligations of the
Owner, the Owner shall be released and discharged form any further obligations
hereunder and under the Equipment Notes (except with respect to any such
obligations that accrued prior thereto) and the Equipment Notes shall be
delivered to the Indenture Trustee for cancellation.
ARTICLE III RECEIPT, DISTRIBUTION AND APPLICATION OF PAYMENTS
SECTION 3.01. Basic Distributions
Except as otherwise provided in Sections 3.02 and 3.03 hereof, each
periodic payment of principal or interest on the Equipment Notes received by the
Mortgagee shall be promptly distributed in the following order of priority:
(i) so much of such payment as shall be required to pay in full the
aggregate amount of the payment or payments of Original Amount and
interest (as well as any interest on any overdue Original Amount and,
to the extent permitted by Law, on any overdue interest) then due
under all Series A-1 and Series A-2 Equipment Notes shall be
distributed to the Note Holders of Series A-1 and Series A-2 ratably,
without priority of one over the other, in the proportion that the
amount of such payment or payments then due under each Series A-1 and
Series A-2 Equipment Note bears to the aggregate amount of the
payments then due under all Series A-1 and Series A-2 Equipment Notes;
(ii) after giving effect to paragraph (i) above, so much of such payment
remaining as shall be required to pay in full the aggregate amount of
the payment or payments of Original Amount and interest (as well as
any
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interest on any overdue Original Amount and, to the extent permitted
by Law, on any overdue interest) then due under all Series B Equipment
Notes shall be distributed to the Note Holders of Series B ratably,
without priority of one over the other, in the proportion that the
amount of such payment or payments then due under each Series B
Equipment Note bears to the aggregate amount of the payments then due
under all Series B Equipment Notes;
(iii) after giving effect to paragraph (ii) above, so much of such payment
remaining as shall be required to pay in full the aggregate amount of
the payment or payments of Original Amount and interest (as well as
any interest on any overdue Original Amount and, to the extent
permitted by Law, on any overdue interest) then due under all Series C
Equipment Notes shall be distributed to the Note Holders of Series C
ratably, without priority of one over the other, in the proportion
that the amount of such payment or payments then due under each Series
C Equipment Note bears to the aggregate amount of the payments then
due under all Series C Equipment Notes; and
(iv) if any Series D Equipment Notes have been issued, after giving effect
to paragraph (iii) above, so much of such payment remaining as shall
be required to pay in full the aggregate amount of the payment or
payments of Original Amount and interest (as well as any interest on
any overdue Original Amount and, to the extent permitted by Law, on
any overdue interest) then due under all Series D Equipment Notes
shall be distributed to the Note Holders of Series D 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.
SECTION 3.02. Event of Loss; Replacement; Optional Redemption
Except as otherwise provided in Section 3.03 hereof, any payments received
by the Mortgagee (i) with respect to the Airframe or the Airframe and one or
more Engines as the result of an Event of Loss or (ii) pursuant to an optional
redemption of the Equipment Notes pursuant to Section 2.11 hereof shall be
applied to redemption of the Equipment
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Notes and to all other Secured Obligations by applying such funds in the
following order of priority:
First, (a) to reimburse the Mortgagee and the Note Holders for any
reasonable costs or expenses incurred in connection with such
redemption for which they are entitled to reimbursement, or indemnity
by Owner, under the Operative Agreements and then (b) to pay any other
amounts then due (except as provided in clause "Second" below) to the
Mortgagee, the Note Holders and the other Indenture Indemnitees under
this Trust Indenture, the Participation Agreement or the Equipment
Notes;
Second, (i) to pay the amounts specified in paragraph (i) of clause "Third" of
Section 3.03 hereof plus Make-Whole Amount, if any, then due and payable in
respect of the Series A-1 and Series A-2 Equipment Notes;
(ii) after giving effect to paragraph (i) above, to pay the amounts
specified in paragraph (ii) of clause "Third" of Section 3.03 hereof
plus Make-Whole Amount, if any, then due and payable in respect of the
Series B Equipment Notes;
(iii) after giving effect to paragraph (ii) above, to pay the amounts
specified in paragraph (iii) of clause "Third" of Section 3.03 hereof
plus Make-Whole Amount, if any, then due and payable in respect of the
Series C Equipment Notes; and
(iv) if any Series D Equipment Notes have been issued, after giving effect
to paragraph (iii) above, to pay the amounts specified in paragraph
(iv) of clause "Third" of Section 3.03 hereof plus Make-Whole Amount,
if any, then due and payable in respect of the Series D Equipment
Notes; and
Third, as provided in clause "Fourth" of Section 3.03 hereof;
provided, however, that if a Replacement Airframe or Replacement Engine shall be
substituted for the Airframe or Engine subject to such Event of Loss as provided
in Section 4.05 hereof, any insurance, condemnation or similar proceeds which
result from such Event of Loss and are paid over to the Mortgagee shall be held
by the Mortgagee as permitted by Section 7.04 hereof (provided that such moneys
shall be invested as provided in Section 6.06 hereof) as additional security for
the obligations of Owner secured by this Trust Indenture and such proceeds (and
such investment earnings), to the extent not theretofore applied as provided
herein, shall be released to the Owner at the Owner's written request
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upon the release of such Airframe or Engine and the replacement thereof as
provided herein.
SECTION 3.03. Payments After Event of Default
Except as otherwise provided in Section 3.04 hereof, all payments received
and amounts held or realized by the Mortgagee (including any amounts realized by
the Mortgagee from the exercise of any remedies pursuant to Article V hereof)
after an Event of Default shall have occurred and be continuing and after the
Equipment Notes shall have become due and payable, as well as all payments or
amounts then held by the Mortgagee as part of the Collateral, shall be promptly
distributed by the Mortgagee in the following order of priority:
First, so much of such payments or amounts as shall be required to (i) reimburse
the Mortgagee or WTC for any tax (except to the extent resulting from a
failure of the Mortgagee to withhold taxes pursuant to Section 2.04(b)
hereof), expense or other loss (including, without limitation, all amounts
to be expended at the expense of, or charged upon the rents, revenues,
issues, products and profits of, the property included in the Collateral
(all such property being herein called the "Mortgaged Property") pursuant
to Section 5.03(b) hereof) incurred by the Mortgagee or WTC (to the extent
not previously reimbursed), the expenses of any sale, or other proceeding,
reasonable attorneys' fees and expenses, court costs, and any other
expenditures incurred or expenditures or advances made by the Mortgagee,
WTC or the Note Holders in the protection, exercise or enforcement of any
right, power or remedy or any damages sustained by the Mortgagee, WTC or
any Note Holder, liquidated or otherwise, upon such Event of Default shall
be applied by the Mortgagee as between itself, WTC and the Note Holders in
reimbursement of such expenses and any other expenses for which the
Mortgagee, WTC or the Note Holders are entitled to reimbursement under any
Operative Agreement and (ii) pay all amounts payable to the other Indenture
Indemnitees hereunder and under the Participation Agreement; and in the
case the aggregate amount to be so distributed is insufficient to pay as
aforesaid in clauses (i) and (ii), 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 shall be required to
reimburse the then existing or prior Note Holders for payments made
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pursuant to Section 6.03 hereof (to the extent not previously reimbursed)
shall be distributed to such then existing or prior Note Holders 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 Note
Holder pursuant to said Section 6.03 hereof;
Third, (i) so much of such payments or amounts remaining as shall be required to
pay in full the aggregate unpaid Original Amount of all Series A-1 and
Series A-2 Equipment Notes, and the accrued but unpaid interest and other
amounts due thereon (other than Make-Whole Amount which shall not be due
and payable) and all other Secured Obligations in respect of the Series A-1
and Series A-2 Equipment Notes (other than Make-Whole Amount) to the date
of distribution, shall be distributed to the Note Holders of Series A-1 and
Series A-2, and in case the aggregate amount so to be distributed shall be
insufficient to pay in full as aforesaid, then ratably, without priority of
one over the other, in the proportion that the aggregate unpaid Original
Amount of all Series A-1 and Series A-2 Equipment Notes held by each holder
plus the accrued but unpaid interest and other amounts due hereunder or
thereunder (other than Make-Whole Amount, if any) to the date of
distribution, bears to the aggregate unpaid Original Amount of all Series
A-1 and Series A-2 Equipment Notes held by all such holders plus the
accrued but unpaid interest and other amounts due thereon (other than
Make-Whole Amount) to the date of distribution;
(ii) after giving effect to paragraph (i) above, so much of such payments
or amounts remaining as shall be required to pay in full the aggregate
unpaid Original Amount of all Series B Equipment Notes, and the
accrued but unpaid interest and other amounts due thereon (other than
Make-Whole Amount which shall not be due and payable) and all other
Secured Obligations in respect of the Series B Equipment Notes (other
than Make-Whole Amount) to the date of distribution, shall be
distributed to the Note Holders of Series B, and in case the aggregate
amount so to be distributed shall be insufficient to pay in full as
aforesaid, then ratably, without priority of one over the other, in
the proportion that the aggregate unpaid Original Amount of all Series
B Equipment Notes held by each holder plus the accrued but unpaid
interest and other amounts due hereunder or thereunder (other than
Make-Whole Amount, if any) to the date of distribution, bears to the
aggregate unpaid Original Amount of all Series B Equipment Notes held
by all such holders plus the accrued
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but unpaid interest and other amounts due thereon (other than
Make-Whole Amount) to the date of distribution;
(iii) after giving effect to paragraph (ii) above, so much of such payments
or amounts remaining as shall be required to pay in full the aggregate
unpaid Original Amount of all Series C Equipment Notes, and the
accrued but unpaid interest and other amounts due thereon (other than
Make-Whole Amount which shall not be due and payable) and all other
Secured Obligations in respect of the Series C Equipment Notes (other
than Make-Whole Amount) to the date of distribution, shall be
distributed to the Note Holders of Series C, and in case the aggregate
amount so to be distributed shall be insufficient to pay in full as
aforesaid, then ratably, without priority of one over the other, in
the proportion that the aggregate unpaid Original Amount of all Series
C Equipment Notes held by each holder plus the accrued but unpaid
interest and other amounts due hereunder or thereunder (other than
Make-Whole Amount, if any) to the date of distribution, bears to the
aggregate unpaid Original Amount of all Series C Equipment Notes held
by all such holders plus the accrued but unpaid interest and other
amounts due thereon (other than Make-Whole Amount) to the date of
distribution; and
(iv) if any Series D Equipment Notes have been issued, after giving effect
to paragraph (iii) above, so much of such payments or amounts
remaining as shall be required to pay in full the aggregate unpaid
Original Amount of all Series D Equipment Notes, and the accrued but
unpaid interest and other amounts due thereon (other than Make-Whole
Amount which shall not be due and payable) and all other Secured
Obligations in respect of the Series D Equipment Notes (other than
Make-Whole Amount) to the date of distribution, shall be distributed
to the Note Holders of Series D, and in case the aggregate amount so
to be distributed shall be insufficient to pay in full as aforesaid,
then ratably, without priority of one over the other, in the
proportion that the aggregate unpaid Original Amount of all Series D
Equipment Notes held by each holder plus the accrued but unpaid
interest and other amounts due hereunder or thereunder (other than
Make-Whole Amount, if any) to the date of distribution, bears to the
aggregate unpaid Original Amount of all Series D Equipment Notes held
by all such holders plus the accrued but unpaid interest and other
amounts due thereon (other than Make-Whole Amount) to the date of
distribution; and
Fourth, the balance, if any, of such payments or amounts remaining thereafter
<PAGE>
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shall be distributed to the Owner.
No Make-Whole Amount shall be due and payable on the Equipment Notes as a
consequence of the acceleration of the Equipment Notes as a result of an Event
of Default.
SECTION 3.04. Certain Payments
(a) Any payments received by the Mortgagee for which no provision as to the
application thereof is made in this Trust Indenture and for which such provision
is made in any other Operative Agreement shall be applied forthwith to the
purpose for which such payment was made in accordance with the terms of such
other Operative Agreement, as the case may be.
(b) Notwithstanding anything to the contrary contained in this Article III,
the Mortgagee will distribute promptly upon receipt any indemnity payment
received by it from the Owner in respect of the Mortgagee in its individual
capacity, any Note Holder or any other Indenture Indemnitee, in each case
whether or not pursuant to Section 8 of the Participation Agreement, directly to
the Person entitled thereto. Any payment received by the Mortgagee under the
third paragraph of Section 2.02 shall be distributed to the Subordination Agent
in its capacity as Note Holder to be distributed in accordance with the terms of
the Intercreditor Agreement.
SECTION 3.05. Other Payments
Any payments received by the Mortgagee for which no provision as to the
application thereof is made elsewhere in this Trust Indenture or in any other
Operative Agreement shall be distributed by the Mortgagee to the extent received
or realized at any time, in the order of priority specified in Section 3.01
hereof, and after payment in full of all amounts then due in accordance with
Section 3.01 in the manner provided in clause "Fourth" of Section 3.03 hereof.
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ARTICLE IV COVENANTS OF THE OWNER
SECTION 4.01. Liens
The Owner will not directly or indirectly create, incur, assume or suffer
to exist any Lien on or with respect to the Aircraft, the Airframe, any Engine
or any Part, title to any of the foregoing or any interest of Owner therein,
except Permitted Liens. The Owner shall promptly, at its own expense, take such
action as may be necessary, to duly discharge (by bonding or otherwise) any Lien
other than a Permitted Lien arising at any time.
SECTION 4.02. Possession, Operation and Use, Maintenance and Repair,
Registration and Markings
(a) General. Except as otherwise expressly provided herein, the Owner shall
be entitled to operate, use, locate, employ or otherwise utilize or not utilize
the Airframe, any Engine or any Parts in any lawful manner or place in
accordance with the Owner's business judgment.
(b) Possession. The Owner, without the prior consent of Mortgagee, shall
not lease or otherwise in any manner deliver, transfer or relinquish possession
of the Aircraft, the Airframe or any Engine or install any Engine, or permit any
Engine to be installed, on any airframe other than the Airframe; except that the
Owner may, without such prior written consent of Mortgagee:
(i) Subject or permit any Permitted Lessee to subject any Engine to
normal interchange agreements or pooling agreements or arrangements, in
each case customary in the commercial airline industry and entered into by
Owner or such Permitted Lessee, as the case may be, in the ordinary course
of business; provided, however, that if Owner's title to any such Engine is
divested under any such agreement or arrangement, then such Engine shall be
deemed to have suffered an Event of Loss as of the date of such
divestiture, and Owner shall comply with Section 4.04(e) in respect
thereof;
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(ii) Deliver or permit any Permitted Lessee to deliver possession of
the Aircraft, Airframe, any Engine or any Part (x) to the manufacturer
thereof or to any third-party maintenance provider for testing, service,
repair, maintenance or overhaul work on the Aircraft, Airframe, any Engine
or any Part, or, to the extent required or permitted by Section 4.04, for
alterations or modifications in or additions to the Aircraft, Airframe or
any Engine or (y) to any Person for the purpose of transport to a Person
referred to in the preceding clause (x);
(iii) Install or permit any Permitted Lessee to install an Engine on
an airframe owned by Owner or such Permitted Lessee, as the case may be,
free and clear of all Liens, except (x) Permitted Liens and those that do
not apply to the Engines, and (y) the rights of third parties under normal
interchange or pooling agreements and arrangements of the type that would
be permitted under Section 4.02(b)(i);
(iv) Install or permit any Permitted Lessee to install an Engine on an
airframe leased to Owner or such Permitted Lessee, or purchased by Owner or
such Permitted Lessee subject to a mortgage, security agreement,
conditional sale or other secured financing arrangement, but only if (x)
such airframe is free and clear of all Liens, except (A) the rights of the
parties to such lease, or any such secured financing arrangement, covering
such airframe and (B) Liens of the type permitted by clause (iii) above and
(y) Owner or Permitted Lessee, as the case may be, shall have received from
the lessor, mortgagee, secured party or conditional seller, in respect of
such airframe, a written agreement (which may be a copy of the lease,
mortgage, security agreement, conditional sale or other agreement covering
such airframe), whereby such Person agrees that it will not acquire or
claim any right, title or interest in, or Lien on, such Engine by reason of
such Engine being installed on such airframe at any time while such Engine
is subject to the Lien of this Trust Indenture;
(v) Install or permit any Permitted Lessee to install an Engine on an
airframe owned by Owner or such Permitted Lessee, leased to Owner or such
Permitted Lessee, or purchased by Owner or such Permitted Lessee subject to
a conditional sale or other security agreement under circumstances where
neither clause (iii) or (iv) above is applicable; provided, however, that
any such installation shall be deemed an Event of Loss with respect to such
Engine, and Owner shall comply with Section 4.04(e) hereof in respect
thereof;
(vi) Transfer or permit any Permitted Lessee to transfer possession of
the Aircraft, Airframe or any Engine to the U.S. Government, in which event
Owner shall promptly notify Mortgagee in writing of any such transfer of
possession and, in the case of any transfer pursuant to CRAF, in such
notification shall identify by
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name, address and telephone numbers the Contracting Office Representative
or Representatives for the Military Airlift Command of the United States
Air Force to whom notices must be given and to whom requests or claims must
be made to the extent applicable under CRAF;
(vii) So long as no Event of Default shall have occurred and be
continuing, and subject to the provisions of the immediately following
paragraph, enter into a lease with respect to the Aircraft, Airframe or any
Engine to any Permitted Air Carrier that 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, in the case only of a lease to a Permitted Foreign Air Carrier, (A)
the United States maintains diplomatic relations with the country of
domicile of such Permitted Foreign Air Carrier (or, in the case of Taiwan,
diplomatic relations at least as good as those in effect on the Closing
Date) and (B) Owner shall have furnished Mortgagee a favorable opinion of
counsel, reasonably satisfactory to Mortgagee, in the country of domicile
of such Permitted Foreign Air Carrier, that (v) the terms of such lease are
the legal, valid and binding obligations of the parties thereto enforceable
under the laws of such jurisdiction, (w) it is not necessary for Mortgagee
to register or qualify to do business in such jurisdiction, if not already
so registered or qualified, as a result, in whole or in part, of the
proposed lease, (x) Mortgagee's Lien in respect of the Aircraft, Airframe
and Engines, will be recognized in such jurisdiction, (y) the Laws of such
jurisdiction of domicile require fair compensation by the government of
such jurisdiction, payable in a currency freely convertible into Dollars,
for the loss of title to the Aircraft, Airframe or Engines in the event of
the requisition by such government of such title (unless Owner shall
provide insurance in the amounts required with respect to hull insurance
under this Trust Indenture covering the requisition of title to the
Aircraft, Airframe or Engines by the government of such jurisdiction so
long as the Aircraft, Airframe or Engines are subject to such lease) and
(z) the agreement of such Permitted Air Carrier that its rights under the
lease are subject and subordinate to all the terms of this Trust Indenture
is enforceable against such Permitted Air Carrier under applicable law;
provided that (1) the rights of any transferee who receives possession by reason
of a transfer permitted by this Section 4.02(b) (other than by a transfer of an
Engine which is deemed an Event of Loss) shall be subject and subordinate to all
the terms of this Trust Indenture, (2) the Owner shall remain primarily liable
for the performance of all of the terms of this Trust Indenture and all the
terms and conditions of this Trust Indenture and the other Operative Agreements
shall remain in effect and (3) no lease or transfer of possession otherwise in
compliance with this Section 4.02(b) shall (x) result in any registration or
re-
<PAGE>
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registration of an Aircraft, except to the extent permitted by Section
4.02(e) or the maintenance, operation or use thereof except in compliance with
Sections 4.02(c) and 4.02(d) or (y) permit any action not permitted to the Owner
hereunder.
In the case of any lease permitted under this Section 4.02(b), the Owner
will include in such lease appropriate provisions which (t) make such lease
expressly subject and subordinate to all of the terms of this Trust Indenture,
including the rights of the Mortgagee to avoid such lease in the exercise of its
rights to repossession of the Airframe and Engines hereunder; (u) require the
Permitted Lessee to comply with the terms of Section 4.06; and (v) require that
the Airframe or any Engine subject thereto be used in accordance with the
limitations applicable to the Owner's possession and use provided in this Trust
Indenture. No lease permitted under this Section 4.02(b) shall be entered into
unless (w) Owner shall provide written notice to Mortgagee (such notice in the
event of a lease to a U.S. Air Carrier to be given promptly after entering into
any such lease or, in the case of a lease to any other Permitted Air Carrier, 10
days in advance of entering into such lease); (x) Owner shall furnish to
Mortgagee evidence reasonably satisfactory to Mortgagee that the insurance
required by Section 4.06 remains in effect; (y) all necessary documents shall
have been duly filed, registered or recorded in such public offices as may be
required fully to preserve the first priority security interest (subject to
Permitted Liens) of Mortgagee in the Aircraft, Airframe and Engines; and (z)
Owner shall reimburse Mortgagee for all of its reasonable out-of-pocket fees and
expenses, including, without limitation, reasonable fees and disbursements of
counsel, incurred by Mortgagee in connection with any such lease. For all
purposes of this Section, the term "lease" shall be deemed to include
interchange agreements with respect to the Aircraft or Airframe. Except as
otherwise provided herein and without in any way relieving the Owner from its
primary obligation for the performance of its obligations under this Trust
Indenture, the Owner may in its sole discretion permit a lessee to exercise any
or all rights which the Owner would be entitled to exercise under Sections 4.02
and 4.04, and may cause a lessee to perform any or all of the Owner's
obligations under Article IV, and the Mortgagee agrees to accept actual and full
performance thereof by a lessee in lieu of performance by the Owner.
Mortgagee hereby agrees, and each Note Holder by acceptance of an Equipment
Note agrees, for the benefit of each lessor, conditional seller, indenture
trustee or secured party of any engine leased to, or purchased by, Owner or any
Permitted Lessee subject to a lease, conditional sale, trust indenture or other
security agreement that Mortgagee, each Note Holder and their respective
successors and assigns will not acquire or claim, as against such lessor,
conditional seller, indenture trustee or secured party, any right, title or
interest in any engine as the result of such engine being installed on the
Airframe at any time while such engine is subject to such lease, conditional
sale, trust indenture or other
<PAGE>
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security agreement and owned by such lessor or conditional seller or subject to
a trust indenture or security interest in favor of such indenture trustee or
secured party.
Notwithstanding anything to the contrary contained in this Trust Indenture
or any other Operative Agreement, any charter, Wet Lease or ACMI Contract shall
not constitute a delivery, transfer or relinquishment of possession for purposes
of this Section 4.02(b) and shall not be prohibited by the terms hereof, but
shall be subject and subordinate to the terms of this Trust Indenture. Neither a
charter, Wet Lease nor ACMI contract shall be deemed to be a "lease" or
"sublease", and the counterparty of a charter, Wet Lease or ACMI Contract shall
not be deemed to be a lessee or sublessee for any purposes under this Trust
Indenture. Any contract that is part of the United States Civil Reserve Air
Fleet Program shall not be deemed to be a lease or sublease for any purposes
under this Trust Indenture.
(c) Operation and Use. So long as the Aircraft, Airframe or any Engine is
subject to the Lien of this Trust Indenture, the Owner shall not operate, use or
locate the Aircraft, Airframe or any Engine, or allow the Aircraft, Airframe or
any Engine to be operated, used or located, (i) in any area excluded from
coverage by any insurance required by the terms of Section 4.06, except in the
case of a requisition by the U.S. Government where the Owner obtains indemnity
in lieu of such insurance from the U.S. Government, or insurance from the U.S.
Government, against substantially the same risks and for at least the amounts of
the insurance required by Section 4.06 covering such area, or (ii) in any
recognized area of hostilities unless covered in accordance with Section 4.06 by
war risk insurance, or in either case unless the Aircraft, the Airframe or any
Engine is only temporarily operated, used or located in such area as a result of
an emergency, equipment malfunction, navigational error, hijacking, weather
condition or other similar unforeseen circumstance, so long as Owner diligently
and in good faith proceeds to remove the Aircraft from such area. So long as the
Aircraft, the Airframe or any Engine is subject to the Lien of this Trust
Indenture, the Owner shall not permit such Aircraft, Airframe or any Engine, as
the case may be, to be used, operated, maintained, serviced, repaired or
overhauled (x) in violation of any Law binding on or applicable to such
Aircraft, Airframe or Engine or (y) in violation of any airworthiness
certificate, license or registration of any Government Entity relating to the
Aircraft, the Airframe or any Engine, except (i) immaterial or non-recurring
violations with respect to which corrective measures are taken promptly by Owner
or Permitted Lessee, as the case may be, upon discovery thereof, or (ii) to the
extent the validity or application of any such Law or requirement relating to
any such certificate, license or registration is being contested in good faith
by Owner or Permitted Lessee in any reasonable manner which does not involve any
material risk of the sale, forfeiture or loss of the Aircraft, Airframe or any
Engine, any material risk of criminal liability or material civil
<PAGE>
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penalty against Mortgagee or impair the Mortgagee's security interest in the
Aircraft, Airframe or any Engine.
(d) Maintenance and Repair. So long as the Aircraft, Airframe or any Engine
is subject to the Lien of this Trust Indenture, the Owner shall cause the
Aircraft, Airframe and each Engine to be maintained, serviced, repaired and
overhauled in accordance with (i) maintenance standards required by or
substantially equivalent to those required by the FAA or the central aviation
authority of Canada, France, Germany, Japan, the Netherlands or the United
Kingdom for the Aircraft, Airframe and Engines, so as to (A) keep the Aircraft,
the Airframe and each Engine in as good operating condition as on the Closing
Date, ordinary wear and tear excepted, (B) keep the Aircraft in such operating
condition as may be necessary to enable the applicable airworthiness
certification of such Aircraft to be maintained under the regulations of the FAA
or other Aviation Authority then having jurisdiction over the operation of the
Aircraft, except during (x) temporary periods of storage in accordance with
applicable regulations, (y) maintenance and modification permitted hereunder or
(z) periods when the FAA or such other Aviation Authority has revoked or
suspended the airworthiness certificates for Similar Aircraft; and (ii) except
during periods when a Permitted Lease is in effect, the same standards as Owner
uses with respect to similar aircraft of similar size in its fleet operated by
Owner in similar circumstances and, during any period in which a Permitted Lease
is in effect, the same standards used by the Permitted Lessee with respect to
similar aircraft of similar size in its fleet and operated by the Permitted
Lessee in similar circumstances. Owner further agrees that the Aircraft,
Airframe and Engines will be maintained, used, serviced, repaired, overhauled or
inspected in compliance with applicable Laws with respect to the maintenance of
the Aircraft and in compliance with each applicable airworthiness certificate,
license and registration relating to the Aircraft, Airframe or any Engine issued
by the Aviation Authority, other than minor or nonrecurring violations with
respect to which corrective measures are taken upon discovery thereof and except
to the extent Owner or Permitted Lessee is contesting in good faith the validity
or application of any such Law or requirement relating to any such certificate,
license or registration in any reasonable manner which does not create a
material risk of sale, loss or forfeiture of the Aircraft, the Airframe or any
Engine or the interest of Mortgagee therein, or any material risk of criminal
liability or material civil penalty against Mortgagee. The Owner shall maintain
or cause to be maintained the Aircraft Documents in the English language.
(e) Registration. The Owner on or prior to the date of the Closing shall
cause the Aircraft to be duly registered in its name under the Act and except as
otherwise permitted by this Section 4.02(e) at all times thereafter shall cause
the Aircraft to remain so registered. So long as no Special Default or Event of
Default shall have occurred and be continuing, Owner may, by written notice to
Mortgagee, request to change the country of
<PAGE>
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registration of the Aircraft. Any such change in registration shall be effected
only in compliance with, and subject to all of the conditions set forth in,
Section 6.4.5 of the Participation Agreement. Unless the Trust Indenture has
been discharged, Owner shall also cause the Trust Indenture to be duly recorded
and at all times maintained of record as a first-priority perfected mortgage
(subject to Permitted Liens) on the Aircraft, the Airframe and each of the
Engines (except to the extent such perfection or priority cannot be maintained
solely as a result of the failure by Mortgagee to execute and deliver any
necessary documents).
(f) Markings. If permitted by applicable Law, on or reasonably promptly
after the Closing Date, Owner will cause to be affixed to, and maintained in,
the cockpit of the Airframe and on each Engine, in each case, in a clearly
visible location, a placard of a reasonable size and shape bearing the legend:
"Subject to a security interest in favor of Wilmington Trust Company, not in its
individual capacity but solely as Mortgagee." Such placards may be removed
temporarily, if necessary, in the course of maintenance of the Airframe or
Engines. If any such placard is damaged or becomes illegible, Owner shall
promptly replace it with a placard complying with the requirements of this
Section.
SECTION 4.03. Inspection
(a) At all reasonable times, so long as the Aircraft is subject to the Lien
of this Trust Indenture, Mortgagee and its authorized representatives (the
"Inspecting Parties") may (not more than once every 12 months unless an Event of
Default has occurred and is continuing then such inspection right shall not be
so limited) inspect the Aircraft, Airframe and Engines (including without
limitation, the Aircraft Documents) and any such Inspecting Party may make
copies of such Aircraft Documents not reasonably deemed confidential by Owner or
any Permitted Lessee.
(b) Any inspection of the Aircraft hereunder shall be limited to a visual,
walk-around inspection and shall not include the opening of any panels, bays or
other components of the Aircraft, and no such inspection shall interfere with
Owner's or any Permitted Lessee's maintenance and operation of the Aircraft,
Airframe and Engines.
(c) With respect to such rights of inspection, Mortgagee shall not have any
duty or liability to make, or any duty or liability by reason of not making, any
such visit, inspection or survey.
(d) Each Inspecting Party shall bear its own expenses in connection with
any such inspection (including the cost of any copies made in accordance with
Section 4.03(a)).
<PAGE>
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SECTION 4.04. Replacement and Pooling of Parts, Alterations, Modifications
and Additions; Substitution of Engines
(a) Replacement of Parts. Except as otherwise provided herein, so long as
the Aircraft, Airframe or Engine is subject to the Lien of this Trust Indenture,
Owner, at its own cost and expense, will, or will cause a Permitted Lessee to,
at its own cost and expense, promptly replace (or cause to be replaced) all
Parts which may from time to time be incorporated or installed in, or attached
to, the Aircraft, Airframe or any Engine and which may from time to time become
worn out, lost, stolen, destroyed, seized, confiscated, damaged beyond repair or
permanently rendered unfit for use for any reason whatsoever. In addition, Owner
may, at its own cost and expense, or may permit a Permitted Lessee at its own
cost and expense to, remove (or cause to be removed) 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
permanently rendered unfit for use; provided, however, that Owner, except as
otherwise provided herein, at its own cost and expense, will, or will cause a
Permitted Lessee at its own cost and expense to, replace such Parts as promptly
as practicable. All replacement Parts shall be free and clear of all Liens,
except for Permitted Liens and pooling arrangements to the extent permitted by
Section 4.04(c) below (and except in the case of replacement property
temporarily installed on an emergency basis) and shall be in good operating
condition and have a value and utility not less than the value and utility of
the Parts replaced (assuming such replaced Parts were in the condition required
hereunder).
(b) Parts. Except as otherwise provided herein, any Part at any time
removed from the Airframe or any Engine shall remain subject to the Lien of this
Trust Indenture, no matter where located, until such time as such Part shall be
replaced by a Part that has been incorporated or installed in, or attached to,
such Airframe or any Engine and that meets the requirements for replacement
Parts specified above. Immediately upon any replacement Part becoming
incorporated or installed in or attached to such Airframe or any Engine as
provided in Section 4.04(a), without further act, (i) the replaced Part shall
thereupon be free and clear of all rights of the Mortgagee and shall no longer
be deemed a Part hereunder, and (ii) such replacement Part shall become subject
to this Trust Indenture and be deemed part of such Airframe or any Engine, as
the case may be, for all purposes hereof to the same extent as the Parts
originally incorporated or installed in, or attached to, such Airframe or any
Engine.
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(c) Pooling of Parts. Any Part removed from the Aircraft, Airframe or an
Engine may be subjected by the Owner or a Permitted Lessee to a normal pooling
arrangement customary in the airline industry and entered into in the ordinary
course of business of Owner or such Permitted Lessee, provided that the part
replacing such removed Part shall be incorporated or installed in, or attached
to, such Airframe or any Engine in accordance with Sections 4.04(a) and 4.04(b)
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 a normal
pooling arrangement, so long as the Owner or a Permitted Lessee, at its own cost
and expense, as promptly thereafter as reasonably possible, either (i) causes
such replacement part to become subject to the Lien of this Trust Indenture,
free and clear of all Liens except Permitted Liens, at which time such
replacement part shall become a Part or (ii) replaces (or causes to be replaced)
such replacement part by incorporating or installing in, or attaching to, the
Aircraft, Airframe or any Engine a further replacement Part owned by the Owner
free and clear of all Liens except Permitted Liens and which shall become
subject to the Lien of this Trust Indenture in accordance with Section 4.04(b).
(d) Alterations, Modifications and Additions. The Owner shall, or shall
cause a Permitted Lessee to, make (or cause to be made) such alterations and
modifications in and additions to the Aircraft, Airframe and each Engine as may
be required to be made from time to time to meet the applicable standards of the
FAA or other Aviation Authority having jurisdiction over the operation of the
Aircraft, to the extent made mandatory in respect of the Aircraft (a "Mandatory
Modification"); provided, however, that the Owner or a Permitted Lessee may, in
good faith and by appropriate procedure, contest the validity or application of
any law, rule, regulation or order in any reasonable manner which does not
materially adversely affect Mortgagee's interest in the Aircraft and does not
involve any material risk of sale, forfeiture or loss of the Aircraft or the
interest of Mortgagee therein, or any material risk of material civil penalty or
any material risk of criminal liability being imposed on Mortgagee or the holder
of any Equipment Note. In addition, the Owner, at its own expense, may, or may
permit a Permitted Lessee at its own cost and expense to, from time to time make
or cause to be made such alterations and modifications in and additions to the
Airframe or any Engine (each an "Optional Modification") as the Owner or such
Permitted Lessee may deem desirable in the proper conduct of its business
including, without limitation, removal of Parts which Owner deems are obsolete
or no longer suitable or appropriate for use in the Aircraft, Airframe or such
Engine; provided, however, that no such Optional Modification shall (i)
materially diminish the fair market value, utility, or useful life of the
Aircraft or any Engine below its fair market value, utility or useful life
immediately prior to such Optional Modification (assuming the Aircraft or such
Engine was in the condition required by the Trust Indenture immediately prior to
such Optional Modification) or (ii) cause the Aircraft to cease to have the
applicable standard certificate of air-
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worthiness. All Parts incorporated or installed in or attached to any Airframe
or any Engine as the result of any alteration, modification or addition effected
by the Owner shall be free and clear of any Liens except Permitted Liens and
become subject to the Lien of this Trust Indenture; provided that the Owner or
any Permitted Lessee may, at any time so long as the Airframe or any Engine is
subject to the Lien of this Trust Indenture, remove any such Part (such Part
being referred to herein as a "Removable Part") if (i) such Part is in addition
to, and not in replacement of or in substitution for, any Part originally
incorporated or installed in, or attached to, such Airframe or any Engine at the
time of delivery thereof hereunder or any Part in replacement of, or in
substitution for, any such original Part, (ii) such Part is not required to be
incorporated or installed in, or attached or added to, the Aircraft, Airframe or
such Engine pursuant to the terms of Section 4.02(d) or the first sentence of
this Section 4.04(d) and (iii) such Part can be removed from the Aircraft,
Airframe or any Engine without materially diminishing the fair market value,
utility or remaining useful life which such Aircraft, Airframe or Engine would
have had at the time of removal had such removal not been effected by the Owner,
assuming the Aircraft was otherwise maintained in the condition required by this
Trust Indenture. Upon the removal by the Owner of any such Part as above
provided, title thereto shall, without further act, be free and clear of all
rights of the Mortgagee and such Part shall no longer be deemed a Part
hereunder. Removable Parts may not be leased from or financed by third parties
other than Mortgagee.
(e) Substitution of Engines. Upon the occurrence of an Event of Loss with
respect to an Engine under circumstances in which an Event of Loss with respect
to the Airframe has not occurred, Owner shall promptly (and in any event within
15 days after such occurrence) give the Mortgagee written notice of such Event
of Loss. The Owner shall have the right at its option at any time, on at least 5
Business Days prior notice to the Mortgagee, to substitute, and if an Event of
Loss shall have occurred with respect to an Engine under circumstances in which
an Event of Loss with respect to the Airframe has not occurred, shall within 90
days of the occurrence of such Event of Loss substitute, a Replacement Engine
for any Engine. In such event, immediately upon the effectiveness of such
substitution and without further act, (i) the replaced Engine shall thereupon be
free and clear of all rights of the Mortgagee and the Lien of this Trust
Indenture and shall no longer be deemed an Engine hereunder and (ii) such
Replacement Engine shall become subject to this Trust Indenture and be deemed
part of the Aircraft for all purposes hereof to the same extent as the replaced
Engine. Such Replacement Engine shall be an engine manufactured by Engine
Manufacturer that is the same model as the Engine to be replaced thereby, or an
improved model, and that is suitable for installation and use on the Airframe,
and that has a value, utility and remaining useful life (without regard to hours
and cycles remaining until overhaul) at least equal to the Engine to be replaced
thereby (assuming that such Engine had been maintained in accordance with this
Trust Indenture). The Owner's right to make a
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replacement hereunder shall be subject to the fulfillment (which may be
simultaneous with such replacement) of the following conditions precedent at the
Owner's sole cost and expense, and the Mortgagee agrees to cooperate with the
Owner to the extent necessary to enable it to timely satisfy such conditions:
(i) an executed counterpart of each of the following documents shall
be delivered to the Mortgagee:
(A) a Trust Indenture Supplement covering the Replacement Engine,
which shall have been duly filed for recordation pursuant to the Act
or such other applicable law of the jurisdiction other than the United
States in which the Aircraft of which such Engine is a part is
registered in accordance with Section 4.02(e), as the case may be;
(B) a full warranty bill of sale (as to title), covering the
Replacement Engine, executed by the former owner thereof in favor of
the Owner (or, at the Owner's option, other evidence of the Owner's
ownership of such Replacement Engine, reasonably satisfactory to the
Mortgagee); and
(C) UCC financing statements covering the security interests
created by this Trust Indenture (or any similar statements or other
documents required to be filed or delivered pursuant to the laws of
the jurisdiction in which such Aircraft may be registered) as are
deemed necessary or desirable by counsel for the Mortgagee to protect
the security interests of the Mortgagee, in the Replacement Engine;
(ii) the Owner shall cause to be delivered to the Mortgagee an opinion
of counsel to the effect that the Lien of this Trust Indenture continues to
be in full force and effect with respect to the Replacement Engine and such
evidence of compliance with the insurance provisions of Section 4.06 with
respect to such Replacement Engine as Mortgagee shall reasonably request;
(iii) the Owner shall have furnished to Mortgagee an opinion of
Owner's aviation law counsel reasonably satisfactory to Mortgagee and
addressed to Mortgagee as to the due filing for recordation of the Trust
Indenture Supplement with respect to such Replacement Engine under the Act
or such other applicable law of the jurisdiction other than the United
States in which the Aircraft is registered in accordance with Section
4.02(e), as the case may be; and
(iv) the Owner shall have furnished to Mortgagee a certificate of a
qualified aircraft engineer (who may be an employee of Owner) certifying
that such Replace-
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ment Engine has a value and utility and remaining useful life (without
regard to hours and cycles remaining until overhaul) at least equal to the
Engine so replaced (assuming that such Engine had been maintained in
accordance with this Trust Indenture).
Upon satisfaction of all conditions to such substitution, (x) the Mortgagee
shall execute and deliver to the Owner such documents and instruments, prepared
at the Owner's expense, as the Owner shall reasonably request to evidence the
release of such replaced Engine from the Lien of this Trust Indenture, (y) the
Mortgagee shall assign to the Owner all claims it may have against any other
Person relating to any Event of Loss giving rise to such substitution and (z)
the Owner shall receive all insurance proceeds (other than those reserved to
others under Section 4.06(b)) and proceeds in respect of any Event of Loss
giving rise to such replacement to the extent not previously applied to the
purchase price of the Replacement Engine as provided in Section 4.05(d).
SECTION 4.05. 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, the
Owner shall promptly (and in any event within 15 days after such occurrence)
give the Mortgagee written notice of such Event of Loss. The Owner shall, within
60 days after such occurrence, give the Mortgagee written notice of Owner's
election to either replace the Airframe as provided under Section 4.05(a)(i) or
to make payment in respect of such Event of Loss as provided under Section
4.05(a)(ii) (it being agreed that if Owner shall not have given the Mortgagee
such notice of such election within the above specified time period, the Owner
shall be deemed to have elected to make payment in respect of such Event of Loss
as provided under Section 4.05(a)(ii)):
(i) if Owner elects to replace the Airframe, Owner shall, subject to
the satisfaction of the conditions contained in Section 4.05(c), as
promptly as possible and in any event within 180 days after the occurrence
of such Event of Loss, cause to be subjected to the Lien of this Trust
Indenture, in replacement of the Airframe with respect to which the Event
of Loss occurred, a Replacement Airframe and, if any Engine shall have been
installed on the Airframe when it suffered the Event of Loss, a Replacement
Engine therefor, such Replacement Airframe and Replacement Engines to be
free and clear of all Liens except Permitted Liens and to have a value,
utility and remaining useful life (without regard to hours or cycles
remaining until the next regular maintenance check) at least equal to the
Airframe or Engine, as the
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case may be, to be replaced thereby (assuming that such Airframe or Engine
had been maintained in accordance with this Trust Indenture); provided that
if the Owner shall not perform its obligation to effect such replacement
under this clause (i) during the 180-day period of time provided herein, it
shall pay the amounts required to be paid pursuant to and within the time
frame specified in clause (ii) below; or
(ii) if Owner elects to make a payment in respect of such Event of
Loss of the Airframe, Owner shall make a payment to the Mortgagee for
purposes of redeeming Equipment Notes in accordance with Section 2.10
hereof on a date on or before the earlier of (x) the Business Day next
following the 180th day following the date of the occurrence of such Event
of Loss, and (y) a date irrevocably designated by Owner upon at least 20
days prior notice to the Mortgagee ; and upon such payment and payment of
all other Secured Obligations then due and payable, the Mortgagee shall, at
the cost and expense of the Owner, release from the Lien of this Trust
Indenture the Airframe and the Engines, by executing and delivering to the
Owner all documents and instruments as the Owner may reasonably request to
evidence such release.
(b) Effect of Replacement. Should the Owner have provided a Replacement
Airframe and Replacement Engines, if any, as provided for in Section 4.05(a)(i),
(i) the Lien of this Trust Indenture shall continue with respect to such
Replacement Airframe and Replacement Engines, if any, as though no Event of Loss
had occurred; (ii) the Mortgagee shall, at the cost and expense of the Owner,
release from the Lien of this Trust Indenture the replaced Airframe and Engines,
if any, by executing and delivering to the Owner such documents and instruments
as the Owner may reasonably request to evidence such release; and (iii) in the
case of a replacement upon an Event of Loss, the Mortgagee shall assign to the
Owner all claims the Mortgagee may have against any other Person arising from
the Event of Loss and the Owner shall receive all insurance proceeds (other than
those reserved to others under Section 4.06(b)) and proceeds from any award in
respect of condemnation, confiscation, seizure or requisition, including, any
investment interest thereon, to the extent not previously applied to the
purchase price of the Replacement Airframe and Replacement Engines, if any, as
provided in Section 4.05(d).
(c) Conditions to Airframe and Engine Replacement. The Owner's right to
substitute a Replacement Airframe and Replacement Engines, if any, as provided
in Section 4.05(a)(i) shall be subject to the fulfillment, at the Owner's sole
cost and expense, in addition to the conditions contained in such Section
4.05(a)(i), of the following conditions precedent:
(i) on the date when the Replacement Airframe and Replacement Engines,
if any, are subjected to the Lien of this Trust Indenture (such date being
referred to
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in this Section 4.05 as the "Replacement Closing Date"), an executed
counterpart of each of the following documents (or, in the case of the FAA
Bill of Sale and full warranty bill of sale referred to below, a photocopy
thereof) shall have been delivered to the Mortgagee:
(A) a Trust Indenture Supplement covering the Replacement
Airframe and Replacement Engines, if any, which shall have been duly
filed for recordation pursuant to the Act or such other applicable law
of such jurisdiction other than the United States in which the
Replacement Airframe and Replacement Engines, if any, are to be
registered in accordance with Section 4.02(e), as the case may be;
(B) an FAA Bill of Sale (or a comparable document, if any, of
another Aviation Authority, if applicable) covering the Replacement
Airframe and Replacement Engines, if any, executed by the former owner
thereof in favor of the Owner;
(C) a full warranty (as to title) bill of sale, covering the
Replacement Airframe and Replacement Engines, if any, executed by the
former owner thereof in favor of the Owner (or, at the Owner's option,
other evidence of the Owner's ownership of such Replacement Airframe
and Replacement Engines, if any, reasonably satisfactory to the
Mortgagee); and
(D) UCC financing statements (or any similar statements or other
documents required to be filed or delivered pursuant to the laws of
the jurisdiction in which the Replacement Airframe and Replacement
Engines, if any, may be registered in accordance with Section 4.02(e))
as are deemed necessary or desirable by counsel for the Mortgagee to
protect the security interests of the Mortgagee in the Replacement
Airframe and Replacement Engines, if any;
(ii) the Replacement Airframe and Replacement Engines, if any, shall
be of the same model as the Airframe or Engines, as the case may be, or an
improved model of such aircraft or engines of the manufacturer thereof,
shall have a value, utility and remaining useful life (without regard to
hours or cycles remaining until the next regular maintenance check) at
least equal to the Airframe and any Engines replaced (assuming such
Airframe and Engines had been maintained in accordance with this Trust
Indenture);
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(iii) the Mortgagee (acting directly or by authorization to its
special counsel) shall have received satisfactory evidence as to the
compliance with Section 4.06 with respect to the Replacement Airframe and
Replacement Engines, if any;
(iv) on the Replacement Closing Date, (A) the Owner shall cause the
Replacement Airframe and Replacement Engines, if any, to be subject to the
Lien of this Trust Indenture free and clear of Liens (other than Permitted
Liens), (B) the Replacement Airframe shall have been duly certified by the
FAA as to type and airworthiness in accordance with the terms of this Trust
Indenture and (C) application for registration of the Replacement Airframe
in accordance with Section 4.02(e) shall have been duly made with the FAA
or other applicable Aviation Authority and the Owner shall have authority
to operate the Replacement Airframe;
(v) the Mortgagee at the expense of the Owner, shall have received
(acting directly or by authorization to its special counsel) (A) an opinion
of counsel, addressed to the Mortgagee, to the effect that the Replacement
Airframe and Replacement Engine, if any, has or have duly been made subject
to the Lien of this Trust Indenture, and Mortgagee will be entitled to the
benefits of Section 1110 with respect to the Replacement Airframe, provided
that such opinion with respect to Section 1110 need not be delivered to the
extent that immediately prior to such replacement the benefits of Section
1110 were not, solely by reason of a change in law or court interpretation
thereof, available to Mortgagee, and (B) an opinion of Owner's aviation law
counsel reasonably satisfactory to and addressed to Mortgagee as to the due
registration of any such Replacement Airframe and the due filing for
recordation of each Trust Indenture Supplement with respect to such
Replacement Airframe or Replacement Engine under the Act or such other
applicable law of the jurisdiction other than the United States in which
the Replacement Airframe is to be registered in accordance with Section
4.02(e), as the case may be; and
(vi) the Owner shall have furnished to the Mortgagee a certificate of
a qualified aircraft engineer (who may be an employee of Owner) certifying
that the Replacement Airframe and Replacement Engines, if any, have a value
and utility and remaining useful life (without regard to hours and cycles
remaining until overhaul) at least equal to the Airframe and any Engines so
replaced (assuming that such Airframe and Engines had been maintained in
accordance with this Trust Indenture).
(d) Non-Insurance Payments Received on Account of an Event of Loss. Any
amounts, other than insurance proceeds in respect of damage or loss not
constituting an Event of Loss (the application of which is provided for in Annex
B), received at any time by Mortgagee or Owner from any Government Entity or any
other Person in respect of any Event of Loss will be applied as follows:
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(i) If such amounts are received with respect to the Airframe, and any
Engine installed thereon at the time of such Event of Loss, upon compliance
by Owner with the applicable terms of Section 4.05(c) with respect to the
Event of Loss for which such amounts are received, such amounts shall be
paid over to, or retained by, Owner;
(ii) If such amounts are received with respect to an Engine (other
than an Engine installed on the Airframe at the time such Airframe suffers
an Event of Loss), upon compliance by Owner with the applicable terms of
Section 4.04(e) with respect to the Event of Loss for which such amounts
are received, such amounts shall be paid over to, or retained by, Owner;
(iii) If such amounts are received, in whole or in part, with respect
to the Airframe, and Owner makes, has made or is deemed to have made the
election set forth in Section 4.05(a)(ii), such amounts shall be applied as
follows:
first, if the sum described in Section 4.05(a)(ii) has not then
been paid in full by Owner, such amounts shall be paid to Mortgagee to
the extent necessary to pay in full such sum; and
second, the remainder, if any, shall be paid to Owner.
(e) Requisition for Use. In the event of a requisition for use by any
Government Entity of the Airframe and the Engines, if any, or engines installed
on such Airframe while such Airframe is subject to the Lien of this Trust
Indenture, the Owner shall promptly notify the Mortgagee of such requisition and
all of the Owner's obligations under this Trust Indenture shall continue to the
same extent as if such requisition had not occurred except to the extent that
the performance or observance of any obligation by the Owner shall have been
prevented or delayed by such requisition provided that the Owner's obligations
under this Section 4.05 with respect to the occurrence of an Event of Loss for
the payment of money and under Section 4.06 (except while an assumption of
liability by the U.S. Government of the scope referred to in Section 4.02(c) is
in effect) shall not be reduced or delayed by such requisition. Any payments
received by the Mortgagee or the Owner or Permitted Lessee from such Government
Entity with respect to such requisition of use shall be paid over to, or
retained by, the Owner. In the event of an Event of Loss of an Engine resulting
from the requisition for use by a Government Entity of such Engine (but not the
Airframe), the Owner will replace such Engine hereunder by complying with the
terms of Section 4.04(e) and any payments received by the Mortgagee or the Owner
from such Government Entity with respect to such requisition shall be paid over
to, or retained by, the Owner.
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(f) Certain Payments to Be Held as Security. Any amount referred to in this
Section 4.05 or Section 4.06 which is payable or creditable to, or retainable
by, the Owner shall not be paid or credited to, or retained by the Owner if at
the time of such payment, credit or retention a Special Default or an Event of
Default shall have occurred and be continuing, but shall be paid to and held by
the Mortgagee as security for the obligations of the Owner under this Trust
Indenture and the Operative Agreements, and at such time as there shall not be
continuing any such Special Default or Event of Default such amount and any gain
realized as a result of investments required to be made pursuant to Section 6.06
shall to the extent not theretofore applied as provided herein, be paid over to
the Owner.
SECTION 4.06. Insurance
(a) Owner's Obligation to Insure. Owner shall comply with, or cause to be
complied with, each of the provisions of Annex B, which provisions are hereby
incorporated by this reference as if set forth in full herein.
(b) Insurance for Own Account. Nothing in Section 4.06 shall limit or
prohibit (a) Owner from maintaining the policies of insurance required under
Annex B with higher limits than those specified in Annex B, or (b) Mortgagee
from obtaining insurance for its own account (and any proceeds payable under
such separate insurance shall be payable as provided in the policy relating
thereto); provided, however, that no insurance may be obtained or maintained
that would limit or otherwise adversely affect the coverage of any insurance
required to be obtained or maintained by Owner pursuant to this Section 4.06 and
Annex B.
(c) Indemnification by Government in Lieu of Insurance. Mortgagee agrees to
accept, in lieu of insurance against any risk with respect to the Aircraft
described in Annex B, indemnification from, or insurance provided by, the U.S.
Government, or upon the written consent of Mortgagee, other Government Entity,
against such risk in an amount that, when added to the amount of insurance
(including permitted self-insurance), if any, against such risk that Owner (or
any Permitted Lessee) may continue to maintain, in accordance with this Section
4.06, during the period of such requisition or transfer, shall be at least equal
to the amount of insurance against such risk otherwise required by this Section
4.06.
(d) Application of Insurance Proceeds. As between Owner and Mortgagee, all
insurance proceeds received as a result of the occurrence of an Event of Loss
with respect to the Aircraft or any Engine under policies required to be
maintained by Owner pursuant to this Section 4.06 will be applied in accordance
with this Section 4.05(d). All proceeds of insurance required to be maintained
by Owner, in accordance with Section 4.06
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and Section B of Annex B, in respect of any property damage or loss not
constituting an Event of Loss with respect to the Aircraft, Airframe or any
Engine will be applied in payment (or to reimburse Owner) for repairs or for
replacement property, and any balance remaining after such repairs or
replacement with respect to such damage or loss shall be paid over to, or
retained by, Owner.
SECTION 4.07. Merger of Owner
(a) In General. Owner shall not consolidate with or merge into any other
person under circumstances in which Owner is not the surviving corporation, or
convey, transfer or lease in one or more transactions all or substantially all
of its assets to any other person, unless:
(i) such person is organized, existing and in good standing under the
Laws of the United States, any State of the United States or the District
of Columbia and, upon consummation of such transaction, such person will be
a U.S. Air Carrier;
(ii) such person executes and delivers to Mortgagee a duly authorized,
legal, valid, binding and enforceable agreement, reasonably satisfactory in
form and substance to Mortgagee, containing an effective assumption by such
person of the due and punctual performance and observance of each covenant,
agreement and condition in the Operative Agreements to be performed or
observed by Owner;
(iii) such person makes such filings and recordings with the FAA
pursuant to the Act as shall be necessary to evidence such consolidation or
merger; and
(iv) immediately after giving effect to such consolidation or merger
no Event of Default shall have occurred and be continuing.
(b) Effect of Merger. Upon any such consolidation or merger of Owner with
or into, or the conveyance, transfer or lease by Owner of all or substantially
all of its assets to, any Person in accordance with this Section 4.07, such
Person will succeed to, and be substituted for, and may exercise every right and
power of, Owner under the Operative Agreements with the same effect as if such
person had been named as "Owner" therein. No such consolidation or merger, or
conveyance, transfer or lease, shall have the effect of releasing Owner or such
Person from any of the obligations, liabilities, covenants or undertakings of
Owner under the Trust Indenture.
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ARTICLE V EVENTS OF DEFAULT; REMEDIES OF MORTGAGEE
SECTION 5.01. Event of Default
"Event of Default" means any of the following events (whatever the reason
for such Event of Default and whether such event shall be voluntary or
involuntary or come about or be effected by operation of Law or pursuant to or
in compliance with any judgment, decree or order of any court or any order, rule
or regulation of any administrative or governmental body):
(a) the failure of the Owner to pay (i) principal of, interest on or
Make-Whole Amount, if any, under any Equipment Note when due, and such
failure shall continue unremedied for a period of 10 Business Days, or (ii)
any other amount payable by it to the Note Holders under this Trust
Indenture or the Participation Agreement when due, and such failure shall
continue for a period in excess of 10 Business Days after Owner has
received written notice from Mortgagee or any Note Holder of the failure to
make such payment when due;
(b) Owner shall fail to carry and maintain, or cause to be carried and
maintained, insurance on and in respect of the Aircraft, Airframe and
Engines in accordance with the provisions of Section 4.06;
(c) Owner shall fail to observe or perform (or cause to be observed or
performed) in any material respect any other covenant, agreement or
obligation set forth herein or in any other Operative Agreement to which
Owner is a party and such failure continues to be material and adverse to
the interests of the Mortgagee and the Note Holders and shall continue
unremedied for a period of 60 days from and after the date of written
notice thereof to Owner from Mortgagee, unless such failure is capable of
being corrected and Owner shall be diligently proceeding to correct such
failure, in which case there shall be no Event of Default unless and until
such failure shall continue unremedied for a period of 180 days after
receipt of such notice;
(d) any representation or warranty made by Owner herein, in the
Participation Agreement or in any other Operative Agreement to which Owner
is a party (a) shall prove to have been false or inaccurate in any material
respect as of the date made, (b) shall continue to be material and adverse
to the interests of the Mortgagee
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or Note Holders, and (c) the same shall remain uncured (to the extent of
the material and adverse impact of such incorrectness on the interest of
the Mortgagee or Note Holders) for a period in excess of 60 days from and
after the date of written notice thereof from Mortgagee to Owner;
(e) the Owner shall consent to the appointment of or taking possession
by a receiver, trustee or liquidator of itself or of a substantial part of
its property, or the Owner shall admit in writing its inability to pay its
debts generally as they come due or shall make a general assignment for the
benefit of its creditors, or the Owner shall file a voluntary petition in
bankruptcy or a voluntary petition or an answer seeking reorganization,
liquidation or other relief 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 it in any such case, or the Owner
shall seek relief by voluntary petition, answer or consent, under the
provisions of any other bankruptcy or similar law providing for the
reorganization or winding-up of corporations (as in effect at such time),
or the Owner shall seek an agreement, composition, extension or adjustment
with its creditors under such laws or the Owner's board of directors shall
adopt a resolution authorizing corporate action in furtherance of any of
the foregoing;
(f) an order, judgment or decree shall be entered by any court of
competent jurisdiction appointing, without the consent of the Owner, a
receiver, trustee or liquidator of the Owner or of any substantial part of
its property, or any substantial part of the property of the Owner shall be
sequestered, or granting any other relief in respect of the Owner as a
debtor under any bankruptcy laws or other insolvency laws (as in effect at
such time), and any such order, judgment, decree, or decree of appointment
or sequestration shall remain in force undismissed, unstayed or unvacated
for a period of 90 days after the date of entry thereof; or
(g) a petition against the Owner in a proceeding under any 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 which may apply to the Owner, any court of competent
jurisdiction shall assume jurisdiction, custody or control of the Owner of
any substantial part of its property and such jurisdiction, custody or
control shall remain in force unrelinquished, unstayed or unterminated for
a period of 60 days.
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SECTION 5.02. Remedies
(a) If an Event of Default shall have occurred and be continuing and so
long as the same shall continue unremedied, then and in every such case the
Mortgagee may exercise any or all of the rights and powers and pursue any and
all of the remedies pursuant to this Article V and shall have and may exercise
all of the rights and remedies of a secured party under the Uniform Commercial
Code and may take possession of all or any part of the properties covered or
intended to be covered by the Lien created hereby or pursuant hereto and may
exclude the Owner and all persons claiming under it wholly or partly therefrom;
provided that the Mortgagee shall give the Owner 20 days prior written notice of
its intention to sell the Aircraft. Without limiting any of the foregoing, it is
understood and agreed that the Mortgagee may exercise any right of sale of the
Aircraft available to it, even though it shall not have taken possession of the
Aircraft and shall not have possession thereof at the time of such sale.
(b) If an Event of Default shall have occurred and be continuing, then and
in every such case the Mortgagee may (and shall, upon receipt of a written
demand therefor from a Majority in Interest of Note Holders), at any time, by
delivery of written notice or notices to the Owner, declare all the Equipment
Notes to be due and payable, whereupon the unpaid Original Amount of all
Equipment Notes then outstanding, together with accrued but unpaid interest
thereon (without Make-Whole Amount) and other amounts due thereunder or
otherwise payable hereunder, 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 clause (e), (f) or (g) of Section
5.01 hereof shall have occurred, then and in every such case the unpaid Original
Amount then outstanding, together with accrued but unpaid interest and all other
amounts due hereunder and under the Equipment Notes shall immediately and
without further act become due and payable without presentment, demand, protest
or notice, all of which are hereby waived.
This Section 5.02(b), however, is subject to the condition that, if at any
time after the Original Amount of the Equipment Notes shall have become so due
and payable, and before any judgment or decree for the payment of the money so
due, or any thereof, shall be entered, all overdue payments of interest upon the
Equipment Notes and all other amounts payable hereunder or under the Equipment
Notes (except the Original Amount of the Equipment Notes which by such
declaration shall have become payable) shall have been duly paid, and every
other Default and Event of Default with respect to any covenant or provision of
this Trust Indenture shall have been cured, then and in every such case a
Majority in Interest of Note Holders may (but shall not be obligated to), by
written instrument filed with the Mortgagee, rescind and annul the Mortgagee's
declaration (or such automatic
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acceleration) and its consequences; but no such rescission or annulment shall
extend to or affect any subsequent Default or Event of Default or impair any
right consequent thereon.
(c) The Note Holders shall be entitled, at any sale pursuant to this
Section 5.02, to credit against any purchase price bid at such sale by such
holder all or any part of the unpaid obligations owing to such Note Holder and
secured by the Lien of this Trust Indenture (only to the extent that such
purchase price would have been paid by such Note Holder pursuant to Article III
hereof if such purchase price were paid in cash and the foregoing provisions of
this subsection (c) were not given effect).
(d) In the event of any sale of the Collateral, or any part thereof,
pursuant to any judgment or decree of any court or otherwise in connection with
the enforcement of any of the terms of this Trust Indenture, the unpaid Original
Amount of all Equipment Notes then outstanding, together with accrued interest
thereon (without Make-Whole Amount), and other amounts due thereunder, shall
immediately become due and payable without presentment, demand, protest or
notice, all of which are hereby waived.
(e) Notwithstanding anything contained herein, so long as the Pass Through
Trustee under any Pass Through Trust Agreement (or its designee) is a Note
Holder, the Mortgagee 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 Trust to fail to qualify as a
"grantor trust" for federal income tax purposes.
SECTION 5.03. Return of Aircraft, Etc.
(a) If an Event of Default shall have occurred and be continuing and the
Equipment Notes have been accelerated, at the request of the Mortgagee, the
Owner shall promptly execute and deliver to the Mortgagee such instruments of
title and other documents as the Mortgagee may deem necessary or advisable to
enable the Mortgagee or an agent or representative designated by the Mortgagee,
at such time or times and place or places as the Mortgagee may specify, to
obtain possession of all or any part of the Collateral to which the Mortgagee
shall at the time be entitled hereunder. If the Owner shall for any reason fail
to execute and deliver such instruments and documents after such request by the
Mortgagee, the Mortgagee may (i) obtain a judgment conferring on the Mortgagee
the right to immediate possession and requiring the Owner to execute and deliver
such instruments and documents to the Mortgagee, to the entry of which judgment
the Owner hereby specifically consents to the fullest extent permitted by Law,
and (ii) pursue all or part of such Collateral wherever it may be found and may
enter any of the premises of Owner wherever such Collateral may be or be
supposed to be and search for such Collateral and
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take possession of and remove such Collateral. All expenses of obtaining such
judgment or of pursuing, searching for and taking such property shall, until
paid, be secured by the Lien of this Trust Indenture.
(b) Upon every such taking of possession, the Mortgagee may, from time to
time, at the expense of the Collateral, make all such expenditures for
maintenance, use, operation, storage, insurance, leasing, control, management,
disposition, modifications or alterations to and of the Collateral, as it may
deem proper. In each such case, the Mortgagee shall have the right to maintain,
use, operate, store, insure, lease, control, manage, dispose of, modify or alter
the Collateral and to exercise all rights and powers of the Owner relating to
the Collateral, as the Mortgagee shall deem best, including the right to enter
into any and all such agreements with respect to the maintenance, use,
operation, storage, insurance, leasing, control, management, disposition,
modification or alteration of the Collateral or any part thereof as the
Mortgagee may determine, and the Mortgagee shall be entitled to collect and
receive directly all rents, revenues and other proceeds of the Collateral and
every part thereof, without prejudice, however, to the right of the Mortgagee
under any provision of this Trust Indenture to collect and receive all cash held
by, or required to be deposited with, the Mortgagee hereunder. Such rents,
revenues and other proceeds shall be applied to pay the expenses of the
maintenance, use, operation, storage, insurance, leasing, control, management,
disposition, improvement, modification or alteration of the Collateral and of
conducting the business thereof, and to make all payments which the Mortgagee
may be required or may elect to make, if any, for taxes, assessments, insurance
or other proper charges upon the Collateral or any part thereof (including the
employment of engineers and accountants to examine, inspect and make reports
upon the properties and books and records of the Owner), and all other payments
which the Mortgagee may be required or authorized to make under any provision of
this Trust Indenture, as well as just and reasonable compensation for the
services of the Mortgagee, and of all persons properly engaged and employed by
the Mortgagee with respect hereto.
SECTION 5.04. Remedies Cumulative
Each and every right, power and remedy given to the Mortgagee specifically
or otherwise in this Trust Indenture 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 be
exercised from time to time and as often and in such order as may be deemed
expedient by the Mortgagee, and the exercise or the beginning of the exercise of
any power or remedy shall not be construed to be a waiver of the right to
exercise at the same time or thereafter any other right, power or remedy. No
delay or omission by the Mortgagee in the exercise of any right, remedy or power
or in the
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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 Owner or to be an
acquiescence therein.
SECTION 5.05. Discontinuance of Proceedings
In case the Mortgagee shall have instituted any proceeding to enforce any
right, power or remedy under this Trust Indenture by foreclosure, entry or
otherwise, and such proceedings shall have been discontinued or abandoned for
any reason or shall have been determined adversely to the Mortgagee, then and in
every such case the Owner and the Mortgagee 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 the Owner
or the Mortgagee shall continue as if no such proceedings had been instituted.
SECTION 5.06. Waiver of Past Defaults
Upon written instruction from a Majority in Interest of Note Holders, the
Mortgagee 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 this
Trust Indenture, but no such waiver shall extend to any subsequent or other
Default or impair any right consequent thereon, provided, that in the absence of
written instructions from all the Note Holders, the Mortgagee shall not waive
any Default (i) in the payment of the Original Amount, Make-Whole Amount, if
any, and interest and other amounts due under any Equipment Note then
outstanding, or (ii) in respect of a covenant or provision hereof which, under
Article X hereof, cannot be modified or amended without the consent of each Note
Holder.
SECTION 5.07. Appointment of Receiver
The Mortgagee shall, as a matter of right, be entitled to the appointment
of a receiver (who may be the Mortgagee 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 the Owner 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 the Mortgagee with respect to the Collateral.
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SECTION 5.08. Mortgagee Authorized to Execute Bills of Sale, Etc.
The Owner irrevocably appoints, while an Event of Default has occurred and
is continuing, the Mortgagee the true and lawful attorney-in-fact of the Owner
(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 Trust Indenture, whether
pursuant to foreclosure or power of sale, assignments and other instruments as
may be necessary or appropriate, with full power of substitution, the Owner
hereby ratifying and confirming all that such attorney or any substitute shall
do by virtue hereof in accordance with applicable law. Nevertheless, if so
requested by the Mortgagee or any purchaser, the Owner shall ratify and confirm
any such sale, assignment, transfer or delivery, by executing and delivering to
the Mortgagee or such purchaser all bills of sale, assignments, releases and
other proper instruments to effect such ratification and confirmation as may be
designated in any such request.
SECTION 5.09. Rights of Note Holders to Receive Payment
Notwithstanding any other provision of this Trust Indenture, the right of
any Note Holder 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, or to bring suit for the enforcement of any such payment on
or after such respective dates in accordance with the terms hereof, shall not be
impaired or affected without the consent of such Note Holder.
ARTICLE VI DUTIES OF THE MORTGAGEE
SECTION 6.01. Notice of Event of Default
If the Mortgagee shall have Actual Knowledge of an Event of Default or of a
Default arising from a failure to pay any installment of principal and interest
on any Equipment Note, the Mortgagee shall give prompt written notice thereof to
each Note Holder. Subject to the terms of Sections 5.06, 6.02 and 6.03 hereof,
the Mortgagee shall
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take such action, or refrain from taking such action, with respect to such Event
of Default or Default (including with respect to the exercise of any rights or
remedies hereunder) as the Mortgagee shall be instructed in writing by a
Majority in Interest of Note Holders. Subject to the provisions of Section 6.03,
if the Mortgagee shall not have received instructions as above provided within
20 days after mailing notice of such Event of Default to the Note Holders, the
Mortgagee may, subject to instructions thereafter received pursuant to the
preceding provisions of this Section 6.01, take such action, or refrain from
taking such action, but shall be under no duty to take or refrain from taking
any action, with respect to such Event of Default or Default as it shall
determine advisable in the best interests of the Note Holders; provided,
however, that the Mortgagee may not sell the Aircraft or any Engine without the
consent of a Majority in Interest of Note Holders. For all purposes of this
Trust Indenture, in the absence of Actual Knowledge on the part of the
Mortgagee, the Mortgagee shall not be deemed to have knowledge of a Default or
an Event of Default (except, the failure of Owner to pay any installment of
principal or interest within one Business Day after the same shall become due,
which failure shall constitute knowledge of a Default) unless notified in
writing by the Owner or one or more Note Holders.
SECTION 6.02. Action upon Instructions; Certain Rights and Limitations
Subject to the terms of Sections 5.02(a), 5.06, 6.01 and 6.03 hereof, upon
the written instructions at any time and from time to time of a Majority in
Interest of Note Holders, the Mortgagee shall, subject to the terms of this
Section 6.02, take such of the following actions as may be specified in such
instructions: (i) give such notice or direction or exercise such right, remedy
or power hereunder as shall be specified in such instructions and (ii) give such
notice or direction or exercise such right, remedy or power hereunder with
respect to any part of the Collateral as shall be specified in such
instructions; it being understood that without the written instructions of a
Majority in Interest of Note Holders, the Mortgagee shall not, except as
provided in Section 6.01, approve any such matter as satisfactory to the
Mortgagee.
The Mortgagee will execute and the Owner will file such continuation
statements with respect to financing statements relating to the security
interest created hereunder in the Collateral as may be specified from time to
time in written instructions of a Majority in Interest of Note Holders (which
instructions shall be accompanied by the form of such continuation statement so
to be filed). The Mortgagee will furnish to each Note Holder, promptly upon
receipt thereof, duplicates or copies of all reports, notices, requests,
demands, certificates and other instruments furnished to the Mortgagee
hereunder.
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SECTION 6.03. Indemnification
The Mortgagee shall not be required to take any action or refrain from
taking any action under Section 6.01 (other than the first sentence thereof),
Section 6.02 or Article V hereof unless the Mortgagee shall have been
indemnified to its reasonable satisfaction against any liability, cost or
expense (including counsel fees) which may be incurred in connection therewith
pursuant to a written agreement with one or more Note Holders. The Mortgagee
agrees that it shall look solely to the Note Holders for the satisfaction of any
indemnity (except expenses for foreclosure of the type referred to in clause
"First" of Section 3.03 hereof) owed to it pursuant to this Section 6.03. The
Mortgagee shall not be under any obligation to take any action under this Trust
Indenture or any other Operative Agreement and nothing herein or therein shall
require the Mortgagee to expend or risk its own funds or otherwise incur the
risk of any financial liability in the performance 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 or liability is not reasonably
assured to it (the written indemnity of any Note Holder who is a QIB, signed by
an authorized officer thereof, in favor of, delivered to and in form reasonably
satisfactory to the Mortgagee shall be accepted as reasonable assurance of
adequate indemnity). The Mortgagee shall not be required to take any action
under Section 6.01 (other than the first sentence thereof), Section 6.02 or
Article V hereof, nor shall any other provision of this Trust Indenture or any
other Operative Agreement be deemed to impose a duty on the Mortgagee to take
any action, if the Mortgagee shall have been advised by counsel that such action
is contrary to the terms hereof or is otherwise contrary to Law.
SECTION 6.04. No Duties Except as Specified in Trust Indenture or
Instructions
The Mortgagee shall not have any duty or obligation to use, operate, store,
lease, control, manage, sell, 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 Trust Indenture or any part of the
Collateral, except as expressly provided by the terms of this Trust Indenture or
as expressly provided in written instructions from Note Holders as provided in
this Trust Indenture; and no implied duties or obligations shall be read into
this Trust Indenture against the Mortgagee. The Mortgagee agrees that it will in
its individual capacity and at its own cost and expense (but without any right
of indemnity in respect of any such cost or expense under Section 8.01 hereof),
promptly take such action as may be necessary duly to discharge all liens and
encumbrances on any part of the Collateral which result from claims against it
in its individual capacity not related to the
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administration of the Collateral or any other transaction pursuant to this Trust
Indenture or any document included in the Collateral.
SECTION 6.05. No Action Except Under Trust Indenture or Instructions
The Mortgagee will not use, operate, store, lease, control, manage, sell,
dispose of or otherwise deal with the Aircraft or any other part of the
Collateral except in accordance with the powers granted to, or the authority
conferred upon, the Mortgagee pursuant to this Trust Indenture and in accordance
with the express terms hereof.
SECTION 6.06. Investment of Amounts Held by Mortgagee
Any amounts held by the Mortgagee pursuant to the proviso to the first
sentence of Section 3.01, pursuant to Section 3.02, or pursuant to any provision
of any other Operative Agreement providing for amounts to be held by the
Mortgagee which are not distributed pursuant to the other provisions of Article
III hereof shall be invested by the Mortgagee from time to time in Cash
Equivalents as directed by the Owner (so long as no Event of Default has
occurred and is continuing) or, in the absence of such direction, by the
Majority in Interest of Note Holders so long as the Mortgagee may acquire the
same using its best efforts. Unless otherwise expressly provided in this Trust
Indenture, any income realized as a result of any such investment, net of the
Mortgagee's reasonable fees and expenses in making such investment, shall be
held and applied by the Mortgagee in the same manner as the principal amount of
such investment is to be applied and any losses, net of earnings and such
reasonable fees and expenses, shall be charged against the principal amount
invested. The Mortgagee shall not be liable for any loss resulting from any
investment required to be made by it under this Trust Indenture other than by
reason of its willful misconduct or gross negligence, and any such investment
may be sold (without regard to its maturity) by the Mortgagee without
instructions whenever such sale is necessary to make a distribution required by
this Trust Indenture.
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ARTICLE VII THE MORTGAGEE
SECTION 7.01. Acceptance of Trusts and Duties
The Mortgagee accepts the duties hereby created and applicable to it and
agrees to perform the same but only upon the terms of this Trust Indenture and
agrees to receive and disburse all monies constituting part of the Collateral in
accordance with the terms hereof. The Mortgagee, in its individual capacity,
shall not be answerable or accountable under any circumstances, except (i) for
its own willful misconduct or gross negligence (other than for the handling of
funds, for which the standard of accountability shall be willful misconduct or
negligence), (ii) as provided in the fourth sentence of Section 2.04(a) hereof
and the last sentence of Section 6.04 hereof, and (iii) from the inaccuracy of
any representation or warranty of the Mortgagee (in its individual capacity) in
the Participation Agreement or hereunder.
SECTION 7.02. Absence of Duties
Except in accordance with written instructions furnished pursuant to
Section 6.01 or 6.02 hereof, and except as provided in, and without limiting the
generality of, Sections 6.03, 6.04 and 7.07 hereof the Mortgagee shall have no
duty (i) to see to any registration of the Aircraft or any recording or filing
of this Trust Indenture or any other document, or to see to the maintenance of
any such registration, recording or filing, (ii) to see to any insurance on the
Aircraft or to effect or maintain any such insurance, whether or not Owner shall
be in default with respect thereto, (iii) to see to the payment or discharge of
any lien or encumbrance of any kind against any part of the Collateral, (iv) to
confirm, verify or inquire into the failure to receive any financial statements
from Owner, or (v) to inspect the Aircraft at any time or ascertain or inquire
as to the performance or observance of any of Owner's covenants herein or any
Permitted Lessee's covenants under any assigned Permitted Lease with respect to
the Aircraft.
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SECTION 7.03. No Representations or Warranties as to Aircraft or Documents
THE MORTGAGEE IN ITS INDIVIDUAL OR TRUST CAPACITY DOES NOT MAKE AND SHALL
NOT BE DEEMED TO HAVE MADE AND HEREBY EXPRESSLY DISCLAIMS ANY REPRESENTATION OR
WARRANTY, EXPRESS OR IMPLIED, AS TO THE TITLE, AIRWORTHINESS, VALUE, COMPLIANCE
WITH SPECIFICATIONS, CONDITION, DESIGN, QUALITY, DURABILITY, OPERATION,
MERCHANTABILITY OR FITNESS FOR USE FOR A PARTICULAR PURPOSE OF THE AIRCRAFT OR
ANY ENGINE, AS TO THE ABSENCE OF LATENT OR OTHER DEFECTS, WHETHER OR NOT
DISCOVERABLE, AS TO THE ABSENCE OF ANY INFRINGEMENT OF ANY PATENT, TRADEMARK OR
COPYRIGHT, AS TO THE ABSENCE OF OBLIGATIONS BASED ON STRICT LIABILITY IN, TORT
OR ANY OTHER REPRESENTATION OR WARRANTY WHATSOEVER. The Mortgagee, in its
individual or trust capacities, does not make or shall not be deemed to have
made any representation or warranty as to the validity, legality or
enforceability of this Trust Indenture, the Participation Agreement, the
Equipment Notes, or the Purchase Agreement, or as to the correctness of any
statement contained in any thereof, except for the representations and
warranties of the Owner made in its individual capacity and the representations
and warranties of the Mortgagee in its individual capacity, in each case
expressly made in this Trust Indenture or in the Participation Agreement. The
Note Holders make no representation or warranty hereunder whatsoever.
SECTION 7.04. No Segregation of Monies; No Interest
Any monies paid to or retained by the Mortgagee pursuant to any provision
hereof and not then required to be distributed to the Note Holders or the Owner
as provided in Article III hereof need not be segregated in any manner except to
the extent required by Law or Section 6.06 hereof, and may be deposited under
such general conditions as may be prescribed by Law, and the Mortgagee shall not
be liable for any interest thereon (except that the Mortgagee shall invest all
monies held in accordance with Section 6.06 hereof; provided, however, that any
payments received, or applied hereunder, by the Mortgagee shall be accounted for
by the Mortgagee so that any portion thereof paid or applied pursuant hereto
shall be identifiable as to the source thereof.
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SECTION 7.05. Reliance; Agreements; Advice of Counsel
The Mortgagee 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. The Mortgagee
may accept a copy of a resolution of the Board of Directors (or Executive
Committee thereof) of the Owner, certified by the Secretary or an Assistant
Secretary thereof 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 the aggregate unpaid Original Amount of Equipment Notes
outstanding as of any date, the Owner may for all purposes hereof rely on a
certificate signed by any Vice President or other authorized corporate trust
officer of the Mortgagee. As to any fact or matter relating to the Owner the
manner of which is not specifically described herein, the Mortgagee may for all
purposes hereof rely on a certificate, signed by a duly authorized officer of
the Owner, as to such fact or matter, and such certificate shall constitute full
protection to the Mortgagee 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 Mortgagee may execute any of the trusts or powers hereof and perform its
powers and duties hereunder directly or through agents or attorneys and may, at
the expense of the Collateral, advise with counsel, accountants and other
skilled persons to be selected and retained by it, and the Mortgagee shall not
be liable for anything done, suffered or omitted in good faith by it in
accordance with the written advice or written opinion of any such counsel,
accountants or other skilled persons.
SECTION 7.06. Compensation
The Mortgagee shall be entitled to reasonable compensation, including
expenses and disbursements (including the reasonable fees and expenses of
counsel), for all services rendered hereunder and shall, on and subsequent to an
Event of Default hereunder, have a priority claim on the Collateral for the
payment of such compensation, to the extent that such compensation shall not be
paid by Owner, and shall have the right, on and subsequent to an Event of
Default hereunder, to use or apply any monies held by it hereunder in the
Collateral toward such payments. The Mortgagee agrees that it shall have no
right against the Note Holders for any fee as compensation for its services as
trustee under this Trust Indenture.
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SECTION 7.07. Instructions from Note Holders
In the administration of the trusts created hereunder, the Mortgagee shall
have the right to seek instructions from a Majority in Interest of Note Holders
should any provision of this Trust Indenture appear to conflict with any other
provision herein or should the Mortgagee's duties or obligations hereunder be
unclear, and the Mortgagee shall incur no liability in refraining from acting
until it receives such instructions. The Mortgagee shall be fully protected by
the Note Holders for acting in accordance with any instructions received under
this Section 7.07.
ARTICLE VIII INDEMNIFICATION
SECTION 8.01. Scope of Indemnification
The Mortgagee shall be indemnified by the Owner to the extent and in the
manner provided in Section 8 of the Participation Agreement.
ARTICLE IX SUCCESSOR AND SEPARATE TRUSTEES
SECTION 9.01. Resignation of Mortgagee; Appointment of Successor
(a) The Mortgagee or any successor thereto may resign at any time without
cause by giving at least 30 days prior written notice to the Owner and each Note
Holder. such resignation to be effective upon the acceptance of the trusteeship
by a successor Mortgagee. In addition, a Majority in Interest of Note Holders
may at any time (but only with the consent of Owner, which consent shall not be
unreasonably withheld, except that such consent shall not be necessary if an
Event of Default is continuing) remove the Mortgagee without cause by an
instrument in writing delivered to the Owner and the Mortgagee, and the
Mortgagee shall promptly notify each Note Holder thereof in writing, such
removal to be effective upon the acceptance of the trusteeship by a successor
Mortgagee. In the case
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of the resignation or removal of the Mortgagee, a Majority in Interest of Note
Holders may appoint a successor Mortgagee by an instrument signed by such
holders, which successor, so long as no Event of Default shall have occurred and
be continuing, shall be subject to Owner's reasonable approval. If a successor
Mortgagee shall not have been appointed within 30 days after such notice of
resignation or removal, the Mortgagee, the Owner or any Note Holder may apply to
any court of competent jurisdiction to appoint a successor Mortgagee to act
until such time, if any, as a successor shall have been appointed as above
provided. The successor Mortgagee so appointed by such court shall immediately
and without further act be superseded by any successor Mortgagee appointed as
above provided.
(b) Any successor Mortgagee, however appointed, shall execute and deliver
to the Owner and the predecessor Mortgagee an instrument accepting such
appointment and assuming the obligations of the Mortgagee arising from and after
the time of such appointment, and thereupon such successor Mortgagee, without
further act, shall become vested with all the estates, properties, rights,
powers and duties of the predecessor Mortgagee hereunder in the trust hereunder
applicable to it with like effect as if originally named the Mortgagee herein;
but nevertheless upon the written request of such successor Mortgagee, such
predecessor Mortgagee shall execute and deliver an instrument transferring to
such successor Mortgagee, upon the trusts herein expressed applicable to it, all
the estates, properties, rights and powers of such predecessor Mortgagee, and
such predecessor Mortgagee shall duly assign, transfer, deliver and pay over to
such successor Mortgagee all monies or other property then held by such
predecessor Mortgagee hereunder.
(c) Any successor Mortgagee, however appointed, shall be a bank or trust
company having its principal place of business in the Borough of Manhattan, City
and State of New York; Chicago, Illinois; Hartford, Connecticut; Wilmington,
Delaware; or Boston, Massachusetts and having (or whose obligations under the
Operative Agreements are guaranteed by an affiliated entity having) a combined
capital and surplus of at least $100,000,000, if there be such an institution
willing, able and legally qualified to perform the duties of the Mortgagee
hereunder upon reasonable or customary terms.
(d) Any corporation into which the Mortgagee 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 Mortgagee shall be a party, or any
corporation to which substantially all the corporate trust business of the
Mortgagee may be transferred, shall, subject to the terms of paragraph (c) of
this Section 9.01, be a successor Mortgagee and the Mortgagee under this Trust
Indenture without further act.
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SECTION 9.02. Appointment of Additional and Separate Trustees
(a) Whenever (i) the Mortgagee shall deem it necessary or desirable in
order to conform to any Law of any jurisdiction in which all or any part of the
Collateral shall be situated or to make any claim or bring any suit with respect
to or in connection with the Collateral, this Trust Indenture, any other
Indenture Agreement, the Equipment Notes or any of the transactions contemplated
by the Participation Agreement, (ii) the Mortgagee shall be advised by counsel
satisfactory to it that it is so necessary or prudent in the interests of the
Note Holders (and the Mortgagee shall so advise the Owner), or (iii) the
Mortgagee shall have been requested to do so by a Majority in Interest of Note
Holders, then in any such case, the Mortgagee and, upon the written request of
the Mortgagee, the Owner, shall execute and deliver an indenture supplemental
hereto and such other instruments as may from time to time be necessary or
advisable either (1) to constitute one or more bank or trust companies or one or
more persons approved by the Mortgagee, either to act jointly with the Mortgagee
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
Trust Indenture as may be provided in such supplemental indenture or other
instruments as the Mortgagee or a Majority in Interest of Note Holders may deem
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 9.02. If the Owner shall not have taken any action requested of it under
this Section 9.02(a) that is permitted or required by its terms within 15 days
after the receipt of a written request from the Mortgagee so to do, or if an
Event of Default shall have occurred and be continuing, the Mortgagee may act
under the foregoing provisions of this Section 9.02(a) without the concurrence
of the Owner, and the Owner hereby irrevocably appoints (which appointment is
coupled with an interest) the Mortgagee, its agent and attorney-in-fact to act
for it under the foregoing provisions of this Section 9.02(a) in either of such
contingencies. The Mortgagee 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. In
case any additional or separate trustee appointed under this Section 9.02(a)
shall die, become incapable of acting, resign or be removed, all the assets,
property, rights, powers, trusts, duties and obligations of such additional or
separate trustee shall revert to the Mortgagee until a successor additional or
separate trustee is appointed as provided in this Section 9.02(a).
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(b) No additional or separate trustee shall be entitled to exercise any of
the rights, powers, duties and obligations conferred upon the Mortgagee 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 Agreement to the Mortgagee
shall be promptly paid over by it to the Mortgagee. All other rights, powers,
duties and obligations conferred or imposed upon any additional or separate
trustee shall be exercised or performed by the Mortgagee and such additional or
separate trustee jointly except to the extent that applicable Law of any
jurisdiction in which any particular act is to be performed renders the
Mortgagee incompetent or unqualified to perform such act, in which event such
rights, powers, duties and obligations (including the holding of title to all or
part of the Collateral in any such jurisdiction) shall be exercised and
performed by such additional or separate trustee. No additional or separate
trustee shall take any discretionary action except on the instructions of the
Mortgagee or a Majority in Interest of Note Holders. No trustee hereunder shall
be personally liable by reason of any act or omission of any other trustee
hereunder, except that the Mortgagee shall be liable for the consequences of its
lack of reasonable care in selecting, and the Mortgagee's own actions in acting
with, any additional or separate trustee. Each additional or separate trustee
appointed pursuant to this Section 9.02 shall be subject to, and shall have the
benefit of Articles V through IX and Article XI hereof insofar as they apply to
the Mortgagee. The powers of any additional or separate trustee appointed
pursuant to this Section 9.02 shall not in any case exceed those of the
Mortgagee hereunder.
(c) If at any time the Mortgagee shall deem it no longer necessary or
desirable in order to conform to any such Law or take any such action or shall
be advised by such counsel that it is no longer so necessary or desirable in the
interest of the Note Holders, or in the event that the Mortgagee shall have been
requested to do so in writing by a Majority in Interest of Note Holders, the
Mortgagee and, upon the written request of the Mortgagee, the Owner, shall
execute and deliver an indenture supplemental hereto and all other instruments
and agreements necessary or proper to remove any additional or separate trustee.
The Mortgagee may act on behalf of the Owner under this Section 9.02(c) when and
to the extent it could so act under Section 9.02(a) hereof.
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ARTICLE X SUPPLEMENTS AND AMENDMENTS TO THIS
TRUST INDENTURE AND OTHER DOCUMENTS
SECTION 10.01. Instructions of Majority; Limitations
(a) Without limiting the provisions of this Section 10.01, the Mortgagee
agrees with the Note Holders that it shall not enter into any amendment, waiver
or modification of, supplement or consent to this Trust Indenture, or any other
Operative Agreement to which it is a party, unless such supplement, amendment,
waiver, modification or consent is consented to in writing by a Majority in
Interest of Note Holders, but upon the written request of a Majority in Interest
of Note Holders, the Mortgagee shall from time to time enter into any such
supplement or amendment, or execute and deliver any such waiver, modification or
consent, as may be specified in such request and as may be (in the case of any
such amendment, supplement or modification), to the extent such agreement is
required, agreed to by the Owner and, as may be appropriate, the Airframe
Manufacturer or the Engine Manufacturer; provided, however, that, without the
consent of each holder of an affected Equipment Note then outstanding and of
each Liquidity Provider, no such amendment, waiver or modification of the terms
of, or consent under, any thereof, shall (i) modify any of the provisions of
this Section 10.01, or of Article II or III or Section 5.01. 5.02(c), 5.02(d),
or 6.02 hereof, the definitions of "Event of Default," "Default," "Majority in
Interest of Note Holders," "Make-Whole Amount" or "Note Holder," or the
percentage of Note Holders required to take or approve any action hereunder,
(ii) reduce the amount, or change the time of payment or method of calculation
of any amount, or Original Amount, Make-Whole Amount, if any, or interest with
respect to any Equipment Note, (iii) reduce, modify or amend any indemnities in
favor of the Mortgagee or the Note Holders (except that the Mortgagee may
consent to any waiver or reduction of an indemnity payable to it), or (iv)
permit the creation of any Lien on the Trust Indenture Estate or any part
thereof other than Permitted Liens or deprive any Note Holder of the benefit of
the Lien of this Trust Indenture on the Collateral, except as provided in
connection with the exercise of remedies under Article V hereof. Notwithstanding
the foregoing, without the consent of the affected Liquidity Providers, neither
the Owner nor the Mortgagee shall enter into any amendment, waiver or
modification of, supplement or consent to this Trust Indenture or the other
Operative Agreements which shall reduce, modify or amend any indemnities in
favor of such Liquidity Providers.
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(b) The Owner and the Mortgagee may enter into one or more agreements
supplemental hereto without the consent of any Note Holder for any of the
following purposes: (i) (a) to cure any defect or inconsistency herein or in the
Equipment Notes, or to make any change not inconsistent with the provisions
hereof (provided that such change does not adversely affect the interests of any
Note Holder in its capacity solely as Note Holder) or (b) to cure any ambiguity
or correct any mistake; (ii) to evidence the succession of another party as the
Owner in accordance with the terms hereof or to evidence the succession of a new
trustee hereunder pursuant hereto, the removal of the trustee hereunder or the
appointment of any co-trustee or co-trustees or any separate or additional
trustee or trustees; (iii) to convey, transfer, assign, mortgage or pledge any
property to or with the Mortgagee or to make any other provisions with respect
to matters or questions arising hereunder so long as such action shall not
adversely affect the interests of the Note Holders in its capacity solely as
Note Holder; (iv) to correct or amplify the description of any property at any
time subject to the Lien of this Trust Indenture or better to assure, convey and
confirm unto the Mortgagee any property subject or required to be subject to the
Lien of this Trust Indenture, the Airframe or Engines or any Replacement
Airframe or Replacement Engine; (v) to add to the covenants of the Owner for the
benefit of the Note Holders, or to surrender any rights or power herein
conferred upon the Owner; (vi) to add to the rights of the Note Holders; (vii)
to provide for the issuance of Series D Equipment Notes and Pass Through
Certificates issued by the Class D Pass Through Trust and to make changes
relating thereto, provided that the Series D Equipment Notes are issued in
accordance with the Note Purchase Agreement; and (viii) to include on the
Equipment Notes any legend as may be required by Law.
SECTION 10.02. Mortgagee Protected
If, in the opinion of the institution acting as Mortgagee hereunder, any
document required to be executed by it pursuant to the terms of Section 10.01
hereof affects any right, duty, immunity or indemnity with respect to such
institution under this Trust Indenture, such institution may in its discretion
decline to execute such document.
SECTION 10.03. Documents Mailed to Note Holders
Promptly after the execution by the Owner or the Mortgagee of any document
entered into pursuant to Section 10.01 hereof, the Mortgagee shall mail, by
first class mail, postage prepaid, a copy thereof to Owner (if not a party
thereto) and to each Note Holder at its address last set forth in the Equipment
Note Register, but the failure of the Mortgagee to mail such copies shall not
impair or affect the validity of such document.
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SECTION 10.04. No Request Necessary for Trust Indenture Supplement
No written request or consent of the Note Holders pursuant to Section 10.01
hereof shall be required to enable the Mortgagee to execute and deliver a Trust
Indenture Supplement specifically required by the terms hereof.
ARTICLE XI MISCELLANEOUS
SECTION 11.01. Termination of Trust Indenture
Upon (or at any time after) payment in full of the Original Amount of,
Make-Whole Amount, if any, and interest on and all other amounts due under all
Equipment Notes and provided that there shall then be no other Secured
Obligations due to the Indenture Indemnitees, the Note Holders and the Mortgagee
hereunder or under the Participation Agreement or other Operative Agreement, the
Owner shall direct the Mortgagee to execute and deliver to or as directed in
writing by the Owner an appropriate instrument releasing the Aircraft and the
Engines and all other Collateral from the Lien of the Trust Indenture and the
Mortgagee shall execute and deliver such instrument as aforesaid; provided,
however, that this Trust Indenture and the trusts created hereby shall earlier
terminate and this Trust Indenture shall be of no further force or effect upon
any sale or other final disposition by the Mortgagee of all property
constituting part of the Collateral and the final distribution by the Mortgagee
of all monies or other property or proceeds constituting part of the Collateral
in accordance with the terms hereof. Except as aforesaid otherwise provided,
this Trust Indenture and the trusts created hereby shall continue in full force
and effect in accordance with the terms hereof.
SECTION 11.02. No Legal Title to Collateral in Note Holders
No holder of an Equipment Note 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 Note Holder in and to the Collateral
or hereunder shall oper-
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ate to terminate this Trust Indenture or entitle such holder 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 11.03. Sale of Aircraft by Mortgagee Is Binding
Any sale or other conveyance of the Collateral, or any part thereof
(including any part thereof or interest therein), by the Mortgagee made pursuant
to the terms of this Trust Indenture shall bind the Note Holders and shall be
effective to transfer or convey all right, title and interest of the Mortgagee,
the Owner and such holders in and to such Collateral or part thereof. No
purchaser or other grantee shall be required to inquire as to the authorization,
necessity, expediency or regularity of such sale or conveyance or as to the
application of any sale or other proceeds with respect thereto by the Mortgagee.
SECTION 11.04. Trust Indenture for Benefit of Owner, Mortgagee, Note
Holders and the Other Indenture Indemnitees
Nothing in this Trust Indenture, whether express or implied, shall be
construed to give any person other than the Owner, the Mortgagee, the Note
Holders and the other Indenture Indemnitees, any legal or equitable right,
remedy or claim under or in respect of this Trust Indenture, except that the
persons referred to in the last paragraph of Section 4.02(b) shall be third
party beneficiaries of such paragraph.
SECTION 11.05. Notices
Unless otherwise expressly specified or permitted by the terms hereof, all
notices, requests, demands, authorizations, directions, consents, waivers or
documents provided or permitted by this Trust Indenture to be made, given,
furnished or filed shall be in writing, and shall be personally delivered or
sent by certified mail, postage prepaid, by prepaid courier service or by
facsimile followed by overnight courier service for next Business Day receipt,
and (i) if to the Owner, addressed to it at 538 Commons Drive, Golden, Colorado
80401, Attention: Chief Financial Officer, facsimile number (303) 526-5051, (ii)
if to Mortgagee, addressed to it at its office at Rodney Square North, 1100
North Market Street, Wilmington, Delaware 19890, Attention: Corporate Trust
Administration, facsimile
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number (302) 651-8882, (iii) if to any Note Holder or any Indenture Indemnitee,
addressed to such party at such address as such party shall have furnished by
notice to the Owner and the Mortgagee, or, until an address is so furnished,
addressed to the address of such party (if any) set forth on Schedule I to the
Participation Agreement or in the Equipment Note Register. Whenever any notice
in writing is required to be given by the Owner or the Mortgagee or any Note
Holder to any of the other of them, such notice shall be deemed given and such
requirement satisfied when such notice is received, provided, in the case of
facsimile, there is receipt of such notice the next Business Day from an
overnight courier service or if such notice is mailed by certified mail, postage
prepaid, three Business Days after being mailed, addressed as provided above.
Any party hereto may change the address to which notices to such party will be
sent by giving notice of such change to the other parties to this Trust
Indenture.
SECTION 11.06. Severability
Any provision of this Trust Indenture 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. Any such prohibition or unenforceability in any particular
jurisdiction shall not invalidate or render unenforceable such provision in any
other jurisdiction.
SECTION 11.07. No Oral Modification or Continuing Waivers
No term or provision of this Trust Indenture or the Equipment Notes may be
changed, waived, discharged or terminated orally, but only by an instrument in
writing signed by the Owner and the Mortgagee, in compliance with Section 10.01
hereof. 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 11.08. Successors and Assigns
All covenants and agreements contained herein shall be binding upon, and
inure to the benefit of, each of the parties hereto and the permitted successors
and assigns of each, all as herein provided. Any request, notice, direction,
consent, waiver or other instrument or action by any Note Holder shall bind the
successors and assigns of such holder. Each Note Holder by its acceptance of an
Equipment Note agrees to be bound by
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this Trust Indenture and all provisions of the Operative Agreements applicable
to a Note Holder.
SECTION 11.09. 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 11.10. Normal Commercial Relations
Anything contained in this Trust Indenture to the contrary notwithstanding,
Owner and Mortgagee may conduct any banking or other financial transactions, and
have banking or other commercial relationships, with Owner, fully to the same
extent as if this Trust Indenture were not in effect, including without
limitation the making of loans or other extensions of credit to Owner for any
purpose whatsoever, whether related to any of the transactions contemplated
hereby or otherwise.
SECTION 11.11. Governing Law; Counterpart Form
THIS TRUST INDENTURE SHALL IN ALL RESPECTS BE GOVERNED BY, AND CONSTRUED IN
ACCORDANCE WITH, THE INTERNAL LAWS OF THE STATE OF NEW YORK, INCLUDING ALL
MATTERS OF CONSTRUCTION, VALIDITY AND PERFORMANCE. THIS TRUST INDENTURE IS BEING
DELIVERED IN THE STATE OF NEW YORK. This Trust Indenture may be executed by the
parties hereto in separate counterparts (or upon separate signature pages bound
together into one or more counterparts), each of which when so executed and
delivered shall be an original, but all such counterparts shall together
constitute but one and the same instrument.
SECTION 11.12. Voting by Note Holders
All votes of the Note Holders shall be governed by a vote of a Majority in
Interest of Note Holders, except as otherwise provided herein.
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SECTION 11.13. Bankruptcy
It is the intention of the parties that the Mortgagee shall be entitled to
the benefits of Section 11.10 with respect to the right to take possession of
the Aircraft, Airframe, Engines and Parts as provided herein in the event of a
case under Chapter 11 of the Bankruptcy Code in which Owner is a debtor, and in
any instance where more than one construction is possible of the terms and
conditions hereof or any other pertinent Operative Agreement, each such party
agrees that a construction which would preserve such benefits shall control over
any construction which would not preserve such benefits.
IN WITNESS WHEREOF, the parties hereto have caused this Trust Indenture and
Mortgage to be duly executed by their respective officers thereof duly
authorized as of the day and year first above written.
ATLAS AIR, INC.
By:
------------------------------------
Name:
Title:
WILMINGTON TRUST COMPANY,
not in its individual capacity, except as
provided herein, but solely as Mortgagee
By:
------------------------------------
Name:
Title:
<PAGE>
ANNEX A
TO THE TRUST INDENTURE
DEFINITIONS
GENERAL PROVISIONS
(a) In each Operative Agreement, unless otherwise expressly provided, a
reference to:
(i) each of "Owner," "Mortgagee," "Note Holder" or any other person
includes, without prejudice to the provisions of any Operative
Agreement, any successor in interest to it and any permitted
transferee, permitted purchaser or permitted assignee of it;
(ii) words importing the plural include the singular and words importing
the singular include the plural;
(iii) any agreement, instrument or document, or any annex, schedule or
exhibit thereto, or any other part thereof includes, without prejudice
to the provisions of any Operative Agreement, that agreement,
instrument or document, or annex, schedule or exhibit, or part,
respectively, as amended, modified or supplemented from time to time
in accordance with its terms and in accordance with the Operative
Agreements, and any agreement, instrument or document entered into in
substitution or replacement therefor;
(iv) any provision of any Law includes any such provision as amended,
modified, supplemented, substituted, reissued or reenacted prior to
the Closing Date, and thereafter from time to time;
(v) the words "Agreement, "this Agreement, "hereby," herein," "hereto,"
"hereof" and "hereunder" and words of similar import when used in any
Operative Agreement refer to such Operative Agreement as a whole and
not to any particular provision of such Operative Agreement;
(vi) the words "including," "including, without limitation," "including,
but not limited to," and terms or phrases of similar import when used
in any Operative Agreement, with respect to any matter or thing, mean
including, without limitation, such matter or thing; and
(vii) a "Section," an "Exhibit," an "Annex" or a "Schedule" in any
Operative Agreement, or in any annex thereto, is a reference to a
section of, or an exhibit, an annex or a schedule to, such Operative
Agreement or such annex, respectively.
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(b) Each exhibit, annex and schedule to each Operative Agreement is
incorporated in, and shall be deemed to be a part of, such Operative Agreement.
(c) Unless otherwise defined or specified in any Operative Agreement, all
accounting terms therein shall be construed and all accounting determinations
thereunder shall be made in accordance with GAAP.
(d) Headings used in any Operative Agreement are for convenience only and
shall not in any way affect the construction of, or be taken into consideration
in interpreting, such Operative Agreement.
(e) For purposes of each Operative Agreement, the occurrence and
continuance of a Default or Event of Default referred to in Section 5.01(e), (f)
or (g) of the Trust Indenture shall not be deemed to prohibit the Owner from
taking any action or exercising any right that's conditioned on no Special
Default, Default or Event of Default having occurred and be continuing if such
Special Default, Default or Event of Default consists of the institution of
reorganization proceedings with respect to Owner under Chapter II of the
Bankruptcy Code and the trustee or debtor-in-possession in such proceedings
shall have agreed to perform its obligations under the Trust Indenture with the
approval of the applicable court and thereafter shall have continued to perform
such obligations in accordance with Section 1110.
DEFINED TERMS
"ACMI Contract" means (i) any contract entered into by Owner pursuant to
which Owner furnishes the aircraft, crew, maintenance and insurance and the
other party to such contract bears all other operating expenses and (ii) any
similar contract in which the other party to such contract provides the flight
crew, all substantially in accordance with Owner's historical practice.
"Act" means part A of subtitle VII of title 49, United States Code.
"Actual Knowledge" means (a) as it applies to Mortgagee, actual knowledge
of a responsible officer in the Corporate Trust Office, and (b) as it applies to
Owner, actual knowledge of a Vice President or more senior officer of Owner or
any other officer of Owner having responsibility for the transactions
contemplated by the Operative Agreements; provided that each of Owner and
Mortgagee shall be deemed to have "Actual Knowledge" of any matter as to which
it has received notice from Owner, any Note Holder or Mortgagee, such notice
having been given pursuant to Section 11.05 of the Trust Indenture.
"Affiliate" means, with respect to any person, any other person directly or
indirectly controlling, controlled by or under common control with such person.
For purposes of this definition, "control" means the power, directly or
indirectly, to direct or cause
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the direction of the management and policies of such person, whether through the
ownership of voting securities or by contract or otherwise and "controlling,"
"controlled by" and "under common control with" have correlative meanings.
"Aircraft" means, collectively, the Airframe and Engines.
"Aircraft Bill of Sale" means the full warranty bill of sale covering the
Aircraft delivered by Airframe Manufacturer to Owner on the Closing Date.
"Aircraft Documents" means all technical data, manuals and log books, and
all inspection, modification and overhaul records and other service, repair,
maintenance and technical records that are required by the FAA (or the relevant
Aviation Authority), to be maintained with respect to the Aircraft, Airframe,
Engines or Parts, and such term shall include all additions, renewals, revisions
and replacements of any such materials from time to time made, or required to be
made, by the FAA (or other Aviation Authority) regulations, and in each case in
whatever form and by whatever means or medium (including, without limitation,
microfiche, microfilm, paper or computer disk) such materials may be maintained
or retained by or on behalf of Owner (provided that all such materials shall he
maintained in the English language).
"Airframe" means (a) the aircraft (excluding Engines or engines from time
to time installed thereon) manufactured by Airframe Manufacturer and identified
by Airframe Manufacturer's model number, United States registration number and
Airframe Manufacturer's serial number set forth in the initial Trust Indenture
Supplement and any Replacement Airframe and (b) any and all Parts incorporated
or installed in or attached or appurtenant to such airframe, and any and all
Parts removed from such airframe, unless the Lien of the Trust Indenture shall
not be applicable to such Parts in accordance with Section 4.04 of the Trust
Indenture. Upon substitution of a Replacement Airframe under and in accordance
with the Trust Indenture, such Replacement Airframe shall become subject to the
Trust Indenture and shall be the "Airframe" for all purposes of the Trust
Indenture and the other Operative Agreements and thereupon the Airframe for
which the substitution is made shall no longer be subject to the Trust
Indenture, and such replaced Airframe shall cease to be the "Airframe."
"Airframe Manufacturer" means The Boeing Company, a Delaware corporation.
"Average Life Date" for any Equipment Note shall be the date which follows
the time of determination by a period equal to the Remaining Weighted Average
Life of such Equipment Note. "Remaining Weighted Average Life" on a given date
with respect to any Equipment Note shall be the number of days equal to the
quotient obtained by dividing (a) the sum of each of the products obtained by
multiplying (i) the amount of each then remaining scheduled payment of principal
of such Equipment Note by (ii) the number of days from and including such
determination date to but excluding the date on which such pay-
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ment of principal is scheduled to be made, by (b) the then outstanding principal
amount of such Equipment Note.
"Aviation Authority" means the FAA or, if the Aircraft is permitted to be,
and is, registered with any Government Entity under and in accordance with
Section 4.02(e) of the Trust Indenture and Section 6.4.5 of the Participation
Agreement, such other Government Entity.
"Bankruptcy Code" means the United States Bankruptcy Code, 11 U.S.C.
Sections 101 et seq.
"Bills of Sale" means the FAA Bill of Sale and the Aircraft Bill of Sale.
"Business Day" means any day other than a Saturday, Sunday or other day on
which commercial banks are authorized or required by law to close in New York,
New York, Denver, Colorado, Wilmington, Delaware or Chicago, Illinois.
"Cash Equivalents" means the following securities (which shall mature
within 90 days of the date of purchase thereof): (a) direct obligations of the
U.S. Government; (b) obligations fully guaranteed by the U.S. Government; (c)
certificates of deposit issued by, or bankers' acceptances of, or time deposits
or a deposit account with, Mortgagee or any bank, trust company or national
banking association incorporated or doing business under the laws of the United
States or any state thereof having a combined capital, and surplus and retained
earnings of at least $500,000,000 and having a rate of "C" or better from the
Thomson Bank Watch Service; or (d) commercial paper of any issuer doing business
under the laws of the United States or one of the states thereof and in each
case having a rating assigned to such commercial paper by Standard & Poor's
Rating Services or Moody's Investors Service, Inc. equal to Al or P1 or higher.
"Citizen of the United States" is defined in 49 U.S.C. ss. 40102(a)(15).
"Class D Pass Through Trust" means the Atlas Air Pass Through Trust 1999-1D
created by the Pass Through Trust Agreement and the Pass Through Trust
Supplement providing for the issuance of the Class D Certificates.
"Closing" means the closing of the transactions contemplated by the
Participation Agreement.
"Closing Date" means the date on which the Closing occurs.
"Code" means the Internal Revenue Code of 1986, as amended; provided that,
when used in relation to a Plan, "Code" shall mean the Internal Revenue Code of
1986 and any regulations and rulings issued thereunder, all as amended and in
effect from time to time.
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"Collateral" is defined in the Granting Clause of the Trust Indenture.
"Consent and Agreement" means the Manufacturer Consent and Agreement dated
as of even date with the Participation Agreement, of Airframe Manufacturer.
"Corporate Trust Office" means the principal office of Mortgagee located at
Mortgagee's address for notices under the Participation Agreement or such other
office at which Mortgagee's corporate trust business shall be administered which
Mortgagee shall have specified by notice in writing to Owner and each Note
Holder.
"CRAF" means the Civil Reserve Air Fleet Program established pursuant to 10
U.S.C. Section 9511-13 or any similar substitute program.
"Debt" means any liability for borrowed money, or any liability for the
payment of money in connection with any letter of credit transaction or any
other liabilities evidenced or to be evidenced by bonds, debentures, notes or
other similar instruments.
"Debt Rate" means, with respect to (i) any Series, the rate per annum
specified for such Series under the heading "Interest Rate" in Schedule I to the
Trust Indenture and (ii) for any other purpose, with respect to any period, the
weighted average interest rate per annum during such period borne by the
outstanding Equipment Notes, excluding any interest payable at the Payment Due
Rate.
"Default" means any event or condition that with the giving of notice or
the lapse of time or both would become an Event of Default.
"Deposit Agreement" means each of the four Deposit Agreements between the
Escrow Agent and the Depositary, dated as of the Issuance Date, each of which
relates to one of the Pass Through Trusts, provided that, for purposes of any
obligation of Owner, no amendment, modification or supplement to, or
substitution or replacement of, any such Deposit Agreement shall be effective
unless consented to by Owner.
"Depositary" means , as Depositary under each Deposit Agreement.
"Dollars," "United States Dollars" or "$" means the lawful currency of the
United States.
"Engine" means (a) each of the engines manufactured by Engine Manufacturer
and identified by Engine Manufacturer's model number and Engine Manufacturer's
serial number set forth in the initial Trust Indenture Supplement and originally
installed on the Airframe on the Closing Date, and any Replacement Engine, in
any case whether or not from time to time installed on such Airframe or
installed on any other airframe or aircraft, and (b) any and all Parts
incorporated or installed in or attached or appurtenant to such en-
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gine, and any and all Parts removed from such engine, unless the Lien of the
Trust Indenture shall not apply to such Parts in accordance with Section 4.04 of
the Trust Indenture. Upon substitution of a Replacement Engine under and in
accordance with the Trust Indenture, such Replacement Engine shall become
subject to the Trust Indenture and shall be an "Engine" for all purposes of the
Trust Indenture and the other Operative Agreements and thereupon the Engine for
which the substitution is made shall no longer be subject to the Trust
Indenture, and such replaced Engine shall cease to be an "Engine."
"Engine Consent and Agreement" means the Engine Manufacturer Consent and
Agreement dated as of even date with Participation Agreement, of Engine
Manufacturer.
"Engine Manufacturer" means General Electric Company, a corporation
organized under the laws of New York.
"Equipment Note Register" is defined in Section 2.07 of the Trust
Indenture.
"Equipment Notes" means and includes any equipment notes issued under the
Trust Indenture in the form specified in Section 2.01 thereof (as such form may
be varied pursuant to the terms of the Trust Indenture) and any Equipment Note
issued under the Trust Indenture in exchange for or replacement of any Equipment
Note.
"ERISA" means the Employee Retirement Income Security Act of 1974, and any
regulations and rulings issued thereunder all as amended and in effect from time
to time.
"Escrow Agent" means First Security Bank, National Association, as Escrow
Agent under each of the Escrow Agreements.
"Escrow Agreement" means each of the four Escrow and Paying Agent
Agreements, among the Escrow Agent, the Paying Agent, underwriters of the Pass
Through Certificates named therein and one of the Pass Through Trustees, dated
as of the Issuance Date, each of which relates to one of the Pass Through
Trusts, that, for purposes of any obligation of Owner, no amendment,
modification or supplement to, or substitution or replacement of, any such
Escrow Agreement shall be effective unless consented to by Owner.
"Event of Default" is defined in Section 5.01 of the Trust Indenture.
"Event of Loss" means. with respect to the Aircraft, Airframe or any
Engine, any of the following circumstances, conditions or events with respect to
such property, for any reason whatsoever:
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(a) the destruction of such property, damage to such property beyond
economic repair or rendition of such property permanently unfit for normal
use by Owner;
(b) the actual or constructive total loss of such property or any
damage to such property, or requisition of title or use of such property,
which results in an insurance settlement with respect to such property on
the basis of a total loss or constructive or compromised total loss;
(c) any theft, hijacking or disappearance of such property for a
period of 180 consecutive days or more;
(d) any seizure, condemnation, confiscation, taking or requisition
(including loss of title) of such property by any Government Entity or
purported Government Entity (other than a requisition of use by a Permitted
Government Entity) for a period exceeding 180 consecutive days;
(e) as a result of any law, rule, regulation, order or other action by
the Aviation Authority or by any Government Entity of the government of
registry of the Aircraft or by any Government Entity otherwise having
jurisdiction over the operation or use of the Aircraft, the use of such
property in the normal course of Owner's business of cargo air
transportation is prohibited for a period of 180 consecutive days unless
Owner, prior to the expiration of such 180-day period, shall have
undertaken and shall be diligently carrying forward such steps as may be
necessary or desirable to permit the normal use of such property by Owner,
but in any event if such use shall have been prohibited for a period of two
consecutive years, provided that no Event of Loss shall be deemed to have
occurred if such prohibition has been applicable to Owner's entire U.S.
fleet of such property and Owner, prior to the expiration of such two-year
period, shall have conformed at least one unit of such property in its
fleet to the requirements of any such law, rule, regulation, order or other
action and commenced regular commercial use of the same in such
jurisdiction and shall be diligently carrying forward, in a manner which
does not discriminate against such property in so conforming such property,
steps which are necessary or desirable to permit the normal use of the
Aircraft by Owner, but in any event if such use shall have been prohibited
for a period of three years.
"Expenses" means any and all liabilities, obligations, losses, damages,
settlements, penalties, claims, actions, suits, costs, expenses and
disbursements (including, without limitation, reasonable fees and disbursements
of legal counsel, accountants, appraisers, inspectors or other professionals,
and costs of investigation).
"FAA" means the Federal Aviation Administration of the United States or any
Government Entity succeeding to the functions of such Federal Aviation
Administration.
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"FAA Bill of Sale" means a bill of sale for the Aircraft on AC Form 8050-2
(or such other form as may be approved by the FAA) delivered to Owner on the
Closing Date by Airframe Manufacturer.
"FAA Filed Documents" means the Trust Indenture, the initial Trust
Indenture Supplement, the FAA Bill of Sale and an application for registration
of the Aircraft with the FAA in the name of Owner.
"FAA Regulations" means the Federal Aviation Regulations issued or
promulgated pursuant to the Act from time to time.
"Financing Statements" means, collectively, UCC-1 (and, where appropriate,
UCC-3) financing statements covering the Collateral, by Owner, as debtor,
showing Mortgagee as secured party, for filing in Colorado and each other
jurisdictions that, in the opinion of Mortgagee, is necessary or reasonably
desirable to perfect its Lien on the Collateral.
"GAAP" means generally accepted accounting principles as set forth in the
statements of financial accounting standards issued by the Financial Accounting
Standards Board of the American Institute of Certified Public Accountants, as
such principles may at any time or from time to time be varied by any applicable
financial accounting rules or regulations issued by the SEC and, with respect to
any person, shall mean such principles applied on a basis consistent with prior
periods except as may be disclosed in such person's financial statements.
"Government Entity" means (a) any federal, state, provincial or similar
government, and any body, board, department, commission, court, tribunal,
authority, agency or other instrumentality of any such government or otherwise
exercising any executive, legislative, judicial, administrative or regulatory
functions of such government or (b) any other government entity having
jurisdiction over any matter contemplated by the Operative Agreements or
relating to the observance or performance of the obligations of any of the
parties to the Operative Agreements.
"Indemnitee" means (i) WTC and Mortgagee, (ii) each separate or additional
trustee appointed pursuant to the Trust Indenture, (iii) the Subordination
Agent, the Paying Agent and the Escrow Agent, (iv) each Liquidity Provider, (v)
the Pass Through Trustees, (vi) each Affiliate of the persons described in
clauses (i) and (ii), (vii) each Affiliate of the persons described in clauses
(iii), (iv) and (v), (viii) the respective directors, officers, employees,
agents and servants of each of the persons described in clauses (i), (ii) and
(vi), (ix) the respective directors, officers, employees, agents and servants,
of each of the persons described in clauses (iii), (iv), (v) and (vii), (x) the
successors and permitted assigns of the persons described in clauses (i), (ii)
and (viii), and (xi) the successors and permitted assigns of the persons
described in clauses (iii), (iv), (v) and (ix); provided that the persons
described in clauses (iii), (iv), (v), (vii), (ix) and (xi) are Indemnitees only
for purposes of Section 8.1 of the Participation Agreement. If any Indemnitee is
Airframe Manufacturer or
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Engine Manufacturer or any subcontractor or supplier of either thereof, such
Person shall be an Indemnitee only in its capacity as Note Holder.
"Indenture Agreements" means the Purchase Agreement and the Bills of Sale,
to the extent included in Granting Clause (2) of the Trust Indenture, and any
other contract, agreement or instrument from time to time assigned or pledged
under the Trust Indenture.
"Indenture Indemnitee" means (i) WTC and the Mortgagee, (ii) each separate
or additional trustee appointed pursuant to the Trust Indenture, (iii) the
Subordination Agent, (iv) each Liquidity Provider, (v) each Pass Through
Trustee, (vi) the Paying Agent, (vii) the Escrow Agent and (viii) each of the
respective directors, officers, employees, agents and servants of each of the
persons described in clauses (i) through (vii) inclusive above.
"Inspecting Parties" is defined in Section 4.03 of the Trust Indenture.
"Intercreditor Agreement" means that certain Intercreditor Agreement among
the Pass Through Trustees, the Liquidity Providers and the Subordination Agent,
dated as of the Issuance Date, provided that, for purposes of any obligation of
Owner, no amendment, modification or supplement to, or substitution or
replacement of, such Intercreditor Agreement shall be effective unless consented
to by Owner.
"IRS" means the Internal Revenue Service of the United States or any
Government Entity succeeding to the functions of such Internal Revenue Service.
"Issuance Date" means ________ _, .
"Law" means (a) any constitution, treaty, statute, law, decree, regulation.
order, rule or directive of any Government Entity, and (b) any judicial or
administrative interpretation or application of, or decision under, any of the
foregoing.
"Lien" means any mortgage, pledge, lien, charge, claim, encumbrance, lease
or security interest affecting the title to or any interest in property.
"Liquidity Facilities" means the four Revolving Credit Agreements
(consisting of a separate Revolving Credit Agreement with each Liquidity
Provider with respect to each Pass Through Trust) between the Subordination
Agent, as borrower, and a Liquidity Provider, each dated as of the Issuance
Date, provided that, for purposes of any obligation of Owner, no amendment,
modification or supplement to, or substitution or replacement of, any such
Liquidity Facility shall be effective unless consented to by Owner.
"Liquidity Provider" (as the Class A-1 and A-2 Liquidity Provider) (as the
Class B and the Class C
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<PAGE>
Liquidity Provider) (as such terms are defined in the Intercreditor Agreement),
under their respective Liquidity Facilities, or any successor thereto.
"Majority in Interest of Note Holders" means as of a particular date of
determination, the holders of a majority in aggregate unpaid Original Amount of
all Equipment Notes outstanding as of such date (excluding any Equipment Notes
held by Owner or any of its Affiliates (unless all Equipment Notes then
outstanding shall be held by Owner or any Affiliate of Owner); provided that for
the purposes of directing any action or casting any vote or giving any consent,
waiver or instruction hereunder, any Note Holder of an Equipment Note or
Equipment Notes may allocate, in such Note Holder's sole discretion, any
fractional portion of the principal amount of such Equipment Note or Equipment
Notes in favor of or in opposition to any such action, vote, consent, waiver or
instruction.
"Make-Whole Amount" means, with respect to any Equipment Note, an amount
(as determined by an independent investment banker of national standing) equal
to the excess, if any, of (a) the present value of the remaining scheduled
payments of principal and interest to maturity of such Equipment Note computed
by discounting such payments on a semiannual basis on each Payment Date
(assuming a 360-day year of twelve 30-day months) using a discount rate equal to
the Treasury Yield over (b) the outstanding principal amount of such Equipment
Note plus accrued interest to the date of determination. For purposes of
determining Make-Whole Amount, "Treasury Yield" means, at the date of
determination with respect to any Equipment Note, the interest rate (expressed
as a decimal and, in the case of United States Treasury bills, converted to a
bond equivalent yield) determined to be the per annum rate equal to the
semiannual yield to maturity for United States Treasury securities maturing on
the Average Life Date of such Equipment Note and trading in the public
securities markets either as determined by interpolation between the most recent
weekly average yield to maturity for two series of United States Treasury
securities, trading in the public securities markets, (A) one maturing as close
as possible to, but earlier than, the Average Life Date of such Equipment Note
and (B) the other maturing as close as possible to, but later than, the Average
Life Date of such Equipment Note, in each case as published in the most recent
H.15(5.19) or, if a weekly average yield to maturity for United States Treasury
securities maturing on the Average Life Date of such Equipment Note is reported
on the most recent H.15(519), such weekly average yield to maturity as published
in such H.15(519). "H.15(519)" means the weekly statistical release designated
as such, or any successor publication, published by the Board of Governors of
the Federal Reserve System. The date of determination of a Make-Whole Amount
shall be the third Business Day prior to the applicable payment or redemption
date and the "most recent H.15(519) " means the H.15(519) published prior to the
close of business on the third Business Day prior to the applicable payment or
redemption date.
"Mandatory Modification" is defined in Section 4.04(d) of the Trust
Indenture.
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"Material Adverse Change" means, with respect to any person, any event,
condition or circumstance that materially and adversely affects such person's
business or consolidated financial condition, or its ability to observe or
perform its obligations, liabilities and agreements under the Operative
Agreements.
"Minimum Liability Insurance Amount" is defined in Schedule 3 to the
Participation Agreement.
"Mortgaged Property" is defined in Section 3.03 of the Trust Indenture.
"Mortgagee" means Wilmington Trust Company, a Delaware banking corporation,
not in its individual capacity but solely as mortgagee under the Trust
Indenture.
"Non-U.S. Person" means any Person other than a United States person, as
defined in Section 7701(a)(30) of the Code.
"Note Holder" means at any time each registered holder of one or more
Equipment Notes.
"Note Purchase Agreement" means the Note Purchase Agreement, dated as of
the Issuance Date, among Atlas Air, Inc., the Subordination Agent, the Escrow
Agent, the Paying Agent and the Pass Through Trustee under each Pass Through
Trust Agreement providing for, among other things, the issuance and sale of
certain equipment notes.
"Officer's Certificate" means, in respect of any party to the Participation
Agreement, a certificate signed by the Chairman, the President, any Vice
President (including those with varying ranks such as Executive, Senior,
Assistant or Staff Vice President), the Treasurer or the Secretary of such
party.
"Operative Agreements" means, collectively, the Participation Agreement,
the Trust Indenture, the initial Trust Indenture Supplement, the Bills of Sale,
and the Equipment Notes.
"Operative Indentures" means each of the indentures under which notes have
been issued and purchased by the Pass Through Trustees pursuant to the Note
Purchase Agreement.
"Optional Modification" is defined in Section 4.04(d) of the Trust
Indenture.
"Original Amount," with respect to an Equipment Note, means the stated
original principal amount of such Equipment Note and, with respect to all
Equipment Notes, means the aggregate stated original principal amounts of all
Equipment Notes.
"Owner Person" means Owner, any lessee, assignee, successor or other user
or person in possession of the Aircraft, Airframe or an Engine with or without
color of
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right, or any Affiliate of any of the foregoing (excluding any Tax Indemnitee or
any related Tax Indemnitee with respect thereto, or any person using or claiming
any rights with respect to the Aircraft, Airframe or an Engine directly by or
through any of the persons in this parenthetical).
"Participation Agreement" means the Participation Agreement dated as of
________ __, among Owner, the Pass Through Trustees, the Subordination Agent and
Mortgagee.
"Parts" means all appliances, parts, components, instruments,
appurtenances, accessories, furnishings, seats and other equipment of whatever
nature (other than (a) Engines or engines, and (b) any Removable Part leased by
Owner from a third party or subject to a security interest granted to a third
party), that may from time to time be installed or incorporated in or attached
or appurtenant to the Airframe or any Engine.
"Pass Through Agreements" means the Pass Through Trust Agreements, the Note
Purchase Agreement, the Deposit Agreements, the Escrow Agreements, the
Intercreditor Agreement, the Liquidity Facilities and the Fee Letters referred
to in Section 2.03 of each of the Liquidity Facilities, provided that no
amendment, modification or supplement to, or substitution or replacement of, any
such Fee Letter shall be effective for purposes of any obligation of Owner,
unless consented to by Owner.
"Pass Through Certificates" means the pass through certificates issued by
the Pass Through Trusts (and any other pass through certificates for which such
pass through certificates may be exchanged).
"Pass Through Trust" means each of the four separate pass through trusts
created under the Pass Through Trust Agreements.
"Pass Through Trust Agreements" means the Pass Through Trust Agreement
dated as of April 1, 1999 and the four Pass Through Trust Supplements by and
between the Owner and a Pass Through Trustee.
"Pass Through Trustee" means Wilmington Trust Company, a Delaware banking
corporation, in its capacity as trustee under each Pass Through Trust Agreement.
"Pass Through Trustee Agreements" means the Participation Agreement, the
Pass Through Trust Agreements, the Note Purchase Agreement, the Deposit
Agreements, the Escrow Agreements, and the Intercreditor Agreement.
"Paying Agent" means Wilmington Trust Company, as paying agent under each
of the Escrow Agreements.
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"Payment Date" means each January 2 and July 2, commencing on January 2,
2000.
"Payment Due Rate" means, with respect to (i) any payment made to a Note
Holder under any Series of Equipment Notes, the lesser of (a) the Debt Rate
applicable to such Series plus 2% and (b) the maximum rate permitted by
applicable law and (ii) any other payment made under any Operative Agreement to
any other Person, 9.59% per annum (computed on the basis of a year of 360 days
comprised of twelve 30-day months).
"Permitted Air Carrier" means (i) any manufacturer of airframes or aircraft
engines, or any Affiliate of a manufacturer of airframes or aircraft engines,
(ii) any Permitted Foreign Air Carrier, (iii) any person approved in writing by
Mortgagee or (iv) any U.S. Air Carrier.
"Permitted Country" means any country listed on Schedule 4 to the
Participation Agreement.
"Permitted Foreign Air Carrier" means any air carrier with its principal
executive offices in any Permitted Country and which is authorized to conduct
commercial airline operations and to operate jet aircraft similar to the
Aircraft under the applicable Laws of such Permitted Country.
"Permitted Government Entity" means (i) the U.S. Government or (ii) any
Government Entity if the Aircraft is then registered under the laws of the
country of such Government Entity.
"Permitted Lease" means a lease permitted under Section 4.02(b) of the
Trust Indenture.
"Permitted Lessee" means the lessee under a Permitted Lease.
"Permitted Lien" means (a) the rights of Mortgagee under the Operative
Agreements, or of any Permitted Lessee under any Permitted Lease; (b) Liens
attributable to Mortgagee (both in its capacity as trustee under the Trust
Indenture and in its individual capacity); (c) the rights of others under
agreements or arrangements to the extent expressly permitted by the terms of
Section 4.02(b) or 4.04 of the Trust Indenture; (d) Liens of Taxes of Owner or
any Permitted Lessee (and their respective U.S. federal tax law consolidated
group), or Liens for Taxes of any Tax Indemnitee (and its U.S. federal tax law
consolidated group) for which Owner is obligated to indemnify such Tax
Indemnitee under any of the Operative Agreements, in any such case either not
yet due or being contested in good faith by appropriate proceedings so long as
such Liens and such proceedings do not involve any material risk of the sale,
forfeiture or loss of the Aircraft, the Airframe, or any Engine or the interest
of Mortgagee therein or impair the Lien of the Trust Indenture; (e)
materialmen's, mechanics', workers', repairers', employees' or other like Liens
arising in the ordi-
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nary course of business for amounts the payment of which is either not yet
delinquent for more than 60 days or is being contested in good faith by
appropriate proceedings, so long as such Liens and such proceedings do not
involve any material risk of the sale, forfeiture or loss of the Aircraft, the
Airframe, or any Engine or the interest of Mortgagee therein or impair the Lien
of the Trust Indenture; (f) Liens arising out of any judgment or award against
Owner (or any Permitted Lessee), so long as such judgment shall, within 60 days
after the entry thereof, have been discharged or vacated, or execution thereof
stayed pending appeal or shall have been discharged, vacated or reversed within
60 days after the expiration of such stay, and so long as during any such 60-day
period there is not, or any such judgment or award does not involve, any
material risk of the sale, forfeiture or loss of the Aircraft, the Airframe, or
any Engine or the interest of Mortgagee therein or impair the Lien of the Trust
Indenture; and (g) any other Lien with respect to which Owner (or any Permitted
Lessee) shall have provided a bond, cash collateral or other security adequate
in the reasonable opinion of Mortgagee. Owner shall promptly take (or cause to
be taken) such action as may be necessary duly to discharge (by bonding or
otherwise) any Lien not excepted above if the same shall at any time arise in
respect of the Aircraft, the Airframe, any Engine or any Part so long as there
exists the Lien of this Trust Indenture.
"Persons" or "persons" means individuals, firms, partnerships, joint
ventures, trusts, trustees, Government Entities, organizations, associations,
corporations, government agencies, committees, departments, authorities and
other bodies, corporate or incorporate, whether having distinct legal status or
not, or any member of any of the same.
"Plan" means any employee benefit plan within the meaning of Section 3(3)
of ERISA, or any plan within the meaning of Section 4975(e)(1) of the Code.
"Purchase Agreement" means the Purchase Agreement, dated as of June 6,
1997, between Airframe Manufacturer and Owner (including all exhibits thereto,
together with all letter agreements entered into that by their terms constitute
part of such Purchase Agreement), to the extent included in the Granting Clause
(2) of the Trust Indenture.
"QIB" is defined in Section 2.08 of the Trust Indenture.
"Removable Part" is defined in Section 4.04(d) of the Trust Indenture.
"Replacement Airframe" means any airframe substituted for the Airframe
pursuant to Article IV of the Trust Indenture.
"Replacement Closing Date" is defined in Section 4.05(c)(i) of the Trust
Indenture.
"Replacement Engine" means an engine substituted for an Engine pursuant to
Article IV of the Trust Indenture.
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<PAGE>
"SEC" means the Securities and Exchange Commission of the United States, or
any Government Entity succeeding to the functions of such Securities and
Exchange Commission.
"Section 1110" means 11 U.S.C. Section 1110 of the Bankruptcy Code or any
successor or analogous section of the federal bankruptcy law in effect from time
to time.
"Secured Obligations" is defined in Section 2.06 of the Trust Indenture.
"Securities Act" means the Securities Act of 1933, as amended.
"Security" means a "security" as defined in Section 2(l) of the Securities
Act.
"Senior Holder" is defined in Section 2.13(c) of the Trust Indenture.
"Series" means any of Series A-1, Series A-2, Series B, Series C or Series
D.
"Series A-1" or "Series A-1 Equipment Notes" means Equipment Notes issued
under the Trust Indenture and designated as "Series A-1" thereunder, in the
Original Amount and maturities and bearing interest as specified in Schedule I
to the Trust Indenture under the heading "Series A-1."
"Series A-2" or "Series A-2 Equipment Notes" means Equipment Notes issued
under the Trust Indenture and designated as "Series A-2" thereunder, in the
Original Amount and maturities and bearing interest as specified in Schedule I
to the Trust Indenture under the heading "Series A-2."
"Series B" or "Series B Equipment Notes" means Equipment Notes issued under
the Trust Indenture and designated as "Series B" thereunder, in the Original
Amount and maturities and bearing interest as specified in Schedule I to the
Trust Indenture under the heading "Series B."
"Series C" or "Series C Equipment Notes" means Equipment Notes issued under
the Trust Indenture and designated as "Series C" thereunder, in the Original
Amount and maturities and bearing interest as specified in Schedule I to the
Trust Indenture under the heading "Series C."
"Series D" or "Series D Equipment Notes" means Equipment Notes issued under
the Trust Indenture and designated as "Series D" thereunder, in the Original
Amount and maturities and bearing interest as specified in Schedule I to the
Trust Indenture under the heading "Series D" (or, if the Series D are issued
after the Closing Date, as specified in an amendment to the Trust Indenture at
the time of issuance of the Series D).
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<PAGE>
"Similar Aircraft" means a Boeing Model 747-400 aircraft.
"Special Default" means (i) the failure by Owner to pay any amount of
principal of or interest on any Equipment Note when due or (ii) the occurrence
of any Default or Event of Default referred to in Section 5.01(e), (f) or (g) of
the Trust Indenture.
"Subordination Agent" means Wilmington Trust Company, as subordination
agent under the Intercreditor Agreement, or any successor thereto.
"Tax Indemnitee" means (a) WTC and Mortgagee, (b) each separate or
additional trustee appointed pursuant to the Trust Indenture, (c) each Note
Holder and (d) the respective successors, assigns, agents and servants of the
foregoing.
"Taxes" means all license, recording, documentary, registration and other
similar fees and all taxes, levies, imposts, duties, charges, assessments or
withholdings of any nature whatsoever imposed by any Taxing Authority, together
with any penalties, additions to tax, fines or interest thereon or additions
thereto.
"Taxing Authority" means any federal, state or local government or other
taxing authority in the United States, any foreign government or any political
subdivision or taxing authority thereof, any international taxing authority or
any territory or possession of the United States or any taxing authority
thereof.
"Threshold Amount" is defined in Schedule 3 to the Participation Agreement.
"Transaction Expenses" means all costs and expenses incurred by Mortgagee
in connection with (a) the preparation, execution and delivery of the Operative
Agreements and the recording or filing of any documents, certificates or
instruments in accordance with any Operative Agreement, including, without
limitation, the FAA Filed Documents and the Financing Statements, (b) the
initial fee of Mortgagee under the Trust Indenture and (c) the reasonable fees
and disbursements of counsel for each Mortgagee and special counsel in Oklahoma
City, Oklahoma, in each case, in connection with the Closing.
"Transactions" means the transactions contemplated by the Participation
Agreement.
"Transfer" means the transfer, sale, assignment or other conveyance of all
or any interest in any property, right or interest.
"Transferee" means a person to which any Note Holder purports or intends to
Transfer any or all of its right, title or interest in an Equipment Note, as
described in Section 9 of the Participation Agreement.
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<PAGE>
"Trust" means the trust created by the Trust Indenture.
"Trust Indenture" means the Trust Indenture and Mortgage dated as of the
date of the Participation Agreement between Owner and Mortgagee.
"Trust Indenture Supplement" means a Trust Indenture and Mortgage
Supplement, substantially in the form of Exhibit A to the Trust Indenture, with
appropriate modifications to reflect the purpose for which it is being used.
"UCC" means the Uniform Commercial Code as in effect in any applicable
jurisdiction.
"United States" or "U.S." means the United States of America; provided that
for geographic purposes, "United States" means, in aggregate, the 50 states and
the District of Columbia of the United States of America.
"U.S. Air Carrier" means any United States air carrier that is a Citizen of
the United States holding an air carrier operating certificate issued by the
Secretary of Transportation pursuant to chapter 447 of title 49 of the United
States Code for aircraft capable of carrying 10 or more individuals or 6,000
pounds or more of cargo, and as to which there is in force an air carrier
operating certificate issued pursuant to Part 121 of the FAA Regulations, or
which may operate as an air carrier by certification or otherwise under any
successor or substitute provisions therefor or in the absence thereof.
"U.S. Government" means the federal government of the United States, or-any
instrumentality or agency thereof the obligations of which are guaranteed by the
full faith and credit of the federal government of the United States.
"U.S. Person" means any Person described in Section 7701(a)(30) of the
Code.
"Weighted Average Life to Maturity" means, with respect to any specified
Debt, at the time of the determination thereof the number of years obtained by
dividing the then Remaining Dollar-years of such Debt by the then outstanding
principal amount of such Debt. The term "Remaining Dollar-years" shall mean the
amount obtained by (1) multiplying the amount of each then-remaining principal
payment on such Debt by the number of years (calculated at the nearest
one-twelfth) that will elapse between the date of determination of the Weighted
Average Life to Maturity of such Debt and the date of such remaining principal
payment and (2) totaling all the products obtained in clause (1) above.
"Wet Lease" means any arrangement whereby Owner or a Permitted Lessee
agrees to furnish the Aircraft, Airframe or any Engine to a third party pursuant
to which the Aircraft, Airframe or Engine shall at all times be in the
operational control of Owner or
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a Permitted Lessee, provided that Owner's obligations under the Trust Indenture
shall continue in full force and effect notwithstanding any such arrangement.
"WTC" means Wilmington Trust Company, a Delaware banking corporation, not
in its capacity as Mortgagee under the Trust Indenture, but in its individual
capacity.
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<PAGE>
ANNEX B
TO THE TRUST INDENTURE
INSURANCE
Capitalized terms used but not defined herein shall have the respective
meanings set forth or incorporated by reference in Annex A to the Trust
Indenture.
A. Liability Insurance
1. Except as provided in Section A.2 below, Owner will carry or cause to be
carried at all times, at no expense to Mortgagee, comprehensive airline legal
liability (including, but not limited to passenger liability insurance for up to
ten non-revenue passengers, property damage, baggage liability, cargo and mail
liability, hangarkeeper's liability and contractual liability insurance) with
respect to the Aircraft, the Airframe and the Engines, which is (i) in an amount
not less than the greater of (x) the amount of comprehensive airline legal
liability insurance from time to time applicable to aircraft owned or leased and
operated by Owner of the same type and operating on similar routes as the
Aircraft and (y) the Minimum Liability Insurance Amount per occurrence; (ii) of
the type and covering the same risks as from time to time applicable to aircraft
operated by Owner of the same type as the Aircraft; and (iii) maintained in
effect with insurers of nationally or internationally recognized responsibility
(such insurers being referred to herein as "Approved Insurers").
2. During any period that the Aircraft is on the ground and not in
operation, Owner may carry or cause to be carried, in lieu of the insurance
required by Section A.1 above, insurance otherwise conforming with the
provisions of said Section A.1 except that (i) the amounts of coverage shall not
be required to exceed the amounts of public liability and property damage
insurance from time to time applicable to aircraft owned or leased and operated
by Owner of the same type as the Aircraft which are on the ground and not in
operation and (ii) the scope of the risks covered and the type of insurance
shall be the same as from time to time shall be applicable to aircraft owned or
leased and operated by Owner of the same type which are on the ground and not in
operation.
B. Hull Insurance
3. Except as provided in Section B.2 below, Owner will carry or cause to be
carried at all times, at no expense to Mortgagee, with Approved Insurers
"all-risk" ground and flight aircraft hull insurance covering each Aircraft
(including the Engines when they are installed on the Airframe or any other
airframe) which is of the type as from time to time applicable to aircraft owned
by Owner of the same type as the Aircraft for an amount denominated in United
States Dollars not less than the unpaid Original Amount together with six months
of interest accrued thereon (the "Debt Balance").
B-1
<PAGE>
Any policies of insurance carried in accordance with this Section B.1
covering the Aircraft and any policies taken out in substitution or replacement
for any such policies (i) shall name Mortgagee as exclusive loss payee for any
proceeds to be paid under such policies up to an amount equal to the Debt
Balance and (ii) shall provide that (A) in the event of a loss involving
proceeds in excess of the Threshold Amount, the proceeds in respect of such loss
up to an amount equal to the Debt Balance shall be payable to the Mortgagee,
except in the case of a loss with respect to an Engine installed on an airframe
other than the Airframe, in which case Owner (or any Permitted Lessee) shall
endeavor to arrange for any payment of insurance proceeds in respect of such
loss to be held for the account of the Mortgagee whether such payment is made to
Owner (or any Permitted Lessee) or any third party, it being understood and
agreed that in the case of any payment to Mortgagee otherwise than in respect of
an Event of Loss, the Mortgagee shall, upon receipt of evidence satisfactory to
it that the damage giving rise to such payment shall have been repaired or that
such payment shall then be required to pay for repairs then being made, pay the
amount of such payment to Owner or its order, and (B) the entire amount of any
loss involving proceeds of the Threshold Amount or less or the amount of any
proceeds of any loss in excess of the Debt Balance shall be paid to Owner or its
order unless an Event of Default shall have occurred and be continuing and the
insurers have been notified thereof by the Mortgagee. In the case of a loss with
respect to an engine (other than an Engine) installed on the Airframe, Mortgagee
shall hold any payment to it of any insurance proceeds in respect of such loss
for the account of Owner or any other third party that is entitled to receive
such proceeds.
4. During any period that the Aircraft is on the ground and not in
operation. Owner may carry or cause to be carried, in lieu of the insurance
required by Section B.1 above, insurance otherwise conforming with the
provisions of said Section B.1 except that the scope of the risks and the type
of insurance shall be the same as from time to time applicable to aircraft owned
by Owner of the same type similarly on the ground and not in operation, provided
that Owner shall maintain insurance against risk of loss or damage to the
Aircraft in an amount equal to the Debt Balance during such period that the
Aircraft is on the ground and not in operation.
C. War-Risk, Hijacking and Allied Perils Insurance
If Owner (or any Permitted Lessee) shall at any time operate or propose to
operate the Aircraft, Airframe or any Engine (i) in any area of recognized
hostilities or (ii) on international routes and war-risk, hijacking or allied
perils insurance is maintained by Owner (or any Permitted Lessee) with respect
to other aircraft owned or operated by Owner (or any Permitted Lessee) on such
routes or in such areas, Owner shall maintain or cause to be maintained
war-risk, hijacking and related perils insurance of substantially the same type
carried by major United States commercial air cargo carriers operating the same
or comparable models of aircraft on similar routes or in such areas and in no
event in an amount less than the unpaid Original Amount.
B-2
<PAGE>
D. General Provisions
Any policies of insurance carried in accordance with Sections A, B and C,
including any policies taken out in substitution or replacement for such
policies:
(i) shall name Mortgagee, each Note Holder and each Liquidity
Provider as an additional insured (collectively, the "Additional
Insureds"), as their interests may appear.
(ii) shall apply worldwide and have no territorial restrictions or
limitations (except, in the case of war-risk, hijacking and
related perils insurance, as otherwise permitted under Section
C);
(iii) shall provide that, in respect of the interests of the
Additional Insureds in such policies, the insurance shall not be
invalidated or impaired by any act or omission (including
misrepresentation and nondisclosure) by Owner (or any Permitted
Lessee) or any other Person (including, without limitation, use
for illegal purposes of the Aircraft or any Engine) and shall
insure the Additional Insureds regardless of any breach or
violation of any representation, warranty, declaration, term or
condition contained in such policies by Owner (or any Permitted
Lessee);
(iv) shall provide that, if the insurers cancel such insurance for any
reason whatsoever, or if the same is allowed to lapse for
nonpayment of premium, or if any material change is made in the
insurance which adversely affects the interest of any of the
Additional Insureds, such cancellation, lapse or change shall not
be effective as to the Additional Insureds for 30 days (10 days
in the case of non-payment of premium and seven days in the case
of war-risk, hijacking and allied perils insurance) after receipt
by the Additional Insureds of written notice by such insurers of
such cancellation, lapse or change, provided that if any notice
period specified above is not reasonably obtainable, such
policies shall provide for as long a period of prior notice as
shall then be reasonably obtainable; provided, further, that
changes that are substantially the same as contained in the
policies of other major U.S. air cargo carriers shall not be
considered material;
(v) shall waive any rights of recourse, subrogation, setoff
(including for unpaid premiums), recoupment, counterclaim or
other deduction, whether by attachment or otherwise, against each
Additional Insured;
(vi) shall be primary without right of contribution from any other
insurance that may be available to any Additional Insured;
B-3
<PAGE>
(vii) shall provide that all of the liability insurance provisions
thereof, except the limits of liability, shall operate in all
respects as if a separate policy had been issued covering each
party insured thereunder:
(viii) shall provide that none of the Additional Insureds shall be
liable for any insurance premium; and
(ix) shall contain a 50/50% Clause per Lloyd's Aviation Underwriters'
Association Standard Policy Form AVS 103.
E. Reports and Certificates; Other Information
On or prior to the Delivery Date and on or prior to each renewal date of
the insurance policies required hereunder, Owner will furnish or cause to be
furnished to Mortgagee insurance certificates describing in reasonable detail
the insurance maintained by Owner hereunder and a report, signed by Owner's
regularly retained independent insurance broker (the "Insurance Broker"),
stating the opinion of such Insurance Broker that (a) all premiums in connection
with the insurance then due have been paid and (b) such insurance complies with
the terms of this Annex B. To the extent such agreement is reasonably
obtainable, Owner will also cause the Insurance Broker to agree to advise
Mortgagee in writing of any default in the payment of any premium and of any
other act or omission on the part of Owner of which it has knowledge and which
might invalidate or render unenforceable, in whole or in part, any insurance on
the Aircraft or Engines or cause the cancellation or termination of such
insurance, and to advise Mortgagee in writing at least 30 days (ten days in the
case of non-payment of premium and seven days in the case of war-risk and allied
perils coverage or such shorter period as may be available in the international
insurance market, as the case may be) prior to the cancellation, lapse or
material adverse change of any insurance maintained pursuant to this Annex B.
F. Right to Pay Premiums
The Additional Insureds shall have the rights but not the obligations of a
named insured. None of Mortgagee and the other Additional Insureds shall have
any obligation to pay any premium, commission, assessment or call due on any
such insurance (including reinsurance). Notwithstanding the foregoing, in the
event of cancellation of any insurance due to the nonpayment of premiums,
Mortgagee shall have the option, in its sole discretion, to pay any such premium
in respect of the Aircraft that is due in respect of the coverage pursuant to
this Trust Indenture and to maintain such coverage, as Mortgagee may require,
until the scheduled expiry date of such insurance and, in such event, Owner
shall, upon demand, reimburse Mortgagee for amounts so paid by them.
B-4
<PAGE>
G. Deductibles; Self-insurance
Owner may self-insure by way of deductible, premium adjustment or franchise
provisions or otherwise (including, with respect to insurance maintained
pursuant to Section B, insuring for a maximum amount which is less than the Debt
Balance) in the insurance covering the risks required to be insured against
pursuant to Section 4.06 and this Annex B under a program generally applicable
to all aircraft in Owner's fleet, but in no case shall the aggregate amount of
self-insurance in regard to Section 4.06 and this Annex B exceed the lesser of
(a) 50% of the largest replacement value of any single aircraft in Owner's fleet
and (b) 1 1/2% of the average aggregate insurable value (during the preceding
policy year) of all aircraft (including, without limitation, the Aircraft) on
which Owner carries insurance, unless an insurance broker of national standing
shall certify that the standard among other major U.S. air cargo carriers is a
higher level of self-insurance, in which case Owner may self-insure to such
higher level. In addition, Owner (and any Permitted Lessee) may self insure to
the extent of any applicable deductible per aircraft that does not exceed
industry standards for major U.S. air cargo carriers.
B-5
<PAGE>
EXHIBIT A
TO
TRUST INDENTURE
TRUST INDENTURE AND MORTGAGE SUPPLEMENT
This TRUST INDENTURE AND MORTGAGE SUPPLEMENT NO. 1, dated , (herein called
this "Trust Indenture Supplement") of ATLAS AIR, INC., as Owner (the "Owner").
W I T N E S S E T H:
WHEREAS, the Trust Indenture and Mortgage, dated as of , (as amended and
supplemented to the date hereof, the "Trust Indenture") between the Owner and
Wilmington Trust Company, as Mortgagee (the "Mortgagee"), provides for the
execution and delivery of a supplement thereto substantially in the form hereof,
which shall particularly describe the Aircraft, and shall specifically mortgage
such Aircraft to the Mortgagee; and
WHEREAS, the Trust Indenture relates to the Airframe and Engines described
below, and a counterpart of the Trust Indenture is attached hereto and made a
part hereof and this Trust Indenture Supplement, together with such counterpart
of the Trust Indenture, is being filed for recordation on the date hereof with
the FAA as one document;
NOW, THEREFORE, this Trust Indenture Supplement witnesseth that the Owner
hereby confirms that the Lien of the Trust Indenture on the Collateral covers
all of Owner's right, title and interest in and to the following described
property:
AIRFRAME
One airframe identified as follows:
FAA Registration Manufacturer's
Manufacturer Model Number Serial Number
------------ ----- ------ -------------
The Boeing Company 747-47UF N MC
together with all of the Owner's right, title and interest in and to all Parts
of whatever nature, whether now owned or hereinafter acquired and which are from
time to time incorporated or installed in, or attached to, said airframe.
<PAGE>
-2-
AIRCRAFT ENGINES
Four aircraft engines, each such engine having 750 or more rated take-off
horsepower or the equivalent thereof, identified as follows:
Manufacturer Manufacturer's Model Serial Number
General Electric CF6-80C2B5FG04
General Electric CF6-80C2B5FG04
General Electric CF6-80C2B5FG04
General Electric CF6-80C2B5FG04
together with all of Owner's right, title and interest in and to all Parts of
whatever nature, whether now owned or hereafter acquired and which are from time
to time incorporated or installed in or attached to either of such engines.
Together with all of Owner's right, title and interest in and to (a) all
Parts of whatever nature, which from time to time are included within the
definition of "Airframe" or "Engine," whether now owned or hereafter acquired,
including all substitutions, renewals and replacements of and additions,
improvements. accessions and accumulations to the Airframe and Engines (other
than additions, improvements, accessions and accumulations which constitute
appliances, parts, instruments, appurtenances, accessories, furnishings or other
equipment excluded from the definition of Parts) and (b) all Aircraft Documents.
TO HAVE AND TO HOLD all and singular the aforesaid property unto the
Mortgagee, its successors and assigns, in trust for the equal and proportionate
benefit and security of the Note Holders and the Indenture Indemnitees, except
as provided in Section 2.13 and Article III of the Trust 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 Trust Indenture.
This Trust Indenture Supplement shall be construed as supplemental to the
Trust Indenture and shall form a part thereof. The Trust Indenture is hereby
incorporated by reference herein and is hereby ratified, approved and confirmed.
AND, FURTHER, the Owner hereby acknowledges that the Aircraft referred to
in this Trust Indenture Supplement has been delivered to the Owner and is
included in
<PAGE>
-3-
the property of the Owner subject to the pledge and mortgage thereof
under the Trust Indenture.
<PAGE>
-4-
IN WITNESS WHEREOF, the Owner has caused this Trust Indenture Supplement to
be duly executed by one of its officers, thereunto duly authorized, on the day
and year first above written.
ATLAS AIR, INC.
By:
---------------------------------
Name:
Title:
<PAGE>
SCHEDULE I
Original Amount Interest Rate
Series A-1: %
Series A-2: %
Series B: %
Series C: %
Series D %
Maximum Aggregate
Original Amount:
<PAGE>
-2-
Trust Indenture and Mortgage
Equipment Note Amortization
SERIES A-1
Percentage of Original
Payment Date Amount to Be Paid
<PAGE>
-3-
Trust Indenture and Mortgage
Equipment Note Amortization
SERIES A-2
Percentage of Original
Payment Date Amount to Be Paid
<PAGE>
-4-
SERIES B
Percentage of Original
Payment Date Amount to Be Paid
<PAGE>
-5-
SERIES C
Percentage of Original
Payment Date Amount to Be Paid
<PAGE>
-6-
SERIES D
Percentage of Original
Payment Date Amount to Be Paid
<PAGE>
ANNEX B
TO THE TRUST INDENTURE
Certificate CUSIP
No. A-1-1 No. 049164 AU 0
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.
ATLAS AIR PASS THROUGH TRUST 1999-lA-1
7.20% Atlas Air Pass Through Certificate, Series 1999-lA-1
Issuance Date: April 13, 1999
Final Expected Distribution Date: January 2, 2019
Evidencing A Fractional Undivided Interest In The
Atlas Air Pass Through Trust 1999-lA-1, The
Property Of Which Shall Include Certain Equipment Notes
Each Secured By An Aircraft Leased To Or Owned By
Atlas Air, Inc.
$200,000,000 Fractional Undivided Interest
representing 0.000372845% of the Trust per $1,000 face amount
THIS CERTIFIES THAT CEDE & CO., for value received, is the registered owner
of a $200,000,000 (two hundred million dollars) Fractional Undivided interest in
the Atlas Air Pass Through Trust 1999-1A-1 (the "TRUST") created by Wilmington
Trust Company, as trustee (the "Trustee"), pursuant to a Pass Through Trust
Agreement, dated as of April 1, 1999 (the "BASIC AGREEMENT"), between the
Trustee and Atlas Air, Inc., a Delaware corporation (the "Company"), as
supplemented by Trust Supplement No. 1999-1A-1 thereto, dated as of April 13,
1999 (the "Trust Supplement" and, together with the Basic Agreement, 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 "7.20% Atlas Air Pass Through Certificates, Series
1999-lA-1" (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 holder of this Certificate (the
"CERTIFICATEHOLDER" and, together with all other holders of Certificates issued
by the Trust, the "CERTIFICATEHOLDERS") assents to and agrees to be bound by the
provisions of the Agreement and the Intercreditor Agreement. The property of the
Trust includes certain Equipment Notes and all rights of the Trust to receive
payments under the Intercreditor Agreement and the Liquidity Facility (the
"TRUST PROPERTY"). Each issue of the Equipment Notes is secured by, among other
things, a security interest in an Aircraft leased to or owned by the Company.
<PAGE>
-2-
The Certificates represent Fractional Undivided Interests in the Trust and
the Trust Property and 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 2 and July 2 (a "REGULAR DISTRIBUTION DATE")
commencing January 2, 2000, 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 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 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 distribution 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 or the 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
distribution to such Certificateholder as provided in the 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
Certificate-
<PAGE>
-3-
holders 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.
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.
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.
Each Certificateholder and Investor, by its acceptance of this Certificate
or a beneficial interest herein, agrees to treat the Trust as a grantor trust
for all U.S. federal, state and local income tax purposes.
The Trustee, the Registrar, and any agent of the Trustee or the Registrar
may treat the person in whose name this Certificate is registered as the owner
hereof for all purposes, and neither the Trustee, the Registrar, nor 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 have represented and
warranted that either: (i) the assets of an employee benefit plan subject to
Title I of the Employee Retirement Income Security Act of 1974, as amended
("ERISA"), or of a plan subject to Section 4975 of the Internal Revenue Code of
1986, as amended (the "CODE"), have not been used to purchase this Certificate
or an interest herein or (ii) the purchase and holding of this Certificate or an
interest herein are exempt from the prohibited transaction restrictions of ERISA
and the Code pursuant to one or more prohibited transaction statutory or
administrative exemptions.
THE AGREEMENT AND THIS CERTIFICATE SHALL BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK AND THE OBLIGATIONS, RIGHTS
AND REMEDIES OF THE PARTIES HEREUNDER SHALL BE DETERMINED IN ACCORDANCE WITH
SUCH LAWS.
<PAGE>
-4-
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.
IN WITNESS WHEREOF, the Trustee has caused this Certificate to be duly
executed.
ATLAS AIR PASS THROUGH TRUST
1999-1A-1
By: WILMINGTON TRUST COMPANY,
not in its individual capacity but solely
as Trustee
By: /s/ James P. Lawler
-------------------------------------
Name: James P. Lawler
Title: Vice President
This is one of the Certificates referred to in the within-mentioned
Agreement.
WILMINGTON TRUST COMPANY,
not in its individual capacity but solely
as Trustee
By: /s/ James P. Lawler
-------------------------------------
Name: James P. Lawler
Title: Vice President
Date: April 13, 1999
Certificate CUSIP
No. A-1-2 No. 049164 AU 0
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.
ATLAS AIR PASS THROUGH TRUST 1999-lA-1
7.20% Atlas Air Pass Through Certificate, Series 1999-lA-1
Issuance Date: April 13, 1999
Final Expected Distribution Date: January 2, 2019
Evidencing A Fractional Undivided Interest In The
Atlas Air Pass Through Trust 1999-lA-1, The
Property Of Which Shall Include Certain Equipment Notes
Each Secured By An Aircraft Leased To Or Owned By
Atlas Air, Inc.
$68,208,000 Fractional Undivided Interest
representing 0.000372845% of the Trust per $1,000 face amount
THIS CERTIFIES THAT CEDE & CO., for value received, is the registered owner
of a $68,208,000 (sixty-eight million two hundred eight thousand dollars)
Fractional Undivided interest in the Atlas Air Pass Through Trust 1999-1A-1 (the
"TRUST") created by Wilmington Trust Company, as trustee (the "Trustee"),
pursuant to a Pass Through Trust Agreement, dated as of April 1, 1999 (the
"BASIC AGREEMENT"), between the Trustee and Atlas Air, Inc., a Delaware
corporation (the "Company"), as supplemented by Trust Supplement No. 1999-1A-1
thereto, dated as of April 13, 1999 (the "Trust Supplement" and, together with
the Basic Agreement, 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 "7.20% Atlas Air Pass Through
Certificates, Series 1999-lA-1" (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 holder of
this Certificate (the "CERTIFICATEHOLDER" and, together with all other holders
of Certificates issued by the Trust, the "CERTIFICATEHOLDERS") assents to and
agrees to be bound by the provisions of the Agreement and the Intercreditor
Agreement. The property of the Trust includes certain Equipment Notes and all
rights of the Trust to receive payments under the Intercreditor Agreement and
the Liquidity Facility (the "TRUST PROPERTY"). Each issue of the Equipment Notes
is secured by, among other things, a security interest in an Aircraft leased to
or owned by the Company.
<PAGE>
-2-
The Certificates represent Fractional Undivided Interests in the Trust and
the Trust Property and 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 2 and July 2 (a "REGULAR DISTRIBUTION DATE")
commencing January 2, 2000, 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 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 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 distribution 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 or the 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
distribution to such Certificateholder as provided in the 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
Certificate-
<PAGE>
-3-
holders 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.
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.
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.
Each Certificateholder and Investor, by its acceptance of this Certificate
or a beneficial interest herein, agrees to treat the Trust as a grantor trust
for all U.S. federal, state and local income tax purposes.
The Trustee, the Registrar, and any agent of the Trustee or the Registrar
may treat the person in whose name this Certificate is registered as the owner
hereof for all purposes, and neither the Trustee, the Registrar, nor 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 have represented and
warranted that either: (i) the assets of an employee benefit plan subject to
Title I of the Employee Retirement Income Security Act of 1974, as amended
("ERISA"), or of a plan subject to Section 4975 of the Internal Revenue Code of
1986, as amended (the "CODE"), have not been used to purchase this Certificate
or an interest herein or (ii) the purchase and holding of this Certificate or an
interest herein are exempt from the prohibited transaction restrictions of ERISA
and the Code pursuant to one or more prohibited transaction statutory or
administrative exemptions.
THE AGREEMENT AND THIS CERTIFICATE SHALL BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK AND THE OBLIGATIONS, RIGHTS
AND REMEDIES OF THE PARTIES HEREUNDER SHALL BE DETERMINED IN ACCORDANCE WITH
SUCH LAWS.
<PAGE>
-4-
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.
IN WITNESS WHEREOF, the Trustee has caused this Certificate to be duly
executed.
ATLAS AIR PASS THROUGH TRUST
1999-1A-1
By: WILMINGTON TRUST COMPANY,
not in its individual capacity but solely
as Trustee
By: /s/ James P. Lawler
-------------------------------------
Name: James P. Lawler
Title: Vice President
This is one of the Certificates referred to in the within-mentioned
Agreement.
WILMINGTON TRUST COMPANY,
not in its individual capacity but solely
as Trustee
By: /s/ James P. Lawler
-------------------------------------
Name: James P. Lawler
Title: Vice President
Date: April 13, 1999
Certificate CUSIP
No. A-2-1 No. 049164 AV 8
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.
ATLAS AIR PASS THROUGH TRUST 1999-lA-2
6.88% Atlas Air Pass Through Certificate, Series 1999-lA-2
Issuance Date: April 13, 1999
Final Expected Distribution Date: July 2, 2009
Evidencing A Fractional Undivided Interest In The
Atlas Air Pass Through Trust 1999-lA-2, The
Property Of Which Shall Include Certain Equipment Notes
Each Secured By An Aircraft Leased To Or Owned By
Atlas Air, Inc.
$43,544,000 Fractional Undivided Interest
representing 0.002296528% of the Trust per $1,000 face amount
THIS CERTIFIES THAT CEDE & CO., for value received, is the registered owner
of a $43,544,000 (forty-three million five hundred forty-four thousand dollars)
Fractional Undivided interest in the Atlas Air Pass Through Trust 1999-1A-2 (the
"TRUST") created by Wilmington Trust Company, as trustee (the "Trustee"),
pursuant to a Pass Through Trust Agreement, dated as of April 1, 1999 (the
"BASIC AGREEMENT"), between the Trustee and Atlas Air, Inc., a Delaware
corporation (the "Company"), as supplemented by Trust Supplement No. 1999-1A-2
thereto, dated as of April 13, 1999 (the "Trust Supplement" and, together with
the Basic Agreement, 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 "6.88% Atlas Air Pass Through
Certificates, Series 1999-lA-2" (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 holder of
this Certificate (the "CERTIFICATEHOLDER" and, together with all other holders
of Certificates issued by the Trust, the "CERTIFICATEHOLDERS") assents to and
agrees to be bound by the provisions of the Agreement and the Intercreditor
Agreement. The property of the Trust includes certain Equipment Notes and all
rights of the Trust to receive payments under the Intercreditor Agreement and
the Liquidity Facility (the "TRUST PROPERTY"). Each issue of the Equipment Notes
is secured by, among other things, a security interest in an Aircraft leased to
or owned by the Company.
<PAGE>
-2-
The Certificates represent Fractional Undivided Interests in the Trust and
the Trust Property and 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 2 and July 2 (a "REGULAR DISTRIBUTION DATE")
commencing January 2, 2000, 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 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 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 distribution 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 or the 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
distribution to such Certificateholder as provided in the 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
Certificate-
<PAGE>
-3-
holders 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.
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.
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.
Each Certificateholder and Investor, by its acceptance of this Certificate
or a beneficial interest herein, agrees to treat the Trust as a grantor trust
for all U.S. federal, state and local income tax purposes.
The Trustee, the Registrar, and any agent of the Trustee or the Registrar
may treat the person in whose name this Certificate is registered as the owner
hereof for all purposes, and neither the Trustee, the Registrar, nor 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 have represented and
warranted that either: (i) the assets of an employee benefit plan subject to
Title I of the Employee Retirement Income Security Act of 1974, as amended
("ERISA"), or of a plan subject to Section 4975 of the Internal Revenue Code of
1986, as amended (the "CODE"), have not been used to purchase this Certificate
or an interest herein or (ii) the purchase and holding of this Certificate or an
interest herein are exempt from the prohibited transaction restrictions of ERISA
and the Code pursuant to one or more prohibited transaction statutory or
administrative exemptions.
THE AGREEMENT AND THIS CERTIFICATE SHALL BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK AND THE OBLIGATIONS, RIGHTS
AND REMEDIES OF THE PARTIES HEREUNDER SHALL BE DETERMINED IN ACCORDANCE WITH
SUCH LAWS.
<PAGE>
-4-
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.
IN WITNESS WHEREOF, the Trustee has caused this Certificate to be duly
executed.
ATLAS AIR PASS THROUGH TRUST
1999-1A-2
By: WILMINGTON TRUST COMPANY,
not in its individual capacity but solely
as Trustee
By: /s/ James P. Lawler
-------------------------------------
Name: James P. Lawler
Title: Vice President
This is one of the Certificates referred to in the within-mentioned
Agreement.
WILMINGTON TRUST COMPANY,
not in its individual capacity but solely
as Trustee
By: /s/ James P. Lawler
-------------------------------------
Name: James P. Lawler
Title: Vice President
Date: April 13, 1999
<PAGE>
Certificate CUSIP
No. B-1 No. 049164 AW 6
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.
ATLAS AIR PASS THROUGH TRUST 1999-1B
7.63% Atlas Air Pass Through Certificate, Series 1999-1B
Issuance Date: April 13, 1999
Final Expected Distribution Date: January 2, 2015
Evidencing A Fractional Undivided Interest In The
Atlas Air Pass Through Trust 1999-1B, The
Property Of Which Shall Include Certain Equipment Notes
Each Secured By An Aircraft Leased To Or Owned By
Atlas Air, Inc.
$111,910,000 Fractional Undivided Interest
representing 0.000893575% of the Trust per $1,000 face amount
THIS CERTIFIES THAT CEDE & CO., for value received, is the registered owner
of a $111,910,000 (one hundred eleven million nine hundred ten thousand dollars)
Fractional Undivided interest in the Atlas Air Pass Through Trust 1999-1B (the
"TRUST") created by Wilmington Trust Company, as trustee (the "Trustee"),
pursuant to a Pass Through Trust Agreement, dated as of April 1, 1999 (the
"BASIC AGREEMENT"), between the Trustee and Atlas Air, Inc., a Delaware
corporation (the "Company"), as supplemented by Trust Supplement No. 1999-1B
thereto, dated as of April 13, 1999 (the "Trust Supplement" and, together with
the Basic Agreement, 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 "7.63% Atlas Air Pass Through
Certificates, Series 1999-1B" (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 holder of
this Certificate (the "CERTIFICATEHOLDER" and, together with all other holders
of Certificates issued by the Trust, the "CERTIFICATEHOLDERS") assents to and
agrees to be bound by the provisions of the Agreement and the Intercreditor
Agreement. The property of the Trust includes certain Equipment Notes and all
rights of the Trust to receive payments under the Intercreditor Agreement and
the Liquidity Facility (the "TRUST PROPERTY"). Each issue of the Equipment Notes
is secured by, among other things, a security interest in an Aircraft leased to
or owned by the Company.
<PAGE>
-2-
The Certificates represent Fractional Undivided Interests in the Trust and
the Trust Property and 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 2 and July 2 (a "REGULAR DISTRIBUTION DATE")
commencing January 2, 2000, 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 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 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 distribution 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 or the 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
distribution to such Certificateholder as provided in the 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
Certificate-
<PAGE>
-3-
holders 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.
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.
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.
Each Certificateholder and Investor, by its acceptance of this Certificate
or a beneficial interest herein, agrees to treat the Trust as a grantor trust
for all U.S. federal, state and local income tax purposes.
The Trustee, the Registrar, and any agent of the Trustee or the Registrar
may treat the person in whose name this Certificate is registered as the owner
hereof for all purposes, and neither the Trustee, the Registrar, nor 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 have represented and
warranted that either: (i) the assets of an employee benefit plan subject to
Title I of the Employee Retirement Income Security Act of 1974, as amended
("ERISA"), or of a plan subject to Section 4975 of the Internal Revenue Code of
1986, as amended (the "CODE"), have not been used to purchase this Certificate
or an interest herein or (ii) the purchase and holding of this Certificate or an
interest herein are exempt from the prohibited transaction restrictions of ERISA
and the Code pursuant to one or more prohibited transaction statutory or
administrative exemptions.
THE AGREEMENT AND THIS CERTIFICATE SHALL BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK AND THE OBLIGATIONS, RIGHTS
AND REMEDIES OF THE PARTIES HEREUNDER SHALL BE DETERMINED IN ACCORDANCE WITH
SUCH LAWS.
<PAGE>
-4-
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.
IN WITNESS WHEREOF, the Trustee has caused this Certificate to be duly
executed.
ATLAS AIR PASS THROUGH TRUST
1999-1B
By: WILMINGTON TRUST COMPANY,
not in its individual capacity but solely
as Trustee
By: /s/ James P. Lawler
-------------------------------------
Name: James P. Lawler
Title: Vice President
This is one of the Certificates referred to in the within-mentioned
Agreement.
WILMINGTON TRUST COMPANY,
not in its individual capacity but solely
as Trustee
By: /s/ James P. Lawler
-------------------------------------
Name: James P. Lawler
Title: Vice President
Date: April 13, 1999
Certificate CUSIP
No. C-1 No. 049164 AX 4
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.
ATLAS AIR PASS THROUGH TRUST 1999-1C
8.77% Atlas Air Pass Through Certificate, Series 1999-1C
Issuance Date: April 13, 1999
Final Expected Distribution Date: January 2, 2011
Evidencing A Fractional Undivided Interest In The
Atlas Air Pass Through Trust 1999-1C, The
Property Of Which Shall Include Certain Equipment Notes
Each Secured By An Aircraft Leased To Or Owned By
Atlas Air, Inc.
$119,904,000 Fractional Undivided Interest
representing 0.000834001% of the Trust per $1,000 face amount
THIS CERTIFIES THAT CEDE & CO., for value received, is the registered owner
of a $119,904,000 (one hundred nineteen million nine hundred four thousand
dollars) Fractional Undivided interest in the Atlas Air Pass Through Trust
1999-1C (the "TRUST") created by Wilmington Trust Company, as trustee (the
"Trustee"), pursuant to a Pass Through Trust Agreement, dated as of April 1,
1999 (the "BASIC AGREEMENT"), between the Trustee and Atlas Air, Inc., a
Delaware corporation (the "Company"), as supplemented by Trust Supplement No.
1999-1C thereto, dated as of April 13, 1999 (the "Trust Supplement" and,
together with the Basic Agreement, 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 "8.77% Atlas Air Pass
Through Certificates, Series 1999-1C" (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 holder of
this Certificate (the "CERTIFICATEHOLDER" and, together with all other holders
of Certificates issued by the Trust, the "CERTIFICATEHOLDERS") assents to and
agrees to be bound by the provisions of the Agreement and the Intercreditor
Agreement. The property of the Trust includes certain Equipment Notes and all
rights of the Trust to receive payments under the Intercreditor Agreement and
the Liquidity Facility (the "TRUST PROPERTY"). Each issue of the Equipment Notes
is secured by, among other things, a security interest in an Aircraft leased to
or owned by the Company.
<PAGE>
-2-
The Certificates represent Fractional Undivided Interests in the Trust and
the Trust Property and 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 2 and July 2 (a "REGULAR DISTRIBUTION DATE")
commencing January 2, 2000, 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 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 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 distribution 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 or the 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
distribution to such Certificateholder as provided in the 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
Certificate-
<PAGE>
-3-
holders 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.
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.
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.
Each Certificateholder and Investor, by its acceptance of this Certificate
or a beneficial interest herein, agrees to treat the Trust as a grantor trust
for all U.S. federal, state and local income tax purposes.
The Trustee, the Registrar, and any agent of the Trustee or the Registrar
may treat the person in whose name this Certificate is registered as the owner
hereof for all purposes, and neither the Trustee, the Registrar, nor 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 have represented and
warranted that either: (i) the assets of an employee benefit plan subject to
Title I of the Employee Retirement Income Security Act of 1974, as amended
("ERISA"), or of a plan subject to Section 4975 of the Internal Revenue Code of
1986, as amended (the "CODE"), have not been used to purchase this Certificate
or an interest herein or (ii) the purchase and holding of this Certificate or an
interest herein are exempt from the prohibited transaction restrictions of ERISA
and the Code pursuant to one or more prohibited transaction statutory or
administrative exemptions.
THE AGREEMENT AND THIS CERTIFICATE SHALL BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK AND THE OBLIGATIONS, RIGHTS
AND REMEDIES OF THE PARTIES HEREUNDER SHALL BE DETERMINED IN ACCORDANCE WITH
SUCH LAWS.
<PAGE>
-4-
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.
IN WITNESS WHEREOF, the Trustee has caused this Certificate to be duly
executed.
ATLAS AIR PASS THROUGH TRUST
1999-1C
By: WILMINGTON TRUST COMPANY,
not in its individual capacity but solely
as Trustee
By: /s/ James P. Lawler
-------------------------------------
Name: James P. Lawler
Title: Vice President
This is one of the Certificates referred to in the within-mentioned
Agreement.
WILMINGTON TRUST COMPANY,
not in its individual capacity but solely
as Trustee
By: /s/ James P. Lawler
-------------------------------------
Name: James P. Lawler
Title: Vice President
Date: April 13, 1999
AVSOLUTIONS, INC.
Aviation Solutions
March 25, 1999
Atlas Air
538 Commons Drive
Golden, Colorado 80401
Re: PRELIMINARY PROSPECTUS SUPPLEMENT, DATED MARCH 25, 1999, TO THE
PROSPECTUS DATED FEBRUARY 16, 1999, INCLUDED IN REGISTRATION
STATEMENT NO. 333-71833 OF ATLAS AIR, INC.
Ladies and Gentlemen:
We hereby consent to the use in the above-captioned Preliminary Prospectus
Supplement of the report prepared by us with respect to the Aircraft referred to
therein, to the summary of such report in the text of such Preliminary
Prospectus Supplement and to the references to our name in such Preliminary
Prospectus Supplement. We also consent to such use, summary and references in
any Final Prospectus Supplement relating to the offering described in such
Preliminary Prospectus Supplement, to the extent such use, summary and
references are unchanged.
Sincerely,
AvSOLUTIONS, Inc.
By: /s/ Bryant Lynch
-----------------------------
Name: Bryant Lynch
Title: Manager, Commercial Appraisals
MORTEN BEYER & AGNEW
March 25,1999
Atlas Air
538 Commons Drive
Golden, CO 80401
Re: PRELIMINARY PROSPECTUS SUPPLEMENT, DATED MARCH 25, 1999, TO THE
PROSPECTUS DATED FEBRUARY 16, 1999, INCLUDED IN REGISTRATION
STATEMENT NO. 333-71833 OF ATLAS AIR, INC.
Ladies and Gentlemen:
We hereby consent to the use in the above-captioned Preliminary Prospectus
Supplement of the report prepared by us with respect to the Aircraft referred to
therein, to the summary of such report in the text of such Preliminary
Prospectus Supplement and to the references to our name in such Preliminary
Prospectus Supplement. We also consent to such use, summary and references in
any Final Prospectus Supplement, to the extent such use, summary and references
are unchanged.
Sincerely,
/s/ R.F. Agnew
--------------------
MORTEN BEYER & AGNEW
R.F. Agnew
President
SH&E
March 25, 1999
Atlas Air
538 Commons Drive
Golden, CO 80401
Re: PRELIMINARY PROSPECTUS SUPPLEMENT, DATED MARCH 25, 1999, TO THE
PROSPECTUS DATED FEBRUARY 16, 1999, INCLUDED IN REGISTRATION
STATEMENT NO. 333-71833 OF ATLAS AIR, INC.
Ladies and Gentlemen:
We hereby consent to the use in the above-captioned Preliminary Prospectus
Supplement of the report prepared by us with respect to the Aircraft referred to
therein, to the summary of such report in the text of such Preliminary
Prospectus Supplement and to the references to our name in such Preliminary
Prospectus Supplement. We also consent to such use, summary and references in
any Final Prospectus Supplement relating to the offering described in such
Preliminary Prospectus Supplement, to the extent such use, summary and
references are unchanged.
Sincerely,
SH&E, Inc.
By: /s/ Clive G. Medland
----------------------------
Clive G. Medland
Vice President
AVSOLUTIONS, INC.
Aviation Solutions
April 5, 1999
Atlas Air
538 Commons Drive
Golden, Colorado 80401
Re: FINAL PROSPECTUS SUPPLEMENT, DATED APRIL 5, 1999, TO THE
PROSPECTUS DATED FEBRUARY 16, 1999, INCLUDED IN REGISTRATION
STATEMENT NO. 333-71833 OF ATLAS AIR, INC.
Ladies and Gentlemen:
We hereby consent to the use in the above-captioned Final Prospectus
Supplement of the report prepared by us with respect to the Aircraft referred to
therein, to the summary of such report in the text of such Final Prospectus
Supplement and to the references to our name in such Final Prospectus
Supplement.
Sincerely,
AvSOLUTIONS, Inc.
By: /s/ Bryant Lynch
-----------------------------
Name: Bryant Lynch
Title: Manager, Commercial Appraisals
MORTEN BEYER & AGNEW
April 5, 1999
Atlas Air
538 Commons Drive
Golden, CO 80401
Re: FINAL PROPECTUS SUPPLEMENT, DATED APRIL 5, 1999, TO THE
PROSPECTUS DATED FEBRUARY 16, 1999, INCLUDED IN THE REGISTRATION
STATEMENT NO. 333-71833 OF ATLAS AIR, INC.
Ladies and Gentlemen:
We hereby consent to the use in the above-captioned Final Prospectus
Supplement of the report prepared by us with respect to the Aircraft referred to
therein, to the summary of such report in the text of such Final Prospectus
Supplement and to the references to our name in such Final Prospectus
Supplement.
Sincerely,
/s/ R.F. Agnew
--------------------
MORTEN BEYER & AGNEW
R.F. Agnew
President
SH&E
April 5, 1999
Atlas Air, Inc.
538 Commons Drive
Golden, CO 80401
Re: Final Prospectus Supplement, Dated April 5, 1999, To the
Prospectus Dated February 16, 1999, Included in the Registration
Statement No. 333-71833 of Atlas Air, Inc.
Ladies and Gentlemen:
We hereby consent to the use in the above-captioned Final Prospectus Supplement
of the report prepared by us with respect to the Aircraft referred to therein,
to the summary of such report in the text of such Final Prospectus Supplement
and to the reference to our name in such Final Prospectus Supplement.
Sincerely,
SH&E
/s/ David H. Treitel
- -------------------------
David H. Treitel
Chairman & CEO
