<PAGE> 1
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON MAY 4, 2000
REGISTRATION NO. 333-
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
---------------------
FORM S-4
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
---------------------
ATLAS AIR, INC.
(Exact name of registrant as specified in its charter)
<TABLE>
<S> <C> <C>
DELAWARE 4731 84-1207329
(State or other jurisdiction of (Primary Standard Industrial (I.R.S. Employer
incorporation or organization) Classification Code Number) Identification Number)
</TABLE>
538 COMMONS DRIVE
GOLDEN, COLORADO 80401
(303) 526-5050
(Address, including Zip Code, and Telephone Number, including Area Code, of
Registrant's Principal Executive Offices)
RICHARD H. SHUYLER
EXECUTIVE VICE PRESIDENT -- STRATEGIC PLANNING AND TREASURER
ATLAS AIR, INC.
538 COMMONS DRIVE
GOLDEN, COLORADO 80401
(303) 526-5050
(Name, Address, including Zip Code, and Telephone Number, including Area Code,
of Agent for Service)
with a copy to:
STEPHEN A. GREENE, ESQ.
CAHILL GORDON & REINDEL
80 PINE STREET
NEW YORK, NEW YORK 10005
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: As soon as
practicable after this Registration Statement becomes effective.
If the securities being registered on this Form are being offered in
connection with the formation of a holding company and there is compliance with
General Instruction G, check the following box. [ ]
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, check the following box and
list the Securities Act registration statement number of the earlier effective
registration statement for the same offering. [ ]
If this Form is a post-effective amendment filed pursuant to Rule 462(d)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [ ]
---------------------
CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------------------
PROPOSED MAXIMUM PROPOSED MAXIMUM
TITLE OF EACH CLASS OF SECURITIES TO BE AMOUNT TO BE OFFERING PRICE PER AGGREGATE OFFERING AMOUNT OF
REGISTERED REGISTERED(1) SHARE(2) PRICE(2) REGISTRATION FEE
- ---------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Pass Through Certificates, Series
2000-1A......................... $124,639,000 100% $124,639,000 $32,905
Pass Through Certificates, Series
2000-1B......................... $ 44,741,000 100% $ 44,741,000 $11,812
Pass Through Certificates, Series
2000-1C......................... $ 47,937,000 100% $ 47,937,000 $12,656
- ---------------------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------------------
</TABLE>
(1) Equals the aggregate principal amount of securities being registered.
(2) Pursuant to Rule 457(f)(2), the registration fee has been calculated using
the book value of the securities being registered.
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL
FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(a) OF
THE SECURITIES ACT OF 1933 OR UNTIL THIS REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(a),
MAY DETERMINE.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE> 2
THE INFORMATION IN THIS PRELIMINARY PROSPECTUS IS NOT COMPLETE AND MAY BE
CHANGED. THESE SECURITIES ARE NOT TO BE SOLD UNTIL THE REGISTRATION
STATEMENT FILED WITH THE SECURITIES AND EXCHANGE COMMISSION IS EFFECTIVE.
THIS PRELIMINARY PROSPECTUS IS NOT AN OFFER TO SELL NOR DOES IT SEEK AN
OFFER TO BUY THESE SECURITIES IN ANY JURISDICTION WHERE THE OFFER OR SALE
IS NOT PERMITTED.
SUBJECT TO COMPLETION DATED MAY 4, 2000
PROSPECTUS
ATLAS LOGO
OFFER TO EXCHANGE PASS THROUGH CERTIFICATES, SERIES 2000-1,
WHICH HAVE BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933,
FOR ANY AND ALL OUTSTANDING PASS THROUGH CERTIFICATES, SERIES 2000-1
TERMS OF THE EXCHANGE OFFER:
- The New Certificates are being registered with the Securities and
Exchange Commission (the "SEC") and are being offered in exchange for the
Old Certificates that were previously issued pursuant to an offering
exempt from the SEC's registration requirements. The terms and conditions
of the Exchange Offer are summarized below and more fully described in
this prospectus.
<TABLE>
<S> <C>
Expiration Date....................... 5:00 p.m. (New York City time) ,
2000
Withdrawal Rights..................... Expire before 5:00 p.m. (New York City time)
on the Expiration Date
Integral Multiples.................... Old Certificates may only be tendered in
integral multiples of $1,000
Expenses.............................. Paid for by Atlas Air, Inc.
</TABLE>
NEW CERTIFICATES
- The New Certificates will represent the same fractional undivided
interest in the trusts as the Old Certificates they are replacing. The
New Certificates will have the same material financial terms as the Old
Certificates, which are summarized below and described more fully in this
prospectus. The New Certificates will not contain terms with respect to
transfer restrictions or interest rate increases and will only be
available in book-entry form.
---------------------
THE CERTIFICATES AND THE EXCHANGE OFFER INVOLVE RISKS. SEE "RISK FACTORS"
BEGINNING ON PAGE 15.
---------------------
<TABLE>
<CAPTION>
PASS THROUGH PRINCIPAL INTEREST FINAL EXPECTED
CERTIFICATES AMOUNT RATE DISTRIBUTION DATE
- ------------ ------------ -------- -----------------
<S> <C> <C> <C>
Class A....................................... $124,639,000 8.707% January 2, 2020
Class B....................................... 44,741,000 9.057 January 2, 2016
Class C....................................... 47,937,000 9.702 January 2, 2010
</TABLE>
---------------------
NEITHER THE SEC NOR ANY STATE SECURITIES COMMISSION OR REGULATORY AUTHORITY
HAS APPROVED OR DISAPPROVED OF THESE SECURITIES OR PASSED UPON THE ACCURACY OR
ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL
OFFENSE.
---------------------
The date of this prospectus is , 2000
<PAGE> 3
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
-----
<S> <C>
IMPORTANT NOTICE ABOUT INFORMATION PRESENTED IN THIS
PROSPECTUS................................................ ii
WHERE YOU CAN FIND MORE INFORMATION......................... ii
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE............. ii
FORWARD-LOOKING STATEMENTS.................................. iii
PROSPECTUS SUMMARY.......................................... 1
SUMMARY CONSOLIDATED FINANCIAL AND OPERATING DATA........... 14
RISK FACTORS................................................ 15
THE EXCHANGE OFFER.......................................... 19
USE OF PROCEEDS............................................. 26
THE COMPANY................................................. 26
DESCRIPTION OF THE CERTIFICATES............................. 26
DESCRIPTION OF THE DEPOSIT AGREEMENTS....................... 44
DESCRIPTION OF THE ESCROW AGREEMENTS........................ 45
DESCRIPTION OF THE LIQUIDITY FACILITIES..................... 45
DESCRIPTION OF THE INTERCREDITOR AGREEMENT.................. 51
DESCRIPTION OF THE AIRCRAFT AND THE APPRAISALS.............. 56
DESCRIPTION OF THE EQUIPMENT NOTES.......................... 57
CERTAIN U.S. FEDERAL INCOME TAX CONSEQUENCES................ 75
ERISA CONSIDERATIONS........................................ 75
PLAN OF DISTRIBUTION........................................ 78
LEGAL MATTERS............................................... 79
EXPERTS..................................................... 79
APPENDIX A -- INDEX OF TERMS................................ 80
APPENDIX B -- APPRAISAL LETTERS............................. 89
PART II INFORMATION NOT REQUIRED IN PROSPECTUS.............. II-1
SIGNATURES.................................................. II-12
</TABLE>
i
<PAGE> 4
IMPORTANT NOTICE ABOUT INFORMATION PRESENTED IN THIS PROSPECTUS
You should rely only on the information provided in this prospectus
including the information incorporated by reference. We have not authorized
anyone to provide you with different information. We are not offering the
Certificates in any state where the offer is not permitted. We do not claim the
accuracy of the information in this prospectus as of any date other than the
date stated on the cover.
We include cross-references in this prospectus to captions within where you
can find further related discussions. The Table of Contents provides the pages
on which these captions are located. You can find a listing of the pages where
capitalized terms used in this prospectus are defined under the caption "Index
of Terms" in Appendix A of this prospectus.
Market data and certain industry forecasts used throughout this prospectus
were obtained from internal surveys, market research, publicly available
information and industry publications. Industry publications generally state
that the information contained therein has been obtained from sources believed
to be reliable, but that the accuracy and completeness of such information is
not guaranteed. Similarly, internal surveys, industry forecasts and market
research, while believed to be reliable, have not been independently verified,
and Atlas makes no representation as to the accuracy of such information.
WHERE YOU CAN FIND MORE INFORMATION
We have filed with the SEC a Registration Statement on Form S-4 (together
will all amendments, exhibits and schedules, the "Registration Statement") under
the Securities Act of 1933, as amended (the "Securities Act") with respect to
the Certificates offered hereby. This prospectus does not contain all of the
information set forth in the Registration Statement, certain parts of which are
omitted in accordance with the rules and regulations of the SEC, and to which
reference is hereby made. Statements made in this prospectus as to the contents
of any contract, agreement or other document referred to are not necessarily
complete. With respect to each such contract, agreement or other document filed
as an exhibit to the Registration Statement, reference is made to the exhibit
for a more complete description of the matter involved.
We are subject to the information requirements of the Securities and
Exchange Act of 1934, as amended (the "Exchange Act"), and in accordance
therewith file annual, quarterly and special reports, proxy statements and other
information with the SEC. Such reports, proxy statements and other information
can be inspected and copied at the public reference facilities maintained by the
SEC at Judiciary Plaza, 450 Fifth Street, N.W., Washington, D.C. 20549, and at
the following Regional Offices of the SEC: New York Regional Office, Seven World
Trade Center, 13th Floor, New York, New York 10048; and Chicago Regional Office,
Citicorp Center, 500 West Madison Street, 14th Floor, Chicago, Illinois 60601.
Copies of such material can be obtained from the Public Reference Section of the
SEC, Judiciary Plaza, 450 Fifth Street, N.W., Washington, D.C. 20549 at
prescribed rates. The SEC also maintains an Internet Web Site at
http://www.sec.gov that contains reports and other information. Our Common Stock
is traded on the New York Stock Exchange under the symbol "CGO" and reports,
proxy statements and other information concerning the Company can be inspected
at the New York Stock Exchange, 20 Broad Street, New York, New York 10005.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
We have incorporated important business and financial information about the
Company that is not included in or delivered with this prospectus. The following
document has been filed by the Company with the SEC under the Exchange Act, and
is incorporated herein by reference:
- The Company's Annual Report on Form 10-K for the fiscal year ended
December 31, 1999.
All documents filed by us pursuant to Section 13(a), 13(c), 14 or 15(d) of
the Exchange Act subsequent to the date of this prospectus and prior to the
termination of this Exchange Offer are incorporated by reference and become a
part of this prospectus from their date of filing. Any statement
ii
<PAGE> 5
contained in this prospectus or in a document incorporated by reference is
modified or superseded for purposes of this prospectus to the extent that a
statement contained in any such document modifies or supersedes such statement.
Any such statement so modified or superseded shall not be deemed, except as so
modified or superseded, to constitute a part of this prospectus.
On request and without charge, we will provide anyone who receives a copy
of this prospectus with a copy of any or all of the documents incorporated in
this prospectus by reference. Written or telephone requests for such copies
should be directed to our principal office: Atlas Air, Inc., 538 Commons Drive,
Golden, Colorado 80401 Attention: Chief Financial Officer (telephone (303)
526-5050).
FORWARD-LOOKING STATEMENTS
This prospectus includes or incorporates forward-looking statements. Atlas
has based these forward-looking statements on its current expectations and
projections about future events. Many of these statements may be identified by
the use of forward-looking words such as "believe," "expect," "anticipate,"
"should," "planned," "estimated," and "potential," among others. These
forward-looking statements are subject to risks, uncertainties and assumptions
including, among other things, those discussed under "Risk Factors," and
elsewhere in this prospectus.
To the extent that any of the statements contained herein relating to
Atlas' expectations, assumptions and other Company matters are forward-looking,
they are made in reliance upon the safe harbor provisions of the Private
Securities Litigation Reform Act of 1995. Such statements are based on current
expectations that involve a number of uncertainties and risks that could cause
actual results to differ materially from those projected in the forward-looking
statements, including, but not limited to, risks associated with:
- worldwide business and economic conditions;
- product demand and the rate of growth in the air cargo industry;
- the impact of competitors and competitive aircraft and aircraft financing
availability;
- the ability to attract and retain new and existing customers;
- normalized aircraft operating costs and reliability;
- management of growth and complying with FAA policies;
- the continued productivity of our workforce;
- dependence on key personnel; and
- other regulatory requirements.
As a result of the foregoing and other factors, no assurance can be given
as to Atlas' future results and achievements. Neither Atlas nor any other person
assumes responsibility for the accuracy and completeness of these statements.
iii
<PAGE> 6
PROSPECTUS SUMMARY
This summary highlights selected information from this prospectus and may
not contain all of the information that is important to you and is qualified in
its entirety by the detailed information and financial statements (including the
notes thereto) appearing elsewhere or incorporated by reference in this
prospectus. For more complete information about the Certificates and Atlas, you
should read this entire prospectus, as well as the other documents to which it
refers to fully understand the terms of the Certificates. Unless otherwise
indicated, "we," "us," "our" and similar terms, as well as references to the
"Company" and "Atlas," refer to Atlas Air, Inc. and its subsidiaries. The term
"you" refers to Certificateholders.
THE EXCHANGE OFFER
The Certificates........... On January 28, 2000, we established three Atlas Air
2000-1 Pass Through Trusts (the "Trusts"). The
three Trusts are referred to as the "Class A
Trust," the "Class B Trust" and the "Class C
Trust." The Class A Trust issued "Class A
Certificates," the Class B Trust issued "Class B
Certificates" and the Class C Trust issued "Class C
Certificates," which represent fractional undivided
interests in the respective Trusts.
On January 28, 2000, we privately placed an
aggregate of $124,639,000 Class A Certificates,
$44,741,000 Class B Certificates and $47,937,000
Class C Certificates, pursuant to exemptions from
the SEC registration requirements. The "Initial
Purchasers" of the Certificates were Morgan Stanley
& Co. Incorporated, Deutsche Bank Securities Inc.
and Salomon Smith Barney Inc.
We have used all of the proceeds of the
Certificates to purchase Equipment Notes relating
to the acquisition of two new Boeing 747-400F
Aircraft.
When we use the term "Old Certificates" in this
prospectus, we mean the Class A, Class B and Class
C Certificates, Series 2000-1 privately placed with
the Initial Purchasers on January 28, 2000 and
which were not registered with the SEC. When we use
the term "New Certificates" in this prospectus, we
mean the Class A, Class B and Class C Certificates
registered with the SEC and offered hereby in
exchange for the Old Certificates.
When we use the term "Certificates" in this
prospectus, the related discussion applies to the
Old Certificates and the New Certificates.
Registration Agreement..... On January 28, 2000, we entered into a Registration
Rights Agreement with the Initial Purchasers and
Trustee providing, among other things, for the
Exchange Offer.
The Exchange Offer......... We are offering New Certificates in exchange for an
equal principal amount of Old Certificates. The New
Certificates will be issued to satisfy our
obligations under the Registration Rights
Agreement. The New Certificates will be entitled to
the benefits of and will be governed by the same
Pass Through Trust Agreements that govern the Old
Certificates. The form and terms of the New
Certificates are the same in all material respects
as the form and terms of the Old Certificates,
except that we registered the New Certificates
under the Securities Act so their transfer is not
restricted like the Old
1
<PAGE> 7
Certificates and the New Certificates are not
entitled to liquidated damages under the
Registration Rights Agreement.
As of the date of this prospectus, the aggregate
principal amount of Old Certificates outstanding is
$217,317,000.
Conditions to the Exchange
Offer.................... The Exchange Offer is not conditioned upon any
minimum principal amount of Old Certificates being
tendered for exchange. However, the Exchange Offer
is subject to certain customary conditions, which
may be waived by us. See "The Exchange
Offer -- Conditions."
Procedures for Tendering
Old Certificates......... If you wish to accept the Exchange Offer you must
deliver your Old Certificates to the Exchange Agent
for exchange no later than 5:00 p.m., New York
time, on , 2000 (the "Expiration
Date"). The Expiration Date may be extended under
certain circumstances.
You must also deliver a completed and signed letter
of transmittal with tender of the Old Certificates
(the "Letter of Transmittal"). A Letter of
Transmittal has been sent to Certificateholders and
a form can be found as an exhibit to the
Registration Statement. Please refer to "The
Exchange Offer -- Procedures for Tendering."
You must deliver the Old Certificates and the
Letter of Transmittal to Wilmington Trust Company
(the "Exchange Agent") as follows:
By Hand:
Wilmington Trust Company
1105 North Market Street, 1st Floor
Wilmington, Delaware 19890
Attn: Corporate Trust Operations -- Atlas
Air -- 2000 EETC Exchange Offer
Telephone: (302) 651-8474 Fax: (302) 651-1079
Mail or Overnight Delivery:
Wilmington Trust Company
1100 North Market Street, 1st Floor
Wilmington, Delaware 19890-0001
Attn: Corporate Trust Operations -- Atlas
Air -- 2000 EETC Exchange Offer
See "The Exchange Offer -- Procedures for
Tendering" and "-- Exchange Agent."
Guaranteed Delivery
Procedures............... If you wish to tender Old Certificates and your Old
Certificates are not immediately available or you
cannot deliver your Old Certificates and a properly
completed Letter of Transmittal or any other
documents required by the Letter of Transmittal to
the Exchange Agent prior to the Expiration Date,
you may tender your Old Certificates according to
the guaranteed delivery procedures set forth in
"The Exchange Offer -- Guaranteed Delivery
Procedures."
2
<PAGE> 8
Denominations.............. You may only tender Old Certificates in integral
multiples of $1,000. Similarly, the New
Certificates will only be issued in integral
multiples of $1,000.
Resale of New
Certificates............. We believe that you can offer for resale, resell
and otherwise transfer the New Certificates without
complying with the registration and prospectus
delivery requirements of the Securities Act if:
- you acquire the New Certificates in the ordinary
course of your business;
- you are not participating, do not intend to
participate, and have no arrangement or
understanding with any person to participate, in
the distribution of the New Certificates; and
- you are not an "affiliate" of ours, as defined in
Rule 405 of the Securities Act.
If any of these conditions is not satisfied and you
transfer any New Certificate without delivering a
proper prospectus or without qualifying for a
registration exemption, you may incur liability
under the Securities Act. We do not assume or
indemnify you against such liability.
Each broker-dealer that is issued New Certificates
in the Exchange Offer for its own account in
exchange for Old Certificates which were acquired
by such broker-dealer as a result of market-making
or other trading activities, must acknowledge that
it will deliver a prospectus meeting the
requirements of the Securities Act in connection
with any resale of the New Certificates issued in
the Exchange Offer. A broker-dealer may use this
prospectus for an offer to resell, resale or other
transfer of the New Certificates issued to it in
the Exchange Offer.
For more information on the resale of New
Certificates see "The Exchange Offer -- Terms of
the Exchange Offer."
Withdrawal Rights.......... You may withdraw a tender of Old Certificates at
any time before 5:00 p.m., New York City time, on
the Expiration Date. To withdraw a tender of Old
Certificates, the Exchange Agent must receive a
written or facsimile transmission notice requesting
such withdrawal at its address set forth under "The
Exchange Offer -- Exchange Agent" prior to 5:00
p.m., New York City time, on the Expiration Date.
See "The Exchange Offer -- Withdrawal of Tenders."
Registration, Clearance and
Settlement............... The New Certificates will be represented by one or
more permanent global certificates, which will be
registered in the name of the nominee of The
Depository Trust Company ("DTC"). The global
certificates (the "Global Certificates") will be
deposited with the Trustee as custodian for DTC.
See "Description of the New Certificates -- Book
Entry; Delivery and Form."
Delivery of New
Certificates............. The Exchange Agent will deliver New Certificates in
exchange for all properly tendered Old Certificates
promptly following the expiration of the Exchange
Offer.
3
<PAGE> 9
Certain United States
Federal Income Tax
Consequences............. The exchange of New Certificates for Old
Certificates will not be considered a taxable event
for U.S. federal income tax purposes. See "Certain
U.S. Federal Income Tax Considerations."
Fees and Expenses.......... We will pay for all expenses of completing the
Exchange Offer and compliance with the Registration
Rights Agreement, except that the Initial
Purchasers will bear any additional expenses caused
by a request by the Initial Purchasers to delay
effectiveness of the Registration Statement and
keeping the Registration Statement effective with
the SEC for more than 180 days after expiration of
the Exchange Offer. See "The Exchange Offer -- Fees
and Expenses."
Failure to Exchange Old
Certificates............. Once the Exchange Offer has been completed, if you
do not exchange your Old Certificates for New
Certificates in the Exchange Offer, you will no
longer be entitled to registration rights and will
not be able to offer or sell your Old Certificates,
unless (i) such Old Certificates are subsequently
registered under the Securities Act (which, subject
to certain exceptions set forth in the Registration
Rights Agreement, we will have no obligation to do)
or (ii) your transaction is exempt from or
otherwise not subject to, the Securities Act and
applicable state securities laws. See "Risk
Factors -- Risk Factors Relating to the New
Certificates and the Exchange Offer -- Consequences
of Failure to Exchange" and "The Exchange Offer."
Use of Proceeds............ We will not receive any cash proceeds from the
exchange of the New Certificates for the Old
Certificates.
SUMMARY OF TERMS OF CERTIFICATES
<TABLE>
<CAPTION>
CLASS A CERTIFICATES CLASS B CERTIFICATES CLASS C CERTIFICATES
-------------------- -------------------- --------------------
<S> <C> <C> <C>
Aggregate Face Amount.................. $124,639,000 $44,741,000 $47,937,000
Ratings:
Moody's.............................. A2 Baa2 Ba2
Standard & Poor's.................... AA- A- BBB-
Duff & Phelps........................ AA- A- BBB-
Initial Loan to Aircraft Value
(cumulative)(1)(2)................... 36.9% 48.4% 60.8%
Expected Principal Distribution Window
(in years)........................... 0.9-19.9 0.9-15.9 0.9-9.9
Initial Average Life from Issuance Date
(in years)........................... 13.5 9.0 4.0
Regular Distribution Dates............. January 2 and July 2 January 2 and July 2 January 2 and July 2
Final Expected Regular Distribution
Date................................. January 2, 2020 January 2, 2016 January 2, 2010
Final Maturity Date.................... July 2, 2021 July 2, 2017 July 2, 2011
Minimum Denomination................... $100,000 $100,000 $100,000
Section 1110 Protection................ Yes Yes Yes
Liquidity Facility Coverage............ 3 semiannual 3 semiannual 3 semiannual
interest payments interest payments interest payments
</TABLE>
4
<PAGE> 10
- ---------------
(1) These percentages are calculated as of January 2, 2001, the first Regular
Distribution Date after all the Aircraft are scheduled to have been
delivered. In making such calculations, we have assumed that all Aircraft
are delivered prior to such date, the maximum amount of Equipment Notes is
issued, the aggregate appraised base value for the Aircraft is $310,002,300
as of such date and that all principal payments through such date have been
made on the Equipment Notes. The appraised base value is only an estimate
and reflects certain assumptions, which may not reflect current market
conditions. See "Description of the Aircraft and the Appraisals -- The
Appraisals."
(2) See "Summary -- Loan to Aircraft Value Ratios."
EQUIPMENT NOTES AND THE AIRCRAFT
Set forth below is certain information about the Equipment Notes expected
to be held in the Trusts and the Aircraft expected to secure such Equipment
Notes:
<TABLE>
<CAPTION>
MAXIMUM
EXPECTED SCHEDULED PRINCIPAL AMOUNT
MANUFACTURER'S REGISTRATION AIRCRAFT DELIVERY OF EQUIPMENT APPRAISED BASE
AIRCRAFT TYPE SERIAL NUMBER NUMBER MONTH(1) NOTES(2) VALUE(3)
- ------------- -------------- ------------ ----------------- ---------------- --------------
<S> <C> <C> <C> <C> <C>
B747-400F................ 30558 N409MC July 2000 $108,550,667 $159,633,333
B747-400F................ 30559 N412MC August 2000 $108,770,533 $159,956,667
</TABLE>
- ---------------
(1) The actual delivery month for each Aircraft was April 2000.
(2) The actual principal amount may be less depending on the circumstances of
the financing of such Aircraft. The aggregate principal amount of all of the
Equipment Notes will not exceed the aggregate face amount of the
Certificates.
(3) The appraised base value of each Aircraft set forth above is the lesser of
the average and median values of such Aircraft as appraised by three
independent appraisal and consulting firms, projected as of the scheduled
delivery month of each Aircraft. Such appraisals are based upon varying
assumptions (which may not reflect current market conditions) and upon
varying methodologies. An appraisal is only an estimate of value and should
not be relied upon as a measure of realizable value. See "Risk
Factors -- Risk Factors Relating to the New Certificates and the Exchange
Offer -- Appraisals and Realizable Value of the Aircraft."
5
<PAGE> 11
LOAN TO AIRCRAFT VALUE RATIOS
The following table sets forth loan to Aircraft value ratios ("LTVs") for
each Class of Certificates as of January 2, 2001 (the first Regular Distribution
Date that occurs after all Aircraft are scheduled to be delivered) and each
January 2 Regular Distribution Date thereafter. The LTVs for any Class of
Certificates as of dates prior to January 2, 2001, are not meaningful, since
during such period all of the Equipment Notes expected to be acquired by the
Trusts and the related Aircraft will not be included in the calculation. The
table should not be considered a forecast or prediction of expected or likely
LTVs but simply a mathematical calculation based on one set of assumptions. See
"Risk Factors -- Risk Factors Relating to the New Certificates and the Exchange
Offer -- Appraisals and Realizable Value of the Aircraft."
<TABLE>
<CAPTION>
ASSUMED OUTSTANDING BALANCE(2) LTV(3)
AGGREGATE ------------------------------------------ ------------------------------------------
AIRCRAFT CLASS A CLASS B CLASS C CLASS A CLASS B CLASS C
DATE VALUE(1) CERTIFICATES CERTIFICATES CERTIFICATES CERTIFICATES CERTIFICATES CERTIFICATES
- ---- ------------ ------------ ------------ ------------ ------------ ------------ ------------
<S> <C> <C> <C> <C> <C> <C> <C>
January 2, 2001...... $310,002,300 $114,254,674 $35,792,800 $38,349,600 36.9% 48.4% 60.8%
January 2, 2002...... 300,414,600 114,254,674 35,792,800 32,562,086 38.0 49.9 60.8
January 2, 2003...... 290,826,900 113,422,491 35,792,800 24,863,957 39.0 51.3 59.9
January 2, 2004...... 281,239,200 109,683,288 35,792,800 19,226,946 39.0 51.7 58.6
January 2, 2005...... 271,651,500 105,944,085 35,792,800 12,672,977 39.0 52.2 56.8
January 2, 2006...... 262,063,800 102,204,882 35,413,251 5,489,388 39.0 52.5 54.6
January 2, 2007...... 252,476,100 98,465,679 28,381,193 5,489,388 39.0 50.2 52.4
January 2, 2008...... 242,888,400 94,726,476 23,387,244 5,489,388 39.0 48.6 50.9
January 2, 2009...... 233,300,700 90,987,273 22,750,965 3,129,380 39.0 48.8 50.1
January 2, 2010...... 223,713,000 87,248,070 22,750,965 0 39.0 49.2 NA
January 2, 2011...... 214,125,300 83,508,867 19,200,472 0 39.0 48.0 NA
January 2, 2012...... 204,537,600 79,769,664 14,888,946 0 39.0 46.3 NA
January 2, 2013...... 194,949,900 76,030,461 10,408,767 0 39.0 44.3 NA
January 2, 2014...... 185,362,200 72,291,258 4,913,484 0 39.0 41.7 NA
January 2, 2015...... 175,774,500 68,552,055 100,000 0 39.0 39.1 NA
January 2, 2016...... 166,186,800 64,812,852 0 0 39.0 NA NA
January 2, 2017...... 156,599,100 61,073,649 0 0 39.0 NA NA
January 2, 2018...... 147,011,400 39,895,667 0 0 27.1 NA NA
January 2, 2019...... 137,423,700 100,000 0 0 0.1 NA NA
January 2, 2020...... 0 0 0 0 NA NA NA
</TABLE>
- ---------------
(1) We have assumed that the initial appraised value of each Aircraft,
determined as described under "-- Equipment Notes and the Aircraft,"
declines by 3% per year for the first 20 years after the year of delivery of
such Aircraft and by 4% per year thereafter. Different depreciation
assumptions would result in material differences in the LTVs.
(2) In calculating the outstanding balances, we have assumed that the Trusts
will acquire the maximum principal amount of Equipment Notes for all
Aircraft.
(3) The LTVs for each Class of Certificates were obtained for each Regular
Distribution Date by dividing (i) the expected outstanding balance of such
Class together with the expected outstanding balance of all other Classes
equal or senior in right of payment to such Class after giving effect to the
distributions expected to be made on such date, by (ii) the assumed value of
all of the Aircraft on such date based on the assumptions described above.
The outstanding balances and LTVs may change if, among other things, the
aggregate principal amount of the Equipment Notes acquired by the Trusts is
less than the maximum permitted under the terms of the offering or the
amortization of the Equipment Notes differs from the assumed amortization
schedule calculated for purposes of this prospectus.
The above table was compiled on an aggregate basis. However, the Equipment
Notes for an Aircraft will not have a security interest in any other Aircraft.
This means that any excess proceeds realized from the sale of an Aircraft or
other exercise of remedies will not be available to cover any shortfalls on the
6
<PAGE> 12
Equipment Notes relating to any other Aircraft. See "Description of the
Equipment Notes -- Loan to Value Ratios of Equipment Notes" for an example of
LTVs for the Equipment Notes issued in respect of individual Aircraft, which may
be more relevant in a default situation than the aggregate values shown above.
CASH FLOW STRUCTURE
Set forth below is a diagram illustrating the structure for the offering of
the Old Certificates and certain cash flows:
[Atlas Air, Inc. Flow Chart]
- ---------------
(1) Each Aircraft leased to us will be subject to a separate Lease and a related
Indenture. Each Aircraft owned by us will be subject to a separate
Indenture. We will have the ability to enter into a sale/leaseback
transaction with respect to any Aircraft that we initially own.
(2) The proceeds of the offering of each Class of Old Certificates initially are
held in escrow and were deposited with the Depositary. The Depositary holds
such funds as an interest-bearing Deposit. Each Trust will withdraw funds
from the Deposit relating to such Trust to purchase Equipment Notes from
time to time as each Aircraft is financed. The scheduled payments of
interest on the Equipment Notes and on the Deposit relating to a Trust,
taken together, will be sufficient to pay accrued interest on the
outstanding Certificates of such Trust. The Liquidity Facilities will not
cover interest on the Deposits. On April 5, 2000, $108,548,000 was withdrawn
from escrow to purchase the first Boeing Aircraft and on April 25, 2000,
$108,769,000 was withdrawn from escrow to purchase the second Boeing
Aircraft.
7
<PAGE> 13
THE CERTIFICATES
Certificates Offered for
Exchange................... - Class A Certificates
- Class B Certificates
- Class C Certificates
Each Class of Certificates represents a fractional
undivided interest in a related Trust. The
Certificates represent interests in the Trusts only
and do not represent interests in or obligations of
Atlas or any of our affiliates.
Use of Proceeds............ We have used the proceeds from the sale of the
Class A Certificates, Class B Certificates and
Class C Certificates to purchase Equipment Notes
issued to finance the acquisition by Atlas of two
new Boeing 747-400F aircraft (the "Aircraft").
Subordination Agent,
Trustee, Paying Agent and
Loan Trustee............. Wilmington Trust Company
Escrow Agent............... First Security Bank, National Association
Depositary................. Westdeutsche Landesbank Girozentrale ("WestLB"),
acting through its New York Branch, is the
Depositary under each Deposit Agreement.
Liquidity Providers........ WestLB, acting through its New York Branch, is
providing a liquidity facility for the benefit of
the Class A Trust. Morgan Stanley Capital Services
Inc. ("MSCS") is providing a separate liquidity
facility for the benefit of each of the Class B
Trust and the Class C Trust. The obligations of
MSCS under its liquidity facilities are fully and
unconditionally guaranteed by its parent company,
Morgan Stanley Dean Witter & Co. ("MSDW"), which is
also the parent company of Morgan Stanley & Co.
Incorporated.
Trust Property............. The property of each Trust includes:
- Equipment Notes acquired by such Trust.
- All monies receivable under the liquidity
facility for such Trust.
- Funds from time to time deposited with the Trust
in accounts relating to such Trust.
Regular Distribution
Dates...................... January 2 and July 2, commencing on July 2, 2000.
Record Dates............... The fifteenth day preceding the related
Distribution Date.
Distributions.............. The Trustee will distribute all payments of
principal, premium (if any) and interest received
on the Equipment Notes held in each Trust to the
holders of the Certificates of such Trust, subject
to the subordination provisions applicable to the
Certificates.
Scheduled payments of principal and interest made
on the Equipment Notes will be distributed on the
applicable Regular Distribution Dates.
Payments of principal, premium (if any) and
interest made on the Equipment Notes resulting from
any early redemption or purchase of such Equipment
Notes will be distributed on a Special Distribution
8
<PAGE> 14
Date after not less than 15 days' notice to
Certificateholders. Under certain circumstances,
such special distribution date may be postponed up
to 10 business days. See "Description of the
Equipment Notes -- The Leases and Certain
Provisions of the Owned Aircraft Indentures --
Lease Termination."
Possible Issuance of Series
D Equipment Notes.......... Series D Equipment Notes may be issued in
connection with the financing of Owned Aircraft.
Series D Equipment Notes will not be purchased by
any of the Trusts and will be funded from sources
other than the original placement of Old
Certificates.
Subordination.............. Distributions on the Certificates will be made in
the following order:
- First, to holders of the Class A Certificates.
- Second, to the holders of the Class B
Certificates.
- Third, to the holders of the Class C
Certificates.
If we are in bankruptcy or certain other specified
events have occurred but we are continuing to meet
certain of our obligations, the subordination
provisions applicable to the Certificates permit
distributions to be made to junior Certificates
prior to making distributions in full on the senior
Certificates.
Control of Loan Trustee.... The holders of at least a majority of the
outstanding principal amount of Equipment Notes
issued under each Indenture will be entitled to
direct the Loan Trustee under such Indenture in
taking action as long as no Indenture Event of
Default is continuing thereunder. If an Indenture
Event of Default is continuing, subject to certain
conditions, the "Controlling Party" will direct the
Loan Trustee (including in exercising remedies,
such as accelerating such Equipment Notes or
foreclosing the lien on the Aircraft securing such
Equipment Notes).
The Controlling Party will be:
- The Class A Trustee.
- Upon payment of final distributions to the
holders of Class A Certificates, the Class B
Trustee.
- Upon payment of final distributions to the
holders of Class B Certificates, the Class C
Trustee.
- Under certain circumstances, the Liquidity
Provider with the greatest amount of obligations
owed to it.
In exercising remedies during the nine months after
the earlier of (a) the acceleration of the
Equipment Notes issued pursuant to any Indenture or
(b) the bankruptcy of Atlas, the Controlling Party
may not sell such Equipment Notes or the Aircraft
subject to the lien of such Indenture for less than
certain specified minimums or modify lease rental
payments for such Aircraft below a specified
threshold.
9
<PAGE> 15
Right to Buy Other Classes
of Certificates............ If we are in bankruptcy or certain other specified
events have occurred, the Certificateholders may
have the right to buy certain other Classes of
Certificates on the following basis:
- The Class B Certificateholders will have the
right to purchase all of the Class A
Certificates.
- The Class C Certificateholders will have the
right to purchase all of the Class A and Class B
Certificates.
The purchase price in each case described above
will be the outstanding balance of the applicable
Class or Classes of Certificates plus accrued and
unpaid interest.
Liquidity Facilities....... Under the Liquidity Facility for each Trust, the
Liquidity Provider will, if necessary, make
advances in an aggregate amount sufficient to pay
interest on the applicable Certificates on up to
three successive semiannual Regular Distribution
Dates at the applicable interest rate for such
Certificates. The Liquidity Facilities cannot be
used to pay any other amount in respect of the
Certificates and will not cover interest payable on
amounts held in escrow as Deposits with the
Depositaries.
Notwithstanding the subordination provisions
applicable to the Certificates, the holders of the
Certificates issued by each Trust will be entitled
to receive and retain the proceeds of drawings
under the Liquidity Facility for such Trust.
Upon each drawing under any Liquidity Facility to
pay interest on the Certificates, the Subordination
Agent will reimburse the applicable Liquidity
Provider for the amount of such drawing. Such
reimbursement obligation and all interest, fees and
other amounts owing to the applicable Liquidity
Provider will rank senior to the Certificates in
right of payment.
Escrowed Funds............. Funds paid to the Escrow Agent by the
Certificateholders were deposited with the
Depositary and were held as Deposits pursuant to
separate Deposit Agreements for each Trust. Funds
were withdrawn by the Trustees in April, 2000 to
purchase Equipment Notes to finance the acquisition
of the two Aircraft. On each Regular Distribution
Date, the Depositary will pay interest accrued on
the Deposit relating to such Trust at a rate per
annum equal to the interest rate applicable to the
Certificates issued by such Trust. The Deposits
relating to each Trust and interest paid thereon
will not be subject to the subordination provisions
applicable to the Certificates. The Deposits cannot
be used to pay any other amount in respect of the
Certificates.
Obligation to Purchase
Equipment Notes.......... Pursuant to the Note Purchase Agreement, the Class
A, Class B and Class C Trustees, respectively, are
obligated to purchase any Series A, Series B and
Series C Equipment Notes issued with respect to
each Aircraft. We may enter into a leveraged lease
financing or a secured debt financing with respect
to any of the Aircraft. Each financing will be made
pursuant to forms of financing agreements attached
to the Note Purchase Agreement. We may elect to
convert an Owned
10
<PAGE> 16
Aircraft to a Leased Aircraft at any time by
entering into a sale/ leaseback transaction. In the
case of a Leased Aircraft, the terms of the
financing agreements entered into may differ from
the forms of such agreements described in this
prospectus because a third party -- the Owner
Participant -- will provide a portion of the
financing of the Aircraft and may request changes.
However, under the Note Purchase Agreement, the
terms of such financing agreements must (a) contain
the Mandatory Document Terms set forth in the Note
Purchase Agreement and (b) not vary the Mandatory
Economic Terms set forth in the Note Purchase
Agreement. In addition, we must (a) certify to the
Trustees that any such modifications do not
materially and adversely affect the
Certificateholders and (b) obtain written
confirmation from Moody's Investors Service, Inc.
("Moody's") and Standard & Poor's Rating Services
("Standard & Poor's") (together, the "Rating
Agencies") that the use of versions of such
agreements modified in any material respect will
not result in a withdrawal, suspension or
downgrading of the rating of any Class of
Certificates. The Trustees are not obligated to
purchase Equipment Notes if, at the time of
issuance, we are in bankruptcy or certain other
specified events have occurred. See "Description of
the Certificates -- Obligation to Purchase
Equipment Notes."
PTC Events of Default...... PTC Events of Default under each Pass Through Trust
Agreement are the failure to pay within 10 business
days after it is due:
- the outstanding balance of any Class of
Certificates on the Final Maturity Date therefor;
or
- interest due on any Class of Certificates
Equipment Notes
(a) Issuer............... LEASED AIRCRAFT. If we lease an Aircraft, the
related Equipment Notes will be issued by First
Security Bank, National Association, or another
financial institution acting as Owner Trustee. The
Owner Trustee will not be individually liable for
such Equipment Notes. However, our scheduled rental
obligations under the related Lease will be in
amounts sufficient to pay scheduled payments on
such Equipment Notes.
OWNED AIRCRAFT. If we purchase an Aircraft, the
related Equipment Notes will be issued by us.
(b) Interest............... The Equipment Notes held in each Trust will accrue
interest at the rate per annum for the Certificates
issued by such Trust set forth on the cover page of
this prospectus, subject to certain adjustments
described in "-- The Exchange Offer." Interest will
be payable on January 2 and July 2 of each year,
commencing on July 2, 2000. Interest is calculated
on the basis of a 360-day year consisting of twelve
30-day months.
(c) Principal.............. Principal payments on the Series A, Series B and
Series C Equipment Notes are scheduled to be
payable on January 2 and July 2 in certain years,
commencing on January 2, 2001.
(d) Redemption and
Purchase............... AIRCRAFT EVENT OF LOSS. If an Event of Loss occurs
with respect to an Aircraft, all of the Equipment
Notes issued with respect to such
11
<PAGE> 17
Aircraft will be redeemed, unless such Aircraft is
replaced by us under the related financing
agreements. The redemption price in such case will
be the unpaid principal amount of such Equipment
Notes, together with accrued interest, but without
any premium.
OPTIONAL REDEMPTION. The issuer of the Equipment
Notes with respect to an Aircraft may elect to
redeem them prior to maturity. The redemption price
in such case will be the unpaid principal amount of
such Equipment Notes, together with accrued
interest plus a Make-Whole Premium. See
"Description of the Equipment Notes -- Redemption."
PURCHASE BY OWNER. In the case of a Leased
Aircraft, if a Lease Event of Default is
continuing, the applicable Owner Trustee or Owner
Participant may elect to purchase all of the
Equipment Notes with respect to such Aircraft,
subject to the terms of the applicable Leased
Aircraft Indenture. The purchase price in such case
will be the unpaid principal amount of such
Equipment Notes, together with accrued interest,
but without any premium (provided that a Make-Whole
Premium will be payable under certain circumstances
specified in the Leased Aircraft Indenture). In the
case of an Owned Aircraft, we will have no
comparable right to purchase the Equipment Notes
under such circumstances.
(e) Security............... The Equipment Notes issued with respect to each
Aircraft will be secured by a security interest in
such Aircraft and, in the case of each Leased
Aircraft, in the related Owner Trustee's rights
under the Lease with respect to such Aircraft (with
certain exceptions).
The Equipment Notes will not be
cross-collateralized (except in certain cases, if
any, where the related Owner Participant and Atlas
shall agree otherwise). This means that the
Equipment Notes issued in respect of an Aircraft
will not be secured by any other Aircraft or Leases
and that any excess proceeds from the sale of an
Aircraft or other exercise of remedies with respect
to such Aircraft will not be available to cover any
shortfall with respect to any other Aircraft.
By virtue of the Intercreditor Agreement, the
Equipment Notes are cross-subordinated. This means
that payments received on a junior class of
Equipment Notes issued in respect of one Aircraft
may be applied in accordance with the priority of
payment provisions set forth in the Intercreditor
Agreement to make payments in respect of a more
senior Class of Certificates.
There are no cross-default provisions in the
Indentures or in the Leases. This means that if the
Equipment Notes issued with respect to one or more
Aircraft are in default and the Equipment Notes
issued with respect to the remaining Aircraft are
not in default, no remedies will be exercisable
with respect to the remaining Aircraft.
Section 1110 Protection.... As a condition of the acquisition of Aircraft with
the proceeds of Equipment Notes, our outside
counsel will provide its opinion to the Trustees
that the benefits of Section 1110 of the U.S.
Bankruptcy Code are available with respect to the
remedies of the Loan Trustees against such
Aircraft.
12
<PAGE> 18
Certain Federal Income Tax
Consequences............. The exchange of the Old Certificates for the New
Certificates will not be a taxable event for U.S.
federal income tax purposes. See "Certain United
States Federal Income Tax Consequences."
Certain ERISA
Considerations............. Each person who acquires a New Certificate will be
deemed to have represented that either (a) no
employee benefit plan assets have been used to
purchase such New Certificate or (b) the purchase
and holding of such New Certificate are exempt from
the prohibited transaction restrictions of the
Employee Retirement Income Security Act of 1974 and
the Internal Revenue Code of 1986 pursuant to one
or more prohibited transaction statutory or
administrative exemptions. See "ERISA
Considerations."
Ratings of the
Certificates............... The Class A, Class B and Class C Certificates are
rated by Moody's, Standard & Poor's and Duff &
Phelps Credit Rating Co. ("Duff & Phelps"), as set
forth below:
<TABLE>
<CAPTION>
STANDARD & DUFF &
CERTIFICATES POOR'S PHELPS MOODY'S
------------ ---------- ------ -------
<S> <C> <C> <C>
Class A........................... AA- AA- A2
Class B........................... A- A- Baa2
Class C........................... BBB- BBB- Ba2
</TABLE>
A rating is not a recommendation to purchase, hold
or sell Certificates, since such rating does not
address market price or suitability for a
particular investor. There can be no assurance that
such ratings will not be lowered or withdrawn by a
rating agency. See "Risk Factors -- Risk Factors
Relating to the New Certificates and the Exchange
Offer -- Ratings of the Certificates" and
"Description of the Equipment Notes -- Remedies."
<TABLE>
<CAPTION>
STANDARD
MOODY'S & POOR'S
-------- --------
<S> <C> <C> <C>
Ratings of the Depositary.... Short Term P-1 A-1+
Threshold Ratings for the
Liquidity Providers........ Short Term
Class A P-1 A-1+
Class B P-1 A-1
Class C P-1 A-1
</TABLE>
Liquidity Providers Ratings
(as guaranteed)............ WestLB, acting through its New York Branch, the
Liquidity Provider for the Class A Trust, and MSDW,
the guarantor of MSCS's obligations as the
Liquidity Provider for the Class B and Class C
Trusts, each meet the applicable threshold rating
requirements for the relevant Classes of
Certificates.
Our principal executive offices are located at 538 Commons Drive, Golden,
Colorado 80401 (telephone (303) 526-5050).
13
<PAGE> 19
SUMMARY CONSOLIDATED FINANCIAL AND OPERATING DATA
A discussion of the consolidated financial and operating data relating to
Atlas is included in our Form 10-K for the year ended December 31, 1999 which is
incorporated herein by reference.
RATIO OF EARNINGS TO FIXED CHARGES
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
-------------------------------------
1995 1996 1997 1998 1999
----- ----- ----- ----- -----
<S> <C> <C> <C> <C> <C>
Ratio of earnings to fixed charges(1).................. 1.86x 2.11x 1.30x 1.34x 1.57x
</TABLE>
- ---------------
(1) In calculating the ratio of earnings to fixed charges, earnings consists of
income (loss) prior to income tax benefit (expense), as adjusted to exclude
the "Write-off of capital investment and other" in the second quarter of
1997, and fixed charges (excluding capitalized interest for the period).
Fixed charges consist of interest expense (including amounts capitalized),
amortization of debt issuance costs and one-third of rental payments on
operating leases (such one-third portion having been deemed by us to
represent the interest portion of such payments).
14
<PAGE> 20
RISK FACTORS
You should carefully read the following risk factors before tendering your
Old Certificates in the Exchange Offer. The risk factors set forth below (other
than "Consequences of Failure to Exchange") are generally applicable to Old
Certificates as well as New Certificates.
RISK FACTORS RELATING TO ATLAS
A discussion of risk factors relating to Atlas is included in our Form 10-K
for the year ended December 31, 1999 which is incorporated herein by reference.
RISK FACTORS RELATING TO THE NEW CERTIFICATES AND THE EXCHANGE OFFER
CONSEQUENCES OF FAILURE TO EXCHANGE -- Holders of Old Certificates who chose not
to participate in the Exchange Offer will be subject to continued restrictions
on the transfer of such Certificates.
Holders of Old Certificates who do not exchange their Old Certificates for
New Certificates pursuant to the Exchange Offer will continue to be subject to
the restrictions on transfer of such Old Certificates as set forth in the legend
thereon. In general, the Old Certificates may not be offered or sold, unless
registered under the Securities Act, except pursuant to an exemption from, or in
a transaction not subject to, the Securities Act and applicable state securities
laws. We do not currently anticipate that we will register the Old Certificates
under the Securities Act. To the extent that Old Certificates are tendered and
accepted in the Exchange Offer, the trading market for untendered and tendered
but unaccepted Old Certificates could be adversely affected.
APPRAISALS AND REALIZABLE VALUE OF THE AIRCRAFT -- If the realized value of an
Aircraft is not equal to its appraised value, the remedies provided to
Certificateholders under an Indenture would be insufficient to cover the
payments on the Certificates.
Three independent appraisal and consulting firms prepared appraisals of the
Aircraft in connection with the sale of the Old Certificates in January, 2000.
Letters summarizing such appraisals are annexed to this prospectus as Appendix
B. Such appraisals, which are based on the base value of the Aircraft, rely on
certain varying assumptions and methodologies and may not reflect current market
conditions that could affect the fair market value of the Aircraft or the actual
purchase price to be paid by us. Appraisals that are based on different
assumptions and methodologies may result in valuations that are materially
different from those contained in the appraisals. See "Description of the
Aircraft and the Appraisals -- The Appraisals."
An appraisal is only an estimate of value. The proceeds realized upon a
sale of any Aircraft may be less than the appraised value. The value of an
Aircraft if the remedies are exercised under the applicable Indenture will
depend on market and economic conditions, the supply of similar aircraft, the
availability of buyers, the condition of the Aircraft and other factors.
Accordingly, there can be no assurance that the proceeds realized upon any such
exercise of remedies would be sufficient to satisfy in full payments due on the
Certificates.
REPOSSESSION -- The Loan Trustee may encounter difficulty repossessing an
Aircraft due to circumstances beyond its control. As a result, the benefits of
the security interest created in the Equipment Notes could be limited.
There are no general geographic restrictions on our ability to operate the
Aircraft. Although we do not currently intend to do so, we are permitted to
register the Aircraft in foreign jurisdictions, subject to certain conditions.
In addition, we are permitted to lease any Owned Aircraft and sublease any
Leased Aircraft, subject to certain conditions. It may be difficult,
time-consuming and expensive for the Loan Trustee to exercise its repossession
rights if the Aircraft is located outside the United States, is registered in a
foreign location or is subleased to a foreign operator. Additional difficulties
may exist when a permitted sublessee, in the case of a Leased Aircraft, or
lessee, in the case of an Owned Aircraft is the
15
<PAGE> 21
subject of a bankruptcy, insolvency or similar event. In addition, certain
jurisdictions may allow for certain other liens or other third party rights to
have priority over the security interest in the Aircraft.
PRIORITY OF DISTRIBUTIONS; SUBORDINATION -- If there is a payment default under
any Equipment Note or a Triggering Event occurs, the holders of one or more
junior Classes of Certificates may not receive the full amount of interest due
them.
Certain Classes of Certificates are subordinated to other Classes in rights
to distributions. See "Description of the Certificates -- Subordination."
Consequently, a payment default under any Equipment Note or a Triggering Event
may cause the distribution to more senior Classes of Certificates of payments
received from payment on one or more junior series of Equipment Notes. If this
should occur, the interest accruing on the remaining Equipment Notes would be
less than the interest accruing on the remaining Certificates. This is because
the remaining Certificates of the junior Classes accrue interest at a higher
rate than the remaining Equipment Notes, which include series applicable to the
senior Classes bearing interest at a lower rate. As a result of this possible
interest shortfall, the holders of one or more junior Classes of Certificates
may not receive the full amount due to them after a payment default under any
Equipment Note even if all Equipment Notes are eventually paid in full.
CONTROL OVER COLLATERAL; SALE OF COLLATERAL -- The ability of a Controlling
Party to direct the Loan Trustee in an Indenture Event of Default may result in
Certificateholders receiving a smaller amount of principal than anticipated.
If an Indenture Event of Default is continuing, subject to certain
conditions, the Loan Trustee under such Indenture will be directed by the
"Controlling Party" in exercising remedies under the Indenture including
accelerating the applicable Equipment Notes, or foreclosing the lien on the
Aircraft securing such Equipment Notes. See "Description of the
Certificates -- Indenture Defaults and Certain Rights Upon an Indenture
Default."
The Controlling Party will be:
- the Trustee of the Class A Trust (the "Class A Trustee");
- upon payment of final distributions to the holders of Class A
Certificates, the Trustee of the Class B Trust ("Class B Trustee");
- upon payment of final distributions to the holders of Class B
Certificates, the Trustee of the Class C Certificates ("Class C
Trustee"); and
- under certain circumstances, the Liquidity Provider with the greatest
amount of obligations owed to it.
During the continuation of any Indenture Event of Default, the Controlling
Party may accelerate and sell the Equipment Notes issued under such Indenture,
subject to certain limitations. See "Description of the Intercreditor
Agreement -- Intercreditor Rights -- Sale of Equipment Notes or Aircraft." The
market for Equipment Notes during any Indenture Event of Default may be very
limited, and there can be no assurance as to the price at which they could be
sold. If the Controlling Party sells any Equipment Notes for less than their
outstanding principal amount, certain Certificateholders will receive a smaller
amount of principal distributions than anticipated and will not have any claim
for the shortfall against us, any Owner Trustee, any Owner Participant or any
Trustee.
OWNER PARTICIPANT; REVISIONS TO AGREEMENTS -- Agreements described in the
prospectus may differ from the descriptions of such agreements contained in the
prospectus.
Atlas may seek commitments of one or more companies to act as the Owner
Participant with respect to leveraged leases for one or more of the Aircraft.
Such Owner Participants may request revisions to the forms of the Participation
Agreement, the Lease and the Leased Aircraft Indenture attached to the Note
Purchase Agreement. As a result, the actual Participation Agreement, Lease and
Leased Aircraft
16
<PAGE> 22
Indenture may differ from the description of such agreements contained in this
prospectus. The degree to which such agreements may change is limited because:
- such agreements are required to contain the Mandatory Document Terms and
the Mandatory Economic Terms;
- we are obligated to certify that any changes to the form agreements do
not materially and adversely affect the Certificateholders; and
- we are obligated to obtain written confirmation from each Rating Agency
that the use of versions of such agreements modified in any material
respect will not result in a withdrawal, suspension or downgrading of the
rating of any Class of Certificates.
RATINGS OF THE CERTIFICATES -- Ratings on the Certificates may not remain and
the lowering or withdrawal of a rating by a Rating Agency may negatively impact
the value of the Certificates.
It was a condition to the issuance of the Old Certificates that
- the Class A Certificates be rated not lower than A2 by Moody's, AA- by
Duff & Phelps and AA- by Standard & Poor's;
- the Class B Certificates be rated not lower than Baa2 by Moody's, A- by
Duff & Phelps and A- by Standard & Poor's; and
- the Class C Certificates be rated not lower than Ba2 by Moody's, BBB- by
Duff & Phelps and BBB- by Standard & Poor's.
A rating is not a recommendation to purchase, hold or sell Certificates,
since such rating does not address market price or suitability for a particular
investor. A rating may not remain for any given period of time and may be
lowered or withdrawn entirely by a rating agency if in its judgment
circumstances in the future (including the downgrading of Atlas, the Depositary
or the applicable Liquidity Provider) so warrant. See "Description of the
Equipment Notes -- Remedies."
The rating of the Certificates is based primarily on the default risk of
the Equipment Notes and the Depositary, the availability of the Liquidity
Facility for the benefit of holders of the Certificates, the collateral value
provided by the Aircraft relating to the Equipment Notes and the subordination
provisions applicable to the Certificates. Standard & Poor's has indicated that
its rating applies to a unit consisting of Certificates representing the Trust
Property and Escrow Receipts initially representing undivided interests in
certain rights to $217,317,000 of the Deposits. Amounts deposited under the
Escrow Agreements are not the property of Atlas and are not entitled to the
benefits of Section 1110 of the U.S. Bankruptcy Code. Neither the Certificates
nor the Escrow Receipts may be separately assigned or transferred.
ABSENCE OF AN ESTABLISHED MARKET FOR THE CERTIFICATES -- If an active public
market does not develop or continue, you may have trouble reselling
Certificates.
Prior to the Exchange Offer, there was no public market for the
Certificates and neither Atlas nor any Trust intends to apply for listing of the
Certificates on any securities exchange or otherwise. The Initial Purchasers may
assist in resales of the Certificates, but they are not required to do so. An
active public market for the Certificates may not develop. If an active public
market does develop, it might not continue or it might not be sufficiently
liquid to allow the resale of any particular Certificates.
PROCEDURES FOR TENDER OF OLD CERTIFICATES -- If you fail to deliver the proper
documentation to the Exchange Agent in a timely fashion, your tender of Old
Certificates will be rejected.
The New Certificates will be issued in exchange for the Old Certificates
only after timely receipt by the Exchange Agent of the Old Certificates, a
properly completed and executed Letter of Transmittal and all other required
documentation. Holders of Old Certificates who wish to tender their Old
Certificates in exchange for New Certificates should allow sufficient time to
ensure timely delivery. None of the
17
<PAGE> 23
Exchange Agent, the Trustee or the Company is under any duty to give holders of
Old Certificates notification of defects or irregularities with respect to
tenders of Old Certificates for exchange. Old Certificates that are not tendered
or are tendered but not accepted will, following the Exchange Offer, continue to
be subject to the existing transfer restrictions. In addition, holders of Old
Certificates who tender Old Certificates in the Exchange Offer to participate in
a distribution of the New Certificates will be required to comply with the
registration and prospectus delivery requirements of the Securities Act in
connection with any resale transaction.
18
<PAGE> 24
THE EXCHANGE OFFER
This summary describes certain provisions of the registration rights
agreement dated as of January 28, 2000 (the "Registration Rights Agreement")
among Atlas, the Initial Purchasers and the Trustee but is not complete. We
encourage you to review the Registration Rights Agreement, which has been filed
as an exhibit to the Registration Statement and a copy of which is available as
set forth under the heading "Where You Can Find More Information."
TERMS OF THE EXCHANGE OFFER
General
In connection with the issuance of the Old Certificates pursuant to a
placement agreement dated as of January 20, 2000, between Atlas and the Initial
Purchasers (the "Placement Agreement"), the Initial Purchasers and their
respective assignees became entitled to the benefits of the Registration Rights
Agreement.
Under the Registration Rights Agreement, we are obligated to use our best
efforts:
- to file the Registration Statement, of which this prospectus is a part,
with the SEC for a registered exchange offer (the "Exchange Offer") with
respect to an issue of New Certificates identical in all material
respects to the Old Certificates (except that the New Certificates would
not contain terms with respect to transfer restrictions or interest rate
increases) within 120 calendar days after January 28, 2000, the date the
Old Certificates were issued (the "Issuance Date");
- to cause the Registration Statement to become effective within 60 days
after filing of the Registration Statement with the SEC;
- to have the Registration Statement remain effective until the closing of
the Exchange Offer; and
- to have the Exchange Offer consummated not later than 60 days after the
effective date of the Registration Statement.
We will keep the Exchange Offer open for a period of not less than 30 calendar
days after the date notice of the Exchange Offer is mailed to the holders of the
Certificates. If the Exchange Offer is commenced and consummated within the time
periods described in this paragraph, we will satisfy these requirements of the
Registration Rights Agreement.
Upon the terms and subject to the conditions set forth in this prospectus
and in the Letter of Transmittal (which together constitute the Exchange Offer),
all Old Certificates validly tendered and not withdrawn prior to 5:00 p.m., New
York City time, on the Expiration Date will be accepted for exchange. New
Certificates of the same class will be issued in exchange for an equal principal
amount of outstanding Old Certificates accepted in the Exchange Offer. Old
Certificates may be tendered only in integral multiples of $1,000. This
prospectus, together with the Letter of Transmittal, is being sent to all
registered holders as of , 2000. The Exchange Offer is not
conditioned upon any minimum principal amount of Old Certificates being tendered
for exchange. However, the obligation to accept Old Certificates for exchange
pursuant to the Exchange Offer is subject to certain conditions as set forth
herein under "-- Conditions."
Old Certificates shall be deemed to have been accepted as validly tendered
when, as and if the Trustee has given oral or written notice thereof to the
Exchange Agent (as defined herein). The Exchange Agent will act as agent for the
tendering holders of Old Certificates for the purposes of receiving the New
Certificates and delivering New Certificates to such holders.
Based on interpretations by the staff of the SEC, as set forth in no-action
letters issued to third parties, we believe that the New Certificates issued
pursuant to the Exchange Offer may be offered for resale, resold or otherwise
transferred by holders thereof (other than a broker-dealer who acquires such New
Certificates directly from the Trustee for resale pursuant to Rule 144A under
the Securities Act or
19
<PAGE> 25
any other available exemption under the Securities Act or any holder that is an
"affiliate" of the Company as defined under Rule 405 of the Securities Act),
without compliance with the registration and prospectus delivery provisions of
the Securities Act, provided that such New Certificates are acquired in the
ordinary course of such holders' business and such holders are not engaged in,
and do not intend to engage in, a distribution of such New Certificates and have
no arrangement with any person to participate in a distribution of such New
Certificates. By tendering the Old Certificates in exchange for New
Certificates, each holder, other than a broker-dealer, will represent to the
Company that:
- it is not an affiliate of the Company (as defined under Rule 405 of the
Securities Act) nor a broker-dealer tendering Old Certificates acquired
directly from the Company for its own account;
- any New Certificates to be received by it will be acquired in the
ordinary course of its business; and
- it is not engaged in, and does not intend to engage in, a distribution of
such New Certificates and has no arrangement or understanding to
participate in a distribution of the New Certificates.
If a holder of Old Certificates is engaged in or intends to engage in a
distribution of the New Certificates or has any arrangement or understanding
with respect to the distribution of the New Certificates to be acquired pursuant
to the Exchange Offer, such holder may not rely on the applicable
interpretations of the staff of the SEC and must comply with the registration
and prospectus delivery requirements of the Securities Act in connection with
any secondary resale transaction. Each Participating Broker-Dealer that receives
New Certificates for its own account pursuant to the Exchange Offer must
acknowledge that it will deliver a prospectus in connection with any resale of
such New Certificates. The Letter of Transmittal states that by so acknowledging
and by delivering a prospectus, a Participating Broker-Dealer will not be deemed
to admit that it is an "underwriter" within the meaning of the Securities Act.
This prospectus, as it may be amended or supplemented from time to time, may be
used by a Participating Broker-Dealer in connection with resales of New
Certificates received in exchange for Old Certificates where such Old
Certificates were acquired by such Participating Broker-Dealer as a result of
market-making activities or other trading activities.
In the event that any changes in law or the applicable interpretations of
the staff of the SEC do not permit Atlas to effect the Exchange Offer, if the
Registration Statement is not declared effective within 60 calendar days after
the filing thereof with the SEC under certain circumstances or the Exchange
Offer is not consummated within 30 days after the effectiveness of the
Registration Statement under certain other circumstances, at the request of a
holder not eligible to participate in the Exchange Offer or under certain other
circumstances described in the Registration Rights Agreement, Atlas will, in
lieu of effecting the registration of the New Certificates pursuant to the
Registration Statement and at no cost to the holders of Old Certificates:
- as promptly as practicable, file with the SEC a shelf registration
statement (the "Shelf Registration Statement") covering resales of the
Old Certificates;
- use its best efforts to cause the Shelf Registration Statement to be
declared effective under the Securities Act by the 180th calendar day
after the Issuance Date; and
- use its best efforts to keep effective the Shelf Registration Statement
for a period of two years after its effective date (or for such shorter
period as shall end when all of the Old Certificates covered by the Shelf
Registration Statement have been sold pursuant thereto or may be freely
sold pursuant to Rule 144 under the Securities Act).
In the event that neither the consummation of the Exchange Offer nor the
declaration by the SEC of the Shelf Registration Statement to be effective
(each, a "Registration Event") occurs on or prior to the 210th calendar day
following the Issuance Date, the interest rate per annum borne by the Equipment
Notes and passed through to holders of Old Certificates shall be increased by
0.50% effective from and including August 25, 2000, to but excluding the date on
which a Registration Event occurs. In the event that the Shelf Registration
Statement ceases to be effective at any time, during the period we are required
20
<PAGE> 26
to keep such Shelf Registration Statement effective, for more than 60 days,
whether or not consecutive, during any 12-month period, the interest rate per
annum borne by the Equipment Notes shall be increased by 0.50% from the 61st day
of the applicable 12-month period such Shelf Registration Statement ceases to be
effective until such time as the Shelf Registration Statement again becomes
effective.
Upon consummation of the Exchange Offer, subject to certain exceptions,
holders of Old Certificates who do not exchange their Old Certificates for New
Certificates in the Exchange Offer will no longer be entitled to registration
rights and will not be able to offer or sell their Old Certificates, unless such
Old Certificates are subsequently registered under the Securities Act which,
subject to limited exceptions, we will have no obligation to do, except pursuant
to an exemption from, or in a transaction not subject to, the Securities Act and
applicable state securities laws. See "Risk Factors -- Risk Factors Relating to
the New Certificates and the Exchange Offer -- Consequences of Failure to
Exchange."
Expiration Date; Extensions; Amendments; Termination
The term "Expiration Date" shall mean , 2000 (30 calendar days
following the commencement of the Exchange Offer), unless we, in our sole
discretion, extend the Exchange Offer, in which case the term "Expiration Date"
shall mean the latest date to which the Exchange Offer is extended.
Notwithstanding any extension of the Exchange Offer, if the Exchange Offer is
not consummated by August 25, 2000, the interest rate borne by the Equipment
Notes and passed through to the Certificateholders is subject to increase. See
"-- General."
In order to extend the Expiration Date, we will notify the Exchange Agent
of any extension by oral or written notice and will mail to the record holders
of Old Certificates an announcement thereof, each prior to 9:00 a.m., New York
City time, on the next business day after the previously scheduled Expiration
Date. Such announcement may state that we are extending the Exchange Offer for a
specified period of time.
We reserve the right:
- to delay acceptance of any Old Certificates, to extend the Exchange Offer
or to terminate the Exchange Offer and not permit acceptance of Old
Certificates not previously accepted if any of the conditions set forth
herein under "-- Conditions" shall have occurred and shall not have been
waived by us, by giving oral or written notice of such delay, extension
or termination to the Exchange Agent; or
- to amend the terms of the Exchange Offer in any manner deemed by us to be
advantageous to the holders of the Old Certificates.
Any such delay in acceptance, extension, termination or amendment will be
followed as promptly as practicable by oral or written notice thereof to the
Exchange Agent. If the Exchange Offer is amended in a manner determined by us to
constitute a material change, we will promptly disclose such amendment in a
manner reasonably calculated to inform the holders of the Old Certificates of
such amendment.
Without limiting the manner in which we may choose to make a public
announcement of any delay, extension, amendment or termination of the Exchange
Offer, we shall have no obligation to publish, advertise, or otherwise
communicate any such public announcement, other than by making a timely release
to an appropriate news agency.
INTEREST ON THE NEW CERTIFICATES
The New Certificates will accrue interest at the applicable per annum rate
for such Trust set forth on the cover page of this prospectus, from the last
date on which interest was paid on the Old Certificates surrendered in exchange
therefor. Interest on the New Certificates is payable on January 2 and July 2 of
each year commencing upon the consummation of the Exchange Offer, subject to the
terms of the Intercreditor Agreement.
21
<PAGE> 27
PROCEDURES FOR TENDERING
To tender in the Exchange Offer, a holder must complete, sign and date the
Letter of Transmittal, or a facsimile thereof, have the signatures thereon
guaranteed if required by the Letter of Transmittal and mail or otherwise
deliver such Letter of Transmittal or such facsimile, together with any other
required documents, to the Exchange Agent prior to 5:00 p.m., New York City
time, on the Expiration Date. In addition, either:
- certificates for such Old Certificates must be received by the Exchange
Agent along with the Letter of Transmittal;
- a timely confirmation of a book-entry transfer (a "Book-Entry
Confirmation") of such Old Certificates, if such procedure is available,
into the Exchange Agent's account at DTC (the "Book-Entry Transfer
Facility") pursuant to the procedure for book-entry transfer described
below, must be received by the Exchange Agent prior to the Expiration
Date; or
- the holder must comply with the guaranteed delivery procedures described
below.
The method of delivery of Old Certificates, Letters of Transmittal and all other
required documents is at the election and risk of the holders. If such delivery
is by mail, it is recommended that registered mail, properly insured, with
return receipt requested, be used. In all cases, sufficient time should be
allowed to assure timely delivery. No Letters of Transmittal or Old Certificates
should be sent to Atlas. Delivery of all documents must be made to the Exchange
Agent at its address set forth below. Holders may also request their respective
brokers, dealers, commercial banks, trust companies or nominees to effect such
tender for such holders.
The tender by a holder of Old Certificates will constitute an agreement
between such holder and the Company in accordance with the terms and subject to
the conditions set forth in this prospectus and in the Letter of Transmittal.
Only a holder of Old Certificates may tender such Old Certificates in the
Exchange Offer. The term "holder" with respect to the Exchange Offer means any
person in whose name Old Certificates are registered on our books or any other
person who has obtained a properly completed bond power from the registered
holder.
Any beneficial owner whose Old Certificates are registered in the name of a
broker, dealer, commercial bank, trust company or other nominee and who wishes
to tender should contact such registered holder promptly and instruct such
registered holder to tender on his behalf. If such beneficial owner wishes to
tender on his own behalf, such beneficial owner must, prior to completing and
executing the Letter of Transmittal and delivering his Old Certificates, either
make appropriate arrangements to register ownership of the Old Certificates in
such owner's name or obtain a properly completed bond power from the registered
holder. The transfer of registered ownership may take considerable time.
Signatures on a Letter of Transmittal or a notice of withdrawal, as the
case may be, must be guaranteed by any member firm of a registered national
securities exchange or of the National Association of Securities Dealers, Inc.,
a commercial bank or trust company having an office or correspondent in the
United States or an "eligible guarantor" institution within the meaning of Rule
17Ad-15 under the Exchange Act (each, an "Eligible Institution") unless the Old
Certificates tendered pursuant thereto are tendered (a) by a registered holder
who has not completed the box entitled "Special Issuance Instructions" or
"Special Delivery Instructions" on the Letter of Transmittal or (b) for the
account of an Eligible Institution.
If the Letter of Transmittal is signed by a person other than the
registered holder of any Old Certificates listed therein, such Old Certificates
must be endorsed or accompanied by bond powers and a proxy which authorizes such
person to tender the Old Certificates on behalf of the registered holder, in
each case as the name of the registered holder or holders appears on the Old
Certificates.
22
<PAGE> 28
If the Letter of Transmittal or any Old Certificates or bond powers are
signed by trustees, executors, administrators, guardians, attorneys-in-fact,
officers of corporations or others acting in a fiduciary or representative
capacity, such persons should so indicate when signing, and unless waived,
evidence satisfactory to us of their authority to so act must be submitted with
the Letter of Transmittal.
All questions as to the validity, form, eligibility (including time of
receipt) and withdrawal of the tendered Old Certificates will be determined by
us in our sole discretion, which determination will be final and binding. We
reserve the absolute right to reject any and all Old Certificates not properly
tendered or any Old Certificates which, if accepted, would, in the opinion of
our counsel, be unlawful. We also reserve the absolute right to waive any
irregularities or conditions of tender as to particular Old Certificates. Our
interpretation of the terms and conditions of the Exchange Offer, including the
instructions in the Letter of Transmittal, will be final and binding on all
parties. Unless waived, any defects or irregularities in connection with tenders
of Old Certificates must be cured within such time as we shall determine.
Neither we, the Exchange Agent nor any other person shall be under any duty to
give notification of defects or irregularities with respect to tenders of Old
Certificates, nor shall any of us incur any liability for failure to give such
notification. Tenders of Old Certificates will not be deemed to have been made
until such irregularities have been cured or waived. Any Old Certificates
received by the Exchange Agent that are not properly tendered and as to which
the defects or irregularities have not been cured or waived will be returned
without cost to such holder by the Exchange Agent to the tendering holders of
Old Certificates, unless otherwise provided in the Letter of Transmittal, as
soon as practicable following the Expiration Date.
In addition, we reserve the right in our sole discretion, subject to the
provisions of the Indenture, to (a) purchase or make offers for any Old
Certificates that remain outstanding subsequent to the Expiration Date or, as
set forth under "-- Conditions," to terminate the Exchange Offer in accordance
with the terms of the Registration Rights Agreement and (b) to the extent
permitted by applicable law, purchase Old Certificates in the open market, in
privately negotiated transactions or otherwise. The terms of any such purchases
or offers could differ from the terms of the Exchange Offer.
ACCEPTANCE OF OLD CERTIFICATES FOR EXCHANGE; DELIVERY OF NEW CERTIFICATES
Upon satisfaction or waiver of all of the conditions to the Exchange Offer,
all Old Certificates properly tendered will be accepted, promptly after the
Expiration Date, and the New Certificates will be issued promptly after
acceptance of the Old Certificates. See "-- Conditions" below. For purposes of
the Exchange Offer, Old Certificates shall be deemed to have been accepted
validly tendered for exchange when, as and if we have given oral or written
notice thereof to the Exchange Agent.
In all cases, issuance of New Certificates for Old Certificates that are
accepted for exchange pursuant to the Exchange Offer will be made only after
timely receipt by the Exchange Agent of certificates for such Old Certificates
or a timely Book-Entry Confirmation of such Old Certificates into the Exchange
Agent's account at the Book-Entry Transfer Facility, a properly completed and
duly executed Letter of Transmittal and all other required documents. If any
tendered Old Certificates are not accepted for any reason set forth in the terms
and conditions of the Exchange Offer or if Old Certificates are submitted for a
greater principal amount than the holder desires to exchange, such unaccepted or
nonexchanged Old Certificates will be returned without expense to the tendering
holder thereof (or, in the case of Old Certificates tendered by book-entry
transfer procedures described below, such nonexchanged Old Certificates will be
credited to an account maintained with such Book-Entry Transfer Facility) as
promptly as practicable after the expiration or termination of the Exchange
Offer.
BOOK-ENTRY TRANSFER
The Exchange Agent will make a request to establish an account with respect
to the Old Certificates at the Book-Entry Transfer Facility for purposes of the
Exchange Offer within two business days after the date of this prospectus. Any
financial institution that is a participant in the Book-Entry Transfer
Facility's systems may make book-entry delivery of Old Certificates by causing
the Book-Entry Transfer Facility to
23
<PAGE> 29
transfer such Old Certificates into the Exchange Agent's account at the
Book-Entry Transfer Facility in accordance with such Book-Entry Transfer
Facility's procedures for transfer. However, although delivery of Old
Certificates may be effected through book-entry transfer at the Book-Entry
Transfer Facility, the Letter of Transmittal or facsimile thereof with any
required signature guarantees and any other required documents must, in any
case, be transmitted to and received by the Exchange Agent at one of the
addresses set forth below under "-- Exchange Agent" on or prior to the
Expiration Date or the guaranteed delivery procedures described below must be
complied with.
GUARANTEED DELIVERY PROCEDURES
If a registered holder of the Old Certificates desires to tender such Old
Certificates, and the Old Certificates are not immediately available, or time
will not permit such holder's Old Certificates or other required documents to
reach the Exchange Agent before the Expiration Date, or the procedures for book-
entry transfer cannot be completed on a timely basis, a tender may be effected
pursuant to the following:
- the tender is made through an Eligible Institution;
- prior to the Expiration Date, the Exchange Agent receives from such
Eligible Institution a properly completed and duly executed Letter of
Transmittal (or a facsimile thereof) and Notice of Guaranteed Delivery,
substantially in the form provided by the Company (by facsimile
transmission, mail or hand delivery), setting forth the name and address
of the holder of Old Certificates and the amount of Old Certificates
tendered, stating that the tender is being made thereby and guaranteeing
that within three New York Stock Exchange ("NYSE") trading days after the
date of execution of the Notice of Guaranteed Delivery, the certificates
for all physically tendered Old Certificates, in proper form for
transfer, or a Book-Entry Confirmation, as the case may be, and any other
documents required by the Letter of Transmittal will be deposited by the
Eligible Institution with the Exchange Agent; and
- the certificates for all physically tendered Old Certificates, in proper
form for transfer, or a Book-Entry Confirmation, as the case may be, and
all other documents required by the Letter of Transmittal are received by
the Exchange Agent within three NYSE trading days after the date of
execution of the Notice of Guaranteed Delivery.
WITHDRAWAL OF TENDERS
Tenders of Old Certificates may be withdrawn at any time prior to 5:00
p.m., New York City time, on the Expiration Date.
For a withdrawal to be effective, a written notice of withdrawal must be
received by the Exchange Agent prior to 5:00 p.m., New York City time, on the
Expiration Date at one of the addresses set forth below under "-- Exchange
Agent." Any such notice of withdrawal must specify the name of the person having
tendered the Old Certificates to be withdrawn, identify the Old Certificates to
be withdrawn, including the principal amount of such Old Certificates, and
(where certificates for Old Certificates have been transmitted) specify the name
in which such Old Certificates are registered, if different from that of the
withdrawing holder. If certificates for Old Certificates have been delivered or
otherwise identified to the Exchange Agent, then, prior to the release of such
certificates, the withdrawing holder must also submit the serial numbers of the
particular certificates to be withdrawn and a signed notice of withdrawal with
signatures guaranteed by an Eligible Institution unless such holder is an
Eligible Institution. If Old Certificates have been tendered pursuant to the
procedure for book-entry transfer described above, any notice of withdrawal must
specify the name and number of the account at the Book-Entry Transfer Facility
to be credited with the withdrawn Old Certificates and otherwise comply with the
procedures of such facility. We will determine all questions as to the validity,
form and eligibility (including time of receipt) of such notices. Our
determination shall be final and binding on all parties. Any Old Certificates so
withdrawn will be deemed not to have been validly tendered for exchange for
purposes of the Exchange Offer. Any Old Certificates which have been tendered
for exchange but which are not exchanged for any reason will be returned to the
holder thereof without cost to such holder (or, in the case of Old
24
<PAGE> 30
Certificates tendered by book-entry transfer into the Exchange Agent's account
at the Book-Entry Transfer Facility pursuant to the book-entry transfer
procedures described above, such Old Certificates will be credited to an account
maintained with such Book-Entry Transfer Facility for the Old Certificates) as
soon as practicable after withdrawal, rejection of tender or termination of the
Exchange Offer. Properly withdrawn Old Certificates may be retendered by
following one of the procedures described under "-- Procedures for Tendering"
and "-- Book-Entry Transfer" above at any time on or prior to the Expiration
Date.
CONDITIONS
Notwithstanding any other term of the Exchange Offer, Old Certificates will
not be required to be accepted for exchange, nor will New Certificates be issued
in exchange for any Old Certificates and we may terminate or amend the Exchange
Offer before the acceptance of such Old Certificates, if because of any change
in law, or applicable interpretations thereof by the SEC, we determine that we
are not permitted to effect the Exchange Offer. In addition, we have no
obligation to, and will not knowingly, permit acceptance of tenders of Old
Certificates from our affiliates (within the meaning of Rule 405 under the
Securities Act) or from any other holder or holders who are not eligible to
participate in the Exchange Offer under applicable law or interpretations
thereof by the SEC, or if the New Certificates to be received by such holder or
holders of Old Certificates in the Exchange Offer, upon receipt, will not be
tradable by such holder without restriction under the Securities Act and the
Exchange Act and without material restrictions under the "blue sky" or
securities laws of substantially all of the states of the United States.
EXCHANGE AGENT
Wilmington Trust Company has been appointed as Exchange Agent for the
Exchange Offer. Questions and requests for assistance and requests for
additional copies of this prospectus or of the Letter of Transmittal should be
directed to the Exchange Agent addressed as follows:
<TABLE>
<S> <C>
By Mail, Overnight Delivery: By Hand:
Wilmington Trust Company Wilmington Trust Company
1100 North Market Street, 1st Floor 1105 North Market Street, 1st Floor
Wilmington, Delaware 19890-000 Wilmington, Delaware 19890
Attention: Corporate Trust Operations -- Attention: Corporate Trust Operations --
Atlas Air -- 2000 EETC Exchange Offer Atlas Air -- 2000 EETC Exchange Offer
</TABLE>
Facsimile Transmission:
(302) 651-1079
Confirm by Telephone:
(302) 651-8474
Corporate Trust Operations
FEES AND EXPENSES
We will pay the expenses of soliciting tenders pursuant to the Exchange
Offer. The principal solicitation for tenders pursuant to the Exchange Offer is
being made by mail; however, additional solicitations may be made by telegraph,
telephone, telecopy or in person by our officers and regular employees.
We will not make any payments to brokers, dealers or other persons
soliciting acceptances of the Exchange Offer. We will, however, pay the Exchange
Agent reasonable and customary fees for its services and will reimburse the
Exchange Agent for its reasonable out-of-pocket expenses in connection with its
services. We may also pay brokerage houses and other custodians, nominees and
fiduciaries the reasonable out-of-pocket expenses incurred by them in forwarding
copies of the prospectus and related documents to the beneficial owners of the
Old Certificates, and in handling or forwarding tenders for exchange.
25
<PAGE> 31
We will pay the expenses to be incurred in connection with the Exchange
Offer, including fees and expenses of the Exchange Agent and Trustee and
accounting, legal, printing and related fees and expenses.
We will pay all transfer taxes, if any, applicable to the exchange of Old
Certificates pursuant to the Exchange Offer. If, however, certificates
representing New Certificates or Old Certificates for principal amounts not
tendered or accepted for exchange are to be delivered to, or are to be
registered or issued in the name of, any person other than the registered holder
of the Old Certificates tendered, or if tendered Old Certificates are registered
in the name of any person other than the person signing the Letter of
Transmittal, or if a transfer tax is imposed for any reason other than the
exchange of Old Certificates pursuant to the Exchange Offer, then the amount of
any such transfer taxes (whether imposed on the registered holder or any other
persons) will be payable by the tendering holder. If satisfactory evidence of
payment of such taxes or exemption therefrom is not submitted with the Letter of
Transmittal, the amount of such transfer taxes will be billed directly to such
tendering holder.
USE OF PROCEEDS
There will be no cash proceeds payable to Atlas as a result of the issuance
of New Certificates pursuant to the Exchange Offer. All of the proceeds from the
sale of the Old Certificates were used to purchase Equipment Notes to finance
all or a portion of Atlas' purchase price of the Owned Aircraft, including
reimbursement of amounts paid by Atlas. Prior to utilization of such proceeds to
purchase Equipment Notes, such proceeds from the sale of the Old Certificates of
each Trust were deposited with the Depositary on behalf of the Escrow Agent for
the benefit of the Certificateholders of such Trust.
THE COMPANY
OVERVIEW
We are the world's largest air cargo outsourcer, with an all Stage 3
Federal Aviation Administration ("FAA") noise regulation compliant fleet of
Boeing 747 freighter aircraft. We provide reliable airport-to-airport cargo
transportation services throughout the world to major international air carriers
generally under three- to five-year fixed-rate U.S. dollar denominated contracts
which typically require that we supply aircraft, crew, maintenance and insurance
("ACMI Contracts"). Our customers currently include some of the world's leading
air carriers, including Alitalia, China Airlines Ltd., China Southern Airlines,
Korean Airlines and Malaysian Airlines. We provide efficient, cost effective
service to our customers primarily as a result of our productive work force, the
outsourcing of a significant part of our regular maintenance work on a
long-term, fixed-cost contractual basis and the advantageous cost economies
realized in the operation of our fleet, comprised solely of Boeing 747 aircraft
which are configured for service in long-haul cargo operations.
Our fleet currently includes 22 Boeing 747-200 and 12 Boeing 747-400
freighter aircraft in service. We acquired the 747-400 aircraft in 1998, 1999
and 2000 pursuant to an agreement with The Boeing Company ("Boeing") to purchase
10 new 747-400 freighter aircraft powered by engines acquired from General
Electric Company, with options to purchase up to 10 additional 747-400 aircraft
(the "Boeing Purchase Agreement"). In February 1999, we exercised options for
two additional aircraft pursuant to the Boeing Purchase Agreement. We placed
five 747-400 aircraft into service in 1998, four 747-400 aircraft into service
in 1999 and three 747-400 aircraft into service in the first half of 2000.
DESCRIPTION OF THE CERTIFICATES
The following summary describes material terms of the Certificates. The
summary does not purport to be complete and is qualified in its entirety by
reference to all of the provisions of the Basic Agreement and to all of the
provisions of the Certificates, the Trust Supplements, the Deposit Agreements,
the Escrow Agreements, the Liquidity Facilities and the Intercreditor Agreement,
forms of which were filed as exhibits
26
<PAGE> 32
to the Registration Statement and copies of which are available as set forth
under the heading "Where You Can Find More Information."
Except as otherwise indicated, the following summary relates to each of the
Trusts and the Certificates issued by each Trust. The terms and conditions
governing each of the Trusts will be substantially the same, except as described
under "-- Subordination" below and except that the principal amount and
scheduled principal repayments of the Equipment Notes held by each Trust and the
interest rate and maturity date of the Equipment Notes held by each Trust will
differ. The references to Sections in parentheses in the following summary are
to the relevant Sections of the Basic Agreement unless otherwise indicated.
GENERAL
On January 28, 2000, Pass Through Certificates were issued representing a
fractional undivided interest in one of the three classes (each, a "Class") of
Atlas Air, Inc. 2000-1 Pass Through Trusts (the "Class A Trust," the "Class B
Trust," and the "Class C Trust," and, collectively, the "Trusts"). The Trusts
were formed pursuant to a pass through trust agreement between Atlas and
Wilmington Trust Company, as trustee (the "Trustee"), dated as of January 28,
2000 (the "Basic Agreement"), and three separate supplements thereto (each, a
"Trust Supplement" and, together with the Basic Agreement, collectively, the
"Pass Through Trust Agreements"). The Certificates were issued by the Class A
Trust, the Class B Trust, and the Class C Trust and are referred to herein as
the "Class A Certificates," the "Class B Certificates" and the "Class C
Certificates." As of the date of this prospectus, $124,639,000 Class A
Certificates, $44,741,000 Class B Certificates and $47,937,000 Class C
Certificates remain outstanding.
The New Certificates will be issued pursuant to the Pass Through Trust
Agreements. The forms and terms of the New Certificates are the same in all
material respects as the form and terms of the Old Certificates, except that:
- we registered the New Certificates under the Securities Act so their
transfer is not restricted like the Old Certificates; and
- the New Certificates are not entitled to liquidated damages under the
Registration Rights Agreement.
Each Certificate represents a fractional undivided interest in the Trust
created by the Pass Through Trust Agreement pursuant to which such Certificate
is issued. (Section 2.01) The Trust Property of each Trust (the "Trust
Property") consists of:
- subject to the Intercreditor Agreement, Equipment Notes acquired under
the Note Purchase Agreement and issued at Atlas' election in connection
with the delivery of each Aircraft during the Delivery Period either (a)
on a nonrecourse basis by an Owner Trustee in each separate leveraged
lease transaction with respect to each Leased Aircraft to finance a
portion of the purchase price of such Leased Aircraft by the Owner
Trustee, in which case the applicable Leased Aircraft will be leased to
Atlas or (b) on a recourse basis by Atlas in connection with each
separate secured loan transaction with respect to each Owned Aircraft to
finance a portion of the purchase price of such Owned Aircraft by Atlas;
- the rights of such Trust under the Intercreditor Agreement (including all
monies receivable in respect of such rights);
- all monies receivable under the Liquidity Facility for such Trust; and
- funds from time to time deposited with the Trustee in accounts relating
to such Trust.
27
<PAGE> 33
The Certificates of each Trust have been issued in fully registered form
only and are subject to the provisions described below under "-- Book Entry;
Delivery and Form." New Certificates will be issued in denominations of $1,000
or integral multiples thereof. (Trust Supplement, Section 8.01(a))
The Certificates represent interests in the respective Trusts, and all
payments and distributions thereon will be made only from the Trust Property of
the related Trust. (Section 3.09) The Certificates do not and will not represent
an interest in or obligation of Atlas, the Trustees, any of the Loan Trustees or
Owner Trustees in their individual capacities, any Owner Participant or any
affiliate of any thereof.
Pursuant to the Escrow Agreement applicable to each Trust, the holders of
Certificates of such Trust (each, a "Certificateholder") as holders of the
Escrow Receipts affixed to each Certificate are entitled to certain rights with
respect to the Deposit relating to such Trust. Accordingly, any transfer of a
Certificate will have the effect of transferring the corresponding rights with
respect to the Deposit, and rights with respect to the Deposit may not be
separately transferred by Certificateholders. Rights with respect to the Deposit
and the Escrow Agreement relating to a Trust, except for the right to request
withdrawals for the purchase of Equipment Notes, will not constitute Trust
Property of such Trust. Payments to the Certificateholders in respect of the
Deposit and the Escrow Receipts relating to a Trust will constitute payments to
such Certificateholders solely in their capacity as holders of Escrow Receipts.
SUBORDINATION
The subordination terms of the Certificates vary depending upon whether a
"Triggering Event" has occurred. "Triggering Event" means (x) the occurrence of
an Indenture Event of Default under all Indentures resulting in a PTC Event of
Default with respect to the most senior Class of Certificates then outstanding,
(y) the acceleration of all of the outstanding Equipment Notes (provided that
during the Delivery Period the aggregate principal amount thereof exceeds $100
million) or (z) certain bankruptcy or insolvency events involving Atlas.
Before a Triggering Event
On each Regular Distribution Date or Special Distribution Date (each, a
"Distribution Date"), so long as no Triggering Event shall have occurred
(whether or not continuing), all payments received by the Subordination Agent in
respect of Equipment Notes and certain other payments under the related
Indenture will be distributed under the Intercreditor Agreement in the order
specified under "Description of the Intercreditor Agreement -- Priority of
Distributions -- Before a Triggering Event."
After a Triggering Event
Upon the occurrence of a Triggering Event and at all times thereafter, all
payments received by the Subordination Agent in respect of the Equipment Notes
and certain other payments will be distributed under the Intercreditor Agreement
in the order specified under "Description of the Intercreditor
Agreement -- Priority of Distributions -- After a Triggering Event."
Payments in respect of the Deposit relating to a Trust will not be subject
to the subordination provisions of the Intercreditor Agreement.
PAYMENTS AND DISTRIBUTIONS
Payments of interest on the Deposit with respect to each Trust and payments
of principal, premium (if any) and interest on the Equipment Notes or with
respect to other Trust Property held in each Trust will be distributed by the
Paying Agent (in the case of the Deposit) or by the Trustee (in the case of
Trust Property of such Trust) to Certificateholders of such Trust on the date
receipt of such payment is confirmed, except in the case of certain types of
Special Payments.
The Deposit held with respect to each Trust and the Equipment Notes held in
each Trust will accrue interest at the applicable rate per annum for
Certificates to be issued by such Trust set forth on the cover page of this
prospectus, payable on January 2 and July 2 of each year, commencing on July 2,
2000 (or, in
28
<PAGE> 34
the case of Equipment Notes issued after such date, commencing with the first
such date to occur after initial issuance thereof). Such interest payments will
be distributed to Certificateholders of such Trust on each such date until the
final Distribution Date for such Trust, subject in the case of payments on the
Equipment Notes to the Intercreditor Agreement. Interest is calculated on the
basis of a 360-day year consisting of twelve 30-day months.
Payments of interest applicable to the Certificates are supported by a
separate Liquidity Facility provided by the applicable Liquidity Provider for
the benefit of the holders of such Certificates in an aggregate amount
sufficient to pay interest thereon at the Stated Interest Rate for such Trust on
up to three successive Regular Distribution Dates (without regard to any future
payments of principal on such Certificates), except that the Liquidity Facility
with respect to such Trust does not cover interest payable by the Depositary on
the Deposit relating to such Trust. The Liquidity Facility for any Class of
Certificates does not provide for drawings thereunder to pay for principal of or
premium on the Certificates of such Class, any interest on the Certificates of
such Class in excess of the Stated Interest Rate, or, notwithstanding the
subordination provisions of the Intercreditor Agreement, principal of or
interest or premium on the Certificates of any other Class. Therefore, only the
holders of the Certificates issued by a particular Trust will be entitled to
receive and retain the proceeds of drawings under the Liquidity Facility for
such Trust. See "Description of the Liquidity Facilities."
Payments of principal of the Series A, Series B and Series C Equipment
Notes are scheduled to be received by the Trustee on January 2 and July 2 in
certain years depending upon the terms of the Equipment Notes held in such Trust
commencing on January 2, 2001 (or, in the case of Equipment Notes issued after
such date, commencing with the first such date to occur after initial issuance
thereof).
Scheduled payments of interest on the Deposits and of interest or principal
on the Equipment Notes are herein referred to as "Scheduled Payments," and
January 2 and July 2 of each year are herein referred to as "Regular
Distribution Dates." See "Description of the Equipment Notes -- Principal and
Interest Payments." The "Final Maturity Date" for the Class A Certificates is
July 2, 2021, for the Class B Certificates is July 2, 2017 and for the Class C
Certificates is July 2, 2011.
The Paying Agent with respect to each Escrow Agreement will distribute on
each Regular Distribution Date to the Certificateholders of the Trust to which
such Escrow Agreement relates all Scheduled Payments received in respect of the
related Deposit, the receipt of which is confirmed by the Paying Agent on such
Regular Distribution Date. The Trustee of each Trust will distribute, subject to
the Intercreditor Agreement, on each Regular Distribution Date to the
Certificateholders of such Trust all Scheduled Payments received in respect of
Equipment Notes held on behalf of such Trust, the receipt of which is confirmed
by the Trustee on such Regular Distribution Date. Each Certificateholder of each
Trust will be entitled to receive its proportionate share, based upon its
fractional interest in such Trust, of any distribution in respect of Scheduled
Payments of interest on the Deposit relating to such Trust and, subject to the
Intercreditor Agreement, of principal or interest on Equipment Notes held on
behalf of such Trust. Each such distribution of Scheduled Payments will be made
by the applicable Paying Agent or Trustee to the Certificateholders of record of
the relevant Trust on the record date applicable to such Scheduled Payment
subject to certain exceptions. (Sections 4.01 and 4.02; Escrow Agreement,
Section 2.03) If a Scheduled Payment is not received by the applicable Paying
Agent or Trustee on a Regular Distribution Date but is received within five days
thereafter, it will be distributed on the date received to such holders of
record. If it is received after such five-day period, it will be treated as a
Special Payment and distributed as described below.
Any payment in respect of, or any proceeds of, any Equipment Note or the
Trust Indenture Estate under (and as defined in) each Leased Aircraft Indenture
or Collateral under (and as defined in) any Owned Aircraft Indenture other than
a Scheduled Payment (each, a "Special Payment") will be distributed on, in the
case of an early redemption or a purchase of any Equipment Note, the date of
such early redemption or purchase (which shall be a Business Day), and otherwise
on the Business Day specified for distribution of such Special Payment pursuant
to a notice delivered by each Trustee as soon as practicable after the Trustee
has received funds for such Special Payment (each, a "Special
29
<PAGE> 35
Distribution Date"). Any such distribution will be subject to the Intercreditor
Agreement. Any unused Deposits to be distributed, together with accrued and
unpaid interest thereon and any premium payable by Atlas (each, also a "Special
Payment"), will be distributed on a date 15 days after the Paying Agent has
received notice of the event requiring such distribution (also a "Special
Distribution Date"). However, if such date is within 10 days before a Regular
Distribution Date, the Special Payment shall be made on such Regular
Distribution Date.
Each Paying Agent, in the case of the Deposits, and each Trustee, in the
case of Trust Property, will mail a notice to the Certificateholders of the
applicable Trust stating the scheduled Special Distribution Date, the related
record date, the amount of the Special Payment and the reason for the Special
Payment. In the case of a redemption or purchase of the Equipment Notes held in
the related Trust or any distribution of unused Deposits, such notice will be
mailed not less than 15 days prior to the date such Special Payment is scheduled
to be distributed, and in the case of any other Special Payment, such notice
will be mailed as soon as practicable after the Trustee has confirmed that it
has received funds for such Special Payment. (Section 4.02(c); Escrow Agreement,
Section 2.03) Each distribution of a Special Payment, other than a final
distribution, on a Special Distribution Date for any Trust will be made by the
Paying Agent or the Trustee, as applicable, to the Certificateholders of record
of such Trust on the record date applicable to such Special Payment. (Section
4.02(b); Escrow Agreement, Section 2.03) See "-- Indenture Defaults and Certain
Rights Upon an Indenture Default" and "Description of the Equipment
Notes -- Redemption."
Each Pass Through Trust Agreement requires that the Trustee establish and
maintain, for the related Trust and for the benefit of the Certificateholders of
such Trust, one or more non-interest bearing accounts (the "Certificate
Account") for the deposit of payments representing Scheduled Payments received
by such Trustee. Each Pass Through Trust Agreement requires that the Trustee
establish and maintain, for the related Trust and for the benefit of the
Certificateholders of such Trust, one or more accounts (the "Special Payments
Account") for the deposit of payments representing Special Payments received by
such Trustee, which shall be non-interest bearing except in certain
circumstances where the Trustee may invest amounts in such account in certain
permitted investments. Pursuant to the terms of each Pass Through Trust
Agreement, the Trustee is required to deposit any Scheduled Payments relating to
the applicable Trust received by it in the Certificate Account of such Trust and
to deposit any Special Payments so received by it in the Special Payments
Account of such Trust. (Section 4.01) All amounts so deposited will be
distributed by the Trustee on a Regular Distribution Date or a Special
Distribution Date, as appropriate. (Section 4.02)
Each Escrow Agreement requires that the Paying Agent establish and
maintain, for the benefit of the Receiptholders, one or more accounts (the
"Paying Agent Account"), which shall be non-interest bearing. Pursuant to the
terms of the Escrow Agreement, the Paying Agent is required to deposit interest
on the Deposit relating to such Trust and any unused Deposits withdrawn by the
Escrow Agent in the Paying Agent Account. All amounts so deposited will be
distributed by the Paying Agent on a Regular Distribution Date or Special
Distribution Date, as appropriate.
The final distribution for each Trust will be made only upon presentation
and surrender of the Certificates for such Trust at the office or agency of the
Trustee specified in the notice given by the Trustee of such final distribution.
The Trustee will mail such notice of the final distribution to the
Certificateholders of such Trust, specifying the date set for such final
distribution and the amount of such distribution. (Section 11.01) See
"-- Termination of the Trusts" below. Distributions in respect of Certificates
issued in global form will be made as described in "-- Book-Entry; Delivery and
Form" below.
If any Distribution Date is a Saturday, Sunday or other day on which
commercial banks are authorized or required to close in New York, New York,
Wilmington, Delaware, Denver, Colorado, or Salt Lake City, Utah (any other day
being a "Business Day"), distributions scheduled to be made on such Regular
Distribution Date or Special Distribution Date will be made on the next
succeeding Business Day without additional interest.
30
<PAGE> 36
POOL FACTORS
The "Pool Balance" for each Trust or for the Certificates issued by any
Trust indicates, as of any date, the original aggregate face amount of the
Certificates of such Trust less the aggregate amount of all payments made in
respect of the Certificates of such Trust or in respect of the Deposit relating
to such Trust other than payments made in respect of interest or premium 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 will be computed after giving effect to any special
distribution with respect to the unused Deposit, 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. (Trust Supplement,
Section 2.01)
The "Pool Factor" for each Trust as of any Distribution Date will be the
quotient (rounded to the seventh decimal place) computed by dividing (i) the
Pool Balance by (ii) the original aggregate face amount of the Certificates of
such Trust. The Pool Factor for each Trust or for the Certificates issued by any
Trust as of any Distribution Date will be computed after giving effect to any
special distribution with respect to the unused Deposit, 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. (Trust Supplement,
Section 2.01) The Pool Factor for each Trust was 1.0000000 on the date of
issuance of the Certificates; thereafter, the Pool Factor for each Trust
declines as described herein to reflect reductions in the Pool Balance of such
Trust. The amount of a Certificateholder's pro rata share of the Pool Balance of
a Trust can be determined by multiplying the par value of the holder's
Certificate of such Trust by the Pool Factor for such Trust as of the applicable
Distribution Date. Notice of the Pool Factor and the Pool Balance for each Trust
will be mailed to Certificateholders of such Trust on each Regular Distribution
Date and Special Distribution Date. (Trust Supplement, Section 3.02)
The following table sets forth an illustrative aggregate principal
amortization schedule for the Equipment Notes held in each Trust (the "Assumed
Amortization Schedule") and resulting Pool Factors with respect to such Trust.
The actual aggregate principal amortization schedule applicable to the Class A,
Class B or Class C Trust and the resulting Pool Factors with respect to each
such Trust may differ from those set forth below, since the amortization
schedule for the Series A, Series B or Series C Equipment Notes issued with
respect to an Aircraft may vary from such illustrative amortization schedule so
long as it complies with the Mandatory Economic Terms. Moreover, the scheduled
distribution of principal payments for any Trust would be affected if any
Equipment Notes held in such Trust are redeemed or purchased or if a default in
payment on such Equipment Notes occurred. In addition, the table set forth below
assumes that each Aircraft is delivered in the month scheduled for its delivery
(see "Description of the Aircraft and the Appraisals -- The Appraisals" for the
delivery schedule) and that Equipment Notes in the maximum principal amount in
respect of all of the Aircraft are purchased by the Trusts. Actual circumstances
may vary from these assumptions, which would result in differences in the
aggregate principal amortization schedule applicable to a Trust and in the
resulting Pool Factors.
<TABLE>
<CAPTION>
CLASS A CLASS B CLASS C
------------------------- ------------------------ ------------------------
SCHEDULED SCHEDULED SCHEDULED
PRINCIPAL EXPECTED PRINCIPAL EXPECTED PRINCIPAL EXPECTED
DATE PAYMENTS POOL FACTOR PAYMENTS POOL FACTOR PAYMENTS POOL FACTOR
- ---- ----------- ----------- ---------- ----------- ---------- -----------
<S> <C> <C> <C> <C> <C> <C>
January 2, 2001...... $10,384,326 0.9166848 $8,948,200 0.8000000 $9,587,400 0.8000000
January 2, 2002...... 0 0.9166848 0 0.8000000 5,787,514 0.6792683
January 2, 2003...... 832,183 0.9100080 0 0.8000000 7,698,129 0.5186799
January 2, 2004...... 3,739,203 0.8800078 0 0.8000000 5,637,012 0.4010878
January 2, 2005...... 3,739,203 0.8500075 0 0.8000000 6,553,968 0.2643673
January 2, 2006...... 3,739,203 0.8200072 379,549 0.7915168 7,183,589 0.1145126
January 2, 2007...... 3,739,203 0.7900070 7,032,058 0.6343442 0 0.1145126
January 2, 2008...... 3,739,203 0.7600067 4,993,949 0.5227251 0 0.1145126
January 2, 2009...... 3,739,203 0.7300064 636,279 0.5085037 2,360,008 0.0652811
January 2, 2010...... 3,739,203 0.7000062 0 0.5085037 3,129,380 0.0000000
</TABLE>
31
<PAGE> 37
<TABLE>
<CAPTION>
CLASS A CLASS B CLASS C
------------------------- ------------------------ ------------------------
SCHEDULED SCHEDULED SCHEDULED
PRINCIPAL EXPECTED PRINCIPAL EXPECTED PRINCIPAL EXPECTED
DATE PAYMENTS POOL FACTOR PAYMENTS POOL FACTOR PAYMENTS POOL FACTOR
- ---- ----------- ----------- ---------- ----------- ---------- -----------
<S> <C> <C> <C> <C> <C> <C>
January 2, 2011...... 3,739,203 0.6700059 3,550,493 0.4291471 0 0.0000000
January 2, 2012...... 3,739,203 0.6400056 4,311,527 0.3327808 0 0.0000000
January 2, 2013...... 3,739,203 0.6100054 4,480,179 0.2326449 0 0.0000000
January 2, 2014...... 3,739,203 0.5800051 5,495,282 0.1098206 0 0.0000000
January 2, 2015...... 3,739,203 0.5500049 4,813,484 0.0022351 0 0.0000000
January 2, 2016...... 3,739,203 0.5200046 100,000 0.0000000 0 0.0000000
January 2, 2017...... 3,739,203 0.4900043 0 0.0000000 0 0.0000000
January 2, 2018...... 21,177,982 0.3200898 0 0.0000000 0 0.0000000
July 2, 2018......... 20,473,746 0.1558254 0 0.0000000 0 0.0000000
January 2, 2019...... 19,321,921 0.0008023 0 0.0000000 0 0.0000000
January 2, 2020...... 100,000 0.0000000 0 0.0000000 0 0.0000000
</TABLE>
The final schedule of principal payments and the resulting schedule of Pool
Balances and Pool Factors may change from that set forth above as a result of
any reoptimization. Such reoptimization may occur at any time prior to July 2,
2001. In addition, the Pool Factor and Pool Balance of each Trust will be
recomputed if there has been an early redemption, purchase, or default in the
payment of principal or interest in respect of one or more of the Equipment
Notes held in a Trust, as described in "-- Indenture Defaults and Certain Rights
Upon an Indenture Default" and "Description of the Equipment Notes --
Redemption," or a special distribution attributable to unused Deposits, as
described in "Description of the Deposit Agreements." If (i) any such change in
the scheduled repayments or (ii) any such redemption, purchase, default or
special distribution occurs, the Pool Factors and the Pool Balances of each
Trust so affected will be recomputed after giving effect thereto and notice
thereof will be mailed to the Certificateholders of such Trust promptly after
any such change in scheduled repayments or after the occurrence of any event
described in clause (ii), as the case may be.
REPORTS TO CERTIFICATEHOLDERS
On each Distribution Date, the applicable Paying Agent and Trustee will
include with each distribution by it of a Scheduled Payment or Special Payment
to Certificateholders of the related Trust a statement, setting forth the
following information (per $1,000 aggregate principal amount of Certificate for
such Trust, as to (2), (3), (4) and (5) below):
(1) the aggregate amount of such funds distributed on such
Distribution Date under the Pass Through Trust Agreement and the Escrow
Agreement, indicating the amount allocable to each source;
(2) the amount of such distribution under the Pass Through Trust
Agreement allocable to principal and the amount allocable to premium
(including any premium paid by Atlas with respect to unused Deposits), if
any;
(3) the amount of such distribution under the Pass Through Trust
Agreement allocable to interest;
(4) the amount of such distribution under the Escrow Agreement
allocable to interest;
(5) the amount of such distribution under the Escrow Agreement
allocable to unused Deposits (if any); and
(6) the Pool Balance and the Pool Factor for such Trust. (Trust
Supplement, Section 3.02(a))
So long as the Certificates are registered in the name of DTC or its
nominee, on the record date prior to each Distribution Date, the applicable
Trustee will request from DTC a securities position listing setting forth the
names of all DTC Participants reflected on DTC's books as holding interests in
the Certificates
32
<PAGE> 38
on such record date. On each Distribution Date, the applicable Paying Agent and
Trustee will mail to each such DTC Participant the statement described above and
will make available additional copies as requested by such DTC Participant for
forwarding to holders of interests in the Certificates. (Trust Supplement,
Section 3.02(a))
In addition, after the end of each calendar year, the applicable Trustee
and Paying Agent will furnish to each Certificateholder of each Trust at any
time during the preceding calendar year a report containing the sum of the
amounts determined pursuant to clauses (1), (2), (3), (4) and (5) above with
respect to the Trust for such calendar year or, if such person was a
Certificateholder during only a portion of such calendar year, for the
applicable portion of such calendar year, and such other items as are readily
available to such Trustee and which a Certificateholder shall reasonably request
as necessary for the purpose of such Certificateholder's preparation of its U.S.
federal income tax returns. (Trust Supplement, Section 3.02(b)) Such report and
such other items shall be prepared on the basis of information supplied to the
applicable Trustee by the DTC Participants and will be delivered by such Trustee
to such DTC Participants to be available for forwarding by such DTC Participants
to holders of interests in the Certificates in the manner described above.
(Trust Supplement, Section 3.02(b)) At such time, if any, as the Certificates
are issued in the form of definitive certificates, the applicable Paying Agent
and Trustee will prepare and deliver the information described above to each
Certificateholder of record of each Trust as the name and period of ownership of
such Certificateholder appear on the records of the registrar of the
Certificates.
INDENTURE DEFAULTS AND CERTAIN RIGHTS UPON AN INDENTURE DEFAULT
An event of default under an Indenture (an "Indenture Event of Default")
will, with respect to the Leased Aircraft Indentures, include an event of
default under the related Lease (a "Lease Event of Default"). See "Description
of the Equipment Notes -- Indenture Event of Defaults, Notice and Waiver." Since
the Equipment Notes issued under an Indenture will be held in more than one
Trust, a continuing Indenture Event of Default under such Indenture would affect
the Equipment Notes held by each Trust. There are no cross-default provisions in
the Indentures or in the Leases (unless otherwise agreed between an Owner
Participant and Atlas). Consequently, events resulting in an Indenture Event of
Default under any particular Indenture may or may not result in an Indenture
Event of Default under any other Indenture, and a Lease Event of Default under
any particular Lease may or may not constitute a Lease Event of Default under
any other Lease. If an Indenture Event of Default occurs in fewer than all of
the Indentures, notwithstanding the treatment of Equipment Notes issued under
any Indenture under which an Indenture Event of Default has occurred, payments
of principal and interest on the Equipment Notes will continue to be distributed
to the holders of the Certificates as originally scheduled, subject to the
Intercreditor Agreement. See "Description of the Intercreditor
Agreement -- Priority of Distributions."
With respect to each Leased Aircraft, the applicable Owner Trustee and
Owner Participant, under the related Leased Aircraft Indenture, will have the
right under certain circumstances to cure Indenture defaults that result from
the occurrence of a Lease Event of Default under the related Lease. If the Owner
Trustee or the Owner Participant exercises any such cure right, the Indenture
default will be deemed to have been cured.
In the event that the same institution acts as Trustee of multiple Trusts,
in the absence of instructions from the Certificateholders of any such Trust,
such Trustee could be faced with a potential conflict of interest upon an
Indenture Event of Default. In such event, each Trustee has indicated that it
would resign as Trustee of one or all such Trusts, and a successor trustee would
be appointed in accordance with the terms of the applicable Pass Through Trust
Agreement. Wilmington Trust Company will be the initial Trustee under each
Trust.
Upon the occurrence and continuation of an Indenture Event of Default, the
Controlling Party will direct the Indenture Trustee under such Indenture in the
exercise of remedies thereunder and may accelerate and sell all (but not less
than all) of the Equipment Notes issued under such Indenture to any person,
subject to certain limitations. See "Description of the Intercreditor
Agreement -- Intercreditor
33
<PAGE> 39
Rights -- Sale of Equipment Notes or Aircraft." The proceeds of such sale will
be distributed pursuant to the provisions of the Intercreditor Agreement. Any
such proceeds so distributed to any Trustee upon any such sale shall be
deposited in the applicable Special Payments Account and shall be distributed to
the Certificateholders of the applicable Trust on a Special Distribution Date.
(Sections 4.01 and 4.02) The market for Equipment Notes at the time of the
existence of an Indenture Event of Default may be very limited and there can be
no assurance as to the price at which they could be sold. If any such Equipment
Notes are sold for less than their outstanding principal amount, certain
Certificateholders will receive a smaller amount of principal distributions than
anticipated and will not have any claim for the shortfall against Atlas, any
Liquidity Provider, any Owner Trustee, any Owner Participant or any Trustee.
Any amount, other than Scheduled Payments received on a Regular
Distribution Date or within five days thereafter, distributed to the Trustee of
any Trust by the Subordination Agent on account of any Equipment Note or Trust
Indenture Estate under (and as defined in) any Leased Aircraft Indenture or
Collateral under (and as defined in) any Owned Aircraft Indenture held in such
Trust following an Indenture Event of Default will be deposited in the Special
Payments Account for such Trust and will be distributed to the
Certificateholders of such Trust on a Special Distribution Date. (Sections 4.01
and 4.02) In addition, if, following an Indenture Event of Default under any
Leased Aircraft Indenture, the applicable Owner Participant or Owner Trustee
exercises its option to redeem or purchase the outstanding Equipment Notes
issued under such Leased Aircraft Indenture, the price paid by such Owner
Participant or Owner Trustee for the Equipment Notes issued under such Leased
Aircraft Indenture and distributed to such Trust by the Subordination Agent will
be deposited in the Special Payments Account for such Trust and will be
distributed to the Certificateholders of such Trust on a Special Distribution
Date. (Sections 4.01 and 4.02)
Any funds representing payments received with respect to any defaulted
Equipment Notes, or the proceeds from the sale of any Equipment Notes, held by
the Trustee in the Special Payments Account for such Trust will, to the extent
practicable, be invested and reinvested by such Trustee in certain permitted
investments pending the distribution of such funds on a Special Distribution
Date. (Section 4.04) Such permitted investments will be defined as obligations
of the United States or agencies or instrumentalities thereof for the payment of
which the full faith and credit of the United States is pledged and which mature
in not more than 60 days or such lesser time as is required for the distribution
of any such funds on a Special Distribution Date. (Section 1.01)
Each Pass Through Trust Agreement provides that the Trustee of the related
Trust will, within 90 days after the occurrence of any default known to the
Trustee, give to the Certificateholders of such Trust notice, transmitted by
mail, of such uncured or unwaived defaults with respect to such Trust known to
it, provided that, except in the case of default in a payment of principal,
premium, if any, or interest on any of the Equipment Notes held in such Trust,
the applicable Trustee will be protected in withholding such notice if it in
good faith determines that the withholding of such notice is in the interests of
such Certificateholders. (Section 7.02) The term "default" as used in this
paragraph only with respect to any Trust means the occurrence of an Indenture
Event of Default under any Indenture pursuant to which Equipment Notes held by
such Trust were issued, as described above, except that in determining whether
any such Indenture Event of Default has occurred, any grace period or notice in
connection therewith will be disregarded.
Each Pass Through Trust Agreement contains a provision entitling the
Trustee of the related Trust, subject to the duty of such Trustee during a
default to act with the required standard of care, to be offered reasonable
security or indemnity by the holders of the Certificates of such Trust before
proceeding to exercise any right or power under such Pass Through Trust
Agreement at the request of such Certificateholders. (Section 7.03(e))
Subject to certain qualifications set forth in each Pass Through Trust
Agreement and to the Intercreditor Agreement, the Certificateholders of each
Trust holding Certificates evidencing fractional undivided interests aggregating
not less than a majority in interest in such Trust will have the right to direct
the time, method and place of conducting any proceeding for any remedy available
to the Trustee
34
<PAGE> 40
with respect to such Trust or pursuant to the terms of the Intercreditor
Agreement, or exercising any trust or power conferred on such Trustee under such
Pass Through Trust Agreement or the Intercreditor Agreement, including any right
of such Trustee as Controlling Party under the Intercreditor Agreement or as
holder of the Equipment Notes. (Section 6.04)
In certain cases, the holders of the Certificates of a Trust evidencing
fractional undivided interests aggregating not less than a majority in interest
of such Trust may on behalf of the holders of all the Certificates of such Trust
waive any past Indenture Event of Default and its consequences under any
Indenture pursuant to which Equipment Notes held by such Trust were issued or,
if the Trustee of such Trust is the Controlling Party, may direct the Trustee to
instruct the applicable Loan Trustee to waive any past Indenture Default and its
consequences, except (i) a default in the deposit of any Scheduled Payment or
Special Payment or in the distribution thereof, (ii) a default in payment of the
principal, premium, if any, or interest with respect to any of the Equipment
Notes and (iii) a default in respect of any covenant or provision of the Pass
Through Trust Agreement that cannot be modified or amended without the consent
of each Certificateholder of such Trust affected thereby. (Section 6.05) Each
Indenture will provide that, with certain exceptions, the holders of the
majority in aggregate unpaid principal amount of the Equipment Notes issued
thereunder may on behalf of all such holders waive any past default or Indenture
Event of Default thereunder. Notwithstanding such provisions of the Indentures,
pursuant to the Intercreditor Agreement only the Controlling Party will be
entitled to waive any such past default or Indenture Event of Default.
PURCHASE RIGHTS OF CERTIFICATEHOLDERS
Upon the occurrence and during the continuation of a Triggering Event, with
10 days' written notice to the Trustee and each Certificateholder of the same
Class:
- the Class B Certificateholders will have the right to purchase all, but
not less than all, of the Class A Certificates;
- the Class C Certificateholders will have the right to purchase all, but
not less than all, of the Class A and Class B Certificates; and
- if the Class D Certificates are issued, the Class D Certificateholders
shall have the right to purchase all, but not less than all, of the Class
A, Class B and Class C Certificates.
In each case the purchase price will be equal to the Pool Balance of the
relevant Class or Classes of Certificates plus accrued and unpaid interest
thereon to the date of purchase, without premium, but including any other
amounts due to the Certificateholders of such Class or Classes. (Trust
Supplement, Section 4.01) In each case, if prior to the end of the 10-day
period, any other Certificateholder of the same Class notifies the purchasing
Certificateholder that the other Certificateholder wants to participate in such
purchase, then such other Certificateholder may join with the purchasing
Certificateholder to purchase the Certificates pro rata based on the interest in
the Trust held by each Certificateholder.
PTC EVENT OF DEFAULT
A Pass Through Certificate Event of Default (a "PTC Event of Default") is
defined under the Pass Through Trust Agreements as the failure to pay:
- the outstanding Pool Balance of the applicable Class of Certificates
within 10 Business Days of the Final Maturity Date for such Class; or
- interest due on such Class of Certificates within 10 Business Days of any
Distribution Date (unless the Subordination Agent shall have made
Interest Drawings, or withdrawals from the Cash Collateral Accounts for
such Class of Certificates, with respect thereto in an aggregate amount
sufficient to pay such interest and shall have distributed such amount to
the Trustee entitled thereto).
35
<PAGE> 41
Any failure to make expected principal distributions with respect to any
Class of Certificates on any Regular Distribution Date (other than the Final
Maturity Date) will not constitute a PTC Event of Default with respect to such
Certificates. A PTC Event of Default with respect to the most senior outstanding
Class of Certificates resulting from an Indenture Event of Default under all
Indentures will constitute a Triggering Event. See "Description of the
Intercreditor Agreement -- Priority of Distributions" for a discussion of the
consequences of the occurrence of a Triggering Event.
MERGER, CONSOLIDATION AND TRANSFER OF ASSETS
Atlas is prohibited from consolidating with or merging into any other
corporation or transferring substantially all of its assets as an entirety to
any other corporation unless:
- the surviving successor or transferee corporation is validly existing
under the laws of the United States or any state thereof;
- the surviving successor or transferee corporation is a "citizen of the
United States" (as defined in Title 49 of the United States Code relating
to aviation (the "Transportation Code")) holding an air carrier operating
certificate issued by the Secretary of Transportation pursuant to Chapter
447 of Title 49, United States Code, if, and so long as, such status is a
condition of entitlement to the benefits of Section 1110 of the
Bankruptcy Code;
- the surviving successor or transferee corporation expressly assumes all
of the obligations of Atlas contained in any Pass Through Trust
Agreement, the Note Purchase Agreement, the Owned Aircraft Indentures,
the Participation Agreements and the Leases, and any other operative
documents; and
- Atlas delivers a certificate and an opinion or opinions of counsel
indicating that such transaction, in effect, complies with such
conditions.
In addition, after giving effect to such transaction, no Lease Event of
Default, in the case of a Leased Aircraft, or Indenture Default, in the case of
an Owned Aircraft, shall have occurred and be continuing. (Section 5.02; Leases,
Section 13.02; Owned Aircraft Indentures, Section 4.07)
The Pass Through Trust Agreements, the Note Purchase Agreement, the
Indentures, the Participation Agreements and the Leases do not contain any
covenants or provisions which may afford the applicable Trustee or
Certificateholders protection in the event of a highly leveraged transaction,
including transactions effected by management or affiliates, which may or may
not result in a change in control of Atlas.
MODIFICATIONS OF THE PASS THROUGH TRUST AGREEMENTS AND CERTAIN OTHER AGREEMENTS
Each Pass Through Trust Agreement contains provisions permitting, at our
request, the execution of amendments or supplements to such Pass Through Trust
Agreement or, if applicable, to the Deposit Agreements, the Escrow Agreements,
the Intercreditor Agreement, the Note Purchase Agreement or any Liquidity
Facility, without the consent of the holders of any of the Certificates of such
Trust:
- to provide for the formation of a Trust to issue additional classes of
certificates and to enter into Trust Supplements setting forth the terms
of any such class of certificates;
- to evidence the succession of another corporation to Atlas and the
assumption by such corporation of Atlas' obligations under such Pass
Through Trust Agreement, Deposit Agreement, Escrow Agreement, Note
Purchase Agreement or Liquidity Facility;
- to add to the covenants of Atlas for the benefit of holders of such
Certificates or to surrender any right or power conferred upon Atlas in
such Pass Through Trust Agreement, Deposit Agreement, Escrow Agreement,
Intercreditor Agreement, Note Purchase Agreement or Liquidity Facility;
36
<PAGE> 42
- to correct or supplement any provision of such Pass Through Trust
Agreement, the Deposit Agreement, Escrow Agreement, Intercreditor
Agreement, Note Purchase Agreement or Liquidity Facility which may be
defective or inconsistent with any other provision in such Pass Through
Trust Agreement, Deposit Agreement, Escrow Agreement, Intercreditor
Agreement, Note Purchase Agreement or Liquidity Facility, as applicable,
or to cure any ambiguity or to modify any other provision with respect to
matters or questions arising under such Pass Through Trust Agreement,
Deposit Agreement, Escrow Agreement, Intercreditor Agreement, Note
Purchase Agreement or Liquidity Facility, provided that such action shall
not materially adversely affect the interests of the holders of such
Certificates;
- to correct any mistake in such Pass Through Trust Agreement, Deposit
Agreement, Escrow Agreement, Intercreditor Agreement, Note Purchase
Agreement or Liquidity Facility; or, as provided in the Intercreditor
Agreement, to give effect to or provide for a Replacement Facility;
- to comply with any requirement of the SEC, any applicable law, rules or
regulations of any exchange or quotation system on which the Certificates
are listed, or any regulatory body;
- to modify, eliminate or add to the provisions of such Pass Through Trust
Agreement, Deposit Agreement, Escrow Agreement, Intercreditor Agreement,
Note Purchase Agreement or Liquidity Facility to such extent as shall be
necessary to continue the qualification of such Pass Through Trust
Agreement (including any supplemental agreement) under the Trust
Indenture Act of 1939, as amended (the "Trust Indenture Act"), or any
similar federal statute enacted after the execution of such Pass Through
Trust Agreement, and to add to such Pass Through Trust Agreement, Deposit
Agreement, Escrow Agreement, Intercreditor Agreement, Note Purchase
Agreement or Liquidity Facility such other provisions as may be expressly
permitted by the Trust Indenture Act; and
- to evidence and provide for the acceptance of appointment under such Pass
Through Trust Agreement, Deposit Agreement, Escrow Agreement,
Intercreditor Agreement, Note Purchase Agreement or Liquidity Facility by
a successor Trustee and to add to or change any of the provisions of such
Pass Through Trust Agreement, Deposit Agreement, Escrow Agreement,
Intercreditor Agreement, Note Purchase Agreement or Liquidity Facility as
shall be necessary to provide for or facilitate the administration of the
Trusts by more than one Trustee.
In each case, such modification or supplement may not adversely affect the
status of the 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 (the
"Code"), for U.S. federal income tax purposes. (Section 9.01)
Each Pass Through Trust Agreement also contains provisions permitting the
execution, with the consent of the holders of the Certificates of the related
Trust evidencing fractional undivided interests aggregating not less than a
majority in interest of such Trust, and with the consent of the applicable Owner
Trustee, of amendments or supplements adding any provisions to or changing or
eliminating any of the provisions of such Pass Through Trust Agreement, the
Deposit Agreements, the Escrow Agreements, the Intercreditor Agreement, the Note
Purchase Agreement or any Liquidity Facility to the extent applicable to such
Certificateholders or of modifying the rights and obligations of such
Certificateholders under such Pass Through Trust Agreement, the Deposit
Agreements, the Escrow Agreements, the Intercreditor Agreement, the Note
Purchase Agreement or any Liquidity Facility. However, no such amendment or
supplement may, without the consent of the holder of each Certificate adversely
affected thereby:
- reduce in any manner the amount of, or delay the timing of, any receipt
by the Trustee (or, with respect to the Deposit, the Receiptholders) of
payments with respect to the Deposit, the Equipment Notes held in such
Trust or distributions in respect of any Certificate related to such
Trust, or change the date or place of any payment in respect of any
Certificate, or make distributions payable in coin or currency other than
that provided for in such Certificates, or impair the right of any
Certificateholder of such Trust to institute suit for the enforcement of
any such payment when due;
37
<PAGE> 43
- permit the disposition of any Equipment Note held in such Trust, except
as provided in such Pass Through Trust Agreement, or otherwise deprive
such Certificateholder of the benefit of the ownership of the applicable
Equipment Notes;
- alter the priority of distributions specified in the Intercreditor
Agreement in a manner materially adverse to such Certificateholders;
- reduce the percentage of the aggregate fractional undivided interests of
the Trust provided for in such Pass Through Trust Agreement, the consent
of the holders of which is required for any such supplemental trust
agreement or for any waiver provided for in such Pass Through Trust
Agreement; or
- modify any of the provisions relating to the rights of the
Certificateholders in respect of the waiver of events of default or
receipt of payment. (Section 9.02; Trust Supplement, Section 6.02)
In the event that a Trustee, as holder (or beneficial owner through the
Subordination Agent) of any Equipment Note in trust for the benefit of the
Certificateholders of the relevant Trust or as Controlling Party under the
Intercreditor Agreement, receives (directly or indirectly through the
Subordination Agent) a request for a consent to any amendment, modification,
waiver or supplement under any Indenture, any Participation Agreement, any
Lease, any Equipment Note or any other related document, the Trustee shall
forthwith send a notice of such proposed amendment, modification, waiver or
supplement to each Certificateholder of the relevant Trust as of the date of
such notice. The Trustee shall request from the Certificateholders a direction
as to:
- whether or not to take or refrain from taking (or direct the
Subordination Agent to take or refrain from taking) any action which a
holder of such Equipment Note or the Controlling Party has the option to
take;
- 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 such Equipment Note or as Controlling Party;
and
- how to vote (or direct the Subordination Agent to vote) any Equipment
Note if a vote has been called for with respect thereto.
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):
- other than as Controlling Party, the Trustee shall vote for or give
consent to any such action with respect to such Equipment Note in the
same proportion as that of (x) the aggregate face amount of all
Certificates actually voted in favor of or for giving consent to such
action by such direction of Certificateholders to (y) the aggregate face
amount of all outstanding certificates of the relevant Trust; and
- as the Controlling Party, the Trustee shall vote as directed in such
Certificateholder direction by the Certificateholders evidencing
fractional undivided interests aggregating not less than a majority in
interest in the relevant Trust.
For purposes of the immediately preceding sentence, a Certificate shall
have been "actually voted" if the Certificateholder has delivered to the Trustee
an instrument evidencing such Certificateholder's consent to such direction
prior to one Business Day before the Trustee directs such action or casts such
vote or gives such consent. Notwithstanding the foregoing, but subject to
certain rights of the Certificateholders under the relevant Pass Through Trust
Agreement and subject to the Intercreditor Agreement, the Trustee may, in its
own discretion and at its own direction, consent and notify the relevant Loan
Trustee of such consent (or direct the Subordination Agent to consent and notify
the relevant Loan Trustee of such consent) to any amendment, modification,
waiver or supplement under the relevant Indenture,
38
<PAGE> 44
Participation Agreement or Lease, any relevant Equipment Note or any other
related document, if an Indenture Event of Default under any Indenture shall
have occurred and be continuing, or if such amendment, modification, waiver or
supplement will not materially adversely affect the interests of the
Certificateholders. (Section 10.01)
OBLIGATION TO PURCHASE EQUIPMENT NOTES
The Class A, Class B and Class C Trustees, respectively, are obligated to
purchase the Series A, Series B and Series C Equipment Notes issued with respect
to each Aircraft, subject in each case to the terms and conditions of a note
purchase agreement (the "Note Purchase Agreement"). Under the Note Purchase
Agreement, Atlas agrees to finance each Aircraft in the manner provided therein
and in connection therewith will have the option of entering into a leveraged
lease financing or a secured debt financing with respect to each Aircraft. In
addition, Atlas may elect to convert an Owned Aircraft to a Leased Aircraft at
any time by entering into a sale/leaseback transaction.
- If Atlas chooses to enter into a leveraged lease financing with respect
to an Aircraft (such Aircraft, a "Leased Aircraft"), the Note Purchase
Agreement provides for the relevant parties to enter into a participation
agreement (each, a "Participation Agreement"), a Lease and an indenture
(each, a "Leased Aircraft Indenture") relating to the financing of such
Leased Aircraft.
- If Atlas chooses to enter into a secured debt financing with respect to
an Aircraft (such Aircraft, an "Owned Aircraft"), the Note Purchase
Agreement provides for the relevant parties to enter into a participation
agreement (each, a "Participation Agreement") and an indenture (each an
"Owned Aircraft Indenture" and together with the other Owned Aircraft
Indentures and the Leased Aircraft Indentures, the "Indentures") relating
to the financing of such Owned Aircraft.
The description of such agreements in this prospectus is based on the forms
of such agreements to be utilized pursuant to the Note Purchase Agreement. In
the case of a Leased Aircraft, the terms of the agreements actually entered into
may differ from the forms of such agreements and, consequently, may differ from
the description of such agreements contained in this prospectus. See
"Description of the Equipment Notes." However, under the Note Purchase
Agreement, the terms of such agreements are required to (a) contain the
Mandatory Document Terms and (b) not vary the Mandatory Economic Terms. In
addition, Atlas is obligated (a) to certify to the Trustees that any such
modifications do not materially and adversely affect the Certificateholders and
(b) to obtain written confirmation from each Rating Agency that the use of
versions of such agreements modified in any material respect (other than
modifications affecting only the Owner Participant) will not result in a
withdrawal, suspension or downgrading of the rating of any Class of
Certificates. Further, under the Note Purchase Agreement, it is a condition
precedent to the obligation of each Trustee to purchase the Equipment Notes
related to the financing of an Aircraft that no Triggering Event shall have
occurred. The Trustees will have no right or obligation to purchase Equipment
Notes after the Delivery Period Termination Date.
MANDATORY ECONOMIC TERMS AND MANDATORY DOCUMENT TERMS
The "Mandatory Economic Terms," as defined in the Note Purchase Agreement,
require, among other things, that:
- the aggregate principal amount of all the Equipment Notes issued with
respect to an Aircraft not exceed the maximum principal amount of
Equipment Notes indicated for each such Aircraft as set forth in
"Summary -- Equipment Notes and the Aircraft" under the column "Maximum
Principal Amount of Equipment Notes";
- the initial LTV with respect to an Aircraft (with the value of any
Aircraft for these purposes to equal the value (the "Assumed Appraised
Value") for such Aircraft set forth in "Summary -- Equipment Notes and
the Aircraft" under the column "Appraised Base Value"), not exceed 39.0%
in the case of Series A Equipment Notes, 53.0% in the case of Series B
Equipment Notes and 68.0% in the case of Series C Equipment Notes;
39
<PAGE> 45
- the LTV 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)
not exceed as of any Regular Distribution Date thereafter (assuming no
default in the payment of the Equipment Notes) 39.0% in the case of the
Series A Equipment Notes, 53.0% in the case of the Series B Equipment
Notes and 68.0% in the case of the Series C Equipment Notes.
- the initial average life of each series of Equipment Notes for any
Aircraft from the Issuance Date shall be as follows:
Series A Equipment Notes: not less than 11.0 years or more than 13.5
years
Series B Equipment Notes: not less than 6.5 years or more than 9.5 years
Series C Equipment Notes: not less than 2.5 years or more than 4.25 years
- as of the Delivery Period Termination Date, the average life of each
Class of Certificates shall be as follows, in each case 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):
Class A Certificates: not less than 11.5 years or more than 13.5 years
Class B Certificates: not less than 7.5 years or more than 9.0 years
Class C Certificates: not less than 3.0 years or more than 4.0 years
- the final expected Distribution Date of each Class of Certificates shall
be as set forth on the cover page of this prospectus;
- the original aggregate principal amount of all of the Equipment Notes of
each Series shall not exceed the original aggregate face amount of the
Certificates issued by the corresponding Trust;
- the interest rate applicable to each Series of Equipment Notes must be
equal to the rate applicable to the Certificates issued by the
corresponding Trust;
- the payment dates for the Equipment Notes and basic rent under the Leases
must be January 2 and July 2; provided however that rent under a Lease
may also be paid at Atlas' election upon the commencement of such Lease
and on any other date agreed between Atlas 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 the Lease
relates;
- rent, stipulated loss values and termination values under the Leases must
be sufficient to pay amounts due with respect to the related Equipment
Notes;
- the amounts payable under the all-risk aircraft hull insurance maintained
with respect to each Aircraft must be sufficient to pay the applicable
stipulated loss value, or, in the case of Owned Aircraft, unpaid
principal amount of the related Equipment Notes, subject to certain
rights of self-insurance; and
- (a) the past due rate in the Indentures and the Leases, (b) the
Make-Whole Premium payable under the Indentures, (c) the provisions
relating to the redemption and purchase of Equipment Notes in the
Indentures, (d) the minimum liability insurance amount on Aircraft in the
Leases subject to certain rights of self-insurance, (e) the interest rate
payable, if any, with respect to stipulated loss value in the Leases, and
(f) the indemnification of the Loan Trustees, Subordination Agent,
Liquidity Providers (including MSDW so long as MSCS is a Liquidity
Provider), Trustees, Escrow Agents and registered holders of the
Equipment Notes (in such capacity, the "Note Holders") with respect to
certain taxes and expenses, in each case be provided as set forth in the
form of Participation Agreements, Lease and Indentures (collectively, the
"Aircraft Operative Agreements").
40
<PAGE> 46
The "Mandatory Document Terms" prohibit modifications in any material
adverse respect to certain specified provisions of the Aircraft Operative
Agreements annexed to the Note Purchase Agreement, as follows:
- In the case of the Indentures, the following modifications are
prohibited:
(i) to the Granting Clause of the Indentures so as to deprive the Note
Holders of a first priority security interest in the Aircraft, certain of
Atlas' rights under its purchase agreement with the Aircraft manufacturer
and, in the case of a Leased Aircraft, the Lease or to eliminate the
obligations intended to be secured thereby;
(ii) to certain provisions relating to the issuance, redemption,
purchase, payments, and ranking of the Equipment Notes (including the
obligation to pay the Make-Whole Premium in certain circumstances);
(iii) to certain provisions regarding Indenture Defaults, remedies
relating thereto and rights of the Owner Trustee and Owner Participant in
such circumstances;
(iv) to certain provisions relating to any replaced airframe or
engines with respect to an Aircraft; and
(v) to the provision that New York law will govern the Indentures.
- In the case of the Lease, the following modifications are prohibited:
(i) to certain provisions regarding the obligation of Atlas to pay
basic rent, stipulated loss value and termination value to the Leased
Aircraft Trustee;
(ii) to certain provisions regarding the obligation of Atlas to record
the Leased Aircraft Indenture with the Federal Aviation Administration and
to maintain such Indenture as a first-priority perfected mortgage on the
related Aircraft;
(iii) to certain provisions relating to the obligation of Atlas to
furnish certain opinions with respect to a replacement airframe;
(iv) to certain provisions relating to the obligation of Atlas to
consent to the assignment of the Lease by the Owner Trustee as collateral
under the Leased Aircraft Indenture; and
(v) modifications which would either alter the provision that New York
law will govern the Lease or would deprive the Loan Trustee of rights
expressly granted to it under the Leases.
- In the case of the Participation Agreement, the following modifications
are prohibited:
(i) to certain conditions to the obligations of the Trustees to
purchase the Equipment Notes issued with respect to an Aircraft involving
good title to such Aircraft, obtaining a certificate of airworthiness with
respect to such Aircraft, entitlement to the benefits of Section 1110 with
respect to such Aircraft and filings of certain documents with the Federal
Aviation Administration;
(ii) to the provisions restricting the Note Holder's ability to
transfer such Equipment Notes;
(iii) to certain provisions requiring the delivery of legal opinions;
and
(iv) to the provision that New York law will govern the Participation
Agreement.
- In the case of all of the Aircraft Operative Agreements, modifications
are prohibited in any material adverse respect as regards the interest of
the Note Holders, the Subordination Agent, the Liquidity Providers or the
Loan Trustees in the definition of Make-Whole Premium.
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,
41
<PAGE> 47
provided that any such action shall not materially adversely affect the
interests of the Note Holders, the Subordination Agent, the Liquidity Providers,
the Loan Trustees or the Certificateholders.
POSSIBLE ISSUANCE OF SERIES D EQUIPMENT NOTES
Atlas may elect to issue Series D Equipment Notes in connection with the
financing of Owned Aircraft, which will be funded from sources other than the
original placement of the Old Certificates. Atlas may elect to fund the sale of
the Series D Equipment Notes through the sale of Pass Through Certificates (the
"Class D Certificates") issued by a Class D Atlas Air 2000-1 Pass Through Trust
(the "Class D Trust"). Atlas will not issue any Series D Equipment Notes at any
time prior to the consummation of the original placement of the Old
Certificates. The Note Purchase Agreement provides that Atlas' ability to issue
any Series D Equipment Notes is contingent upon its obtaining written
confirmation from each Rating Agency that the issuance of such Series D
Equipment Notes will not result in a withdrawal or downgrading of the rating of
any Class of Certificates. If the Class D Certificates are issued, the Class D
Trustee will become a party to the Intercreditor Agreement. See "Description of
the Intercreditor Agreement."
TERMINATION OF THE TRUSTS
The obligations of Atlas and the applicable Trustee with respect to a Trust
will terminate upon the distribution to Certificateholders of such Trust of all
amounts required to be distributed to them pursuant to the applicable Pass
Through Trust Agreement and the disposition of all property held in such Trust.
(Trust Supplement, Section 7.01) The applicable Trustee will send to each
Certificateholder of such Trust notice of the termination of such Trust, the
amount of the proposed final payment and the proposed date for the distribution
of such final payment for such Trust. The final distribution to any
Certificateholder of such Trust will be made only upon surrender of such
Certificateholder's Certificates at the office or agency of the applicable
Trustee specified in such notice of termination. (Section 11.01)
THE TRUSTEES
Wilmington Trust Company is the Trustee for each Trust.
BOOK-ENTRY; DELIVERY AND FORM
The New Certificates of each Trust will be represented by one or more
permanent Global Certificates, in definitive, fully registered form without
interest coupons, to be deposited with the Trustee as custodian for DTC and
registered in the name of the nominee of DTC.
DTC has advised Atlas as follows: DTC is a limited purpose trust company
organized under the laws of the State of New York, a "banking organization"
within the meaning of the New York Banking Law, a member of the Federal Reserve
System, a "clearing corporation" within the meaning of the Uniform Commercial
Code and a "clearing agency" registered pursuant to the provisions of Section
17A of the Exchange Act. DTC was created to hold securities for its participants
and facilitate the clearance and settlement of securities transactions between
participants through electronic book-entry changes in accounts of its
participants, thereby eliminating the need for physical movement of
certificates. Participants include securities brokers and dealers, banks, trust
companies and clearing corporations and certain other organizations. Indirect
access to the DTC system is available to others such as banks, brokers, dealers
and trust companies that clear through or maintain a custodial relationship with
a participant, either directly or indirectly ("indirect participants").
Ownership of beneficial interests in the Global Certificates will be
limited to persons who have accounts with DTC ("DTC Participants") or persons
who hold interests through DTC Participants. Ownership of beneficial interests
in the Global Certificates will be shown on, and the transfer of that ownership
will be effected only through, records maintained by DTC or its nominee (with
respect to interests of DTC Participants) and the records of DTC Participants
(with respect to interests of persons other than DTC Participants). The laws of
some states require that certain purchasers of securities take
42
<PAGE> 48
physical delivery of such securities. Such limits and such laws may limit the
market for beneficial interests in the Global Certificates.
So long as DTC or its nominee is the registered owner or holder of the
Global Certificates, DTC or such nominee, as the case may be, will be considered
the sole record owner or holder of the New Certificates represented by such
Global Certificates for all purposes under the related Pass Through Trust
Agreements. No beneficial owners of an interest in the Global Certificates will
be able to transfer that interest except in accordance with DTC's applicable
procedures, in addition to those provided for under the Pass Through Trust
Agreements, and, if applicable, the Euroclear System or Cedel Bank Societe
Anonyme.
Payments of the principal of, premium, if any, and interest on the Global
Certificates will be made to DTC or its nominee, as the case may be, as the
registered owner thereof. Neither Atlas, the Trustee, nor any paying agent will
have any responsibility or liability for any aspect of the records relating to
or payments made on account of beneficial ownership interests in the Global
Certificates or for maintaining, supervising or reviewing any records relating
to such beneficial ownership interests.
Atlas expects that DTC or its nominee, upon receipt of any payment of
principal, premium, if any, or interest in respect of the Global Certificates
will credit DTC Participants' accounts with payments in amounts proportionate to
their respective beneficial ownership interests in the principal amount of such
Global Certificates, as shown on the records of DTC or its nominee. Atlas also
expects that payments by DTC Participants to owners of beneficial interests in
such Global Certificates held through such DTC Participants will be governed by
standing instructions and customary practices, as is now the case with
securities held for the accounts of customers registered in the names of
nominees for such customers. Such payments will be the responsibility of such
DTC Participants.
Neither Atlas nor the Trustee will have any responsibility for the
performance by DTC or its participants or indirect participants of their
respective obligations under the rules and procedures governing their
operations.
DEFINITIVE CERTIFICATES
Interests in Global Certificates of any class will be exchangeable or
transferable, as the case may be, for certificates in definitive, fully
registered form without interest coupons (the "Definitive Certificates") only if
(i) Atlas advises the Trustee in writing that DTC is no longer willing or able
to discharge properly its responsibilities as depository with respect to such
Certificates and Atlas is unable to locate a qualified successor within 90 days
of receipt of such notice or, (ii) after the occurrence of certain events of
default or other events specified in the Pass Through Trust Agreement,
Certificateholders with fractional undivided interests aggregating not less than
a majority in interest in such Trust advise the Trustee, Atlas and DTC through
DTC Participants in writing that the continuation of a book-entry system through
DTC (or a successor thereto) is no longer in the Certificateholders' best
interests.
Upon the occurrence of any event described in the immediately preceding
paragraph, the Trustee will be required to notify through participants all
Certificateholders having a beneficial interest in the Global Certificates of
the availability of Definitive Certificates. Upon surrender by DTC of the
certificates representing the Global Certificates and receipt of instructions
for re-registration, the Trustee will reissue the Certificates as Definitive
Certificates to Certificateholders.
Distributions of principal, premium, if any, and interest with respect to
Certificates will thereafter be made by the Trustee directly in accordance with
the procedures set forth in the Pass Through Trust Agreement, to holders in
whose names the Definitive Certificates were registered at the close of business
on the applicable Record Date. Such distributions will be made by check mailed
to the address of such holder as it appears on the register maintained by the
Trustee. The final payment on any Certificate, however, will be made only upon
presentation and surrender of such Certificate at the office or agency specified
in the notice of final distribution to Certificateholders.
43
<PAGE> 49
DESCRIPTION OF THE DEPOSIT AGREEMENTS
The following summary describes material terms of the deposit agreements
("Deposit Agreements"). The summary does not purport to be complete and is
qualified in its entirety by reference to all of the provisions of the Deposit
Agreements. The provisions of the Deposit Agreements are substantially identical
except as otherwise indicated.
GENERAL
Under the Escrow Agreements, the Escrow Agent with respect to each Trust
has entered into a separate Deposit Agreement with the Depositary. The
Depositary has established separate accounts into which the proceeds of the
original placement of the Old Certificates attributable to the applicable Trust
were deposited (each, a "Deposit") on the Issuance Date on behalf of such Escrow
Agent. Both Aircraft were delivered in April 2000 and the applicable amounts
were withdrawn from the Deposits to finance the two Aircraft. On each Regular
Distribution Date the Depositary will pay to the Paying Agent on behalf of the
applicable Escrow Agent, for distribution to the holders of Escrow Receipts, an
amount equal to interest accrued on the Deposit relating to such Trust during
the relevant interest period at the rate per annum applicable to the
Certificates issued by such Trust.
Upon each delivery of the Aircraft during the Delivery Period, the Trustee
for each Trust requested the Escrow Agent relating to such Trust to withdraw
from the Deposit relating to such Trust funds sufficient to enable the Trustee
of such Trust to purchase the Equipment Note of the series applicable to such
Trust issued with respect to such Aircraft. Accrued but unpaid interest on such
Deposit (or portion thereof) withdrawn will be paid on the next Regular
Distribution Date. The Deposit relating to each Trust and interest paid thereon
will not be subject to the subordination provisions of the Intercreditor
Agreement and will not be available to pay any amount due in respect of the
Certificates.
DEPOSITARY
Westdeutsche Landesbank Girozentrale, New York Branch, is the depositary
(the "Depositary"). WestLB, a German universal bank, provides commercial and
investment banking services regionally, nationally and internationally to
public, corporate and bank customers. WestLB is the largest of the German state
banks. At December 31, 1998, WestLB had total assets of approximately DM 540.8
billion ($323.2 billion).
WestLB operates its New York Branch (the "Branch") pursuant to a license
granted by the Superintendent of Banks of the State of New York in 1975. It is
also subject to review and supervision by the Federal Reserve Bank. The Branch
offers a range of financial products and advisory services.
WestLB has short-term unsecured debt ratings of P-1 from Moody's and A-1+
from Standard & Poor's.
WestLB's registered head office is located at Herzogstrasse 15, 40217
Dusseldorf, Germany, and its telephone number is 011-49-21-826-01. The Branch is
located at 1211 Avenue of the Americas, New York, N.Y. 10036, and its telephone
number is 212-852-6000. A copy of WestLB's 1998 Annual Report may be obtained
from the Branch by delivery of a written request to the attention of the Branch
Management.
The description of WestLB above has been provided by WestLB. WestLB,
however, has not been involved in the preparation of, nor does it accept
responsibility for, this prospectus.
Atlas shall have the option to substitute another financial institution
acceptable to the Rating Agencies as Depositary under certain circumstances.
44
<PAGE> 50
DESCRIPTION OF THE ESCROW AGREEMENTS
The following summary describes material terms of the escrow and paying
agent agreements (the "Escrow Agreements"). The summary does not purport to be
complete and is qualified in its entirety by reference to all of the provisions
of the Escrow Agreements. The provisions of the Escrow Agreements are
substantially identical except as otherwise indicated.
First Security Bank, National Association, as escrow agent in respect of
each Trust (the "Escrow Agent"), Wilmington Trust Company, as paying agent on
behalf of the Escrow Agent in respect of each Trust (the "Paying Agent"), each
Trustee and the Initial Purchasers have entered into a separate Escrow Agreement
for the benefit of the Certificateholders of each Trust as holders of the Escrow
Receipts affixed thereto (in such capacity, a "Receiptholder"). The cash
proceeds of the offering of Old Certificates of each Trust were deposited on
behalf of the Escrow Agent (for the benefit of Receiptholders) with the
Depositary as the Deposit relating to such Trust. Both Aircraft were delivered
in April 2000 and the applicable amount of each Deposit was withdrawn from such
Deposit to finance the Aircraft.
The Escrow Agent shall direct the Depositary to pay interest on the
Deposits accrued in accordance with the Deposit Agreement to the Paying Agent
for distribution to the Receiptholders. Each Escrow Agreement requires that the
Paying Agent establish and maintain, for the benefit of the related
Receiptholders, one or more Paying Agent Account(s), which shall be non-interest
bearing. The Paying Agent shall deposit interest on Deposits in the related
Paying Agent Account. The Paying Agent shall distribute these amounts on a
Regular Distribution Date or Special Distribution Date, as appropriate.
The Escrow Agent has issued one or more escrow receipts (the "Escrow
Receipts") which were affixed by the relevant Trustee to each Certificate. Each
Escrow Receipt evidences a fractional undivided interest in amounts from time to
time deposited into the Paying Agent Account and is limited in recourse to
amounts deposited into such account. An Escrow Receipt may not be assigned or
transferred except in connection with the assignment or transfer of the
Certificate to which it is affixed. In connection with the Exchange Offer, each
Escrow Receipt attached to an Old Certificate (an "Old Escrow Receipt") will be
exchanged for an Escrow Receipt attached to a New Certificate (a "New Escrow
Receipt") that will be identical in all material respects to the Old Escrow
Receipt. Each Escrow Receipt will be registered by the Escrow Agent in the same
name and manner as the Certificate to which it is affixed.
DESCRIPTION OF THE LIQUIDITY FACILITIES
The following summary describes material terms of the Liquidity Facilities
and certain provisions of the Intercreditor Agreement relating to the Liquidity
Facilities. The summary does not purport to be complete and is qualified in its
entirety by reference to all of the provisions of the Liquidity Facilities and
the Intercreditor Agreement. The provisions of the Liquidity Facilities are
substantially identical except as otherwise indicated.
GENERAL
The liquidity provider for each trust (the "Liquidity Provider") has
entered into a separate revolving credit agreement (each, a "Liquidity
Facility") with the Subordination Agent. Under each Liquidity Facility, the
Liquidity Provider will, if necessary, make one or more advances ("Interest
Drawings") to the Subordination Agent in an aggregate amount (the "Required
Amount") sufficient to pay interest on the Certificates on up to three
consecutive semiannual Regular Distribution Dates at the respective interest
rates shown on the cover page of this prospectus for such Certificates of the
related Class (the "Stated Interest Rate"). If interest payment defaults occur
which exceed the amount covered by or available under the Liquidity Facility for
any Trust, the Certificateholders of such Trust will bear their allocable share
of the deficiencies to the extent that there are no other sources of funds.
Although WestLB, New York Branch, and MSCS are the initial Liquidity Providers,
the Liquidity Provider for any Trust under certain circumstances may be replaced
by one or more other entities. See "-- Replacement of Liquidity
45
<PAGE> 51
Facilities." The obligations of MSCS to make advances under the Liquidity
Facilities for the Class B Trust and the Class C Trust will be fully and
unconditionally guaranteed by MSDW.
DRAWINGS
The initial amount available under the Liquidity Facilities for each Trust
on the Issuance Date was as follows:
<TABLE>
<CAPTION>
TRUST AVAILABLE AMOUNT
- ----- ----------------
<S> <C>
Class A............................................. $16,278,477
Class B............................................. $ 6,078,289
Class C............................................. $ 6,976,272
</TABLE>
Except as otherwise provided below, the Liquidity Facility for each Trust
will enable the Subordination Agent to make Interest Drawings thereunder on or
promptly after any Regular Distribution Date to pay interest then due and
payable on the Certificates of such Trust at the Stated Interest Rate for such
Trust to the extent that the amount, if any, available to the Subordination
Agent on such Regular Distribution Date is not sufficient to pay such interest;
provided, however, that the maximum amount available to be drawn under a
Liquidity Facility with respect to any Trust on any Regular Distribution Date to
fund any shortfall of interest on Certificates of such Trust will not exceed the
then Maximum Available Commitment under such Liquidity Facility.
The "Maximum Available Commitment" at any time under each Liquidity
Facility is an amount equal to the then Required Amount of such Liquidity
Facility less the aggregate amount of each Interest Drawing outstanding under
such Liquidity Facility at such time, provided that following a Downgrade
Drawing, a Final Drawing or a Non-Extension Drawing under a Liquidity Facility,
the Maximum Available Commitment under such Liquidity Facility shall be zero.
The Liquidity Facility for any Class of Certificates does not provide for
drawings thereunder to pay for principal of or premium on the Certificates of
such Class or any interest on the Certificates of such Class in excess of the
Stated Interest Rate for such Class or more than three semiannual installments
of interest thereon or principal of or interest or premium on the Certificates
of any other Class. (Liquidity Facilities, Section 2.02; Intercreditor
Agreement, Section 3.6) In addition, the Liquidity Facility with respect to each
Trust does not provide for drawings thereunder to pay any amounts payable with
respect to the Deposits relating to such Trust.
Each payment by the Liquidity Provider reduces by the same amount the
Maximum Available Commitment under the related Liquidity Facility, subject to
reinstatement as hereinafter described. With respect to any Interest Drawings
upon reimbursement of the Liquidity Provider in full for the amount of such
Interest Drawings plus interest thereon, the Maximum Available Commitment under
such Liquidity Facility in respect of interest on the Certificates of such Trust
will be reinstated to an amount not to exceed the then Required Amount of such
Liquidity Facility. However, such Liquidity Facility will not be so reinstated
at any time if (i) a Liquidity Event of Default shall have occurred and be
continuing and (ii) less than 65% of the then aggregate outstanding principal
amount of all Equipment Notes are Performing Equipment Notes. With respect to
any other drawings under such Liquidity Facility, amounts available to be drawn
thereunder are not subject to reinstatement. The Required Amount of the
Liquidity Facility for any Trust will be automatically reduced from time to time
to an amount equal to the next three successive interest payments due on the
Certificates of such Trust (without regard to expected future payment of
principal of such Certificates) at the Stated Interest Rate for such Trust.
(Liquidity Facilities, Section 2.04(a); Intercreditor Agreement, Section 3.6(j))
"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 the U.S. Bankruptcy Code, (a) any payment default existing during
the 60-day period under Section 1110(a)(1)(A) of the U.S. Bankruptcy Code (or
such longer
46
<PAGE> 52
period as may apply under Section 1110(b) of the U.S. 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 Owned Aircraft Indenture related
to such Equipment Note (in the case of an Owned Aircraft), and (b) any payment
default occurring after the date of the order of relief in such proceeding will
not be taken into consideration if such payment default is cured under Section
1110(a)(1)(B) of the U.S. Bankruptcy Code before the later of 30 days after the
date of such default or the expiration of the Section 1110 Period.
REPLACEMENT OF LIQUIDITY FACILITIES
If at any time (i) the short-term unsecured debt rating of any Liquidity
Provider or, if applicable, of any guarantor of the obligations of a Liquidity
Provider then issued by any of the Rating Agencies is lower than the Threshold
Rating for the relevant Class or (ii) any guarantee of a Liquidity Provider's
obligations under the relevant Liquidity Facilities becomes invalid or
unenforceable, then the relevant Liquidity Facility may be replaced by a
Replacement Facility. In the event that such Liquidity Facility is not replaced
with a Replacement Facility, within 10 days after notice of the downgrading or
such guarantee becoming invalid or unenforceable and as otherwise provided in
the Intercreditor Agreement, such Liquidity Facility will be drawn in full up to
the then Maximum Available Commitment under such Liquidity Facility (the
"Downgrade Drawing") and the proceeds will be deposited into a cash collateral
account (the "Cash Collateral Account") for such Class of Certificates and used
for the same purposes and under the same circumstances and subject to the same
conditions as cash payments of Interest Drawings under such Liquidity Facility
would be used. (Liquidity Facilities, Section 2.02(c); Intercreditor Agreement,
Section 3.6(c))
A "Replacement Facility" for any Liquidity Facility means an irrevocable
liquidity facility (or liquidity facilities) 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 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 applicable Required Amount and issued by a
person having unsecured short-term debt ratings issued by the Rating Agencies
which are equal to or higher than the Threshold Rating for the relevant Class.
(Intercreditor Agreement, Section 1.1) The provider of any Replacement Facility
will have the same rights (including, without limitation, priority distribution
rights and rights as "Controlling Party") under the Intercreditor Agreement as
the initial Liquidity Provider.
"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 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 and Class C Liquidity Provider.
The Liquidity Facility for each Trust provides that the Liquidity
Provider's obligations thereunder will expire on the earliest of:
- January 26, 2001;
- the date on which the Subordination Agent delivers to such Liquidity
Provider a certification that all of the Certificates of such Trust have
been paid in full;
- the date on which the Subordination Agent delivers to such Liquidity
Provider a certification that a Replacement Facility has been substituted
for such Liquidity Facility;
47
<PAGE> 53
- the fifth Business Day following receipt by the Subordination Agent of a
Termination Notice from such Liquidity Provider (see "-- Liquidity Events
of Default"); or
- the date on which no amount is or may (by reason of reinstatement) become
available for drawing under such Liquidity Facility.
Each Liquidity Facility provides that the scheduled expiration date thereof
may be extended for additional 364-day periods by mutual agreement of the
relevant Liquidity Provider and the Subordination Agent. (Liquidity Facilities,
Section 2.10)
The Intercreditor Agreement provides for the replacement of the Liquidity
Facility for any Trust if such Liquidity Facility is scheduled to expire earlier
than 15 days after the Final Maturity Date for the Certificates of such Trust
and such Liquidity Facility is not extended at least 25 days prior to its then
scheduled expiration date. (Intercreditor Agreement, Section 3.6(d)) If such
Liquidity Facility is not so extended or replaced by the 25th day prior to its
then scheduled expiration date, such Liquidity Facility will be drawn in full up
to the then Maximum Available Commitment under such Liquidity Facility (the
"Non-Extension Drawing"). The proceeds of the Non-Extension Drawing will be
deposited in the Cash Collateral Account for the related Class of Certificates
as cash collateral to be used for the same purposes and under the same
circumstances, and subject to the same conditions, as cash payments of Interest
Drawings under such Liquidity Facility would be used. (Liquidity Facilities,
Section 2.02(b))
Subject to certain limitations, Atlas may, at its option, arrange for a
Replacement Facility at any time to replace the liquidity facility for any Trust
(including without limitation any Replacement Facility described in the
following sentence). In addition, if any liquidity provider shall determine not
to extend any liquidity facility, then such liquidity provider may, at its
option, arrange for a Replacement Facility to replace such liquidity facility
during the period no earlier than 40 days and no later than 25 days prior to the
then scheduled expiration date of such liquidity facility. If any Replacement
Facility is provided at any time after a Downgrade Drawing or a Non-Extension
Drawing under any Liquidity Facility, the funds with respect to such liquidity
facility on deposit in the Cash Collateral Account for such Trust will be
returned to the liquidity provider being replaced. (Intercreditor Agreement,
Section 3.6(e))
Upon receipt by the Subordination Agent of a Termination Notice with
respect to any Liquidity Facility from the relevant Liquidity Provider, the
Subordination Agent shall request a final drawing (a "Final Drawing") under such
Liquidity Facility in an amount equal to the then Maximum Available Commitment
thereunder. The Subordination Agent will hold the proceeds of the Final Drawing
in the Cash Collateral Account for the related Trust as cash collateral to be
used for the same purposes and under the same circumstances, and subject to the
same conditions, as cash payments of Interest Drawings under such Liquidity
Facility would be used. (Liquidity Facilities, Section 2.02(d); Intercreditor
Agreement, Section 3.6(i))
REIMBURSEMENT OF DRAWINGS
The Subordination Agent must reimburse amounts drawn under any Liquidity
Facility by reason of an Interest Drawing, Final Drawing, Downgrade Drawing or
Non-Extension Drawing and interest thereon, but only to the extent that the
Subordination Agent has funds available therefor.
Interest Drawings and Final Drawings
Amounts drawn under any Liquidity Facility by reason of an Interest Drawing
or the Final Drawing will be immediately due and payable, together with interest
on the amount of such drawing. From the date of each such drawing to (but
excluding) the third business day following the applicable Liquidity Provider's
receipt of the notice of such drawing, interest will accrue at the Base Rate
plus 2.25% per annum, in the case of the Class A Trust, and 2.00% per annum in
the case of the Class B Trust or the Class C Trust. Thereafter, interest will
accrue at LIBOR for the applicable Interest Period plus 2.25% per annum in the
case of the Class A Trust and 2.00% per annum in the case of the Class B Trust
or the Class C Trust. In the case of a Final Drawing, however, the Subordination
Agent may convert the Final
48
<PAGE> 54
Drawing into a drawing bearing interest at the Base Rate plus 2.25% per annum,
in the case of the Class A Trust, and 2.00% per annum, in the case of the Class
B Trust and the Class C Trust, on the last day of an Interest Period for such
Drawing.
"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%).
"LIBOR" 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
applicable 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.
Downgrade Drawings and Non-Extension Drawings
The amount drawn under any Liquidity Facility for any Trust by reason of a
Downgrade Drawing or a Non-Extension Drawing will be treated as follows:
- such amount will be released on any Distribution Date to the relevant
Liquidity Provider to the extent that such amount exceeds the Required
Amount;
- any portion of such amount withdrawn from the Cash Collateral Account for
such Certificate to pay interest on such Certificates will be treated in
the same way as Interest Drawings; and
- the balance of such amount will be invested in Eligible Investments.
A Downgrade Drawing or a Non-Extension Drawing under the Liquidity Facility
for the Class A Trust (other than any portion thereof applied to the payment of
interest on the Class A Certificates) will bear interest equal to the earnings,
if any, on funds on deposit in the Cash Collateral Account for the Class A
Trust.
A Downgrade Drawing or a Non-Extension Drawing under the Liquidity Facility
for the Class B Trust or the Class C Trust (other than any portion thereof
applied to the payment of interest on the Certificates of Class B or Class C,
respectively) will bear interest at (x) the greater of (A) an amount equal to
the earnings, if any, plus 0.50% per annum on the outstanding amount from time
to time of such Downgrade Drawing or Non-Extension Drawing for the Class B Trust
or the Class C Trust, as applicable, for the relevant interest period and (B)
interest on the outstanding amount from time to time of such Downgrade Drawing
or Non-Extension Drawing, (i) at the Base Rate plus 0.50% per annum with respect
to the period from the date of such drawing to (but excluding) the third
business day following the applicable Liquidity Provider's receipt of the notice
of such drawing, (ii) thereafter subject to clause (y) below, at a rate equal to
LIBOR for the applicable interest period plus 0.50% per annum, and (y) from and
after the date, if any, on which it is converted into a Final Drawing as
described below under "-- Liquidity Events of Default," at a rate equal to LIBOR
for the applicable Interest Period (or, as described in the fourth preceding
paragraph, the Base Rate) plus 2.00% per annum. (Liquidity Facilities, Sections
2.06 and 3.07)
49
<PAGE> 55
LIQUIDITY EVENTS OF DEFAULT
Events of Default under each Liquidity Facility (each, a "Liquidity Event
of Default") will consist of:
- the acceleration of all the Equipment Notes; and
- certain bankruptcy or similar events involving Atlas. (Liquidity
Facilities, Section 1.01)
If (i) any Liquidity Event of Default under any Liquidity Facility has
occurred and is continuing and (ii) less than 65% of the aggregate outstanding
principal amount of all Equipment Notes are Performing Equipment Notes, the
applicable Liquidity Provider may, in its discretion, give a notice of
termination of the related Liquidity Facility (a "Termination Notice"). The
Termination Notice will have the following consequences:
- the related Liquidity Facility will expire on the fifth Business Day
after the date on which such Termination Notice is received by the
Subordination Agent;
- the Subordination Agent will promptly request, and the Liquidity Provider
will make, a Final Drawing thereunder in an amount equal to the then
Maximum Available Commitment thereunder;
- any Drawing remaining unreimbursed as of the date of termination will be
automatically converted into a Final Drawing under such Liquidity
Facility; and
- all amounts owing to the applicable Liquidity Provider will be
automatically accelerated.
Notwithstanding the foregoing, the Subordination Agent will be obligated to
pay amounts owing to the applicable Liquidity Provider only to the extent of
funds available therefor after giving effect to the payments in accordance with
the provisions set forth under "Description of the Intercreditor Agreement --
Priority of Distributions." (Liquidity Facilities, Section 6.01) Upon the
circumstances described below under "Description of the Intercreditor
Agreement -- Intercreditor Rights," a Liquidity Provider may become the
Controlling Party with respect to the exercise of remedies under the Indentures.
(Intercreditor Agreement, Section 2.6(c))
INITIAL LIQUIDITY PROVIDERS
The initial Liquidity Provider for the Class A Trust is WestLB, acting
through its New York Branch.
The initial Liquidity Provider for the Class B Trust and the Class C Trust
is MSCS. MSCS, a subsidiary of MSDW, commenced operation in August 1985 and was
established to conduct, primarily as principal, an interest rate, currency and
equity derivatives products business. MSCS also engages in a variety of other
related transactions.
MSDW, the guarantor of MSCS's obligations under its Liquidity Facilities,
is a global financial services firm. MSDW has long-term unsecured debt ratings
of Aa3 from Moody's and A+ from Standard & Poor's and short-term unsecured debt
ratings of P-1 from Moody's and A-1 from Standard & Poor's. MSDW files reports,
proxy statements and other information with the Commission pursuant to the
information requirements of the Exchange Act. Such information can be inspected
and copied at the public reference facilities of the Commission, or
electronically accessed through the Internet.
The descriptions of MSCS and MSDW above have been provided by the
respective parties. None of MSCS or MSDW, however, has been involved in the
preparation of or accepts responsibility for this prospectus Morgan Stanley &
Co. Incorporated, a subsidiary of MSDW and an affiliate of MSCS, acted as an
Initial Purchaser of the Certificates.
50
<PAGE> 56
DESCRIPTION OF THE INTERCREDITOR AGREEMENT
The following summary describes material provisions of the intercreditor
agreement (the "Intercreditor Agreement") among the Trustees, the Liquidity
Providers, Wilmington Trust Company, as subordination agent (the "Subordination
Agent") and any holder of Class D Equipment Notes, if issued. The summary does
not purport to be complete and is qualified in its entirety by reference to all
of the provisions of the Intercreditor Agreement.
INTERCREDITOR RIGHTS
Controlling Party
Each Loan Trustee is directed in taking, or refraining from taking, any
action thereunder or with respect to the Equipment Notes issued under the
related Indenture, by the holders of at least a majority of the outstanding
principal amount of the Equipment Notes issued under such Indenture, so long as
no Indenture Event of Default (which, with respect to Leased Aircraft, has not
been cured by the applicable Owner Trustee or Owner Participant) shall have
occurred and be continuing thereunder. For so long as the Subordination Agent is
the registered holder of the Equipment Notes, the Subordination Agent will act
with respect to the preceding sentence in accordance with the directions of the
Trustees for whom the Equipment Notes issued under such Indenture are held as
Trust Property, to the extent constituting, in the aggregate, directions with
respect to the required principal amount of Equipment Notes.
After the occurrence and during the continuance of an Indenture Event of
Default under such Indenture (which, with respect to Leased Aircraft, has not
been cured by the applicable Owner Trustee or Owner Participant), each Loan
Trustee will be directed in taking, or refraining from taking, any action
thereunder or with respect to the Equipment Notes issued under the related
Indenture, including acceleration of such Equipment Notes or foreclosing the
lien on the related Aircraft, by the Controlling Party, subject to the
limitations described below. See "Description of the Certificates -- Indenture
Event of Defaults and Certain Rights Upon an Indenture Event of Default" for a
description of the rights of the Certificateholders of each Trust to direct the
respective Trustees.
The "Controlling Party" will be:
- the Class A Trustee;
- upon payment of Final Distributions to the holders of Class A
Certificates, the Class B Trustee; and
- upon payment of Final Distributions to the holders of Class B
Certificates, the Class C Trustee.
At any time after 18 months from the earlier to occur of (x) 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, (y) the date on which the entire amount of any
Downgrade Drawing or Non-Extension Drawing has been withdrawn from the relevant
Cash Collateral Account to pay interest on the relevant Class of Certificates
and remains unreimbursed and (z) the date on which all Equipment Notes shall
have been accelerated, the Liquidity Provider with the greatest amount of
unreimbursed Liquidity Obligations shall have the right to become the
Controlling Party with respect to any Indenture.
For purposes of giving effect to the rights of the Controlling Party, the
Trustees (other than the Controlling Party) shall irrevocably agree, and the
Certificateholders (other than the Certificateholders represented by the
Controlling Party) will be deemed to agree by virtue of their purchase of
Certificates, that the Subordination Agent, as record holder of the Equipment
Notes, shall exercise its voting rights in respect of the Equipment Notes as
directed by the Controlling Party. (Intercreditor Agreement, Section 2.6) For a
description of certain limitations on the Controlling Party's rights to exercise
remedies, see "Description of the Equipment Notes -- Remedies."
51
<PAGE> 57
"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 payable on the Deposit
relating to such Trust) and (y) the Pool Balance of such Certificates as of the
immediately preceding Distribution Date (less the amount of the Deposit 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.
Sale of Equipment Notes or Aircraft
Upon the occurrence and during the continuation of any Indenture Event of
Default under any Indenture, the Controlling Party may accelerate and, subject
to the provisions of the immediately following sentence, direct the
Subordination Agent to sell all (but not less than all) of the Equipment Notes
issued under such Indenture to any person. So long as any Certificates are
outstanding, during nine months after the earlier of (x) the acceleration of the
Equipment Notes under any Indenture and (y) the bankruptcy or insolvency of
Atlas, without the consent of each Trustee, 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. In addition, with respect to any Leased Aircraft, the amount
and payment dates of rentals payable by Atlas under the related Lease for such
Aircraft may not be adjusted during this nine-month period, 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. The discounted present value
of all rentals shall be determined using the weighted average interest rate of
the Equipment Notes outstanding under such Indenture as the discount rate.
"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 (1) 75% of
the Appraised Current Market Value of such Aircraft and (2) the aggregate
outstanding principal amount of such Equipment Notes, plus accrued and unpaid
interest thereon.
PRIORITY OF DISTRIBUTIONS
Before a Triggering Event
So long as no Triggering Event shall have occurred (whether or not
continuing) all payments in respect of the Equipment Notes and certain other
payments received on any Distribution Date will be promptly distributed by the
Subordination Agent on such Distribution Date in the following order of
priority:
- to the Liquidity Providers to the extent required to pay the Liquidity
Expenses;
- to the Liquidity Providers to the extent required to pay interest accrued
on the Liquidity Obligations;
- to the Liquidity Providers to the extent required to pay or reimburse the
Liquidity Providers for the Liquidity Obligations (other than amounts
payable pursuant to the two preceding clauses) and/or, if applicable, to
replenish each Cash Collateral Account up to the applicable Required
Amounts;
- to the Class A Trustee to the extent required to pay Expected
Distributions on the Class A Certificates;
- to the Class B Trustee to the extent required to pay Expected
Distributions on the Class B Certificates;
52
<PAGE> 58
- to the Class C Trustee to the extent required to pay Expected
Distributions on the Class C Certificates;
- if Class D Certificates have been issued, to the trustee for the Class D
Trust (the "Class D Trustee") to the extent required to pay "Expected
Distributions" (to be defined in a manner equivalent to the definition
below for other Classes of Certificates) on the Class D Certificates; and
- to the Subordination Agent and each Trustee for the payment of certain
fees and expenses.
"Liquidity Obligations" means the obligations to reimburse or to pay the
Liquidity Providers all principal, interest, fees and other amounts owing to
them under each Liquidity Facility or certain other agreements.
"Liquidity Expenses" means the Liquidity Obligations other than any
interest accrued thereon or the principal amount of any drawing under the
Liquidity Facilities.
"Expected Distributions" means, with respect to the Certificates of any
Trust on any Distribution Date (the "Current Distribution Date"), the sum of (1)
accrued and unpaid interest on such Certificates (excluding interest, if any,
payable with respect to the Deposits relating to such Trust) and (2) the
difference between:
(A) the Pool Balance of such Certificates as of the immediately
preceding Distribution Date (or, if the Current Distribution Date is the
first Distribution Date, the original aggregate face amount of the
Certificates of such Trust); and
(B) the Pool Balance of such Certificates as of the Current
Distribution Date calculated on the basis that (i) the principal of the
Equipment Notes held in such Trust has been paid when due (whether at
stated maturity, upon redemption, prepayment, purchase 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 Intercreditor Agreement 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 the Deposit
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 determining the priority of distributions on account of the
redemption, purchase or prepayment of all of the Equipment Notes issued pursuant
to an Indenture, clause (1) of the definition of Expected Distributions shall be
deemed to read as follows: "(1) accrued, due and unpaid interest on such
Certificates (excluding interest, if any, payable with respect to the Deposits
relating to such Trust) together with (without duplication) accrued and unpaid
interest on a portion of such Certificates equal to the outstanding principal
amount of the Equipment Notes being redeemed, purchased or prepaid (immediately
prior to such redemption, purchase or prepayment)."
After a Triggering Event
Subject to the terms of the Intercreditor Agreement, upon the occurrence of
a Triggering Event and at all times thereafter, all funds received by the
Subordination Agent in respect of the Equipment Notes and certain other payments
will be promptly distributed by the Subordination Agent in the following order
of priority:
- to the Subordination Agent, any Trustee, any Certificateholder and the
Liquidity Providers to the extent required to pay certain out-of-pocket
costs and expenses actually incurred by the Subordination Agent or any
Trustee or to reimburse any Certificateholder or the Liquidity Providers
in respect of payments made to the Subordination Agent or any Trustee in
connection with the protection or realization of the value of the
Equipment Notes, any Trust Indenture Estate under
53
<PAGE> 59
(and as defined in) any Leased Aircraft Indenture or Collateral under
(and as defined in) any Owned Aircraft Indenture (collectively, the
"Administration Expenses");
- to the Liquidity Providers to the extent required to pay the Liquidity
Expenses;
- to the Liquidity Providers to the extent required to pay interest accrued
on the Liquidity Obligations;
- to the Liquidity Providers to the extent required to pay the outstanding
amount of all Liquidity Obligations and/or, if applicable, with respect
to any particular Liquidity Facility, unless (x) less than 65% of the
aggregate outstanding principal amount of all Equipment Notes are
Performing Equipment Notes and a Liquidity Event of Default shall have
occurred and is continuing under such Liquidity Facility or (y) a Final
Drawing shall have occurred under such Liquidity Facility, to replenish
the Cash Collateral Account with respect to such Liquidity Facility up to
the Required Amount for the related Class of Certificates (less the
amount of any repayments of Interest Drawings under such Liquidity
Facility while sub-clause (x) of this clause is applicable);
- to the Subordination Agent, any Trustee or any Certificateholder to the
extent required to pay certain fees, taxes, charges and other amounts
payable;
- to the Class A Trustee to the extent required to pay Adjusted Expected
Distributions on the Class A Certificates.
- to the Class B Trustee to the extent required to pay Adjusted Expected
Distributions on the Class B Certificates;
- to the Class C Trustee to the extent required to pay Adjusted Expected
Distributions on the Class C Certificates; and
- if Class D Certificates have been issued, to the Class D Trustee to the
extent required to pay "Adjusted Expected Distributions" (to be defined
in a manner equivalent to the definition below for other Classes of
Certificates) on the Class D Certificates.
"Adjusted Expected Distributions" means, with respect to the Certificates
of any Trust on any Current Distribution Date, the sum of (1) accrued and unpaid
interest on such Certificates (excluding interest, if any, payable with respect
to the Deposits relating to such Trust) and (2) the greater of:
(A) the difference between (x) the Pool Balance of such Certificates
as of the immediately preceding Distribution Date (or, if the Current
Distribution Date is the first Distribution Date, the original aggregate
face amount of the Certificates of such Trust) and (y) the Pool Balance of
such Certificates as of the Current Distribution Date calculated on the
basis that (i) the principal of the Equipment Notes other than Performing
Equipment Notes (the "Non-Performing Equipment Notes") held in such Trust
has been paid in full and such payments have been distributed to the
holders of such Certificates, (ii) the principal of the Performing
Equipment Notes held in such Trust has been paid when due (but without
giving effect to any acceleration of Performing Equipment Notes) and such
payments have been distributed to the holders of such Certificates and
(iii) the principal of any Equipment Notes formerly held in such Trust that
have been sold pursuant to the Intercreditor Agreement has been paid in
full and such payments have been distributed to the holders of such
Certificates, but without giving effect to any reduction in the Pool
Balance as a result of any distribution attributable to the Deposit
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
54
<PAGE> 60
Deposit for such Class of Certificates) other than any portion of such
Deposit thereafter used to acquire Equipment Notes pursuant to the Note
Purchase Agreement (the amount described in this clause (i), the "Current
Pool Balance"), 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.
For purposes of calculating Expected Distributions or 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
Expected Distributions or Adjusted Expected Distributions.
"Aggregate LTV Collateral Amount" for any Class of Certificates for any
Distribution Date means the product of (i) the sum of the applicable LTV
Collateral Amounts for each 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.
"LTV Collateral Amount" of any Aircraft for any Class of Certificates
means, as of any Distribution Date, the lesser of (i) the LTV Ratio for such
Class of Certificates multiplied by the Appraised Current Market Value of such
Aircraft (or with respect to any such Aircraft which has suffered an Event of
Loss under and as defined in the relevant Lease, in the case of a Leased
Aircraft, or relevant 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 Certificates 39.0%, for the Class B
Certificates 53.0% and for the Class C Certificates 68.0%.
"Appraised Current Market Value" of any Aircraft means the lower of the
average and the median of the most recent three LTV Appraisals of such Aircraft.
After a Triggering Event occurs and any Equipment Note becomes a
Non-Performing Equipment Note, the Subordination Agent shall obtain LTV
Appraisals of the Aircraft securing such Equipment Note as soon as practicable
and additional LTV Appraisals on or prior to each anniversary of the date of
such initial LTV Appraisals; provided that if the Controlling Party reasonably
objects to the appraised value of the Aircraft shown in such LTV Appraisals, the
Controlling Party shall have the right to obtain or cause to be obtained
substitute LTV Appraisals (including LTV Appraisals based upon physical
inspection of such Aircraft).
"LTV Appraisal" means a current fair market value appraisal (which may be a
"desk-top" appraisal) performed by any Appraiser or any other nationally
recognized appraiser on the basis of an arm's-length transaction between an
informed and willing purchaser under no compulsion to buy and an informed and
willing seller under no compulsion to sell and both having knowledge of all
relevant facts.
Interest Drawings under the Liquidity Facility and withdrawals from the
Cash Collateral Account, in each case in respect of interest on the Certificates
of any Trust, will be distributed to the Trustee for such Trust, notwithstanding
the priority of distributions set forth in the Intercreditor Agreement and
otherwise described herein.
ADDITION OF TRUSTEE FOR CLASS D CERTIFICATES
If the Class D Certificates are issued, the Class D Trustee will become a
party to the Intercreditor Agreement.
55
<PAGE> 61
THE SUBORDINATION AGENT
Wilmington Trust Company is the Subordination Agent under the Intercreditor
Agreement. Atlas and its affiliates may from time to time enter into banking and
trustee relationships with the Subordination Agent and its affiliates. The
Subordination Agent's address is Wilmington Trust Company, One Rodney Square,
1100 North Market Street, Wilmington, Delaware 19890-0001, Attention: Corporate
Trust Administration.
The Subordination Agent may resign at any time, in which event a successor
Subordination Agent will be appointed as provided in the Intercreditor
Agreement. The Controlling Party may remove the Subordination Agent for cause as
provided in the Intercreditor Agreement. In such circumstances, a successor
Subordination Agent will be appointed as provided in the Intercreditor
Agreement. Any resignation or removal of the Subordination Agent and appointment
of a successor Subordination Agent does not become effective until acceptance of
the appointment by the successor Subordination Agent. (Intercreditor Agreement,
Section 8.1)
DESCRIPTION OF THE AIRCRAFT AND THE APPRAISALS
THE AIRCRAFT
The Aircraft consist of two new Boeing 747-400F aircraft, both of which
were delivered by the manufacturer to Atlas in April 2000. The Aircraft have
been designed to be in compliance with Stage 3 noise level standards. The Boeing
747-400F aircraft is a long-range aircraft with payload capacity of
approximately 150 tons. The engine type expected to be utilized on each Aircraft
is the General Electric Model CF6-80C2B5FG04.
THE APPRAISALS
The table below sets forth the appraised base values as determined by
AvSolutions, Inc. ("AvS"), Morton Beyer and Agnew, Inc. ("MBA") and Simat
Helliesen & Eichner, Inc. ("SH&E"), independent aircraft appraisal and
consulting firms (the "Appraisers") and certain additional information regarding
the Aircraft.
<TABLE>
<CAPTION>
AIRCRAFT SCHEDULED APPRAISED BASE VALUE
REGISTRATION MANUFACTURER'S DELIVERY ------------------------------------------
NUMBER SERIAL NUMBER MONTH(1) AVS MBA SH&E
- ------------ -------------- ----------- ------------ ------------ ------------
<S> <C> <C> <C> <C> <C>
N409MC................. 30558 July 2000 $164,600,000 $161,100,000 $153,200,000
N412MC................. 30559 August 2000 164,600,000 161,770,000 153,500,000
</TABLE>
- ---------------
(1) The actual delivery month for each Aircraft was April 2000.
For purposes of the foregoing chart, each Appraiser was asked to provide
its opinion as to the appraised base value of each Aircraft projected as of the
scheduled delivery month of each such Aircraft. As part of this process, all
three Appraisers performed "desk-top" appraisals without any physical inspection
of the Aircraft. The appraisals are based on various assumptions and
methodologies, which vary among the appraisals. The Appraisers have delivered
letters summarizing their respective appraisals, copies of which are annexed to
this prospectus as Appendix B. For a definition of appraised base value and a
discussion of the assumptions and methodologies used in each of the appraisals,
reference is hereby made to such letters.
An appraisal is only an estimate of value. It is not indicative of the
price at which an aircraft may be purchased from the manufacturer and should not
be relied upon as a measure of realizable value. The proceeds realized upon a
sale of any Aircraft may be less than its appraised base value. The value of the
Aircraft in the event of the exercise of remedies under the applicable Indenture
will depend on market and economic conditions, the availability of buyers, the
condition of the Aircraft and other similar factors. Accordingly, there can be
no assurance that the proceeds realized upon any such exercise with respect to
56
<PAGE> 62
the Equipment Notes and the Aircraft pursuant to the applicable Indenture would
equal the appraised value of such Aircraft or be sufficient to satisfy in full
payments due on the Equipment Notes issued thereunder or the Certificates.
DELIVERIES OF AIRCRAFT
The Note Purchase Agreement provides that the delivery period (the
"Delivery Period") will expire on December 31, 2000, subject to extension if a
labor strike occurs at Boeing prior to December 31, 2000, by the number of days
that such strike continues in effect (the "Delivery Period Termination Date").
DESCRIPTION OF THE EQUIPMENT NOTES
The statements under this caption describe certain terms of the Equipment
Notes, the Indentures, the Leases, the Participation Agreements, the trust
agreements under which the Owner Trustees act on behalf of the Owner
Participants (the "Trust Agreements") and the Note Purchase Agreement and do not
purport to be complete. The summaries make use of terms defined in and are
qualified in their entirety by reference to all of the provisions of the
Equipment Notes, the Indentures, the Leases, the Participation Agreements, the
Trust Agreements and the Note Purchase Agreement, forms of which were filed as
exhibits to the Registration Statement and copies of which are available as set
forth under the heading "Where You Can Find More Information." Except as
otherwise indicated, the following summaries relate to the Equipment Notes, the
Indenture, the Lease, the Participation Agreement and the Trust Agreement that
may be applicable to each Aircraft.
Under the Note Purchase Agreement, Atlas has the option of entering into a
leveraged lease financing or a secured debt financing with respect to each of
the Aircraft.
- If Atlas chooses to enter into a leveraged lease financing with respect
to an Aircraft, the Note Purchase Agreement provides for the relevant
parties to enter into a Participation Agreement, a Lease and a Leased
Aircraft Indenture (among other documents) relating to the financing of
such Leased Aircraft.
- If Atlas chooses to enter into a secured debt financing with respect to
an Aircraft, the Note Purchase Agreement provides for the relevant
parties to enter into a Participation Agreement and an Owned Aircraft
Indenture relating to the financing of such Owned Aircraft.
The description of such agreements in this prospectus is based on the forms
of such agreements annexed to the Note Purchase Agreement. In the case of Leased
Aircraft, the terms of the agreements actually entered into may differ from the
forms of such agreements and, consequently, may differ from the description of
such agreements contained in this prospectus. This is because a third
party -- the owner participant that will be the beneficial owner of the Leased
Aircraft (the "Owner Participant") -- will provide a portion of the financing of
such Aircraft and may request changes. However, under the Note Purchase
Agreement, the terms of such agreements are required to (i) contain the
Mandatory Documents Terms and (ii) not vary the Mandatory Economic Terms. In
addition, Atlas will be obligated (i) to certify to the Trustees that any such
modifications do not materially and adversely affect the Certificateholders and
(ii) to obtain written confirmation from each Rating Agency that the use of
versions of such agreements modified in any material respect would not result in
a withdrawal, suspension or downgrading of the ratings of any Class of
Certificates. See "Description of the Certificates -- Obligation to Purchase
Equipment Notes." Each Owner Participant will be required to satisfy certain
requirements, including having a minimum combined capital and surplus or net
worth.
GENERAL
The Equipment Notes will be issued in up to three series with respect to
each Aircraft (the "Series A Equipment Notes," the "Series B Equipment Notes,"
the "Series C Equipment Notes," and, collectively, the "Equipment Notes"). Atlas
may elect to issue an additional series with respect to Owned Aircraft (the
57
<PAGE> 63
"Series D Equipment Notes"), which will be funded from sources other than the
original placement of the Old Certificates. See "Description of the
Certificates -- Possible Issuance of Series D Equipment Notes." The Equipment
Notes with respect to each Leased Aircraft will be issued under a separate
Leased Aircraft Indenture between First Security Bank, National Association, as
owner trustee of a trust for the benefit of the Owner Participant who will be
the beneficial owner of such Aircraft (each, an "Owner Trustee"), and Wilmington
Trust Company, as an indenture trustee thereunder (each, a "Leased Aircraft
Trustee"). The Equipment Notes with respect to each Owned Aircraft will be
issued under a separate Owned Aircraft Indenture between Atlas and Wilmington
Trust Company, as indenture trustee thereunder (each, an "Owned Aircraft
Trustee" and, together with the other Owned Aircraft Trustees and the Leased
Aircraft Trustees, the "Loan Trustees"). The Indentures will not provide for
defeasance, or discharge upon deposit of cash or certain obligations of the
United States.
The related Owner Trustee will lease each Leased Aircraft to Atlas pursuant
to a separate Lease between such Owner Trustee and Atlas with respect to such
Leased Aircraft. Under each Lease, Atlas will be obligated to make or cause to
be made rental and other payments to the related Leased Aircraft Trustee on
behalf of the related Owner Trustee, which rental and other payments will be at
least sufficient to pay in full when due all payments required to be made on the
Equipment Notes issued with respect to such Leased Aircraft. The Equipment Notes
issued with respect to the Leased Aircraft are not, however, direct obligations
of, or guaranteed by, Atlas. Atlas' rental obligations under each Lease and
Atlas' obligations under the Equipment Notes issued with respect to each Owned
Aircraft will be general obligations of Atlas.
SUBORDINATION
The Indenture provides for the following subordination provisions
applicable to the Equipment Notes:
- Series A Equipment Notes issued in respect of an Aircraft will rank
senior in right of payment to other Equipment Notes issued in respect of
such Aircraft;
- Series B Equipment Notes issued in respect of an Aircraft will rank
junior in right of payment to the Series A Equipment Notes issued in
respect of such Aircraft and will rank senior to the Series C and, if
applicable, Series D Equipment Notes issued in respect of such Aircraft;
- Series C Equipment Notes issued in respect of such Aircraft will rank
junior in right of payment to the Series A and Series B Equipment Notes
issued in respect of such Aircraft and, if Series D Equipment Notes are
issued with respect to such Aircraft, senior to such Series D Equipment
Notes; and
- If Atlas elects to issue Series D Equipment Notes with respect to an
Aircraft, they will be subordinated in right of payment to the Series A,
Series B, and Series C Equipment Notes issued with respect to such
Aircraft.
PRINCIPAL AND INTEREST PAYMENTS
Subject to the provisions of the Intercreditor Agreement, interest paid on
the Equipment Notes held in each Trust will be passed through to the
Certificateholders of such Trust on the dates and at the rate per annum set
forth on the cover page of this prospectus with respect to Certificates issued
by such Trust until the final expected Regular Distribution Date for such Trust.
Subject to the provisions of the Intercreditor Agreement, principal paid on the
Equipment Notes held in each Trust will be passed through to the
Certificateholders of such Trust in scheduled amounts on the dates set forth
herein until the final expected Regular Distribution Date for such Trust.
Interest will be payable on the unpaid principal amount of each Equipment
Note at the rate applicable to such Equipment Note on January 2 and July 2 of
each year, commencing on July 2, 2000. Such interest will be computed on the
basis of a 360-day year of twelve 30-day months.
58
<PAGE> 64
Scheduled principal payments on the Equipment Notes will be made on January
2 and July 2 in certain years, commencing on, January 2, 2001 (or, in the case
of Equipment Notes issued after such date, commencing with the first such date
to occur after initial issuance thereof). See "Description of the
Certificates -- Pool Factors" for a discussion of the scheduled payments of
principal of the Equipment Notes and possible revisions thereto.
If any date scheduled for a payment of principal, premium (if any) or
interest with respect to the Equipment Notes is not a Business Day, such payment
will be made on the next succeeding Business Day without any additional
interest.
REDEMPTION
If an Event of Loss occurs with respect to an Aircraft and such Aircraft is
not replaced by Atlas under the related Lease (in the case of a Leased Aircraft)
or under the related Owned Aircraft Indenture (in the case of an Owned
Aircraft), the Equipment Notes issued with respect to such Aircraft will be
redeemed, in whole, in each case at a price equal to the aggregate unpaid
principal amount thereof, together with accrued interest thereon to, but not
including, the date of redemption, but without premium, on a Special
Distribution Date. (Leased Aircraft Indentures, Section 2.10(a)) (Owned Aircraft
Indentures, Section 2.10)
If Atlas exercises its right to terminate a Lease under Section 9 or
Section 17.3.1 of such Lease, the Equipment Notes relating to the applicable
Leased Aircraft will be redeemed, in whole, on a Special Distribution Date at a
price equal to the aggregate unpaid principal amount thereof, together with
accrued and unpaid interest thereon to, but not including, the date of
redemption, plus a Make-Whole Premium, if any. (Leased Aircraft Indentures,
Section 2.10(b)) See "-- The Leases and Certain Provisions of the Owned Aircraft
Indentures -- Lease Termination."
All (but not less than all) of the Equipment Notes issued with respect to a
Leased Aircraft may be redeemed prior to maturity at the option of the issuer
with the prior written consent of Atlas and all of the Equipment Notes issued
with respect to an Owned Aircraft may be redeemed prior to maturity at the
option of Atlas, in each case at a price equal to the aggregate unpaid principal
thereof, together with accrued interest thereon to, but not including, the date
of redemption, plus a Make-Whole Premium, if any. (Indentures, Section 2.11)
Notice of redemption shall be given to each Note Holder by the Loan Trustee
not less than 15 nor more than 60 days prior to the applicable redemption date.
If notice of such a redemption shall have been given (A) in connection with a
refinancing of Equipment Notes with respect to an Aircraft, such notice may be
revoked not later than three days prior to the proposed redemption date and (B)
in connection with the anticipated termination of a Lease as described above,
such notice may be revoked, and shall be deemed revoked, in the event the Lease
does not in fact terminate. In addition, the redemption date may be postponed
for up to 10 Business Days. (Indentures, Section 2.12)
If, with respect to a Leased Aircraft, (x) one or more Lease Events of
Default shall have occurred and are continuing, (y) in the event of a bankruptcy
proceeding involving Atlas, (i) during the Section 1110 Period, the trustee in
such proceeding or Atlas does not assume or agree to perform its obligations
under the related Lease or (ii) at any time after assuming or agreeing to
perform such obligations, such trustee or Atlas ceases to perform such
obligations such that the stay period applicable under the U.S. Bankruptcy Code
comes to an end or (z) the Equipment Notes with respect to such Leased Aircraft
have been accelerated or the Leased Aircraft Trustee with respect to such
Equipment Notes takes action or notifies the applicable Owner Trustee that it
intends to take action to foreclose the lien of the related Leased Aircraft
Indenture or otherwise commence the exercise of any significant remedy under
such Indenture or the related Lease, then in each case all, but not less than
all, of the Equipment Notes issued with respect to such Leased Aircraft may be
purchased by the related Owner Trustee or Owner Participant on the applicable
purchase date at a price equal to the aggregate unpaid principal thereof,
together with accrued and unpaid interest thereon to, but not including, the
date of purchase, but without any premium (provided that a Make-Whole Premium
shall be payable if such
59
<PAGE> 65
Equipment Notes are to be purchased pursuant to clause (x) when a Lease Event of
Default shall have occurred and been continuing for less than 180 days). (Leased
Aircraft Indentures, Section 2.13) Atlas as owner of the Owned Aircraft has no
comparable right under the Owned Aircraft Indentures to purchase Equipment Notes
under such circumstances.
"Make-Whole Premium" means, with respect to any Equipment Note, an amount
(as determined by an independent investment bank 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 under the
applicable Indenture (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 Premium, "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(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
in 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 Premium
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.
"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.
SECURITY
Leased Aircraft
The Equipment Notes issued with respect to each Leased Aircraft will be
secured by:
- an assignment by the related Owner Trustee to the related Leased Aircraft
Trustee of such Owner Trustee's rights, except for certain rights, under
the Lease with respect to the related Leased Aircraft, including the
right to receive payments of rent thereunder;
- a mortgage to such Leased Aircraft Trustee of such Aircraft, subject to
the rights of Atlas under such Lease; and
- an assignment to such Leased Aircraft Trustee of certain of such Owner
Trustee's rights under the purchase agreement between Atlas and the
Leased Aircraft manufacturer.
60
<PAGE> 66
Unless and until an Indenture Event of Default with respect to a Leased
Aircraft has occurred and is continuing, the Leased Aircraft Trustee may not
exercise the rights of the Owner Trustee under the related Lease, except the
Owner Trustee's right to receive payments of rent due thereunder. The assignment
by the Owner Trustee to the Leased Aircraft Trustee of its rights under the
related Lease will exclude certain rights of such Owner Trustee and the related
Owner Participant, including the rights of the Owner Trustee and the Owner
Participant with respect to indemnification by Atlas for certain matters,
insurance proceeds payable to such Owner Trustee in its individual capacity or
to such Owner Participant under public liability insurance maintained by Atlas
under such Lease or by such Owner Trustee or such Owner Participant, insurance
proceeds payable to such Owner Trustee in its individual capacity or to such
Owner Participant under certain casualty insurance maintained by such Owner
Trustee or such Owner Participant under such Lease and certain reimbursement
payments made by Atlas to such Owner Trustee. (Leased Aircraft Indenture,
Granting Clause) The Equipment Notes issued in respect of any one Aircraft will
not be secured by any of the other Aircraft or Leases (except in certain cases,
if any, where the related Owner Participant and Atlas shall agree to
cross-collateralization). Accordingly, any excess proceeds from the exercise of
remedies with respect to the Equipment Notes relating to an Aircraft will not be
available to cover any shortfall with respect to any other Aircraft.
Owned Aircraft
The Equipment Notes issued with respect to each Owned Aircraft will be
secured by:
- a mortgage to the Owned Aircraft Trustee of such Aircraft; and
- an assignment to the Owned Aircraft Trustee of certain of Atlas' rights
under its purchase agreement with the Aircraft manufacturer.
Cash
Cash, if any, held from time to time by the Loan Trustee with respect to
any Aircraft, including funds held as the result of an Event of Loss to such
Aircraft or, in the case of a Leased Aircraft, termination of the Lease, if any,
relating thereto, will be invested and reinvested by such Loan Trustee, at the
direction of the related Owner Trustee in the case of the Leased Aircraft or
Atlas in the case of the Owned Aircraft, in investments described in the related
Indenture. (Leased Aircraft Indentures, Section 5.09; Owned Aircraft Indentures,
Section 6.06)
LOAN TO VALUE RATIOS OF EQUIPMENT NOTES
The following table sets forth illustrative loan to Aircraft value ratios
for the Equipment Notes issued in respect of a Leased Aircraft as of each
January 2 Regular Distribution Date occurring after the scheduled date of
original issuance of such Equipment Notes, assuming that Series A, Series B, and
Series C Equipment Notes in the maximum principal amount are issued in respect
of such Aircraft. This example was utilized by Atlas in preparing the Assumed
Amortization Schedule, although the amortization schedule for the Series A,
Series B and Series C Equipment Notes issued with respect to an Aircraft may
vary from such assumed schedule so long as it complies with the Mandatory
Economic Terms. Accordingly, the schedule set forth below may not be applicable
in the case of any particular Leased Aircraft or in the case of any Owned
Aircraft. See "Description of the Certificates -- Pool Factors." The LTV was
obtained by dividing (i) the outstanding balance (assuming no payment default)
of such Equipment Notes determined immediately after giving effect to the
payments scheduled to be made on each such Regular Distribution Date by (ii) the
assumed value (the "Assumed Aircraft Value") of the Aircraft securing such
Equipment Notes.
The following table is based on the assumption (the "Depreciation
Assumption") that the value of the Aircraft set forth opposite the initial
Regular Distribution Date included in the table depreciates by 3% of the initial
appraised value per year for the first 20 years after the year of delivery of
such Aircraft and by 4% of the initial appraised value per year thereafter.
Other rates or methods of depreciation would result in materially different loan
to Aircraft value ratios, and no assurance can be given (i) that the
61
<PAGE> 67
depreciation rates and method assumed for the purposes of the table are the ones
most likely to occur or (ii) as to the actual future value of any Aircraft. Thus
the table should not be considered a forecast or prediction of expected or
likely loan to Aircraft value ratios, but simply a mathematical calculation
based on one set of assumptions.
<TABLE>
<CAPTION>
INDICATIVE LEASED AIRCRAFT
----------------------------------------------
B747-400F
----------------------------------------------
ASSUMED
EQUIPMENT NOTE AIRCRAFT LOAN TO
DATE OUTSTANDING BALANCE VALUE VALUE RATIO
- ---- ------------------- ---------- -----------
(MILLIONS) (MILLIONS)
<S> <C> <C> <C>
January 2, 2001................................ $94.10 $154.84 60.8%
January 2, 2002................................ 91.21 150.06 60.8
January 2, 2003................................ 86.94 145.27 59.8
January 2, 2004................................ 82.25 140.48 58.5
January 2, 2005................................ 77.10 135.69 56.8
January 2, 2006................................ 71.44 130.90 54.6
January 2, 2007................................ 66.07 126.11 52.4
January 2, 2008................................ 61.70 121.32 50.9
January 2, 2009................................ 58.33 116.53 50.1
January 2, 2010................................ 55.03 111.74 49.2
January 2, 2011................................ 51.19 106.95 47.9
January 2, 2012................................ 47.32 102.17 46.3
January 2, 2013................................ 43.37 97.38 44.5
January 2, 2014................................ 38.59 92.59 41.7
January 2, 2015................................ 34.29 87.80 39.1
January 2, 2016................................ 32.37 83.01 39.0
January 2, 2017................................ 30.51 78.22 39.0
January 2, 2018................................ 19.91 73.43 27.1
January 2, 2019................................ 0.05 68.64 0.1
January 2, 2020................................ 0.00 0.00 NA
</TABLE>
LIMITATION OF LIABILITY
The Equipment Notes issued with respect to each Leased Aircraft are not
direct obligations of, or guaranteed by, Atlas, any Owner Participant or the
Leased Aircraft Trustees or the Owner Trustees in their individual capacities.
None of the Owner Trustees, the Owner Participants or the Leased Aircraft
Trustees, or any affiliates thereof, will be personally liable to any holder of
an Equipment Note or, in the case of the Owner Trustees and the Owner
Participants, to the Leased Aircraft Trustees for any amounts payable under the
Equipment Notes or, except as provided in each Leased Aircraft Indenture, for
any liability under such Leased Aircraft Indenture. All payments of principal
of, premium, if any, and interest on the Equipment Notes issued with respect to
any Leased Aircraft (other than payments made in connection with an optional
redemption or purchase of Equipment Notes issued with respect to a Leased
Aircraft by the related Owner Trustee or the related Owner Participant) will be
made only from the assets subject to the lien of the Indenture with respect to
such Leased Aircraft or the income and proceeds received by the related Leased
Aircraft Trustee therefrom (including rent payable by Atlas under the Lease with
respect to such Leased Aircraft).
The Equipment Notes issued with respect to the Owned Aircraft will be
direct obligations of Atlas.
Except as otherwise provided in the Indentures, each Owner Trustee and each
Loan Trustee, in its individual capacity, will not be answerable or accountable
under the Indentures or under the Equipment Notes under any circumstances
except, among other things, for its own willful misconduct or gross negligence.
None of the Owner Participants will have any duty or responsibility under any of
the Leased Aircraft Indentures or the Equipment Notes to the Leased Aircraft
Trustees or to any holder of any Equipment Note. (Owned Aircraft Indenture,
Section 7.01; Leased Aircraft Indenture, Section 6.01)
62
<PAGE> 68
INDENTURE DEFAULTS, NOTICE AND WAIVER
Indenture Events of Default under each Indenture will include:
- in the case of a Leased Aircraft Indenture, the occurrence of any Lease
Event of Default under the related Lease (other than the failure to make
certain indemnity payments and other payments to the related Owner
Trustee or Owner Participant unless a notice is given by such Owner
Participant that such failure shall constitute an Indenture Default);
- the failure by the related Owner Trustee (other than as a result of a
Lease Default or Lease Event of Default), in the case of a Leased
Aircraft Indenture, or Atlas, in the case of an Owned Aircraft Indenture,
to pay any interest or principal or premium, if any, under such Indenture
or under any Equipment Note issued thereunder that continues for more
than 10 Business Days, in the case of principal, interest or Make-Whole
Premium, and, in all other cases, 10 Business Days after the relevant
Owner Trustee or Owner Participant, in the case of a Leased Aircraft
Indenture or Atlas, in the case of an Owned Aircraft Indenture, receives
written demand from the related Loan Trustee or holder of an Equipment
Note;
- the failure by the related Owner Participant or the related Owner Trustee
(in its individual capacity), in the case of a Leased Aircraft Indenture,
to discharge certain liens that continue after notice and specified cure
periods;
- any representation or warranty made by the related Owner Trustee or Owner
Participant, in the case of a Leased Aircraft Indenture, or Atlas, in the
case of an Owned Aircraft Indenture, in such Indenture, the related
Participation Agreement, or certain related documents furnished to the
Loan Trustee or any holder of an Equipment Note pursuant thereto being
false or incorrect in any material respect when made that continues to be
material and adverse to the interests of the Loan Trustee or Note Holders
and remains unremedied after notice and specified cure periods;
- failure by Atlas or the related Owner Trustee or Owner Participant to
perform or observe covenants or obligations for the benefit of the Loan
Trustee or holders of Equipment Notes under such Indenture or certain
related documents which continues after notice and specified cure periods
and which is material and adverse to the interests of the Loan Trustee or
the Note Holders;
- the registration of the related Aircraft ceasing to be effective as a
result of the Owner Participant (in the case of a Leased Aircraft) not
being a citizen of the United States, as defined in the Transportation
Code (subject to a cure period);
- with respect to the Owned Aircraft, the lapse or cancellation of
insurance required under the Owned Aircraft Indenture; or
- the occurrence of certain events of bankruptcy, reorganization or
insolvency of the related Owner Trustee or Owner Participant (in the case
of a Leased Aircraft) or Atlas (in the case of an Owned Aircraft).
(Leased Aircraft Indentures, Section 4.02; Owned Aircraft Indentures,
Section 5.01)
There will not be cross-default provisions in the Indentures or in the
Leases (unless otherwise agreed between an Owner Participant and Atlas).
Consequently, events resulting in an Indenture Event of Default under any
particular Indenture may or may not result in an Indenture Event of Default
occurring under any other Indenture, and a Lease Event of Default under any
particular Lease may or may not constitute a Lease Event of Default under any
other Lease.
If Atlas fails to make any semiannual basic rental payment due under any
Lease, within a specified period after such failure the applicable Owner Trustee
may furnish to the Leased Aircraft Trustee the amount due on the Equipment Notes
issued with respect to the related Leased Aircraft, together with any interest
thereon on account of the delayed payment thereof, in which event the Leased
Aircraft Trustee and the holders of outstanding Equipment Notes issued under
such Indenture may not exercise any remedies otherwise available under such
Indenture or such Lease as the result of such failure to make such rental
payment, unless such Owner Trustee has previously cured three or more
immediately
63
<PAGE> 69
preceding semiannual basic rental payment defaults or, in total, six or more
previous semiannual basic rental payment defaults. The applicable Owner Trustee
also may cure any other default by Atlas in the performance of its obligations
under any Lease that can be cured with the payment of money. (Leased Aircraft
Indentures, Section 4.03)
The holders of a majority in principal amount of the outstanding Equipment
Notes issued with respect to any Aircraft, by notice to the Loan Trustee, may on
behalf of all the holders waive any existing default and its consequences under
the Indenture with respect to such Aircraft, except a default in the payment of
the principal of, or premium or interest on any such Equipment Notes or a
default in respect of any covenant or provision of such Indenture that cannot be
modified or amended without the consent of each holder of Equipment Notes.
(Leased Aircraft Indentures, Section 4.08; Owned Aircraft Indentures, Section
5.06)
REMEDIES
If an Indenture Event of Default occurs and is continuing under an
Indenture, the related Loan Trustee or the holders of a majority in principal
amount of the Equipment Notes outstanding under such Indenture may, subject to
the applicable Owner Participant's or Owner Trustee's right to cure, as
discussed above, declare the principal of all such Equipment Notes issued
thereunder immediately due and payable, together with all accrued but unpaid
interest thereon, provided that in the event of a reorganization proceeding
involving Atlas instituted under Chapter 11 of the U.S. Bankruptcy Code, if no
other Lease Event of Default and no other Indenture Event of Default (other than
the failure to pay the outstanding 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 will be automatically rescinded without any
further action on the part of any holder of Equipment Notes. The holders of a
majority in principal amount of Equipment Notes outstanding under an Indenture
may rescind any declaration of acceleration of such Equipment Notes at any time
before the judgment or decree for the payment of the money so due shall be
entered if (i) there has been paid to the related Loan Trustee an amount
sufficient to pay all principal, interest, and premium, if any, on any such
Equipment Notes, to the extent such amounts have become due otherwise than by
such declaration of acceleration and (ii) all other Indenture Events of Default
and incipient Indenture Events of Default with respect to any covenant or
provision of such Indenture have been cured. (Leased Aircraft Indentures Section
4.04(b); Owned Aircraft Indentures, Section 5.02(b))
Each Indenture provides that if an Indenture Event of Default under such
Indenture has occurred and is continuing, the related Loan Trustee may exercise
certain rights or remedies available to it under such Indenture or under
applicable law, including if, in the case of a Leased Aircraft, the
corresponding Lease has been declared in default one or more of the remedies
under such Lease with respect to the Aircraft subject to such Lease. If an
Indenture Event of Default arises solely by reason of one or more events or
circumstances which constitutes a Lease Event of Default, the related Leased
Aircraft Trustee's right to exercise remedies under a Leased Aircraft Indenture
is subject, with certain exceptions, to its having proceeded to exercise one or
more of the dispossessory remedies under the Lease with respect to such Leased
Aircraft; provided that the requirement to exercise one or more of such remedies
under such Lease shall not apply in circumstances where such exercise has been
involuntarily stayed or prohibited by applicable law or court order for a
continuous period in excess of 60 days or such period as may be specified in
Section 1110(a)(1)(A) of the U.S. Bankruptcy Code, plus an additional period, if
any, resulting from (i) the trustee or debtor-in-possession in such proceeding
agreeing to perform obligations under such Lease with the approval of the
applicable court and its continuous performance of such Lease under Section
1110(a)(1) (A-B) of the U.S. Bankruptcy Code or such Leased Aircraft Trustee's
consent to an extension of such period, (ii) such Leased Aircraft Trustee's
failure to give any requisite notice or (iii) Atlas' assumption of such Lease
with the approval of the relevant court and its continuous performance of the
Lease as so assumed. See "-- The Leases and Certain Provisions of the Owned
Aircraft Indentures -- Events of Default Under the Leases." Such remedies may be
exercised by the related Leased Aircraft Trustee to the exclusion of the related
Owner Trustee, subject to certain conditions
64
<PAGE> 70
specified in such Indenture and subject to the terms of such Lease. Any Aircraft
sold in the exercise of such remedies will be free and clear of any rights of
those parties, including the rights of Atlas under the Lease with respect to
such Aircraft; provided that no exercise of any remedies by the related Leased
Aircraft Trustee may affect the rights of Atlas under any Lease unless a Lease
Event of Default has occurred and is continuing. (Leased Aircraft Indentures,
Section 4.04; Leases, Section 15) The Owned Aircraft Indentures will not contain
such limitations on the Owned Aircraft Trustee's ability to exercise remedies
upon an Indenture Event of Default under an Owned Aircraft Indenture.
If a bankruptcy proceeding involving Atlas under the U.S. Bankruptcy Code
occurs, all of the rights of the Owner Trustee as lessor under a particular
Lease will be exercised by the Owner Trustee in accordance with the terms
thereof unless (i) during the Section 1110 Period the trustee in such proceeding
or Atlas does not assume or agree to perform its obligations under such Lease,
(ii) at any time after assuming or agreeing to perform such obligations, such
trustee or Atlas ceases to perform such obligations or (iii) the related Loan
Trustee takes action, or notifies the Owner Trustee that such Loan Trustee
intends to take action, to foreclose the lien of the related Leased Aircraft
Indenture or otherwise commence the exercise of any significant remedy in
accordance with the Leased Aircraft Indenture in connection with any continuing
non-bankruptcy Indenture Event of Default. The Owner Trustee's exercise of such
rights shall be subject to certain limitations and may not, in any event, reduce
the amount or change the time of any payment in respect of the Equipment Notes
or adversely affect the validity or enforceability of the lien under the related
Leased Aircraft Indenture.
If the Equipment Notes issued in respect of one Aircraft are in default,
the Equipment Notes issued in respect of the other Aircraft may not be in
default, and, if not, no remedies will be exercisable under the applicable
Indentures with respect to such other Aircraft.
Section 1110 of the U.S. Bankruptcy Code ("Section 1110") provides in
relevant part that the right of lessors, conditional vendors and holders of
security interests with respect to "Equipment" (as defined in Section 1110) to
take possession of such Equipment in compliance with the provisions of a lease,
conditional sale contract or security agreement, as the case may be, is not
affected by:
- the automatic stay provision of the U.S. Bankruptcy Code, which provision
enjoins repossessions by creditors for the duration of the reorganization
period;
- the provision of the U.S. Bankruptcy Code allowing the trustee in
reorganization to use property of the debtor during the reorganization
period;
- Section 1129 of the U.S. Bankruptcy Code (which governs the confirmation
of plans of reorganization in Chapter 11 cases); and
- any power of the bankruptcy court to enjoin a repossession.
Section 1110 provides in relevant part, however, that the right of a
lessor, conditional vendor or holder of a security interest to take possession
of an aircraft in the event of an event of default may not be exercised for 60
days following the date of commencement of the reorganization proceedings
(unless specifically permitted by the bankruptcy court) and may not be exercised
at all if, within such 60-day period (or such longer period consented to by the
lessor, conditional vendor or holder of a security interest), the trustee in
reorganization agrees to perform the debtor's obligations that become due on or
after such date and cures all existing defaults (other than defaults resulting
solely from the financial condition, bankruptcy, insolvency or reorganization of
the debtor).
"Equipment" is defined in Section 1110, in part, as an aircraft, aircraft
engine, propeller, appliance, or spare part (as defined in Section 40102 of
Title 49 of the U.S. Code) that is subject to a security interest granted by,
leased to, or conditionally sold to a debtor that is a citizen of the United
States (as defined in Section 40102 of Title 49 of the U.S. Code) holding an air
carrier operating certificate issued by the Secretary of Transportation pursuant
to chapter 447 of Title 49 of the U.S. Code for aircraft capable of carrying 10
or more individuals or 6,000 pounds or more of cargo.
65
<PAGE> 71
It is a condition to the Trustee's obligation to purchase Equipment Notes
with respect to each Aircraft that outside counsel to Atlas, Cahill Gordon &
Reindel, provide its opinion to the Trustees that (x) if such Aircraft is a
Leased Aircraft, the Owner Trustee, as lessor under the Lease for such Aircraft,
and the Leased Aircraft Trustee, as assignee of such Owner Trustee's rights
under such Lease pursuant to the related Leased Aircraft Indenture, will be
entitled to the benefits of Section 1110 with respect to the airframe and
engines comprising such Aircraft or (y) if such Aircraft is an Owned Aircraft,
the Owned Aircraft Trustee will be entitled to the benefits of Section 1110 with
respect to the airframe and engines comprising such Owned Aircraft, in each
case, assuming that Atlas is a "citizen of the United States" as defined in
Section 40102 of Title 49 of the U.S. Code holding an air carrier operating
certificate issued by the Secretary of Transportation pursuant to chapter 447 of
Title 49 of the U.S. Code for aircraft capable of carrying 10 or more
individuals or 6,000 pounds or more of cargo and assuming that the Aircraft and
Engines constitute "equipment" as defined in Section 1110. For a description of
certain limitations on the Loan Trustee's exercise of rights contained in the
Indenture, see "-- Indenture Defaults, Notice and Waiver."
The opinion of Cahill Gordon & Reindel will not address the possible
replacement of an Aircraft after an Event of Loss in the future, the
consummation of which is conditioned upon the contemporaneous delivery of an
opinion of counsel to the effect that the related Loan Trustee will be entitled
to Section 1110 benefits with respect to such replacement unless there is a
change in law or court interpretation that results in Section 1110 not being
available. See "-- The Leases and Certain Provisions of the Owned Aircraft
Indentures -- Events of Loss." The opinion of Cahill Gordon & Reindel will also
not address the availability of Section 1110 with respect to any possible
sublessee of a Leased Aircraft subleased by Atlas or to any possible lessee of
an Owned Aircraft if it is leased by Atlas.
The U.S. District Court for the District of Colorado in 1998 issued
opinions arising from the bankruptcy proceedings of Western Pacific Airlines,
Inc. relating to Section 1110. The decisions held that, once an airline debtor
reaffirms 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. (An appeal of these decisions to
the United States Court of Appeals for the Tenth Circuit was dismissed as moot
on July 7, 1999.) The opinion of Cahill Gordon & Reindel will state that, in
such firm's opinion, the District Court cases were incorrectly decided, since
they are contrary to the plain language of Section 1110 that requires the cure
of any default (other than certain defaults relating to the bankruptcy
proceedings) and are not limited to defaults occurring at the commencement of
the bankruptcy proceeding. Moreover, such opinion of Cahill Gordon & Reindel
will state that, in such firm's opinion, such District Court cases are contrary
to the clear intent of Congress in enacting Section 1110, since they would
substantially eliminate the benefit of Section 1110 by giving no effect to
rights of repossession under Section 1110 after the initial reaffirmance and
cure.
As a result of these decisions and the fact that Atlas is headquartered in
Colorado, Standard & Poor's placed Atlas' 1998 EETCs, 1999 EETCs and 2000 EETCs
on credit watch with negative implications while affirming its corporate credit
rating on Atlas' unsecured debt. Standard & Poor's has placed the Certificates
offered hereby on credit watch for the same reason. Standard & Poor's has stated
that if remedial legislation which favorably resolves the Section 1110
uncertainty becomes law, or if the issue is favorably resolved in a court
decision, ratings on the pass through trust certificates would be affirmed.
Standard & Poor's has also stated that once Atlas moves its headquarters from
Colorado to New York State, they expect to affirm and remove the ratings from
credit watch.
If an Indenture Default under any Indenture occurs and is continuing, any
sums held or received by the related Loan Trustee may be applied to reimburse
such Loan Trustee for any tax, expense or other loss incurred by it and to pay
any other amounts due to such Loan Trustee prior to any payments to holders of
the Equipment Notes issued under such Indenture. (Indentures, Section 3.03)
In the event of bankruptcy, insolvency, receivership or like proceedings
involving an Owner Participant, it is possible that, notwithstanding that the
applicable Leased Aircraft is owned by the related
66
<PAGE> 72
Owner Trustee in trust, such Leased Aircraft and the related Lease and Equipment
Notes might become part of such proceeding. In such event, payments under such
Lease or on such Equipment Notes might be interrupted and the ability of the
related Leased Aircraft Trustee to exercise its remedies under the related
Leased Aircraft Indenture might be restricted, although such Leased Aircraft
Trustee would retain its status as a secured creditor in respect of the related
Lease and the related Leased Aircraft.
MODIFICATION OF INDENTURES AND LEASES
Without the consent of holders of a majority in principal amount of the
Equipment Notes outstanding under any Indenture, the provisions of such
Indenture and any related Lease, Participation Agreement or Trust Agreement may
not be amended or modified, except to the extent indicated below.
Subject to certain limitations, certain provisions of any Leased Aircraft
Indenture, and of the Lease, the Participation Agreement, and the Trust
Agreement related thereto, may be amended or modified by the parties thereto
without the consent of any holders of the Equipment Notes outstanding under such
Indenture. In the case of each Lease, such provisions include, among others,
provisions relating to (i) the return to the related Owner Trustee of the
related Leased Aircraft at the end of the term of such Lease (except to the
extent that such amendment would affect the rights or exercise of remedies under
the Lease) and (ii) the renewal of such Lease and the option of Atlas at the end
of the term of such Lease to purchase the related Leased Aircraft so long as the
same would not adversely affect the Note Holders. (Leased Aircraft Indentures,
Section 9.01(a)) In addition, any Indenture may be amended without the consent
of the holders of Equipment Notes to, among other things, cure any defect or
inconsistency in such Indenture or the Equipment Notes issued thereunder,
provided that such change does not adversely affect the interests of any such
holder. (Leased Aircraft Indentures, Section 9.01(c); Owned Aircraft Indentures,
Section 10.01)
Without the consent of each Liquidity Provider and the holder of each
Equipment Note outstanding under any Indenture affected thereby, no amendment or
modification of such Indenture may among other things (a) reduce the principal
amount of, or premium, if any, or interest payable on, any Equipment Notes
issued under such Indenture or change the date on which any principal, premium,
if any, or interest is due and payable, (b) permit the creation of any security
interest with respect to the property subject to the lien of such Indenture,
except as provided in such Indenture, or deprive any holder of an Equipment Note
issued under such Indenture of the benefit of the lien of such Indenture upon
the property subject thereto or (c) reduce the percentage in principal amount of
outstanding Equipment Notes issued under such Indenture required to take or
approve any action under such Indenture. (Leased Aircraft Indentures, Section
9.01(b); Owned Aircraft Indentures, Section 10.01(a))
INDEMNIFICATION
Atlas will be required to indemnify each Loan Trustee, each Owner
Participant, each Owner Trustee, each Liquidity Provider, the Subordination
Agent, the Escrow Agent and each Trustee, but not the holders of Certificates,
for certain losses, claims and other matters. Atlas will be required under
certain circumstances to indemnify each Owner Participant against the loss of
depreciation deductions and certain other benefits allowable for certain income
tax purposes with respect to the related Leased Aircraft.
THE LEASES AND CERTAIN PROVISIONS OF THE OWNED AIRCRAFT INDENTURES
Each Leased Aircraft will be leased to Atlas by the relevant Owner Trustee
under the relevant lease agreement (each, a "Lease"). Each Owned Aircraft will
be owned by Atlas.
Lease Term Rentals and Payments
Each Leased Aircraft will be leased separately by the relevant Owner
Trustee to Atlas for a term commencing on the date on which the Aircraft is
acquired by the Owner Trustee and expiring on a date not earlier than the latest
maturity date of the relevant Equipment Notes, unless terminated prior to the
originally scheduled expiration date as permitted by the applicable Lease. The
semiannual basic rent
67
<PAGE> 73
payment under each Lease is payable by Atlas on each related Lease Payment Date
(or, if such day is not a Business Day, on the next Business Day), and will be
assigned by the Owner Trustee under the corresponding Leased Aircraft Indenture
to provide the funds necessary to make scheduled payments of principal and
interest due from the Owner Trustee on the Equipment Notes issued under such
Indenture. In certain cases, the semiannual basic rent payments under the Leases
may be adjusted, but each Lease provides that under no circumstances will rent
payments by Atlas be less than the scheduled payments on the related Equipment
Notes. Any balance of each such semiannual basic rent payment under each Lease,
after payment of amounts due on the Equipment Notes issued under the Indenture
corresponding to such Lease, will be paid over to the Owner Trustee. (Leases,
Section 3; Leased Aircraft Indentures, Section 3.01)
"Lease Payment Date" means, with respect to each Lease, January 2 or July 2
during the term of such Lease, the commencement date of such Lease or any other
date agreed between Atlas 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.
Semiannual payments of interest on the Equipment Notes issued by Atlas
under an Owned Aircraft Indenture are payable January 2 and July 2 of each year,
commencing on July 2, 2000. Semiannual payments of principal under the Equipment
Notes issued by Atlas under an Owned Aircraft Indenture are payable on January 2
and July 2 in certain years, commencing on January 2, 2001.
Net Lease; Maintenance
Under the terms of each Lease, Atlas' obligations in respect of each Leased
Aircraft will be those of a lessee under a "net lease." Accordingly, Atlas is
obligated under each Lease, among other things and at its expense, to keep each
Aircraft duly registered and insured, to pay all costs of operating the Aircraft
and to maintain, service, repair and overhaul the Aircraft so as to keep it in
as good operating condition as when delivered to Atlas, ordinary wear and tear
excepted, and in such condition as required to maintain the airworthiness
certificate for the Aircraft in good standing at all times. (Leases, Sections
7.1, 8.1 and 11.1 and Annexes C and D) The Owned Aircraft Indentures impose
comparable registration, insurance, maintenance, service and repair obligations
on Atlas with respect to the Owned Aircraft. (Owned Aircraft Indentures,
Sections 4.02 and 4.06)
Possession, Sublease and Transfer
Each Aircraft may be operated by Atlas or, subject to certain restrictions,
by certain other persons. Normal interchange and pooling agreements customary in
the commercial airline industry with respect to any Engine are permitted.
Subleases, in the case of the Leased Aircraft, and leases, in the case of Owned
Aircraft, are also permitted to U.S. air carriers, U.S. aircraft manufacturers,
foreign air carriers and foreign aircraft manufacturers that have their
principal executive office in certain specified countries, subject to a
reasonably satisfactory legal opinion that, among other things, such country
would recognize (in the case of the Leased Aircraft) Owner Trustee's title to,
and the Loan Trustee's security interest in respect of, the applicable Aircraft.
In addition, a sublessee may not be subject to insolvency or similar proceedings
at the commencement of such sublease or lease. (Leases, Section 7; Owned
Aircraft Indentures, Section 4.02) Permitted foreign air carriers are not
limited to those based in a country that is a party to the Convention on the
International Recognition of Rights in Aircraft (Geneva 1948) (the
"Convention"). It is uncertain to what extent the relevant Loan Trustee's
security interest would be recognized if an Aircraft is registered or located in
a jurisdiction not a party to the Convention. Moreover, in the case of an
Indenture Event of Default, the ability of the related Loan Trustee to realize
upon its security interest in an Aircraft could be adversely affected as a legal
or practical matter if such Aircraft were registered or located outside the
United States.
68
<PAGE> 74
Registration
Atlas is required to keep each Aircraft duly registered under the
Transportation Code with the FAA, except (in the case of the Leased Aircraft) if
the relevant Owner Trustee or the relevant Owner Participant fails to meet the
applicable citizenship requirements, and to record each Lease (in the case of
the Leased Aircraft) and Indenture and certain other documents under the
Transportation Code. (Leases, Section 7; Owned Aircraft Indentures, Section
4.02(e)) Such recordation of the Indenture and other documents with respect to
each Aircraft will give the relevant Loan Trustee a first-priority, perfected
security interest in such Aircraft whenever it is located in the United States
or any of its territories and possessions. The Convention provides that such
security interest will also be recognized, with certain limited exceptions, in
those jurisdictions that have ratified or adhere to the Convention.
So long as no Lease Event of Default exists, Atlas has the right to
register the Leased Aircraft subject to such Lease in a country other than the
United States at its own expense in connection with a permitted sublease of the
Aircraft to a permitted foreign air carrier, subject to certain conditions set
forth in the related Participation Agreement. These conditions include a
requirement that the lien of the applicable Indenture continue as a first
priority security interest in the applicable Aircraft. (Leases, Section 7.1.2;
Participation Agreements, Section 7.6.11) The Owned Aircraft Indentures contain
comparable provisions with respect to the registration of the Owned Aircraft in
connection with a permitted lease of the Owned Aircraft. (Owned Aircraft
Indentures, Section 4.02(e))
Liens
Atlas is required to maintain each Aircraft free of any liens, other than
the rights of the relevant Loan Trustee, the holders of the related Equipment
Notes, Atlas, and, with respect to a Leased Aircraft, the Owner Participant and
Owner Trustee arising under the applicable Indenture, the Lease (in the case of
the Leased Aircraft) or the other operative documents related thereto, and other
than certain limited liens permitted under such documents, including but not
limited to (i) liens for taxes either not yet due or being contested in good
faith by appropriate proceedings; (ii) materialmen's, mechanics' and other
similar liens arising in the ordinary course of business and securing
obligations that either are not yet delinquent for more than 60 days or are
being contested in good faith by appropriate proceedings; (iii) judgment liens
so long as such judgment is discharged or vacated within 60 days or the
execution of such judgment is stayed pending appeal or discharged, vacated or
reversed within 60 days after expiration of such stay; and (iv) any other lien
as to which Atlas has provided a bond or other security adequate in the
reasonable opinion of the Owner Trustee; provided that in the case of each of
the liens described in the foregoing clauses (i), (ii) and (iii), such liens and
proceedings do not involve any material risk of the sale, forfeiture or loss of
such Aircraft or the interest of any Participant therein or impair the lien of
the relevant Indenture. (Leases, Section 6; Owned Aircraft Indentures, Section
4.01)
Replacement of Parts, Alterations
Atlas is obligated to replace all parts at its expense that may from time
to time be incorporated or installed in or attached to any Aircraft and that may
become lost, damaged beyond repair, worn out, stolen, seized, confiscated or
rendered permanently unfit for use. Atlas or any permitted sublessee has the
right, at its own expense, to make such alterations, modifications and additions
with respect to each Aircraft as it deems desirable in the proper conduct of its
business and to remove parts which it deems to be obsolete or no longer suitable
or appropriate for use, so long as such alteration, modification, addition or
removal does not materially diminish the fair market value, utility or useful
life of the related Aircraft or Engine or invalidate the Aircraft's
airworthiness certificate. (Leases, Section 8.1 and Annex C; Owned Aircraft
Indentures, Section 4.04(d))
Insurance
Atlas is required to maintain, at its expense (or at the expense of a
permitted lessee, in the case of the Owned Aircraft, or a permitted sublessee,
in the case of the Leased Aircraft), all-risk aircraft hull
69
<PAGE> 75
insurance covering each Aircraft, at all times in an amount not less than the
stipulated loss value of such Aircraft (which will exceed the aggregate
outstanding principal amount of the Equipment Notes relating to such Aircraft,
together with accrued interest thereon). However, after giving effect to
self-insurance permitted as described below, the amount payable under such
insurance may be less than such amounts payable with respect to the Equipment
Notes. In the event of a loss involving insurance proceeds in excess of $7.5
million, to be adjusted for inflation, per occurrence such proceeds up to the
stipulated loss value of the relevant Aircraft will be payable to the applicable
Loan Trustee, for so long as the relevant Indenture shall be in effect. In the
event of a loss involving insurance proceeds of up to $7.5 million, to be
adjusted for inflation, per occurrence such proceeds will be payable directly to
Atlas so long as an Indenture Event of Default does not exist with respect to
the Owned Aircraft or (in the case of the Leased Aircraft) the Owner Trustee has
not notified the insurance underwriters that a Lease Event of Default exists. So
long as the loss does not constitute an Event of Loss, insurance proceeds will
be applied to repair or replace the property. (Leases, Sections 11 and Annex D;
Owned Aircraft Indentures, Section 4.06)
In addition, Atlas is obligated to maintain comprehensive airline liability
insurance at its expense (or at the expense of a permitted lessee, in the case
of the Owned Aircraft, or a permitted sublessee, in the case of the Leased
Aircraft), including without limitation, passenger liability, baggage liability,
cargo and mail liability, hangarkeeper's liability and contractual liability
insurance with respect to each Aircraft. Such liability insurance must be
underwritten by insurers of nationally or internationally recognized
responsibility. The amount of such liability insurance coverage per occurrence
may not be less than the amount of comprehensive airline liability insurance
from time to time applicable to aircraft owned or leased and operated by Atlas
of the same type and operating on similar routes as such Aircraft. (Leases,
Section 11.1 and Annex D; Owned Aircraft Indentures, Section 4.06)
Atlas is also required to maintain war-risk, hijacking or allied perils
insurance if it (or any permitted sublessee or lessee) operates any Aircraft,
Airframe or Engine in any area of recognized hostilities or if Atlas (or any
permitted sublessee or lessee) maintains such insurance with respect to other
aircraft operated on the same routes or areas on or in which the Aircraft is
operated. (Leases, Annex D; Owned Aircraft Indentures, Section 4.06)
Atlas may self-insure under a program applicable to all aircraft in its
fleet, but the amount of such self-insurance in the aggregate may not exceed 50%
of the largest replacement value of any single aircraft in Atlas' fleet or
1 1/2% of the average aggregate insurable value (during the preceding policy
year) of all aircraft on which Atlas carries insurance, whichever is less,
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 Atlas may self-insure the Aircraft to such higher level. In
addition, Atlas 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. (Leases, Section 11.1 and Annex D; Owned Aircraft Indentures, Section
4.06 and Annex B)
In respect of each Aircraft, Atlas is required to name as additional
insured parties the relevant Loan Trustee and holders of the Equipment Notes and
(in the case of the Leased Aircraft) the relevant Owner Participant and Owner
Trustee, in its individual capacity and as owner of such Aircraft, and the
Liquidity Provider under all liability, hull and property and war risk,
hijacking and allied perils insurance policies required with respect to such
Aircraft. In addition, the insurance policies will be required to provide that,
in respect of the interests of such additional insured persons, the insurance
shall not be invalidated or impaired by any act or omission of Atlas, any
permitted sublessee or any other person. (Leases, Annex D; Owned Aircraft
Indentures, Section 4.06 and Annex B)
Lease Termination
Atlas may terminate any Lease on any Lease Payment Date occurring after the
fifth anniversary of the date on which such Lease commenced, if it makes a good
faith determination that the Leased Aircraft subject to such Lease is
economically obsolete or surplus to its requirements or if it is to be disposed
pursuant to a program of fleet renewal. Atlas is required to give notice of its
intention to exercise its right
70
<PAGE> 76
of termination described in this paragraph at least 90 days prior to the
proposed date of termination, which notice may be withdrawn up to 10 Business
Days prior to such proposed date; provided that Atlas may with respect to such
Lease give only five such termination notices. In such a situation, unless the
Owner Trustee elects to retain title to such Aircraft, Atlas is required to use
commercially reasonable efforts to sell such Aircraft as an agent for such Owner
Trustee. The Owner Trustee will sell such Aircraft to the highest cash bidder on
the date of termination specified in Atlas' notice or on any other date within
10 Business Days of such date of termination agreed with the applicable lessor.
If such sale occurs, the Equipment Notes related thereto are required to be
prepaid. If the net proceeds to be received from such sale are less than the
termination value for such Aircraft (which is set forth in a schedule to each
Lease), Atlas is required to pay to the applicable Owner Trustee an amount equal
to the excess, if any, of the applicable termination value for such Aircraft
over such net proceeds. Upon payment of termination value for such Aircraft and
an amount equal to the Make-Whole Premium, if any, payable on such date of
payment, together with certain additional amounts, the lien of the relevant
Indenture will be released, the relevant Lease will terminate, and the
obligation of Atlas thereafter to make scheduled rent payments under such Lease
will cease. (Leases, Section 9; Leased Aircraft Indentures, Section 2.10(b))
The Owner Trustee has the option to retain title to the Leased Aircraft if
Atlas has given a notice of termination under the Lease. In such event, such
Owner Trustee will pay to the applicable Loan Trustee an amount sufficient to
prepay the outstanding Equipment Notes issued with respect to such Aircraft
(including the Make-Whole Premiums), in which case the lien of the relevant
Indenture will be released, the relevant Lease will terminate and the obligation
of Atlas thereafter to make scheduled rent payments under such Lease will cease.
(Leases, Section 9; Leased Aircraft Indentures, Sections 2.06 and 2.10(b))
Events of Loss
If an Event of Loss occurs with respect to the Airframe or the Airframe and
Engines of an Aircraft, Atlas must elect within 60 days after such occurrence
either to make payment with respect to such Event of Loss or to replace such
Airframe and any such Engines. If Atlas elects to make payment with respect to
such Event of Loss, then such payment shall be made on or before the earlier of
(i) the Business Day next following the 180th day after the date of occurrence
of such Event of Loss, and (ii) the Business Day specified as the payment date
in an irrevocable notice delivered by Atlas not less than 20 days prior to such
payment date. The amount of such payment shall include the outstanding principal
amount of the Equipment Notes (in the case of an Owned Aircraft) or the
stipulated loss value of such Aircraft (in the case of a Leased Aircraft),
together with certain additional amounts, but shall exclude any Make-Whole
Premium. If Atlas elects to replace such Airframe and any such Engines, Atlas
must, within 180 days after the date of occurrence of such Event of Loss,
substitute an airframe (or airframe and one or more engines, as the case may be)
for the Airframe or Airframe and Engines that suffered such Event of Loss.
Notwithstanding the foregoing, if an Indenture Event of Default or failure to
pay principal or interest under the Owned Aircraft Indenture has occurred and is
continuing or certain bankruptcy defaults have occurred and are continuing,
Atlas shall be required to make payment with respect to such Event of Loss.
(Leases, Sections 10.1.1 and 10.1.2; Leased Aircraft Indentures, Section
2.10(a); Owned Aircraft Indentures, Section 2.10 and 4.05(a))
If Atlas elects to replace an Airframe (or Airframe and one or more
Engines, as the case may be) that suffered such Event of Loss, it shall, in the
case of the Leased Aircraft, convey to the related Owner Trustee title to an
airframe (or airframe and one or more engines, as the case may be) or, in the
case of an Owned Aircraft, subject such an airframe (or airframe and one or more
engines) to the lien of the Owned Aircraft Indenture, and such replacement
airframe or airframe and engines must be the same model as the Airframe or
Airframe and Engines to be replaced or an improved model, with 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 Airframe and
Engines to be replaced, assuming that such Airframe and such Engines had been
maintained in accordance with the related Lease or Owned Aircraft Indenture, as
the case may be. Atlas is also required to provide to the relevant Loan Trustee
and (in the case of a Leased Aircraft) the relevant Owner Trustee and Owner
Participant reasonably acceptable
71
<PAGE> 77
opinions of counsel to the effect, among other things, that (i) certain
specified documents have been duly filed under the Transportation Code and (ii)
such Owner Trustee and Leased Aircraft Trustee (as assignee of lessor's rights
and interests under the Lease), in the case of a Leased Aircraft, or the Owned
Aircraft Trustee, in the case of an Owned Aircraft, will be entitled to receive
the benefits of Section 1110 of the U.S. Bankruptcy Code with respect to any
such replacement airframe (unless, as a result of a change in law or court
interpretation, such benefits are not then available). (Leases, Sections 10.1.3
and 10.3; Owned Aircraft Indentures, Section 4.05(c))
If Atlas elects not to replace such Airframe, or Airframe and Engine(s),
then upon payment of the outstanding principal amount of the Equipment Notes
issued with respect to such Aircraft (in the case of an Owned Aircraft) or the
stipulated loss value for such Aircraft (in the case of a Leased Aircraft),
together with all additional amounts then due and unpaid with respect to such
Aircraft, which must be at least sufficient to pay in full as of the date of
payment thereof the aggregate unpaid principal amount under such Equipment Notes
together with accrued but unpaid interest thereon and all other amounts due and
owing in respect of such Equipment Notes (but without any Make-Whole Premium),
the lien of the Indenture and (in the case of a Leased Aircraft) the Lease
relating to such Aircraft shall terminate with respect to such Aircraft, the
obligation of Atlas thereafter to make the scheduled rent payments (in the case
of a Leased Aircraft) or interest and principal payments (in the case of an
Owned Aircraft) with respect thereto shall cease and the related Owner Trustee
shall transfer all of its right, title and interest in and to the related
Aircraft to Atlas. The stipulated loss value and other payments made under the
Leases or the Owned Aircraft Indenture, as the case may be, by Atlas shall be
deposited with the applicable Loan Trustee. Amounts in excess of the amounts due
and owing under the Equipment Notes issued with respect to such Aircraft will be
distributed by such Loan Trustee to the applicable Owner Trustee or to Atlas, as
the case may be. (Leases, Section 10.1.2; Leased Aircraft Indentures, Sections
2.06 and 3.02; Owned Aircraft Indentures, Section 4.05(a)(ii))
If an Event of Loss occurs with respect to an Engine alone, Atlas will be
required to replace such Engine within 90 days after the occurrence of such
Event of Loss with another engine, free and clear of all liens (other than
certain permitted liens). Such replacement engine shall be the same make and
model as the Engine to be replaced, or an improved model, suitable for
installation and use on the Airframe, and having a value, utility and remaining
useful life (without regard to hours or cycles remaining until overhaul) at
least equal to the Engine to be replaced, assuming that such Engine had been
maintained in accordance with the relevant Lease or the Owned Aircraft
Indenture, as the case may be. (Leases, Section 10.2; Owned Aircraft Indenture,
Section 4.04(e))
An "Event of Loss" with respect to an Aircraft, Airframe or any Engine
means any of the following events with respect to such property:
- the destruction of such property, damage to such property beyond economic
repair or rendition of such property permanently unfit for normal use;
- 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 a constructive or compromised total loss;
- any theft, hijacking or disappearance of such property for a period of
180 consecutive days or more;
- any seizure, condemnation, confiscation, taking or requisition of title
to such property by any governmental entity or purported governmental
entity (other than a U.S. government entity or an entity of the country
of registration of the relevant Aircraft) for a period exceeding 180
consecutive days or, if earlier, at the end of the term of such Lease (in
the case of a Leased Aircraft) or the final maturity of the Equipment
Notes (in the case of an Owned Aircraft);
- in the case of any Leased Aircraft, any seizure, condemnation,
confiscation, taking or requisition of use of such property by any U.S.
government entity (or governmental entity of the country of registration
of the relevant Aircraft) that continues until the 30th day after the
last day of the term
72
<PAGE> 78
of the relevant Lease (unless the Owner Trustee shall have elected not to
treat such event as an Event of Loss);
- as a result of any law, rule, regulation, order or other action by the
FAA or any governmental entity, the use of such property in the normal
course of Atlas' business of air cargo transportation is prohibited for
180 consecutive days, unless Atlas, prior to the expiration of such
180-day period, shall have undertaken and shall be diligently carrying
forward steps which are necessary or desirable to permit the normal use
of such property by Atlas, 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 Atlas' entire U.S. registered fleet of similar property and
Atlas, 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 and shall be diligently
carrying forward, in a manner which does not discriminate against
applicable property in so conforming such property, steps which are
necessary or desirable to permit the normal use of such property by
Atlas, but in any event if such use shall have been prohibited for a
period of three years or, in the case of a Leased Aircraft, such use
shall be prohibited at the expiration of the term of the relevant Lease;
or
- with respect to any Engine, any divestiture of title to such Engine shall
be treated as an Event of Loss. (Leases, Section 7.2.6 and Annex A; Owned
Aircraft Indentures, Annex A)
Renewal and Purchase Options
At the end of the term of each Lease after final maturity of the related
Equipment Notes and subject to certain conditions, Atlas will have the option to
renew such Lease for additional limited periods (each a "Renewal Term"). Each
Renewal Term shall be for not less than three months and not more than 2 years,
as determined by Atlas. Rent payments during the first Renewal Term shall equal
the lesser of fair market rental and a fixed rate rental as specified in the
Lease. Rent payments during subsequent Renewal Terms shall equal fair market
rental (Leases, Section 17.2).
In addition, Atlas will have the right (i) at the end of the term of each
Lease, (ii) at the end of each Renewal Term, (iii) on specified dates prior to
the end of the term of each Lease and (iv) upon certain tax events, to purchase
the Aircraft from the applicable Owner Trustee and assume as direct obligations
of Atlas, the Equipment Notes with respect to such Aircraft. In such case, the
Leased Aircraft Indenture relating to such Equipment Notes will be amended and
restated to be substantially the same as an Owned Aircraft Indenture. Such
assumption may occur only if, Atlas has (i) 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) and (ii) if such an opinion can be given, 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. See "Certain U.S. Federal Income Tax
Consequences -- Taxation of Certificateholders Generally" for a discussion of
certain tax consequences of such purchase and assumption under current
regulations.
Events of Default Under the Leases
Lease Events of Default under each Lease include among other things:
- failure by Atlas to make any payment of basic rent, renewal rent,
stipulated loss value or termination value under such Lease within 10
Business Days after the same shall have become due, or failure by Atlas
to pay any other amount due under such Lease or under any other related
operative document (other than excluded payments (as defined in the
Lease)) within 10 Business
73
<PAGE> 79
Days from and after the date of any written notice from the Owner Trustee
or Loan Trustee of the failure to make such payment when due;
- failure by Atlas to make any excluded payment (as defined in the Lease)
within 10 Business Days after written notice that such failure
constitutes a Lease Event of Default is given by the relevant Owner
Participant to Atlas and the relevant Loan Trustee;
- failure by Atlas to carry and maintain insurance on and in respect of the
Aircraft, Airframe and Engines, in accordance with the provisions of such
Lease;
- failure by Atlas to perform or observe in any material respect any other
covenant or agreement to be performed or observed by it under such Lease
or the related Participation Agreement or any other related operative
document (other than the related tax indemnity agreement between Atlas
and the Owner Participant), and such failure shall continue unremedied
for a period of 30 days after written notice of such failure by the
applicable Owner Trustee or Loan Trustee unless such failure is capable
of being corrected and Atlas 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 the receipt of such notice;
- any representation or warranty made by Atlas in such Lease or the related
Participation Agreement or in any other related operative document (other
than in the related tax indemnity agreement between Atlas and the Owner
Participant) shall prove to have been untrue or inaccurate in any
material respect at the time made, such representation or warranty is
material at the time in question and the same shall remain uncured (to
the extent of the adverse impact thereof) for more than 30 days after the
date of written notice thereof to Atlas; and
- the occurrence of certain voluntary events of bankruptcy, reorganization
or insolvency of Atlas or the occurrence of involuntary events of
bankruptcy, reorganization or insolvency which shall continue
undismissed, unvacated or unstayed for a period of 90 days. (Leases,
Section 14)
Indenture Events of Default under the Owned Aircraft Indentures are
discussed above under "-- Indenture Defaults, Notice and Waiver."
Remedies Exercisable upon Events of Default Under the Leases
If a Lease Event of Default has occurred and is continuing, the applicable
Owner Trustee may (or, so long as the Indenture shall be in effect, the
applicable Loan Trustee may, subject to the terms of the Indenture) exercise one
or more of the remedies provided in such Lease with respect to the related
Aircraft. These remedies include the right to repossess and use or operate such
Aircraft, to rescind or terminate such Lease, to sell or re-lease such Aircraft
free and clear of Atlas' rights, except as set forth in the Lease, and retain
the proceeds, and to require Atlas to pay, as liquidated damages any due and
unpaid basic rent plus an amount equal to, at such Owner Trustee's (or, subject
to the terms of the relevant Leased Aircraft Indenture, the Leased Aircraft
Trustee's) option, either (i) the excess of the present value of all unpaid rent
during the remainder of the term of such Lease over the present value of the
fair market rental value of such Aircraft for the remainder of the term of such
Lease or, (ii) the excess of the stipulated loss value of such Aircraft over the
fair market sales value of such Aircraft or, if such Aircraft has been sold, the
net sales proceeds from the sale of such Aircraft. (Leases, Section 15; Leased
Aircraft Indentures, Section 4.04) If the Loan Trustee has validly terminated
such Lease, the Loan Trustee may not sell or lease or otherwise afford the use
of such Aircraft to Atlas or any of its affiliates. (Leased Aircraft Indentures,
Sections 4.03 and 4.04(a))
Remedies under the Owned Aircraft Indentures are discussed above under
"Description of the Equipment Notes -- Remedies."
74
<PAGE> 80
Transfer of Owner Participant Interests
Subject to certain restrictions, each Owner Participant may transfer all or
any part of its interest in the related Leased Aircraft. (Participation
Agreements, Section 10.1.1)
CERTAIN U.S. FEDERAL INCOME TAX CONSEQUENCES
GENERAL
The following summary describes the material U.S. federal income tax
consequences to Certificateholders of the exchange of the Old Certificates for
the New Certificates pursuant to the Exchange Offer. Except as otherwise
specified, the summary is addressed to beneficial owners of Certificates that
are citizens or residents of the United States, corporations, partnerships or
other entities created or organized in or under the laws of the United States or
any state therein, estates the income of which is subject to U.S. federal income
taxation regardless of its source, and trusts that meet the following two tests:
(a) a U.S. court is able to exercise primary supervision over the administration
of the trust and (b) one or more U.S. persons have the authority to control all
substantial decisions of the trust that will hold the Certificates as capital
assets. The summary does not purport to be a comprehensive description of all of
the tax considerations that may be relevant to a decision to exchange the Old
Certificates for the New Certificates. This summary does not describe any tax
consequences arising under the laws of any state, locality or taxing
jurisdiction other than the United States.
The exchange of the Old Certificates for the New Certificates pursuant to
the Exchange Offer will not be a taxable event for U.S. federal income tax
purposes. The receipt of New Certificates in the exchange will be treated as a
continuation of the original investment in the Old Certificates. As a result, no
gain or loss will be recognized by a holder of the Old Certificates upon receipt
of the New Certificates. A holder's tax basis in the New Certificates received
pursuant to the Exchange Offer will be the same as the holder's tax basis in the
Old Certificates exchanged therefor. A holder's holding period for the New
Certificates received pursuant to the Exchange Offer will include its holding
period for the Old Certificates exchanged therefor.
The summary is based upon the tax laws and practice of the United States as
in effect on the date of this prospectus, as well as judicial and administrative
interpretations thereof available on or before such date. All of the foregoing
are subject to change, which change could apply retroactively. Certificate
holders should note that no rulings have been sought from the U.S. Internal
Revenue Service (the "IRS") with respect to the tax consequences described
above, and no assurance can be given that the IRS will not take contrary
positions.
The foregoing summary of U.S. federal tax consequences is for general
information only and is not tax advice. CERTIFICATEHOLDERS ARE ADVISED TO
CONSULT THEIR OWN TAX ADVISORS WITH RESPECT TO THE FEDERAL, STATE, LOCAL AND
FOREIGN TAX CONSEQUENCES TO THEM OF EXCHANGING THE OLD CERTIFICATES FOR THE NEW
CERTIFICATES AND THE OWNERSHIP AND DISPOSITION OF THE NEW CERTIFICATES RECEIVED
IN THE EXCHANGE OFFER IN LIGHT OF THEIR OWN PARTICULAR CIRCUMSTANCES.
ERISA CONSIDERATIONS
The Employee Retirement Income Security Act of 1974, as amended ("ERISA")
imposes certain requirements on employee benefit plans subject to Title I of
ERISA ("ERISA Plans"), and on those persons who are fiduciaries with respect to
ERISA Plans. Investments by ERISA Plans are subject to ERISA's general fiduciary
requirements, including, but not limited to, the requirement of investment
prudence and diversification and the requirement that an ERISA Plan's
investments be made in accordance with the documents governing the Plan.
Section 406 of ERISA and Section 4975 of the Code prohibit certain
transactions involving the assets of an ERISA Plan (as well as those plans that
are not subject to ERISA but which are subject to
75
<PAGE> 81
Section 4975 of the Code, such as individual retirement accounts (together with
ERISA Plans, "Plans")) and certain persons (referred to as "parties in interest"
or "disqualified persons") having certain relationships to such Plans, unless a
statutory or administrative exemption is applicable to the transaction. A party
in interest or disqualified person who engages in a prohibited transaction may
be subject to excise taxes and other penalties and liabilities under ERISA and
the Code.
The Department of Labor has promulgated a regulation, 29 CFR Section
2510.3-101 (the "Plan Asset Regulation"), describing what constitutes the assets
of a Plan with respect to the Plan's investment in an entity for purposes of
ERISA and Section 4975 of the Code. Under the Plan Asset Regulation, if a Plan
invests (directly or indirectly) in a New Certificate, the Plan's assets will
include both the New Certificate and an undivided interest in each of the
underlying assets of the corresponding Trust, including the Equipment Notes held
by such Trust, unless it is established that equity participation in the Trust
by employee benefit plans (including Plans and entities whose underlying assets
include Plan assets by reason of an employee benefit plan's investment in the
entity) is not "significant" within the meaning of the Plan Asset Regulation. In
this regard, the extent to which there is equity participation in a particular
Trust by, or on behalf of, employee benefit plans will not be monitored. If the
assets of a Trust are deemed to constitute the assets of a Plan, transactions
involving the assets of such Trust could be subject to the prohibited
transaction provisions of ERISA and Section 4975 of the Code unless a statutory
or administrative exemption is applicable to the transaction.
The fiduciary of a Plan that proposes to acquire and hold any New
Certificates should consider, among other things, whether such acquisition and
holding may involve (i) the direct or indirect extension of credit to a party in
interest or a disqualified person, (ii) the sale or exchange of any property
between a Plan and a party in interest or a disqualified person, and (iii) the
transfer to, or use by or for the benefit of, a party in interest or a
disqualified person, of any Plan assets. Such parties in interest or
disqualified persons could include, without limitation, Atlas and its
affiliates, the Owner Participants, the Underwriters, the Trustees, the Escrow
Agent, the Depositary, the Owner Trustees and the Liquidity Provider. In
addition, whether or not the assets of a Trust are deemed to be Plan assets
under the Plan Asset Regulation, if New Certificates are acquired by a Plan and
Certificates of another Class are held by a party in interest or a disqualified
person with respect to such Plan, the exercise by the holder of such other Class
of Certificates of its right to purchase another Class of Certificates upon the
occurrence and during the continuation of a Triggering Event could be considered
to constitute a prohibited transaction unless a statutory or administrative
exemption were applicable. Depending on the identity of the Plan fiduciary
making the decision to acquire or hold New Certificates on behalf of a Plan,
Prohibited Transaction Class Exemption ("PTCE") 91-38 (relating to investments
by bank collective investment funds), PTCE 84-14 (relating to transactions
effected by a "qualified professional asset manager"), PTCE 95-60 (relating to
investments by an insurance company general account), PTCE 96-23 (relating to
transactions directed by an in-house professional asset manager) or PTCE 90-1
(relating to investments by insurance company pooled separate accounts)
(collectively, the "Class Exemptions") could provide an exemption from the
prohibited transaction provisions of ERISA and Section 4975 of the Code.
However, there can be no assurance that any of these Class Exemptions or any
other exemption will be available with respect to any particular transaction
involving the New Certificates.
Governmental plans and certain church plans, while not subject to the
fiduciary responsibility provisions of ERISA or the provisions of Section 4975
of the Code, may nevertheless be subject to state or other federal laws that are
substantially similar to the foregoing provisions of ERISA and the Code.
Fiduciaries of any such plans should consult with their counsel before acquiring
any New Certificates.
Any Plan fiduciary which proposes to cause a Plan to acquire any New
Certificates should consult with its counsel regarding the applicability of the
fiduciary responsibility and prohibited transaction provisions of ERISA and
Section 4975 of the Code to such an investment, and to confirm that such
acquisition and holding will not constitute or result in a non-exempt prohibited
transaction or any other violation of an applicable requirement of ERISA.
76
<PAGE> 82
In addition to the Class Exemptions referred to above, an individual
exemption may apply to the purchase, holding and secondary market sale of Class
A Certificates by Plans, provided that certain specified conditions are met. In
particular, the Department of Labor has issued individual administrative
exemptions to certain of the Initial Purchasers which are substantially the same
as the administrative exemption issued to Morgan Stanley & Co. Incorporated,
Prohibited Transaction Exemption 90-24 (55 Fed. Reg. 20,548 (1990)), as amended
(the "Underwriter Exemption"). The Underwriter Exemption generally exempts from
the application of certain, but not all, of the prohibited transaction
provisions of Section 406 of ERISA and Section 4975 of the Code certain
transactions relating to the initial purchase, holding and subsequent secondary
market sale of pass through certificates which represent an interest in a trust
that holds secured credit instruments that bear interest or are purchased at a
discount in transactions by or between business entities (including equipment
notes secured by leases) and certain other assets, provided that certain
conditions set forth in the Underwriter Exemption are satisfied.
The Underwriter Exemption sets a number of general and specific conditions
which must be satisfied for a transaction involving the initial purchase,
holding or secondary market sale of Class A Certificates to be eligible for
exemptive relief thereunder. In particular, the acquisition of Class A
Certificates by a Plan must be on terms that are at least as favorable to the
Plan as they would be in an arm's-length transaction with an unrelated party;
the rights and interests evidenced by the Certificates must not be subordinated
to the rights and interests evidenced by other Certificates of the same trust
estate; the Certificates at the time of acquisition by the Plan must be rated in
one of the three highest generic rating categories by Moody's, Standard & Poor's
or Duff & Phelps; and the investing Plan must be (and by its acquisition or
acceptance of a Certificate or an interest therein, would be deemed to have
represented that it is) an accredited investor as defined in Rule 501(a)(1) of
Regulation D of the Commission under the Securities Act.
In addition, the trust corpus generally must be invested in qualifying
receivables, such as the Equipment Notes, but may not in general include a
pre-funding account (except for a limited amount of pre-funding which is
invested in qualifying receivables within a limited period of time following the
closing not to exceed three months).
With respect to the investment restrictions set forth in the Underwriter
Exemption, an investment in a Certificate will evidence both an interest in the
respective Trust as well as an interest in the Deposits held in escrow by an
Escrow Agent for the benefit of the Certificateholder. Under the terms of the
Escrow Agreement, the proceeds from the offering of the Old Certificates of each
Class were paid over by the Initial Purchasers to the Depositary on behalf of
the Escrow Agent (for the benefit of such Certificateholders as the holders of
the Escrow Receipts) and do not constitute property of the Trusts. Under the
terms of each Escrow Agreement, the Escrow Agent is irrevocably instructed to
enter into the Deposit Agreements with the Depositary and to effect withdrawals
upon the receipt of appropriate notice from the relevant Trustee so as to enable
such Trustee to purchase the identified Equipment Notes on the terms and
conditions set forth in the Note Purchase Agreement. Interest on the Deposits
relating to each Trust will be paid to the Certificateholders of such Trust as
Receiptholders through a Paying Agent appointed by the Escrow Agent. Pending
satisfaction of such conditions and withdrawal of such Deposits, the Escrow
Agent's rights with respect to the Deposits will remain plan assets subject to
the fiduciary responsibility and prohibited transaction provisions of ERISA and
Section 4975 of the Code.
There can be no assurance that the Department of Labor would agree that the
Underwriter Exemption will be applicable to Class A Certificates in these
circumstances. In particular, the Department of Labor might assert that the
escrow arrangement is tantamount to an impermissible pre-funding rendering the
Underwriter Exemption inapplicable. In addition, even if all of the conditions
of the Underwriter Exemption are satisfied with respect to the Class A
Certificates, no assurance can be given that the Underwriter Exemption would
apply with respect to all transactions involving the Class A Certificates or the
assets of the Class A Trust. In particular, it appears that the Underwriter
Exemption would not apply to the purchase by Certificateholders of another Class
of Certificates in connection with the exercise of their rights upon the
occurrence and during the continuance of a Triggering Event. Therefore, the
fiduciary of a Plan considering the purchase of a Class A Certificate should
consider the
77
<PAGE> 83
availability of the exemptive relief provided by the Underwriter Exemption, as
well as the availability of any other exemptions that may be applicable.
The Underwriter Exemption does not apply to the Class B or Class C
Certificates.
Each person who acquires or accepts a New Certificate or an interest
therein will be deemed by such acquisition or acceptance to have represented and
warranted that either: (i) no Plan assets have been used to purchase such New
Certificate or an interest therein or (ii) the purchase and holding of such New
Certificate or interest therein are exempt from the prohibited transaction
restrictions of ERISA and the Code pursuant to one or more prohibited
transaction statutory or administrative exemptions.
Each Plan fiduciary (and each fiduciary for a governmental or church plan
subject to rules similar to those imposed on Plans under ERISA) should consult
with its legal advisor concerning an investment in any of the New Certificates.
PLAN OF DISTRIBUTION
Each broker-dealer that receives New Certificates for its own account
pursuant to the Exchange Offer must acknowledge that it will deliver a
prospectus in connection with any resale of such New Certificates. This
prospectus, as it may be amended or supplemented from time to time, may be used
by a broker-dealer in connection with resales of New Certificates received in
exchange for Old Certificates where such Old Certificates were acquired as a
result of market-making activities or other trading activities. Atlas has agreed
that for a period of one hundred eighty (180) days after the Expiration Date, it
will make this prospectus, as amended or supplemented, available to any
broker-dealer for use in connection with any such resale.
Atlas will not receive any proceeds from any sale of New Certificates by
broker-dealers. New Certificates received by broker-dealers for their own
account pursuant to the Exchange Offer may be sold from time to time on one or
more transactions in the over-the-counter market, in negotiated transactions,
through the writing of options on the New Certificates or a combination of such
methods of resale, at market prices prevailing at the time of resale, at prices
related to such prevailing market prices or negotiated prices. Any such resale
may be made directly to purchasers or to or through brokers or dealers who may
receive compensation in the form of commissions or concessions from any such
broker-dealer and/or the purchasers of any such New Certificates. Any
broker-dealer that resells New Certificates that were received by it for its own
account pursuant to the Exchange Offer and any broker or dealer that
participates in a distribution of such New Certificates may be deemed to be an
"underwriter" within the meaning of the Securities Act and any profit on any
such resale of New Certificates and any commissions or concessions received by
any such persons may be deemed to be underwriting compensation under the
Securities Act. The Letter of Transmittal states that by acknowledging that it
will deliver and by delivering a prospectus, a broker-dealer will not be deemed
to admit that it is an "underwriter" within the meaning of the Securities Act.
For a period of one hundred eighty (180) days after the Expiration Date,
Atlas will promptly send additional copies of this prospectus and any amendment
or supplement to this prospectus to any broker-dealer that requests such
documents in the Letter of Transmittal. Atlas has agreed to pay all expenses
incident to the Exchange Offer other than commissions or concessions of any
brokers or dealers and will indemnify the holders of the Certificates (including
any broker-dealers) against certain liabilities, including liabilities under the
Securities Act.
78
<PAGE> 84
LEGAL MATTERS
The validity of the New Certificates is being passed upon for Atlas by
Cahill Gordon & Reindel, New York, New York. Cahill Gordon & Reindel will rely
on the opinion of Morris, James, Hitchens & Williams LLP, counsel for Wilmington
Trust Company, as Trustee, as to matters of Delaware law relating to the
authorization, execution and delivery of the New Certificates under the Pass
Through Trust Agreements.
EXPERTS
The consolidated financial statements of the Company incorporated by
reference in this prospectus and elsewhere in the registration statement have
been audited by Arthur Andersen LLP, independent public accountants, as
indicated in their report with respect thereto, and are incorporated by
reference in reliance upon the authority of said firm as experts in giving said
report.
The references to AvS, MBA and SH&E and to their respective appraisal
reports, each dated as of December 21, 1999, January 4, 2000 and January 4,
2000, respectively, are included herein in reliance upon the authority of each
such firm as an expert with respect to the matters contained in its appraisal
report.
79
<PAGE> 85
APPENDIX A -- INDEX OF TERMS
<TABLE>
<CAPTION>
PAGE
-----
<S> <C>
ACMI Contracts.............................................. 26
"actually voted"............................................ 38
Adjusted Expected Distributions............................. 54
Administration Expenses..................................... 54
Aggregate LTV Collateral Amount............................. 55
Aircraft.................................................... 8
Aircraft Operative Agreements............................... 40
Appraised Current Market Value.............................. 55
Appraisers.................................................. 56
Assumed Aircraft Value...................................... 61
Assumed Amortization Schedule............................... 31
Assumed Appraised Value..................................... 39
Atlas....................................................... 1
Average Life Date........................................... 60
AvS......................................................... 56
Base Rate................................................... 49
Basic Agreement............................................. 27
Boeing...................................................... 26
Boeing Purchase Agreement................................... 26
Book-Entry Confirmation..................................... 22
Book-Entry Transfer Facility................................ 22
Branch...................................................... 44
Business Day................................................ 30
Cash Collateral Account..................................... 47
Certificate Account......................................... 30
Certificateholder........................................... 28
Certificates................................................ 1
Class....................................................... 27
Class A Certificates........................................ 1
Class A Trust............................................... 27
Class A Trustee............................................. 16
Class B Certificates........................................ 1
Class B Trust............................................... 27
Class B Trustee............................................. 16
Class C Certificates........................................ 1
Class C Trust............................................... 27
Class C Trustee............................................. 16
Class D Certificates........................................ 42
Class D Trust............................................... 42
Class D Trustee............................................. 53
Class Exemptions............................................ 76
Code........................................................ 37
Company..................................................... 1
Controlling Party........................................... 47
Convention.................................................. 68
Current Distribution Date................................... 53
Current Pool Balance........................................ 55
</TABLE>
80
<PAGE> 86
<TABLE>
<CAPTION>
PAGE
-----
<S> <C>
default..................................................... 34
Definitive Certificates..................................... 43
Delivery Period............................................. 57
Delivery Period Termination Date............................ 57
Deposit..................................................... 44
Deposit Agreements.......................................... 44
Depositary.................................................. 44
Depreciation Assumption..................................... 61
disqualified persons........................................ 76
Distribution Date........................................... 28
Downgrade Drawing........................................... 47
DTC......................................................... 3
DTC Participants............................................ 42
Duff & Phelps............................................... 13
Eligible Institution........................................ 22
Equipment................................................... 65
Equipment Notes............................................. 57
ERISA....................................................... 75
ERISA Plans................................................. 75
Escrow Agent................................................ 45
Escrow Agreements........................................... 45
Escrow Receipts............................................. 45
Event of Loss............................................... 71
Exchange Act................................................ ii
Exchange Agent.............................................. 2
Exchange Offer.............................................. 19
Expected Distributions...................................... 53
Expiration Date............................................. 2
FAA......................................................... 26
Final Distributions......................................... 52
Final Drawing............................................... 48
Final Maturity Date......................................... 29
Global Certificates......................................... 3
holder...................................................... 22
Indenture Event of Default.................................. 33
Indentures.................................................. 39
indirect participants....................................... 42
Initial Purchasers.......................................... 1
Intercreditor Agreement..................................... 51
Interest Drawings........................................... 45
IRS......................................................... 75
Issuance Date............................................... 19
Lease....................................................... 67
Lease Event of Default...................................... 33
Lease Payment Date.......................................... 68
Leased Aircraft............................................. 39
Leased Aircraft Indenture................................... 39
Leased Aircraft Trustee..................................... 58
Letter of Transmittal....................................... 2
LIBOR....................................................... 49
Liquidity Event of Default.................................. 50
</TABLE>
81
<PAGE> 87
<TABLE>
<CAPTION>
PAGE
-----
<S> <C>
Liquidity Expenses.......................................... 53
Liquidity Facility.......................................... 45
Liquidity Obligations....................................... 53
Liquidity Provider.......................................... 45
Loan Trustees............................................... 58
LTV Appraisal............................................... 55
LTV Collateral Amount....................................... 55
LTV Ratio................................................... 55
LTVs........................................................ 6
Make-Whole Premium.......................................... 60
Mandatory Document Terms.................................... 41
Mandatory Economic Terms.................................... 39
Maximum Available Commitment................................ 46
MBA......................................................... 56
Minimum Sale Price.......................................... 52
Moody's..................................................... 11
MSDW........................................................ 8
MSCS........................................................ 8
New Certificates............................................ 1
New Escrow Receipt.......................................... 45
Non-Extension Drawing....................................... 48
Non-Performing Equipment Notes.............................. 54
Note Holders................................................ 40
Note Purchase Agreement..................................... 39
NYSE........................................................ 24
Old Certificates............................................ 1
Old Escrow Receipt.......................................... 45
Owned Aircraft.............................................. 39
Owned Aircraft Indenture.................................... 39
Owned Aircraft Trustee...................................... 58
Owner Participant........................................... 57
Owner Trustee............................................... 58
Participation Agreement..................................... 39
parties in interest......................................... 76
Pass Through Trust Agreements............................... 27
Paying Agent................................................ 45
Paying Agent Account........................................ 30
Performing Equipment Note................................... 46
Placement Agreement......................................... 19
Plan Asset Regulation....................................... 76
Plans....................................................... 76
Pool Balance................................................ 31
Pool Factor................................................. 31
PTC Event of Default........................................ 35
PTCE........................................................ 76
Rating Agencies............................................. 11
Receiptholder............................................... 45
Record Dates................................................ 8
Registration Event.......................................... 20
Registration Rights Agreement............................... 19
Registration Statement...................................... ii
</TABLE>
82
<PAGE> 88
<TABLE>
<CAPTION>
PAGE
-----
<S> <C>
Regular Distribution Dates.................................. 29
Remaining Weighted Average Life............................. 60
Renewal Term................................................ 73
Replacement Facility........................................ 47
Required Amount............................................. 45
Scheduled Payments.......................................... 29
SEC......................................................... Cover
Section 1110................................................ 65
Section 1110 Period......................................... 47
Securities Act.............................................. ii
Series A Equipment Notes.................................... 57
Series B Equipment Notes.................................... 57
Series C Equipment Notes.................................... 57
Series D Equipment Notes.................................... 57
SH&E........................................................ 56
Shelf Registration Statement................................ 20
Special Distribution Date................................... 30
Special Payment............................................. 29
Special Payments Account.................................... 30
Standard & Poor's........................................... 11
Stated Interest Rate........................................ 45
Subordination Agent......................................... 51
Termination Notice.......................................... 50
Threshold Rating............................................ 47
Transportation Code......................................... 36
Treasury Yield.............................................. 60
Triggering Event............................................ 28
Trust Agreements............................................ 57
Trust Indenture Act......................................... 37
Trust Property.............................................. 27
Trustee..................................................... 27
Trusts...................................................... 27
Trust Supplement............................................ 27
Underwriter Exemption....................................... 77
WestLB...................................................... 8
</TABLE>
83
<PAGE> 89
APPENDIX B -- APPRAISAL LETTERS
84
<PAGE> 90
December 21, 1999
Mr. Fred deLeeuw
Director, Corporate Finance
Atlas Air, Inc.
538 Commons Drive
Golden, Colorado 80401
Dear Mr. deLeeuw:
AvSOLUTIONS is pleased to provide this opinion on the base value, as of
December 1999, of two Boeing 747-400F aircraft (the aircraft). The Boeing
747-400F aircraft are powered by General Electric CF6-80C2B5F engines. The two
aircraft will be delivered new to Atlas Air, Inc. during the third quarter of
2000. A listing of the aircraft is provided as attachment 1 of this document.
Set forth below is a summary of the methodology, considerations and
assumptions utilized in this appraisal.
BASE VALUE
Base value is the appraiser's opinion of the underlying economic value of
an aircraft in an open, unrestricted, stable market environment with a
reasonable balance of supply and demand, and assumes full consideration of its
"highest and best use". An aircraft's base value is founded in the historical
trend of values and in the projection of future value trends and presumes an
arm's length, cash transaction between willing, able and knowledgeable parties,
acting prudently, with an absence of duress and with a reasonable period of time
available for marketing.
CURRENT FAIR MARKET VALUE
According to the International Society of Transport Aircraft Trading's
(ISTAT) definition of Fair Market Value (FMV), to which AvSOLUTIONS subscribes,
the quoted FMV is the appraiser's opinion of the most likely trading price that
may be generated for an aircraft under the market circumstances that are
perceived to exist at the time in question. The fair market value assumes that
the aircraft is valued for its highest and best use, that the parties to the
hypothetical sales transaction are willing, able, prudent and knowledgeable, and
under no unusual pressure for a prompt sale, and that the transaction would be
negotiated in an open and unrestricted market on an arm's length basis, for cash
equivalent consideration, and given an adequate amount of time for effective
market exposure to prospective buyers, which AvSOLUTIONS considers to be ten to
eighteen months.
10687 Gaskins Way, Suite 200, Manassas, Virginia 20109-2371, USA
Telephone: 703-330-0461 Fax: 703-330-0581
Email: [email protected]
<PAGE> 91
APPRAISAL METHODOLOGY
The method employed by AvSOLUTIONS to appraise the current and future
values of aircraft and the associated equipment addresses the factors that
influence the market value of an aircraft, such as its age, condition,
configuration, the population of similar aircraft, similar aircraft on the
market, operating costs, cost to acquire a new aircraft, and the state of demand
for transportation services.
To achieve this objective, cross-sectional data concerning the values of
aircraft in each of several general categories is collected and analyzed.
Cross-sectional data is then postulated and compared with reported market values
at a specified point in time. Such data reflects the effect of deterioration in
aircraft performance due to usage and exposure to the elements, as well as the
effect of obsolescence due to the evolutionary development and implementation of
new designs and materials.
The product of the analysis identifies the relationship between the value
of each aircraft and its characteristics, such as age, model designation,
service configuration and engine type. Once the relationship is identified, one
can then postulate the effects of the difference between the economic
circumstances at the time when the cross-sectional data were collected and the
current situation. Therefore, if one can determine the current value of an
aircraft in one category, it is possible to estimate the current values of all
aircraft in that category.
The manufacturer and size of the aircraft usually determine the specific
category to which it is assigned. Segregating the world airplane fleet in this
manner accommodates the potential effects of different size and different design
philosophies.
The variability of the data used by AvSOLUTIONS to determine the current
and future market values implies that the actual value realized will fall within
a range of values. Therefore, if a contemplated value falls within the specified
confidence range, AvSOLUTIONS cannot reject the hypothesis that it is a
reasonable representation of the current market situation.
LIMITING CONDITIONS AND ASSUMPTIONS
In order to conduct this valuation, AvSOLUTIONS is solely relying on
information as supplied by Atlas Air, Inc., and from data within AvSOLUTIONS'
own database. In determining the base value of the subject Boeing 747-400F
aircraft, the following assumptions have been researched and determined.
1. AvSOLUTIONS has not inspected these aircraft or their maintenance
records; accordingly, AvSOLUTIONS cannot attest to their specific location
or condition.
2. The aircraft will be delivered new to Atlas Air, Inc. during the
third quarter of 2000.
3. The aircraft will be certified, maintained and operated under
United States Federal Aviation Regulation (FAR) part 121.
4. All mandatory inspections and Airworthiness Directives have been
complied with.
5. The aircraft have no damage history.
6. The aircraft are in good condition.
7. AvSOLUTIONS considers the economic useful life of these aircraft to
be at least 37 years.
Based upon the above methodology, considerations and assumptions, it is
AvSOLUTIONS' opinion that the base values of each aircraft are as listed in
attachment 1.
2
<PAGE> 92
STATEMENT OF INDEPENDENCE
This appraisal report represents the opinion of AvSOLUTIONS, and is
intended to be advisory in nature. Therefore, AvSOLUTIONS assumes no
responsibility or legal liability for actions taken or not taken by the Client
or any other party with regard to the subject aircraft. By accepting this
report, the Client agrees that AvSOLUTIONS shall bear no responsibility or legal
liability regarding this report. Further, this report is prepared for the
exclusive use of the Client and shall not be provided to other parties without
the Client's express consent.
AvSOLUTIONS hereby states that this valuation report has been independently
prepared and fairly represents the subject aircraft and AvSOLUTIONS' opinion of
their values. AvSOLUTIONS further states that it has no present or contemplated
future interest or association with the subject aircraft.
Signed,
/s/ BRYANT LYNCH
Bryant Lynch
Manager, Commercial Appraisals
3
<PAGE> 93
ATLAS AIR, INC.
BOEING 747-400F AIRCRAFT BASE VALUES
As of December, 1999
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------
Engine Type CF6-80C2B5F CF6-80C2B5F
- -----------------------------------------------------------------------------------------------
<S> <C> <C>
Aircraft Registration N409MC N412MC
- -----------------------------------------------------------------------------------------------
Serial Number 30558 30559
- -----------------------------------------------------------------------------------------------
Delivery Date July 2000 August 2000
- -----------------------------------------------------------------------------------------------
MTOGW (Estimated) 875,000 lbs 875,000 lbs
- -----------------------------------------------------------------------------------------------
BASE VALUE $164,600,000 $164,600,000
- -----------------------------------------------------------------------------------------------
</TABLE>
ATTACHMENT 1
<PAGE> 94
MORTEN BEYER & AGNEW
AVIATION CONSULTING FIRM
APPRAISAL OF TWO
BOEING B747-400F AIRCRAFT
SERIAL NUMBERS 30558 & 30559
PREPARED FOR:
ATLAS AIR, INC.
JANUARY 4, 2000
<TABLE>
<S> <C>
Washington, D.C. London
8180 Greensboro Drive Lahinch 62, Lashmere
Suite 1000 Copthorne
McLean, Virginia 22102 West Sussex
Phone +703 847 6598 Phone +44 1342 716248
Fax +703 847 1911 Fax +44 1342 718967
</TABLE>
<PAGE> 95
I. INTRODUCTION AND EXECUTIVE SUMMARY
MORTEN BEYER & AGNEW (MBA) has been retained by Atlas Air, Inc. to
determine the Current Base Value (CBV) of (2) Boeing 747-400 Freighter aircraft,
delivered new. The aircraft are further identified in Section II of this report.
In performing this valuation we did not inspect the aircraft or their
historical maintenance documentation, and we relied solely on information
provided to us by Atlas Air. Based on the information set forth further in this
report, it is our opinion that the CBV of the total value of aircraft in this
portfolio is $322,870,000 with their respective individual values noted in
Section IV.
MBA uses the definition of certain terms, such as CMV and Base Value (BV),
as promulgated by the International Society of Transport Aircraft Trading
(ISTAT), a non-profit association of management personnel from banks, leasing
companies, airlines, manufacturers, appraisers, brokers, and others who have a
vested interest in the commercial aviation industry.
ISTAT defines CMV as the appraiser's opinion of the most likely trading
price that may be generated for an aircraft under market conditions that are
perceived to exist at the time in question. Market Value (MV) assumes that the
aircraft is valued for its highest, best use; that the parties to the
hypothetical sale transaction are willing, able, prudent and knowledgeable and
under no unusual pressure for a prompt sale; and that the transaction would be
negotiated in an open and unrestricted market on an arm's-length basis, for cash
or equivalent consideration, and given an adequate amount of time for effective
exposure to prospective buyers.
The ISTAT definition of Base Value (BV) has, essentially, the same elements
of MV except that the market circumstances are assumed to be in a reasonable
state of equilibrium. Thus, BV pertains to an idealized aircraft and market
combination, but will not necessarily reflect the actual CMV of the aircraft in
question. BV is founded in the historical trend of values and is generally used
to analyze historical values or to project future values.
1
<PAGE> 96
II. AIRCRAFT
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------
Boeing 747-400 Freighter
- --------------------------------------------------------------------------------------------------------
<S> <C> <C>
Serial Number 30558 30559
- --------------------------------------------------------------------------------------------------------
Registration N409MC N412MC
- --------------------------------------------------------------------------------------------------------
Delivery Date 7/2000 8/2000
- --------------------------------------------------------------------------------------------------------
Engine Type CF6-80C2B5F CF6-80C2B5F
- --------------------------------------------------------------------------------------------------------
MTOW (lbs.) 875,000 875,000
- --------------------------------------------------------------------------------------------------------
</TABLE>
V. COVENANTS
This report has been prepared for the exclusive use of Atlas Air and shall
not be provided to other parties by MBA without the express consent of Atlas
Air.
MBA certifies that this report has been independently prepared and that it
fully and accurately reflects MBA's opinion as to the Current Base Value. MBA
further certifies that it does not have, and does not expect to have, any
financial or other interest in the subject or similar aircraft.
This report represents the opinion of MBA as to the Current Base Value of
the subject aircraft and is intended to be advisory only in nature. Therefore,
MBA assumes no responsibility or legal liability for any actions taken or not
taken by Atlas Air or any other party with regard to the subject aircraft. By
accepting this report, all parties agree that MBA shall bear no such
responsibility or legal liability.
PREPARED BY:
/s/ BRYSON P. MONTELEONE
Bryson P. Monteleone
Director -- Operations
REVIEWED BY:
/s/ MORTEN S. BEYER
Morten S. Beyer
Chairman and CEO
ISTAT Certified Appraiser Fellow
January 4, 2000
Ref# 99408
2
<PAGE> 97
January 4, 2000
Fred L. deLeeuw
Director -- Corporate Finance
Atlas Air, Inc.
538 Commons Drive
Golden, CO 80401
Re: Value Opinion of Two Boeing 747-400 Freighters
Dear Mr. deLeeuw:
Simat, Helliesen & Eichner, Inc ("SH&E") was asked by Atlas Air (the
"Client") to determine the Base Value ("BV") of two Boeing 747-400 Freighter
aircraft operated by Atlas Air (the "Subject Aircraft"). The specifications for
the Subject Aircraft are referenced herein.
SH&E has determined the aggregate Base Value of the Subject Aircraft to be
US$306.7 million.
SUBJECT AIRCRAFT BASE VALUES ($MIL)
<TABLE>
<CAPTION>
AIRCRAFT TYPE ENGINE TYPE SERIAL # DELIVERY DATE BASE VALUE
------------- ----------- -------- ------------- ----------
<S> <C> <C> <C> <C> <C>
1 747-400F CF6-80C2B5F 30558 July 2000 $153.2
2 747-400F CF6-80C2B5F 30559 August 2000 $153.5
Total $306.7
</TABLE>
AIRCRAFT DESCRIPTION
The Boeing 747 was launched in 1966 and first entered passenger service
with Pan Am in January 1970. At an overall length of 231 ft. and 380-passenger
capacity, the 747-100 was the largest commercial aircraft available and
revolutionized the commercial air travel industry.
In 1971 Boeing launched the 747-200, realizing that the 747-100 lacked
sufficient range to serve the Pacific on a nonstop basis without incurring a
significant payload penalty. While similar in appearance to the 747-100, the
747-200 incorporated increased fuel capacity and more powerful engines with
increased fuel efficiency. The Maximum Gross Takeoff Weight ("MTOW") was
initially increased from 730,000 pounds to 775,000 pounds and later to 833,000
pounds. The range was increased to 7,000 nautical miles and, apart from the 747,
the only other aircraft that approach this range capability are 777s, MD-11s and
A340s.
In 1980, Boeing offered the Stretched Upper Deck ("SUD") modification for
the new 747-100 and the existing 747-200 aircraft, bridging the standard 747-200
with the 747-300. The SUD modification involved extending the upper deck area by
23 ft and removing the circular stairway, thereby increasing passenger capacity
by approximately 44 seats. The 747-200 SUD and the 747-300 are nearly identical,
with the exception of minor doorway and window modifications.
Boeing began development of the 747-400 in May of 1985 and Northwest
Airlines took delivery of its first 747-400 aircraft on January 26, 1989.
Compared to previous derivatives, the 747-400 represents a major improvement
over its predecessors through its enhanced technology, economic efficiencies and
performance.
Externally, the 747-400 looks similar to its -300 predecessor, sharing the
- -300's Stretched Upper Deck. The most noticeable modifications are the 6-ft
winglets that enhance aerodynamic performance and fuel efficiency. Boeing also
upgraded the cockpit with digital avionics and eliminated the flight engineer
position in the cockpit. The 747-400 cabin is identical in size to the 747-300
with a 416-passenger capacity in a standard configuration. With an increased
fuel capacity of 383,800 pounds and a MTOW of 875,000
<PAGE> 98
pounds, the 747-400 has long distance range capability of approximately 7,400
nautical miles, which is most closely matched by the Airbus A340.
The 747-400F is the freighter version of the 747-400. The aircraft the same
with a shorter upper deck than the passenger version. It has the same MTOW as
the passenger variant, but with a shorter range of 4,400 nm. The maximum landing
weight and maximum zero-fuel weight are both greater for the 747-400F with a
maximum payload of 249,125 lb. A modification of the 747-400F to a passenger
version is being studied by Boeing and is labeled 747-200X. The aircraft can
hold 30 96" by 125" pallets in its upper deck and 32 LD-1 containers in its
lower deck. Currently there is no aircraft that completes with the 747-400F
given its payload/range capabilities.
Foreseeing a requirement for increased range and capacity, Boeing was
developing a new 747 series, numbered -500X and -600X, that would have carried
550 passengers increased the maximum range to approximately 8,700 nm. However,
Boeing suspended development of this series in 1997 citing limited customer
demand. Airbus, on the other hand, has publicly stated that it will continue
development of the A3XX, an aircraft type with similar passenger and range
capabilities and recently began soliciting firm orders from potential launch
customers.
As of October 1999, 35 747-400Fs were operated by six airlines worldwide
and a further 74 are on order.
SUBJECT AIRCRAFT SPECIFICATIONS
<TABLE>
<S> <C>
- -------------------------------------------------------------------------------------
Engines 4 CF6-80C2B5F
- -------------------------------------------------------------------------------------
Maximum Takeoff Weight 875,000 lbs
- -------------------------------------------------------------------------------------
Maximum Payload 284,870 lbs
- -------------------------------------------------------------------------------------
Maximum Range 4,400 nm (5,120 m)
- -------------------------------------------------------------------------------------
Total Cargo/Volume 27,467 cubic feet
- -------------------------------------------------------------------------------------
Main-deck 96- by 125 in Pallets 30 Pallets- 21,347 cubic feet
- -------------------------------------------------------------------------------------
Lower-hold LD-1 containers 32 containers- 5600 cubic feet
- -------------------------------------------------------------------------------------
Bulk Cargo Volume 520 cubic feet
- -------------------------------------------------------------------------------------
</TABLE>
SH&E VALUATION METHODOLOGY
SH&E's appraisal's are performed according to the International Society of
Transport Aircraft Trading ("ISTAT") principles of appraisal practice and code
of ethics.
The SH&E valuation approach starts by determining a half-life value. The
term 'half-life' represents an aircraft whose major components, the airframe,
engines, landing gear and APU have used 50 percent of the time between scheduled
or expected overhauls. If appropriate, this initial appraisal can then be
adjusted, positively or negatively for each individual unit to reflect the
aircraft's maintenance status relative to the next overhaul. In most cases, the
Base Value of an aircraft assumes its physical condition is average for an
aircraft of its type and age, and its maintenance times status is at half-life,
or benefiting from an above-average maintenance status if it is new or nearly
new, as the case may be. SH&E half-life values are determined on an annual basis
by reviewing recent past sales, aircraft availability trends, technological
aspects, environmental constraints and maintenance requirements.
In the case of new aircraft, the above half-life values are automatically
adjusted upwards to reflect the fact that the aircraft has the full span of
maintenance overhaul intervals available. Consequently, SH&E's initial
depreciation of new aircraft is considerably greater than for a used aircraft,
thereby accounting for both the change in its maintenance status and its
intrinsic depreciation.
2
<PAGE> 99
BASE VALUE DEFINITION
The Base Value ("BV") is the appraiser's opinion of the underlying economic
value of an asset in an open, unrestricted and stable market environment with a
reasonable balance of supply and demand, and also assumes full considerations of
its "highest and best use". An asset's BV is founded in the historical trend of
values and in the projection of value trends and presumes an arm's-length, cash
transaction between willing, able and knowledgeable parties, acting prudently,
with an absence of duress and with a reasonable period of time available for
marketing.
Since BV pertains to a somewhat idealized asset and market combination it
may not necessarily reflect the actual value of the asset in question, but is a
nominal starting value to which adjustments may be applied to determine an
actual value. Since BV is related to long-term market trends, the BV definition
is normally applied to analyses of historical values and projections of residual
values and lease rates.
ASSUMPTIONS
SH&E used information supplied by the Client together with in-house data
accumulated through other recent studies of aircraft transactions. SH&E assumed
that the Subject Aircraft will meet all of the specifications and performance
standards for standard 747-400F series aircraft.
SH&E's opinions are based upon historical relationships and expectations
that it believes are reasonable. Some of the underlying assumptions, including
those described above are detailed explicitly or implicitly elsewhere in this
report, and may not materialize because of unanticipated events and
circumstances. SH&E's opinions could, and would, vary materially, should any of
the above assumptions prove to be inaccurate.
QUALIFICATIONS
Founded in 1963 and with offices in New York, Boston, Washington, London
and Amsterdam, SH&E is the world's largest consulting firm specializing in
commercial aviation. Its staff of over 90 personnel encompasses expertise in all
disciplines of the industry and the firm has provided appraisal, consulting,
strategic planning and technical services to airlines, leasing companies,
government agencies, airframe and engine manufacturers, and financial
institutions.
A related service that SH&E offers its clients is Asset Management. Over
the last few years, SH&E has been the principal Asset Manager responsible for
the recovery and subsequent re-marketing of a number of individual aircraft and
some significant portfolios. In addition, we have been the advisors and
re-marketing agents to Bank of New York, NationsCredit, NationsBank, Greyrock
Capital, Potomac, Concorde, Integrated Resources and the First Fidelity Trust.
In the course of those and other similar assignments we have sold, leased or
parted-out over 150 aircraft, a like number of engines and approximately $30
million worth of spare parts.
In addition to the above aircraft valuations, SH&E annually values in
excess of $1 billion worth of aircraft spare parts and spare engines. We have
developed a statistically based methodology for the appraisal of spare parts
that provides accurate valuations with known confidence levels. SH&E has also
valued a number of portfolios of ground equipment, the valuations of which have
been assisted by our recent acquisition, on behalf of a client, of sufficient
ground equipment for the start-up of an eight aircraft airline.
This active participation in the market place provides SH&E with practical
and first hand knowledge of aircraft values and lease rates. SH&E annually
appraises aviation equipment worth over $10 billion. The major U.S. bond rating
agencies have used SH&E's Residual Value model to validate their own
depreciation schedules.
3
<PAGE> 100
LIMITATIONS
The opinions expressed herein are not given as an inducement or endorsement
for any financial transaction. Although they are prepared for the exclusive use
of the addressee, the addressee may provide this report to third parties without
SH&E's written consent.
SH&E accepts no responsibility for damages, if any, that may result from
decisions made or actions taken by third parties that may be based upon this
report. In accepting this report the Client agrees to indemnify and hold SH&E
harmless against all losses, claims and costs arising as a result of this report
except when attributable to SH&E's negligence or willful misconduct.
This report reflects SH&E's expert opinion and best judgment based upon the
information available to it at the time of its preparation. SH&E does not have,
and does not expect to have, any financial interest in the appraised property.
Yours sincerely,
/s/ CLIVE G. MEDLAND
Clive G. Medland, FRAeS
Vice President
Senior Appraiser
International Society of Transport
Aircraft Trading
4
<PAGE> 101
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 20. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
The Delaware General Corporation Law and the Restated Certificate of
Incorporation of Atlas Air, Inc. (the "Charter") provide for indemnification of
directors and officers for liabilities and expenses incurred in defending
actions brought against them in such capacities. The Company's Charter provides
that the Company shall indemnify directors of the Company to the maximum extent
now or hereafter permitted by law, and officers, employees and agents of the
Company to the extent required by law and may, as authorized hereafter by the
Board of Directors, provide further indemnification to officers, employees and
agents of the Company to the maximum extent now or hereafter permitted by law.
The Company maintains directors' and officers' liability insurance covering all
directors and officers of the Company against claims arising out of the
performance of their duties.
ITEM 21. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES.
(a) Exhibits:
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
------- -----------
<C> <S>
+3.2 -- Restated Certificate of Incorporation of the Company.
++++3.3 -- Amended and Restated By-Laws of the Company.
4.1 -- Form of 8.707% Atlas Air Pass Through Certificates Series
2000-1A (included in Exhibit 4.5).
4.2 -- Form of 9.057% Atlas Air Pass Through Certificates Series
2000-1B (included in Exhibit 4.6).
4.3 -- Form of 9.702% Atlas Air Pass Through Certificates Series
2000-1C (included in Exhibit 4.7).
4.4 -- Pass Through Trust Agreement, dated as of January 28,
2000, between Wilmington Trust Company, as Trustee, and
Atlas Air, Inc.
4.5 -- Trust Supplement No. 2000-1A, dated January 28, 2000,
between Wilmington Trust Company, as Trustee, and Atlas
Air, Inc. to Pass Through Trust Agreement, dated as of
January 28, 2000.
4.6 -- Trust Supplement No. 2000-1B, dated January 28, 2000,
between Wilmington Trust Company, as Trustee, and Atlas
Air, Inc. to Pass Through Trust Agreement dated as of
January 28, 2000.
4.7 -- Trust Supplement No. 2000-1C, dated January 28, 2000,
between Wilmington Trust Company, as Trustee, and Atlas
Air, Inc. to Pass Through Trust Agreement dated as of
January 28, 2000.
4.8 -- Revolving Credit Agreement (2000-1A), dated as of January
28, 2000, between Wilmington Trust Company, not in its
individual capacity but solely as Subordination Agent, as
Borrower, and Westdeutsche Landesbank Girozentrale, as
Liquidity Provider.
4.9 -- Revolving Credit Agreement (2000-1B), dated as of January
28, 2000, between Wilmington Trust Company, not in its
individual capacity but solely as Subordination Agent, as
Borrower, and Morgan Stanley Capital Services Inc., as
Liquidity Provider.
</TABLE>
II-1
<PAGE> 102
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
------- -----------
<C> <S>
4.10 -- Revolving Credit Agreement (2000-1C), dated as of January
28, 2000, between Wilmington Trust Company, not in its
individual capacity but solely as Subordination Agent, as
Borrower, and Morgan Stanley Capital Services Inc., as
Liquidity Provider.
4.11 -- Escrow and Paying Agent Agreement (Class A) dated as of
January 28, 2000 among First Security Bank, National
Association, as Escrow Agent, Morgan Stanley & Co.
Incorporated, Deutsche Bank Securities Inc. and Salomon
Smith Barney Inc., as Placement Agents, Wilmington Trust
Company, as Trustee, and Wilmington Trust Company as
Paying Agent.
4.12 -- Escrow and Paying Agent Agreement (Class B) dated as of
January 28, 2000 among First Security Bank, National
Association, as Escrow Agent, Morgan Stanley & Co.
Incorporated, Deutsche Bank Securities Inc. and Salomon
Smith Barney Inc., as Placement Agents, Wilmington Trust
Company, as Trustee, and Wilmington Trust Company as
Paying Agent.
4.13 -- Escrow and Paying Agent Agreement (Class C) dated as of
January 28, 2000 among First Security Bank, National
Association, as Escrow Agent, Morgan Stanley & Co.
Incorporated, Deutsche Bank Securities Inc. and Salomon
Smith Barney Inc., as Placement Agents, Wilmington Trust
Company, as Trustee, and Wilmington Trust Company as
Paying Agent.
4.14 -- Deposit Agreement (Class A), dated as of January 28,
2000, between First Security Bank, National Association,
as Escrow Agent, and Westdeutsche Landesbank
Gironzentrale, as Depositary.
4.15 -- Deposit Agreement (Class B), dated as of January 28,
2000, between First Security Bank, National Association,
as Escrow Agent, and Westdeutsche Landesbank
Gironzentrale, as Depositary.
4.16 -- Deposit Agreement (Class C), dated as of January 28,
2000, between First Security Bank, National Association,
as Escrow Agent, and Westdeutsche Landesbank
Gironzentrale, as Depositary.
4.17 -- Registration Rights Agreement dated January 28, 2000
among Atlas Air, Inc., Wilmington Trust Company, as
Trustee, and Morgan Stanley & Co. Incorporated, Deutsche
Bank Securities Inc. and Salomon Smith Barney Inc., as
Placement Agents.
4.18 -- Intercreditor Agreement, dated as of January 28, 2000,
among Wilmington Trust Company, as Trustee, Westdeutsche
Landesbank Girozentrale, as Class A 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.
4.19 -- Note Purchase Agreement, dated as of January 28, 2000,
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.
4.20 -- 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).
4.21 -- Form of Lease (Lease Agreement between First Security
Bank, National Association, Lessor, and Atlas Air, Inc.,
Lessee) (Exhibit A-2 to Note Purchase Agreement).
</TABLE>
II-2
<PAGE> 103
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
------- -----------
<C> <S>
4.22 -- 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).
4.23 -- Form of Leased Aircraft Trust Agreement (Trust Agreement
between and First Security Bank, National
Association) (Exhibit A-5 to Note Purchase Agreement).
4.24 -- 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).
4.25 -- Form of Owned Aircraft Indenture (Trust Indenture and
Mortgage between Atlas Air, Inc., Owner, and Wilmington
Trust Company, as Mortgagee) (Exhibit C-2 to Note
Purchase Agreement).
5.1 -- Opinion of Cahill Gordon & Reindel as to the legality of
the New Certificates being registered hereby.
+10.14 -- Boeing 747 Maintenance Agreement dated January 1, 1995,
between the Company and KLM Royal Dutch Airlines, as
amended.
+10.15 -- Atlas Air, Inc. 1995 Long Term Incentive and Stock Award
Plan.
+10.16 -- Atlas Air, Inc. Employee Stock Purchase Plan.
++++10.17 -- Atlas Air, Inc. Profit Sharing Plan.
+10.18 -- Atlas Air, Inc. Retirement Plan.
++10.19 -- Employment Agreement between the Company and Michael A.
Chowdry.
10.20 -- Employment Agreement between the Company and Richard H.
Shuyler.
++10.23 -- Employment Agreement between the Company and James T.
Matheny.
+10.26 -- Maintenance Agreement between the Company and Hong Kong
Aircraft Engineering Company Limited dated April 12,
1995, for the performance of certain maintenance events.
***10.53 -- Secured Loan Agreement by and between the Company and
Finova Capital Corporation dated April 11, 1996.
***/****10.55 -- Engine Maintenance Agreement between the Company and
General Electric Company dated June 6, 1996.
**10.56 -- Employment Agreement dated as of May 1, 1997 between the
Company and Stanley G. Wraight.
10.58 -- Fourth Amended and Restated Credit Agreement among the
Company, the Lenders listed therein, Goldman Sachs Credit
Partners L.P. (as Syndication Agent) and Bankers Trust
Company (as Administrative Agent) dated April 25, 2000.
**10.59 -- Credit Agreement among Atlas Freighter Leasing, Inc., the
Lenders listed therein and Bankers Trust Company, as
agent, dated May 29, 1997.
**10.60 -- Lease Agreement between Atlas Freighter Leasing, Inc., as
lessor, and the Company, as lessee, relating to B747-200
aircraft. U.S. Registration No. N516MC.
**10.61 -- Lease Agreement between Atlas Freighter Leasing, Inc., as
lessor, and the Company, as lessee, relating to B747-200
aircraft. U.S. Registration No. N508MC.
**10.62 -- Lease Agreement between Atlas Freighter Leasing, Inc., as
lessor, and the Company, as lessee, relating to B747-200
aircraft. U.S. Registration No. N507MC.
</TABLE>
II-3
<PAGE> 104
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
------- -----------
<C> <S>
**10.63 -- Lease Agreement between Atlas Freighter Leasing, Inc., as
lessor, and the Company, as lessee, relating to B747-200
aircraft. U.S. Registration No. N509MC.
**10.64 -- Lease Agreement between Atlas Freighter Leasing, Inc., as
lessor, and the Company, as lessee, relating to B747-200
aircraft. U.S. Registration No. N808MC.
**10.65 -- Lease Agreement between Atlas Freighter Leasing, Inc., as
lessor, and the Company, as lessee, relating to B747-200
aircraft. U.S. Registration No. N505MC.
**10.66 -- Security Agreement and Chattel Mortgage between the
Company, Atlas Freighter Leasing, Inc. and Bankers Trust
Company, as agent, relating to B747-200 aircraft. U.S.
Registration No. N808MC.
**10.67 -- Security Agreement and Chattel Mortgage between the
Company, Atlas Freighter Leasing, Inc. and Bankers Trust
Company, as agent, relating to B747-200 aircraft. U.S.
Registration No. N507MC.
**10.68 -- Security Agreement and Chattel Mortgage between the
Company, Atlas Freighter Leasing, Inc. and Bankers Trust
Company, as agent, relating to B747-200 aircraft. U.S.
Registration No. N509MC.
**10.69 -- Security Agreement and Chattel Mortgage between the
Company, Atlas Freighter Leasing, Inc. and Bankers Trust
Company, as agent, relating to B747-200 aircraft. U.S.
Registration No. N505MC.
**10.70 -- Security Agreement and Chattel Mortgage between the
Company, Atlas Freighter Leasing, Inc. and Bankers Trust
Company, as agent, relating to B747-200 aircraft. U.S.
Registration No. N508MC.
**10.71 -- Security Agreement and Chattel Mortgage between the
Company, Atlas Freighter Leasing, Inc. and Bankers Trust
Company, as agent, relating to B747-200 aircraft. U.S.
Registration No. N516MC.
**10.72 -- Form of Indenture, dated August 13, 1997, between the
Company and State Street Bank and Trust Company, as
Trustee, relating to the 10 3/4% Senior Notes (with form
of Note attached as exhibit thereto).
**10.75 -- Credit Agreement among Atlas Freighter Leasing II, Inc.,
the Lenders listed therein, Bankers Trust Company (as
Administrative Agent) and Goldman Sachs Credit Partners
L.P. (as Syndication Agent) dated September 5, 1997.
**10.76 -- Lease Agreement dated September 5, 1997 between Atlas
Freighter Leasing II, Inc., as lessor, and the Company,
as lessee, relating to B747-200 aircraft, U.S.
Registration No. N527MC and Spare Engine Nos. 517538,
517539 and 455167.
**10.77 -- Lease Agreement dated September 5, 1997 between Atlas
Freighter Leasing II, Inc., as lessor, and the Company,
as lessee, relating to B747-200 aircraft, U.S.
Registration No. N523MC and Spare Engine Nos. 530168 and
517530.
**10.78 -- Lease Agreement dated September 5, 1997 between Atlas
Freighter Leasing II, Inc., as lessor, and the Company,
as lessee, relating to B747-200 aircraft, U.S.
Registration No. N524MC and Spare Engine Nos. 517790 and
517602.
**10.79 -- Lease Agreement dated September 5, 1997 between Atlas
Freighter Leasing II, Inc., as lessor, and the Company,
as lessee, relating to B747-200 aircraft, U.S.
Registration No. N526MC and Spare Engine Nos. 517544 and
517547.
**10.80 -- Security Agreement and Chattel Mortgage dated September
5, 1997 between Atlas Freighter Leasing II, Inc., the
Company and Bankers Trust Company, as Agent, relating to
B747-200 aircraft, U.S. Registration No. N523MC and Spare
Engine Nos. 530168 and 517530.
</TABLE>
II-4
<PAGE> 105
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
------- -----------
<C> <S>
*10.81 -- Security Agreement and Chattel Mortgage dated September
5, 1997 between Atlas Freighter Leasing II, Inc., the
Company and Bankers Trust Company, as Agent, relating to
B747-200 aircraft, U.S. Registration No. N524MC and Spare
Engine Nos. 517790 and 517602.
**10.82 -- Security Agreement and Chattel Mortgage dated September
5, 1997 between Atlas Freighter Leasing II, Inc., the
Company and Bankers Trust Company, as Agent, relating to
B747-200 aircraft, U.S. Registration No. N526MC and Spare
Engine Nos. 517544 and 517547.
**10.84 -- Security Agreement and Chattel Mortgage dated September
5, 1997 between Atlas Freighter Leasing II, Inc., the
Company and Bankers Trust Company, as Agent, relating to
B747-200 aircraft, U.S. Registration No. N527MC and Spare
Engine Nos. 517538, 517539 and 455167.
**10.85 -- First Amendment to Lease Agreement among Atlas Freighter
Leasing, Inc. and Bankers Trust Company, as agent, dated
September 5, 1997
**/****10.86 -- Purchase Agreement Number 2021 between The Boeing Company
and the Company dated June 6, 1997.
**10.87 -- Aircraft General Terms Agreement between The Boeing
Company and the Company dated June 6, 1997.
++10.90 -- Pass Through Trust Agreement, dated as of February 9,
1998, between the Company and Wilmington Trust Company,
as Trustee, relating to the Atlas Air Pass Through Trust
1998-1A-0.
++10.91 -- Pass Through Trust Agreement, dated as of February 9,
1998, between the Company and Wilmington Trust Company,
as Trustee, relating to the Atlas Air Pass Through Trust
1998-1A-S.
++10.92 -- Pass Through Trust Agreement, dated as of February 9,
1998, between the Company and Wilmington Trust Company,
as Trustee, relating to the Atlas Air Pass Through Trust
1998-1B-0.
++10.93 -- Pass Through Trust Agreement, dated as of February 9,
1998, between the Company and Wilmington Trust Company,
as Trustee, relating to the Atlas Air Pass Through Trust
1998-1B-S.
++10.94 -- Pass Through Trust Agreement, dated as of February 9,
1998, between the Company and Wilmington Trust Company,
as Trustee, relating to the Atlas Air Pass Through Trust
1998-1C-0.
++10.95 -- Pass Through Trust Agreement, dated as of February 9,
1998, between the Company and Wilmington Trust Company,
as Trustee, relating to the Atlas Air Pass Through Trust
1998-1C-S.
++10.96 -- Deposit Agreement (Class A), dated as of February 9,
1998, between First Security Bank, National Association,
as Escrow Agent, and ABN AMRO Bank N.V., acting through
its Chicago Branch, as Depositary.
++10.97 -- Deposit Agreement (Class B), dated as of February 9,
1998, between First Security Bank, National Association,
as Escrow Agent, and ABN AMRO Bank N.V., acting through
its Chicago Branch, as Depositary.
++10.98 -- Deposit Agreement (Class C), dated as of February 9,
1998, between First Security Bank, National Association,
as Escrow Agent, and ABN AMRO Bank N.V., acting through
its Chicago Branch, as Depositary.
++10.99 -- Indemnity Agreement, dated as of February 9, 1998,
between ABN AMRO Bank N.V., acting through its Chicago
Branch, as Depositary, and the Company.
</TABLE>
II-5
<PAGE> 106
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
------- -----------
<C> <S>
++10.100 -- Escrow and Paying Agent Agreement (Class A), dated as of
February 9, 1998, among First Security Bank, National
Association, as Escrow Agent, Morgan Stanley & Co.
Incorporated, BT Alex. Brown Incorporated, Donaldson,
Lufkin & Jenrette Securities Corporation and Goldman,
Sachs & Co., as Placement Agents, Wilmington Trust
Company, not in its individual capacity, but solely as
Pass Through Trustee, and Wilmington Trust Company, as
Paying Agent.
++10.101 -- Escrow and Paying Agent Agreement (Class B), dated as of
February 9, 1998, among First Security Bank, National
Association, as Escrow Agent, Morgan Stanley & Co.
Incorporated, BT Alex. Brown Incorporated, Donaldson,
Lufkin & Jenrette Securities Corporation and Goldman,
Sachs & Co., as Placement Agents, Wilmington Trust
Company, not in its individual capacity, but solely as
Pass Through Trustee, and Wilmington Trust Company, as
Paying Agent.
++10.102 -- Escrow and Paying Agent Agreement (Class C), dated as of
February 9, 1998, among First Security Bank, National
Association, as Escrow Agent, Morgan Stanley & Co.
Incorporated, BT Alex. Brown Incorporated, Donaldson,
Lufkin & Jenrette Securities Corporation and Goldman,
Sachs & Co., as Placement Agents, Wilmington Trust
Company, not in its individual capacity, but solely as
Pass Through Trustee, and Wilmington Trust Company, as
Paying Agent.
++10.103 -- Revolving Credit Agreement (1998-1A), dated as of
February 9, 1998, between Wilmington Trust Company, not
in its individual capacity but solely as Subordination
Agent, as Borrower, and ABN AMRO Bank N.V., acting
through its Chicago Branch as Liquidity Provider.
++10.104 -- Revolving Credit Agreement (1998-1B), dated as of
February 9, 1998, between Wilmington Trust Company, not
in its individual capacity but solely as Subordination
Agent, as Borrower, and Morgan Stanley Capital Services,
Inc., as Liquidity Provider.
++10.105 -- Revolving Credit Agreement (1998-1C), dated as of
February 9, 1998, between Wilmington Trust Company, not
in its individual capacity but solely as Subordination
Agent, as Borrower, and Morgan Stanley Capital Services,
Inc., as Liquidity Provider.
++10.106 -- Guarantee, dated as of February 9, 1998, from Morgan
Stanley, Dean Witter, Discover & Co. to Atlas Air, Inc.
Pass Through Trust 1998-B relating to Class B Liquidity
Facility.
++10.107 -- Guarantee, dated as of February 9, 1998, from Morgan
Stanley, Dean Witter, Discover & Co. to Atlas Air, Inc.
Pass Through Trust 1998-C relating to Class C Liquidity
Facility.
++10.108 -- Intercreditor Agreement, dated as of February 9, 1998,
among Wilmington Trust Company, not in its individual
capacity but solely as Trustee, ABN AMRO Bank N.V.,
acting through its Chicago Branch, as Class A Liquidity
Provider, Morgan Stanley Capital Services, Inc., as Class
B Liquidity Provider and Class C Liquidity Provider, and
Wilmington Trust Company.
++10.109 -- Note Purchase Agreement, dated as of February 9, 1998,
among the Company, Wilmington Trust Company and First
Security Bank, National Association.
*****10.111 -- Form of Indenture, dated April 9, 1998, between the
Company and State Street Bank and Trust company, as
Trustee, relating to the 9 1/4% Senior Notes (with form
of Note attached as exhibit thereto).
****/*****10.114 -- Engine Maintenance Agreement between the Company and GE
Engine Services, Inc.
</TABLE>
II-6
<PAGE> 107
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
------- -----------
<C> <S>
****/*****10.115 -- Engine Maintenance Agreement between the Company and GE
Engine Services, Inc.
****/*****10.116 -- General Terms Agreement between the Company and General
Electric Company dated June 6, 1997.
******10.117 -- Form of Indenture, dated November 18, 1998, between the
Company and State Street Bank and Trust Company, as
Trustee, relating to the 9 3/8% Senior Notes (with form
of Note attached as exhibit thereto).
++++++10.118 -- Employment Agreement dated June 22, 1998, between the
Company and Thomas G. Scott.
+++10.119 -- 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.
+++10.120 -- 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.
+++10.121 -- 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.
+++10.122 -- 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.
+++10.123 -- 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.
+++10.124 -- Guarantee, dated April 13, 1999, by Morgan Stanley Dean
Witter & Co. relating to Revolving Credit Agreement
(1999-1B).
+++10.125 -- Guarantee, dated April 13, 1999, by Morgan Stanley Dean
Witter & Co. relating to Revolving Credit Agreement
(1999-1C).
+++10.126 -- Pass Through Trust Agreement, dated as of April 1, 1999,
between Wilmington Trust Company, as Trustee, and Atlas
Air, Inc.
+++10.127 -- 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.
+++10.128 -- 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.
+++10.129 -- 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.
+++10.130 -- 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.
+++10.131 -- 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.
</TABLE>
II-7
<PAGE> 108
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
------- -----------
<C> <S>
+++10.132 -- 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.
+++10.133 -- 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, as Depositary.
+++10.134 -- 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.
+++10.135 -- 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.
+++10.136 -- 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.
+++10.137 -- 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.
+++10.138 -- Escrow and Paying Agent Agreement (Class A-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.
+++10.139 -- Escrow and Paying Agent Agreement (Class A-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.
+++10.140 -- 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.
+++10.141 -- 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).
+++10.142 -- Form of Lease (Lease Agreement between First Security
Bank, National Association, Lessor, and Atlas Air, Inc.,
Lessee) (Exhibit A-2 to Note Purchase Agreement).
+++10.143 -- 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).
</TABLE>
II-8
<PAGE> 109
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
------- -----------
<C> <S>
+++10.144 -- Form of Leased Aircraft Trust Agreement (Trust Agreement
between and First Security Bank, National
Association) (Exhibit A-5 to Note Purchase Agreement).
+++10.145 -- 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).
+++10.146 -- Form of Owned Aircraft Indenture (Trust Indenture and
Mortgage between Atlas Air, Inc., Owner, and Wilmington
Trust Company, as Mortgagee) (Exhibit C-2 to Note
Purchase Agreement).
+++10.147 -- 7.20% Atlas Air Pass Through Certificate 1999-1A-1,
Certificate No. A-1-1.
+++10.148 -- 7.20% Atlas Air Pass Through Certificate 1999-1A-1,
Certificate No. A-1-2.
+++10.149 -- 6.88% Atlas Air Pass Through Certificate 1999-1A-2,
Certificate No. A-2-1.
+++10.150 -- 7.63% Atlas Air Pass Through Certificate 1999-1B-1,
Certificate No. B-1.
+++10.151 -- 8.77% Atlas Air Pass Through Certificate 1999-1C-1,
Certificate No. C-1.
++++10.152 -- Agreement of Lease between Texaco, Inc., Landlord, and
the Company, Tenant, 2000 Westchester Avenue, White
Plains, New York 10650 dated November 9, 1999.
++++10.153 -- Atlas Air, Inc. Annual Incentive Compensation Plan.
++++10.154 -- Atlas Air, Inc. Long-Term Incentive Plan.
++++10.155 -- Amendments to the Atlas Air, Inc. 1995 Long Term
Incentive and Stock Award Plan. (The Atlas Air, Inc. 1995
Long Term Incentive and Stock Award Plan is filed as
Exhibit 10.15, which is incorporated by reference in this
Report.)
++21.1 -- Subsidiaries of the Registrant.
23.1 -- Consent of Arthur Andersen LLP.
23.2 -- Consent of Cahill Gordon & Reindel (included in Exhibit
5.1).
24.1 -- Powers of Attorney (set forth on the signature page of
the Registration Statement).
25.1 -- Statement of Eligibility of Wilmington Trust Company for
the 2000-1A Pass Through Certificates, on Form T-1.
25.2 -- Statement of Eligibility of Wilmington Trust Company for
the 2000-1B Pass Through Certificates, on Form T-1.
25.3 -- Statement of Eligibility of Wilmington Trust Company for
the 2000-1C Pass Through Certificates, on Form T-1.
99.1 -- Form of Letter of Transmittal.
99.2 -- Form of Notice of Guaranteed Delivery.
99.3 -- Form of Letter to Brokers, Dealers Commercial Banks,
Trust Companies and Other Nominees.
99.4 -- Form of Letter to Clients.
</TABLE>
- ---------------
++++ Incorporated by reference to the exhibits to the Company's Annual Report
for 1999 on Form 10-K.
+++ Incorporated by reference to the exhibits to the Company's Current Report
on Form 8-K dated April 13, 1999.
++ Incorporated by reference to the exhibits to the Company's Annual Report
for 1997 on Form 10-K.
II-9
<PAGE> 110
+ Incorporated by reference to the exhibits to the Company's Registration
Statement on Form S-1 (No. 33-90304).
++ Incorporated by reference to the exhibits to the Company's Registration
Statement on Form S-1 (No. 33-97892).
++++ Incorporated by reference to the exhibits to the Company's
Registration Statement on Form S-4 (No. 333-51819).
++++++ Incorporated by reference to the exhibits to the Company's Annual
Report for 1998 on Form 10-K.
* Incorporated by reference to the exhibits to the Company's Registration
Statement on Form S-1 (No. 333-2810).
** Incorporated by reference to the exhibits to the Company's Registration
Statement on Form S-4 (No. 333-36305).
*** Incorporated by reference to the exhibits to the Company's Annual Report
for 1996 on Form 10-K.
**** Portions of this document, for which the Company has been granted
confidential treatment, have been redacted and filed separately with the
Securities and Exchange Commission.
***** Incorporated by reference to the exhibits to the Company's Registration
Statement on Form S-4 (No. 333-56391).
****** Incorporated by reference to the exhibits to the Company's Registration
Statement on Form S-4 (No. 333-72211).
(b) Schedules.
All schedules are omitted as the required information is presented in the
Registrant's consolidated financial statements or related notes or such
schedules are not applicable.
ITEM 22. UNDERTAKINGS.
(1) The undersigned registrant hereby undertakes as follows: that
prior to any public reoffering of the securities registered hereunder
through use of a prospectus which is a part of this registration statement,
by any person or party who is deemed to be an underwriter within the
meaning of Rule 145(c), the issuer undertakes that such reoffering
prospectus will contain the information called for by the applicable
registration form with respect to reofferings by persons who may be deemed
underwriters, in addition to the information called for by the other items
of the applicable form.
(2) The registrant undertakes that every prospectus: (i) that is filed
pursuant to paragraph (1) immediately preceding, or (ii) that purports to
meet the requirements of Section 10(a)(3) of the Act and is used in
connection with an offering of securities subject to Rule 415, will be
filed as a part of the amendment to the registration statement and will not
be used until such amendment is effective, and that, for purposes of
determining any liability under the Securities Act of 1933, each such
post-effective amendment shall be deemed to be a new registration statement
relating to the securities offered therein, and the offering of such
securities at that time shall be deemed to be the initial bona fide
offering thereof.
Insofar as indemnification for liabilities arising under the Securities Act
of 1933 may be permitted to directors, officers or persons controlling the
registrant pursuant to the foregoing provisions, the registrant has been
informed that in the opinion of the Securities and Exchange Commission such
indemnification is against public policy as expressed in the Act and is,
therefore, unenforceable. In the event that a claim for indemnification against
such liabilities (other than the payment by the registrant of expenses incurred
or paid by a director, officer or controlling person of the registrant in the
successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities being
registered, the registrant will, unless in the opinion of its counsel the matter
has been settled by
II-10
<PAGE> 111
controlling precedent, submit to a court of appropriate jurisdiction the
question whether such indemnification by it is against public policy as
expressed in the Act and will be governed by the final adjudication of such
issue.
The undersigned registrant hereby undertakes to respond to requests for
information that is incorporated by reference into the prospectus pursuant to
Item 4, 10(b), 11 or 13 of this form, within one business day of receipt of such
request, and to send the incorporated documents by first class mail or other
equally prompt means. This includes information contained in documents filed
subsequent to the effective date of the registration statement through the date
of responding to the request.
The undersigned registrant hereby undertakes to supply by means of a
post-effective amendment all information concerning a transaction, and the
company being acquired involved therein, that was not the subject of and
included in the registration statement when it became effective.
The undersigned registrant hereby undertakes to file an application for the
purpose of determining the eligibility of the trustee to act under subsection
(a) of Section 310 of the Trust Indenture Act in accordance with the rules and
regulations prescribed by the SEC under Section 305(b)(2) of the Act.
II-11
<PAGE> 112
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the registrant
has duly caused this registration statement to be signed on its behalf by the
undersigned, thereunto duly authorized in the City of Denver, State of Colorado
on the 4th day of May, 2000.
ATLAS AIR, INC.
By: /s/ RICHARD H. SHUYLER
----------------------------------
Name: Richard H. Shuyler
Title: Executive Vice
President --
Strategic Planning,
Treasurer
and Director
POWER OF ATTORNEY
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons, in the
capacities and on the dates indicated. Each person whose signature appears below
hereby appoints Michael A. Chowdry and Richard H. Shuyler, and each of them
singly, such person's true and lawful attorneys, each with full power of
substitution to sign for such person and in such person's name and capacity as
indicated below, any and all amendments to this Registration Statement,
including post-effective amendments thereto, and to file the same with the
Securities and Exchange Commission, hereby ratifying and confirming such
person's signature as it may be signed by said attorneys to any and all
amendments.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
--------- ----- ----
<C> <S> <C>
/s/ MICHAEL A. CHOWDRY Chairman of the Board, Chief May 4, 2000
- ----------------------------------------------------- Executive Officer, President
Michael A. Chowdry and Director
/s/ RICHARD H. SHUYLER Executive Vice President -- May 4, 2000
- ----------------------------------------------------- Strategic Planning, Treasurer
Richard H. Shuyler and Director
/s/ BERL BERNHARD Director May 4, 2000
- -----------------------------------------------------
Berl Bernhard
/s/ LAWRENCE W. CLARKSON Director May 4, 2000
- -----------------------------------------------------
Lawrence W. Clarkson
/s/ DAVID K.P. LI Director May 4, 2000
- -----------------------------------------------------
David K.P. Li
/s/ DAVID T. MCLAUGHLIN Director May 4, 2000
- -----------------------------------------------------
David T. McLaughlin
/s/ BRIAN ROWE Director May 4, 2000
- -----------------------------------------------------
Brian Rowe
</TABLE>
II-12
<PAGE> 113
EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
------- -----------
<C> <S>
+3.2 -- Restated Certificate of Incorporation of the Company.
++++3.3 -- Amended and Restated By-Laws of the Company.
4.1 -- Form of 8.707% Atlas Air Pass Through Certificates Series
2000-1A (included in Exhibit 4.5).
4.2 -- Form of 9.057% Atlas Air Pass Through Certificates Series
2000-1B (included in Exhibit 4.6).
4.3 -- Form of 9.702% Atlas Air Pass Through Certificates Series
2000-1C (included in Exhibit 4.7).
4.4 -- Pass Through Trust Agreement, dated as of January 28,
2000, between Wilmington Trust Company, as Trustee, and
Atlas Air, Inc.
4.5 -- Trust Supplement No. 2000-1A, dated January 28, 2000,
between Wilmington Trust Company, as Trustee, and Atlas
Air, Inc. to Pass Through Trust Agreement, dated as of
January 28, 2000.
4.6 -- Trust Supplement No. 2000-1B, dated January 28, 2000,
between Wilmington Trust Company, as Trustee, and Atlas
Air, Inc. to Pass Through Trust Agreement dated as of
January 28, 2000.
4.7 -- Trust Supplement No. 2000-1C, dated January 28, 2000,
between Wilmington Trust Company, as Trustee, and Atlas
Air, Inc. to Pass Through Trust Agreement dated as of
January 28, 2000.
4.8 -- Revolving Credit Agreement (2000-1A), dated as of January
28, 2000, between Wilmington Trust Company, not in its
individual capacity but solely as Subordination Agent, as
Borrower, and Westdeutsche Landesbank Girozentrale, as
Liquidity Provider.
4.9 -- Revolving Credit Agreement (2000-1B), dated as of January
28, 2000, between Wilmington Trust Company, not in its
individual capacity but solely as Subordination Agent, as
Borrower, and Morgan Stanley Capital Services Inc., as
Liquidity Provider.
4.10 -- Revolving Credit Agreement (2000-1C), dated as of January
28, 2000, between Wilmington Trust Company, not in its
individual capacity but solely as Subordination Agent, as
Borrower, and Morgan Stanley Capital Services Inc., as
Liquidity Provider.
4.11 -- Escrow and Paying Agent Agreement (Class A) dated as of
January 28, 2000 among First Security Bank, National
Association, as Escrow Agent, Morgan Stanley & Co.
Incorporated, Deutsche Bank Securities Inc. and Salomon
Smith Barney Inc., as Placement Agents, Wilmington Trust
Company, as Trustee, and Wilmington Trust Company as
Paying Agent.
4.12 -- Escrow and Paying Agent Agreement (Class B) dated as of
January 28, 2000 among First Security Bank, National
Association, as Escrow Agent, Morgan Stanley & Co.
Incorporated, Deutsche Bank Securities Inc. and Salomon
Smith Barney Inc., as Placement Agents, Wilmington Trust
Company, as Trustee, and Wilmington Trust Company as
Paying Agent.
</TABLE>
<PAGE> 114
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
------- -----------
<C> <S>
4.13 -- Escrow and Paying Agent Agreement (Class C) dated as of
January 28, 2000 among First Security Bank, National
Association, as Escrow Agent, Morgan Stanley & Co.
Incorporated, Deutsche Bank Securities Inc. and Salomon
Smith Barney Inc., as Placement Agents, Wilmington Trust
Company, as Trustee, and Wilmington Trust Company as
Paying Agent.
4.14 -- Deposit Agreement (Class A), dated as of January 28,
2000, between First Security Bank, National Association,
as Escrow Agent, and Westdeutsche Landesbank
Gironzentrale, as Depositary.
4.15 -- Deposit Agreement (Class B), dated as of January 28,
2000, between First Security Bank, National Association,
as Escrow Agent, and Westdeutsche Landesbank
Gironzentrale, as Depositary.
4.16 -- Deposit Agreement (Class C), dated as of January 28,
2000, between First Security Bank, National Association,
as Escrow Agent, and Westdeutsche Landesbank
Gironzentrale, as Depositary.
4.17 -- Registration Rights Agreement dated January 28, 2000
among Atlas Air, Inc., Wilmington Trust Company, as
Trustee, and Morgan Stanley & Co. Incorporated, Deutsche
Bank Securities Inc. and Salomon Smith Barney Inc., as
Placement Agents.
4.18 -- Intercreditor Agreement, dated as of January 28, 2000,
among Wilmington Trust Company, as Trustee, Westdeutsche
Landesbank Girozentrale, as Class A 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.
4.19 -- Note Purchase Agreement, dated as of January 28, 2000,
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.
4.20 -- 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).
4.21 -- Form of Lease (Lease Agreement between First Security
Bank, National Association, Lessor, and Atlas Air, Inc.,
Lessee) (Exhibit A-2 to Note Purchase Agreement).
4.22 -- 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).
4.23 -- Form of Leased Aircraft Trust Agreement (Trust Agreement
between and First Security Bank, National
Association) (Exhibit A-5 to Note Purchase Agreement).
4.24 -- 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).
4.25 -- Form of Owned Aircraft Indenture (Trust Indenture and
Mortgage between Atlas Air, Inc., Owner, and Wilmington
Trust Company, as Mortgagee) (Exhibit C-2 to Note
Purchase Agreement).
</TABLE>
<PAGE> 115
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
------- -----------
<C> <S>
5.1 -- Opinion of Cahill Gordon & Reindel as to the legality of
the New Certificates being registered hereby.
+10.14 -- Boeing 747 Maintenance Agreement dated January 1, 1995,
between the Company and KLM Royal Dutch Airlines, as
amended.
+10.15 -- Atlas Air, Inc. 1995 Long Term Incentive and Stock Award
Plan.
+10.16 -- Atlas Air, Inc. Employee Stock Purchase Plan.
++++10.17 -- Atlas Air, Inc. Profit Sharing Plan.
+10.18 -- Atlas Air, Inc. Retirement Plan.
++10.19 -- Employment Agreement between the Company and Michael A.
Chowdry.
10.20 -- Employment Agreement between the Company and Richard H.
Shuyler.
++10.23 -- Employment Agreement between the Company and James T.
Matheny.
+10.26 -- Maintenance Agreement between the Company and Hong Kong
Aircraft Engineering Company Limited dated April 12,
1995, for the performance of certain maintenance events.
***10.53 -- Secured Loan Agreement by and between the Company and
Finova Capital Corporation dated April 11, 1996.
***/****10.55 -- Engine Maintenance Agreement between the Company and
General Electric Company dated June 6, 1996.
**10.56 -- Employment Agreement dated as of May 1, 1997 between the
Company and Stanley G. Wraight.
10.58 -- Fourth Amended and Restated Credit Agreement among the
Company, the Lenders listed therein, Goldman Sachs Credit
Partners L.P. (as Syndication Agent) and Bankers Trust
Company (as Administrative Agent) dated April 25, 2000.
**10.59 -- Credit Agreement among Atlas Freighter Leasing, Inc., the
Lenders listed therein and Bankers Trust Company, as
agent, dated May 29, 1997.
**10.60 -- Lease Agreement between Atlas Freighter Leasing, Inc., as
lessor, and the Company, as lessee, relating to B747-200
aircraft. U.S. Registration No. N516MC.
**10.61 -- Lease Agreement between Atlas Freighter Leasing, Inc., as
lessor, and the Company, as lessee, relating to B747-200
aircraft. U.S. Registration No. N508MC.
**10.62 -- Lease Agreement between Atlas Freighter Leasing, Inc., as
lessor, and the Company, as lessee, relating to B747-200
aircraft. U.S. Registration No. N507MC.
**10.63 -- Lease Agreement between Atlas Freighter Leasing, Inc., as
lessor, and the Company, as lessee, relating to B747-200
aircraft. U.S. Registration No. N509MC.
**10.64 -- Lease Agreement between Atlas Freighter Leasing, Inc., as
lessor, and the Company, as lessee, relating to B747-200
aircraft. U.S. Registration No. N808MC.
**10.65 -- Lease Agreement between Atlas Freighter Leasing, Inc., as
lessor, and the Company, as lessee, relating to B747-200
aircraft. U.S. Registration No. N505MC.
**10.66 -- Security Agreement and Chattel Mortgage between the
Company, Atlas Freighter Leasing, Inc. and Bankers Trust
Company, as agent, relating to B747-200 aircraft. U.S.
Registration No. N808MC.
**10.67 -- Security Agreement and Chattel Mortgage between the
Company, Atlas Freighter Leasing, Inc. and Bankers Trust
Company, as agent, relating to B747-200 aircraft. U.S.
Registration No. N507MC.
</TABLE>
<PAGE> 116
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
------- -----------
<C> <S>
**10.68 -- Security Agreement and Chattel Mortgage between the
Company, Atlas Freighter Leasing, Inc. and Bankers Trust
Company, as agent, relating to B747-200 aircraft. U.S.
Registration No. N509MC.
**10.69 -- Security Agreement and Chattel Mortgage between the
Company, Atlas Freighter Leasing, Inc. and Bankers Trust
Company, as agent, relating to B747-200 aircraft. U.S.
Registration No. N505MC.
**10.70 -- Security Agreement and Chattel Mortgage between the
Company, Atlas Freighter Leasing, Inc. and Bankers Trust
Company, as agent, relating to B747-200 aircraft. U.S.
Registration No. N508MC.
**10.71 -- Security Agreement and Chattel Mortgage between the
Company, Atlas Freighter Leasing, Inc. and Bankers Trust
Company, as agent, relating to B747-200 aircraft. U.S.
Registration No. N516MC.
**10.72 -- Form of Indenture, dated August 13, 1997, between the
Company and State Street Bank and Trust Company, as
Trustee, relating to the 10 3/4% Senior Notes (with form
of Note attached as exhibit thereto).
**10.75 -- Credit Agreement among Atlas Freighter Leasing II, Inc.,
the Lenders listed therein, Bankers Trust Company (as
Administrative Agent) and Goldman Sachs Credit Partners
L.P. (as Syndication Agent) dated September 5, 1997.
**10.76 -- Lease Agreement dated September 5, 1997 between Atlas
Freighter Leasing II, Inc., as lessor, and the Company,
as lessee, relating to B747-200 aircraft, U.S.
Registration No. N527MC and Spare Engine Nos. 517538,
517539 and 455167.
**10.77 -- Lease Agreement dated September 5, 1997 between Atlas
Freighter Leasing II, Inc., as lessor, and the Company,
as lessee, relating to B747-200 aircraft, U.S.
Registration No. N523MC and Spare Engine Nos. 530168 and
517530.
**10.78 -- Lease Agreement dated September 5, 1997 between Atlas
Freighter Leasing II, Inc., as lessor, and the Company,
as lessee, relating to B747-200 aircraft, U.S.
Registration No. N524MC and Spare Engine Nos. 517790 and
517602.
**10.79 -- Lease Agreement dated September 5, 1997 between Atlas
Freighter Leasing II, Inc., as lessor, and the Company,
as lessee, relating to B747-200 aircraft, U.S.
Registration No. N526MC and Spare Engine Nos. 517544 and
517547.
**10.80 -- Security Agreement and Chattel Mortgage dated September
5, 1997 between Atlas Freighter Leasing II, Inc., the
Company and Bankers Trust Company, as Agent, relating to
B747-200 aircraft, U.S. Registration No. N523MC and Spare
Engine Nos. 530168 and 517530.
*10.81 -- Security Agreement and Chattel Mortgage dated September
5, 1997 between Atlas Freighter Leasing II, Inc., the
Company and Bankers Trust Company, as Agent, relating to
B747-200 aircraft, U.S. Registration No. N524MC and Spare
Engine Nos. 517790 and 517602.
**10.82 -- Security Agreement and Chattel Mortgage dated September
5, 1997 between Atlas Freighter Leasing II, Inc., the
Company and Bankers Trust Company, as Agent, relating to
B747-200 aircraft, U.S. Registration No. N526MC and Spare
Engine Nos. 517544 and 517547.
**10.84 -- Security Agreement and Chattel Mortgage dated September
5, 1997 between Atlas Freighter Leasing II, Inc., the
Company and Bankers Trust Company, as Agent, relating to
B747-200 aircraft, U.S. Registration No. N527MC and Spare
Engine Nos. 517538, 517539 and 455167.
</TABLE>
<PAGE> 117
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
------- -----------
<C> <S>
**10.85 -- First Amendment to Lease Agreement among Atlas Freighter
Leasing, Inc. and Bankers Trust Company, as agent, dated
September 5, 1997
**/****10.86 -- Purchase Agreement Number 2021 between The Boeing Company
and the Company dated June 6, 1997.
**10.87 -- Aircraft General Terms Agreement between The Boeing
Company and the Company dated June 6, 1997.
++10.90 -- Pass Through Trust Agreement, dated as of February 9,
1998, between the Company and Wilmington Trust Company,
as Trustee, relating to the Atlas Air Pass Through Trust
1998-1A-0.
++10.91 -- Pass Through Trust Agreement, dated as of February 9,
1998, between the Company and Wilmington Trust Company,
as Trustee, relating to the Atlas Air Pass Through Trust
1998-1A-S.
++10.92 -- Pass Through Trust Agreement, dated as of February 9,
1998, between the Company and Wilmington Trust Company,
as Trustee, relating to the Atlas Air Pass Through Trust
1998-1B-0.
++10.93 -- Pass Through Trust Agreement, dated as of February 9,
1998, between the Company and Wilmington Trust Company,
as Trustee, relating to the Atlas Air Pass Through Trust
1998-1B-S.
++10.94 -- Pass Through Trust Agreement, dated as of February 9,
1998, between the Company and Wilmington Trust Company,
as Trustee, relating to the Atlas Air Pass Through Trust
1998-1C-0.
++10.95 -- Pass Through Trust Agreement, dated as of February 9,
1998, between the Company and Wilmington Trust Company,
as Trustee, relating to the Atlas Air Pass Through Trust
1998-1C-S.
++10.96 -- Deposit Agreement (Class A), dated as of February 9,
1998, between First Security Bank, National Association,
as Escrow Agent, and ABN AMRO Bank N.V., acting through
its Chicago Branch, as Depositary.
++10.97 -- Deposit Agreement (Class B), dated as of February 9,
1998, between First Security Bank, National Association,
as Escrow Agent, and ABN AMRO Bank N.V., acting through
its Chicago Branch, as Depositary.
++10.98 -- Deposit Agreement (Class C), dated as of February 9,
1998, between First Security Bank, National Association,
as Escrow Agent, and ABN AMRO Bank N.V., acting through
its Chicago Branch, as Depositary.
++10.99 -- Indemnity Agreement, dated as of February 9, 1998,
between ABN AMRO Bank N.V., acting through its Chicago
Branch, as Depositary, and the Company.
++10.100 -- Escrow and Paying Agent Agreement (Class A), dated as of
February 9, 1998, among First Security Bank, National
Association, as Escrow Agent, Morgan Stanley & Co.
Incorporated, BT Alex. Brown Incorporated, Donaldson,
Lufkin & Jenrette Securities Corporation and Goldman,
Sachs & Co., as Placement Agents, Wilmington Trust
Company, not in its individual capacity, but solely as
Pass Through Trustee, and Wilmington Trust Company, as
Paying Agent.
++10.101 -- Escrow and Paying Agent Agreement (Class B), dated as of
February 9, 1998, among First Security Bank, National
Association, as Escrow Agent, Morgan Stanley & Co.
Incorporated, BT Alex. Brown Incorporated, Donaldson,
Lufkin & Jenrette Securities Corporation and Goldman,
Sachs & Co., as Placement Agents, Wilmington Trust
Company, not in its individual capacity, but solely as
Pass Through Trustee, and Wilmington Trust Company, as
Paying Agent.
</TABLE>
<PAGE> 118
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
------- -----------
<C> <S>
++10.102 -- Escrow and Paying Agent Agreement (Class C), dated as of
February 9, 1998, among First Security Bank, National
Association, as Escrow Agent, Morgan Stanley & Co.
Incorporated, BT Alex. Brown Incorporated, Donaldson,
Lufkin & Jenrette Securities Corporation and Goldman,
Sachs & Co., as Placement Agents, Wilmington Trust
Company, not in its individual capacity, but solely as
Pass Through Trustee, and Wilmington Trust Company, as
Paying Agent.
++10.103 -- Revolving Credit Agreement (1998-1A), dated as of
February 9, 1998, between Wilmington Trust Company, not
in its individual capacity but solely as Subordination
Agent, as Borrower, and ABN AMRO Bank N.V., acting
through its Chicago Branch as Liquidity Provider.
++10.104 -- Revolving Credit Agreement (1998-1B), dated as of
February 9, 1998, between Wilmington Trust Company, not
in its individual capacity but solely as Subordination
Agent, as Borrower, and Morgan Stanley Capital Services,
Inc., as Liquidity Provider.
++10.105 -- Revolving Credit Agreement (1998-1C), dated as of
February 9, 1998, between Wilmington Trust Company, not
in its individual capacity but solely as Subordination
Agent, as Borrower, and Morgan Stanley Capital Services,
Inc., as Liquidity Provider.
++10.106 -- Guarantee, dated as of February 9, 1998, from Morgan
Stanley, Dean Witter, Discover & Co. to Atlas Air, Inc.
Pass Through Trust 1998-B relating to Class B Liquidity
Facility.
++10.107 -- Guarantee, dated as of February 9, 1998, from Morgan
Stanley, Dean Witter, Discover & Co. to Atlas Air, Inc.
Pass Through Trust 1998-C relating to Class C Liquidity
Facility.
++10.108 -- Intercreditor Agreement, dated as of February 9, 1998,
among Wilmington Trust Company, not in its individual
capacity but solely as Trustee, ABN AMRO Bank N.V.,
acting through its Chicago Branch, as Class A Liquidity
Provider, Morgan Stanley Capital Services, Inc., as Class
B Liquidity Provider and Class C Liquidity Provider, and
Wilmington Trust Company.
++10.109 -- Note Purchase Agreement, dated as of February 9, 1998,
among the Company, Wilmington Trust Company and First
Security Bank, National Association.
*****10.111 -- Form of Indenture, dated April 9, 1998, between the
Company and State Street Bank and Trust company, as
Trustee, relating to the 9 1/4% Senior Notes (with form
of Note attached as exhibit thereto).
****/*****10.114 -- Engine Maintenance Agreement between the Company and GE
Engine Services, Inc.
****/*****10.115 -- Engine Maintenance Agreement between the Company and GE
Engine Services, Inc.
****/*****10.116 -- General Terms Agreement between the Company and General
Electric Company dated June 6, 1997.
******10.117 -- Form of Indenture, dated November 18, 1998, between the
Company and State Street Bank and Trust Company, as
Trustee, relating to the 9 3/8% Senior Notes (with form
of Note attached as exhibit thereto).
++++++10.118 -- Employment Agreement dated June 22, 1998, between the
Company and Thomas G. Scott.
</TABLE>
<PAGE> 119
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
------- -----------
<C> <S>
+++10.119 -- 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.
+++10.120 -- 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.
+++10.121 -- 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.
+++10.122 -- 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.
+++10.123 -- 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.
+++10.124 -- Guarantee, dated April 13, 1999, by Morgan Stanley Dean
Witter & Co. relating to Revolving Credit Agreement
(1999-1B).
+++10.125 -- Guarantee, dated April 13, 1999, by Morgan Stanley Dean
Witter & Co. relating to Revolving Credit Agreement
(1999-1C).
+++10.126 -- Pass Through Trust Agreement, dated as of April 1, 1999,
between Wilmington Trust Company, as Trustee, and Atlas
Air, Inc.
+++10.127 -- 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.
+++10.128 -- 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.
+++10.129 -- 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.
+++10.130 -- 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.
+++10.131 -- 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.
+++10.132 -- 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.
+++10.133 -- 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, as Depositary.
+++10.134 -- 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.
</TABLE>
<PAGE> 120
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
------- -----------
<C> <S>
+++10.135 -- 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.
+++10.136 -- 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.
+++10.137 -- 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.
+++10.138 -- Escrow and Paying Agent Agreement (Class A-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.
+++10.139 -- Escrow and Paying Agent Agreement (Class A-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.
+++10.140 -- 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.
+++10.141 -- 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).
+++10.142 -- Form of Lease (Lease Agreement between First Security
Bank, National Association, Lessor, and Atlas Air, Inc.,
Lessee) (Exhibit A-2 to Note Purchase Agreement).
+++10.143 -- 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).
+++10.144 -- Form of Leased Aircraft Trust Agreement (Trust Agreement
between and First Security Bank, National
Association) (Exhibit A-5 to Note Purchase Agreement).
+++10.145 -- 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).
+++10.146 -- Form of Owned Aircraft Indenture (Trust Indenture and
Mortgage between Atlas Air, Inc., Owner, and Wilmington
Trust Company, as Mortgagee) (Exhibit C-2 to Note
Purchase Agreement).
+++10.147 -- 7.20% Atlas Air Pass Through Certificate 1999-1A-1,
Certificate No. A-1-1.
</TABLE>
<PAGE> 121
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
------- -----------
<C> <S>
+++10.148 -- 7.20% Atlas Air Pass Through Certificate 1999-1A-1,
Certificate No. A-1-2.
+++10.149 -- 6.88% Atlas Air Pass Through Certificate 1999-1A-2,
Certificate No. A-2-1.
+++10.150 -- 7.63% Atlas Air Pass Through Certificate 1999-1B-1,
Certificate No. B-1.
+++10.151 -- 8.77% Atlas Air Pass Through Certificate 1999-1C-1,
Certificate No. C-1.
++++10.152 -- Agreement of Lease between Texaco, Inc., Landlord, and
the Company, Tenant, 2000 Westchester Avenue, White
Plains, New York 10650 dated November 9, 1999.
++++10.153 -- Atlas Air, Inc. Annual Incentive Compensation Plan.
++++10.154 -- Atlas Air, Inc. Long-Term Incentive Plan.
++++10.155 -- Amendments to the Atlas Air, Inc. 1995 Long Term
Incentive and Stock Award Plan. (The Atlas Air, Inc. 1995
Long Term Incentive and Stock Award Plan is filed as
Exhibit 10.15, which is incorporated by reference in this
Report.)
++21.1 -- Subsidiaries of the Registrant.
23.1 -- Consent of Arthur Andersen LLP.
23.2 -- Consent of Cahill Gordon & Reindel (included in Exhibit
5.1).
24.1 -- Powers of Attorney (set forth on the signature page of
the Registration Statement).
25.1 -- Statement of Eligibility of Wilmington Trust Company for
the 2000-1A Pass Through Certificates, on Form T-1.
25.2 -- Statement of Eligibility of Wilmington Trust Company for
the 2000-1B Pass Through Certificates, on Form T-1.
25.3 -- Statement of Eligibility of Wilmington Trust Company for
the 2000-1C Pass Through Certificates, on Form T-1.
99.1 -- Form of Letter of Transmittal.
99.2 -- Form of Notice of Guaranteed Delivery.
99.3 -- Form of Letter to Brokers, Dealers Commercial Banks,
Trust Companies and Other Nominees.
99.4 -- Form of Letter to Clients.
</TABLE>
- ---------------
++++ Incorporated by reference to the exhibits to the Company's Annual Report
for 1999 on Form 10-K.
+++ Incorporated by reference to the exhibits to the Company's Current Report
on Form 8-K dated April 13, 1999.
++ Incorporated by reference to the exhibits to the Company's Annual Report
for 1997 on Form 10-K.
+ Incorporated by reference to the exhibits to the Company's Registration
Statement on Form S-1 (No. 33-90304).
++ Incorporated by reference to the exhibits to the Company's Registration
Statement on Form S-1 (No. 33-97892).
++++ Incorporated by reference to the exhibits to the Company's
Registration Statement on Form S-4 (No. 333-51819).
++++++ Incorporated by reference to the exhibits to the Company's Annual
Report for 1998 on Form 10-K.
* Incorporated by reference to the exhibits to the Company's Registration
Statement on Form S-1 (No. 333-2810).
<PAGE> 122
** Incorporated by reference to the exhibits to the Company's Registration
Statement on Form S-4 (No. 333-36305).
*** Incorporated by reference to the exhibits to the Company's Annual Report
for 1996 on Form 10-K.
**** Portions of this document, for which the Company has been granted
confidential treatment, have been redacted and filed separately with the
Securities and Exchange Commission.
***** Incorporated by reference to the exhibits to the Company's Registration
Statement on Form S-4 (No. 333-56391).
****** Incorporated by reference to the exhibits to the Company's Registration
Statement on Form S-4 (No. 333-72211).
<PAGE> 1
EXHIBIT 4.4
- --------------------------------------------------------------------------------
PASS THROUGH TRUST AGREEMENT
Dated as of January 28, 2000
between
ATLAS AIR, INC.
and
WILMINGTON TRUST COMPANY
as Trustee
- --------------------------------------------------------------------------------
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
----
ARTICLE I
DEFINITIONS
<S> <C> <C>
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.........................................................18
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
</TABLE>
<PAGE> 3
<TABLE>
<CAPTION>
ARTICLE IV
DISTRIBUTIONS; STATEMENTS TO
CERTIFICATEHOLDERS
<S> <C> <C>
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................................................................35
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..................36
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
</TABLE>
<PAGE> 4
<TABLE>
<S> <C> <C>
Section 7.04. Not Responsible for Recitals or Issuance of Certificates...............................39
Section 7.05. May Hold Certificates..................................................................39
Section 7.06. Money Held in Trust....................................................................40
Section 7.07. Compensation and Reimbursement.........................................................40
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......................................................48
ARTICLE VIII
CERTIFICATEHOLDERS' LISTS AND REPORTS BY TRUSTEE
Section 8.01. The Company to Furnish Trustee with Names and Addresses of Certificateholders..........50
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...................................................53
Section 9.05. Effect of Supplemental Agreements......................................................53
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
</TABLE>
<PAGE> 5
<TABLE>
<CAPTION>
ARTICLE XI
TERMINATION OF TRUSTS
<S> <C> <C>
Section 11.01. Termination of the Trust...............................................................54
ARTICLE XII
MISCELLANEOUS PROVISIONS
Section 12.01. Limitation on Rights of Certificateholders.............................................56
Section 12.02. Registration of Equipment Notes in Name of Subordination Agent.........................56
Section 12.03. Notices................................................................................56
Section 12.04. Governing Law..........................................................................58
Section 12.05. Severability of Provisions.............................................................58
Section 12.06. Trust Indenture Act Controls...........................................................58
Section 12.07. Effect of Headings and Table of Contents...............................................58
Section 12.08. Successors and Assigns.................................................................58
Section 12.09. Benefits of Agreement..................................................................58
Section 12.10. Legal Holidays.........................................................................58
Section 12.11. Counterparts...........................................................................59
Section 12.12. Communication by Certificateholders, with Other Certificateholders.....................59
Section 12.13. Intention of Parties...................................................................59
</TABLE>
<PAGE> 6
-i-
Reconciliation and tie between Atlas Air Pass Through Trust Agreement, dated as
of January 28, 2000 and the Trust Indenture Act of 1939. This reconciliation
does not constitute part of the Pass Through Trust Agreement.
<TABLE>
<CAPTION>
Trust Indenture Act Pass Through Trust
of 1939 Section Agreement Section
---------------------- ------------------
<S> <C> <C>
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
</TABLE>
<PAGE> 7
PASS THROUGH TRUST AGREEMENT
This PASS THROUGH TRUST AGREEMENT, dated as of January 28, 2000, 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
<PAGE> 8
-2-
Agreement and each Trust Supplement with respect to all such Certificates and is
undertaking to perform certain administrative and ministerial duties hereunder
and is also undertaking to pay the fees and expenses of the Trustee; and
WHEREAS, upon the issuance of the Exchange Certificates, if any, or the
effectiveness of the Shelf Registration Statement, this Basic Agreement, as
supplemented from time to time, shall be 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> 9
-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, or
any Exchange Certificates issued in exchange therefor or replacement thereof
pursuant to any Trust Supplement.
<PAGE> 10
-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> 11
-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.
"Exchange Certificates" means any certificates substantially in the
form of Exhibit A attached to a Trust Supplement and issued pursuant to the
Registration Rights Agreement in exchange for the Certificates initially issued
thereunder.
"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> 12
-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.
<PAGE> 13
-7-
"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 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.
<PAGE> 14
-8-
"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.
"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).
"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
<PAGE> 15
-9-
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.
"Registration Event" has the meaning specified in the Registration
Rights Agreement.
"Registration Rights Agreement" means the Registration Rights Agreement
dated as of January 28, 2000 among the Company, the Trustee and the Placement
Agents named therein.
"Regular Distribution Date" means, with respect to distributions of
Scheduled Payments in respect of any series of Certificates, each date
designated as such in this Agreement, until payment of all the Scheduled
Payments to be made under the Equipment Notes held in the Trust have been made.
<PAGE> 16
-10-
"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).
"Shelf Registration Statement" has the meaning specified in the
Registration Rights Agreement.
<PAGE> 17
-11-
"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 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.
<PAGE> 18
-12-
"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.
"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
<PAGE> 19
-13-
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, 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
<PAGE> 20
-14-
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 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,
<PAGE> 21
-15-
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 record 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
<PAGE> 22
-16-
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 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;
<PAGE> 23
-17-
(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);
(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;
(17) whether such series will be subject to a Registration Rights
Agreement, and, if so, any terms appropriate thereto; and
(18) 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.
<PAGE> 24
-18-
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 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.
<PAGE> 25
-19-
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.
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
<PAGE> 26
-20-
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.
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.
<PAGE> 27
-21-
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.
<PAGE> 28
-22-
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
<PAGE> 29
-23-
Company shall initially be registered on the Register in the name of Cede & Co.,
the nominee of the initial Clearing Agency, and no Certificate Owner will
receive a definitive certificate representing such Certificate Owner's interest
in the Certificates of such series, except as provided 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.
<PAGE> 30
-24-
(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
<PAGE> 31
-25-
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
<PAGE> 32
-26-
Trustee shall have sufficient income or proceeds from the Trust Property to make
such payments in accordance with the terms of Article IV of this Agreement. Each
Certificateholder, by its acceptance of a Certificate, agrees that it will look
solely to the income and proceeds from the Trust Property of the related Trust
for any payment or distribution due to such Certificateholder pursuant to the
terms of this Agreement and that it will not have any recourse to the Company,
the Trustee, the Loan Trustees, 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.
<PAGE> 33
-27-
(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 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).
<PAGE> 34
-28-
(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.
<PAGE> 35
-29-
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 Payment, it shall be sufficient if the notice sets forth the
other amounts to be distributed and states that any premium received will also
be distributed.
If any redemption 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
<PAGE> 36
-30-
income tax returns. With respect to Certificates registered in the name of a
Clearing Agency or its nominee, such statement and such other items shall be
prepared on the basis of information supplied to the Trustee by the Clearing
Agency Participants and shall be delivered by the Trustee to such Clearing
Agency Participants to be available for forwarding by such Clearing Agency
Participants to the holders of interests in the Certificates 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:
<PAGE> 37
-31-
(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. Section
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. Section 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.
<PAGE> 38
-32-
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
<PAGE> 39
-33-
Triggering 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.
<PAGE> 40
-34-
(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.
<PAGE> 41
-35-
Section 6.05. Waiver of Past Defaults. Subject to any related
Intercreditor Agreement, the Certificateholders holding Certificates of a series
evidencing Fractional Undivided Interests aggregating not less than a majority
in interest in the 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.
<PAGE> 42
-36-
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;
(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,
<PAGE> 43
-37-
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.
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
<PAGE> 44
-38-
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 "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;
<PAGE> 45
-39-
(f) the Trustee shall not be bound to make any investigation into the
facts or matters stated in any resolution, certificate, statement,
instrument, opinion, report, notice, request, direction, consent, order,
bond, debenture or other paper or document;
(g) the Trustee may execute any of the trusts or powers under this
Agreement or any Intercreditor Agreement or perform any duties under this
Agreement or any Intercreditor Agreement either directly or by or through
agents or attorneys, and the Trustee shall not be responsible for any
misconduct or negligence on the part of any agent or attorney appointed
with due care by it under this Agreement or any Intercreditor Agreement;
(h) the Trustee shall not be liable with respect to any action taken or
omitted to be taken by it in good faith in accordance with the Direction of
the Certificateholders holding Certificates of any series evidencing
Fractional Undivided Interests aggregating not less than a majority in
interest in the related Trust relating to the time, method and place of
conducting any proceeding for any remedy available to the Trustee, or
exercising any trust or power conferred upon the Trustee, under this
Agreement or any Intercreditor Agreement; and
(i) the Trustee shall not be required to expend or risk its own funds
in the performance of any of its duties under this Agreement, or in the
exercise of any of its rights or powers, if it shall have reasonable
grounds for believing that repayment of such funds or adequate indemnity
against such risk is not reasonably assured to it.
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.
<PAGE> 46
-40-
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:
(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
<PAGE> 47
-41-
$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.
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;
<PAGE> 48
-42-
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.
(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.
<PAGE> 49
-43-
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.
<PAGE> 50
-44-
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
<PAGE> 51
-45-
shall furnish to the Trustee, at stated intervals of not more than six months,
and at such other times as the Trustee may request in writing, a copy of the
Register maintained by such Registrar.
(c) Any corporation into which any Authorized Agent may be merged or
converted or with which it may be consolidated, or any corporation resulting
from any merger, consolidation or conversion to which any Authorized Agent shall
be a party, or any corporation succeeding to the corporate trust business of any
Authorized Agent, shall be the successor of such Authorized Agent, if such
successor corporation is otherwise eligible under this Section 7.12, without the
execution or filing of any paper or any further act on the part of the parties
hereto or such Authorized Agent or such successor corporation.
(d) Any Authorized Agent may at any time resign by giving written
notice of resignation to the Trustee, the Company, any related Owner Trustees
and the related Loan Trustees. The Company may, and at the request of the
Trustee shall, at any time terminate the agency of any Authorized Agent by
giving written notice of termination to such Authorized Agent and to the
Trustee. Upon the resignation or termination of an Authorized Agent or in case
at any time any such Authorized Agent shall cease to be eligible under this
Section 7.12 (when, in either case, no other Authorized Agent performing the
functions of such Authorized Agent 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
<PAGE> 52
-46-
Trustee all sums held in trust by such Paying Agent, such sums to be held by the
Trustee upon the same trusts as those upon which such sums were held by such
Paying Agent; and, upon such payment by any Paying Agent to the Trustee, such
Paying Agent shall be released from all further liability with respect to such
money.
Section 7.14. Registration of Equipment Notes in Trustee's Name.
Subject to the provisions of any Intercreditor Agreement, 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;
<PAGE> 53
-47-
(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 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.
<PAGE> 54
-48-
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.
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.
<PAGE> 55
-49-
Section 8.04. Reports by the Company. The Company shall:
(a) file with the Trustee, within 30 days after the Company is required
to file the same with the SEC, copies of the annual reports and of the
information, documents and other reports (or copies of such portions of any
of the foregoing as the SEC may from time to time by rules and regulations
prescribe) which the Company is required to file with the SEC pursuant to
section 13 or section 15(d) of the Securities Exchange Act of 1934, as
amended; or, if the Company is not required to file information, documents
or reports pursuant to either of such sections, then to file with the
Trustee and the SEC, in accordance with rules and regulations prescribed by
the SEC, such of the supplementary and periodic information, documents and
reports which may be required pursuant to section 13 of the Securities
Exchange Act of 1934, as amended, in respect of a security listed and
registered on a national securities exchange as may be prescribed in such
rules and regulations;
(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).
<PAGE> 56
-50-
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 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
<PAGE> 57
-51-
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
(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 comply with any requirement of the SEC in connection with the
qualification of this Agreement under the Trust Indenture Act; or
(j) 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
<PAGE> 58
-52-
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
(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
<PAGE> 59
-53-
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.
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
<PAGE> 60
-54-
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 Certificates and (ii) as Controlling Party, the Trustee shall
vote as directed in such Certificateholder Direction by the Certificateholders
of such series evidencing a Fractional Undivided Interest aggregating not less
than a majority in interest in the 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
<PAGE> 61
-55-
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 presentation 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
<PAGE> 62
-56-
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 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,
<PAGE> 63
-57-
(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.
(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.
<PAGE> 64
-58-
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. Upon the occurrence of any
Registration Event, this Agreement shall become subject to the provisions of the
Trust Indenture Act and shall, to the extent applicable, be governed by such
provisions. From and after the occurrence of any Registration Event, 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 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.
<PAGE> 65
-59-
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> 66
-60-
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:
--------------------------------------------
Name: Fred L. deLeeuw
Title: Senior Director - Corporate Finance
WILMINGTON TRUST COMPANY,
as Trustee
By:
--------------------------------------------
Name:
Title:
<PAGE> 67
EXHIBIT A
FORM OF CERTIFICATE
REGISTERED
No. ______________
[THIS CERTIFICATE HAS NOT BEEN REGISTERED UNDER THE U.S. SECURITIES ACT OF 1933,
AS AMENDED (THE "SECURITIES ACT") OR ANY STATE SECURITIES LAWS, AND,
ACCORDINGLY, MAY NOT BE OFFERED OR SOLD WITHIN THE UNITED STATES OR TO, OR FOR
THE ACCOUNT OR BENEFIT OF, ANY PERSONS EXCEPT AS SET FORTH IN THE FOLLOWING
SENTENCE. BY ITS ACQUISITION HEREOF, THE HOLDER (1) REPRESENTS THAT (A) IT IS A
"QUALIFIED INSTITUTIONAL BUYER" (AS DEFINED IN RULE 144A UNDER THE SECURITIES
ACT), (B) IT IS AN INSTITUTIONAL "ACCREDITED INVESTOR" (AS DEFINED IN RULE
501(a)(1), (2), (3) OR (7) UNDER THE SECURITIES ACT) (AN "INSTITUTIONAL
ACCREDITED INVESTOR") OR (C) IT IS NOT A U.S. PERSON AND IS ACQUIRING THIS
CERTIFICATE IN AN OFFSHORE TRANSACTION IN COMPLIANCE WITH REGULATION S UNDER THE
SECURITIES ACT; (2) AGREES THAT IT WILL NOT, PRIOR TO EXPIRATION OF THE HOLDING
PERIOD APPLICABLE TO SALES OF THE CERTIFICATES UNDER RULE 144(K) UNDER THE
SECURITIES ACT (OR ANY SUCCESSOR PROVISION) RESELL OR OTHERWISE TRANSFER THIS
CERTIFICATE EXCEPT (A) TO A QUALIFIED INSTITUTIONAL BUYER IN COMPLIANCE WITH
RULE 144A UNDER THE SECURITIES ACT, (B) INSIDE THE UNITED STATES TO AN
INSTITUTIONAL ACCREDITED INVESTOR ACQUIRING $100,000 OR MORE AGGREGATE PRINCIPAL
AMOUNT OF SUCH CERTIFICATE, THAT, PRIOR TO SUCH TRANSFER, FURNISHES TO THE
TRUSTEE A SIGNED LETTER CONTAINING CERTAIN REPRESENTATIONS AND AGREEMENTS
RELATING TO THE RESTRICTIONS ON TRANSFER OF THIS CERTIFICATE (THE FORM OF WHICH
LETTER CAN BE OBTAINED FROM THE TRUSTEE), (C) OUTSIDE THE UNITED STATES IN AN
OFFSHORE TRANSACTION IN COMPLIANCE WITH RULE 904 UNDER THE SECURITIES ACT, (D)
PURSUANT TO THE EXEMPTION FROM REGISTRATION PROVIDED BY RULE 144 UNDER THE
SECURITIES ACT (IF AVAILABLE), (E) PURSUANT TO A REGISTRATION STATEMENT WHICH
HAS BEEN DECLARED EFFECTIVE UNDER THE SECURITIES ACT (AND WHICH CONTINUES TO BE
EFFECTIVE AT THE TIME OF SUCH TRANSFER), OR (F) TO ATLAS OR ANY SUBSIDIARY
THEREOF; (3) PRIOR TO SUCH TRANSFER (OTHER THAN A TRANSFER PURSUANT TO CLAUSE
2(E) ABOVE), IT WILL FURNISH TO THE TRUSTEE SUCH CERTIFICATIONS, LEGAL OPINIONS
OR OTHER INFORMATION AS THE TRUSTEE MAY REASONABLY REQUIRE TO CONFIRM THAT SUCH
TRANSFER IS BEING MADE PURSUANT TO AN EXEMPTION FROM, OR IN A TRANSACTION NOT
SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND (4) AGREES
THAT IT WILL DELIVER TO EACH PERSON TO WHOM THIS CERTIFICATE IS TRANSFERRED A
NOTICE SUBSTANTIALLY TO THE EFFECT OF THIS LEGEND. IN CONNECTION WITH ANY
TRANSFER OF THIS CERTIFICATE PRIOR TO THE EXPIRATION OF THE HOLDING PERIOD
APPLICABLE TO SALES OF THE CERTIFICATES UNDER RULE 144(K) UNDER THE SECURITIES
ACT (OR ANY SUCCESSOR PROVISION), THE HOLDER MUST CHECK THE APPROPRIATE BOX SET
FORTH ON THE REVERSE HEREOF RELATING TO THE MANNER OF SUCH TRANSFER AND SUBMIT
THIS CERTIFICATE TO THE TRUSTEE. IF THE PROPOSED TRANSFEREE IS AN INSTITUTIONAL
ACCREDITED INVESTOR OR IS A PURCHASER WHO IS NOT A U.S. PERSON, THE HOLDER MUST,
PRIOR TO SUCH TRANSFER, FURNISH TO THE TRUSTEE, SUCH CERTIFICATIONS, LEGAL
OPINIONS OR
A-1
<PAGE> 68
OTHER INFORMATION AS IT MAY REASONABLY REQUIRE TO CONFIRM THAT SUCH TRANSFER IS
BEING MADE PURSUANT TO AN EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO,
THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT. THIS LEGEND WILL BE REMOVED
UPON THE EARLIER OF THE TRANSFER OF THE CERTIFICATES PURSUANT TO CLAUSE 2(E)
ABOVE OR UPON ANY TRANSFER OF THE CERTIFICATES UNDER RULE 144(K) UNDER THE
SECURITIES ACT (OR ANY SUCCESSOR PROVISION). AS USED HEREIN, THE TERMS "OFFSHORE
TRANSACTION", "UNITED STATES" AND "U.S. PERSON" HAVE THE MEANINGS GIVEN TO THEM
BY REGULATION S UNDER THE SECURITIES ACT. THE PASS THROUGH TRUST AGREEMENT
CONTAINS A PROVISION REQUIRING THE TRUSTEE TO REFUSE TO REGISTER ANY TRANSFER OF
THIS CERTIFICATE IN VIOLATION OF THE FOREGOING RESTRICTIONS.]1
[UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE
DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION ("DTC"), TO THE TRUSTEE OR ITS
AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT, AND ANY CERTIFICATE
ISSUED IN EXCHANGE FOR THIS CERTIFICATE IS REGISTERED IN THE NAME OF CEDE & CO.
OR IN SUCH OTHER NAME AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC
(AND ANY PAYMENT HEREON IS MADE TO CEDE & CO. OR TO SUCH OTHER ENTITY AS IS
REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC), ANY TRANSFER, PLEDGE OR OTHER
USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL INASMUCH AS
THE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.
TRANSFERS OF THIS GLOBAL CERTIFICATE SHALL BE LIMITED TO TRANSFERS IN WHOLE, BUT
NOT IN PART, TO NOMINEES OF DTC OR TO A SUCCESSOR THEREOF OR SUCH SUCCESSOR'S
NOMINEE AND TRANSFERS OF PORTIONS OF THIS GLOBAL CERTIFICATE SHALL BE LIMITED TO
TRANSFERS MADE IN ACCORDANCE WITH THE RESTRICTIONS SET FORTH IN SECTIONS 8.05
AND 8.06 OF THE TRUST SUPPLEMENT OF THE PASS THROUGH TRUST AGREEMENT REFERRED TO
HEREIN.]
[BY ITS ACQUISITION HEREOF, THE HOLDER REPRESENTS THAT EITHER (A) NO ASSETS OF
AN EMPLOYEE BENEFIT PLAN SUBJECT TO TITLE I OF THE EMPLOYEE RETIREMENT
SECURITIES 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 BEEN
USED TO PURCHASE THIS CERTIFICATE OR (B) THE PURCHASE AND HOLDING OF THIS
CERTIFICATE ARE EXEMPT FROM THE PROHIBITED TRANSACTION RESTRICTIONS OF ERISA AND
THE CODE PURSUANT TO ONE OR MORE PROHIBITED TRANSACTION STATUTORY OR
ADMINISTRATIVE EXEMPTIONS.]
- ----------
(1) Not to be included on the face of the Permanent Offshore Global
Certificate.
A-2
<PAGE> 69
[GLOBAL CERTIFICATE](2)
ATLAS AIR 2000-1__ PASS THROUGH TRUST
___% Atlas Air [Initial] [Exchange] Pass Through Certificate
Series 2000-1__
Final Distribution Date: ________
evidencing a fractional undivided interest in a trust, the property of which
includes certain equipment notes each secured by an Aircraft leased to 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 2000-1__ Pass Through Trust (the "Trust") created
pursuant to a Pass Through Trust Agreement, dated as of January 28, 2000 (the
"Basic Agreement"), between Wilmington Trust Company, not in its individual
capacity but solely as trustee (the "Trustee") and Atlas Air, Inc., a Delaware
corporation (the "Company"), as supplemented by Trust Supplement No. __ thereto,
dated as of January 28, 2000 (the "Trust Supplement" and, together with the
Basic Agreement, the "Agreement") 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 [Initial] [Exchange] Pass Through Certificates
Series 2000-1__" (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 Certificateholder of this Certificate
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 Facilities (the "Trust Property"). Each issue of the
Equipment Notes is secured by, among other things, a security interest in the
Aircraft leased to or owned by the Company.
- ----------
(2) To be included on the face of each Global Certificate.
A-3
<PAGE> 70
The Certificates represent fractional undivided interests in the Trust
and the Trust Property, and have no rights, benefits or interest in respect of
any assets or property other than the Trust Property.
Subject to and in accordance with the terms of the Agreement and the
Intercreditor Agreement, from and to the extent of funds then available to the
Trustee, there will be distributed on each January 2 and July 2 (a "Regular
Distribution Date"), commencing on July 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.
[The Holder of this Certificate is entitled to the benefits of the
Registration Rights Agreement, dated as of January 28, 2000, among the Company,
the Trustee and the Placement Agents named therein (the "Registration Rights
Agreement"). In the event that neither the consummation of the Exchange Offer
nor the declaration by the Commission of a Shelf Registration to be effective (a
"Registration Event") occurs on or prior to the 210th day after the date of the
issuance of the Certificates, the interest rate per annum borne by the Equipment
Notes shall be increased by 0.50%, from and including January 28, 2000, to but
excluding the date on which a Registration Event occurs. In the event that the
Shelf Registration Statement ceases to be effective at any time during the
period specified by the Registration Rights Agreement for more than 60 days,
whether or not consecutive, during any 12-month period, the interest rate per
annum borne by the Equipment Notes shall be increased by 0.50% from the 61st day
of the applicable 12-month period such Shelf Registration Statement
A-4
<PAGE> 71
ceases to be effective until such time as the Shelf Registration Statement again
becomes effective.](3)
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 AGREEMENT AND THIS CERTIFICATE SHALL BE GOVERNED BY AND CONSTRUED
IN ACCORDANCE WITH THE LAWS OF THE STATE OF DELAWARE.
Reference is hereby made to the further provisions of this Certificate
set forth on the reverse hereof, which further provisions shall for all purposes
have the same effect as if set forth at this place.
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.
- ----------
(3) To be included only on each Initial Certificate.
A-5
<PAGE> 72
IN WITNESS WHEREOF, the Trustee has caused this Certificate to be duly
executed.
Dated: [________ __], 2000 ATLAS AIR
2000-1__ PASS THROUGH TRUST
By: WILMINGTON TRUST COMPANY,
not in its individual capacity but
solely as Trustee
Attest: By:
---------------------------------
Name:
Title:
- --------------------
Authorized Signature
A-6
<PAGE> 73
[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
A-7
<PAGE> 74
[REVERSE OF CERTIFICATE]
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
of their affiliates. 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 therein
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, in the Borough of Manhattan, the City of New York, duly
endorsed or accompanied by a written instrument of transfer in form satisfactory
to the Trustee and the Registrar duly executed by the Certificateholder hereof
or such Certificateholder's attorney duly authorized in writing, and thereupon
one or more new Certificates of authorized denominations evidencing the same
aggregate Fractional Undivided Interest in the Trust will be issued to the
designated transferee or transferees.
A-8
<PAGE> 75
The Certificates are issuable only as registered Certificates without
coupons in minimum denominations of [$100,000](4) [$1,000](5) Fractional
Undivided Interest and integral multiples of $1,000 in excess thereof [except
that one Certificate may be in a denomination of less than $100,000](6). 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 by the Holder 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.
- ----------
(4) To be included only on each Initial Certificate.
(5) To be included only on each Exchange Certificate.
(6) To be included only on each Initial Certificate.
A-9
<PAGE> 1
EXHIBIT 4.5
TRUST SUPPLEMENT No. 2000-1A
Dated as of January 28, 2000
between
WILMINGTON TRUST COMPANY
as Trustee,
and
ATLAS AIR INC.
to
PASS THROUGH TRUST AGREEMENT
Dated as of January 28, 2000
$124,639,000
Atlas Air Pass Through Trust 2000-1A
8.707% Atlas Air
Pass Through Certificates,
Series 2000-lA
This Trust Supplement No. 2000-1A (herein called the "Trust
Supplement") dated as of January 28, 2000 between Atlas Air, Inc., a Delaware
corporation (the "Company"), and Wilmington Trust Company (the "Trustee") to the
Pass Through Trust Agreement dated as of January 28, 2000, 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
-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 2000-1A (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 Placement
Agents have contemporaneously herewith entered into an Escrow Agreement with the
Escrow Paying Agent pursuant to which the Placement Agents 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 Deposit 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, upon the occurrence of a Registration Event, 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;
<PAGE> 3
-3-
NOW THEREFORE, in consideration of the premises herein, it is
agreed between the Company and the Trustee as follows:
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 "8.707% Atlas Air Initial Pass Through Certificates, Series 2000-lA"
(the "Initial Certificates"). The exchange certificates which may be issued and
offered in exchange for the Initial Certificates pursuant to the Registration
Rights Agreement shall be known as the "8.707% Atlas Air Exchange Pass Through
Certificates Series 2000-1A" (the "Exchange Certificates"). The Initial
Certificates and the Exchange Certificates 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 $124,639,000.
(b) The Regular Distribution Dates with respect to any payment
of Scheduled Payments means January 2 and July 2 of each year, commencing on
July 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 Placement Agents 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
<PAGE> 4
-4-
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.
(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):
Agent Members: has the meaning specified in Section 8.04 of
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 Certificates: 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.
<PAGE> 5
-5-
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.
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.
Cedel: means Clearstream Banking, societe anonyme.
Class D Certificateholder: has the meaning specified in
Section 4.01(b)(iii) 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 December 31, 2000
(provided that, if a labor strike occurs at Boeing prior to December 31, 2000,
such date shall be extended by adding thereto the number of days that such
strike continues in effect).
Deposit: has the meaning specified in the Deposit Agreement.
Deposit Agreement: means the Deposit Agreement dated as of
January 28, 2000 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 Westdeutsche Landesbank Girozentrale, a
German banking institution organized under the laws of the State of North
Rhine-Westphalia, acting through its New York branch.
Distribution Date: means any Regular Distribution Date or
Special Distribution Date as the context requires.
DTC: means The Depositary Trust Company, and any successor
entity to DTC as depositary for the Applicable Certificates.
<PAGE> 6
-6-
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 January 28, 2000 relating to the Applicable Certificates, among the
Escrow Agent, the Escrow Paying Agent, the Trustee and the Placement Agents, 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.
Euroclear: means Morgan Guaranty Trust Company of New York,
Brussels office, as the operator of the Euroclear System.
Exchange Certificates: means the certificates substantially in
the form of Exhibit A attached hereto issued in exchange for the Initial
Certificates pursuant to the Registration Rights Agreement and authenticated
hereunder.
Exchange Offer Registration Statement: has the meaning
specified in the Registration Rights Agreement.
Final Maturity Date: means July 2, 2021.
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
4.02 of this Trust Supplement.
Global Certificates: has the meaning specified in Section
8.01(c) of this Trust Supplement.
Global Exchange Certificate: has the meaning specified in
Section 8.01(e) 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.
Institutional Accredited Investor: means an institutional
investor that is an "accredited investor" within the meaning set forth in Rule
501(a)(1), (2), (3) or (7) of Regulation D under the Securities Act.
Intercreditor Agreement: means the Intercreditor Agreement
dated as of January 28, 2000, 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
<PAGE> 7
-7-
trustee thereunder, as amended, supplemented or otherwise modified from time to
time in accordance with its terms.
Investors: means the Placement Agents 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 January 28, 2000 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 Westdeutsche Landesbank
Girozentrale, a German banking institution organized under the laws of the State
of North Rhine-Westphalia, acting through its New York branch, or any
replacements or successors therefor appointed in accordance with the
Intercreditor Agreement.
Non-U.S. Person: means a Person that is not a "U.S. Person,"
as defined in Regulation S.
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.
Note Purchase Agreement: means the Note Purchase Agreement
dated as of January 28, 2000 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.
Offering Memorandum: means the offering memorandum dated
January 20, 2000 relating to the offering of the Initial Certificates.
Offshore Certificates Exchange Date: has the meaning specified
in Section 8.01(c) of this Trust Supplement.
<PAGE> 8
-8-
Offshore Global Certificates: has the meaning specified in
Section 8.01(c) of this Trust Supplement.
Offshore Physical Certificates: has the meaning specified in
Section 8.01(d) of this Trust Supplement.
Other Agreements: means (i) the Basic Agreement as
supplemented by Trust Supplement No. 2000-lB dated as of the date hereof
relating to Atlas Air Pass Through Trust 2000-lB; (ii) the Basic Agreement as
supplemented by Trust Supplement No. 2000-lC dated as of the date hereof
relating to Atlas Air Pass Through Trust 2000-1C; and (iii) if Class D
Certificates are issued, the Basic Agreement as supplemented by Trust Supplement
No. 2000-1D relating to Atlas Air Pass Through Trust 2000-1D.
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 2000-lB
and the Atlas Air Pass Through Trust 2000-lC, each created on the date hereof,
and if Class D Certificates are issued, the Atlas Air Pass Through Trust
2000-1D.
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.
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.
Permanent Offshore Global Certificate: has the meaning
specified in Section 8.01(c) of this Trust Supplement.
Physical Certificates: has the meaning specified in Section
8.01(d) of this Trust Supplement.
<PAGE> 9
-9-
Placement Agents: means, collectively, Morgan Stanley & Co.
Incorporated, Deutsche Bank Securities Inc. and Salomon Smith Barney Inc.
Placement Agreement: means the Placement Agreement dated
January 20, 2000 among the Placement Agents and the Company, as the same may be
amended, supplemented or otherwise modified from time to time 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 the Deposit 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 the unused Deposit, 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 the unused Deposit, 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.
Private Placement Legend: has the meaning specified in Section
8.02(a) of this Trust Supplement.
QIB: means a qualified institutional buyer as defined in Rule
144A.
Registration Event: has the meaning set forth in the
Registration Rights Agreement.
Registration Rights Agreement: means the Registration Rights
Agreement dated January 28, 2000 among the Placement Agents, the Trustee, the
Other Trustees and the Company, as amended, supplemented or otherwise modified
from time to time in accordance with its terms.
Registration Statement: has the meaning set forth in the
Registration Rights Agreement.
Regulation S: means Regulation S under the Securities Act or
any successor regulation thereto.
Rule 144A: means Rule 144A under the Securities Act or any
successor rule thereto.
Scheduled Delivery Date: has the meaning specified in the Note
Purchase Agreement.
Securities Act: means the U.S. Securities Act of 1933, as
amended.
Shelf Registration Statement: has the meaning set forth in the
Registration Rights Agreement.
<PAGE> 10
-10-
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) or any Special Redemption Premium.
Special Redemption Premium: means the premium payable by the
Company pursuant to Section 3(a)(i) of the Note Purchase Agreement.
Substitute Aircraft: has the meaning specified in the Note
Purchase Agreement.
Temporary Offshore Global Certificate: has the meaning
specified in Section 8.01(c) of this Trust Supplement.
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 Deposit or under the Escrow Agreement, 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.
U.S. Global Certificate: has the meaning specified in Section
8.01(b) of this Trust Supplement.
U.S. Physical Certificates: has the meaning specified in
Section 8.01(d) of this Trust Supplement.
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;
<PAGE> 11
-11-
(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:
(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
<PAGE> 12
-12-
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, 2001, on the Equipment Notes held as Trust Property as of December 8, 2000,
differs from the amount thereof set forth for the Applicable Certificates on
page 47 of the Offering Memorandum, by no later than December 15, 2000 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) any reoptimization and the Delivery
Period Termination Date, in each case if there has been any change in the
information set forth in clauses (x), (y) and (z) below from that set forth in
page 47 of the Offering Memorandum, 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 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) 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 B 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 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
<PAGE> 13
-13-
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 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 pursuant to this Section 4.01(a);
(ii) each Class C Certificateholder shall have the
right (which shall not expire upon any purchase of the Applicable
Certificates pursuant to clause (a)(i)) to purchase all, but not less
than all, of the Applicable Certificates and the Class B Certificates
upon ten days' written notice to the 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 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 and the Class B Certificates pursuant to this
Section 4.01(a); and
(iii) 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 pursuant to clause (a)(i)
or (ii) above or the Class B Certificates pursuant to clause (a)(ii)
above) to purchase all, but not less than all, of the Applicable
Certificates, the Class B Certificates and the Class C Certificates
upon ten days' written notice to the 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 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 B Certificates and the Class C Certificates
pursuant to this Section 4.01(a).
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
<PAGE> 14
-14-
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 (a)(i) above, all of the Applicable
Certificates, or (B) in all other cases, the Applicable 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(a). 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 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 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.
(b) This Section 4.01 supersedes and replaces Section 6.01(b)
of the Basic Agreement, with respect to the Applicable Trust.
<PAGE> 15
-15-
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 Placement 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 Placement 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 all or a portion of the Deposit 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 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 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 all or a portion of the Deposit 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 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.
<PAGE> 16
-16-
(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 all or a portion of
the Deposit 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 portion of the Deposit remains 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 Note Documents to
which it is or is to become a party and has taken all necessary action to
authorize the execution,
<PAGE> 17
-17-
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> 18
-18-
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
THE CERTIFICATES
Section 8.01. ADDITIONS TO ARTICLE III OF THE BASIC AGREEMENT.
In addition to the provisions of Article III of the Basic Agreement, the
following provisions shall apply to the Applicable Trust:
(a) The Initial Certificates will be issued in minimum
denominations of $100,000 or integral multiples of $1,000 in excess thereof. The
Exchange Certificates will be issued in denominations of $1,000 or integral
multiples thereof. Each Exchange Certificate shall be dated the date of its
authentication. The aggregate Fractional Undivided Interest of Applicable
Certificates shall not at any time exceed $124,639,000;
<PAGE> 19
-19-
(b) Initial Certificates offered and sold in reliance on Rule
144A shall be issued initially in the form of one or more global Certificates in
definitive, fully registered form without interest coupons, substantially in the
form set forth as Exhibit A hereto (the "U.S. Global Certificate"), duly
executed and authenticated by the Trustee as hereinafter provided. The U.S.
Global Certificate will be registered in the name of a nominee for DTC and
deposited with the Trustee, as custodian for DTC. The aggregate principal amount
of the U.S. Global Certificate may from time to time be increased or decreased
by adjustments made on the records of DTC or its nominee, or of the Trustee, as
custodian for DTC or its nominee, as hereinafter provided;
(c) Initial Certificates offered and sold in offshore
transactions in reliance on Regulation S shall be issued initially in the form
of one or more temporary global Certificates in definitive, fully registered
form without interest coupons, substantially in the form set forth as Exhibit A
hereto (the "Temporary Offshore Global Certificate") duly executed and
authenticated by the Trustee as hereinafter provided. The Temporary Offshore
Global Certificate will be registered in the name of a nominee of DTC for credit
to the account of the Agent Members acting as depositaries for Euroclear and
Cedel and deposited with the Trustee as custodian for DTC. At any time following
March 9, 2000 (the "Offshore Certificates Exchange Date"), upon receipt by the
Trustee of a certificate substantially in the form of Exhibit B hereto, a single
permanent global Certificate in registered form substantially in the form set
forth in Exhibit A (the "Permanent Offshore Global Certificate"; and together
with the Temporary Offshore Global Certificate, the "Offshore Global
Certificates"), duly executed and authenticated by the Trustee as hereinafter
provided, shall be registered in the name of a nominee for DTC and deposited
with the Trustee, as custodian for DTC, and the Registrar shall reflect on its
books and records the date of such transfer and a decrease in the principal
amount of any Temporary Offshore Global Certificate in an amount equal to the
principal amount of the beneficial interest in such Temporary Offshore Global
Certificate transferred. The U.S. Global Certificate and the Offshore Global
Certificates are sometimes referred to as the "Global Certificates";
(d) Initial Certificates offered and sold to Institutional
Accredited Investors shall be issued in the form of permanent certificated
Certificates in registered form in substantially the form set forth as Exhibit A
hereto (the "U.S. Physical Certificates"). Certificates issued pursuant to
Section 8.04(b) in exchange for interests in any Offshore Global Certificate
shall be in the form of permanent certificated Certificates in registered form
substantially in the form set forth in Exhibit A (the "Offshore Physical
Certificates"). The Offshore Physical Certificates and U.S. Physical
Certificates are sometimes collectively herein referred to as the "Physical
Certificates";
(e) The Exchange Certificates shall be issued in the form of
one or more global Certificates substantially in the form of Exhibit A hereto
(each, a "Global Exchange Certificate"), except that (i) the Private Placement
Legend (hereinafter defined) shall be omitted and (ii) such Exchange
Certificates shall contain such appropriate insertions, omissions, substitutions
and other variations from the form set forth in Exhibit A hereto relating to the
nature of the Exchange Certificates as the Responsible Officer of the Trustee
executing such Exchange Certificates on behalf of the Trust may determine, as
evidenced by such officer's execution on behalf of the Trust of such Exchange
Certificates. Such Global Exchange Certificates shall be in registered form and
be registered in the name of DTC and deposited with the Trustee, at its
Corporate Trust Office, as custodian for DTC. The aggregate principal amount of
any Global Exchange Certificate may from time to time be increased or decreased
by adjustments made on the records of the Trustee, as custodian for DTC for such
Global Exchange Certificate, which adjustments shall be conclusive as to the
aggregate principal amount of any such Global Exchange Certificate. Subject to
clause (i) and (ii) of the first sentence of this Section 8.01(e), the terms
hereof applicable to U.S. Global Certificates and/or Global Certificates shall
apply to the Global Exchange Certificates, mutatis mutandis;
<PAGE> 20
-20-
(f) The definitive Applicable Certificates shall be in
registered form and shall be typed, printed, lithographed or engraved or
produced by any combination of these methods or may be produced in any other
manner, all as determined by the officers executing such Applicable
Certificates, as evidenced by their execution of such Applicable Certificates.
Section 8.02. RESTRICTIVE LEGENDS. (a) Subject to Section
8.05, unless and until (i) an Initial Certificate is sold under an effective
Shelf Registration Statement or (ii) an Initial Certificate is exchanged for an
Exchange Certificate pursuant to an effective Exchange Offer Registration
Statement, in each case as provided for in the Registration Rights Agreement,
each Global Certificate (other than the Permanent Offshore Global Certificate)
and each U.S. Physical Certificate shall bear the following legend (the "Private
Placement Legend") on the face thereof:
[THIS CERTIFICATE HAS NOT BEEN REGISTERED UNDER THE U.S. SECURITIES ACT
OF 1933, AS AMENDED (THE "SECURITIES ACT") OR ANY STATE SECURITIES
LAWS, AND, ACCORDINGLY, MAY NOT BE OFFERED OR SOLD WITHIN THE UNITED
STATES OR TO, OR FOR THE ACCOUNT OR BENEFIT OF, ANY PERSONS EXCEPT AS
SET FORTH IN THE FOLLOWING SENTENCE. BY ITS ACQUISITION HEREOF, THE
HOLDER (1) REPRESENTS THAT (A) IT IS A "QUALIFIED INSTITUTIONAL BUYER"
(AS DEFINED IN RULE 144A UNDER THE SECURITIES ACT), (B) IT IS AN
INSTITUTIONAL "ACCREDITED INVESTOR" (AS DEFINED IN RULE 501(A)(1), (2),
(3) OR (7) UNDER THE SECURITIES ACT) (AN "INSTITUTIONAL ACCREDITED
INVESTOR") OR (C) IT IS NOT A U.S. PERSON AND IS ACQUIRING THIS
CERTIFICATE IN AN OFFSHORE TRANSACTION IN COMPLIANCE WITH REGULATION S
UNDER THE SECURITIES ACT; (2) AGREES THAT IT WILL NOT, PRIOR TO
EXPIRATION OF THE HOLDING PERIOD APPLICABLE TO SALES OF THE
CERTIFICATES UNDER RULE 144(K) UNDER THE SECURITIES ACT (OR ANY
SUCCESSOR PROVISION) RESELL OR OTHERWISE TRANSFER THIS CERTIFICATE
EXCEPT (A) TO A QUALIFIED INSTITUTIONAL BUYER IN COMPLIANCE WITH RULE
144A UNDER THE SECURITIES ACT, (B) INSIDE THE UNITED STATES TO AN
INSTITUTIONAL ACCREDITED INVESTOR ACQUIRING $100,000 OR MORE AGGREGATE
PRINCIPAL AMOUNT OF SUCH CERTIFICATE, THAT, PRIOR TO SUCH TRANSFER,
FURNISHES TO THE TRUSTEE A SIGNED LETTER CONTAINING CERTAIN
REPRESENTATIONS AND AGREEMENTS RELATING TO THE RESTRICTIONS ON TRANSFER
OF THIS CERTIFICATE (THE FORM OF WHICH LETTER CAN BE OBTAINED FROM THE
TRUSTEE), (C) OUTSIDE THE UNITED STATES IN AN OFFSHORE TRANSACTION IN
COMPLIANCE WITH RULE 904 UNDER THE SECURITIES ACT, (D) PURSUANT TO THE
EXEMPTION FROM REGISTRATION PROVIDED BY RULE 144 UNDER THE SECURITIES
ACT (IF AVAILABLE), (E) PURSUANT TO A REGISTRATION STATEMENT WHICH HAS
BEEN DECLARED EFFECTIVE UNDER THE SECURITIES ACT (AND WHICH CONTINUES
TO BE EFFECTIVE AT THE TIME OF SUCH TRANSFER), OR (F) TO ATLAS OR ANY
SUBSIDIARY THEREOF; (3) PRIOR TO SUCH TRANSFER (OTHER THAN A TRANSFER
PURSUANT TO CLAUSE 2(E) ABOVE), IT WILL FURNISH TO THE TRUSTEE SUCH
CERTIFICATIONS, LEGAL OPINIONS OR OTHER INFORMATION AS THE TRUSTEE MAY
REASONABLY REQUIRE TO CONFIRM THAT SUCH TRANSFER IS BEING MADE PURSUANT
TO AN EXEMPTION FROM, OR IN A
<PAGE> 21
-21-
TRANSACTION NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE
SECURITIES ACT AND (4) AGREES THAT IT WILL DELIVER TO EACH PERSON TO
WHOM THIS CERTIFICATE IS TRANSFERRED A NOTICE SUBSTANTIALLY TO THE
EFFECT OF THIS LEGEND. IN CONNECTION WITH ANY TRANSFER OF THIS
CERTIFICATE PRIOR TO THE EXPIRATION OF THE HOLDING PERIOD APPLICABLE TO
SALES OF THE CERTIFICATES UNDER RULE 144(K) UNDER THE SECURITIES ACT
(OR ANY SUCCESSOR PROVISION), THE HOLDER MUST CHECK THE APPROPRIATE BOX
SET FORTH ON THE REVERSE HEREOF RELATING TO THE MANNER OF SUCH TRANSFER
AND SUBMIT THIS CERTIFICATE TO THE TRUSTEE. IF THE PROPOSED TRANSFEREE
IS AN INSTITUTIONAL ACCREDITED INVESTOR OR IS A PURCHASER WHO IS NOT A
U.S. PERSON, THE HOLDER MUST, PRIOR TO SUCH TRANSFER, FURNISH TO THE
TRUSTEE, SUCH CERTIFICATIONS, LEGAL OPINIONS OR OTHER INFORMATION AS IT
MAY REASONABLY REQUIRE TO CONFIRM THAT SUCH TRANSFER IS BEING MADE
PURSUANT TO AN EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE
REGISTRATION REQUIREMENTS OF THE SECURITIES ACT. THIS LEGEND WILL BE
REMOVED UPON THE EARLIER OF THE TRANSFER OF THE CERTIFICATES PURSUANT
TO CLAUSE 2(E) ABOVE OR UPON ANY TRANSFER OF THE CERTIFICATES UNDER
RULE 144(K) UNDER THE SECURITIES ACT (OR ANY SUCCESSOR PROVISION). AS
USED HEREIN, THE TERMS "OFFSHORE TRANSACTION", "UNITED STATES" AND
"U.S. PERSON" HAVE THE MEANINGS GIVEN TO THEM BY REGULATION S UNDER THE
SECURITIES ACT. THE PASS THROUGH TRUST AGREEMENT CONTAINS A PROVISION
REQUIRING THE TRUSTEE TO REFUSE TO REGISTER ANY TRANSFER OF THIS
CERTIFICATE IN VIOLATION OF THE FOREGOING RESTRICTIONS.]1
(b) Each Global Certificate shall also bear the following
legend on the face thereof:
UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF
THE DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION ("DTC"), TO THE
TRUSTEE OR ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT,
AND ANY CERTIFICATE ISSUED IN EXCHANGE FOR THIS CERTIFICATE IS
REGISTERED IN THE NAME OF CEDE & CO. OR IN SUCH OTHER NAME AS IS
REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC (AND ANY PAYMENT
HEREON IS MADE TO CEDE & CO. OR TO SUCH OTHER ENTITY AS IS REQUESTED BY
AN AUTHORIZED REPRESENTATIVE OF DTC), ANY TRANSFER, PLEDGE OR OTHER USE
HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL INASMUCH
AS THE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.
- ------------
(a) Not to be included on the face of the Permanent Offshore Global
Certificate.
<PAGE> 22
-22-
TRANSFERS OF THIS GLOBAL CERTIFICATE SHALL BE LIMITED TO TRANSFERS IN
WHOLE, BUT NOT IN PART, TO NOMINEES OF DTC OR TO A SUCCESSOR THEREOF OR
SUCH SUCCESSOR'S NOMINEE AND TRANSFERS OF PORTIONS OF THIS GLOBAL
CERTIFICATE SHALL BE LIMITED TO TRANSFERS MADE IN ACCORDANCE WITH THE
RESTRICTIONS SET FORTH IN SECTIONS 8.04 AND 8.05 OF THE TRUST
SUPPLEMENT TO THE PASS THROUGH TRUST AGREEMENT REFERRED TO HEREIN.
Section 8.03. TRANSFER AND EXCHANGE. An Applicable
Certificateholder may transfer an Applicable Certificate by written application
to the Registrar stating the name of the proposed transferee and otherwise
complying with the terms of this Agreement, including providing a written
certificate or other evidence of compliance with any restrictions on transfer.
No such transfer shall be effected until, and such transferee shall succeed to
the rights of an Applicable Certificateholder only upon, final acceptance and
registration of the transfer by the Registrar in the Register. Prior to the
registration of any transfer by an Applicable Certificateholder as provided
herein, the Trustee shall treat the person in whose name the Applicable
Certificate is registered as the owner thereof for all purposes, and the Trustee
shall not be affected by notice to the contrary. Furthermore, DTC shall, by
acceptance of a Global Certificate, agree that transfers of beneficial interests
in such Global Certificate may be effected only through a book-entry system
maintained by DTC (or its agent), and that ownership of a beneficial interest in
the Certificate shall be required to be reflected in a book entry. When
Applicable Certificates are presented to the Registrar with a request to
register the transfer or to exchange them for an equal face amount of Applicable
Certificates of other authorized denominations, the Registrar shall register the
transfer or make the exchange as requested if its requirements for such
transactions are met. To permit registrations of transfers and exchanges in
accordance with the terms, conditions and restrictions hereof, the Trustee shall
execute and authenticate Applicable Certificates at the Registrar's request.
Section 8.04. BOOK-ENTRY PROVISIONS FOR U.S. GLOBAL
CERTIFICATE AND OFFSHORE GLOBAL CERTIFICATES. (a) Members of, or participants
in, DTC ("Agent Members") shall have no rights under this Agreement with respect
to any Global Certificate held on their behalf by DTC, or the Trustee as its
custodian, and DTC may be treated by the Trustee and any agent of the Trustee as
the absolute owner of such Global Certificate for all purposes whatsoever.
Notwithstanding the foregoing, nothing herein shall prevent the Trustee or any
agent of the Trustee from giving effect to any written certification, proxy or
other authorization furnished by DTC or shall impair, as between DTC and its
Agent Members, the operation of customary practices governing the exercise of
the rights of a holder of any Applicable Certificate. Upon the issuance of any
Global Certificate, the Registrar or its duly appointed agent shall record a
nominee of DTC as the registered holder of such Global Certificate.
(b) Transfers of any Global Certificate shall be limited to
transfers of such Global Certificate or Offshore Global Certificate in whole,
but not in part, to nominees of DTC, its successor or such successor's nominees.
Beneficial interests in the U.S. Global Certificate and any Offshore Global
Certificate may be transferred in accordance with the rules and procedures of
DTC and the provisions of Section 8.05. Beneficial interests in the U.S. Global
Certificate or an Offshore Global Certificate shall be delivered to all
beneficial owners in the form of U.S. Physical Certificates or Offshore Physical
Certificates, as the case may be, if (i) DTC notifies the Trustee that it is
unwilling or unable to continue as depositary for the U.S. Global Certificate or
such Offshore Global Certificate, as the case may be, and a successor depositary
is not appointed by the Trustee within 90 days of such notice or (ii) an Event
of Default has occurred and Applicable Certificateholders with fractional
undivided interests aggregating not less than a majority in interest in the
Applicable Trust advise the Trustee, the Company and DTC through Agent Members
in writing that the continuation of a book-entry system through DTC (or a
successor thereto) is no longer in the Applicable Certificateholders' best
interests.
<PAGE> 23
-23-
(c) Any beneficial interest in one of the Global Certificates
that is transferred to a Person who takes delivery in the form of an interest in
the other Global Certificate will, upon such transfer, cease to be an interest
in such Global Certificate and become an interest in the other Global
Certificate and, accordingly, will thereafter be subject to all transfer
restrictions, if any, and other procedures applicable to beneficial interests in
such other Global Certificate for as long as it remains such an interest.
(d) In connection with the transfer of the entire U.S. Global
Certificate or an entire Offshore Global Certificate to the beneficial owners
thereof pursuant to paragraph (b) of this Section 8.04, such U.S. Global
Certificate or Offshore Global Certificate, as the case may be, shall be deemed
to be surrendered to the Trustee for cancellation, and the Trustee shall
execute, authenticate and deliver, to each beneficial owner identified by DTC in
exchange for its beneficial interest in such U.S. Global Certificate or Offshore
Global Certificate, as the case may be, an equal aggregate principal amount of
U.S. Physical Certificates or Offshore Physical Certificates, as the case may
be, of authorized denominations.
(e) Any U.S. Physical Certificate delivered in exchange for an
interest in the U.S. Global Certificate pursuant to paragraph (b) of this
Section 8.04 shall, except as otherwise provided by paragraph (f) of Section
8.05, bear the Private Placement Legend.
(f) Any Offshore Physical Certificate delivered in exchange
for an interest in an Offshore Global Certificate pursuant to paragraph (b) of
this Section shall, except as otherwise provided by paragraph (f) of Section
8.05, bear the applicable legend regarding transfer restrictions set forth in
Section 8.02(a).
(g) The registered holder of the U.S. Global Certificate or
any Offshore Global Certificate may grant proxies and otherwise authorize any
Person, including Agent Members and Persons that may hold interests through
Agent Members, to take any action which a Holder is entitled to take under this
Agreement or the Applicable Certificates.
Section 8.05. SPECIAL TRANSFER PROVISIONS. Unless and until
(i) an Initial Certificate is sold under an effective Shelf Registration
Statement, or (ii) an Initial Certificate is exchanged for an Exchange
Certificate pursuant to an effective Exchange Offer Registration Statement, in
each case pursuant to the Registration Rights Agreement, the following
provisions shall apply to such Initial Certificates:
(a) TRANSFERS TO NON-QIB INSTITUTIONAL ACCREDITED INVESTORS.
The following provisions shall apply with respect to the registration of any
proposed transfer of an Applicable Certificate to any Institutional Accredited
Investor which is not a QIB (excluding transfers to or by Non-U.S. Persons):
(i) The Registrar shall register the transfer of any
Applicable Certificate, whether or not such
Applicable Certificate bears the Private Placement
Legend, if (x) the requested transfer is after the
time period referred to in Rule 144(k) under the
Securities Act as in effect with respect to such
transfer or (y) the proposed transferee has delivered
to the Registrar a letter substantially in the form
of Exhibit D hereto and the aggregate principal
amount of the Applicable Certificates being
transferred is at least $100,000.
(ii) If the proposed transferor is an Agent Member holding
a beneficial interest in the U.S. Global Certificate,
upon receipt by the Registrar of (x) the documents,
if any, required by paragraph (i) and (y)
instructions given in accordance with DTC's and the
Registrar's procedures, the Registrar shall reflect
on its books and records the date of the transfer and
a decrease in the principal amount of such U.S.
Global Certificate in
<PAGE> 24
-24-
an amount equal to the principal amount of the
beneficial interest in such U.S. Global Certificate
to be transferred, and the Company shall execute, and
the Trustee shall authenticate and deliver to the
transferor or at its direction, one or more U.S.
Physical Certificates of like tenor and amount.
(b) TRANSFERS TO QIBS. The following provisions shall apply
with respect to the registration of any proposed transfer of an Initial
Certificate to a QIB (excluding Non-U.S. Persons):
(i) If the Initial Certificate to be transferred consists
of U.S. Physical Certificates or an interest in any
Temporary Offshore Global Certificate, the Registrar
shall register the transfer if such transfer is being
made by a proposed transferor who has checked the box
provided for on the form of Initial Certificate
stating, or has otherwise advised the Trustee and the
Registrar in writing, that the sale has been made in
compliance with the provisions of Rule 144A to a
transferee who has signed the certification provided
for on the form of Initial Certificate stating, or
has otherwise advised the Trustee and the Registrar
in writing, that it is purchasing the Initial
Certificate for its own account or an account with
respect to which it exercises sole investment
discretion and that it, or the Person on whose behalf
it is acting with respect to any such account, is a
QIB within the meaning of Rule 144A, and is aware
that the sale to it is being made in reliance on Rule
144A and acknowledges that it has received such
information regarding the Trust and/or the Company as
it has requested pursuant to Rule 144A or has
determined not to request such information and that
it is aware that the transferor is relying upon its
foregoing representations in order to claim the
exemption from registration provided by Rule 144A.
(ii) Upon receipt by the Registrar of the documents
referred to in clause (i) above and instructions
given in accordance with DTC's and the Registrar's
procedures therefor, the Registrar shall reflect on
its books and records the date of such transfer and
an increase in the principal amount of the U.S.
Global Certificate in an amount equal to the
principal amount of the U.S. Physical Certificates or
interests in the Temporary Offshore Global
Certificate, as the case may be, being transferred,
and the Trustee shall cancel such Physical
Certificates or decrease the amount of such Temporary
Offshore Global Certificate so transferred.
(c) TRANSFERS OF INTERESTS IN THE PERMANENT OFFSHORE GLOBAL
CERTIFICATE OR OFFSHORE PHYSICAL CERTIFICATES. The Registrar shall register any
transfer of interests in the Permanent Offshore Global Certificate or Offshore
Physical Certificates without requiring any additional certification.
(d) TRANSFERS TO NON-U.S. PERSONS AT ANY TIME. The following
provisions shall apply with respect to any registration of any transfer of an
Initial Certificate to a Non-U.S. Person:
(i) Prior to the Offshore Certificates Exchange Date, the
Registrar shall register any proposed transfer of an
Initial Certificate to a Non-U.S. Person upon receipt
of a certificate substantially in the form set forth
as Exhibit C hereto from the proposed transferor.
<PAGE> 25
-25-
(ii) On and after the Offshore Certificates Exchange Date,
the Registrar shall register any proposed transfer to
any Non-U.S. Person if the Initial Certificate to be
transferred is a U.S. Physical Certificate or an
interest in the U.S. Global Certificate, upon receipt
of a certificate substantially in the form of Exhibit
C from the proposed transferor. The Registrar shall
promptly send a copy of such certificate to the
Company.
(iii) (A) Upon receipt by the Registrar of (x) the
documents, if any, required by paragraph (ii) and (y)
instructions in accordance with DTC's and the
Registrar's procedures, the Registrar shall reflect
on its books and records the date of such transfer
and a decrease in the principal amount of such U.S.
Global Certificate in an amount equal to the
principal amount of the beneficial interest in such
U.S. Global Certificate to be transferred, and (B)
upon receipt by the Registrar of instructions given
in accordance with DTC's and the Registrar's
procedures, the Registrar shall reflect on its books
and records the date and an increase in the principal
amount of the Offshore Global Certificate in an
amount equal to the principal amount of the U.S.
Physical Certificate or the U.S. Global Certificate,
as the case may be, to be transferred, and the
Trustee shall cancel the Physical Certificate, if
any, so transferred or decrease the amount of such
U.S. Global Certificate.
(e) PRIVATE PLACEMENT LEGEND. Upon the transfer, exchange or
replacement of Applicable Certificates not bearing the Private Placement Legend,
the Registrar shall deliver Applicable Certificates that do not bear the Private
Placement Legend. Upon the transfer, exchange or replacement of Applicable
Certificates bearing the Private Placement Legend, the Registrar shall deliver
only Applicable Certificates that bear the Private Placement Legend unless
either (i) the circumstances contemplated by paragraph (a)(i)(x) or (e)(ii) of
this Section 8.05 exist or (ii) there is delivered to the Registrar an Opinion
of Counsel to the effect that neither such legend nor the related restrictions
on transfer are required in order to maintain compliance with the provisions of
the Securities Act.
(f) GENERAL. By its acceptance of any Applicable Certificate
bearing the Private Placement Legend, each Holder of such an Applicable
Certificate acknowledges the restrictions on transfer of such Applicable
Certificate set forth in this Agreement and agrees that it will transfer such
Applicable Certificate only as provided in this Agreement. The Registrar shall
not register a transfer of any Applicable Certificate unless such transfer
complies with the restrictions on transfer of such Applicable Certificate set
forth in this Agreement. In connection with any transfer of Applicable
Certificates, each Applicable Certificateholder agrees by its acceptance of the
Applicable Certificates to furnish the Registrar or the Trustee such
certifications, legal opinions or other information as either of them may
reasonably require to confirm that such transfer is being made pursuant to an
exemption from, or a transaction not subject to, the registration requirements
of the Securities Act; provided that the Registrar shall not be required to
determine the sufficiency of any such certifications, legal opinions or other
information.
Until such time as no Applicable Certificates remain
Outstanding, the Registrar shall retain copies of all letters, notices and other
written communications received pursuant to Section 8.04 or this Section 8.05.
The Trustee, if not the Registrar at such time, shall have the right to inspect
and make copies of all such letters, notices or other written communications at
any reasonable time upon the giving of reasonable written notice to the
Registrar.
<PAGE> 26
-26-
ARTICLE IX
MISCELLANEOUS PROVISIONS
Section 9.01. 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 9.02. 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 9.03. 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 9.04. 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> 27
-27-
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:
--------------------------------------
Name: Fred L. deLeeuw
Title: Senior Director - Corporate
Finance
WILMINGTON TRUST COMPANY,
as Trustee
By:
--------------------------------------
Name:
Title:
<PAGE> 28
EXHIBIT A
FORM OF CERTIFICATE
REGISTERED
No. ______________
[THIS CERTIFICATE HAS NOT BEEN REGISTERED UNDER THE U.S. SECURITIES ACT OF 1933,
AS AMENDED (THE "SECURITIES ACT") OR ANY STATE SECURITIES LAWS, AND,
ACCORDINGLY, MAY NOT BE OFFERED OR SOLD WITHIN THE UNITED STATES OR TO, OR FOR
THE ACCOUNT OR BENEFIT OF, ANY PERSONS EXCEPT AS SET FORTH IN THE FOLLOWING
SENTENCE. BY ITS ACQUISITION HEREOF, THE HOLDER (1) REPRESENTS THAT (A) IT IS A
"QUALIFIED INSTITUTIONAL BUYER" (AS DEFINED IN RULE 144A UNDER THE SECURITIES
ACT), (B) IT IS AN INSTITUTIONAL "ACCREDITED INVESTOR" (AS DEFINED IN RULE
501(a)(1), (2), (3) OR (7) UNDER THE SECURITIES ACT) (AN "INSTITUTIONAL
ACCREDITED INVESTOR") OR (C) IT IS NOT A U.S. PERSON AND IS ACQUIRING THIS
CERTIFICATE IN AN OFFSHORE TRANSACTION IN COMPLIANCE WITH REGULATION S UNDER THE
SECURITIES ACT; (2) AGREES THAT IT WILL NOT, PRIOR TO EXPIRATION OF THE HOLDING
PERIOD APPLICABLE TO SALES OF THE CERTIFICATES UNDER RULE 144(K) UNDER THE
SECURITIES ACT (OR ANY SUCCESSOR PROVISION) RESELL OR OTHERWISE TRANSFER THIS
CERTIFICATE EXCEPT (A) TO A QUALIFIED INSTITUTIONAL BUYER IN COMPLIANCE WITH
RULE 144A UNDER THE SECURITIES ACT, (B) INSIDE THE UNITED STATES TO AN
INSTITUTIONAL ACCREDITED INVESTOR ACQUIRING $100,000 OR MORE AGGREGATE PRINCIPAL
AMOUNT OF SUCH CERTIFICATE, THAT, PRIOR TO SUCH TRANSFER, FURNISHES TO THE
TRUSTEE A SIGNED LETTER CONTAINING CERTAIN REPRESENTATIONS AND AGREEMENTS
RELATING TO THE RESTRICTIONS ON TRANSFER OF THIS CERTIFICATE (THE FORM OF WHICH
LETTER CAN BE OBTAINED FROM THE TRUSTEE), (C) OUTSIDE THE UNITED STATES IN AN
OFFSHORE TRANSACTION IN COMPLIANCE WITH RULE 904 UNDER THE SECURITIES ACT, (D)
PURSUANT TO THE EXEMPTION FROM REGISTRATION PROVIDED BY RULE 144 UNDER THE
SECURITIES ACT (IF AVAILABLE), (E) PURSUANT TO A REGISTRATION STATEMENT WHICH
HAS BEEN DECLARED EFFECTIVE UNDER THE SECURITIES ACT (AND WHICH CONTINUES TO BE
EFFECTIVE AT THE TIME OF SUCH TRANSFER), OR (F) TO ATLAS OR ANY SUBSIDIARY
THEREOF; (3) PRIOR TO SUCH TRANSFER (OTHER THAN A TRANSFER PURSUANT TO CLAUSE
2(E) ABOVE), IT WILL FURNISH TO THE TRUSTEE SUCH CERTIFICATIONS, LEGAL OPINIONS
OR OTHER INFORMATION AS THE TRUSTEE MAY REASONABLY REQUIRE TO CONFIRM THAT SUCH
TRANSFER IS BEING MADE PURSUANT TO AN EXEMPTION FROM, OR IN A TRANSACTION NOT
SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND (4) AGREES
THAT IT WILL DELIVER TO EACH PERSON TO WHOM THIS CERTIFICATE IS TRANSFERRED A
NOTICE SUBSTANTIALLY TO THE EFFECT OF THIS LEGEND. IN CONNECTION WITH ANY
TRANSFER OF THIS CERTIFICATE PRIOR TO THE EXPIRATION OF THE HOLDING PERIOD
APPLICABLE TO SALES OF THE CERTIFICATES UNDER RULE 144(K) UNDER THE SECURITIES
ACT (OR ANY SUCCESSOR PROVISION), THE HOLDER MUST CHECK THE APPROPRIATE BOX SET
FORTH ON THE REVERSE HEREOF RELATING TO THE MANNER OF SUCH TRANSFER AND SUBMIT
THIS CERTIFICATE TO THE TRUSTEE. IF THE PROPOSED TRANSFEREE IS AN INSTITUTIONAL
ACCREDITED INVESTOR OR IS A PURCHASER WHO IS NOT A U.S. PERSON, THE HOLDER MUST,
PRIOR TO SUCH TRANSFER, FURNISH TO THE TRUSTEE, SUCH CERTIFICATIONS, LEGAL
OPINIONS OR OTHER INFORMATION
<PAGE> 29
A-2
AS IT MAY REASONABLY REQUIRE TO CONFIRM THAT SUCH TRANSFER IS BEING MADE
PURSUANT TO AN EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE
REGISTRATION REQUIREMENTS OF THE SECURITIES ACT. THIS LEGEND WILL BE REMOVED
UPON THE EARLIER OF THE TRANSFER OF THE CERTIFICATES PURSUANT TO CLAUSE 2(E)
ABOVE OR UPON ANY TRANSFER OF THE CERTIFICATES UNDER RULE 144(K) UNDER THE
SECURITIES ACT (OR ANY SUCCESSOR PROVISION). AS USED HEREIN, THE TERMS "OFFSHORE
TRANSACTION", "UNITED STATES" AND "U.S. PERSON" HAVE THE MEANINGS GIVEN TO THEM
BY REGULATION S UNDER THE SECURITIES ACT. THE PASS THROUGH TRUST AGREEMENT
CONTAINS A PROVISION REQUIRING THE TRUSTEE TO REFUSE TO REGISTER ANY TRANSFER OF
THIS CERTIFICATE IN VIOLATION OF THE FOREGOING RESTRICTIONS.](a)
[UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE
DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION ("DTC"), TO THE TRUSTEE OR ITS
AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT, AND ANY CERTIFICATE
ISSUED IN EXCHANGE FOR THIS CERTIFICATE IS REGISTERED IN THE NAME OF CEDE & CO.
OR IN SUCH OTHER NAME AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC
(AND ANY PAYMENT HEREON IS MADE TO CEDE & CO. OR TO SUCH OTHER ENTITY AS IS
REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC), ANY TRANSFER, PLEDGE OR OTHER
USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL INASMUCH AS
THE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.
TRANSFERS OF THIS GLOBAL CERTIFICATE SHALL BE LIMITED TO TRANSFERS IN WHOLE, BUT
NOT IN PART, TO NOMINEES OF DTC OR TO A SUCCESSOR THEREOF OR SUCH SUCCESSOR'S
NOMINEE AND TRANSFERS OF PORTIONS OF THIS GLOBAL CERTIFICATE SHALL BE LIMITED TO
TRANSFERS MADE IN ACCORDANCE WITH THE RESTRICTIONS SET FORTH IN SECTIONS 8.05
AND 8.06 OF THE TRUST SUPPLEMENT OF THE PASS THROUGH TRUST AGREEMENT REFERRED TO
HEREIN.]
[BY ITS ACQUISITION HEREOF, THE HOLDER REPRESENTS THAT EITHER (A) NO ASSETS OF
AN EMPLOYEE BENEFIT PLAN SUBJECT TO TITLE I OF THE EMPLOYEE RETIREMENT
SECURITIES 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 BEEN
USED TO PURCHASE THIS CERTIFICATE OR (B) THE PURCHASE AND HOLDING OF THIS
CERTIFICATE ARE EXEMPT FROM THE PROHIBITED TRANSACTION RESTRICTIONS OF ERISA AND
THE CODE PURSUANT TO ONE OR MORE PROHIBITED TRANSACTION STATUTORY OR
ADMINISTRATIVE EXEMPTIONS.]
- ----------------
(a) Not to be included on the face of the Permanent Offshore Global
Certificate.
<PAGE> 30
A-3
[GLOBAL CERTIFICATE](a)
ATLAS AIR 2000-1A PASS THROUGH TRUST
8.707% Atlas Air [Initial] [Exchange] Pass Through Certificate
Issuance Date: _______________
Final Expected Distribution Date: ________
Evidencing A Fractional Undivided Interest In The Atlas Air Pass Through Trust
2000-1A, The Property Of Which Shall Include Certain Equipment Notes Each
Secured By An Aircraft Lease 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 2000-1A Pass Through Trust (the "Trust")
created pursuant to a Pass Through Trust Agreement, dated as of January 28, 2000
(the "BASIC AGREEMENT"), between the Trustee and Atlas Air, Inc., a Delaware
corporation (the "Company"), as supplemented by Trust Supplement No. 2000-1A
thereto, dated as of January 28, 2000 (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 "8.707% Atlas Air [Initial]
[Exchange] Pass Through Certificates Series 2000-1A" (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.
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 and to the extent of funds then available
to the Trustee, there will be distributed on each January 2 and July 2 (a
"Regular Distribution Date"), commencing on July 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
- ----------------
(a) To be included on the face of each Global Certificate.
<PAGE> 31
A-4
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.
[The Holder of this Certificate is entitled to the benefits of
the Registration Rights Agreement, dated as of January 28, 2000, among the
Company, the Trustee and the Placement Agents named therein (the "Registration
Rights Agreement"). In the event that neither the consummation of the Exchange
Offer nor the declaration by the Commission of a Shelf Registration to be
effective (a "Registration Event") occurs on or prior to the 210th day after the
date of the issuance of the Certificates, the interest rate per annum borne by
the Equipment Notes shall be increased by 0.50%, from and including such 210th
day, to but excluding the date on which a Registration Event occurs. In the
event that the Shelf Registration Statement ceases to be effective at any time
during the period specified by the Registration Rights Agreement for more than
60 days, whether or not consecutive, during any 12-month period, the interest
rate per annum borne by the Equipment Notes shall be increased by 0.50% from the
61st day of the applicable 12-month period such Shelf Registration Statement
ceases to be effective until such time as the Shelf Registration Statement again
becomes effective.](a)
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.
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 AGREEMENT AND THIS CERTIFICATE SHALL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK.
Unless the certificate of authentication hereon has been
executed by the Trustee, by manual signature, this Certificate shall not be
entitled to any benefit under the Agreement or be valid for any purpose.
- -----------------
(a) To be included only on each Initial Certificate.
<PAGE> 32
A-5
IN WITNESS WHEREOF, the Trustee has caused this Certificate to
be duly executed.
Dated: [__________ __], 2000 ATLAS AIR
2000-1A PASS THROUGH TRUST
By: WILMINGTON TRUST COMPANY,
not in its individual capacity
but solely as Trustee
Attest: By:
--------------------------------------
Name:
Title:
- --------------------
Authorized Signature
<PAGE> 33
A-6
[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
<PAGE> 34
A-7
[REVERSE OF CERTIFICATE]
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 of their affiliates. 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 therein 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, in the Borough of Manhattan, the City
of New York, 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 [$100,000](a) [$1,000](b) Fractional
Undivided Interest and integral multiples of $1,000 in excess thereof [except
that one Certificate may be in a denomination of less than $100,000]*. As
provided in the Agreement and subject to certain limitations therein set forth,
the Certificates are exchangeable for new Certificates of authorized
denominations evidencing the same aggregate Fractional Undivided Interest in the
Trust, as requested by the Certificateholder surrendering the same.
- ------------
(a) To be included only on each Initial Certificate.
(b) To be included only on each Exchange Certificate.
<PAGE> 35
A-8
No service charge will be made for any such registration of
transfer or exchange, but the Trustee shall require payment by the Holder 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.
<PAGE> 36
A-9
FORM OF TRANSFER NOTICE
FOR VALUE RECEIVED the undersigned registered holder hereby
sell(s), assign(s) and transfer(s) unto
Insert Taxpayer Identification No.
- -----------------------------------
- -----------------------------------
please print or typewrite name and address including zip code of assignee
- -----------------------------------
the within Certificate and all rights thereunder, hereby irrevocably
constituting and appointing
- -----------------------------------
attorney to transfer said Certificate on the books of the Trustee with full
power of substitution in the premises.
[THE FOLLOWING PROVISION TO BE INCLUDED
ON ALL CERTIFICATES
EXCEPT EXCHANGE CERTIFICATES AND
PERMANENT OFFSHORE GLOBAL AND
UNLEGENDED OFFSHORE PHYSICAL CERTIFICATES]
In connection with any transfer of this Certificate occurring
prior to the date that is the earlier of (i) the date of Registration Event or
(ii) the end of the period referred to in Rule 144(k) of the Securities Act, the
undersigned confirms that without utilizing any general solicitation or general
advertising that:
[Check One]
[ ](a) this Certificate is being transferred in compliance with the
exemption from registration under the Securities Act of 1933, as
amended, provided by Rule 144A thereunder.
or
[ ](b) this Certificate is being transferred other than in accordance
with (a) above and documents are being furnished that comply
with the conditions of transfer set forth in this Certificate
and the Agreement.
If neither of the foregoing boxes is checked, the Trustee or other Registrar
shall not be obligated to register this Certificate in the name of any Person
other than the Holder hereof unless and until the conditions to any such
transfer of registration set forth herein and in Section 8.06 of the Trust
Supplement shall have been satisfied.
Date: [Name of Transferor]
------------------------- ------------------------------------------
NOTE: The signature must correspond with
the name as written upon the face of the
within-mentioned instrument in every
particular, without alteration or any
change whatsoever.
Signature Guarantee:
--------------
<PAGE> 37
A-10
TO BE COMPLETED BY PURCHASER IF (a) ABOVE IS CHECKED.
The undersigned represents and warrants that it is purchasing
this Certificate for its own account or an account with respect to which it
exercises sole investment discretion and that it and any such account is a
"qualified institutional buyer" within the meaning of Rule 144A under the
Securities Act of 1933, as amended, and is aware that the sale to it is being
made in reliance on Rule 144A and acknowledges that it has received such
information regarding the Company as the undersigned has requested pursuant to
Rule 144A or has determined not to request such information and that it is aware
that the transferor is relying upon the undersigned's foregoing representations
in order to claim the exemption from registration provided by Rule 144A.
Dated:
----------------------- ---------------------------------------------
NOTE: To be executed by an executive officer.
<PAGE> 38
EXHIBIT B
FORM OF CERTIFICATE FOR UNLEGENDED CERTIFICATES
[DATE]
Wilmington Trust Company
One Rodney Square
1100 N. Market Street
Wilmington, DE 19890-0001
Attention: Corporate Trust Administration
Re: Atlas Air 2000-1A Pass Through Trust, Class A Pass Through
Trust Certificates
(the "Certificates")
Dear Sirs:
This letter relates to U.S. $__________ Fractional Undivided
Interest of Certificates represented by a Certificate (the "Legended
Certificate") which bears a legend outlining restrictions upon transfer of such
Legended Certificate. Pursuant to Section 3.01 of the Pass Through Trust
Agreement dated as of January 28, 2000 (the "Basic Agreement") between the
Trustee and Atlas Air, Inc., a Delaware corporation (the "Company"), as
supplemented by Trust Supplement No. 2000-1A thereto (the "Trust Supplement",
and together with the Basic Agreement, the "Agreement"), we hereby certify that
we are (or we will hold such securities on behalf of) a person outside the
United States to whom the Certificates could be transferred in accordance with
Rule 904 of Regulation S promulgated under the U.S. Securities Act of 1933, as
amended. Accordingly, you are hereby requested to exchange the legended
certificate for an unlegended certificate representing an identical principal
amount of Certificates, all in the manner provided for in the Agreement.
You and the Company are entitled to rely upon this letter and
are irrevocably authorized to produce this letter or a copy hereof to any
interested party in any administrative or legal proceedings or official inquiry
with respect to the matters covered hereby. Terms used in this certificate have
the meanings set forth in Regulation S.
Very truly yours,
[Name of Certificateholder]
By:
-----------------------------------
Authorized Signature
<PAGE> 39
EXHIBIT C
FORM OF CERTIFICATE TO BE DELIVERED IN CONNECTION
WITH TRANSFERS PURSUANT TO REGULATION S
[DATE]
Wilmington Trust Company
One Rodney Square
1100 N. Market Street
Wilmington, DE 19890-0001
Attention: Corporate Trust Administration
Re: Atlas Air 2000-1A Pass Through Trust (the "Trust"),
___% Atlas Air Pass Through Trust Certificates
Series 2000-1A (the "Certificates")
Sirs:
In connection with our proposed sale of $_______ Fractional Undivided
Interest of the Certificates, we confirm that such sale has been effected
pursuant to and in accordance with Regulation S under the Securities Act of
1933, as amended, and, accordingly, we represent that:
(1) the offer of the Certificates was not made to a person in the
United States;
(2) either (a) at the time the buy order was originated, the
transferee was outside the United States or we and any person acting on
our behalf reasonably believed that the transferee was outside the
United States or (b) the transaction was executed in, on or through the
facilities of a designated off-shore securities market and neither we
nor any person acting on our behalf knows that the transaction has been
pre-arranged with a buyer in the United States;
(3) no directed selling efforts have been made in the United
States in contravention of the requirements of Rule 903(b) or Rule
904(b) of Regulation S, as applicable; and
(4) the transaction is not part of a plan or scheme to evade the
registration requirements of the Securities Act.
In addition, if the sale is made during a restricted period and
the provisions of Rule 903(c)(3) or Rule 904(c)(1) of Regulation S are
applicable thereto, we confirm that such sale has been made in accordance with
the applicable provisions of Rule 903(c)(3) or Rule 904(c)(1), as the case may
be.
You and Atlas Air, Inc. are entitled to rely upon this letter and
are irrevocably authorized to produce this letter or a copy hereof to any
interested party in any administrative or legal proceedings or official inquiry
with respect to the matters covered hereby. Terms used in this certificate have
the meanings set forth in Regulation S.
Very truly yours,
[Name of Transferor]
By:
--------------------------------------
Authorized Signature
<PAGE> 40
EXHIBIT D
FORM OF CERTIFICATE TO BE
DELIVERED IN CONNECTION WITH
TRANSFERS TO NON-QIB ACCREDITED INVESTORS
[DATE]
Wilmington Trust Company
One Rodney Square
1100 N. Market Street
Wilmington, DE 19890-0001
Attention: Corporate Trust Administration
Re: Atlas Air 2000-1A Pass Through Trust (the "Trust"),
8.707% Atlas Air Pass Through Trust Certificates
Series 2000-1A (the "Certificates")
Dear Sirs:
In connection with our proposed purchase of $_______________
aggregate principal amount of the Certificates, we confirm that:
(1) We understand that any subsequent transfer of the
Certificates is subject to certain restrictions and conditions set
forth in the Pass Through Trust Agreement dated as of January 28, 2000
(the "Basic Agreement") between the Trustee and Atlas Air, Inc., a
Delaware corporation (the "Company"), as supplemented by Trust
Supplement No. 2000-1A thereto (the "Trust Supplement", and together
with the Basic Agreement, the "Agreement") relating to the Certificates
and the undersigned agrees to be bound by the Agreement, and not to
resell, pledge or otherwise transfer the Certificates except in
compliance with, such restrictions and conditions contained in the
Agreement and the Securities Act of 1933, as amended (the "Securities
Act").
(2) We understand that the Certificates have not been registered
under the Securities Act, and that the Certificates may not be offered
or sold except as permitted in the following sentence. We agree, on our
own behalf and on behalf of any accounts for which we are acting as
hereinafter stated, that if we should sell any Certificate, we will do
so only (A) in accordance with Rule 144A under the Securities Act to a
"qualified institutional buyer" (as defined therein), (B) to an
institutional "accredited investor" (as defined below) that, prior to
such transfer, furnishes (or has furnished on its behalf by a U.S.
broker-dealer) to you and to the Company, a signed letter substantially
in the form of this letter, (C) outside the United States in accordance
with Rule 904 of Regulation S under the Securities Act, (D) pursuant to
the exemption from registration provided by Rule 144 under the
Securities Act, (E) pursuant to an effective registration statement
under the Securities Act, or (F) to the Company or any subsidiary
thereof, and we further agree to provide to any person purchasing any
of the Certificates from us a notice advising such purchaser that
resales of the Notes are restricted as stated herein. We further
understand that the Certificates purchased by us will bear a legend to
the foregoing effect.
(3) We understand that, on any proposed resale of any
Certificates, we will be required to furnish to you and the Company
such certifications, legal opinions and other information as you and
the Company may reasonably require to confirm that the proposed sale
complies with the foregoing
<PAGE> 41
D-2
restrictions. We further understand that the Certificates purchased by
us will bear a legend to the foregoing effect.
(4) We are an institutional "accredited investor" (as defined in
Rule 501(a)(1), (2), (3) or (7) of Regulation D under the Securities
Act) and have such knowledge and experience in financial and business
matters as to be capable of evaluating the merits and risks of our
investment in the Certificates and we and any accounts for which we are
acting are each able to bear the economic risk of our or its
investment.
(5) We are acquiring the Certificates purchased by us for our own
account or for one or more accounts (each of which is an institutional
"accredited investor") as to each of which we exercise sole investment
discretion.
You and the Company are entitled to rely upon this letter and
are irrevocably authorized to produce this letter or a copy hereof to any
interested party in any administrative or legal proceedings or official inquiry
with respect to the matters covered hereby.
Very truly yours,
[Name of Transferor]
By:
---------------------------------------
Authorized Signature
<PAGE> 1
EXHIBIT 4.6
TRUST SUPPLEMENT No. 2000-1B
Dated as of January 28, 2000
between
WILMINGTON TRUST COMPANY
as Trustee,
and
ATLAS AIR INC.
to
PASS THROUGH TRUST AGREEMENT
Dated as of January 28, 2000
$44,741,000
Atlas Air Pass Through Trust 2000-1B
9.057% Atlas Air
Pass Through Certificates,
Series 2000-lB
This Trust Supplement No. 2000-1B (herein called the "Trust
Supplement") dated as of January 28, 2000 between Atlas Air, Inc., a Delaware
corporation (the "Company"), and Wilmington Trust Company (the "Trustee") to the
Pass Through Trust Agreement dated as of January 28, 2000, 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
-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 2000-1B (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 Placement
Agents have contemporaneously herewith entered into an Escrow Agreement with the
Escrow Paying Agent pursuant to which the Placement Agents 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 Deposit 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, upon the occurrence of a Registration Event, 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;
<PAGE> 3
-3-
NOW THEREFORE, in consideration of the premises herein, it is
agreed between the Company and the Trustee as follows:
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 "9.057% Atlas Air Initial Pass Through Certificates, Series 2000-lB"
(the "Initial Certificates"). The exchange certificates which may be issued and
offered in exchange for the Initial Certificates pursuant to the Registration
Rights Agreement shall be known as the "9.057% Atlas Air Exchange Pass Through
Certificates Series 2000-1B" (the "Exchange Certificates"). The Initial
Certificates and the Exchange Certificates 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 $44,741,000.
(b) The Regular Distribution Dates with respect to any payment
of Scheduled Payments means January 2 and July 2 of each year, commencing on
July 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 Placement Agents 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
<PAGE> 4
-4-
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.
(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):
Agent Members: has the meaning specified in Section 8.04 of
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 Certificates: 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.
<PAGE> 5
-5-
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.
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.
Cedel: means Clearstream Banking, societe anonyme.
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 December 31, 2000
(provided that, if a labor strike occurs at Boeing prior to December 31, 2000,
such date shall be extended by adding thereto the number of days that such
strike continues in effect).
Deposit: has the meaning specified in the Deposit Agreement.
Deposit Agreement: means the Deposit Agreement dated as of
January 28, 2000 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 Westdeutsche Landesbank Girozentrale, a
German banking institution organized under the laws of the State of North
Rhine-Westphalia, acting through its New York branch.
Distribution Date: means any Regular Distribution Date or
Special Distribution Date as the context requires.
DTC: means The Depositary Trust Company, and any successor
entity to DTC as depositary for the Applicable Certificates.
<PAGE> 6
-6-
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 January 28, 2000 relating to the Applicable Certificates, among the
Escrow Agent, the Escrow Paying Agent, the Trustee and the Placement Agents, 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.
Euroclear: means Morgan Guaranty Trust Company of New York,
Brussels office, as the operator of the Euroclear System.
Exchange Certificates: means the certificates substantially in
the form of Exhibit A attached hereto issued in exchange for the Initial
Certificates pursuant to the Registration Rights Agreement and authenticated
hereunder.
Exchange Offer Registration Statement: has the meaning
specified in the Registration Rights Agreement.
Final Maturity Date: means July 2, 2017.
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
4.02 of this Trust Supplement.
Global Certificates: has the meaning specified in Section
8.01(c) of this Trust Supplement.
Global Exchange Certificate: has the meaning specified in
Section 8.01(e) 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.
Institutional Accredited Investor: means an institutional
investor that is an "accredited investor" within the meaning set forth in Rule
501(a)(1), (2), (3) or (7) of Regulation D under the Securities Act.
Intercreditor Agreement: means the Intercreditor Agreement
dated as of January 28, 2000, 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
<PAGE> 7
-7-
trustee thereunder, as amended, supplemented or otherwise modified from time to
time in accordance with its terms.
Investors: means the Placement Agents 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 January 28, 2000 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 Morgan Stanley Capital Services
Inc., a Delaware corporation.
Non-U.S. Person: means a Person that is not a "U.S. Person,"
as defined in Regulation S.
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.
Note Purchase Agreement: means the Note Purchase Agreement
dated as of January 28, 2000 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.
Offering Memorandum: means the offering memorandum dated
January 20, 2000 relating to the offering of the Initial Certificates.
Offshore Certificates Exchange Date: has the meaning specified
in Section 8.01(c) of this Trust Supplement.
Offshore Global Certificates: has the meaning specified in
Section 8.01(c) of this Trust Supplement.
<PAGE> 8
-8-
Offshore Physical Certificates: has the meaning specified in
Section 8.01(d) of this Trust Supplement.
Other Agreements: means (i) the Basic Agreement as
supplemented by Trust Supplement No. 2000-lA dated as of the date hereof
relating to Atlas Air Pass Through Trust 2000-lA; (ii) the Basic Agreement as
supplemented by Trust Supplement No. 2000-lC dated as of the date hereof
relating to Atlas Air Pass Through Trust 2000-1C; and (iii) if Class D
Certificates are issued, the Basic Agreement as supplemented by Trust Supplement
No. 2000-1D relating to Atlas Air Pass Through Trust 2000-1D.
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 2000-lA
and the Atlas Air Pass Through Trust 2000-lC, each created on the date hereof,
and if Class D Certificates are issued, the Atlas Air Pass Through Trust
2000-1D.
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.
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.
Permanent Offshore Global Certificate: has the meaning
specified in Section 8.01(c) of this Trust Supplement.
Physical Certificates: has the meaning specified in Section
8.01(d) of this Trust Supplement.
Placement Agents: means, collectively, Morgan Stanley & Co.
Incorporated, Deutsche Bank Securities Inc. and Salomon Smith Barney Inc.
<PAGE> 9
-9-
Placement Agreement: means the Placement Agreement dated
January 20, 2000 among the Placement Agents and the Company, as the same may be
amended, supplemented or otherwise modified from time to time 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 the Deposit 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 the unused Deposit, 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 the unused Deposit, 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.
Private Placement Legend: has the meaning specified in Section
8.02(a) of this Trust Supplement.
QIB: means a qualified institutional buyer as defined in Rule
144A.
Registration Event: has the meaning set forth in the
Registration Rights Agreement.
Registration Rights Agreement: means the Registration Rights
Agreement dated January 28, 2000 among the Placement Agents, the Trustee, the
Other Trustees and the Company, as amended, supplemented or otherwise modified
from time to time in accordance with its terms.
Registration Statement: has the meaning set forth in the
Registration Rights Agreement.
Regulation S: means Regulation S under the Securities Act or
any successor regulation thereto.
Rule 144A: means Rule 144A under the Securities Act or any
successor rule thereto.
Scheduled Delivery Date: has the meaning specified in the Note
Purchase Agreement.
Securities Act: means the U.S. Securities Act of 1933, as
amended.
Shelf Registration Statement: has the meaning set forth in the
Registration Rights 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) or any Special Redemption Premium.
<PAGE> 10
-10-
Special Redemption Premium: means the premium payable by the
Company pursuant to Section 3(a)(i) of the Note Purchase Agreement.
Substitute Aircraft: has the meaning specified in the Note
Purchase Agreement.
Temporary Offshore Global Certificate: has the meaning
specified in Section 8.01(c) of this Trust Supplement.
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 Deposit or under the Escrow Agreement, 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.
U.S. Global Certificate: has the meaning specified in Section
8.01(b) of this Trust Supplement.
U.S. Physical Certificates: has the meaning specified in
Section 8.01(d) of this Trust Supplement.
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;
<PAGE> 11
-11-
(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:
(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
<PAGE> 12
-12-
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, 2001, on the Equipment Notes held as Trust Property as of December 8, 2000,
differs from the amount thereof set forth for the Applicable Certificates on
page 47 of the Offering Memorandum, by no later than December 15, 2000 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) any reoptimization and the Delivery
Period Termination Date, in each case if there has been any change in the
information set forth in clauses (x), (y) and (z) below from that set forth in
page 47 of the Offering Memorandum, 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 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 to purchase, for the
purchase price set forth in the Class A Trust Agreement, all, but not less than
all, of the Class A Certificates upon ten days' written notice to the Class A
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
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
<PAGE> 13
-13-
participate in such a purchase, then such other Applicable Certificateholder
shall lose its right to purchase the Class A Certificates;
(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
Certificates pursuant to the Class A Trust Agreement) to purchase all,
but not less than all, of the Applicable Certificates and the Class A
Certificates upon ten days' written notice to the Trustee, the Class A
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 and the Class A 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 and the Class A 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 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 Class A
Certificates, the Class B Certificates and the Class C Certificates
upon ten days' written notice to the Trustee, the Class A 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 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 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
<PAGE> 14
-14-
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
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 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 Certificate", "Class A Certificateholder", "Class
A Trust", "Class A 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 Placement Agreement, the
<PAGE> 15
-15-
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 Placement
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 all or a portion of the Deposit 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 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 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 all or a portion of the Deposit 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 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
<PAGE> 16
-16-
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 all or a portion of the Deposit 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 portion of the Deposit remains 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 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
<PAGE> 17
-17-
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 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
<PAGE> 18
-18-
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
THE CERTIFICATES
Section 8.01. ADDITIONS TO ARTICLE III OF THE BASIC AGREEMENT.
In addition to the provisions of Article III of the Basic Agreement, the
following provisions shall apply to the Applicable Trust:
(a) The Initial Certificates will be issued in minimum
denominations of $100,000 or integral multiples of $1,000 in excess thereof. The
Exchange Certificates will be issued in denominations of $1,000 or integral
multiples thereof. Each Exchange Certificate shall be dated the date of its
authentication. The aggregate Fractional Undivided Interest of Applicable
Certificates shall not at any time exceed $44,741,000;
(b) Initial Certificates offered and sold in reliance on Rule
144A shall be issued initially in the form of one or more global Certificates in
definitive, fully registered form without interest coupons, substantially in the
form set forth as Exhibit A hereto (the "U.S. Global Certificate"), duly
executed and authenticated by the Trustee as hereinafter provided. The U.S.
Global Certificate will be registered in the name of a nominee for DTC and
deposited with the Trustee, as custodian for DTC. The aggregate principal amount
of the U.S. Global Certificate may from time to time be increased or decreased
by adjustments made on the records of DTC or its nominee, or of the Trustee, as
custodian for DTC or its nominee, as hereinafter provided;
(c) Initial Certificates offered and sold in offshore
transactions in reliance on Regulation S shall be issued initially in the form
of one or more temporary global Certificates in definitive, fully registered
form without interest coupons, substantially in the form set forth as Exhibit A
hereto (the "Temporary Offshore Global Certificate") duly executed and
authenticated by the Trustee as hereinafter provided. The Temporary Offshore
Global Certificate will be registered in the name of a nominee of DTC for credit
to the account of the
<PAGE> 19
-19-
Agent Members acting as depositaries for Euroclear and Cedel and deposited with
the Trustee as custodian for DTC. At any time following March 9, 2000 (the
"Offshore Certificates Exchange Date"), upon receipt by the Trustee of a
certificate substantially in the form of Exhibit B hereto, a single permanent
global Certificate in registered form substantially in the form set forth in
Exhibit A (the "Permanent Offshore Global Certificate"; and together with the
Temporary Offshore Global Certificate, the "Offshore Global Certificates"), duly
executed and authenticated by the Trustee as hereinafter provided, shall be
registered in the name of a nominee for DTC and deposited with the Trustee, as
custodian for DTC, and the Registrar shall reflect on its books and records the
date of such transfer and a decrease in the principal amount of any Temporary
Offshore Global Certificate in an amount equal to the principal amount of the
beneficial interest in such Temporary Offshore Global Certificate transferred.
The U.S. Global Certificate and the Offshore Global Certificates are sometimes
referred to as the "Global Certificates";
(d) Initial Certificates offered and sold to Institutional
Accredited Investors shall be issued in the form of permanent certificated
Certificates in registered form in substantially the form set forth as Exhibit A
hereto (the "U.S. Physical Certificates"). Certificates issued pursuant to
Section 8.04(b) in exchange for interests in any Offshore Global Certificate
shall be in the form of permanent certificated Certificates in registered form
substantially in the form set forth in Exhibit A (the "Offshore Physical
Certificates"). The Offshore Physical Certificates and U.S. Physical
Certificates are sometimes collectively herein referred to as the "Physical
Certificates";
(e) The Exchange Certificates shall be issued in the form of
one or more global Certificates substantially in the form of Exhibit A hereto
(each, a "Global Exchange Certificate"), except that (i) the Private Placement
Legend (hereinafter defined) shall be omitted and (ii) such Exchange
Certificates shall contain such appropriate insertions, omissions, substitutions
and other variations from the form set forth in Exhibit A hereto relating to the
nature of the Exchange Certificates as the Responsible Officer of the Trustee
executing such Exchange Certificates on behalf of the Trust may determine, as
evidenced by such officer's execution on behalf of the Trust of such Exchange
Certificates. Such Global Exchange Certificates shall be in registered form and
be registered in the name of DTC and deposited with the Trustee, at its
Corporate Trust Office, as custodian for DTC. The aggregate principal amount of
any Global Exchange Certificate may from time to time be increased or decreased
by adjustments made on the records of the Trustee, as custodian for DTC for such
Global Exchange Certificate, which adjustments shall be conclusive as to the
aggregate principal amount of any such Global Exchange Certificate. Subject to
clause (i) and (ii) of the first sentence of this Section 8.01(e), the terms
hereof applicable to U.S. Global Certificates and/or Global Certificates shall
apply to the Global Exchange Certificates, mutatis mutandis;
(f) The definitive Applicable Certificates shall be in
registered form and shall be typed, printed, lithographed or engraved or
produced by any combination of these methods or may be produced in any other
manner, all as determined by the officers executing such Applicable
Certificates, as evidenced by their execution of such Applicable Certificates.
Section 8.02. RESTRICTIVE LEGENDS. (a) Subject to Section
8.05, unless and until (i) an Initial Certificate is sold under an effective
Shelf Registration Statement or (ii) an Initial Certificate is exchanged for an
Exchange Certificate pursuant to an effective Exchange Offer Registration
Statement, in each case as provided for in the Registration Rights Agreement,
each Global Certificate (other than the Permanent Offshore Global Certificate)
and each U.S. Physical Certificate shall bear the following legend (the "Private
Placement Legend") on the face thereof:
<PAGE> 20
-20-
[THIS CERTIFICATE HAS NOT BEEN REGISTERED UNDER THE U.S. SECURITIES ACT
OF 1933, AS AMENDED (THE "SECURITIES ACT") OR ANY STATE SECURITIES
LAWS, AND, ACCORDINGLY, MAY NOT BE OFFERED OR SOLD WITHIN THE UNITED
STATES OR TO, OR FOR THE ACCOUNT OR BENEFIT OF, ANY PERSONS EXCEPT AS
SET FORTH IN THE FOLLOWING SENTENCE. BY ITS ACQUISITION HEREOF, THE
HOLDER (1) REPRESENTS THAT (A) IT IS A "QUALIFIED INSTITUTIONAL BUYER"
(AS DEFINED IN RULE 144A UNDER THE SECURITIES ACT), (B) IT IS AN
INSTITUTIONAL "ACCREDITED INVESTOR" (AS DEFINED IN RULE 501(a)(1), (2),
(3) OR (7) UNDER THE SECURITIES ACT) (AN "INSTITUTIONAL ACCREDITED
INVESTOR") OR (C) IT IS NOT A U.S. PERSON AND IS ACQUIRING THIS
CERTIFICATE IN AN OFFSHORE TRANSACTION IN COMPLIANCE WITH REGULATION S
UNDER THE SECURITIES ACT; (2) AGREES THAT IT WILL NOT, PRIOR TO
EXPIRATION OF THE HOLDING PERIOD APPLICABLE TO SALES OF THE
CERTIFICATES UNDER RULE 144(K) UNDER THE SECURITIES ACT (OR ANY
SUCCESSOR PROVISION) RESELL OR OTHERWISE TRANSFER THIS CERTIFICATE
EXCEPT (A) TO A QUALIFIED INSTITUTIONAL BUYER IN COMPLIANCE WITH RULE
144A UNDER THE SECURITIES ACT, (B) INSIDE THE UNITED STATES TO AN
INSTITUTIONAL ACCREDITED INVESTOR ACQUIRING $100,000 OR MORE AGGREGATE
PRINCIPAL AMOUNT OF SUCH CERTIFICATE, THAT, PRIOR TO SUCH TRANSFER,
FURNISHES TO THE TRUSTEE A SIGNED LETTER CONTAINING CERTAIN
REPRESENTATIONS AND AGREEMENTS RELATING TO THE RESTRICTIONS ON TRANSFER
OF THIS CERTIFICATE (THE FORM OF WHICH LETTER CAN BE OBTAINED FROM THE
TRUSTEE), (C) OUTSIDE THE UNITED STATES IN AN OFFSHORE TRANSACTION IN
COMPLIANCE WITH RULE 904 UNDER THE SECURITIES ACT, (D) PURSUANT TO THE
EXEMPTION FROM REGISTRATION PROVIDED BY RULE 144 UNDER THE SECURITIES
ACT (IF AVAILABLE), (E) PURSUANT TO A REGISTRATION STATEMENT WHICH HAS
BEEN DECLARED EFFECTIVE UNDER THE SECURITIES ACT (AND WHICH CONTINUES
TO BE EFFECTIVE AT THE TIME OF SUCH TRANSFER), OR (F) TO ATLAS OR ANY
SUBSIDIARY THEREOF; (3) PRIOR TO SUCH TRANSFER (OTHER THAN A TRANSFER
PURSUANT TO CLAUSE 2(E) ABOVE), IT WILL FURNISH TO THE TRUSTEE SUCH
CERTIFICATIONS, LEGAL OPINIONS OR OTHER INFORMATION AS THE TRUSTEE MAY
REASONABLY REQUIRE TO CONFIRM THAT SUCH TRANSFER IS BEING MADE PURSUANT
TO AN EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE
REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND (4) AGREES THAT IT
WILL DELIVER TO EACH PERSON TO WHOM THIS CERTIFICATE IS TRANSFERRED A
NOTICE SUBSTANTIALLY TO THE EFFECT OF THIS LEGEND. IN CONNECTION WITH
ANY TRANSFER OF THIS CERTIFICATE PRIOR TO THE EXPIRATION OF THE HOLDING
PERIOD APPLICABLE TO SALES OF THE CERTIFICATES UNDER RULE 144(K) UNDER
THE SECURITIES ACT (OR ANY SUCCESSOR PROVISION), THE HOLDER MUST CHECK
THE APPROPRIATE BOX SET FORTH ON THE REVERSE HEREOF RELATING TO THE
MANNER OF SUCH TRANSFER AND SUBMIT THIS CERTIFICATE TO THE TRUSTEE. IF
THE PROPOSED TRANSFEREE IS AN INSTITUTIONAL ACCREDITED INVESTOR OR IS A
PURCHASER WHO IS NOT A U.S. PERSON, THE HOLDER MUST, PRIOR TO
<PAGE> 21
-21-
SUCH TRANSFER, FURNISH TO THE TRUSTEE, SUCH CERTIFICATIONS, LEGAL
OPINIONS OR OTHER INFORMATION AS IT MAY REASONABLY REQUIRE TO CONFIRM
THAT SUCH TRANSFER IS BEING MADE PURSUANT TO AN EXEMPTION FROM, OR IN A
TRANSACTION NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE
SECURITIES ACT. THIS LEGEND WILL BE REMOVED UPON THE EARLIER OF THE
TRANSFER OF THE CERTIFICATES PURSUANT TO CLAUSE 2(E) ABOVE OR UPON ANY
TRANSFER OF THE CERTIFICATES UNDER RULE 144(K) UNDER THE SECURITIES ACT
(OR ANY SUCCESSOR PROVISION). AS USED HEREIN, THE TERMS "OFFSHORE
TRANSACTION", "UNITED STATES" AND "U.S. PERSON" HAVE THE MEANINGS GIVEN
TO THEM BY REGULATION S UNDER THE SECURITIES ACT. THE PASS THROUGH
TRUST AGREEMENT CONTAINS A PROVISION REQUIRING THE TRUSTEE TO REFUSE TO
REGISTER ANY TRANSFER OF THIS CERTIFICATE IN VIOLATION OF THE FOREGOING
RESTRICTIONS.](a)
(b) Each Global Certificate shall also bear the following
legend on the face thereof:
UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF
THE DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION ("DTC"), TO THE
TRUSTEE OR ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT,
AND ANY CERTIFICATE ISSUED IN EXCHANGE FOR THIS CERTIFICATE IS
REGISTERED IN THE NAME OF CEDE & CO. OR IN SUCH OTHER NAME AS IS
REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC (AND ANY PAYMENT
HEREON IS MADE TO CEDE & CO. OR TO SUCH OTHER ENTITY AS IS REQUESTED BY
AN AUTHORIZED REPRESENTATIVE OF DTC), ANY TRANSFER, PLEDGE OR OTHER USE
HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL INASMUCH
AS THE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.
TRANSFERS OF THIS GLOBAL CERTIFICATE SHALL BE LIMITED TO TRANSFERS IN
WHOLE, BUT NOT IN PART, TO NOMINEES OF DTC OR TO A SUCCESSOR THEREOF OR
SUCH SUCCESSOR'S NOMINEE AND TRANSFERS OF PORTIONS OF THIS GLOBAL
CERTIFICATE SHALL BE LIMITED TO TRANSFERS MADE IN ACCORDANCE WITH THE
RESTRICTIONS SET FORTH IN SECTIONS 8.04 AND 8.05 OF THE TRUST
SUPPLEMENT TO THE PASS THROUGH TRUST AGREEMENT REFERRED TO HEREIN.
Section 8.03. TRANSFER AND EXCHANGE. An Applicable
Certificateholder may transfer an Applicable Certificate by written application
to the Registrar stating the name of the proposed transferee and otherwise
complying with the terms of this Agreement, including providing a written
certificate or other evidence of compliance with any restrictions on transfer.
No such transfer shall be effected until, and such
- ----------------
(a) Not to be included on the face of the Permanent Offshore Global Certificate.
<PAGE> 22
-22-
transferee shall succeed to the rights of an Applicable Certificateholder only
upon, final acceptance and registration of the transfer by the Registrar in the
Register. Prior to the registration of any transfer by an Applicable
Certificateholder as provided herein, the Trustee shall treat the person in
whose name the Applicable Certificate is registered as the owner thereof for all
purposes, and the Trustee shall not be affected by notice to the contrary.
Furthermore, DTC shall, by acceptance of a Global Certificate, agree that
transfers of beneficial interests in such Global Certificate may be effected
only through a book-entry system maintained by DTC (or its agent), and that
ownership of a beneficial interest in the Certificate shall be required to be
reflected in a book entry. When Applicable Certificates are presented to the
Registrar with a request to register the transfer or to exchange them for an
equal face amount of Applicable Certificates of other authorized denominations,
the Registrar shall register the transfer or make the exchange as requested if
its requirements for such transactions are met. To permit registrations of
transfers and exchanges in accordance with the terms, conditions and
restrictions hereof, the Trustee shall execute and authenticate Applicable
Certificates at the Registrar's request.
Section 8.04. BOOK-ENTRY PROVISIONS FOR U.S. GLOBAL
CERTIFICATE AND OFFSHORE GLOBAL CERTIFICATES. (a) Members of, or participants
in, DTC ("Agent Members") shall have no rights under this Agreement with respect
to any Global Certificate held on their behalf by DTC, or the Trustee as its
custodian, and DTC may be treated by the Trustee and any agent of the Trustee as
the absolute owner of such Global Certificate for all purposes whatsoever.
Notwithstanding the foregoing, nothing herein shall prevent the Trustee or any
agent of the Trustee from giving effect to any written certification, proxy or
other authorization furnished by DTC or shall impair, as between DTC and its
Agent Members, the operation of customary practices governing the exercise of
the rights of a holder of any Applicable Certificate. Upon the issuance of any
Global Certificate, the Registrar or its duly appointed agent shall record a
nominee of DTC as the registered holder of such Global Certificate.
(b) Transfers of any Global Certificate shall be limited to
transfers of such Global Certificate or Offshore Global Certificate in whole,
but not in part, to nominees of DTC, its successor or such successor's nominees.
Beneficial interests in the U.S. Global Certificate and any Offshore Global
Certificate may be transferred in accordance with the rules and procedures of
DTC and the provisions of Section 8.05. Beneficial interests in the U.S. Global
Certificate or an Offshore Global Certificate shall be delivered to all
beneficial owners in the form of U.S. Physical Certificates or Offshore Physical
Certificates, as the case may be, if (i) DTC notifies the Trustee that it is
unwilling or unable to continue as depositary for the U.S. Global Certificate or
such Offshore Global Certificate, as the case may be, and a successor depositary
is not appointed by the Trustee within 90 days of such notice or (ii) an Event
of Default has occurred and Applicable Certificateholders with fractional
undivided interests aggregating not less than a majority in interest in the
Applicable Trust advise the Trustee, the Company and DTC through Agent Members
in writing that the continuation of a book-entry system through DTC (or a
successor thereto) is no longer in the Applicable Certificateholders' best
interests.
(c) Any beneficial interest in one of the Global Certificates
that is transferred to a Person who takes delivery in the form of an interest in
the other Global Certificate will, upon such transfer, cease to be an interest
in such Global Certificate and become an interest in the other Global
Certificate and, accordingly, will thereafter be subject to all transfer
restrictions, if any, and other procedures applicable to beneficial interests in
such other Global Certificate for as long as it remains such an interest.
(d) In connection with the transfer of the entire U.S. Global
Certificate or an entire Offshore Global Certificate to the beneficial owners
thereof pursuant to paragraph (b) of this Section 8.04, such U.S. Global
Certificate or Offshore Global Certificate, as the case may be, shall be deemed
to be surrendered to the Trustee for cancellation, and the Trustee shall
execute, authenticate and deliver, to each beneficial owner identified by DTC in
exchange for its beneficial interest in such U.S. Global Certificate or Offshore
Global Certificate,
<PAGE> 23
-23-
as the case may be, an equal aggregate principal amount of U.S. Physical
Certificates or Offshore Physical Certificates, as the case may be, of
authorized denominations.
(e) Any U.S. Physical Certificate delivered in exchange for an
interest in the U.S. Global Certificate pursuant to paragraph (b) of this
Section 8.04 shall, except as otherwise provided by paragraph (f) of Section
8.05, bear the Private Placement Legend.
(f) Any Offshore Physical Certificate delivered in exchange
for an interest in an Offshore Global Certificate pursuant to paragraph (b) of
this Section shall, except as otherwise provided by paragraph (f) of Section
8.05, bear the applicable legend regarding transfer restrictions set forth in
Section 8.02(a).
(g) The registered holder of the U.S. Global Certificate or
any Offshore Global Certificate may grant proxies and otherwise authorize any
Person, including Agent Members and Persons that may hold interests through
Agent Members, to take any action which a Holder is entitled to take under this
Agreement or the Applicable Certificates.
Section 8.05. SPECIAL TRANSFER PROVISIONS. Unless and until
(i) an Initial Certificate is sold under an effective Shelf Registration
Statement, or (ii) an Initial Certificate is exchanged for an Exchange
Certificate pursuant to an effective Exchange Offer Registration Statement, in
each case pursuant to the Registration Rights Agreement, the following
provisions shall apply to such Initial Certificates:
(a) TRANSFERS TO NON-QIB INSTITUTIONAL ACCREDITED INVESTORS.
The following provisions shall apply with respect to the registration of any
proposed transfer of an Applicable Certificate to any Institutional Accredited
Investor which is not a QIB (excluding transfers to or by Non-U.S. Persons):
(i) The Registrar shall register the transfer of any
Applicable Certificate, whether or not such
Applicable Certificate bears the Private Placement
Legend, if (x) the requested transfer is after the
time period referred to in Rule 144(k) under the
Securities Act as in effect with respect to such
transfer or (y) the proposed transferee has delivered
to the Registrar a letter substantially in the form
of Exhibit D hereto and the aggregate principal
amount of the Applicable Certificates being
transferred is at least $100,000.
(ii) If the proposed transferor is an Agent Member holding
a beneficial interest in the U.S. Global Certificate,
upon receipt by the Registrar of (x) the documents,
if any, required by paragraph (i) and (y)
instructions given in accordance with DTC's and the
Registrar's procedures, the Registrar shall reflect
on its books and records the date of the transfer and
a decrease in the principal amount of such U.S.
Global Certificate in an amount equal to the
principal amount of the beneficial interest in such
U.S. Global Certificate to be transferred, and the
Company shall execute, and the Trustee shall
authenticate and deliver to the transferor or at its
direction, one or more U.S. Physical Certificates of
like tenor and amount.
(b) TRANSFERS TO QIBS. The following provisions shall apply
with respect to the registration of any proposed transfer of an Initial
Certificate to a QIB (excluding Non-U.S. Persons):
(i) If the Initial Certificate to be transferred consists
of U.S. Physical Certificates or an interest in any
Temporary Offshore Global Certificate, the Registrar
shall register the transfer if such transfer is being
made by a proposed transferor who has checked the
<PAGE> 24
-24-
box provided for on the form of Initial Certificate
stating, or has otherwise advised the Trustee and the
Registrar in writing, that the sale has been made in
compliance with the provisions of Rule 144A to a
transferee who has signed the certification provided
for on the form of Initial Certificate stating, or
has otherwise advised the Trustee and the Registrar
in writing, that it is purchasing the Initial
Certificate for its own account or an account with
respect to which it exercises sole investment
discretion and that it, or the Person on whose behalf
it is acting with respect to any such account, is a
QIB within the meaning of Rule 144A, and is aware
that the sale to it is being made in reliance on Rule
144A and acknowledges that it has received such
information regarding the Trust and/or the Company as
it has requested pursuant to Rule 144A or has
determined not to request such information and that
it is aware that the transferor is relying upon its
foregoing representations in order to claim the
exemption from registration provided by Rule 144A.
(ii) Upon receipt by the Registrar of the documents
referred to in clause (i) above and instructions
given in accordance with DTC's and the Registrar's
procedures therefor, the Registrar shall reflect on
its books and records the date of such transfer and
an increase in the principal amount of the U.S.
Global Certificate in an amount equal to the
principal amount of the U.S. Physical Certificates or
interests in the Temporary Offshore Global
Certificate, as the case may be, being transferred,
and the Trustee shall cancel such Physical
Certificates or decrease the amount of such Temporary
Offshore Global Certificate so transferred.
(c) TRANSFERS OF INTERESTS IN THE PERMANENT OFFSHORE GLOBAL
CERTIFICATE OR OFFSHORE PHYSICAL CERTIFICATES. The Registrar shall register any
transfer of interests in the Permanent Offshore Global Certificate or Offshore
Physical Certificates without requiring any additional certification.
(d) TRANSFERS TO NON-U.S. PERSONS AT ANY TIME. The following
provisions shall apply with respect to any registration of any transfer of an
Initial Certificate to a Non-U.S. Person:
(i) Prior to the Offshore Certificates Exchange Date, the
Registrar shall register any proposed transfer of an
Initial Certificate to a Non-U.S. Person upon receipt
of a certificate substantially in the form set forth
as Exhibit C hereto from the proposed transferor.
(ii) On and after the Offshore Certificates Exchange Date,
the Registrar shall register any proposed transfer to
any Non-U.S. Person if the Initial Certificate to be
transferred is a U.S. Physical Certificate or an
interest in the U.S. Global Certificate, upon receipt
of a certificate substantially in the form of Exhibit
C from the proposed transferor. The Registrar shall
promptly send a copy of such certificate to the
Company.
(iii) (A) Upon receipt by the Registrar of (x) the
documents, if any, required by paragraph (ii) and (y)
instructions in accordance with DTC's and the
Registrar's procedures, the Registrar shall reflect
on its books and records the date of such transfer
and a decrease in the principal amount of such U.S.
Global Certificate in an amount equal to the
principal amount of the beneficial interest in such
U.S. Global Certificate to be transferred, and (B)
upon receipt by the Registrar of instructions given
in accordance
<PAGE> 25
-25-
with DTC's and the Registrar's procedures, the
Registrar shall reflect on its books and records the
date and an increase in the principal amount of the
Offshore Global Certificate in an amount equal to the
principal amount of the U.S. Physical Certificate or
the U.S. Global Certificate, as the case may be, to
be transferred, and the Trustee shall cancel the
Physical Certificate, if any, so transferred or
decrease the amount of such U.S. Global Certificate.
(e) PRIVATE PLACEMENT LEGEND. Upon the transfer, exchange or
replacement of Applicable Certificates not bearing the Private Placement Legend,
the Registrar shall deliver Applicable Certificates that do not bear the Private
Placement Legend. Upon the transfer, exchange or replacement of Applicable
Certificates bearing the Private Placement Legend, the Registrar shall deliver
only Applicable Certificates that bear the Private Placement Legend unless
either (i) the circumstances contemplated by paragraph (a)(i)(x) or (e)(ii) of
this Section 8.05 exist or (ii) there is delivered to the Registrar an Opinion
of Counsel to the effect that neither such legend nor the related restrictions
on transfer are required in order to maintain compliance with the provisions of
the Securities Act.
(f) GENERAL. By its acceptance of any Applicable Certificate
bearing the Private Placement Legend, each Holder of such an Applicable
Certificate acknowledges the restrictions on transfer of such Applicable
Certificate set forth in this Agreement and agrees that it will transfer such
Applicable Certificate only as provided in this Agreement. The Registrar shall
not register a transfer of any Applicable Certificate unless such transfer
complies with the restrictions on transfer of such Applicable Certificate set
forth in this Agreement. In connection with any transfer of Applicable
Certificates, each Applicable Certificateholder agrees by its acceptance of the
Applicable Certificates to furnish the Registrar or the Trustee such
certifications, legal opinions or other information as either of them may
reasonably require to confirm that such transfer is being made pursuant to an
exemption from, or a transaction not subject to, the registration requirements
of the Securities Act; provided that the Registrar shall not be required to
determine the sufficiency of any such certifications, legal opinions or other
information.
Until such time as no Applicable Certificates remain
Outstanding, the Registrar shall retain copies of all letters, notices and other
written communications received pursuant to Section 8.04 or this Section 8.05.
The Trustee, if not the Registrar at such time, shall have the right to inspect
and make copies of all such letters, notices or other written communications at
any reasonable time upon the giving of reasonable written notice to the
Registrar.
ARTICLE IX
MISCELLANEOUS PROVISIONS
Section 9.01. 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> 26
-26-
SECTION 9.02. 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 9.03. 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 9.04. 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> 27
-27-
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:
-------------------------------------------
Name: Fred L. deLeeuw
Title: Senior Director - Corporate Finance
WILMINGTON TRUST COMPANY,
as Trustee
By:
-------------------------------------------
Name:
Title:
<PAGE> 28
EXHIBIT A
FORM OF CERTIFICATE
REGISTERED
No. ______________
[THIS CERTIFICATE HAS NOT BEEN REGISTERED UNDER THE U.S. SECURITIES ACT OF 1933,
AS AMENDED (THE "SECURITIES ACT") OR ANY STATE SECURITIES LAWS, AND,
ACCORDINGLY, MAY NOT BE OFFERED OR SOLD WITHIN THE UNITED STATES OR TO, OR FOR
THE ACCOUNT OR BENEFIT OF, ANY PERSONS EXCEPT AS SET FORTH IN THE FOLLOWING
SENTENCE. BY ITS ACQUISITION HEREOF, THE HOLDER (1) REPRESENTS THAT (A) IT IS A
"QUALIFIED INSTITUTIONAL BUYER" (AS DEFINED IN RULE 144A UNDER THE SECURITIES
ACT), (B) IT IS AN INSTITUTIONAL "ACCREDITED INVESTOR" (AS DEFINED IN RULE
501(a)(1), (2), (3) OR (7) UNDER THE SECURITIES ACT) (AN "INSTITUTIONAL
ACCREDITED INVESTOR") OR (C) IT IS NOT A U.S. PERSON AND IS ACQUIRING THIS
CERTIFICATE IN AN OFFSHORE TRANSACTION IN COMPLIANCE WITH REGULATION S UNDER THE
SECURITIES ACT; (2) AGREES THAT IT WILL NOT, PRIOR TO EXPIRATION OF THE HOLDING
PERIOD APPLICABLE TO SALES OF THE CERTIFICATES UNDER RULE 144(K) UNDER THE
SECURITIES ACT (OR ANY SUCCESSOR PROVISION) RESELL OR OTHERWISE TRANSFER THIS
CERTIFICATE EXCEPT (A) TO A QUALIFIED INSTITUTIONAL BUYER IN COMPLIANCE WITH
RULE 144A UNDER THE SECURITIES ACT, (B) INSIDE THE UNITED STATES TO AN
INSTITUTIONAL ACCREDITED INVESTOR ACQUIRING $100,000 OR MORE AGGREGATE PRINCIPAL
AMOUNT OF SUCH CERTIFICATE, THAT, PRIOR TO SUCH TRANSFER, FURNISHES TO THE
TRUSTEE A SIGNED LETTER CONTAINING CERTAIN REPRESENTATIONS AND AGREEMENTS
RELATING TO THE RESTRICTIONS ON TRANSFER OF THIS CERTIFICATE (THE FORM OF WHICH
LETTER CAN BE OBTAINED FROM THE TRUSTEE), (C) OUTSIDE THE UNITED STATES IN AN
OFFSHORE TRANSACTION IN COMPLIANCE WITH RULE 904 UNDER THE SECURITIES ACT, (D)
PURSUANT TO THE EXEMPTION FROM REGISTRATION PROVIDED BY RULE 144 UNDER THE
SECURITIES ACT (IF AVAILABLE), (E) PURSUANT TO A REGISTRATION STATEMENT WHICH
HAS BEEN DECLARED EFFECTIVE UNDER THE SECURITIES ACT (AND WHICH CONTINUES TO BE
EFFECTIVE AT THE TIME OF SUCH TRANSFER), OR (F) TO ATLAS OR ANY SUBSIDIARY
THEREOF; (3) PRIOR TO SUCH TRANSFER (OTHER THAN A TRANSFER PURSUANT TO CLAUSE
2(E) ABOVE), IT WILL FURNISH TO THE TRUSTEE SUCH CERTIFICATIONS, LEGAL OPINIONS
OR OTHER INFORMATION AS THE TRUSTEE MAY REASONABLY REQUIRE TO CONFIRM THAT SUCH
TRANSFER IS BEING MADE PURSUANT TO AN EXEMPTION FROM, OR IN A TRANSACTION NOT
SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND (4) AGREES
THAT IT WILL DELIVER TO EACH PERSON TO WHOM THIS CERTIFICATE IS TRANSFERRED A
NOTICE SUBSTANTIALLY TO THE EFFECT OF THIS LEGEND. IN CONNECTION WITH ANY
TRANSFER OF THIS CERTIFICATE PRIOR TO THE EXPIRATION OF THE HOLDING PERIOD
APPLICABLE TO SALES OF THE CERTIFICATES UNDER RULE 144(K) UNDER THE SECURITIES
ACT (OR ANY SUCCESSOR PROVISION), THE HOLDER MUST CHECK THE APPROPRIATE BOX SET
FORTH ON THE REVERSE HEREOF RELATING TO THE MANNER OF SUCH TRANSFER AND SUBMIT
THIS CERTIFICATE TO THE TRUSTEE. IF THE PROPOSED TRANSFEREE IS AN INSTITUTIONAL
ACCREDITED INVESTOR OR IS A PURCHASER WHO IS NOT A U.S. PERSON, THE HOLDER MUST,
PRIOR TO SUCH TRANSFER, FURNISH TO THE TRUSTEE, SUCH CERTIFICATIONS, LEGAL
OPINIONS OR OTHER INFORMATION
<PAGE> 29
A-2
AS IT MAY REASONABLY REQUIRE TO CONFIRM THAT SUCH TRANSFER IS BEING MADE
PURSUANT TO AN EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE
REGISTRATION REQUIREMENTS OF THE SECURITIES ACT. THIS LEGEND WILL BE REMOVED
UPON THE EARLIER OF THE TRANSFER OF THE CERTIFICATES PURSUANT TO CLAUSE 2(E)
ABOVE OR UPON ANY TRANSFER OF THE CERTIFICATES UNDER RULE 144(K) UNDER THE
SECURITIES ACT (OR ANY SUCCESSOR PROVISION). AS USED HEREIN, THE TERMS "OFFSHORE
TRANSACTION", "UNITED STATES" AND "U.S. PERSON" HAVE THE MEANINGS GIVEN TO THEM
BY REGULATION S UNDER THE SECURITIES ACT. THE PASS THROUGH TRUST AGREEMENT
CONTAINS A PROVISION REQUIRING THE TRUSTEE TO REFUSE TO REGISTER ANY TRANSFER OF
THIS CERTIFICATE IN VIOLATION OF THE FOREGOING RESTRICTIONS.](a)
[UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE
DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION ("DTC"), TO THE TRUSTEE OR ITS
AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT, AND ANY CERTIFICATE
ISSUED IN EXCHANGE FOR THIS CERTIFICATE IS REGISTERED IN THE NAME OF CEDE & CO.
OR IN SUCH OTHER NAME AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC
(AND ANY PAYMENT HEREON IS MADE TO CEDE & CO. OR TO SUCH OTHER ENTITY AS IS
REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC), ANY TRANSFER, PLEDGE OR OTHER
USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL INASMUCH AS
THE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.
TRANSFERS OF THIS GLOBAL CERTIFICATE SHALL BE LIMITED TO TRANSFERS IN WHOLE, BUT
NOT IN PART, TO NOMINEES OF DTC OR TO A SUCCESSOR THEREOF OR SUCH SUCCESSOR'S
NOMINEE AND TRANSFERS OF PORTIONS OF THIS GLOBAL CERTIFICATE SHALL BE LIMITED TO
TRANSFERS MADE IN ACCORDANCE WITH THE RESTRICTIONS SET FORTH IN SECTIONS 8.05
AND 8.06 OF THE TRUST SUPPLEMENT OF THE PASS THROUGH TRUST AGREEMENT REFERRED TO
HEREIN.]
[BY ITS ACQUISITION HEREOF, THE HOLDER REPRESENTS THAT EITHER (A) NO ASSETS OF
AN EMPLOYEE BENEFIT PLAN SUBJECT TO TITLE I OF THE EMPLOYEE RETIREMENT
SECURITIES 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 BEEN
USED TO PURCHASE THIS CERTIFICATE OR (B) THE PURCHASE AND HOLDING OF THIS
CERTIFICATE ARE EXEMPT FROM THE PROHIBITED TRANSACTION RESTRICTIONS OF ERISA AND
THE CODE PURSUANT TO ONE OR MORE PROHIBITED TRANSACTION STATUTORY OR
ADMINISTRATIVE EXEMPTIONS.]
- --------------------
(a) Not to be included on the face of the Permanent Offshore Global Certificate.
<PAGE> 30
A-3
[GLOBAL CERTIFICATE](a)
ATLAS AIR 2000-1B PASS THROUGH TRUST
9.057% Atlas Air [Initial] [Exchange] Pass Through Certificate
Issuance Date: _______________
Final Expected Distribution Date: ________
Evidencing A Fractional Undivided Interest In The Atlas Air Pass Through Trust
2000-1B, The Property Of Which Shall Include Certain Equipment Notes Each
Secured By An Aircraft Lease 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 2000-1B Pass Through Trust (the "Trust")
created pursuant to a Pass Through Trust Agreement, dated as of January 28, 2000
(the "BASIC AGREEMENT"), between the Trustee and Atlas Air, Inc., a Delaware
corporation (the "Company"), as supplemented by Trust Supplement No. 2000-1B
thereto, dated as of January 28, 2000 (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 "9.057% Atlas Air [Initial]
[Exchange] Pass Through Certificates Series 2000-1B" (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.
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 and to the extent of funds then available
to the Trustee, there will be distributed on each January 2 and July 2 (a
"Regular Distribution Date"), commencing on July 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
- -------------------
(a) To be included only on each Global Certificate.
<PAGE> 31
A-4
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.
[The Holder of this Certificate is entitled to the benefits of
the Registration Rights Agreement, dated as of January 28, 2000, among the
Company, the Trustee and the Placement Agents named therein (the "Registration
Rights Agreement"). In the event that neither the consummation of the Exchange
Offer nor the declaration by the Commission of a Shelf Registration to be
effective (a "Registration Event") occurs on or prior to the 210th day after the
date of the issuance of the Certificates, the interest rate per annum borne by
the Equipment Notes shall be increased by 0.50%, from and including such 210th
day, to but excluding the date on which a Registration Event occurs. In the
event that the Shelf Registration Statement ceases to be effective at any time
during the period specified by the Registration Rights Agreement for more than
60 days, whether or not consecutive, during any 12-month period, the interest
rate per annum borne by the Equipment Notes shall be increased by 0.50% from the
61st day of the applicable 12-month period such Shelf Registration Statement
ceases to be effective until such time as the Shelf Registration Statement again
becomes effective.](a)
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.
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 AGREEMENT AND THIS CERTIFICATE SHALL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK.
Unless the certificate of authentication hereon has been
executed by the Trustee, by manual signature, this Certificate shall not be
entitled to any benefit under the Agreement or be valid for any purpose.
- ------------------
(a) To be included only on each Initial Certificate.
<PAGE> 32
A-5
IN WITNESS WHEREOF, the Trustee has caused this Certificate to
be duly executed.
Dated: [__________ __], 2000 ATLAS AIR
2000-1B PASS THROUGH TRUST
By: WILMINGTON TRUST COMPANY,
not in its individual capacity
but solely as Trustee
Attest: By:
-----------------------------
Name:
Title:
- --------------------
Authorized Signature
<PAGE> 33
A-6
[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
<PAGE> 34
A-7
[REVERSE OF CERTIFICATE]
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 of their affiliates. 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 therein 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, in the Borough of Manhattan, the City
of New York, 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 [$100,000](a) [$1,000](b) Fractional
Undivided Interest and integral multiples of $1,000 in excess thereof [except
that one Certificate may be in a denomination of less than $100,000]*. As
provided in the Agreement and subject to certain limitations therein set forth,
the Certificates are exchangeable for new Certificates of authorized
denominations evidencing the same aggregate Fractional Undivided Interest in the
Trust, as requested by the Certificateholder surrendering the same.
- ---------------
(a) To be included only on each Initial Certificate.
(b) To be included only on each Exchange Certificate.
<PAGE> 35
A-8
No service charge will be made for any such registration of
transfer or exchange, but the Trustee shall require payment by the Holder 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.
<PAGE> 36
A-9
FORM OF TRANSFER NOTICE
FOR VALUE RECEIVED the undersigned registered holder hereby
sell(s), assign(s) and transfer(s) unto
Insert Taxpayer Identification No.
- ----------------------------
- ----------------------------
please print or typewrite name and address including zip code of assignee
- ----------------------------
the within Certificate and all rights thereunder, hereby irrevocably
constituting and appointing
- ----------------------------
attorney to transfer said Certificate on the books of the Trustee with full
power of substitution in the premises.
[THE FOLLOWING PROVISION TO BE INCLUDED
ON ALL CERTIFICATES
EXCEPT EXCHANGE CERTIFICATES AND
PERMANENT OFFSHORE GLOBAL AND
UNLEGENDED OFFSHORE PHYSICAL CERTIFICATES]
In connection with any transfer of this Certificate occurring
prior to the date that is the earlier of (i) the date of Registration Event or
(ii) the end of the period referred to in Rule 144(k) of the Securities Act, the
undersigned confirms that without utilizing any general solicitation or general
advertising that:
[Check One]
[ ](a) this Certificate is being transferred in compliance with the
exemption from registration under the Securities Act of 1933, as
amended, provided by Rule 144A thereunder.
or
[ ](b) this Certificate is being transferred other than in accordance
with (a) above and documents are being furnished that comply
with the conditions of transfer set forth in this Certificate
and the Agreement.
If neither of the foregoing boxes is checked, the Trustee or other Registrar
shall not be obligated to register this Certificate in the name of any Person
other than the Holder hereof unless and until the conditions to any such
transfer of registration set forth herein and in Section 8.06 of the Trust
Supplement shall have been satisfied.
<PAGE> 37
A-10
Date: [Name of Transferor]
------------------- -----------------------------------
NOTE: The signature must correspond
with the name as written upon the
face of the within-mentioned
instrument in every particular,
Signature Guarantee: without alteration or any change
------------------- whatsoever.
TO BE COMPLETED BY PURCHASER IF (a) ABOVE IS CHECKED.
The undersigned represents and warrants that it is purchasing
this Certificate for its own account or an account with respect to which it
exercises sole investment discretion and that it and any such account is a
"qualified institutional buyer" within the meaning of Rule 144A under the
Securities Act of 1933, as amended, and is aware that the sale to it is being
made in reliance on Rule 144A and acknowledges that it has received such
information regarding the Company as the undersigned has requested pursuant to
Rule 144A or has determined not to request such information and that it is aware
that the transferor is relying upon the undersigned's foregoing representations
in order to claim the exemption from registration provided by Rule 144A.
Dated:
-------------------- ----------------------------------
NOTE: To be executed by an
executive officer.
<PAGE> 38
EXHIBIT B
FORM OF CERTIFICATE FOR UNLEGENDED CERTIFICATES
[DATE]
Wilmington Trust Company
One Rodney Square
1100 N. Market Street
Wilmington, DE 19890-0001
Attention: Corporate Trust Administration
Re: Atlas Air 2000-1B Pass Through Trust, Class B Pass Through
Trust Certificates
(the "Certificates")
Dear Sirs:
This letter relates to U.S. $__________ Fractional Undivided
Interest of Certificates represented by a Certificate (the "Legended
Certificate") which bears a legend outlining restrictions upon transfer of such
Legended Certificate. Pursuant to Section 3.01 of the Pass Through Trust
Agreement dated as of January 28, 2000 (the "Basic Agreement") between the
Trustee and Atlas Air, Inc., a Delaware corporation (the "Company"), as
supplemented by Trust Supplement No. 2000-1B thereto (the "Trust Supplement",
and together with the Basic Agreement, the "Agreement"), we hereby certify that
we are (or we will hold such securities on behalf of) a person outside the
United States to whom the Certificates could be transferred in accordance with
Rule 904 of Regulation S promulgated under the U.S. Securities Act of 1933, as
amended. Accordingly, you are hereby requested to exchange the legended
certificate for an unlegended certificate representing an identical principal
amount of Certificates, all in the manner provided for in the Agreement.
You and the Company are entitled to rely upon this letter and
are irrevocably authorized to produce this letter or a copy hereof to any
interested party in any administrative or legal proceedings or official inquiry
with respect to the matters covered hereby. Terms used in this certificate have
the meanings set forth in Regulation S.
Very truly yours,
[Name of Certificateholder]
By:
-------------------------------------
Authorized Signature
<PAGE> 39
EXHIBIT C
FORM OF CERTIFICATE TO BE DELIVERED IN CONNECTION
WITH TRANSFERS PURSUANT TO REGULATION S
[DATE]
Wilmington Trust Company
One Rodney Square
1100 N. Market Street
Wilmington, DE 19890-0001
Attention: Corporate Trust Administration
Re: Atlas Air 2000-1B Pass Through Trust (the "Trust"),
9.057% Atlas Air Pass Through Trust Certificates
Series 2000-1B (the "Certificates")
Sirs:
In connection with our proposed sale of $_______ Fractional
Undivided Interest of the Certificates, we confirm that such sale has been
effected pursuant to and in accordance with Regulation S under the Securities
Act of 1933, as amended, and, accordingly, we represent that:
(1) the offer of the Certificates was not made to a person in the
United States;
(2) either (a) at the time the buy order was originated, the transferee
was outside the United States or we and any person acting on our behalf
reasonably believed that the transferee was outside the United States
or (b) the transaction was executed in, on or through the facilities of
a designated off-shore securities market and neither we nor any person
acting on our behalf knows that the transaction has been pre-arranged
with a buyer in the United States;
(3) no directed selling efforts have been made in the United States in
contravention of the requirements of Rule 903(b) or Rule 904(b) of
Regulation S, as applicable; and
(4) the transaction is not part of a plan or scheme to evade the
registration requirements of the Securities Act.
In addition, if the sale is made during a restricted period
and the provisions of Rule 903(c)(3) or Rule 904(c)(1) of Regulation S are
applicable thereto, we confirm that such sale has been made in accordance with
the applicable provisions of Rule 903(c)(3) or Rule 904(c)(1), as the case may
be.
You and Atlas Air, Inc. are entitled to rely upon this letter
and are irrevocably authorized to produce this letter or a copy hereof to any
interested party in any administrative or legal proceedings or official inquiry
with respect to the matters covered hereby. Terms used in this certificate have
the meanings set forth in Regulation S.
Very truly yours,
[Name of Transferor]
By:
-------------------------------------
Authorized Signature
<PAGE> 40
EXHIBIT D
FORM OF CERTIFICATE TO BE
DELIVERED IN CONNECTION WITH
TRANSFERS TO NON-QIB ACCREDITED INVESTORS
[DATE]
Wilmington Trust Company
One Rodney Square
1100 N. Market Street
Wilmington, DE 19890-0001
Attention: Corporate Trust Administration
Re: Atlas Air 2000-1B Pass Through Trust (the "Trust"),
9.057% Atlas Air Pass Through Trust Certificates
Series 2000-1B (the "Certificates")
Dear Sirs:
In connection with our proposed purchase of $_______________
aggregate principal amount of the Certificates, we confirm that:
(1) We understand that any subsequent transfer of the Certificates is
subject to certain restrictions and conditions set forth in the Pass
Through Trust Agreement dated as of January 28, 2000 (the "Basic
Agreement") between the Trustee and Atlas Air, Inc., a Delaware
corporation (the "Company"), as supplemented by Trust Supplement No.
2000-1B thereto (the "Trust Supplement", and together with the Basic
Agreement, the "Agreement") relating to the Certificates and the
undersigned agrees to be bound by the Agreement, and not to resell,
pledge or otherwise transfer the Certificates except in compliance
with, such restrictions and conditions contained in the Agreement and
the Securities Act of 1933, as amended (the "Securities Act").
(2) We understand that the Certificates have not been registered under
the Securities Act, and that the Certificates may not be offered or
sold except as permitted in the following sentence. We agree, on our
own behalf and on behalf of any accounts for which we are acting as
hereinafter stated, that if we should sell any Certificate, we will do
so only (A) in accordance with Rule 144A under the Securities Act to a
"qualified institutional buyer" (as defined therein), (B) to an
institutional "accredited investor" (as defined below) that, prior to
such transfer, furnishes (or has furnished on its behalf by a U.S.
broker-dealer) to you and to the Company, a signed letter substantially
in the form of this letter, (C) outside the United States in accordance
with Rule 904 of Regulation S under the Securities Act, (D) pursuant to
the exemption from registration provided by Rule 144 under the
Securities Act, (E) pursuant to an effective registration statement
under the Securities Act, or (F) to the Company or any subsidiary
thereof, and we further agree to provide to any person purchasing any
of the Certificates from us a notice advising such purchaser that
resales of the Notes are restricted as stated herein. We further
understand that the Certificates purchased by us will bear a legend to
the foregoing effect.
(3) We understand that, on any proposed resale of any Certificates, we
will be required to furnish to you and the Company such certifications,
legal opinions and other information as you and the Company
<PAGE> 41
may reasonably require to confirm that the proposed sale complies with
the foregoing restrictions. We further understand that the Certificates
purchased by us will bear a legend to the foregoing effect.
(4) We are an institutional "accredited investor" (as defined in Rule
501(a)(1), (2), (3) or (7) of Regulation D under the Securities Act)
and have such knowledge and experience in financial and business
matters as to be capable of evaluating the merits and risks of our
investment in the Certificates and we and any accounts for which we are
acting are each able to bear the economic risk of our or its
investment.
(5) We are acquiring the Certificates purchased by us for our own
account or for one or more accounts (each of which is an institutional
"accredited investor") as to each of which we exercise sole investment
discretion.
You and the Company are entitled to rely upon this letter and
are irrevocably authorized to produce this letter or a copy hereof to any
interested party in any administrative or legal proceedings or official inquiry
with respect to the matters covered hereby.
Very truly yours,
[Name of Transferor]
By:
-------------------------------------
Authorized Signature
<PAGE> 1
EXHIBIT 4.7
TRUST SUPPLEMENT No. 2000-1C
Dated as of January 28, 2000
between
WILMINGTON TRUST COMPANY
as Trustee,
and
ATLAS AIR INC.
to
PASS THROUGH TRUST AGREEMENT
Dated as of January 28, 2000
$47,937,000
Atlas Air Pass Through Trust 2000-1C
9.702% Atlas Air
Pass Through Certificates,
Series 2000-lC
This Trust Supplement No. 2000-1C (herein called the "Trust
Supplement") dated as of January 28, 2000 between Atlas Air, Inc., a Delaware
corporation (the "Company"), and Wilmington Trust Company (the "Trustee") to the
Pass Through Trust Agreement dated as of January 28, 2000, 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
-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 2000-1C (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 Placement Agents have
contemporaneously herewith entered into an Escrow Agreement with the Escrow
Paying Agent pursuant to which the Placement Agents 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 Deposit 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, upon the occurrence of a Registration Event, 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;
<PAGE> 3
-3-
NOW THEREFORE, in consideration of the premises herein, it is agreed
between the Company and the Trustee as follows:
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
"9.702% Atlas Air Initial Pass Through Certificates, Series 2000-lC" (the
"Initial Certificates"). The exchange certificates which may be issued and
offered in exchange for the Initial Certificates pursuant to the Registration
Rights Agreement shall be known as the "9.702% Atlas Air Exchange Pass Through
Certificates Series 2000-1C" (the "Exchange Certificates"). The Initial
Certificates and the Exchange Certificates 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 $47,937,000.
(b) The Regular Distribution Dates with respect to any payment of
Scheduled Payments means January 2 and July 2 of each year, commencing on July
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 Placement Agents 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
<PAGE> 4
-4-
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.
(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):
Agent Members: has the meaning specified in Section 8.04 of 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 Certificates: 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.
<PAGE> 5
-5-
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.
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.
Cedel: means Clearstream Banking, societe anonyme.
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 December 31, 2000 (provided
that, if a labor strike occurs at Boeing prior to December 31, 2000, such date
shall be extended by adding thereto the number of days that such strike
continues in effect).
Deposit: has the meaning specified in the Deposit Agreement.
Deposit Agreement: means the Deposit Agreement dated as of January 28,
2000 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 Westdeutsche Landesbank Girozentrale, a German
banking institution organized under the laws of the State of North
Rhine-Westphalia, acting through its New York branch.
Distribution Date: means any Regular Distribution Date or Special
Distribution Date as the context requires.
DTC: means The Depositary Trust Company, and any successor entity to
DTC as depositary for the Applicable Certificates.
<PAGE> 6
-6-
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 January 28, 2000 relating to the Applicable Certificates, among the Escrow
Agent, the Escrow Paying Agent, the Trustee and the Placement Agents, 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.
Euroclear: means Morgan Guaranty Trust Company of New York, Brussels
office, as the operator of the Euroclear System.
Exchange Certificates: means the certificates substantially in the form
of Exhibit A attached hereto issued in exchange for the Initial Certificates
pursuant to the Registration Rights Agreement and authenticated hereunder.
Exchange Offer Registration Statement: has the meaning specified in the
Registration Rights Agreement.
Final Maturity Date: means July 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 4.02 of
this Trust Supplement.
Global Certificates: has the meaning specified in Section 8.01(c) of
this Trust Supplement.
Global Exchange Certificate: has the meaning specified in Section
8.01(e) 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.
Institutional Accredited Investor: means an institutional investor that
is an "accredited investor" within the meaning set forth in Rule 501(a)(1), (2),
(3) or (7) of Regulation D under the Securities Act.
Intercreditor Agreement: means the Intercreditor Agreement dated as of
January 28, 2000, 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
<PAGE> 7
-7-
trustee thereunder, as amended, supplemented or otherwise modified from time to
time in accordance with its terms.
Investors: means the Placement Agents 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 January 28, 2000 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 Morgan Stanley Capital Services Inc., a
Delaware corporation.
Non-U.S. Person: means a Person that is not a "U.S. Person," as defined
in Regulation S.
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.
Note Purchase Agreement: means the Note Purchase Agreement dated as of
January 28, 2000 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.
Offering Memorandum: means the offering memorandum dated January 20,
2000 relating to the offering of the Initial Certificates.
Offshore Certificates Exchange Date: has the meaning specified in
Section 8.01(c) of this Trust Supplement.
Offshore Global Certificates: has the meaning specified in Section
8.01(c) of this Trust Supplement.
<PAGE> 8
-8-
Offshore Physical Certificates: has the meaning specified in Section
8.01(d) of this Trust Supplement.
Other Agreements: means (i) the Basic Agreement as supplemented by
Trust Supplement No. 2000-lA dated as of the date hereof relating to Atlas Air
Pass Through Trust 2000-lA; (ii) the Basic Agreement as supplemented by Trust
Supplement No. 2000-lB dated as of the date hereof relating to Atlas Air Pass
Through Trust 2000-1B; and (iii) if Class D Certificates are issued, the Basic
Agreement as supplemented by Trust Supplement No. 2000-1D relating to Atlas Air
Pass Through Trust 2000-1D.
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 2000-lA and the
Atlas Air Pass Through Trust 2000-lB, each created on the date hereof, and if
Class D Certificates are issued, the Atlas Air Pass Through Trust 2000-1D.
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.
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.
Permanent Offshore Global Certificate: has the meaning specified in
Section 8.01(c) of this Trust Supplement.
Physical Certificates: has the meaning specified in Section 8.01(d) of
this Trust Supplement.
Placement Agents: means, collectively, Morgan Stanley & Co.
Incorporated, Deutsche Bank Securities Inc. and Salomon Smith Barney Inc.
<PAGE> 9
-9-
Placement Agreement: means the Placement Agreement dated January 20,
2000 among the Placement Agents and the Company, as the same may be amended,
supplemented or otherwise modified from time to time 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 the
Deposit 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 the
unused Deposit, 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 the unused Deposit, 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.
Private Placement Legend: has the meaning specified in Section 8.02(a)
of this Trust Supplement.
QIB: means a qualified institutional buyer as defined in Rule 144A.
Registration Event: has the meaning set forth in the Registration
Rights Agreement.
Registration Rights Agreement: means the Registration Rights Agreement
dated January 28, 2000 among the Placement Agents, the Trustee, the Other
Trustees and the Company, as amended, supplemented or otherwise modified from
time to time in accordance with its terms.
Registration Statement: has the meaning set forth in the Registration
Rights Agreement.
Regulation S: means Regulation S under the Securities Act or any
successor regulation thereto.
Rule 144A: means Rule 144A under the Securities Act or any successor
rule thereto.
Scheduled Delivery Date: has the meaning specified in the Note Purchase
Agreement.
Securities Act: means the U.S. Securities Act of 1933, as amended.
Shelf Registration Statement: has the meaning set forth in the
Registration Rights 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) or any Special Redemption Premium.
<PAGE> 10
-10-
Special Redemption Premium: means the premium payable by the Company
pursuant to Section 3(a)(i) of the Note Purchase Agreement.
Substitute Aircraft: has the meaning specified in the Note Purchase
Agreement.
Temporary Offshore Global Certificate: has the meaning specified in
Section 8.01(c) of this Trust Supplement.
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 Deposit or under the Escrow Agreement, 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.
U.S. Global Certificate: has the meaning specified in Section 8.01(b)
of this Trust Supplement.
U.S. Physical Certificates: has the meaning specified in Section
8.01(d) of this Trust Supplement.
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;
<PAGE> 11
-11-
(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:
(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
<PAGE> 12
-12-
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, 2001,
on the Equipment Notes held as Trust Property as of December 8, 2000, differs
from the amount thereof set forth for the Applicable Certificates on page 47 of
the Offering Memorandum, by no later than December 15, 2000 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) any reoptimization and the Delivery Period
Termination Date, in each case if there has been any change in the information
set forth in clauses (x), (y) and (z) below from that set forth in page 47 of
the Offering Memorandum, 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 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 Certificates pursuant to the Class B Trust
Agreement) to purchase, for the purchase prices set forth in the Class A Trust
Agreement and the Class B Trust Agreement, respectively, all, but not less than
all, of the Class A Certificates and the Class B Certificates upon ten days'
written notice to the Class A Trustee, and 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 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
<PAGE> 13
-13-
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
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 Certificates pursuant to the Class B Trust Agreement
or any purchase of the the Class B Certificates pursuant to clause (a) above) to
purchase all, but not less than all, of the Applicable Certificates, the Class A
Certificates and the Class B Certificates upon ten days' written notice to the
Trustee, the Class A 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 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 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
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), 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,
<PAGE> 14
-14-
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 Certificate", "Class A Certificateholder", "Class A Trust",
"Class A 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 Placement 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 Placement 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 all or a portion
of the Deposit on the Applicable Delivery Date in accordance with and to the
extent permitted by
<PAGE> 15
-15-
the terms of the Escrow Agreement and the Deposit Agreement and (B) the payment
of all, or a portion, of such Deposit 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 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
all or a portion of the Deposit 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 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 all or a portion of
the Deposit 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 portion of the Deposit remains 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.
<PAGE> 16
-16-
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 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;
<PAGE> 17
-17-
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> 18
-18-
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
THE CERTIFICATES
Section 8.01. ADDITIONS TO ARTICLE III OF THE BASIC AGREEMENT. In
addition to the provisions of Article III of the Basic Agreement, the following
provisions shall apply to the Applicable Trust:
(a) The Initial Certificates will be issued in minimum denominations of
$100,000 or integral multiples of $1,000 in excess thereof. The Exchange
Certificates will be issued in denominations of $1,000 or integral multiples
thereof. Each Exchange Certificate shall be dated the date of its
authentication. The aggregate Fractional Undivided Interest of Applicable
Certificates shall not at any time exceed $47,937,000;
(b) Initial Certificates offered and sold in reliance on Rule 144A
shall be issued initially in the form of one or more global Certificates in
definitive, fully registered form without interest coupons, substantially in the
form set forth as Exhibit A hereto (the "U.S. Global Certificate"), duly
executed and authenticated by the Trustee as hereinafter provided. The U.S.
Global Certificate will be registered in the name of a nominee for DTC and
deposited with the Trustee, as custodian for DTC. The aggregate principal amount
of the U.S. Global Certificate may from time to time be increased or decreased
by adjustments made on the records of DTC or its nominee, or of the Trustee, as
custodian for DTC or its nominee, as hereinafter provided;
(c) Initial Certificates offered and sold in offshore transactions in
reliance on Regulation S shall be issued initially in the form of one or more
temporary global Certificates in definitive, fully registered form without
interest coupons, substantially in the form set forth as Exhibit A hereto (the
"Temporary Offshore Global Certificate") duly executed and authenticated by the
Trustee as hereinafter provided. The Temporary Offshore Global Certificate will
be registered in the name of a nominee of DTC for credit to the account of the
Agent Members acting as depositaries for Euroclear and Cedel and deposited with
the Trustee as custodian for DTC. At any time following March 9, 2000 (the
"Offshore Certificates Exchange Date"), upon receipt by the Trustee of a
certificate substantially in the form of Exhibit B hereto, a single permanent
global Certificate in registered form substantially in the form set forth in
Exhibit A (the "Permanent Offshore Global Certificate"; and together with the
Temporary Offshore Global Certificate, the "Offshore Global Certificates"), duly
executed and authenticated by the Trustee as hereinafter provided, shall be
registered in the name of a nominee for DTC and deposited with the Trustee, as
custodian for DTC, and the Registrar shall reflect on its books and records the
date of such transfer and a decrease in the principal amount of any Temporary
Offshore Global Certificate in an
<PAGE> 19
-19-
amount equal to the principal amount of the beneficial interest in such
Temporary Offshore Global Certificate transferred. The U.S. Global Certificate
and the Offshore Global Certificates are sometimes referred to as the "Global
Certificates";
(d) Initial Certificates offered and sold to Institutional Accredited
Investors shall be issued in the form of permanent certificated Certificates in
registered form in substantially the form set forth as Exhibit A hereto (the
"U.S. Physical Certificates"). Certificates issued pursuant to Section 8.04(b)
in exchange for interests in any Offshore Global Certificate shall be in the
form of permanent certificated Certificates in registered form substantially in
the form set forth in Exhibit A (the "Offshore Physical Certificates"). The
Offshore Physical Certificates and U.S. Physical Certificates are sometimes
collectively herein referred to as the "Physical Certificates";
(e) The Exchange Certificates shall be issued in the form of one or
more global Certificates substantially in the form of Exhibit A hereto (each, a
"Global Exchange Certificate"), except that (i) the Private Placement Legend
(hereinafter defined) shall be omitted and (ii) such Exchange Certificates shall
contain such appropriate insertions, omissions, substitutions and other
variations from the form set forth in Exhibit A hereto relating to the nature of
the Exchange Certificates as the Responsible Officer of the Trustee executing
such Exchange Certificates on behalf of the Trust may determine, as evidenced by
such officer's execution on behalf of the Trust of such Exchange Certificates.
Such Global Exchange Certificates shall be in registered form and be registered
in the name of DTC and deposited with the Trustee, at its Corporate Trust
Office, as custodian for DTC. The aggregate principal amount of any Global
Exchange Certificate may from time to time be increased or decreased by
adjustments made on the records of the Trustee, as custodian for DTC for such
Global Exchange Certificate, which adjustments shall be conclusive as to the
aggregate principal amount of any such Global Exchange Certificate. Subject to
clause (i) and (ii) of the first sentence of this Section 8.01(e), the terms
hereof applicable to U.S. Global Certificates and/or Global Certificates shall
apply to the Global Exchange Certificates, mutatis mutandis;
(f) The definitive Applicable Certificates shall be in registered form
and shall be typed, printed, lithographed or engraved or produced by any
combination of these methods or may be produced in any other manner, all as
determined by the officers executing such Applicable Certificates, as evidenced
by their execution of such Applicable Certificates.
Section 8.02. RESTRICTIVE LEGENDS. (a) Subject to Section 8.05, unless
and until (i) an Initial Certificate is sold under an effective Shelf
Registration Statement or (ii) an Initial Certificate is exchanged for an
Exchange Certificate pursuant to an effective Exchange Offer Registration
Statement, in each case as provided for in the Registration Rights Agreement,
each Global Certificate (other than the Permanent Offshore Global Certificate)
and each U.S. Physical Certificate shall bear the following legend (the "Private
Placement Legend") on the face thereof:
[THIS CERTIFICATE HAS NOT BEEN REGISTERED UNDER THE U.S. SECURITIES ACT OF
1933, AS AMENDED (THE "SECURITIES ACT") OR ANY STATE SECURITIES LAWS, AND,
ACCORDINGLY, MAY NOT BE OFFERED OR SOLD WITHIN THE UNITED STATES OR TO, OR
FOR THE ACCOUNT OR BENEFIT OF, ANY PERSONS EXCEPT AS SET FORTH IN THE
FOLLOWING SENTENCE. BY ITS ACQUISITION HEREOF, THE HOLDER (1) REPRESENTS
THAT (A) IT IS A "QUALIFIED INSTITUTIONAL BUYER" (AS DEFINED IN RULE 144A
UNDER THE SECURITIES ACT), (B) IT IS AN INSTITUTIONAL "ACCREDITED INVESTOR"
(AS DEFINED IN RULE 501(a)(1), (2), (3) OR (7)
<PAGE> 20
-20-
UNDER THE SECURITIES ACT) (AN "INSTITUTIONAL ACCREDITED INVESTOR") OR (C)
IT IS NOT A U.S. PERSON AND IS ACQUIRING THIS CERTIFICATE IN AN OFFSHORE
TRANSACTION IN COMPLIANCE WITH REGULATION S UNDER THE SECURITIES ACT; (2)
AGREES THAT IT WILL NOT, PRIOR TO EXPIRATION OF THE HOLDING PERIOD
APPLICABLE TO SALES OF THE CERTIFICATES UNDER RULE 144(K) UNDER THE
SECURITIES ACT (OR ANY SUCCESSOR PROVISION) RESELL OR OTHERWISE TRANSFER
THIS CERTIFICATE EXCEPT (A) TO A QUALIFIED INSTITUTIONAL BUYER IN
COMPLIANCE WITH RULE 144A UNDER THE SECURITIES ACT, (B) INSIDE THE UNITED
STATES TO AN INSTITUTIONAL ACCREDITED INVESTOR ACQUIRING $100,000 OR MORE
AGGREGATE PRINCIPAL AMOUNT OF SUCH CERTIFICATE, THAT, PRIOR TO SUCH
TRANSFER, FURNISHES TO THE TRUSTEE A SIGNED LETTER CONTAINING CERTAIN
REPRESENTATIONS AND AGREEMENTS RELATING TO THE RESTRICTIONS ON TRANSFER OF
THIS CERTIFICATE (THE FORM OF WHICH LETTER CAN BE OBTAINED FROM THE
TRUSTEE), (C) OUTSIDE THE UNITED STATES IN AN OFFSHORE TRANSACTION IN
COMPLIANCE WITH RULE 904 UNDER THE SECURITIES ACT, (D) PURSUANT TO THE
EXEMPTION FROM REGISTRATION PROVIDED BY RULE 144 UNDER THE SECURITIES ACT
(IF AVAILABLE), (E) PURSUANT TO A REGISTRATION STATEMENT WHICH HAS BEEN
DECLARED EFFECTIVE UNDER THE SECURITIES ACT (AND WHICH CONTINUES TO BE
EFFECTIVE AT THE TIME OF SUCH TRANSFER), OR (F) TO ATLAS OR ANY SUBSIDIARY
THEREOF; (3) PRIOR TO SUCH TRANSFER (OTHER THAN A TRANSFER PURSUANT TO
CLAUSE 2(E) ABOVE), IT WILL FURNISH TO THE TRUSTEE SUCH CERTIFICATIONS,
LEGAL OPINIONS OR OTHER INFORMATION AS THE TRUSTEE MAY REASONABLY REQUIRE
TO CONFIRM THAT SUCH TRANSFER IS BEING MADE PURSUANT TO AN EXEMPTION FROM,
OR IN A TRANSACTION NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE
SECURITIES ACT AND (4) AGREES THAT IT WILL DELIVER TO EACH PERSON TO WHOM
THIS CERTIFICATE IS TRANSFERRED A NOTICE SUBSTANTIALLY TO THE EFFECT OF
THIS LEGEND. IN CONNECTION WITH ANY TRANSFER OF THIS CERTIFICATE PRIOR TO
THE EXPIRATION OF THE HOLDING PERIOD APPLICABLE TO SALES OF THE
CERTIFICATES UNDER RULE 144(K) UNDER THE SECURITIES ACT (OR ANY SUCCESSOR
PROVISION), THE HOLDER MUST CHECK THE APPROPRIATE BOX SET FORTH ON THE
REVERSE HEREOF RELATING TO THE MANNER OF SUCH TRANSFER AND SUBMIT THIS
CERTIFICATE TO THE TRUSTEE. IF THE PROPOSED TRANSFEREE IS AN INSTITUTIONAL
ACCREDITED INVESTOR OR IS A PURCHASER WHO IS NOT A U.S. PERSON, THE HOLDER
MUST, PRIOR TO SUCH TRANSFER, FURNISH TO THE TRUSTEE, SUCH CERTIFICATIONS,
LEGAL OPINIONS OR OTHER INFORMATION AS IT MAY REASONABLY REQUIRE TO CONFIRM
THAT SUCH TRANSFER IS BEING MADE PURSUANT TO AN EXEMPTION FROM, OR IN A
TRANSACTION NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE SECURITIES
ACT. THIS LEGEND WILL BE REMOVED UPON THE EARLIER OF THE TRANSFER OF THE
CERTIFICATES PURSUANT TO CLAUSE 2(E) ABOVE OR UPON ANY TRANSFER OF THE
CERTIFICATES UNDER RULE 144(K) UNDER THE SECURITIES ACT (OR ANY SUCCESSOR
PROVISION). AS USED HEREIN, THE TERMS
<PAGE> 21
-21-
"OFFSHORE TRANSACTION", "UNITED STATES" AND "U.S. PERSON" HAVE THE MEANINGS
GIVEN TO THEM BY REGULATION S UNDER THE SECURITIES ACT. THE PASS THROUGH
TRUST AGREEMENT CONTAINS A PROVISION REQUIRING THE TRUSTEE TO REFUSE TO
REGISTER ANY TRANSFER OF THIS CERTIFICATE IN VIOLATION OF THE FOREGOING
RESTRICTIONS.](a)
(b) Each Global Certificate shall also bear the following legend on the
face thereof:
UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE
DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION ("DTC"), TO THE TRUSTEE OR
ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT, AND ANY
CERTIFICATE ISSUED IN EXCHANGE FOR THIS CERTIFICATE IS REGISTERED IN THE
NAME OF CEDE & CO. OR IN SUCH OTHER NAME AS IS REQUESTED BY AN AUTHORIZED
REPRESENTATIVE OF DTC (AND ANY PAYMENT HEREON IS MADE TO CEDE & CO. OR TO
SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC),
ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO
ANY PERSON IS WRONGFUL INASMUCH AS THE REGISTERED OWNER HEREOF, CEDE & CO.,
HAS AN INTEREST HEREIN.
TRANSFERS OF THIS GLOBAL CERTIFICATE SHALL BE LIMITED TO TRANSFERS IN
WHOLE, BUT NOT IN PART, TO NOMINEES OF DTC OR TO A SUCCESSOR THEREOF OR
SUCH SUCCESSOR'S NOMINEE AND TRANSFERS OF PORTIONS OF THIS GLOBAL
CERTIFICATE SHALL BE LIMITED TO TRANSFERS MADE IN ACCORDANCE WITH THE
RESTRICTIONS SET FORTH IN SECTIONS 8.04 AND 8.05 OF THE TRUST SUPPLEMENT TO
THE PASS THROUGH TRUST AGREEMENT REFERRED TO HEREIN.
Section 8.03. TRANSFER AND EXCHANGE. An Applicable Certificateholder
may transfer an Applicable Certificate by written application to the Registrar
stating the name of the proposed transferee and otherwise complying with the
terms of this Agreement, including providing a written certificate or other
evidence of compliance with any restrictions on transfer. No such transfer shall
be effected until, and such transferee shall succeed to the rights of an
Applicable Certificateholder only upon, final acceptance and registration of the
transfer by the Registrar in the Register. Prior to the registration of any
transfer by an Applicable Certificateholder as provided herein, the Trustee
shall treat the person in whose name the Applicable Certificate is registered as
the owner thereof for all purposes, and the Trustee shall not be affected by
notice to the contrary. Furthermore, DTC shall, by acceptance of a Global
Certificate, agree that transfers of beneficial interests in such Global
Certificate may be effected only through a book-entry system maintained by DTC
(or its agent), and that ownership of a beneficial interest in the Certificate
shall be required to be reflected in a book entry. When Applicable Certificates
are presented to the Registrar with a request to register the transfer or to
exchange them for an equal face amount of Applicable Certificates of other
authorized denominations, the
- --------------
(a) Not to be included on the face of the Permanent Offshore Global
Certificate.
<PAGE> 22
-22-
Registrar shall register the transfer or make the exchange as requested if its
requirements for such transactions are met. To permit registrations of transfers
and exchanges in accordance with the terms, conditions and restrictions hereof,
the Trustee shall execute and authenticate Applicable Certificates at the
Registrar's request.
Section 8.04. BOOK-ENTRY PROVISIONS FOR U.S. GLOBAL CERTIFICATE AND
OFFSHORE GLOBAL CERTIFICATES. (a) Members of, or participants in, DTC ("Agent
Members") shall have no rights under this Agreement with respect to any Global
Certificate held on their behalf by DTC, or the Trustee as its custodian, and
DTC may be treated by the Trustee and any agent of the Trustee as the absolute
owner of such Global Certificate for all purposes whatsoever. Notwithstanding
the foregoing, nothing herein shall prevent the Trustee or any agent of the
Trustee from giving effect to any written certification, proxy or other
authorization furnished by DTC or shall impair, as between DTC and its Agent
Members, the operation of customary practices governing the exercise of the
rights of a holder of any Applicable Certificate. Upon the issuance of any
Global Certificate, the Registrar or its duly appointed agent shall record a
nominee of DTC as the registered holder of such Global Certificate.
(b) Transfers of any Global Certificate shall be limited to transfers
of such Global Certificate or Offshore Global Certificate in whole, but not in
part, to nominees of DTC, its successor or such successor's nominees. Beneficial
interests in the U.S. Global Certificate and any Offshore Global Certificate may
be transferred in accordance with the rules and procedures of DTC and the
provisions of Section 8.05. Beneficial interests in the U.S. Global Certificate
or an Offshore Global Certificate shall be delivered to all beneficial owners in
the form of U.S. Physical Certificates or Offshore Physical Certificates, as the
case may be, if (i) DTC notifies the Trustee that it is unwilling or unable to
continue as depositary for the U.S. Global Certificate or such Offshore Global
Certificate, as the case may be, and a successor depositary is not appointed by
the Trustee within 90 days of such notice or (ii) an Event of Default has
occurred and Applicable Certificateholders with fractional undivided interests
aggregating not less than a majority in interest in the Applicable Trust advise
the Trustee, the Company and DTC through Agent Members in writing that the
continuation of a book-entry system through DTC (or a successor thereto) is no
longer in the Applicable Certificateholders' best interests.
(c) Any beneficial interest in one of the Global Certificates that is
transferred to a Person who takes delivery in the form of an interest in the
other Global Certificate will, upon such transfer, cease to be an interest in
such Global Certificate and become an interest in the other Global Certificate
and, accordingly, will thereafter be subject to all transfer restrictions, if
any, and other procedures applicable to beneficial interests in such other
Global Certificate for as long as it remains such an interest.
(d) In connection with the transfer of the entire U.S. Global
Certificate or an entire Offshore Global Certificate to the beneficial owners
thereof pursuant to paragraph (b) of this Section 8.04, such U.S. Global
Certificate or Offshore Global Certificate, as the case may be, shall be deemed
to be surrendered to the Trustee for cancellation, and the Trustee shall
execute, authenticate and deliver, to each beneficial owner identified by DTC in
exchange for its beneficial interest in such U.S. Global Certificate or Offshore
Global Certificate, as the case may be, an equal aggregate principal amount of
U.S. Physical Certificates or Offshore Physical Certificates, as the case may
be, of authorized denominations.
(e) Any U.S. Physical Certificate delivered in exchange for an interest
in the U.S. Global Certificate pursuant to paragraph (b) of this Section 8.04
shall, except as otherwise provided by paragraph (f) of Section 8.05, bear the
Private Placement Legend.
<PAGE> 23
-23-
(f) Any Offshore Physical Certificate delivered in exchange for an
interest in an Offshore Global Certificate pursuant to paragraph (b) of this
Section shall, except as otherwise provided by paragraph (f) of Section 8.05,
bear the applicable legend regarding transfer restrictions set forth in Section
8.02(a).
(g) The registered holder of the U.S. Global Certificate or any
Offshore Global Certificate may grant proxies and otherwise authorize any
Person, including Agent Members and Persons that may hold interests through
Agent Members, to take any action which a Holder is entitled to take under this
Agreement or the Applicable Certificates.
Section 8.05. SPECIAL TRANSFER PROVISIONS. Unless and until (i) an
Initial Certificate is sold under an effective Shelf Registration Statement, or
(ii) an Initial Certificate is exchanged for an Exchange Certificate pursuant to
an effective Exchange Offer Registration Statement, in each case pursuant to the
Registration Rights Agreement, the following provisions shall apply to such
Initial Certificates:
(a) TRANSFERS TO NON-QIB INSTITUTIONAL ACCREDITED INVESTORS. The
following provisions shall apply with respect to the registration of any
proposed transfer of an Applicable Certificate to any Institutional Accredited
Investor which is not a QIB (excluding transfers to or by Non-U.S. Persons):
(i) The Registrar shall register the transfer of any Applicable
Certificate, whether or not such Applicable Certificate bears the
Private Placement Legend, if (x) the requested transfer is after
the time period referred to in Rule 144(k) under the Securities
Act as in effect with respect to such transfer or (y) the
proposed transferee has delivered to the Registrar a letter
substantially in the form of Exhibit D hereto and the aggregate
principal amount of the Applicable Certificates being transferred
is at least $100,000.
(ii) If the proposed transferor is an Agent Member holding a
beneficial interest in the U.S. Global Certificate, upon receipt
by the Registrar of (x) the documents, if any, required by
paragraph (i) and (y) instructions given in accordance with DTC's
and the Registrar's procedures, the Registrar shall reflect on
its books and records the date of the transfer and a decrease in
the principal amount of such U.S. Global Certificate in an amount
equal to the principal amount of the beneficial interest in such
U.S. Global Certificate to be transferred, and the Company shall
execute, and the Trustee shall authenticate and deliver to the
transferor or at its direction, one or more U.S. Physical
Certificates of like tenor and amount.
(b) TRANSFERS TO QIBS. The following provisions shall apply with
respect to the registration of any proposed transfer of an Initial Certificate
to a QIB (excluding Non-U.S. Persons):
(i) If the Initial Certificate to be transferred consists of U.S.
Physical Certificates or an interest in any Temporary Offshore
Global Certificate, the Registrar shall register the transfer if
such transfer is being made by a proposed transferor who has
checked the box provided for on the form of Initial Certificate
stating, or has otherwise advised the Trustee and the Registrar
in writing, that the sale has been made in compliance with the
provisions of Rule 144A to a transferee who has signed the
certification provided for on the form of Initial Certificate
stating, or has otherwise advised the Trustee and the Registrar
in writing, that it is purchasing the Initial Certificate for its
own account or an account with respect to which it exercises sole
investment discretion and that it, or the Person on whose behalf
it is acting with respect to any such
<PAGE> 24
-24-
account, is a QIB within the meaning of Rule 144A, and is aware
that the sale to it is being made in reliance on Rule 144A and
acknowledges that it has received such information regarding the
Trust and/or the Company as it has requested pursuant to Rule
144A or has determined not to request such information and that
it is aware that the transferor is relying upon its foregoing
representations in order to claim the exemption from registration
provided by Rule 144A.
(ii) Upon receipt by the Registrar of the documents referred to in
clause (i) above and instructions given in accordance with DTC's
and the Registrar's procedures therefor, the Registrar shall
reflect on its books and records the date of such transfer and an
increase in the principal amount of the U.S. Global Certificate
in an amount equal to the principal amount of the U.S. Physical
Certificates or interests in the Temporary Offshore Global
Certificate, as the case may be, being transferred, and the
Trustee shall cancel such Physical Certificates or decrease the
amount of such Temporary Offshore Global Certificate so
transferred.
(c) TRANSFERS OF INTERESTS IN THE PERMANENT OFFSHORE GLOBAL CERTIFICATE
OR OFFSHORE PHYSICAL CERTIFICATES. The Registrar shall register any transfer of
interests in the Permanent Offshore Global Certificate or Offshore Physical
Certificates without requiring any additional certification.
(d) TRANSFERS TO NON-U.S. PERSONS AT ANY TIME. The following provisions
shall apply with respect to any registration of any transfer of an Initial
Certificate to a Non-U.S. Person:
(i) Prior to the Offshore Certificates Exchange Date, the Registrar
shall register any proposed transfer of an Initial Certificate to
a Non-U.S. Person upon receipt of a certificate substantially in
the form set forth as Exhibit C hereto from the proposed
transferor.
(ii) On and after the Offshore Certificates Exchange Date, the
Registrar shall register any proposed transfer to any Non-U.S.
Person if the Initial Certificate to be transferred is a U.S.
Physical Certificate or an interest in the U.S. Global
Certificate, upon receipt of a certificate substantially in the
form of Exhibit C from the proposed transferor. The Registrar
shall promptly send a copy of such certificate to the Company.
(iii) (A) Upon receipt by the Registrar of (x) the documents, if any,
required by paragraph (ii) and (y) instructions in accordance
with DTC's and the Registrar's procedures, the Registrar shall
reflect on its books and records the date of such transfer and a
decrease in the principal amount of such U.S. Global Certificate
in an amount equal to the principal amount of the beneficial
interest in such U.S. Global Certificate to be transferred, and
(B) upon receipt by the Registrar of instructions given in
accordance with DTC's and the Registrar's procedures, the
Registrar shall reflect on its books and records the date and an
increase in the principal amount of the Offshore Global
Certificate in an amount equal to the principal amount of the
U.S. Physical Certificate or the U.S. Global Certificate, as the
case may be, to be transferred, and the Trustee shall cancel the
Physical Certificate, if any, so transferred or decrease the
amount of such U.S. Global Certificate.
<PAGE> 25
-25-
(e) PRIVATE PLACEMENT LEGEND. Upon the transfer, exchange or
replacement of Applicable Certificates not bearing the Private Placement Legend,
the Registrar shall deliver Applicable Certificates that do not bear the Private
Placement Legend. Upon the transfer, exchange or replacement of Applicable
Certificates bearing the Private Placement Legend, the Registrar shall deliver
only Applicable Certificates that bear the Private Placement Legend unless
either (i) the circumstances contemplated by paragraph (a)(i)(x) or (e)(ii) of
this Section 8.05 exist or (ii) there is delivered to the Registrar an Opinion
of Counsel to the effect that neither such legend nor the related restrictions
on transfer are required in order to maintain compliance with the provisions of
the Securities Act.
(f) GENERAL. By its acceptance of any Applicable Certificate bearing
the Private Placement Legend, each Holder of such an Applicable Certificate
acknowledges the restrictions on transfer of such Applicable Certificate set
forth in this Agreement and agrees that it will transfer such Applicable
Certificate only as provided in this Agreement. The Registrar shall not register
a transfer of any Applicable Certificate unless such transfer complies with the
restrictions on transfer of such Applicable Certificate set forth in this
Agreement. In connection with any transfer of Applicable Certificates, each
Applicable Certificateholder agrees by its acceptance of the Applicable
Certificates to furnish the Registrar or the Trustee such certifications, legal
opinions or other information as either of them may reasonably require to
confirm that such transfer is being made pursuant to an exemption from, or a
transaction not subject to, the registration requirements of the Securities Act;
provided that the Registrar shall not be required to determine the sufficiency
of any such certifications, legal opinions or other information.
Until such time as no Applicable Certificates remain Outstanding, the
Registrar shall retain copies of all letters, notices and other written
communications received pursuant to Section 8.04 or this Section 8.05. The
Trustee, if not the Registrar at such time, shall have the right to inspect and
make copies of all such letters, notices or other written communications at any
reasonable time upon the giving of reasonable written notice to the Registrar.
ARTICLE IX
MISCELLANEOUS PROVISIONS
Section 9.01. 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 9.02. 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 9.03. 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.
<PAGE> 26
-26-
Section 9.04. 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> 27
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:
---------------------------------------------
Name: Fred L. deLeeuw
Title: Senior Director - Corporate Finance
WILMINGTON TRUST COMPANY,
as Trustee
By:
----------------------------------------------
Name:
Title:
<PAGE> 28
EXHIBIT A
FORM OF CERTIFICATE
REGISTERED
No. ______________
[THIS CERTIFICATE HAS NOT BEEN REGISTERED UNDER THE U.S. SECURITIES ACT OF 1933,
AS AMENDED (THE "SECURITIES ACT") OR ANY STATE SECURITIES LAWS, AND,
ACCORDINGLY, MAY NOT BE OFFERED OR SOLD WITHIN THE UNITED STATES OR TO, OR FOR
THE ACCOUNT OR BENEFIT OF, ANY PERSONS EXCEPT AS SET FORTH IN THE FOLLOWING
SENTENCE. BY ITS ACQUISITION HEREOF, THE HOLDER (1) REPRESENTS THAT (A) IT IS A
"QUALIFIED INSTITUTIONAL BUYER" (AS DEFINED IN RULE 144A UNDER THE SECURITIES
ACT), (B) IT IS AN INSTITUTIONAL "ACCREDITED INVESTOR" (AS DEFINED IN RULE
501(a)(1), (2), (3) OR (7) UNDER THE SECURITIES ACT) (AN "INSTITUTIONAL
ACCREDITED INVESTOR") OR (C) IT IS NOT A U.S. PERSON AND IS ACQUIRING THIS
CERTIFICATE IN AN OFFSHORE TRANSACTION IN COMPLIANCE WITH REGULATION S UNDER THE
SECURITIES ACT; (2) AGREES THAT IT WILL NOT, PRIOR TO EXPIRATION OF THE HOLDING
PERIOD APPLICABLE TO SALES OF THE CERTIFICATES UNDER RULE 144(K) UNDER THE
SECURITIES ACT (OR ANY SUCCESSOR PROVISION) RESELL OR OTHERWISE TRANSFER THIS
CERTIFICATE EXCEPT (A) TO A QUALIFIED INSTITUTIONAL BUYER IN COMPLIANCE WITH
RULE 144A UNDER THE SECURITIES ACT, (B) INSIDE THE UNITED STATES TO AN
INSTITUTIONAL ACCREDITED INVESTOR ACQUIRING $100,000 OR MORE AGGREGATE PRINCIPAL
AMOUNT OF SUCH CERTIFICATE, THAT, PRIOR TO SUCH TRANSFER, FURNISHES TO THE
TRUSTEE A SIGNED LETTER CONTAINING CERTAIN REPRESENTATIONS AND AGREEMENTS
RELATING TO THE RESTRICTIONS ON TRANSFER OF THIS CERTIFICATE (THE FORM OF WHICH
LETTER CAN BE OBTAINED FROM THE TRUSTEE), (C) OUTSIDE THE UNITED STATES IN AN
OFFSHORE TRANSACTION IN COMPLIANCE WITH RULE 904 UNDER THE SECURITIES ACT, (D)
PURSUANT TO THE EXEMPTION FROM REGISTRATION PROVIDED BY RULE 144 UNDER THE
SECURITIES ACT (IF AVAILABLE), (E) PURSUANT TO A REGISTRATION STATEMENT WHICH
HAS BEEN DECLARED EFFECTIVE UNDER THE SECURITIES ACT (AND WHICH CONTINUES TO BE
EFFECTIVE AT THE TIME OF SUCH TRANSFER), OR (F) TO ATLAS OR ANY SUBSIDIARY
THEREOF; (3) PRIOR TO SUCH TRANSFER (OTHER THAN A TRANSFER PURSUANT TO CLAUSE
2(E) ABOVE), IT WILL FURNISH TO THE TRUSTEE SUCH CERTIFICATIONS, LEGAL OPINIONS
OR OTHER INFORMATION AS THE TRUSTEE MAY REASONABLY REQUIRE TO CONFIRM THAT SUCH
TRANSFER IS BEING MADE PURSUANT TO AN EXEMPTION FROM, OR IN A TRANSACTION NOT
SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND (4) AGREES
THAT IT WILL DELIVER TO EACH PERSON TO WHOM THIS CERTIFICATE IS TRANSFERRED A
NOTICE SUBSTANTIALLY TO THE EFFECT OF THIS LEGEND. IN CONNECTION WITH ANY
TRANSFER OF THIS CERTIFICATE PRIOR TO THE EXPIRATION OF THE HOLDING PERIOD
APPLICABLE TO SALES OF THE CERTIFICATES UNDER RULE 144(K) UNDER THE SECURITIES
ACT (OR ANY SUCCESSOR PROVISION), THE HOLDER MUST CHECK THE APPROPRIATE BOX SET
FORTH ON THE REVERSE HEREOF RELATING TO THE MANNER OF SUCH TRANSFER AND SUBMIT
THIS CERTIFICATE TO THE TRUSTEE. IF THE PROPOSED TRANSFEREE IS AN INSTITUTIONAL
ACCREDITED INVESTOR OR IS A PURCHASER WHO IS NOT A U.S. PERSON, THE HOLDER MUST,
PRIOR TO SUCH TRANSFER, FURNISH TO THE TRUSTEE, SUCH CERTIFICATIONS, LEGAL
OPINIONS OR OTHER INFORMATION
<PAGE> 29
A-2
AS IT MAY REASONABLY REQUIRE TO CONFIRM THAT SUCH TRANSFER IS BEING MADE
PURSUANT TO AN EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE
REGISTRATION REQUIREMENTS OF THE SECURITIES ACT. THIS LEGEND WILL BE REMOVED
UPON THE EARLIER OF THE TRANSFER OF THE CERTIFICATES PURSUANT TO CLAUSE 2(E)
ABOVE OR UPON ANY TRANSFER OF THE CERTIFICATES UNDER RULE 144(K) UNDER THE
SECURITIES ACT (OR ANY SUCCESSOR PROVISION). AS USED HEREIN, THE TERMS "OFFSHORE
TRANSACTION", "UNITED STATES" AND "U.S. PERSON" HAVE THE MEANINGS GIVEN TO THEM
BY REGULATION S UNDER THE SECURITIES ACT. THE PASS THROUGH TRUST AGREEMENT
CONTAINS A PROVISION REQUIRING THE TRUSTEE TO REFUSE TO REGISTER ANY TRANSFER OF
THIS CERTIFICATE IN VIOLATION OF THE FOREGOING RESTRICTIONS.](a)
[UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE
DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION ("DTC"), TO THE TRUSTEE OR ITS
AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT, AND ANY CERTIFICATE
ISSUED IN EXCHANGE FOR THIS CERTIFICATE IS REGISTERED IN THE NAME OF CEDE & CO.
OR IN SUCH OTHER NAME AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC
(AND ANY PAYMENT HEREON IS MADE TO CEDE & CO. OR TO SUCH OTHER ENTITY AS IS
REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC), ANY TRANSFER, PLEDGE OR OTHER
USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL INASMUCH AS
THE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.
TRANSFERS OF THIS GLOBAL CERTIFICATE SHALL BE LIMITED TO TRANSFERS IN WHOLE, BUT
NOT IN PART, TO NOMINEES OF DTC OR TO A SUCCESSOR THEREOF OR SUCH SUCCESSOR'S
NOMINEE AND TRANSFERS OF PORTIONS OF THIS GLOBAL CERTIFICATE SHALL BE LIMITED TO
TRANSFERS MADE IN ACCORDANCE WITH THE RESTRICTIONS SET FORTH IN SECTIONS 8.05
AND 8.06 OF THE TRUST SUPPLEMENT OF THE PASS THROUGH TRUST AGREEMENT REFERRED TO
HEREIN.]
[BY ITS ACQUISITION HEREOF, THE HOLDER REPRESENTS THAT EITHER (A) NO ASSETS OF
AN EMPLOYEE BENEFIT PLAN SUBJECT TO TITLE I OF THE EMPLOYEE RETIREMENT
SECURITIES 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 BEEN
USED TO PURCHASE THIS CERTIFICATE OR (B) THE PURCHASE AND HOLDING OF THIS
CERTIFICATE ARE EXEMPT FROM THE PROHIBITED TRANSACTION RESTRICTIONS OF ERISA AND
THE CODE PURSUANT TO ONE OR MORE PROHIBITED TRANSACTION STATUTORY OR
ADMINISTRATIVE EXEMPTIONS.]
- -----------------
(a) Not to be included on the face of the Permanent Offshore Global
Certificate.
<PAGE> 30
A-3
[GLOBAL CERTIFICATE](a)
ATLAS AIR 2000-1C PASS THROUGH TRUST
9.702% Atlas Air [Initial] [Exchange] Pass Through Certificate
Issuance Date: _______________
Final Expected Distribution Date: ________
Evidencing A Fractional Undivided Interest In The Atlas Air Pass Through Trust
2000-1C, The Property Of Which Shall Include Certain Equipment Notes Each
Secured By An Aircraft Lease 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 2000-1C Pass Through Trust (the "Trust") created
pursuant to a Pass Through Trust Agreement, dated as of January 28, 2000 (the
"BASIC AGREEMENT"), between the Trustee and Atlas Air, Inc., a Delaware
corporation (the "Company"), as supplemented by Trust Supplement No. 2000-1C
thereto, dated as of January 28, 2000 (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 "9.702% Atlas Air [Initial]
[Exchange] Pass Through Certificates Series 2000-1C" (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.
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 and to the extent of funds then available to the
Trustee, there will be distributed on each January 2 and July 2 (a "Regular
Distribution Date"), commencing on July 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
- -----------------
(a) To be included on the face of each Global Certificate.
<PAGE> 31
A-4
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.
[The Holder of this Certificate is entitled to the benefits of the
Registration Rights Agreement, dated as of January 28, 2000, among the Company,
the Trustee and the Placement Agents named therein (the "Registration Rights
Agreement"). In the event that neither the consummation of the Exchange Offer
nor the declaration by the Commission of a Shelf Registration to be effective (a
"Registration Event") occurs on or prior to the 210th day after the date of the
issuance of the Certificates, the interest rate per annum borne by the Equipment
Notes shall be increased by 0.50%, from and including such 210th day, to but
excluding the date on which a Registration Event occurs. In the event that the
Shelf Registration Statement ceases to be effective at any time during the
period specified by the Registration Rights Agreement for more than 60 days,
whether or not consecutive, during any 12-month period, the interest rate per
annum borne by the Equipment Notes shall be increased by 0.50% from the 61st day
of the applicable 12-month period such Shelf Registration Statement ceases to be
effective until such time as the Shelf Registration Statement again becomes
effective.](a)
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.
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 AGREEMENT AND THIS CERTIFICATE SHALL BE GOVERNED BY AND CONSTRUED
IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK.
Unless the certificate of authentication hereon has been executed by
the Trustee, by manual signature, this Certificate shall not be entitled to any
benefit under the Agreement or be valid for any purpose.
- ----------------
(a) To be included only on each Initial Certificate.
<PAGE> 32
A-5
IN WITNESS WHEREOF, the Trustee has caused this Certificate to be duly
executed.
Dated: [_______ __], 2000 ATLAS AIR
2000-1C PASS THROUGH TRUST
By: WILMINGTON TRUST COMPANY,
not in its individual capacity but solely as
Trustee
Attest: By:
----------------------------------------
Name:
Title:
- ------------------------------
Authorized Signature
<PAGE> 33
A-6
[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
<PAGE> 34
A-7
[REVERSE OF CERTIFICATE]
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
of their affiliates. 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 therein
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, in the Borough of Manhattan, the City of New York, 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 [$100,000](a) [$1,000](b) Fractional
Undivided Interest and integral multiples of $1,000 in excess thereof [except
that one Certificate may be in a denomination of less than $100,000]*. As
provided in the Agreement and subject to certain limitations therein set forth,
the Certificates are exchangeable for new Certificates of authorized
denominations evidencing the same aggregate Fractional Undivided Interest in the
Trust, as requested by the Certificateholder surrendering the same.
- ------------------
(a) To be included only on each Initial Certificate.
(b) To be included only on each Exchange Certificate.
<PAGE> 35
A-8
No service charge will be made for any such registration of transfer or
exchange, but the Trustee shall require payment by the Holder 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.
<PAGE> 36
A-9
FORM OF TRANSFER NOTICE
FOR VALUE RECEIVED the undersigned registered holder hereby sell(s),
assign(s) and transfer(s) unto
Insert Taxpayer Identification No.
- ----------------------------------
- ----------------------------------
please print or typewrite name and address including zip code of assignee
- ----------------------------------
the within Certificate and all rights thereunder, hereby irrevocably
constituting and appointing
- ----------------------------------
attorney to transfer said Certificate on the books of the Trustee with full
power of substitution in the premises.
[THE FOLLOWING PROVISION TO BE INCLUDED
ON ALL CERTIFICATES
EXCEPT EXCHANGE CERTIFICATES AND
PERMANENT OFFSHORE GLOBAL AND
UNLEGENDED OFFSHORE PHYSICAL CERTIFICATES]
In connection with any transfer of this Certificate occurring prior to
the date that is the earlier of (i) the date of Registration Event or (ii) the
end of the period referred to in Rule 144(k) of the Securities Act, the
undersigned confirms that without utilizing any general solicitation or general
advertising that:
[Check One]
[ ] (a) this Certificate is being transferred in compliance with the exemption
from registration under the Securities Act of 1933, as amended,
provided by Rule 144A thereunder.
or
[ ] (b) this Certificate is being transferred other than in accordance with
(a) above and documents are being furnished that comply with the
conditions of transfer set forth in this Certificate and the
Agreement.
If neither of the foregoing boxes is checked, the Trustee or other Registrar
shall not be obligated to register this Certificate in the name of any Person
other than the Holder hereof unless and until the conditions to any such
transfer of registration set forth herein and in Section 8.06 of the Trust
Supplement shall have been satisfied.
Date: [Name of Transferor]
----------------------- -----------------------------
<PAGE> 37
A-10
<TABLE>
<S> <C>
NOTE: The signature must correspond with the name as written
upon the face of the within-mentioned instrument in every
Signature Guarantee: particular, without alteration or any change whatsoever.
---------------------
</TABLE>
TO BE COMPLETED BY PURCHASER IF (a) ABOVE IS CHECKED.
The undersigned represents and warrants that it is purchasing this
Certificate for its own account or an account with respect to which it exercises
sole investment discretion and that it and any such account is a "qualified
institutional buyer" within the meaning of Rule 144A under the Securities Act of
1933, as amended, and is aware that the sale to it is being made in reliance on
Rule 144A and acknowledges that it has received such information regarding the
Company as the undersigned has requested pursuant to Rule 144A or has determined
not to request such information and that it is aware that the transferor is
relying upon the undersigned's foregoing representations in order to claim the
exemption from registration provided by Rule 144A.
Dated:
----------------------- ---------------------------------------------
NOTE: To be executed by an executive officer.
<PAGE> 38
EXHIBIT B
FORM OF CERTIFICATE FOR UNLEGENDED CERTIFICATES
[DATE]
Wilmington Trust Company
One Rodney Square
1100 N. Market Street
Wilmington, DE 19890-0001
Attention: Corporate Trust Administration
Re: Atlas Air 2000-1C Pass Through Trust, Class C Pass Through
Trust Certificates
(the "Certificates")
Dear Sirs:
This letter relates to U.S. $__________ Fractional Undivided Interest
of Certificates represented by a Certificate (the "Legended Certificate") which
bears a legend outlining restrictions upon transfer of such Legended
Certificate. Pursuant to Section 3.01 of the Pass Through Trust Agreement dated
as of January 28, 2000 (the "Basic Agreement") between the Trustee and Atlas
Air, Inc., a Delaware corporation (the "Company"), as supplemented by Trust
Supplement No. 2000-1C thereto (the "Trust Supplement", and together with the
Basic Agreement, the "Agreement"), we hereby certify that we are (or we will
hold such securities on behalf of) a person outside the United States to whom
the Certificates could be transferred in accordance with Rule 904 of Regulation
S promulgated under the U.S. Securities Act of 1933, as amended. Accordingly,
you are hereby requested to exchange the legended certificate for an unlegended
certificate representing an identical principal amount of Certificates, all in
the manner provided for in the Agreement.
You and the Company are entitled to rely upon this letter and are
irrevocably authorized to produce this letter or a copy hereof to any interested
party in any administrative or legal proceedings or official inquiry with
respect to the matters covered hereby. Terms used in this certificate have the
meanings set forth in Regulation S.
Very truly yours,
[Name of Certificateholder]
By:
------------------------------------
Authorized Signature
<PAGE> 39
EXHIBIT C
FORM OF CERTIFICATE TO BE DELIVERED IN CONNECTION
WITH TRANSFERS PURSUANT TO REGULATION S
[DATE]
Wilmington Trust Company
One Rodney Square
1100 N. Market Street
Wilmington, DE 19890-0001
Attention: Corporate Trust Administration
Re: Atlas Air 2000-1C Pass Through Trust (the "Trust"),
9.702% Atlas Air Pass Through Trust Certificates
Series 2000-1C (the "Certificates")
Sirs:
In connection with our proposed sale of $_______ Fractional Undivided
Interest of the Certificates, we confirm that such sale has been effected
pursuant to and in accordance with Regulation S under the Securities Act of
1933, as amended, and, accordingly, we represent that:
(1) the offer of the Certificates was not made to a person in the United
States;
(2) either (a) at the time the buy order was originated, the transferee was
outside the United States or we and any person acting on our behalf
reasonably believed that the transferee was outside the United States or
(b) the transaction was executed in, on or through the facilities of a
designated off-shore securities market and neither we nor any person acting
on our behalf knows that the transaction has been pre-arranged with a buyer
in the United States;
(3) no directed selling efforts have been made in the United States in
contravention of the requirements of Rule 903(b) or Rule 904(b) of
Regulation S, as applicable; and
(4) the transaction is not part of a plan or scheme to evade the
registration requirements of the Securities Act.
In addition, if the sale is made during a restricted period and the
provisions of Rule 903(c)(3) or Rule 904(c)(1) of Regulation S are applicable
thereto, we confirm that such sale has been made in accordance with the
applicable provisions of Rule 903(c)(3) or Rule 904(c)(1), as the case may be.
You and Atlas Air, Inc. are entitled to rely upon this letter and are
irrevocably authorized to produce this letter or a copy hereof to any interested
party in any administrative or legal proceedings or official inquiry with
respect to the matters covered hereby. Terms used in this certificate have the
meanings set forth in Regulation S.
Very truly yours,
[Name of Transferor]
By:
-------------------------------
Authorized Signature
<PAGE> 40
EXHIBIT D
FORM OF CERTIFICATE TO BE
DELIVERED IN CONNECTION WITH
TRANSFERS TO NON-QIB ACCREDITED INVESTORS
[DATE]
Wilmington Trust Company
One Rodney Square
1100 N. Market Street
Wilmington, DE 19890-0001
Attention: Corporate Trust Administration
Re: Atlas Air 2000-1C Pass Through Trust (the "Trust"),
9.702% Atlas Air Pass Through Trust Certificates
Series 2000-1C (the "Certificates")
Dear Sirs:
In connection with our proposed purchase of $_______________ aggregate
principal amount of the Certificates, we confirm that:
(1) We understand that any subsequent transfer of the Certificates is
subject to certain restrictions and conditions set forth in the Pass
Through Trust Agreement dated as of January 28, 2000 (the "Basic
Agreement") between the Trustee and Atlas Air, Inc., a Delaware corporation
(the "Company"), as supplemented by Trust Supplement No. 2000-1C thereto
(the "Trust Supplement", and together with the Basic Agreement, the
"Agreement") relating to the Certificates and the undersigned agrees to be
bound by the Agreement, and not to resell, pledge or otherwise transfer the
Certificates except in compliance with, such restrictions and conditions
contained in the Agreement and the Securities Act of 1933, as amended (the
"Securities Act").
(2) We understand that the Certificates have not been registered under the
Securities Act, and that the Certificates may not be offered or sold except
as permitted in the following sentence. We agree, on our own behalf and on
behalf of any accounts for which we are acting as hereinafter stated, that
if we should sell any Certificate, we will do so only (A) in accordance
with Rule 144A under the Securities Act to a "qualified institutional
buyer" (as defined therein), (B) to an institutional "accredited investor"
(as defined below) that, prior to such transfer, furnishes (or has
furnished on its behalf by a U.S. broker-dealer) to you and to the Company,
a signed letter substantially in the form of this letter, (C) outside the
United States in accordance with Rule 904 of Regulation S under the
Securities Act, (D) pursuant to the exemption from registration provided by
Rule 144 under the Securities Act, (E) pursuant to an effective
registration statement under the Securities Act, or (F) to the Company or
any subsidiary thereof, and we further agree to provide to any person
purchasing any of the Certificates from us a notice advising such purchaser
that resales of the Notes are restricted as stated herein. We further
understand that the Certificates purchased by us will bear a legend to the
foregoing effect.
(3) We understand that, on any proposed resale of any Certificates, we will
be required to furnish to you and the Company such certifications, legal
opinions and other information as you and the Company
<PAGE> 41
may reasonably require to confirm that the proposed sale complies with the
foregoing restrictions. We further understand that the Certificates
purchased by us will bear a legend to the foregoing effect.
(4) We are an institutional "accredited investor" (as defined in Rule
501(a)(1), (2), (3) or (7) of Regulation D under the Securities Act) and
have such knowledge and experience in financial and business matters as to
be capable of evaluating the merits and risks of our investment in the
Certificates and we and any accounts for which we are acting are each able
to bear the economic risk of our or its investment.
(5) We are acquiring the Certificates purchased by us for our own account
or for one or more accounts (each of which is an institutional "accredited
investor") as to each of which we exercise sole investment discretion.
You and the Company are entitled to rely upon this letter and are
irrevocably authorized to produce this letter or a copy hereof to any interested
party in any administrative or legal proceedings or official inquiry with
respect to the matters covered hereby.
Very truly yours,
[Name of Transferor]
By:
------------------------------------------
Authorized Signature
<PAGE> 1
EXHIBIT 4.8
REVOLVING CREDIT AGREEMENT
(2000-lA)
Dated as of January 28, 2000
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 2000-lA,
as Borrower
and
WESTDEUTSCHE LANDESBANK GIROZENTRALE,
NEW YORK BRANCH
as Liquidity Provider
Relating to
Atlas Air Pass Through Trust 2000-lA
8.707% Atlas Air Pass Through Certificates,
Series 2000-lA
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
<S> <C>
ARTICLE I DEFINITIONS
Section 1.01. Certain Defined Terms .......................................................... 1
ARTICLE II AMOUNT AND TERMS OF THE COMMITMENT
Section 2.01. The Advances ................................................................... 7
Section 2.02. Making the Advances ............................................................ 7
Section 2.03. Fees ........................................................................... 9
Section 2.04. Reduction or Termination of the Maximum Commitment ............................. 9
Section 2.05. Repayments of Interest Advances or the Final Advance ........................... 9
Section 2.06. Repayments of Provider Advances ................................................ 10
Section 2.07. Payments to the Liquidity Provider Under the Intercreditor Agreement ........... 11
Section 2.08. Book Entries ................................................................... 11
Section 2.09. Payments from Available Funds Only ............................................. 11
Section 2.10. Extension of the Expiry Date: Non-Extension Advance ........................... 11
ARTICLE III OBLIGATIONS OF THE BORROWER
Section 3.01. Increased Costs ................................................................ 12
Section 3.02. Capital Adequacy ............................................................... 13
Section 3.03. Payments Free of Deductions .................................................... 13
Section 3.04. Payments ....................................................................... 14
Section 3.05. Computations ................................................................... 14
Section 3.06. Payment on Non-Business Days ................................................... 14
Section 3.07. Interest ....................................................................... 15
Section 3.08. Replacement of Borrower ........................................................ 16
Section 3.09. Funding Loss Indemnification ................................................... 16
Section 3.10. Illegality ..................................................................... 17
ARTICLE IV CONDITIONS PRECEDENT
Section 4.01. Conditions Precedent to Effectiveness of Section 2.01 .......................... 17
Section 4.02. Conditions Precedent to Borrowing .............................................. 19
ARTICLE V COVENANTS
Section 5.01. Affirmative Covenants of the Borrower .......................................... 19
Section 5.02. Negative Covenants of the Borrower ............................................. 19
ARTICLE VI LIQUIDITY EVENTS OF DEFAULT
Section 6.01. Liquidity Events of Default .................................................... 20
ARTICLE VII MISCELLANEOUS
Section 7.01. Amendments, Etc. ............................................................... 20
Section 7.02. Notices, Etc. .................................................................. 20
</TABLE>
<PAGE> 3
<TABLE>
<S> <C> <C>
Section 7.03. No Waiver: Remedies ............................................................ 21
Section 7.04. Further Assurances ............................................................. 21
Section 7.05. Indemnification; Survival of Certain Provisions ................................ 21
Section 7.06. Liability of the Liquidity Provider ............................................ 22
Section 7.07. Costs, Expenses and Taxes ...................................................... 22
Section 7.08. Binding Effect; Participations ................................................. 23
Section 7.09. Severability ................................................................... 24
Section 7.10. GOVERNING LAW .................................................................. 24
Section 7.11. Submission to Jurisdiction; Waiver of Jury Trial; Waiver of Immunity ........... 24
Section 7.12. Execution in Counterparts ...................................................... 25
Section 7.13. Entirety ....................................................................... 25
Section 7.14. Headings ....................................................................... 26
Section 7.15. LIQUIDITY PROVIDER'S OBLIGATION TO MAKE ADVANCES ............................... 26
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
</TABLE>
<PAGE> 4
REVOLVING CREDIT AGREEMENT
This REVOLVING CREDIT AGREEMENT dated as of January 28, 2000,
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 Trust
(as defined below) (the "Borrower"), and WESTDEUTSCHE LANDESBANK GIROZENTRALE, a
German banking institution organized under the laws of the State of North
Rhine-Westphalia ("West LB"), acting through its New York branch (the "Liquidity
Provider").
W I T N E S S E T H:
WHEREAS, pursuant to the Class A 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 Trust is issuing the Class A
Certificates; and
WHEREAS, the Borrower, in order to support the timely payment
of a portion of the interest on the Class A 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).
"Applicable Margin" means, with respect to any Unpaid Advance
or Applied Provider Advance, 2.25%.
1
<PAGE> 5
"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, New York, New York or, so long as any Class A
Certificate is outstanding, the city and state in which the Class A
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.
"Deposit" 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 WestLB, acting through its New York branch, as Depositary,
pertaining to the Class A Certificates, as the
2
<PAGE> 6
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 limitation, reasonable fees and
disbursements of legal counsel and costs of investigation), provided
that Expenses shall not include any Taxes.
"Expiry Date" means January 26, 2001, 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).
3
<PAGE> 7
"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
Cash Collateral Account for the purpose of paying
interest on the Class A Certificates as contemplated
by Section 2.06(a) hereof and, in either case, ending
on the numerically corresponding day in the first
calendar month after the first day of the applicable
Interest Period; and
(ii) each subsequent period commencing on the last day of
the immediately preceding Interest Period and ending
on the numerically corresponding day in the first
calendar month after the first day of the applicable
Interest Period;
provided, however, that (I) 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) and
(II) each Interest Period shall end on or prior to the next Regular
Distribution Date.
"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
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.
4
<PAGE> 8
(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 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.
"Offering Memorandum" means the Offering Memorandum dated
January 20, 2000 relating to the Certificates.
"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.
"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 A Certificates, that would be
payable on the Class A Certificates on each of the three
5
<PAGE> 9
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
Certificates on such day and without regard to expected future payments
of principal on the Class A 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
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.
"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:
"Atlas", "Atlas Bankruptcy Event", "Certificates", "Class A Cash
Collateral Account", "Class A Certificates", "Class A
Certificateholders", "Class A Trust", "Class A Trust Agreement", "Class
A Trustee", "Class B Certificates", "Class C Certificates", "Closing
Date", "Controlling Party", "Corporate Trust Office", "Distribution
Date", "Downgraded Facility", "Equipment Notes", "Final Maturity Date",
"Financing Agreement",
6
<PAGE> 10
"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", "WestLB Fee Letter" 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 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
7
<PAGE> 11
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 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 the 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 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 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 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.
8
<PAGE> 12
(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. 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 an
event of default and shall not have occurred hereunder. Following the making of
any Advance pursuant to Section 2.02(b), (c) or (d) hereof to fund the Class A
Cash Collateral Account, the Liquidity Provider shall have no interest in or
rights to the Class A Cash Collateral Account, such Advance or any other amounts
from time to time on deposit in the Class A 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 WestLB 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 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.
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
9
<PAGE> 13
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 Cash Collateral Account, invested and withdrawn from the Class A 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 Cash
Collateral Account for the purpose of paying interest on the Class A
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-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 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 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
10
<PAGE> 14
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 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, 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 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
11
<PAGE> 15
such Expiry Date is on or after the date that is 15 days after the Final
Maturity Date for the Class A 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
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.
12
<PAGE> 16
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 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 Liquidity Provider 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-
13
<PAGE> 17
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 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 The Chase Manhattan Bank, ABA
No. 021-000-021, for account of Westdeutsche Landesbank Girozentrale, New York
Branch, Account No. 920-1-060663, Reference: Atlas Air, Inc., 2000-1A.
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
14
<PAGE> 18
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 Cash
Collateral Account to pay interest on the Class A 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 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 (other than any Unapplied Provider 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. 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 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, that such Final
Advance not be converted from a Base Rate Advance to a LIBOR Advance).
15
<PAGE> 19
(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 Unapplied Provider Advance shall bear interest in an
amount equal to the Investment Earnings on amounts on deposit in the Class A
Cash Collateral Account.
(f) Each amount not paid when due hereunder (whether fees,
commissions, expenses or other amounts or, to the extent permitted by applicable
law, installments of interest on Advances but excluding Advances) shall bear
interest at a rate per annum equal to the Base Rate plus 3.25% until paid.
(g) Each change in the Base Rate shall become effective
immediately. The rates of interest specified in this Section 3.07 with respect
to any Advance or other amount shall be referred to as the "Applicable Liquidity
Rate".
Section 3.08. Replacement of Borrower. 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 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.
16
<PAGE> 20
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;
(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 Offering Memorandum and specimen copies of
the Class A Certificates;
(v) An executed copy of each document, instrument, certificate
and opinion delivered on or before the Closing Date pursuant to the
Class A 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 Placement Agents, either addressed to the
Liquidity Provider or accompanied by a letter from the counsel
rendering such opinion to
17
<PAGE> 21
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.
(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 Placement Agents under the Placement
Agreement shall have been satisfied (unless any of such conditions precedent
shall have been waived by the Placement Agents) .
(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.
18
<PAGE> 22
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 Borrower without the prior written consent
of the Liquidity Provider, which consent shall not be unreasonably withheld or
delayed.
19
<PAGE> 23
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):
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: WESTDEUTSCHE LANDESBANK GIROZENTRALE
1211 Avenue of the Americas
New York, NY 10036
Attention: Transportation Finance
Telephone: (212) 852-6000
Telecopy: (212) 869-7634
20
<PAGE> 24
with a copy to:
WESTDEUTSCHE LANDESBANK GIROZENTRALE
1211 Avenue of the Americas
New York, NY 10036
Attention: Loan Administration
Telephone: (212) 852-6000
Telecopy: (212) 302-7946
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 WestLB Fee Letter (regardless of whether indemnified against pursuant
to said Sections or in such WestLB Fee
21
<PAGE> 25
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 WestLB 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 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 WestLB 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 costs and expenses
22
<PAGE> 26
(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 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 (not including Atlas or any affiliate of Atlas) 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.
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
23
<PAGE> 27
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.
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;
24
<PAGE> 28
(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 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.
25
<PAGE> 29
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.
26
<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 Trust, as Borrower
By:
-----------------------------------------
Name:
Title:
WESTDEUTSCHE LANDESBANK GIROZENTRALE, acting
through its New York Branch as Liquidity
Provider
By:
-----------------------------------------
Name:
Title:
By:
-----------------------------------------
Name:
Title:
<PAGE> 31
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 WESTDEUTSCHE
LANDESBANK GIROZENTRALE, acting through its New York Branch (the "Liquidity
Provider"), with reference to the Revolving Credit Agreement (2000-lA) dated as
of January 28, 2000, 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 Certificates which was payable on (the "Distribution Date") in
accordance with the terms and provisions of the Class A Trust Agreement
and the Class A 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 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 Certificates, the
Class B Certificates or the Class C Certificates, or interest on the
Class B Certificates or the Class C Certificates, (iii) was computed in
accordance with the provisions of the Class A Certificates, the Class A
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 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 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.
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.
<PAGE> 32
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> 33
SCHEDULE I TO INTEREST ADVANCE NOTICE OF BORROWING
[Insert Copy of Computations in accordance with
Interest Advance Notice of Borrowing]
<PAGE> 34
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
WESTDEUTSCHE LANDESBANK GIROZENTRALE, acting through its New York Branch (the
"Liquidity Provider"), with reference to the Revolving Credit Agreement
(2000-lA) dated as of January 28, 2000, 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 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 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
Certificates, or principal of, or interest or premium on, the Class B
Certificates or the Class C Certificates, (iii) was computed in
accordance with the provisions of the Class A Certificates, the Class A
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 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.
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.
<PAGE> 35
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> 36
SCHEDULE I TO NON-EXTENSION ADVANCE NOTICE OF BORROWING
[Insert Copy of computations in accordance
with Non-Extension Advance Notice of Borrowing]
<PAGE> 37
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
WESTDEUTSCHE LANDESBANK GIROZENTRALE, acting through its New York Branch (the
"Liquidity Provider"), with reference to the Revolving Credit Agreement
(2000-lA) dated as of January 28, 2000, 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 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
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
Certificates, or principal of, or interest or premium on, the Class B
Certificates or the Class C Certificates, (iii) was computed in
accordance with the provisions of the Class A Certificates, the Class A
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 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.
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.
<PAGE> 38
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> 39
SCHEDULE I TO DOWNGRADE ADVANCE NOTICE OF BORROWING
[Insert Copy of computations in accordance with
Downgrade Advance Notice of Borrowing]
<PAGE> 40
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 WESTDEUTSCHE
LANDESBANK GIROZENTRALE, acting through its New York Branch (the "Liquidity
Provider"), with reference to the Revolving Credit Agreement (2000-lA) dated as
of January 28, 2000, 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 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 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
Certificates, or principal of, or interest or premium on, the Class B
Certificates or the Class C Certificates, (iii) was computed in
accordance with the provisions of the Class A Certificates, the Class A
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 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.
(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).
- ----------------------
(1) Bracketed language may be included at Borrower's option
<PAGE> 41
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:
<PAGE> 42
SCHEDULE I TO FINAL ADVANCE NOTICE OF BORROWING
[Insert Copy of Computations in accordance with
Final Advance Notice of Borrowing]
<PAGE> 43
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 January 28, 2000,
between Wilmington Trust Company, as Subordination Agent, as agent and trustee
for the Atlas Air, Inc. Pass Through Trust, 2000-lA, as Borrower, and
WESTDEUTSCHE LANDESBANK GIROZENTRALE, acting through its New York 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> 44
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,
WESTDEUTSCHE LANDESBANK
New York Branch,
as Liquidity Provider
By:
-----------------------------------------
Name:
Title:
By:
-----------------------------------------
Name:
Title:
cc: Wilmington Trust Company, as Class A Trustee
<PAGE> 45
Annex VI to
Revolving Credit Agreement
NOTICE OF REPLACEMENT SUBORDINATION AGENT
[Date]
Attention:
Revolving Credit Agreement dated as of January 28, 2000,
between Wilmington Trust Company, as Subordination Agent, as agent and trustee
for the Atlas Air Pass Through Trust, 2000-lA, as Borrower, and WESTDEUTSCHE
LANDESBANK GIROZENTRALE, acting through its New York 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> 46
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> 1
EXHIBIT 4.9
REVOLVING CREDIT AGREEMENT
(2000-lB)
Dated as of January 28, 2000
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 2000-lB,
as Borrower
and
MORGAN STANLEY CAPITAL SERVICES, INC.,
as Liquidity Provider
Relating to
Atlas Air Pass Through Trust 2000-lB
9.057% Atlas Air Pass Through Certificates,
Series 2000-lB
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
ARTICLE I DEFINITIONS
Section 1.01. Certain Defined Terms 1
ARTICLE II AMOUNT AND TERMS OF THE COMMITMENT
Section 2.01. The Advances 9
Section 2.02. Making the Advances 9
Section 2.03. Fees 11
Section 2.04. Reduction or Termination of the Maximum Commitment 11
Section 2.05. Repayments of Interest Advances or the Final Advance 11
Section 2.06. Repayments of Provider Advances 12
Section 2.07. Payments to the Liquidity Provider Under the Intercreditor Agreement 13
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 14
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 16
Section 3.04. Payments 16
Section 3.05. Computations 17
Section 3.06. Payment on Non-Business Days 17
Section 3.07. Interest 17
Section 3.08. Replacement of Borrower 19
Section 3.09. Funding Loss Indemnification 19
Section 3.10. Illegality 19
ARTICLE IV CONDITIONS PRECEDENT
Section 4.01. Conditions Precedent to Effectiveness of Section 2.01 20
Section 4.02. Conditions Precedent to Borrowing 22
ARTICLE V COVENANTS
Section 5.01. Affirmative Covenants of the Borrower 22
Section 5.02. Negative Covenants of the Borrower 22
ARTICLE VI LIQUIDITY EVENTS OF DEFAULT
Section 6.01. Liquidity Events of Default 23
ARTICLE VII MISCELLANEOUS
Section 7.01. Amendments, Etc. 23
Section 7.02. Notices, Etc. 23
</TABLE>
<PAGE> 3
<TABLE>
<S> <C>
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 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 29
Section 7.14. Headings 29
Section 7.15. LIQUIDITY PROVIDER'S OBLIGATION TO MAKE ADVANCES 29
</TABLE>
<PAGE> 4
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
<PAGE> 5
REVOLVING CREDIT AGREEMENT
This REVOLVING CREDIT AGREEMENT dated as of January 28, 2000,
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> 6
"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, 0.50%.
"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, 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.
<PAGE> 7
"Certificates of Deposit" has the meaning assigned to such
term in the Deposit Agreement.
"Deposit" 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 January
28, 2000 between First Security Bank, National Association, as Escrow
Agent and Westdeutsche Landesbank Girozentrale, 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 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.
<PAGE> 8
"Expiry Date" means January 26, 2001, 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 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
<PAGE> 9
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, (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) and (III) each Interest Period shall end on or prior to the next
Regular Distribution Date.
"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
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.
<PAGE> 10
"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).
"Notice of Replacement Subordination Agent" has the meaning
specified in Section 3.08.
"Offering Memorandum" means the Offering Memorandum dated
January 20, 2000 relating to the Certificates.
"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.
"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).
<PAGE> 11
"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 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 Certificates", "Class B Cash Collateral Account", "Class B
Certificates", "Class B Certificateholder",
<PAGE> 12
"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", "Placement Agents", "Placement Agreement", "Pool Balance",
"Rating Agencies", "Ratings Confirmation", "Regular Distribution
Dates", "Replacement Liquidity Facility", "Responsible Officer",
"Scheduled Payment", "Special Payment", "Stated Interest Rate",
"Subordination Agent", "Taxes", "Threshold Rating", "Trust Agreement",
"Trustee", and "Written Notice".
<PAGE> 13
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.
(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
<PAGE> 14
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 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. 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 an
event of default shall not have occurred 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
<PAGE> 15
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.
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.
<PAGE> 16
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, 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
<PAGE> 17
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, 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.
<PAGE> 18
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
("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
<PAGE> 19
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 Liquidity Provider 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 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
<PAGE> 20
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., 2000-1B.
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 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.
<PAGE> 21
(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 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 Unapplied Provider Advance shall bear interest as
provided in Section 3.07(b) hereof plus an amount equal to the amount by which
(i) the Investment Earnings plus 0.50% per annum on the outstanding amount from
time to time of such Advance for the period for which interest is calculated
pursuant to clause (ii) hereof exceeds (ii) the amount of interest on such
Unapplied Provider Advance under Section 3.07(b). . (f) 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.
(g) Each change in the Base Rate shall become effective
immediately. The rates of interest specified in this Section 3.07 with respect
to any Advance or other amount shall be referred to as the "Applicable Liquidity
Rate".
Section 3.08. Replacement of Borrower. From time to time and
subject to the successor Borrower's meeting the eligibility requirements set
forth in Section 6.9 of the
<PAGE> 22
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 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:
<PAGE> 23
(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 Offering Memorandum, 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 Placement Agents, 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.
<PAGE> 24
(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 Placement Agents under the Placement
Agreement shall have been satisfied (unless any of such conditions precedent
shall have been waived by the Placement Agents).
(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.
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.
<PAGE> 25
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 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
<PAGE> 26
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):
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.
<PAGE> 27
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 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
<PAGE> 28
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 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
<PAGE> 29
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 (not including Atlas or any affiliate of Atlas) 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.
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
<PAGE> 30
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.
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 AMENDMENTS, RENEWALS,
SUPPLEMENTS OR MODIFICATIONS TO THIS AGREEMENT.
<PAGE> 31
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> 32
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:
----------------------------------------
Name:
Title:
MORGAN STANLEY CAPITAL SERVICES, INC.,
as Liquidity Provider
By:
----------------------------------------
Name:
Title:
<PAGE> 33
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 (2000-lB) dated as of January 28, 2000, 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 Certificates, the
Class B Certificates or the Class C Certificates, or interest on the
Class A 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 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
<PAGE> 34
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 agent and trustee
for the Class B Trust, as Borrower
By:
----------------------------------------
Name:
Title:
<PAGE> 35
SCHEDULE I TO INTEREST ADVANCE NOTICE OF BORROWING
[Insert Copy of Computations in accordance with
Interest Advance Notice of Borrowing]
<PAGE> 36
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 (2000-lB) dated as of January 28, 2000, 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, 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 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
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.
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
<PAGE> 37
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 agent and trustee
for the Class B Trust, as Borrower
By:
----------------------------------------
Name:
Title:
<PAGE> 38
SCHEDULE I TO NON-EXTENSION ADVANCE NOTICE OF BORROWING
[Insert Copy of computations in accordance with
Non-Extension Advance Notice of Borrowing]
<PAGE> 39
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 (2000-lB) dated as of January 28, 2000, 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
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.
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
<PAGE> 40
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 agent and trustee
for the Class B Trust, as Borrower
By:
----------------------------------------
Name:
Title:
<PAGE> 41
SCHEDULE I TO DOWNGRADE ADVANCE NOTICE OF BORROWING
[Insert Copy of computations in accordance with
Downgrade Advance Notice of Borrowing]
<PAGE> 42
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 (2000-lB) dated as of January 28, 2000, 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
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.
(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).
- --------------------
(1) Bracketed language may be included at Borrower's option
<PAGE> 43
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 agent and trustee
for the Class B Trust, as Borrower
By:
----------------------------------------
Name:
Title:
<PAGE> 44
SCHEDULE I TO FINAL ADVANCE NOTICE OF BORROWING
[Insert Copy of Computations in accordance with
Final Advance Notice of Borrowing]
<PAGE> 45
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 January 28, 2000,
between Wilmington Trust Company, as Subordination Agent, as agent and trustee
for the Atlas Air, Inc. Pass Through Trust, 2000-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> 46
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> 47
Annex VI to
Revolving Credit Agreement
NOTICE OF REPLACEMENT SUBORDINATION AGENT
[Date]
Attention:
Revolving Credit Agreement dated as of January 28, 2000,
between Wilmington Trust Company, as Subordination Agent, as agent and trustee
for the Atlas Air Pass Through Trust, 2000-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> 48
We ask that this transfer be effective as of _______________, ____.
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:
----------------------------------------
Name:
Title:
<PAGE> 49
Exhibit I to
Revolving Credit Agreement
FORM OF GUARANTEE AGREEMENT
<PAGE> 1
EXHIBIT 4.10
REVOLVING CREDIT AGREEMENT
(2000-1C)
Dated as of January 28, 2000
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 2000-1C,
as Borrower
and
MORGAN STANLEY CAPITAL SERVICES, INC.,
as Liquidity Provider
Relating to
Atlas Air Pass Through Trust 2000-1C
9.057% Atlas Air Pass Through Certificates,
Series 2000-1C
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C> <C>
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 10
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 12
ARTICLE III OBLIGATIONS OF THE BORROWER
Section 3.01. Increased Costs 13
Section 3.02. Capital Adequacy 13
Section 3.03. Payments Free of Deductions 14
Section 3.04. Payments 15
Section 3.05. Computations 15
Section 3.06. Payment on Non-Business Days 15
Section 3.07. Interest 15
Section 3.08. Replacement of Borrower 17
Section 3.09. Funding Loss Indemnification 17
Section 3.10. Illegality 17
ARTICLE IV CONDITIONS PRECEDENT
Section 4.01. Conditions Precedent to Effectiveness of Section 2.01 17
Section 4.02. Conditions Precedent to Borrowing 19
ARTICLE V COVENANTS
Section 5.01. Affirmative Covenants of the Borrower 19
Section 5.02. Negative Covenants of the Borrower 20
ARTICLE VI LIQUIDITY EVENTS OF DEFAULT
Section 6.01. Liquidity Events of Default 20
</TABLE>
<PAGE> 3
<TABLE>
<S> <C> <C>
ARTICLE VII MISCELLANEOUS
Section 7.01. Amendments, Etc. 21
Section 7.02. Notices, Etc. 21
Section 7.03. No Waiver: Remedies 21
Section 7.04. Further Assurances 22
Section 7.05. Indemnification; Survival of Certain Provisions 22
Section 7.06. Liability of the Liquidity Provider 22
Section 7.07. Costs, Expenses and Taxes 23
Section 7.08. Binding Effect; Participations 23
Section 7.09. Severability 24
Section 7.10. GOVERNING LAW 24
Section 7.11. Submission to Jurisdiction; Waiver of Jury Trial; Waiver of Immunity 25
Section 7.12. Execution in Counterparts 25
Section 7.13. Entirety 26
Section 7.14. Headings 26
Section 7.15. LIQUIDITY PROVIDER'S OBLIGATION TO MAKE ADVANCES 26
</TABLE>
<PAGE> 4
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
<PAGE> 5
REVOLVING CREDIT AGREEMENT
This REVOLVING CREDIT AGREEMENT dated as of January 28, 2000,
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.
1
<PAGE> 6
"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, 0.50%.
"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, 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.
2
<PAGE> 7
"Certificates of Deposit" has the meaning assigned to such
term in the Deposit Agreement.
"Deposit" 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 January
28, 2000 between First Security Bank, National Association, as Escrow
Agent and Westdeutsche Landesbank Girozentrale, 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 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.
3
<PAGE> 8
"Expiry Date" means January 26, 2001, 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 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
4
<PAGE> 9
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, (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) and (III) each Interest Period shall end on or prior to the next
Regular Distribution Date.
"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
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.
5
<PAGE> 10
"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).
"Notice of Replacement Subordination Agent" has the meaning
specified in Section 3.08.
"Offering Memorandum" means the Offering Memorandum dated
January 20, 2000 relating to the Certificates.
"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.
"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).
6
<PAGE> 11
"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 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 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", "Placement Agents", "Placement Agreement", "Pool Balance",
"Rating Agencies", "Ratings Confirmation", "Regular Distribution
Dates", "Replacement Liquidity Facility", "Responsible Officer",
"Scheduled Payment", "Special Payment", "Stated Interest Rate",
"Subordination Agent", "Taxes", "Threshold Rating", "Trust Agreement",
"Trustee", and "Written Notice".
7
<PAGE> 12
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.
(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
8
<PAGE> 13
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 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. 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 an
event of default shall not have occurred 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
9
<PAGE> 14
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.
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.
10
<PAGE> 15
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, 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.
11
<PAGE> 16
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, 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.
12
<PAGE> 17
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
("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
13
<PAGE> 18
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 Liquidity Provider 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 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
14
<PAGE> 19
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., 2000-1B.
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 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 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
15
<PAGE> 20
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 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 Unapplied Provider Advance shall bear interest as
provided in Section 3.07(b) hereof plus an amount equal to the amount by which
(i) the Investment Earnings plus 0.50% per annum on the outstanding amount from
time to time of such Advance for the period for which interest is calculated
pursuant to clause (ii) hereof exceeds (ii) the amount of interest on such
Unapplied Provider Advance under Section 3.07(b).
(f) 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.
(g) Each change in the Base Rate shall become effective
immediately. The rates of interest specified in this Section 3.07 with respect
to any Advance or other amount shall be referred to as the "Applicable Liquidity
Rate".
16
<PAGE> 21
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 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:
17
<PAGE> 22
(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 Offering Memorandum, 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 Placement Agents, 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
18
<PAGE> 23
(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 Placement Agents under the Placement
Agreement shall have been satisfied (unless any of such conditions precedent
shall have been waived by the Placement Agents) .
(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.
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:
19
<PAGE> 24
(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 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.
20
<PAGE> 25
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
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.
21
<PAGE> 26
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 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.
22
<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 participations and participations in rights to
receive interest payments hereunder) and under the other Operative Agreements to
such Persons as (not including Atlas or any affiliate of Atlas) 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
23
<PAGE> 28
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. 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.
Section 7.10. GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED
BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAW OF THE STATE OF NEW YORK.
24
<PAGE> 29
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 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.
25
<PAGE> 30
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.
26
<PAGE> 31
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:
--------------------------------------
Name:
Title:
MORGAN STANLEY CAPITAL SERVICES, INC.,
as Liquidity Provider
By:
--------------------------------------
Name:
Title:
<PAGE> 32
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 (2000-1C) dated as of January 28, 2000, 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 Certificates, the
Class B Certificates or the Class C Certificates, or interest on the
Class A 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 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
<PAGE> 33
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> 34
SCHEDULE I TO INTEREST ADVANCE NOTICE OF BORROWING
[Insert Copy of Computations in accordance with
Interest Advance Notice of Borrowing]
<PAGE> 35
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 (2000-1C) dated as of January 28, 2000, 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, 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 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
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.
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
<PAGE> 36
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> 37
SCHEDULE I TO NON-EXTENSION ADVANCE NOTICE OF BORROWING
[Insert Copy of computations in accordance with
Non-Extension Advance Notice of Borrowing]
<PAGE> 38
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 (2000-1C) dated as of January 28, 2000, 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
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.
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
<PAGE> 39
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> 40
SCHEDULE I TO DOWNGRADE ADVANCE NOTICE OF BORROWING
[Insert Copy of computations in accordance with
Downgrade Advance Notice of Borrowing]
<PAGE> 41
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 (2000-1C) dated as of January 28, 2000, 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
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.
(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).
- --------
(1) Bracketed language may be included at Borrower's option
<PAGE> 42
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:
<PAGE> 43
SCHEDULE I TO FINAL ADVANCE NOTICE OF BORROWING
[Insert Copy of Computations in accordance with
Final Advance Notice of Borrowing]
<PAGE> 44
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 January 28, 2000,
between Wilmington Trust Company, as Subordination Agent, as agent and trustee
for the Atlas Air, Inc. Pass Through Trust, 2000-1C, 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> 45
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> 46
Annex VI to
Revolving Credit Agreement
NOTICE OF REPLACEMENT SUBORDINATION AGENT
[Date]
Attention:
Revolving Credit Agreement dated as of January 28, 2000,
between Wilmington Trust Company, as Subordination Agent, as agent and trustee
for the Atlas Air Pass Through Trust, 2000-1C, 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> 47
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> 48
EXHIBIT I TO
REVOLVING CREDIT AGREEMENT
FORM OF GUARANTEE AGREEMENT
<PAGE> 1
EXHIBIT 4.11
ESCROW AND PAYING AGENT AGREEMENT
(Class A)
Dated as of January 28, 2000
among
FIRST SECURITY BANK, NATIONAL ASSOCIATION
as Escrow Agent
MORGAN STANLEY & CO. INCORPORATED
DEUTSCHE BANK SECURITIES INC.
SALOMON SMITH BARNEY INC.
as Placement Agents
WILMINGTON TRUST COMPANY
not in its individual capacity,
but solely as Pass Through Trustee
for and on behalf of
Atlas Air Pass Through Trust 2000-1A
as Pass Through Trustee
and
WILMINGTON TRUST COMPANY
as Paying Agent
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
----
<S> <C> <C>
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 4
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 9
SECTION 3. Payments 9
SECTION 4. Other Actions 10
SECTION 5. Representations and Warranties of the Escrow Agent 10
SECTION 6. Representations and Warranties of the Paying Agent 11
</TABLE>
<PAGE> 3
<TABLE>
<CAPTION>
Page
----
<S> <C> <C>
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 15
Exhibit A Escrow Receipt
Exhibit B Withdrawal Certificate
Exhibit C Prepayment Withdrawal Certificate
</TABLE>
<PAGE> 4
ESCROW AND PAYING AGENT AGREEMENT (Class A) dated as of
January 28, 2000 (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, DEUTSCHE
BANK SECURITIES INC. and SALOMON SMITH BARNEY INC., as Placement Agents of the
Certificates referred to below (the "Placement Agents" and together with their
respective transferees and assigns as registered owners of the Certificates, the
"Investors") under the Placement 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 January 28, 2000 (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
2000-1A (the "Pass Through Trust") pursuant to which the Atlas Air Pass Through
Trust, Series 2000-1A Certificates referred to therein (the "Certificates") are
being issued;
WHEREAS, Atlas and the Placement Agents have entered into a
Placement Agreement dated as of January 20, 2000 (as amended, modified or
supplemented from time to time in accordance with the terms thereof, the
"Placement Agreement") pursuant to which the Pass Through Trustee will issue and
sell the Certificates to the Placement Agents;
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 Placement Agents 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 Westdeutsche
Landesbank Girozentrale, acting through its New York Branch, as Depositary (the
"Depositary") under the Deposit Agreement, dated as of the date hereof between
the Depositary
<PAGE> 5
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
Placement Agents, 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).
Section 1.02. Instruction; Etc. The Placement Agents, 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
2
<PAGE> 6
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 amounts in the Account
(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 amount of the Deposit (as defined in the Deposit Agreement),
together with accrued and unpaid interest on the Deposit 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 December 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 amounts in the
Account (as defined in the Deposit Agreement) on such date, the Final Withdrawal
Date shall be deemed to be January 16, 2001 (or, if the December 31, 2000 date
has been extended as provided in this sentence, the fifteenth day after the
Delivery Period Termination Date).
Section 1.03. Initial Escrow Amount; Issuance of Escrow
Receipts. The Escrow Agent hereby directs the Placement Agents to, and the
Placement Agents 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
$124,639,000 for deposit on behalf of the Escrow Agent with the Depositary in
accordance with Section 2.1 of the Deposit Agreement. The Placement Agents
hereby instruct the Escrow Agent,
3
<PAGE> 7
upon receipt of such sum from the Placement Agents, 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 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.
4
<PAGE> 8
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 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
5
<PAGE> 9
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.
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 Deposit, 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.
6
<PAGE> 10
(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 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 Deposit
(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 Deposit (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,
7
<PAGE> 11
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 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 the unused portion
of the Deposit (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).
8
<PAGE> 12
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 Deposit (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 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);
9
<PAGE> 13
(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 governing its banking and
fiduciary powers 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
(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
10
<PAGE> 14
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 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.
11
<PAGE> 15
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
(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
12
<PAGE> 16
(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
(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 Placement Agents 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.
13
<PAGE> 17
IN WITNESS WHEREOF, the Escrow Agent, the Paying Agent, the
Placement Agents and the Pass Through Trustee have caused this Escrow and Paying
Agent Agreement (Class A) to be duly executed as of the day and year first above
written.
FIRST SECURITY BANK, NATIONAL
ASSOCIATION,
as Escrow Agent
By
---------------------------------------
Name:
Title:
<PAGE> 18
MORGAN STANLEY & CO. INCORPORATED
DEUTSCHE BANK SECURITIES INC.
SALOMON SMITH BARNEY INC.,
as Placement Agents
By: MORGAN STANLEY & CO.
INCORPORATED
By:
--------------------------------------
Name:
Title:
WILMINGTON TRUST COMPANY, not in its
individual capacity, but solely as Pass
Through Trustee for and on behalf of
Atlas Air Pass Through Trust 2000-1A
By:
--------------------------------------
Name:
Title:
WILMINGTON TRUST COMPANY,
as Paying Agent
By:
--------------------------------------
Name:
Title:
<PAGE> 19
EXHIBIT A
ATLAS AIR, INC. 2000-1A 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) dated as of January 28, 2000 (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, Deutsche Bank Securities Inc. and Salomon Smith
Barney Inc., as Placement Agents, 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.
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
<PAGE> 20
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:
<PAGE> 21
EXHIBIT B
WITHDRAWAL CERTIFICATE
(Class A)
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 January 28, 2000 (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> 22
EXHIBIT C
PREPAYMENT WITHDRAWAL CERTIFICATE
(Class A)
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 January 28, 2000 (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
<PAGE> 1
EXHIBIT 4.12
ESCROW AND PAYING AGENT AGREEMENT
(Class B)
Dated as of January 28, 2000
among
FIRST SECURITY BANK, NATIONAL ASSOCIATION
as Escrow Agent
MORGAN STANLEY & CO. INCORPORATED
DEUTSCHE BANK SECURITIES INC.
SALOMON SMITH BARNEY INC.
as Placement Agents
WILMINGTON TRUST COMPANY
not in its individual capacity,
but solely as Pass Through Trustee
for and on behalf of
Atlas Air Pass Through Trust 2000-1B
as Pass Through Trustee
and
WILMINGTON TRUST COMPANY
as Paying Agent
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
----
<S> <C>
SECTION 1. Escrow Agent 2
Section 1.01. Appointment of Escrow Agent 2
Section 1.02. Instruction; Etc 2
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 5
Section 1.09. Further Assurances 5
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 6
Section 2.04. Withholding Taxes 7
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 9
SECTION 6. Representations and Warranties of the Paying Agent 10
</TABLE>
<PAGE> 3
<TABLE>
<CAPTION>
Page
----
<S> <C>
SECTION 7. Indemnification 11
SECTION 8. Amendment, Etc. 12
SECTION 9. Notices 12
SECTION 10. Transfer 13
SECTION 11. Entire Agreement 13
SECTION 12. Governing Law 13
SECTION 13. Waiver of Jury Trial Right 13
SECTION 14. Counterparts 14
Exhibit A Escrow Receipt
Exhibit B Withdrawal Certificate
Exhibit C Prepayment Withdrawal Certificate
</TABLE>
<PAGE> 4
ESCROW AND PAYING AGENT AGREEMENT (Class B) dated as of
January 28, 2000 (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, DEUTSCHE
BANK SECURITIES INC. and SALOMON SMITH BARNEY INC., as Placement Agents of the
Certificates referred to below (the "Placement Agents" and together with their
respective transferees and assigns as registered owners of the Certificates, the
"Investors") under the Placement 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 January 28, 2000 (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
2000-1B (the "Pass Through Trust") pursuant to which the Atlas Air Pass Through
Trust, Series 2000-1B Certificates referred to therein (the "Certificates") are
being issued;
WHEREAS, Atlas and the Placement Agents have entered into a
Placement Agreement dated as of January 20, 2000 (as amended, modified or
supplemented from time to time in accordance with the terms thereof, the
"Placement Agreement") pursuant to which the Pass Through Trustee will issue and
sell the Certificates to the Placement Agents;
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 Placement Agents 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 Westdeutsche
Landesbank Girozentrale, acting through its New York Branch, as Depositary (the
"Depositary") under the Deposit Agreement, dated as of the date hereof between
the Depositary
1
<PAGE> 5
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
Placement Agents, 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).
Section 1.02. Instruction; Etc. The Placement Agents, 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
2
<PAGE> 6
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 amounts in the Account
(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 amount of the Deposit (as defined in the Deposit Agreement),
together with accrued and unpaid interest on the Deposit 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 December 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 amounts in the
Account (as defined in the Deposit Agreement) on such date, the Final Withdrawal
Date shall be deemed to be January 16, 2001 (or, if the December 31, 2000 date
has been extended as provided in this sentence, the fifteenth day after the
Delivery Period Termination Date).
Section 1.03. Initial Escrow Amount; Issuance of Escrow
Receipts. The Escrow Agent hereby directs the Placement Agents to, and the
Placement Agents 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 $44,741,000
for deposit on behalf of the Escrow Agent with the Depositary in accordance with
Section 2.1 of the Deposit Agreement. The Placement Agents hereby instruct the
Escrow Agent,
3
<PAGE> 7
upon receipt of such sum from the Placement Agents, 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 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.
4
<PAGE> 8
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 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
5
<PAGE> 9
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.
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 Deposit, 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.
6
<PAGE> 10
(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 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 Deposit
(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 Deposit (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,
7
<PAGE> 11
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 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 the unused portion
of the Deposit (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).
8
<PAGE> 12
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 Deposit (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 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);
9
<PAGE> 13
(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 governing its banking and
fiduciary powers 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
(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
10
<PAGE> 14
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 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.
11
<PAGE> 15
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
(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
12
<PAGE> 16
(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
(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 Placement Agents 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
13
<PAGE> 17
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> 18
IN WITNESS WHEREOF, the Escrow Agent, the Paying Agent, the
Placement Agents 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
----------------------------------------
Name:
Title:
<PAGE> 19
MORGAN STANLEY & CO. INCORPORATED
DEUTSCHE BANK SECURITIES INC.;
SALOMON SMITH BARNEY INC.,
as Placement Agents
By: MORGAN STANLEY & CO.
INCORPORATED
By:
----------------------------------------
Name:
Title:
WILMINGTON TRUST COMPANY, not in its
individual capacity, but solely as Pass
Through Trustee for and on behalf of Atlas
Air Pass Through Trust 2000-1B
By:
----------------------------------------
Name:
Title:
WILMINGTON TRUST COMPANY,
as Paying Agent
By:
----------------------------------------
Name:
Title:
<PAGE> 20
EXHIBIT A
ATLAS AIR, INC. 2000-1B 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 January 28, 2000 (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, Deutsche Bank Securities Inc. and Salomon Smith
Barney Inc., as Placement Agents, 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.
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
<PAGE> 21
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:
<PAGE> 22
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 January 28, 2000 (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:
Title:
Dated:
----------------
<PAGE> 23
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 January 28, 2000 (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:
Title:
<PAGE> 1
EXHIBIT 4.13
ESCROW AND PAYING AGENT AGREEMENT
(Class C)
Dated as of January 28, 2000
among
FIRST SECURITY BANK, NATIONAL ASSOCIATION
as Escrow Agent
MORGAN STANLEY & CO. INCORPORATED
DEUTSCHE BANK SECURITIES INC.
SALOMON SMITH BARNEY INC.
as Placement Agents
WILMINGTON TRUST COMPANY
not in its individual capacity,
but solely as Pass Through Trustee
for and on behalf of
Atlas Air Pass Through Trust 2000-1C
as Pass Through Trustee
and
WILMINGTON TRUST COMPANY
as Paying Agent
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
----
<S> <C>
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 4
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 9
SECTION 3. Payments 9
SECTION 4. Other Actions 10
SECTION 5. Representations and Warranties of the Escrow Agent 10
SECTION 6. Representations and Warranties of the Paying Agent 11
</TABLE>
<PAGE> 3
<TABLE>
<CAPTION>
Page
----
<S> <C>
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 15
Exhibit A Escrow Receipt
Exhibit B Withdrawal Certificate
Exhibit C Prepayment Withdrawal Certificate
</TABLE>
<PAGE> 4
ESCROW AND PAYING AGENT AGREEMENT (Class C) dated as of
January 28, 2000 (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, DEUTSCHE
BANK SECURITIES INC. and SALOMON SMITH BARNEY INC., as Placement Agents of the
Certificates referred to below (the "Placement Agents" and together with their
respective transferees and assigns as registered owners of the Certificates, the
"Investors") under the Placement 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 January 28, 2000 (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
2000-1C (the "Pass Through Trust") pursuant to which the Atlas Air Pass Through
Trust, Series 2000-1C Certificates referred to therein (the "Certificates") are
being issued;
WHEREAS, Atlas and the Placement Agents have entered into a
Placement Agreement dated as of January 20, 2000 (as amended, modified or
supplemented from time to time in accordance with the terms thereof, the
"Placement Agreement") pursuant to which the Pass Through Trustee will issue and
sell the Certificates to the Placement Agents;
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 Placement Agents 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 Westdeutsche
Landesbank Girozentrale, acting through its New York Branch, as Depositary (the
"Depositary") under the Deposit Agreement, dated as of the date hereof between
the Depositary
<PAGE> 5
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
Placement Agents, 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).
Section 1.02. Instruction; Etc. The Placement Agents, 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
<PAGE> 6
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 amounts in the Account
(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 amount of the Deposit (as defined in the Deposit Agreement),
together with accrued and unpaid interest on the Deposit 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 December 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 amounts in the
Account (as defined in the Deposit Agreement) on such date, the Final Withdrawal
Date shall be deemed to be January 16, 2001 (or, if the December 31, 2000 date
has been extended as provided in this sentence, the fifteenth day after the
Delivery Period Termination Date).
Section 1.03. Initial Escrow Amount; Issuance of Escrow
Receipts. The Escrow Agent hereby directs the Placement Agents to, and the
Placement Agents 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 $47,937,000
for deposit on behalf of the Escrow Agent with the Depositary in accordance with
Section 2.1 of the Deposit Agreement. The Placement Agents hereby instruct the
Escrow Agent,
<PAGE> 7
upon receipt of such sum from the Placement Agents, 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 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.
<PAGE> 8
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 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
<PAGE> 9
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.
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 Deposit, 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.
<PAGE> 10
(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 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 Deposit
(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 Deposit (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,
<PAGE> 11
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 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 the unused portion
of the Deposit (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).
<PAGE> 12
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 Deposit (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 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);
<PAGE> 13
(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 governing its banking and
fiduciary powers 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
(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
<PAGE> 14
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 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.
<PAGE> 15
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
(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
<PAGE> 16
(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
(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 Placement Agents 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
<PAGE> 17
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> 18
IN WITNESS WHEREOF, the Escrow Agent, the Paying Agent, the
Placement Agents 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
-------------------------------------------
Name:
Title:
<PAGE> 19
MORGAN STANLEY & CO. INCORPORATED
DEUTSCHE BANK SECURITIES INC.
SALOMON SMITH BARNEY INC.,
as Placement Agents
By: MORGAN STANLEY & CO. INCORPORATED
By
-------------------------------------------
Name:
Title:
WILMINGTON TRUST COMPANY, not in its
individual capacity, but solely as Pass
Through Trustee for and on behalf of Atlas
Air Pass Through Trust 2000-1C
By
-------------------------------------------
Name:
Title:
WILMINGTON TRUST COMPANY,
as Paying Agent
By
-------------------------------------------
Name:
Title:
<PAGE> 20
EXHIBIT A
ATLAS AIR, INC. 2000-1C 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 January 28, 2000 (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, Deutsche Bank Securities Inc. and Salomon Smith
Barney Inc., as Placement Agents, 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.
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
<PAGE> 21
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:
<PAGE> 22
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 January 28, 2000 (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> 23
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 January 28, 2000 (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:
<PAGE> 1
EXHIBIT 4.14
DEPOSIT AGREEMENT
(Class A)
Dated as of January 28, 2000
between
FIRST SECURITY BANK, NATIONAL ASSOCIATION
as Escrow Agent
and
WESTDEUTSCHE LANDESBANK GIROZENTRALE,
NEW YORK BRANCH
as Depositary
<PAGE> 2
DEPOSIT AGREEMENT (Class A) dated as of January 28, 2000 (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
WESTDEUTSCHE LANDESBANK GIROZENTRALE, a German banking institution organized
under the laws of the State of North Rhine-Westphalia, acting through its New
York Branch as depositary bank (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 January
28, 2000 (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 2000-1A pursuant to which the Atlas Air Pass
Through Trust, Series 2000-1A Certificates referred to therein (the
"Certificates") are being issued;
WHEREAS, Atlas and Morgan Stanley & Co. Incorporated, Deutsche
Bank Securities Inc. and Salomon Smith Barney Inc. (collectively, the "Placement
Agents" and, together with their respective transferees and assigns as
registered owners of the Certificates, the "Investors") have entered into a
Placement Agreement dated January 20, 2000 pursuant to which the Pass Through
Trustee will issue and sell the Certificates to the Placement Agents;
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 Placement Agents, 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");
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 Placement Agents 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
<PAGE> 3
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 an
account 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 Deposit and the Account (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 Account except as permitted by this Agreement.
SECTION 1.2 Establishment of Account. The Escrow Agent hereby
instructs the Depositary, and the Depositary agrees, to establish the deposit
account listed on Schedule I hereto (the "Account"), in the name of the Escrow
Agent and on the terms and conditions set forth in this Agreement.
SECTION 2.1 Deposit. The Escrow Agent shall direct the Placement
Agents to deposit with the Depositary on the date of this Agreement (the
"Deposit Date") in Federal (same day) funds by wire transfer to: Westdeutsche
Landesbank Girozentrale, New York Branch, Reference: Atlas 2000-1A, and the
Depositary shall accept from the Placement Agents, on behalf of the Escrow
Agent, the sum of US$124,639,000. Upon acceptance of such sum, the Depositary
shall (i) establish the deposit specified in Schedule I hereto maturing on the
date set forth therein (the "Deposit") and (ii) credit the Deposit to the
Account as set forth therein. No amount shall be deposited in the Account other
than the related Deposit.
SECTION 2.2 Interest. The Depositary shall pay interest on the
balance of the Deposit from and including the date of deposit to but excluding
the date of withdrawal at the rate of 8.707% 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 July 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 portion of the
Deposit is withdrawn on an Interest Payment Date); provided, however, that in
the event that no Registration Event (as defined in the Registration Rights
Agreement) occurs on or prior to the 210th day after the date of the issuance of
the Certificates (the "Registration Date"), the interest rate per annum paid by
the Depositary on each Deposit shall be increased by 0.50%, effective from and
including the 210th day after the date of issuance of the Certificates, to but
excluding the date on which a Registration Event
<PAGE> 4
occurs; and provided, further, that in the event that a Shelf Registration
Statement (as defined in the Registration Rights Agreement) ceases to be
effective for more than 60 days, whether or not consecutive, during any 12-month
period at any time before the earlier of (a) the second anniversary of the
effective date of the Shelf Registration Statement or (b) the sale pursuant to
the Shelf Registration Statement of all the Certificates covered thereby, the
interest rate per annum paid by the Depositary on each Deposit shall be
increased by 0.50% per annum from the 61st day of the applicable 12-month period
such Shelf Registration Statement ceases to be effective until such time as the
Shelf Registration Statement again becomes effective. Interest accrued on any
portion of the Deposit when 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 the 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 all or a
portion of the Deposit, except that at any time prior to the actual withdrawal
of the 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 the Deposit shall continue to be maintained by the
Depositary in accordance with the original terms thereof. Following such
withdrawal the balance in the Account shall be reduced by the amount of the
withdrawal. 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. If a Notice of Purchase Withdrawal is related to a single
aircraft, the amount of withdrawal specified therein shall not exceed the
maximum principal amount of the Equipment Notes for such aircraft, as specified
in the Offering Memorandum (as defined in the Note Purchase Agreement).
(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 all or a portion of the Deposit
together with all accrued and unpaid interest thereon 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 Account shall be reduced by the amount of the withdrawal.
Upon any Prepayment Withdrawal, the Depositary shall pay to the Paying Agent the
amount requested in the related Notice of Prepayment Withdrawal, provided that
after giving pro forma effect to any Prepayment Withdrawal, the remaining amount
of the Deposit shall not be less than the maximum principal amount of the
Equipment Notes issuable in respect of any aircraft scheduled to be delivered
after the date of such Prepayment Withdrawal, as specified in the Offering
Memorandum.
(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 the Deposit
together with the all accrued and unpaid interest on the Deposit to but
excluding the specified date of withdrawal (a "Final Withdrawal"), on such
<PAGE> 5
date as shall be specified in such Notice of Final Withdrawal. Following such
withdrawal the balance in the Account shall be zero and the Depositary shall
close such Account. If a Notice of Final Withdrawal has not been given to the
Depositary on or before December 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 amounts in the
Account on such date, the Depositary shall pay the amount of the Final
Withdrawal to the Paying Agent on January 16, 2001 (or if the December 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.
No notice of withdrawal shall be given within seven days after the date of the
immediately preceding notice of withdrawal.
SECTION 2.4 Re-Deposit. On the date of withdrawal of any portion
of the 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 deemed not to have been withdrawn for all
purposes hereof.
SECTION 3.1 Termination. This Agreement shall terminate on the
later of the date on which (i) all of the Deposit shall have been withdrawn and
paid as provided herein without any re-deposit and (ii) all accrued and unpaid
interest on the Deposit 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 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 Deposit 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. 50849-0,
Attention: Robert Hines, Reference: Atlas Air 2000-1A, 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 all or a portion
of the Deposit 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 Deposit howsoever arising. All payments on or in respect of the
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
<PAGE> 6
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 the Federal Republic of Germany 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 the 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 duly organized and validly existing as a German public
law banking institution under the laws of the State of Rhine-Westphalia
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 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;
<PAGE> 7
(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.
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:
WESTDEUTSCHE LANDESBANK GIROZENTRALE
1211 Avenue of the Americas
New York, NY 10036
Attention: Transportation Finance
Telecopier: 212-869-7634
<PAGE> 8
with a copy to:
Attention: Loan Administration
Telecopier: 212-302-7946
(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
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 the 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.
<PAGE> 9
SECTION 11. Governing Law. This Agreement, and the rights and
obligations of the Depositary and the Escrow Agent with respect to the Deposit,
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;
(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 Placement Agents or anyone else,
and has no and shall have no obligation to monitor, account for
<PAGE> 10
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.
<PAGE> 11
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
-------------------------------------
Name:
Title:
WESTDEUTSCHE LANDESBANK GIROZENTRALE,
New York Branch,
as Depositary
By
-------------------------------------
Name:
Title:
By
-------------------------------------
Name:
Title:
<PAGE> 12
Schedule I
Deposit
-------
(Class A)
<TABLE>
<CAPTION>
Date Deposit Amount Account No. Maturity Date
- ---- -------------- ----------- -------------
<S> <C> <C> <C>
January 28, 2000 $124,639,000 712-000 1 January 16, 2001
</TABLE>
<PAGE> 13
EXHIBIT A
NOTICE OF PURCHASE WITHDRAWAL
WESTDEUTSCHE LANDESBANK GIROZENTRALE
1211 Avenue of the Americas
New York, NY 10036
Attention: Transportation Finance
Telecopier: 212-869-7634
Attention: Loan Administration
Telecopier: 212-302-7946
Ladies and Gentlemen:
Reference is made to the Deposit Agreement (Class A) dated as of January
28, 2000 (the "Deposit Agreement") between First Security Bank, N.A., as Escrow
Agent, and Westdeutsche Landesbank Girozentrale, 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 following amount of the
Deposit: $_______, Account No. ____________.
The undersigned hereby directs that on _______________, the Depositary
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.
FIRST SECURITY BANK,
NATIONAL ASSOCIATION,
as Escrow Agent
By:
-----------------------------
Name:
Title:
Dated: _______ __, ____
<PAGE> 14
EXHIBIT B
NOTICE OF PREPAYMENT WITHDRAWAL
WESTDEUTSCHE LANDESBANK GIROZENTRALE
1211 Avenue of the Americas
New York, NY 10036
Attention: Transportation Finance
Telecopier: 212-869-7634
Attention: Loan Administration
Telecopier: 212-302-7946
Reference is made to the Deposit Agreement (Class A) dated as of January
28, 2000 (the "Deposit Agreement") between First Security Bank, N.A., as Escrow
Agent, and Westdeutsche Landesbank Girozentrale, 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 following amount of the
Deposit: $_______, Account No. ____________.
The undersigned hereby directs that on _______ the Depositary pay
$________ of the proceeds of such Deposit and accrued interest thereon to the
Paying Agent at Wilmington Trust Company, ABA# [ ], Account No.[ ], Reference:
Atlas Air.
FIRST SECURITY BANK,
NATIONAL ASSOCIATION,
as Escrow Agent
By:
-------------------------------
Name:
Title:
Dated: _______ __, ____
<PAGE> 15
EXHIBIT C
NOTICE OF FINAL WITHDRAWAL
WESTDEUTSCHE LANDESBANK GIROZENTRALE
1211 Avenue of the Americas
New York, NY 10036
Attention: Transportation Finance
Telecopier: 212-869-7634
Attention: Loan Administration
Telecopier: 212-302-7946
Ladies and Gentlemen:
Reference is made to the Deposit Agreement (Class A) dated as
of January 28, 2000 (the "Deposit Agreement") between First Security Bank, N.A.,
as Escrow Agent, and Westdeutsche Landesbank Girozentrale, 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 the
Deposit on _____________.
The undersigned hereby directs the Depositary to pay the
proceeds of the Deposit and accrued interest thereon to the Paying Agent at
Wilmington Trust Company, ABA# [ ], Account No. [ ], Reference: Atlas
Air.
FIRST SECURITY BANK,
NATIONAL ASSOCIATION,
as Escrow Agent
By:
----------------------------
Name:
Title:
Dated: _______ __, ______
<PAGE> 1
EXHIBIT 4.15
DEPOSIT AGREEMENT
(Class B)
Dated as of January 28, 2000
between
FIRST SECURITY BANK, NATIONAL ASSOCIATION
as Escrow Agent
and
Westdeutsche Landesbank Girozentrale,
New York Branch,
as Depositary
<PAGE> 2
DEPOSIT AGREEMENT (Class B) dated as of January 28, 2000 (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
WESTDEUTSCHE LANDESBANK GIROZENTRALE, a German banking institution organized
under the laws of the State of North Rhine-Westphalia, acting through its New
York Branch as depositary bank (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 January 28, 2000 (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 2000-1B pursuant to which the Atlas Air
Pass Through Trust, Series 2000-1B Certificates referred to therein (the
"Certificates") are being issued;
WHEREAS, Atlas and Morgan Stanley & Co. Incorporated, Deutsche
Bank Securities Inc. and Salomon Smith Barney Inc. (collectively, the "Placement
Agents" and, together with their respective transferees and assigns as
registered owners of the Certificates, the "Investors") have entered into a
Placement Agreement dated January 20, 2000 pursuant to which the Pass Through
Trustee will issue and sell the Certificates to the Placement Agents;
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 Placement Agents, 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");
WHEREAS, Atlas and the Depositary concurrently herewith are
entering into an Indemnity Agreement, dated as of the date hereof (the
"Indemnity Agreement"); and
<PAGE> 3
WHEREAS, the Placement Agents 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 an account 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 Deposit and the Account (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 Account except as permitted by this Agreement.
SECTION 1.2 Establishment of Account. The Escrow Agent hereby
instructs the Depositary, and the Depositary agrees, to establish the deposit
account listed on Schedule I hereto (the "Account"), in the name of the Escrow
Agent and on the terms and conditions set forth in this Agreement.
SECTION 2.1 Deposit. The Escrow Agent shall direct the
Placement Agents to deposit with the Depositary on the date of this Agreement
(the "Deposit Date") in Federal (same day) funds by wire transfer to:
Westdeutsche Landesbank Girozentrale, New York Branch, Reference: Atlas 2000-1B,
and the Depositary shall accept from the Placement Agents, on behalf of the
Escrow Agent, the sum of US$44,741,000. Upon acceptance of such sum, the
Depositary shall (i) establish the deposit specified in Schedule I hereto
maturing on the date set forth therein (the "Deposit") and (ii) credit the
Deposit to the Account as set forth therein. No amount shall be deposited in the
Account other than the related Deposit.
SECTION 2.2 Interest. The Depositary shall pay interest on the
balance of the Deposit from and including the date of deposit to but excluding
the date of withdrawal at the rate of 9.057% 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 July 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 portion of the
Deposit is withdrawn on an Interest Payment Date); provided, however, that in
the event that no Registration Event (as defined in the Registration Rights
Agreement) occurs on or prior to the 210th day after the date of the issuance of
the Certificates (the "Registration Date"), the interest rate per annum paid by
the Depositary
<PAGE> 4
on each Deposit shall be increased by 0.50%, effective from and including the
210th day after the date of issuance of the Certificates, to but excluding the
date on which a Registration Event occurs; and provided, further, that in the
event that a Shelf Registration Statement (as defined in the Registration Rights
Agreement) ceases to be effective for more than 60 days, whether or not
consecutive, during any 12-month period at any time before the earlier of (a)
the second anniversary of the effective date of the Shelf Registration Statement
or (b) the sale pursuant to the Shelf Registration Statement of all the
Certificates covered thereby, the interest rate per annum paid by the Depositary
on each Deposit shall be increased by 0.50% per annum from the 61st day of the
applicable 12-month period such Shelf Registration Statement ceases to be
effective until such time as the Shelf Registration Statement again becomes
effective. Interest accrued on any portion of the Deposit when 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 the 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 all or a
portion of the Deposit, except that at any time prior to the actual withdrawal
of the 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 the Deposit shall continue to be maintained by the
Depositary in accordance with the original terms thereof. Following such
withdrawal the balance in the Account shall be reduced by the amount of the
withdrawal. 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. If a Notice of Purchase Withdrawal is related to a single
aircraft, the amount of withdrawal specified therein shall not exceed the
maximum principal amount of the Equipment Notes for such aircraft, as specified
in the Offering Memorandum (as defined in the Note Purchase Agreement).
(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 all or a portion of the Deposit
together with all accrued and unpaid interest thereon 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 Account shall be reduced by the amount of the withdrawal.
Upon any Prepayment Withdrawal, the Depositary shall pay to the Paying Agent the
amount requested in the related Notice of Prepayment Withdrawal, provided that
after giving pro forma effect to any Prepayment Withdrawal, the remaining amount
of the Deposit shall not be less than the maximum principal amount of the
Equipment Notes issuable in respect of any aircraft scheduled to be delivered
after the date of such Prepayment Withdrawal, as specified in the Offering
Memorandum.
(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"),
<PAGE> 5
withdraw the entire amount of the Deposit together with the all accrued and
unpaid interest on the Deposit 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 Account shall be
zero and the Depositary shall close such Account. If a Notice of Final
Withdrawal has not been given to the Depositary on or before December 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 amounts in the Account on such date, the Depositary shall pay
the amount of the Final Withdrawal to the Paying Agent on January 16, 2001 (or
if the December 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.
No notice of withdrawal shall be given within seven days after the date of the
immediately preceding notice of withdrawal.
SECTION 2.4 Re-Deposit. On the date of withdrawal of any
portion of the 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 deemed not to have been withdrawn for
all purposes hereof.
SECTION 3.1 Termination. This Agreement shall terminate on the
later of the date on which (i) all of the Deposit shall have been withdrawn and
paid as provided herein without any re-deposit and (ii) all accrued and unpaid
interest on the Deposit 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 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 Deposit 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. 50849-0,
Attention: Robert Hines, Reference: Atlas Air 2000-1B, 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 all or a portion
of the Deposit 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 Deposit howsoever arising. All payments on or in respect of the
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
<PAGE> 6
(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 the Federal Republic of Germany 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 the 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 duly organized and validly existing as a German
public law banking institution under the laws of the State of
Rhine-Westphalia 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 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
<PAGE> 7
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.
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:
WESTDEUTSCHE LANDESBANK GIROZENTRALE
1211 Avenue of the Americas
<PAGE> 8
New York, NY 10036
Attention: Transportation Finance
Telecopier: 212-869-7634
with a copy to:
Attention: Loan Administration
Telecopier: 212-302-7946
(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
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 the 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
<PAGE> 9
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 Deposit,
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;
(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 Placement Agents 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.
<PAGE> 10
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
-------------------------------------
Name:
Title:
WESTDEUTSCHE LANDESBANK
GIROZENTRALE, New York Branch,
as Depositary
By
-------------------------------------
Name:
Title:
By
-------------------------------------
Name:
Title:
<PAGE> 11
Schedule I
Deposit
(Class B)
<TABLE>
<CAPTION>
Date Deposit Amount Account No. Maturity Date
- ---- -------------- ----------- -------------
<S> <C> <C> <C>
January 28, 2000 $44,741,000 712-000 2 January 16, 2001
</TABLE>
<PAGE> 12
EXHIBIT A
NOTICE OF PURCHASE WITHDRAWAL
WESTDEUTSCHE LANDESBANK GIROZENTRALE
1211 Avenue of the Americas
New York, NY 10036
Attention: Transportation Finance
Telecopier: 212-869-7634
Attention: Loan Administration
Telecopier: 212-302-7946
Ladies and Gentlemen:
Reference is made to the Deposit Agreement (Class B) dated as
of January 28, 2000 (the "Deposit Agreement") between First Security Bank, N.A.,
as Escrow Agent, and Westdeutsche Landesbank Girozentrale, 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 following amount of the
Deposit: $_______, Account No. ____________.
The undersigned hereby directs that on _______________, the
Depositary 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.
FIRST SECURITY BANK,
NATIONAL ASSOCIATION,
as Escrow Agent
By
-------------------------------------
Name:
Title:
Dated: ,
------- -- ------
<PAGE> 13
EXHIBIT B
NOTICE OF PREPAYMENT WITHDRAWAL
WESTDEUTSCHE LANDESBANK GIROZENTRALE
1211 Avenue of the Americas
New York, NY 10036
Attention: Transportation Finance
Telecopier: 212-869-7634
Attention: Loan Administration
Telecopier: 212-302-7946
Reference is made to the Deposit Agreement (Class B) dated as
of January 28, 2000 (the "Deposit Agreement") between First Security Bank, N.A.,
as Escrow Agent, and Westdeutsche Landesbank Girozentrale, 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 following amount of the
Deposit: $_______, Account No. ____________.
The undersigned hereby directs that on _______ the Depositary
pay $________ of the proceeds of such Deposit and accrued interest thereon to
the Paying Agent at Wilmington Trust Company, ABA# [ ], Account No.[ ],
Reference: Atlas Air.
FIRST SECURITY BANK,
NATIONAL ASSOCIATION,
as Escrow Agent
By
-------------------------------------
Name:
Title:
Dated:
------------------
<PAGE> 14
EXHIBIT C
NOTICE OF FINAL WITHDRAWAL
WESTDEUTSCHE LANDESBANK GIROZENTRALE
1211 Avenue of the Americas
New York, NY 10036
Attention: Transportation Finance
Telecopier: 212-869-7634
Attention: Loan Administration
Telecopier: 212-302-7946
Ladies and Gentlemen:
Reference is made to the Deposit Agreement (Class B) dated as
of January 28, 2000 (the "Deposit Agreement") between First Security Bank, N.A.,
as Escrow Agent, and Westdeutsche Landesbank Girozentrale, 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 the
Deposit on _____________.
The undersigned hereby directs the Depositary to pay the
proceeds of the Deposit and accrued interest thereon to the Paying Agent at
Wilmington Trust Company, ABA# [ ], Account No. [ ], Reference: Atlas Air.
FIRST SECURITY BANK,
NATIONAL ASSOCIATION,
as Escrow Agent
By
-------------------------------------
Name:
Title:
Dated: ,
------- -- ------
<PAGE> 1
EXHIBIT 4.16
DEPOSIT AGREEMENT
(Class C)
Dated as of January 28, 2000
between
FIRST SECURITY BANK, NATIONAL ASSOCIATION
as Escrow Agent
and
Westdeutsche Landesbank Girozentrale,
New York Branch,
as Depositary
<PAGE> 2
DEPOSIT AGREEMENT (Class C) dated as of January 28, 2000 (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
WESTDEUTSCHE LANDESBANK GIROZENTRALE, a German banking institution organized
under the laws of the State of North Rhine-Westphalia, acting through its New
York Branch as depositary bank (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 January 28, 2000 (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 2000-1C pursuant to which the Atlas Air
Pass Through Trust, Series 2000-1C Certificates referred to therein (the
"Certificates") are being issued;
WHEREAS, Atlas and Morgan Stanley & Co. Incorporated, Deutsche
Bank Securities Inc. and Salomon Smith Barney Inc. (collectively, the "Placement
Agents" and, together with their respective transferees and assigns as
registered owners of the Certificates, the "Investors") have entered into a
Placement Agreement dated January 20, 2000 pursuant to which the Pass Through
Trustee will issue and sell the Certificates to the Placement Agents;
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 Placement Agents, 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");
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 Placement Agents 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
<PAGE> 3
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 an
account 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 Deposit and the Account (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 Account except as permitted by this Agreement.
SECTION 1.2 Establishment of Account. The Escrow Agent hereby
instructs the Depositary, and the Depositary agrees, to establish the deposit
account listed on Schedule I hereto (the "Account"), in the name of the Escrow
Agent and on the terms and conditions set forth in this Agreement.
SECTION 2.1 Deposit. The Escrow Agent shall direct the
Placement Agents to deposit with the Depositary on the date of this Agreement
(the "Deposit Date") in Federal (same day) funds by wire transfer to:
Westdeutsche Landesbank Girozentrale, New York Branch, Reference: Atlas 2000-1C,
and the Depositary shall accept from the Placement Agents, on behalf of the
Escrow Agent, the sum of US$47,937,000. Upon acceptance of such sum, the
Depositary shall (i) establish the deposit specified in Schedule I hereto
maturing on the date set forth therein (the "Deposit") and (ii) credit the
Deposit to the Account as set forth therein. No amount shall be deposited in the
Account other than the related Deposit.
SECTION 2.2 Interest. The Depositary shall pay interest on the
balance of the Deposit from and including the date of deposit to but excluding
the date of withdrawal at the rate of 9.702% 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 July 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 portion of the
Deposit is withdrawn on an Interest Payment Date); provided, however, that in
the event that no Registration Event (as defined in the Registration Rights
Agreement) occurs on or prior to the 210th day after the date of the issuance of
the Certificates (the "Registration Date"), the interest rate per annum paid by
the Depositary on each Deposit shall be increased by 0.50%, effective from and
including the 210th day after the date of issuance of the Certificates, to but
excluding the date on which a Registration Event
<PAGE> 4
occurs; and provided, further, that in the event that a Shelf Registration
Statement (as defined in the Registration Rights Agreement) ceases to be
effective for more than 60 days, whether or not consecutive, during any 12-month
period at any time before the earlier of (a) the second anniversary of the
effective date of the Shelf Registration Statement or (b) the sale pursuant to
the Shelf Registration Statement of all the Certificates covered thereby, the
interest rate per annum paid by the Depositary on each Deposit shall be
increased by 0.50% per annum from the 61st day of the applicable 12-month period
such Shelf Registration Statement ceases to be effective until such time as the
Shelf Registration Statement again becomes effective. Interest accrued on any
portion of the Deposit when 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 the 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 all or a
portion of the Deposit, except that at any time prior to the actual withdrawal
of the 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 the Deposit shall continue to be maintained by the
Depositary in accordance with the original terms thereof. Following such
withdrawal the balance in the Account shall be reduced by the amount of the
withdrawal. 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. If a Notice of Purchase Withdrawal is related to a single
aircraft, the amount of withdrawal specified therein shall not exceed the
maximum principal amount of the Equipment Notes for such aircraft, as specified
in the Offering Memorandum (as defined in the Note Purchase Agreement).
(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 all or a portion of the Deposit
together with all accrued and unpaid interest thereon 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 Account shall be reduced by the amount of the withdrawal.
Upon any Prepayment Withdrawal, the Depositary shall pay to the Paying Agent the
amount requested in the related Notice of Prepayment Withdrawal, provided that
after giving pro forma effect to any Prepayment Withdrawal, the remaining amount
of the Deposit shall not be less than the maximum principal amount of the
Equipment Notes issuable in respect of any aircraft scheduled to be delivered
after the date of such Prepayment Withdrawal, as specified in the Offering
Memorandum.
(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 the Deposit
together with the all accrued and unpaid interest on the Deposit to but
excluding the specified date of withdrawal (a "Final Withdrawal"), on such
<PAGE> 5
date as shall be specified in such Notice of Final Withdrawal. Following such
withdrawal the balance in the Account shall be zero and the Depositary shall
close such Account. If a Notice of Final Withdrawal has not been given to the
Depositary on or before December 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 amounts in the
Account on such date, the Depositary shall pay the amount of the Final
Withdrawal to the Paying Agent on January 16, 2001 (or if the December 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.
No notice of withdrawal shall be given within seven days after the date of the
immediately preceding notice of withdrawal.
SECTION 2.4 Re-Deposit. On the date of withdrawal of any
portion of the 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 deemed not to have been withdrawn for
all purposes hereof.
SECTION 3.1 Termination. This Agreement shall terminate on the
later of the date on which (i) all of the Deposit shall have been withdrawn and
paid as provided herein without any re-deposit and (ii) all accrued and unpaid
interest on the Deposit 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 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 Deposit 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. 50849-0,
Attention: Robert Hines, Reference: Atlas Air 2000-1C, 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 all or a portion
of the Deposit 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 Deposit howsoever arising. All payments on or in respect of the
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
<PAGE> 6
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 the Federal Republic of Germany 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 the 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 duly organized and validly existing as a German
public law banking institution under the laws of the State of
Rhine-Westphalia 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 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;
<PAGE> 7
(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.
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:
WESTDEUTSCHE LANDESBANK GIROZENTRALE
1211 Avenue of the Americas
New York, NY 10036
Attention: Transportation Finance
Telecopier: 212-869-7634
<PAGE> 8
with a copy to:
Attention: Loan Administration
Telecopier: 212-302-7946
(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
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 the 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.
<PAGE> 9
SECTION 11. Governing Law. This Agreement, and the rights and
obligations of the Depositary and the Escrow Agent with respect to the Deposit,
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;
(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 Placement Agents 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.
<PAGE> 10
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
------------------------------------
Name:
Title:
WESTDEUTSCHE LANDESBANK
GIROZENTRALE, New York Branch,
as Depositary
By
------------------------------------
Name:
Title:
By
------------------------------------
Name:
Title:
<PAGE> 11
Schedule I
Deposit
(Class C)
<TABLE>
<CAPTION>
Date Deposit Amount Account No. Maturity Date
- ---------------- -------------- ----------- ----------------
<S> <C> <C> <C>
January 28, 2000 $47,937,000 712-000 3 January 16, 2001
</TABLE>
<PAGE> 12
EXHIBIT A
NOTICE OF PURCHASE WITHDRAWAL
WESTDEUTSCHE LANDESBANK GIROZENTRALE
1211 Avenue of the Americas
New York, NY 10036
Attention: Transportation Finance
Telecopier: 212-869-7634
Attention: Loan Administration
Telecopier: 212-302-7946
Ladies and Gentlemen:
Reference is made to the Deposit Agreement (Class C) dated as
of January 28, 2000 (the "Deposit Agreement") between First Security Bank, N.A.,
as Escrow Agent, and Westdeutsche Landesbank Girozentrale, 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 following amount of the
Deposit: $_______, Account No. ____________.
The undersigned hereby directs that on _______________, the
Depositary 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.
FIRST SECURITY BANK,
NATIONAL ASSOCIATION,
as Escrow Agent
By
------------------------------------
Name:
Title:
Dated: _______ __, ____
<PAGE> 13
EXHIBIT B
NOTICE OF PREPAYMENT WITHDRAWAL
WESTDEUTSCHE LANDESBANK GIROZENTRALE
1211 Avenue of the Americas
New York, NY 10036
Attention: Transportation Finance
Telecopier: 212-869-7634
Attention: Loan Administration
Telecopier: 212-302-7946
Reference is made to the Deposit Agreement (Class C) dated as
of January 28, 2000 (the "Deposit Agreement") between First Security Bank, N.A.,
as Escrow Agent, and Westdeutsche Landesbank Girozentrale, 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 following amount of the
Deposit: $_______, Account No. ____________.
The undersigned hereby directs that on _______ the Depositary
pay $________ of the proceeds of such Deposit and accrued interest thereon to
the Paying Agent at Wilmington Trust Company, ABA# [ ], Account No.[ ],
Reference: Atlas Air.
FIRST SECURITY BANK,
NATIONAL ASSOCIATION,
as Escrow Agent
By
------------------------------------
Name:
Title:
Dated: _______ __, ____
<PAGE> 14
EXHIBIT C
NOTICE OF FINAL WITHDRAWAL
WESTDEUTSCHE LANDESBANK GIROZENTRALE
1211 Avenue of the Americas
New York, NY 10036
Attention: Transportation Finance
Telecopier: 212-869-7634
Attention: Loan Administration
Telecopier: 212-302-7946
Ladies and Gentlemen:
Reference is made to the Deposit Agreement (Class C) dated as
of January 28, 2000 (the "Deposit Agreement") between First Security Bank, N.A.,
as Escrow Agent, and Westdeutsche Landesbank Girozentrale, 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 the
Deposit on _____________.
The undersigned hereby directs the Depositary to pay the
proceeds of the Deposit and accrued interest thereon to the Paying Agent at
Wilmington Trust Company, ABA# [ ], Account No. [ ], Reference:
Atlas Air.
FIRST SECURITY BANK,
NATIONAL ASSOCIATION,
as Escrow Agent
By
------------------------------------
Name:
Title:
Dated: _______ __, ____
<PAGE> 1
EXECUTION VERSION
REGISTRATION RIGHTS AGREEMENT
THIS REGISTRATION RIGHTS AGREEMENT (the "Agreement") is made
and entered into January 28, 2000, among ATLAS AIR, INC., a Delaware corporation
(the "Company"), WILMINGTON TRUST COMPANY, as trustee under each of the Trusts
(as defined below) (the "Trustee") and MORGAN STANLEY & CO. INCORPORATED
("Morgan Stanley"), DEUTSCHE BANK SECURITIES INC. and SALOMON SMITH BARNEY INC.
(collectively with Morgan Stanley, the "Placement Agents").
This Agreement is made pursuant to the Placement Agreement
dated January [ ], 2000, among the Company and the Placement Agents (the
"Placement Agreement"), which provides for the sale by the Trustee (as defined
below) to the Placement Agents of (i) $124,639,000 aggregate principal amount of
8.707% 2000-1A Pass Through Certificates (the "Class A Certificates"), (ii)
$44,741,000 aggregate principal amount of 9.057% 2000-1B Pass Through
Certificates (the "Class B Certificates") and (iii) $47,937,000 aggregate
principal amount of 9.702% 2000-1C Pass Through Certificates (the "Class C
Certificates, and together with the Class A Certificates and the Class B
Certificates, the "Certificates"). In order to induce the Placement Agents to
enter into the Placement Agreement, the Company has agreed to provide to the
Placement Agents and their direct and indirect transferees the registration
rights set forth in this Agreement. The execution of this Agreement is a
condition to the closing under the Placement Agreement.
The Certificates will be issued pursuant to the Pass Through
Trust Agreement, dated January 28, 2000, between the Company and the Trustee
(the "Basic Agreement"), as supplemented with respect to each series of
Certificates by a separate Pass Through Trust Supplement to be dated as of the
Closing Date (as defined in the Placement Agreement) (individually, a "Trust
Supplement") between the Company and the Trustee (the Basic Agreement, as
supplemented by each such Trust Supplement, being referred to herein as the
"Pass Through Trust Agreements" and collectively as the "Pass Through Trust
Agreements"). The Pass Through Trust Agreements are related to the creation and
administration of Atlas Air, Inc. Pass Through Trust Series 2000-1A (the "Class
A Trust"), Atlas Air, Inc. Pass Through Trust Series 2000-1B (the "Class B
Trust") and Atlas Air, Inc. Pass Through Trust Series 2000-1C (the "Class C
Trust"; and together with the Class A Trust and the Class B Trust and the Class
C Trust, the "Trusts").
The cash proceeds of the offering of 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 Placement Agents, 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. The Escrow Agent will
deposit such cash proceeds (each, a "Deposit") with Westdeutsche Landesbank
Gironzentrale,
<PAGE> 2
acting through its New York branch, as depositary (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 defined
below) from time to time pursuant to a Note Purchase Agreement (the "Note
Purchase Agreement") to be dated as of the Closing Date among the Company,
Wilmington Trust Company, as Trustee, as Subordination Agent and as Paying
Agent, and the Escrow Agent. Each Escrow Agent will issue receipts to be
attached to each related Certificate 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
Certificates.
In consideration of the foregoing, the parties hereto agree as
follows:
1. Definitions. As used in this Agreement, the following
capitalized defined terms shall have the following meanings:
"1933 Act" shall mean the Securities Act of 1933, as amended
from time to time.
"1934 Act" shall mean the Securities Exchange Act of 1934, as
amended from time to time.
"Agreement" shall have the meaning set forth in the preamble.
"Applicable Trust Agreement" shall mean, (i) with respect to
the Class A Certificates, the Class A Holders or the Class A Trustee,
the Class A Trust Agreement, (ii) with respect to the Class B
Certificates, the Class B Holders or the Class B Trustee, the Class B
Trust Agreement and (iii) with respect to the Class C Certificates, the
Class C Holders or the Class C Trustee, the Class C Trust Agreement.
"Certificates" shall have the meaning set forth in the second
paragraph of this Agreement.
"Class A Certificates" shall have the meaning set forth in the
second paragraph of this Agreement.
"Class A Exchange Certificates" shall mean securities issued
under the Class A Trust Agreement of equal outstanding principal amount
as and containing terms identical to the Class A Certificates (except
that (i) interest thereon shall accrue from the last date on which
interest was paid on the Class A Certificates or, if no such interest
has been paid, from the Closing Date, (ii) the transfer restrictions
thereon shall be modified or eliminated, as appropriate and (iii)
certain provisions relating to an increase in the stated rate of
interest thereon shall be eliminated), to be offered to Holders of the
Class A Certificates in exchange for such Class A Certificates pursuant
to the Exchange Offer.
<PAGE> 3
"Class A Holder" shall mean each Placement Agent, for so long
as it owns any Class A Registrable Certificates, and each of its
successors, assigns and direct and indirect transferees who become
registered owners of Class A Registrable Certificates under the Class A
Trust Agreement; provided that for purposes of Sections 4 and 5 of this
Agreement, the term "Class A Holder" shall include Participating
Broker-Dealers (as defined in Section 4(a)).
"Class A Registrable Certificates" shall mean the Class A
Certificates; provided, however, that the Class A Certificates shall
cease to be Class A Registrable Certificates upon the earlier to occur
of (i) the consummation of the Exchange Offer, (ii) a Registration
Statement with respect to such Class A Certificates shall have been
declared effective under the 1933 Act and such Class A Certificates
shall have been disposed of pursuant to such Registration Statement,
(iii) such Class A Certificates shall have been sold to the public
pursuant to Rule 144(k) (or any similar provision then in force, but
not Rule 144A) under the 1933 Act or (iv) such Class A Certificates
shall have ceased to be outstanding.
"Class A Trust Agreement" shall mean the Pass Through Trust
Agreement dated as of January 28, 2000, as supplemented by the Pass
Through Trust Supplement relating to the Class A Certificates dated as
of January 28, 2000 between the Company and the Class A Trustee, as may
be amended from time to time in accordance with the terms thereof.
"Class A Trustee" shall mean Wilmington Trust Company, not in
its individual capacity except as expressly set forth in the Class A
Trust Agreement, but solely as Trustee under the Class A Trust
Agreement, together with any successor Trustee under the terms of the
Class A Trust Agreement.
"Class B Certificates" shall have the meaning set forth in the
second paragraph of this Agreement.
"Class B Exchange Certificates" shall mean securities issued
under the Class B Trust Agreement of equal outstanding principal amount
as and containing terms identical to the Class B Certificates (except
that (i) interest thereon shall accrue from the last date on which
interest was paid on the Class B Certificates or, if no such interest
has been paid, from the Closing Date, (ii) the transfer restrictions
thereon shall be modified or eliminated, as appropriate and (iii)
certain provisions relating to an increase in the stated rate of
interest thereon shall be eliminated), to be offered to Holders of the
Class B Certificates in exchange for such Class B Certificates pursuant
to the Exchange Offer.
"Class B Holder" shall mean each Placement Agent, for so long
as it owns any Class B Registrable Certificates, and each of its
successors, assigns and direct and indirect transferees who become
registered owners of Class B Registrable Certificates under the Class B
Trust Agreement; provided that for purposes of Sections 4 and 5 of this
Agreement, the term "Class B Holder" shall include Participating
Broker-Dealers (as defined in Section 4(a)).
<PAGE> 4
"Class B Registrable Certificates" shall mean the Class B
Certificates; provided, however, that the Class B Certificates shall
cease to be Class B Registrable Certificates upon the earlier to occur
of (i) the consummation of the Exchange Offer, (ii) a Registration
Statement with respect to such Class B Certificates shall have been
declared effective under the 1933 Act and such Class B Certificates
shall have been disposed of pursuant to such Registration Statement,
(iii) such Class B Certificates shall have been sold to the public
pursuant to Rule 144(k) (or any similar provision then in force, but
not Rule 144A) under the 1933 Act or (iv) such Class B Certificates
shall have ceased to be outstanding.
"Class B Trust Agreement" shall mean the Pass Through Trust
Agreement dated as of January 28, 2000, as supplemented by the Pass
Through Trust Supplement relating to the Class B Certificates dated as
of January 28, 2000 between the Company and the Class B Trustee, as may
be amended from time to time in accordance with the terms thereof.
"Class B Trustee" shall mean Wilmington Trust Company, 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 under the terms of the
Class B Trust Agreement.
"Class C Certificates" shall have the meaning set forth in the
second paragraph of this Agreement.
"Class C Exchange Certificates" shall mean securities issued
under the Class C Trust Agreement of equal outstanding principal amount
as and containing terms identical to the Class C Certificates (except
that (i) interest thereon shall accrue from the last date on which
interest was paid on the Class C Certificates or, if no such interest
has been paid, from the Closing Date, (ii) the transfer restrictions
thereon shall be modified or eliminated, as appropriate and (iii)
certain provisions relating to an increase in the stated rate of
interest thereon shall be eliminated), to be offered to Holders of the
Class C Certificates in exchange for such Class C Certificates pursuant
to the Exchange Offer.
"Class C Holder" shall mean each Placement Agent, for so long
as it owns any Class C Registrable Certificates, and each of its
successors, assigns and direct and indirect transferees who become
registered owners of Class C Registrable Certificates under the Class C
Trust Agreement; provided that for purposes of Sections 4 and 5 of this
Agreement, the term "Class C Holder" shall include Participating
Broker-Dealers (as defined in Section 4(a)).
<PAGE> 5
"Class C Registrable Certificates" shall mean the Class C
Certificates; provided, however, that the Class C Certificates shall
cease to be Class C Registrable Certificates upon the earlier to occur
of (i) the consummation of the Exchange Offer, (ii) a Registration
Statement with respect to such Class C Certificates shall have been
declared effective under the 1933 Act and such Class C Certificates
shall have been disposed of pursuant to such Registration Statement,
(iii) such Class C Certificates shall have been sold to the public
pursuant to Rule 144(k) (or any similar provision then in force, but
not Rule 144A) under the 1933 Act or (iv) such Class C Certificates
shall have ceased to be outstanding.
"Class C Trust Agreement" shall mean the Pass Through Trust
Agreement dated as of January 28, 2000, as supplemented by the Pass
Through Trust Supplement relating to the Class C Certificates dated as
of January 28, 2000 between the Company and the Class C Trustee, as may
be amended from time to time in accordance with the terms thereof.
"Class C Trustee" shall mean Wilmington Trust Company, 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 under the terms of the
Class C Trust Agreement.
"Closing Date" shall mean the Closing Date as defined in the
Placement Agreement.
"Company" shall have the meaning set forth in the preamble and
shall also include the Company's successors.
"Deposit" shall have the meaning set forth in the fourth
paragraph of this Agreement.
"Deposit Agreement" shall have the meaning set forth in the
fourth paragraph of this Agreement.
"Depositary" shall have the meaning set forth in the preamble
and shall also include the Depositary's successors.
"Escrow Agent" shall have the meaning set forth in the fourth
paragraph of this Agreement and shall also include the Escrow Agent's
successors.
"Exchange Offer" shall mean the exchange offer by the Company
of Exchange Certificates for Registrable Certificates pursuant to
Section 2(a) hereof.
"Exchange Offer Registration" shall mean a registration under
the 1933 Act effected pursuant to Section 2(a) hereof.
"Exchange Offer Registration Statement" shall mean an exchange
offer registration statement on Form S-4 (or, if applicable, on another
appropriate form) and all amendments and supplements to such
registration statement, in each case including the Prospectus contained
therein, all exhibits thereto and all material incorporated by
reference therein.
<PAGE> 6
"Exchange Certificates" shall mean, together, the Class A
Exchange Certificates, the Class B Exchange Certificates and the Class
C Exchange Certificates.
"Exchange Dates" shall have the meaning set forth in Section
2(a)(ii) of this Agreement.
"Holder" shall mean a Class A Holder, a Class B Holder or a
Class C Holder; provided that for purposes of Sections 4 and 5 of this
Agreement, the term "Holder" shall include Participating Broker-Dealers
(as defined in Section 4(a)).
"Majority Holders" shall mean, together, the Holders of a
majority in aggregate principal amount of the of Registrable
Certificates then outstanding; provided that whenever the consent or
approval of Holders of a specified percentage of Registrable
Certificates is required hereunder, Registrable Certificates held by
the Company or any of its affiliates (as such term is defined in Rule
405 under the 1933 Act) (other than the Placement Agents or subsequent
holders of Registrable Certificates if such subsequent holders are
deemed to be such affiliates solely by reason of their holding of such
Registrable Certificates) shall not be counted in determining whether
such consent or approval was given by the Holders of such required
percentage or amount.
"Morgan Stanley" shall have the meaning set forth in the
preamble.
"Note Purchase Agreement" shall have the meaning set forth in
the fourth paragraph of this Agreement.
"Pass Through Trust Agreements" shall have the meaning set
forth in the third paragraph of this Agreement.
"Paying Agent" shall have the meaning set forth in the fourth
paragraph of this Agreement and shall also include the Paying Agent's
successors.
"Person" shall mean an individual, partnership, corporation,
trust or unincorporated organization, or a government or agency or
political subdivision thereof.
"Placement Agents" shall have the meaning set forth in the
preamble.
"Placement Agreement" shall have the meaning set forth in the
second paragraph of this Agreement.
"Prospectus" shall mean the prospectus included in a
Registration Statement, including any preliminary prospectus, and any
such prospectus as amended or
<PAGE> 7
supplemented by any prospectus supplement, including a prospectus
supplement with respect to the terms of the offering of any portion of
the Registrable Certificates covered by a Shelf Registration
Statement, and by all other amendments and supplements to such
prospectus, and in each case including all material incorporated by
reference therein.
"Registrable Certificates" shall mean, together, the Class A
Registrable Certificates, the Class B Registrable Certificates and the
Class C Registrable Certificates.
"Registration Expenses" shall mean any and all expenses
incident to performance of or compliance by the Company with this
Agreement, including without limitation: (i) all SEC, stock exchange or
National Association of Securities Dealers, Inc. registration and
filing fees, (ii) all fees and expenses incurred in connection with
compliance with state securities or blue sky laws (including reasonable
fees and disbursements of counsel for any underwriters or Holders in
connection with blue sky qualification of any of the Exchange
Certificates or Registrable Certificates), (iii) all expenses in
connection with the printing and distributing of any Registration
Statement, any Prospectus and any amendments or supplements thereto,
(iv) all rating agency fees, (v) all fees and disbursements relating to
the qualification of the Trust Agreements under applicable securities
laws, (vi) the fees and disbursements of the Trustees and their
counsel, (vii) the fees and disbursements of counsel for the Company
and, in the case of a Shelf Registration Statement, the fees and
disbursements of one counsel for the Holders (which counsel shall be
selected by the Majority Holders and which counsel may also be counsel
for the Placement Agents) and (viii) the fees and disbursements of the
independent public accountants of the Company, including the expenses
of any special audits or "cold comfort" letters required by or incident
to such performance and compliance, but excluding fees and expenses of
counsel to the underwriters (other than fees and expenses set forth in
clause (ii) above) or the Holders and underwriting discounts and
commissions and transfer taxes, if any, relating to the sale or
disposition of Registrable Certificates by a Holder.
"Registration Statement" shall mean any registration statement
of the Company that covers any of the Exchange Certificates or
Registrable Certificates pursuant to the provisions of this Agreement
and all amendments and supplements to any such Registration Statement,
including post-effective amendments, in each case including the
Prospectus contained therein, all exhibits thereto and all material
incorporated by reference therein.
"SEC" shall mean the Securities and Exchange Commission.
"Shelf Registration" shall mean a registration effected
pursuant to Section 2(b) hereof.
"Shelf Registration Statement" shall mean a "shelf"
registration statement of the Company pursuant to the provisions of
Section 2(b) of this Agreement which covers all of the Registrable
Certificates (but no other securities unless approved by the Holders
<PAGE> 8
whose Registrable Certificates are covered by such Shelf Registration
Statement) on an appropriate form under Rule 415 under the 1933 Act, or
any similar rule that may be adopted by the SEC, and all amendments and
supplements to such registration statement, including post-effective
amendments, in each case including the Prospectus contained therein,
all exhibits thereto and all material incorporated by reference
therein.
"TIA" shall have the meaning set forth in Section 3(l) of this
Agreement.
"Trustee" shall have the meaning set forth in the first
paragraph of this Agreement and shall also include the Trustee's
successors.
"Underwritten Registration" or "Underwritten Offering" shall
mean a registration in which Registrable Certificates are sold to an
Underwriter (as hereinafter defined) for reoffering to the public.
2. Registration Under the 1933 Act. (a) To the extent not
prohibited by any applicable law or applicable interpretation of the Staff of
the SEC, the Company shall use its best efforts (i) to cause to be filed with
the SEC within 120 days after the Closing Date an Exchange Offer Registration
Statement covering the offer to the Holders to exchange (A) all of the Class A
Registrable Certificates for Class A Exchange Certificates, (B) all of the Class
B Registrable Certificates for Class B Exchange Certificates and (C) all of the
Class C Registrable Certificates for Class C Exchange Certificates, (ii) have
the Exchange Offer Registration Statement declared effective within 60 calendar
days after the filing thereof with the SEC and (iii) to have such Registration
Statement remain effective until the closing of the Exchange Offer. The Company
shall commence the Exchange Offer promptly after the Exchange Offer Registration
Statement has been declared effective by the SEC and use its best efforts to
have the Exchange Offer consummated not later than 60 days after such effective
date. The Company shall, or shall cause the Trustees to, commence the Exchange
Offer by mailing the related exchange offer Prospectus and accompanying
documents to each Holder stating, in addition to such other disclosures as are
required by applicable law:
(i) that the Exchange Offer is being made pursuant to this
Registration Rights Agreement and that all Registrable Certificates
validly tendered will be accepted for exchange;
(ii) the dates of acceptance for exchange (which shall be each
business day during a period of at least 30 days from the date such
notice is mailed) (the "Exchange Dates");
(iii) that any Registrable Certificate not tendered will
remain outstanding and continue to accrue interest, but will not retain
any rights under this Registration Rights Agreement;
(iv) that Holders electing to have a Registrable Certificate
exchanged pursuant to the Exchange Offer will be required to surrender
such Registrable Certificate,
<PAGE> 9
together with the enclosed letters of transmittal, to the institution
and at the address (located in the Borough of Manhattan, The City of
New York) specified in the notice prior to the close of business on the
last Exchange Date; and
(v) that Holders will be entitled to withdraw their election,
not later than the close of business on the last Exchange Date, by
sending to the institution and at the address (located in the Borough
of Manhattan, The City of New York) specified in the notice, a
telegram, telex, facsimile transmission or letter setting forth the
name of such Holder, the principal amount of Registrable Certificates
delivered for exchange, and a statement that such Holder is withdrawing
his election to have such Certificates exchanged.
As soon as practicable after the last Exchange Date, the
Company shall or shall cause the Trustees to:
(i) accept for exchange Registrable Certificates or portions
thereof tendered and not validly withdrawn pursuant to the Exchange
Offer;
(ii) deliver, or cause to be delivered, to the Class A Trustee
for cancellation all Class A Registrable Certificates or portions
thereof so accepted for exchange by the Company, and issue, and cause
the Class A Trustee to promptly authenticate and mail to each Class A
Holder, Class A Exchange Certificates equal in principal amount to the
principal amount of the Class A Registrable Certificates surrendered by
such Class A Holder;
(iii) deliver, or cause to be delivered, to the Class B
Trustee for cancellation all Class B Registrable Certificates or
portions thereof so accepted for exchange by the Company, and issue,
and cause the Class B Trustee to promptly authenticate and mail to each
Class B Holder, Class B Exchange Certificates equal in principal amount
to the principal amount of the Class B Registrable Certificates
surrendered by such Class B Holder; and
(iv) deliver, or cause to be delivered, to the Class C Trustee
for cancellation all Class C Registrable Certificates or portions
thereof so accepted for exchange by the Company, and issue, and cause
the Class C Trustee to promptly authenticate and mail to each Class C
Holder, Class C Exchange Certificates equal in principal amount to the
principal amount of the Class C Registrable Certificates surrendered by
such Class C Holder.
The Company shall use its best efforts to complete the Exchange Offer as
provided above and shall comply with the applicable requirements of the 1933
Act, the 1934 Act and other applicable laws, rules and regulations in connection
with the Exchange Offer. The Exchange Offer shall not be subject to any
conditions, other than that the Exchange Offer does not violate applicable law
or any applicable interpretation of the Staff of the SEC. The Company shall
inform the Placement Agents of the names and addresses of the Holders to whom
the Exchange Offer is
<PAGE> 10
made, and the Placement Agents shall have the right, subject to applicable law,
to contact such Holders and otherwise facilitate the tender of Registrable
Certificates in the Exchange Offer.
(b) In the event that (i) the Company determines that the
Exchange Offer Registration provided for in Section 2(a) above is not available
or may not be consummated as soon as practicable after the last Exchange Date
because it would violate applicable law or the applicable interpretations of the
Staff of the SEC, (ii) the Exchange Offer Registration Statement is not declared
effective with 60 calendar days after the filing thereof with the SEC, (iii) the
Exchange Offer is not for any other reason consummated within 30 days of the
effectiveness of an Exchange Offer Registration Statement or (iv) the Exchange
Offer has been completed and in the opinion of counsel for the Placement Agents
a Registration Statement must be filed and a Prospectus must be delivered by the
Placement Agents in connection with any offering or sale of Registrable
Certificates, the Company shall use its best efforts to cause to be filed as
soon as practicable after such determination, date or notice of such opinion of
counsel is given to the Company, as the case may be, a Shelf Registration
Statement providing for the sale by the Holders of all of the Registrable
Certificates, and to use its best efforts to cause such Shelf Registration
Statement to be declared effective by the SEC by the 180th calendar day after
the Closing Date. The Company agrees to use its best efforts to keep the Shelf
Registration Statement continuously effective for a period of two years after
its effective date or such shorter period that will terminate when all of the
Registrable Certificates covered by the Shelf Registration Statement have been
sold pursuant to the Shelf Registration Statement. The Company further agrees to
supplement or amend the Shelf Registration Statement, if required by the rules,
regulations or instructions applicable to the registration form used by the
Company for such Shelf Registration Statement or by the 1933 Act or by any other
rules and regulations thereunder for shelf registration or if reasonably
requested by a Holder with respect to information relating to such Holder, and
to use its best efforts to cause any such amendment to become effective and such
Shelf Registration Statement to become usable as soon as thereafter practicable.
The Company agrees to furnish to the Holders of Registrable Certificates copies
of any such supplement or amendment promptly after its being used or filed with
the SEC.
(c) The Company shall pay all Registration Expenses in
connection with the registration pursuant to Section 2(a) or Section 2(b). Each
Holder shall pay all underwriting discounts and commissions and transfer taxes,
if any, relating to the sale or disposition of such Holder's Registrable
Certificates pursuant to the Shelf Registration Statement.
(d) An Exchange Offer Registration Statement pursuant to
Section 2(a) hereof or a Shelf Registration Statement pursuant to Section 2(b)
hereof will not be deemed to have become effective unless it has been declared
effective by the SEC; provided, however, that if, after it has been declared
effective, the offering of Registrable Certificates pursuant to a Shelf
Registration Statement is interfered with by any stop order, injunction or other
order or requirement of the SEC or any other governmental agency or court, such
Shelf Registration Statement will be deemed not to have become effective during
the period of such interference until the offering of Registrable Certificates
pursuant to such Registration Statement may legally resume. In the event that
neither the consummation of the Exchange Offer nor the declaration by the SEC of
a Shelf Registration to be effective (each a "Registration Event") occurs on or
prior to
<PAGE> 11
the 210th day after the Closing Date, the interest rate per annum borne by the
Certificates shall be increased by 0.50%, effective from and including such
210th day, to but excluding the date on which a Registration Event occurs. In
the event that the Shelf Registration Statement ceases to be effective at any
time during the period specified by Section 2(b) hereof for more than 60 days,
whether or not consecutive, during any 12-month period, the interest rate borne
by the Certificates shall be increased by 0.50% per annum from the 61st day of
the applicable 12-month period such Shelf Registration Statement ceases to be
effective until such time as the Shelf Registration Statement again becomes
effective.
(e) Without limiting the remedies available to the Placement
Agents and the Holders, the Company acknowledges that any failure by the Company
to comply with its obligations under Section 2(a) and Section 2(b) hereof may
result in material irreparable injury to the Placement Agents or the Holders for
which there is no adequate remedy at law, that it will not be possible to
measure damages for such injuries precisely and that, in the event of any such
failure, each Placement Agent or any Holder may obtain such relief as may be
required to specifically enforce the Company's obligations under Section 2(a)
and Section 2(b) hereof.
3. Registration Procedures. In connection with the obligations
of the Company with respect to the Registration Statements pursuant to Section
2(a) and Section 2(b) hereof, the Company shall as expeditiously as possible:
(a) prepare and file with the SEC a Registration Statement on
the appropriate form under the 1933 Act, which form (x) shall be
selected by the Company and (y) shall, in the case of a Shelf
Registration, be available for the sale of the Registrable Certificates
by the selling Holders thereof and (z) shall comply as to form in all
material respects with the requirements of the applicable form and
include all financial statements required by the SEC to be filed
therewith, and use its best efforts to cause such Registration
Statement to become effective and remain effective in accordance with
Section 2 hereof;
(b) prepare and file with the SEC such amendments and
post-effective amendments to each Registration Statement as may be
necessary to (x) keep such Registration Statement effective for the
applicable period under this Registration Rights Agreement, and (y)
cause each Prospectus to be supplemented by any required prospectus
supplement and, as so supplemented, to be filed pursuant to Rule 424
under the 1933 Act and (z) keep each Prospectus current during the
period described under Section 4(3) and Rule 174 under the 1933 Act
that is applicable to transactions by brokers or dealers with respect
to the Registrable Certificates or Exchange Certificates;
(c) in the case of a Shelf Registration, furnish to each
Holder of Registrable Certificates, to counsel for the Placement
Agents, to counsel for the Holders and to each Underwriter of an
Underwritten Offering of Registrable Certificates, if any, and each
such Underwriter's Counsel, without charge, as many copies of each
Prospectus, including each preliminary Prospectus, and any amendment or
supplement thereto and such other documents as such Holder or
Underwriter may reasonably request, in order to facilitate the public
sale or other disposition of the Registrable Certificates; and the
Company
<PAGE> 12
consents to the use of such Prospectus and any amendment or supplement
thereto in accordance with applicable law by each of the selling
Holders of Registrable Certificates and any such Underwriters in
connection with the offering and sale of the Registrable Certificates
covered by and in the manner described in such Prospectus or any
amendment or supplement thereto in accordance with applicable law;
(d) use its best efforts to register or qualify the
Registrable Certificates under all applicable state securities or "blue
sky" laws of such jurisdictions as any Holder of Registrable
Certificates covered by a Registration Statement shall reasonably
request in writing by the time the applicable Registration Statement is
declared effective by the SEC, to cooperate with such Holders in
connection with any filings required to be made with the National
Association of Securities Dealers, Inc. and do any and all other acts
and things which may be reasonably necessary or advisable to enable
such Holder to consummate the disposition in each such jurisdiction of
such Registrable Certificates owned by such Holder; provided, however,
that the Company shall not be required to (i) qualify as a foreign
corporation or as a dealer in securities in any jurisdiction where it
would not otherwise be required to qualify but for this Section 3(d),
(ii) file any general consent to service of process or (iii) subject
itself to taxation in any such jurisdiction if it is not so subject;
(e) in the case of a Shelf Registration, notify each Holder of
Registrable Certificates, counsel for the Holders and counsel for the
Placement Agents promptly and, if requested by any such Holder or
counsel, confirm such advice in writing, (i) when a Registration
Statement has become effective and when any post-effective amendment
thereto have been filed and become effective, (ii) of any request by
the SEC or any state securities authority for amendments and
supplements to a Registration Statement and Prospectus or for
additional information after the Registration Statement has become
effective, (iii) of the issuance by the SEC or any state securities
authority of any stop order suspending the effectiveness of a
Registration Statement or the initiation of any proceedings for that
purpose, (iv) if, between the effective date of a Registration
Statement and the closing of any sale of Registrable Certificates
covered thereby, the representations and warranties of the Company
contained in any underwriting agreement, securities sales agreement or
other similar agreement, if any, relating to such offering cease to be
true and correct in all material respects or if the Company receives
any notification with respect to the suspension of the qualification of
the Registrable Certificates for sale in any jurisdiction or the
initiation of any proceeding for such purpose, (v) of the happening of
any event during the period a Shelf Registration Statement is effective
which makes any statement made in such Registration Statement or the
related Prospectus untrue in any material respect or which requires the
making of any changes in such Registration Statement or Prospectus in
order to make the statements therein not misleading, and (vi) of any
determination by the Company that a post-effective amendment to a
Registration Statement would be appropriate;
<PAGE> 13
(f) make every reasonable effort to obtain the withdrawal of
any order suspending the effectiveness of a Registration Statement at
the earliest possible moment and provide immediate notice to each
Holder of the withdrawal of any such order;
(g) in the case of a Shelf Registration, furnish to each
Holder of Registrable Certificates, without charge, at least one
conformed copy of each Registration Statement and any post-effective
amendment thereto (without documents incorporated therein by reference
or exhibits thereto, unless requested);
(h) in the case of a Shelf Registration, cooperate with the
selling Holders of Registrable Certificates to facilitate the timely
preparation and delivery of certificates representing Registrable
Certificates to be sold and not bearing any restrictive legends and
enable such Registrable Certificates to be in such denominations
(consistent with the provisions of the Applicable Trust Agreement) and
registered in such names as the selling Holders may reasonably request
at least two business days prior to the closing of any sale of
Registrable Certificates;
(i) in the case of a Shelf Registration, upon the occurrence
of any event contemplated by Section 3(e)(v) hereof, use its best
efforts to prepare and file with the SEC a supplement or post-effective
amendment to a Registration Statement or the related Prospectus or any
document incorporated therein by reference or file any other required
document so that, as thereafter delivered to the purchasers of the
Registrable Certificates, such Prospectus will not contain any untrue
statement of a material fact or omit to state a material fact necessary
to make the statements therein, in light of the circumstances under
which they were made, not misleading; the Company agrees to notify the
Holders to suspend use of the Prospectus as promptly as practicable
after the occurrence of such an event, and the Holders hereby agree to
suspend use of the Prospectus until the Company has amended or
supplemented the Prospectus to correct such misstatement or omission;
(j) a reasonable time prior to the filing of any Registration
Statement, any Prospectus, any amendment to a Registration Statement or
amendment or supplement to a Prospectus or any document which is to be
incorporated by reference into a Registration Statement or a Prospectus
after initial filing of a Registration Statement, provide copies of
such document to the Placement Agents and their counsel (and, in the
case of a Shelf Registration Statement, the Holders and their counsel)
and make such of the representatives of the Company as shall be
reasonably requested by the Placement Agents or their counsel (and, in
the case of a Shelf Registration Statement, the Holders or their
counsel) available for discussion of such document, and shall not at
any time file or make any amendment to the Registration Statement, any
Prospectus or any amendment of or supplement to a Registration
Statement or a Prospectus or any document which is to be incorporated
by reference into a Registration Statement or a Prospectus, of which
the Placement Agents and their counsel (and, in the case of a Shelf
Registration Statement, the Holders and their counsel) shall not have
previously been advised and furnished a copy or to which the Placement
Agents or their counsel (and, in the case of a Registration Statement,
the Holders or their counsel) shall object;
<PAGE> 14
(k) obtain a CUSIP number for all Exchange Certificates or
Registrable Certificates, as the case may be, not later than the
effective date of a Registration Statement;
(l) cause the Trust Agreements to be qualified under the Trust
Indenture Act of 1939, as amended (the "TIA") in connection with the
registration of the Exchange Certificates or Registrable Certificates,
as the case may be, cooperate with the Trustees and the Holders to
effect such changes to the Trust Agreements as may be required for the
Trust Agreements to be so qualified in accordance with the terms of the
TIA and execute, and use its best efforts to cause the Trustees to
execute, all documents as may be required to effect such changes, and
all other forms and documents required to be filed with the SEC to
enable the Trust Agreements to be so qualified in a timely manner;
(m) in the case of a Shelf Registration, make available for
inspection by a representative of the Holders of the Registrable
Certificates, any Underwriter participating in any disposition pursuant
to such Shelf Registration Statement, and attorneys and accountants
designated by the Holders, at reasonable times and in a reasonable
manner, all financial and other records, pertinent documents and
properties of the Company, and cause the respective officers, directors
and employees of the Company to supply all information reasonably
requested by any such representative, Underwriter, attorney or
accountant in connection with a Shelf Registration Statement;
(n) in the case of a Shelf Registration, use its best efforts
to cause all Registrable Certificates to be listed on any securities
exchange or any automated quotation system on which similar securities
issued by the Company are then listed if requested by the Majority
Holders, to the extent such Registrable Certificates satisfy applicable
listing requirements;
(o) use its best efforts to cause the Exchange Certificates or
Registrable Certificates, as the case may be, to be rated by two
nationally recognized statistical rating organizations (as such term is
defined in Rule 436(g)(2) under the 1933 Act);
(p) if reasonably requested by any Holder of Registrable
Certificates covered by a Registration Statement, (i) promptly
incorporate in a Prospectus supplement or post-effective amendment such
information with respect to such Holder as such Holder reasonably
requests to be included therein and (ii) make all required filings of
such Prospectus supplement or such post-effective amendment as soon as
the Company has received satisfactory notification of the matters to be
incorporated in such filing; and
(q) in the case of a Shelf Registration, enter into such
customary agreements and take all such other actions in connection
therewith (including those requested by the Holders of a majority of
the class of Registrable Certificates being sold) in order to expedite
or facilitate the disposition of such Registrable Certificates
including, but not limited to, an Underwritten Offering and in such
connection, (i) to the extent possible,
<PAGE> 15
make such representations and warranties to the Holders and any
Underwriters of such Registrable Certificates with respect to the
business of the Company and its subsidiaries, the Registration
Statement, Prospectus and documents incorporated by reference or deemed
incorporated by reference, if any, in each case, in form, substance and
scope as are customarily made by issuers to underwriters in
underwritten offerings and confirm the same if and when requested, (ii)
obtain opinions of counsel to the Company (which counsel and opinions,
in form, scope and substance, shall be reasonably satisfactory to the
Holders and such Underwriters and their respective counsel) addressed
to each selling Holder and Underwriter of Registrable Certificates,
covering the matters customarily covered in opinions requested in
underwritten offerings, (iii) obtain "cold comfort" letters from the
independent certified public accountants of the Company (and, if
necessary, any other certified public accountant of any subsidiary of
the Company, or of any business acquired by the Company for which
financial statements and financial data are or are required to be
included in the Registration Statement) addressed to each selling
Holder and Underwriter of Registrable Certificates, such letters to be
in customary form and covering matters of the type customarily covered
in "cold comfort" letters in connection with underwritten offerings,
and (iv) deliver such documents and certificates as may be reasonably
requested by the Holders of a majority in principal amount of the
Registrable Certificates being sold or the Underwriters, and which are
customarily delivered in underwritten offerings, to evidence the
continued validity of the representations and warranties of the Company
made pursuant to clause (i) above and to evidence compliance with any
customary conditions contained in an underwriting agreement.
In the case of a Shelf Registration Statement, the Company may
require each Holder of Registrable Certificates to furnish to the Company such
information regarding the Holder and the proposed distribution by such Holder of
such Registrable Certificates as the Company may from time to time reasonably
request in writing.
In the case of a Shelf Registration Statement, each Holder
agrees that, upon receipt of any notice from the Company of the happening of any
event of the kind described in Section 3(e)(v) hereof, such Holder will
forthwith discontinue disposition of Registrable Certificates pursuant to a
Shelf Registration Statement until such Holder's receipt of the copies of the
supplemented or amended Prospectus contemplated by Section 3(i) hereof, and, if
so directed by the Company, such Holder will deliver to the Company (at the
Company's expense) all copies in its possession, other than permanent file
copies then in such Holder's possession, of the Prospectus covering such
Registrable Certificates current at the time of receipt of such notice. If the
Company shall give any such notice to suspend the disposition of Registrable
Certificates pursuant to a Registration Statement, the Company shall extend the
period during which the Registration Statement shall be maintained effective
pursuant to this Registration Rights Agreement by the number of days during the
period from and including the date of the giving of such notice to and including
the date when the Holders shall have received copies of the supplemented or
amended Prospectus necessary to resume such dispositions. The Company may give
any such notice only twice during any 365 day period and any such suspensions
may not exceed 30 days for each suspension and there may not be more than two
suspensions in effect during any 365 day period.
<PAGE> 16
The Holders of Registrable Certificates covered by a Shelf
Registration Statement who desire to do so may sell such Registrable
Certificates in an Underwritten Offering. In any such Underwritten Offering, the
investment banker or investment bankers and manager or managers (the
"Underwriters") that will administer the offering will be selected by the
Majority Holders of the Registrable Certificates included in such offering.
4. Participation of Broker-Dealers in Exchange Offer. (a) The
Staff of the SEC has taken the position that any broker-dealer that receives
Exchange Certificates for its own account in the Exchange Offer in exchange for
Certificates that were acquired by such broker-dealer as a result of market
making or other trading activities (a "Participating Broker-Dealer") may be
deemed to be an "underwriter" within the meaning of the 1933 Act and must
deliver a prospectus meeting the requirements of the 1933 Act in connection with
any resale of such Exchange Certificates.
The Company understands that it is the Staff's position that
if the Prospectus contained in the Exchange Offer Registration Statement
includes a plan of distribution containing a statement to the above effect and
the means by which Participating Broker-Dealers may resell the Exchange
Certificates, without naming the Participating Broker-Dealers or specifying the
amount of Exchange Certificates owned by them, such Prospectus may be delivered
by Participating Broker-Dealers to satisfy their prospectus delivery obligation
under the 1933 Act in connection with resales of Exchange Certificates for their
own accounts, so long as the Prospectus otherwise meets the requirements of the
1933 Act.
(b) In light of Section 4(a) above, notwithstanding the other
provisions of this Registration Rights Agreement, the Company agrees that the
provisions of this Registration Rights Agreement as they relate to a Shelf
Registration shall also apply to an Exchange Offer Registration to the extent,
and with such reasonable modifications thereto as may be reasonably requested by
the Placement Agents or by one or more Participating Broker-Dealers, in each
case as provided in clause (ii) below, in order to expedite or facilitate the
disposition of any Exchange Certificates by Participating Broker-Dealers
consistent with the positions of the Staff recited in Section 4(a) above;
provided that:
(i) the Company shall not be required to amend or supplement
the Prospectus contained in the Exchange Offer Registration Statement,
as would otherwise be contemplated by Section 3(i), for a period
exceeding 180 days after the last Exchange Date (as such period may be
extended pursuant to the penultimate paragraph of Section 3 of this
Agreement) and Participating Broker-Dealers shall not be authorized by
the Company to deliver and shall not deliver such Prospectus after such
period in connection with the resales contemplated by this Section 4;
and
(ii) the application of the Shelf Registration procedures set
forth in Section 3 of this Registration Rights Agreement to an Exchange
Offer Registration, to the extent not required by the positions of the
Staff of the SEC or the 1933 Act and the rules and regulations
thereunder, will be in conformity with the reasonable request to the
Company
<PAGE> 17
by the Placement Agents or with the reasonable request in writing to
the Company by one or more broker-dealers who certify to the Placement
Agents and the Company in writing that they anticipate that they will
be Participating Broker-Dealers; provided that in connection with such
application of the Shelf Registration procedures set forth in Section 3
to an Exchange Offer Registration, the Company shall be obligated (x)
to deal only with one entity representing the Participating
Broker-Dealers, which shall be Morgan Stanley unless it elects not to
act as such representative, (y) to pay the fees and expenses of only
one counsel representing the Participating Broker-Dealers, which shall
be counsel to the Placement Agents unless such counsel elects not to so
act, and (z) to cause to be delivered only one, if any, "cold comfort"
letter with respect to the Prospectus in the form existing on the last
Exchange Date and with respect to each subsequent amendment or
supplement, if any, effected during the period specified in clause (i)
above.
(c) The Placement Agents shall have no liability to the
Company or any Holder with respect to any request that it may make pursuant to
Section 4(b) above.
5. Indemnification and Contribution. (a) The Company agrees to
indemnify and hold harmless each Placement Agent, each Holder and each person,
if any, who controls any Placement Agent or any Holder within the meaning of
either Section 15 of the 1933 Act or Section 20 of the 1934 Act, or is under
common control with, or is controlled by, any Placement Agent or any Holder,
from and against all losses, claims, damages and liabilities (including, without
limitation, any legal or other expenses reasonably incurred by any Placement
Agent, any Holder or any such controlling or affiliated person in connection
with defending or investigating any such action or claim) caused by any untrue
statement or alleged untrue statement of a material fact contained in any
Registration Statement (or any amendment thereto) pursuant to which Exchange
Certificates or Registrable Certificates were registered under the 1933 Act,
including all documents incorporated therein by reference, or caused by any
omission or alleged omission to state therein a material fact required to be
stated therein or necessary to make the statements therein not misleading, or
caused by any untrue statement or alleged untrue statement of a material fact
contained in any Prospectus (as amended or supplemented if the Company shall
have furnished any amendments or supplements thereto), or caused by any omission
or alleged omission to state therein a material fact necessary to make the
statements therein in the light of the circumstances under which they were made
not misleading, except insofar as such losses, claims, damages or liabilities
are caused by any such untrue statement or omission or alleged untrue statement
or omission based upon information relating to the Placement Agents or any
Holder (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 Morgan Stanley Capital
Services, Inc. or to Morgan Stanley Dean Witter & Co.) furnished to the Company
in writing by the Placement Agents or any selling Holder expressly for use
therein, provided, however, that the foregoing indemnity agreement with respect
to any preliminary prospectus shall not inure to the benefit of any Placement
Agent from whom the person asserting any such losses, claims, damages or
liabilities purchased Offered Certificates, or any person controlling such
Placement Agent, if a copy of the final prospectus (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 Placement Agent to such
<PAGE> 18
person, if required by law so to have been delivered, at or prior to the written
confirmation of the sale of the Offered Certificates (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 3 hereof. In connection with any Underwritten Offering
permitted by Section 3, the Company will also indemnify the Underwriters, if
any, selling brokers, dealers and similar securities industry professionals
participating in the distribution, their officers and directors and each Person
who controls such Persons (within the meaning of the 1933 Act and the 1934 Act)
to the same extent as provided above with respect to the indemnification of the
Holders, if requested in connection with any Registration Statement.
(b) Each Holder agrees, severally and not jointly, to
indemnify and hold harmless the Company, each Placement Agent, the other selling
Holders and each of their respective directors, officers who sign the
Registration Statement and each Person, if any, who controls the Company, any
Placement Agent or any other selling Holder within the meaning of either Section
15 of the 1933 Act or Section 20 of the 1934 Act to the same extent as the
foregoing indemnity from the Company to the Placement Agents and the Holders,
but only with reference to information relating to such Holder furnished to the
Company in writing by such Holder expressly for use in any Registration
Statement (or any amendment thereto) or any Prospectus (or any amendment or
supplement thereto).
(c) In case any proceeding (including any governmental
investigation) shall be instituted involving any person in respect of which
indemnity may be sought pursuant to either of paragraph (a) or paragraph (b)
above, such person (the "indemnified party") shall promptly notify the person
against whom such indemnity may be sought (the "indemnifying party") in writing
and the indemnifying party, upon request of the indemnified party, shall retain
counsel reasonably satisfactory to the indemnified party to represent the
indemnified party and any others the indemnifying party may designate in such
proceeding and shall pay the fees and disbursements of such counsel related to
such proceeding. In any such proceeding, any indemnified party shall have the
right to retain its own counsel, but the fees and expenses of such counsel shall
be at the expense of such indemnified party unless (i) the indemnifying party
and the indemnified party shall have mutually agreed to the retention of such
counsel or (ii) the named parties to any such proceeding (including any
impleaded parties) include both the indemnifying party and the indemnified party
and representation of both parties by the same counsel would be inappropriate
due to actual or potential differing interests between them. It is understood
that the indemnifying party shall not, in connection with any proceeding or
related proceedings in the same jurisdiction, be liable for (a) the fees and
expenses of more than one separate firm (in addition to any local counsel) for
the Placement Agents and all persons, if any, who control any Placement Agent
within the meaning of either Section 15 of the 1933 Act or Section 20 of the
1934 Act, (b) the fees and expenses of more than one separate firm (in addition
to any local counsel) for the Company, its directors, its officers who sign the
Registration Statement and each person, if any, who controls the Company within
the meaning of either such Section and (c) the fees and expenses of more than
one separate firm (in addition to any local counsel) for all Holders and all
persons, if any, who control any Holders within the meaning of either such
Section, and that all such fees and expenses shall be reimbursed as they are
incurred. In such case involving the Placement Agents and persons who control
any Placement Agent, such firm shall be designated
<PAGE> 19
in writing by the Placement Agents. In such case involving the Holders and such
persons who control Holders, such firm shall be designated in writing by the
Majority Holders. In all other cases, such firm shall be designated by the
Company. The indemnifying party shall not be liable for any settlement of any
proceeding effected without its written consent but, if settled with such
consent or if there be a final judgment for the plaintiff, the indemnifying
party agrees to indemnify the indemnified party from and against any loss or
liability by reason of such settlement or judgment. Notwithstanding the
foregoing sentence, if at any time an indemnified party shall have requested 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 for such fees and expenses of counsel in accordance with such
request prior to the date of such settlement. No indemnifying party shall,
without the prior written consent of the indemnified party, effect any
settlement of any pending or threatened proceeding in respect of which such
indemnified party is or could have been a party and indemnity could have been
sought hereunder by such indemnified party, unless such settlement includes an
unconditional release of such indemnified party from all liability on claims
that are the subject matter of such proceeding.
(d) If the indemnification provided for in paragraph (a) or
paragraph (b) of this Section 4 is unavailable to an indemnified party or
insufficient in respect of any losses, claims, damages or liabilities, then each
indemnifying party under such paragraph, in lieu of indemnifying such
indemnified party thereunder, shall contribute to the amount paid or payable by
such indemnified party as a result of such losses, claims, damages or
liabilities in such proportion as is appropriate to reflect the relative fault
of the indemnifying party or parties on the one hand and of the indemnified
party or parties on the other hand in connection with the statements or
omissions that resulted in such losses, claims, damages or liabilities, as well
as any other relevant equitable considerations. The relative fault of the
Company and the Holders shall be determined by reference to, among other things,
whether the untrue or alleged untrue statement of a material fact or the
omission or alleged omission to state a material fact relates to information
supplied by the Company or the Holders and the parties' relative intent,
knowledge, access to information and opportunity to correct or prevent such
statement or omission. The Holders' respective obligations to contribute
pursuant to this Section 5(d) are several in proportion to the respective number
of Registrable Certificates of such Holder that were registered pursuant to a
Registration Statement.
(e) The Company and each Holder agree that it would not be
just or equitable if contribution pursuant to this Section 5 were determined by
pro rata allocation or by any other method of allocation that does not take
account of the equitable considerations referred to in paragraph (d) above. The
amount paid or payable by an indemnified party as a result of the losses,
claims, damages and liabilities referred to in paragraph (d) above shall be
deemed to include, subject to the limitations set forth above, any legal or
other expenses reasonably incurred by such indemnified party in connection with
investigating or defending any such action or claim. Notwithstanding the
provisions of this Section 5, no Holder shall be required to
<PAGE> 20
indemnify or contribute any amount in excess of the amount by which the total
price at which Registrable Certificates were sold by such Holder exceeds the
amount of any damages that such Holder has otherwise been required to pay by
reason of such untrue or alleged untrue statement or omission or alleged
omission. No person guilty of fraudulent misrepresentation (within the meaning
of Section 11(f) of the 1933 Act) shall be entitled to contribution from any
person who was not guilty of such fraudulent misrepresentation. The remedies
provided for in this Section 5 are not exclusive and shall not limit any rights
or remedies which may otherwise be available to any indemnified party at law or
in equity.
The indemnity and contribution provisions contained in this
Section 5 shall remain operative and in full force and effect regardless of (i)
any termination of this Agreement, (ii) any investigation made by or on behalf
of the Placement Agents, any Holder or any person controlling any Placement
Agent or any Holder, or by or on behalf of the Company, its officers or
directors or any person controlling the Company, (iii) acceptance of any of the
Exchange Certificates and (iv) any sale of Registrable Certificates pursuant to
a Shelf Registration Statement.
6. Miscellaneous. (a) No Inconsistent Agreements. The Company
has not entered into, and on or after the date of this Registration Rights
Agreement will not enter into, any agreement which is inconsistent with the
rights granted to the Holders of Registrable Certificates in this Registration
Rights Agreement or otherwise conflicts with the provisions hereof. The rights
granted to the Holders hereunder do not in any way conflict with and are not
inconsistent with the rights granted to the holders of the Company's other
issued and outstanding securities under any such agreements.
(b) Amendments and Waivers. The provisions of this
Registration Rights Agreement, including the provisions of this sentence, may
not be amended, modified or supplemented, and waivers or consents to departures
from the provisions hereof may not be given unless the Company has obtained the
written consent of Holders of at least a majority in aggregate principal amount
of the outstanding Registrable Certificates affected by such amendment,
modification, supplement, waiver or consent; provided, however, that no
amendment, modification, supplement, waiver or consents to any departure from
the provisions of Section 5 hereof shall be effective as against any Holder of
Registrable Certificates unless consented to in writing by such Holder.
(c) Notices. All notices and other communications provided for
or permitted hereunder shall be made in writing by hand-delivery, registered
first-class mail, telex, telecopier, or any courier guaranteeing overnight
delivery (i) if to a Holder, at the most current address given by such Holder to
the Company by means of a notice given in accordance with the provisions of this
Section 6(c), which address initially is, with respect to the Placement Agents,
the address set forth in the Placement Agreement, and (ii) if to the Company,
initially at the Company's address set forth in the Placement Agreement and
thereafter at such other address, notice of which is given in accordance with
the provisions of this Section 6(c).
<PAGE> 21
All such notices and communications shall be deemed to have
been duly given: at the time delivered by hand, if personally delivered; five
business days after being deposited in the mail, postage prepaid, if mailed;
when answered back, if telexed; when receipt is acknowledged, if telecopied; and
on the next business day if timely delivered to an air courier guaranteeing
overnight delivery.
Copies of all such notices, demands, or other communications
shall be concurrently delivered by the person giving the same to each Trustee,
at the address specified in the Applicable Trust Agreement.
(d) Successors and Assigns. This Registration Rights Agreement
shall inure to the benefit of and be binding upon the successors, assigns and
transferees of each of the parties, including, without limitation and without
the need for an express assignment, subsequent Holders; provided that nothing
herein shall be deemed to permit any assignment, transfer or other disposition
of Registrable Certificates in violation of the terms of the Placement Agreement
or the Trust Agreements. If any transferee of any Holder shall acquire
Registrable Certificates, in any manner, whether by operation of law or
otherwise, such Registrable Certificates shall be held subject to all of the
terms of this Registration Rights Agreement, and by taking and holding such
Registrable Certificates, such Person shall be conclusively deemed to have
agreed to be bound by and to perform all of the terms and provisions of this
Registration Rights Agreement and such Person shall be entitled to receive the
benefits hereof. The Placement Agents (in their capacity as Placement Agents)
shall have no liability or obligation to the Company with respect to any failure
by any other Holder to comply with, or any breach by any other Holder of, any of
the obligations of such other Holder under this Registration Rights Agreement.
(e) Purchases and Sales of Certificates. The Company shall
not, and shall use its best efforts to cause its affiliates (as defined in Rule
405 under the 1933 Act), not to purchase and then resell or otherwise transfer
any Certificates.
(f) Third Party Beneficiary. The Holders shall be third party
beneficiaries to the agreements made hereunder and shall have the right to
enforce such agreements directly to the extent they deem such enforcement
necessary or advisable to protect their rights hereunder.
(g) Counterparts. This Registration Rights Agreement may be
executed in any number of counterparts and by the parties hereto in separate
counterparts, each of which when so executed shall be deemed to be an original
and all of which taken together shall constitute one and the same agreement.
(h) Headings. The headings in this Registration Rights
Agreement are for convenience of reference only and shall not limit or otherwise
affect the meaning hereof.
(i) Governing Law. This Registration Rights Agreement shall be
governed by and construed in accordance with the internal laws of the State of
New York.
(j) Severability. In the event that any one or more of the
provisions contained herein, or the application thereof in any circumstance, is
held invalid, illegal or unenforceable,
<PAGE> 22
the validity, legality and enforceability of any such provision in every other
respect and of the remaining provisions contained herein shall not be affected
or impaired thereby.
(k) Trustees. The Trustees shall take such action as may be
reasonably requested by the Company in connection with the Company satisfying
its obligations arising under this Agreement.
<PAGE> 23
IN WITNESS WHEREOF, the parties have executed this
Registration Rights Agreement as of the date first written above.
ATLAS AIR, INC.
By:
-------------------------------------
Name:
Title:
WILMINGTON TRUST COMPANY,
as Trustee
By:
-------------------------------------
Name:
Title:
Confirmed and accepted as of
the date first above written:
MORGAN STANLEY & CO. INCORPORATED
DEUTSCHE BANK SECURITIES INC.
SALOMON SMITH BARNEY INC.
By: MORGAN STANLEY & CO. INCORPORATED
By:
--------------------------------------
Name:
Title:
<PAGE> 1
EXHIBIT 4.18
INTERCREDITOR AGREEMENT
Dated as of
January 28, 2000
AMONG
WILMINGTON TRUST COMPANY,
not in its individual capacity
but solely as Trustee under the
Atlas Air Pass Through Trust 2000-1A,
Atlas Air Pass Through Trust 2000-1B
and
Atlas Air Pass Through Trust 2000-1C,
WESTDEUTSCHE LANDESBANK GIROZENTRALE,
New York Branch,
as Class A 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> 2
TABLE OF CONTENTS
<TABLE>
<S> <C>
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 23
SECTION 2.2. Trust Accounts 23
SECTION 2.3. Deposits to the Collection Account and Special Payments Account 25
SECTION 2.4. Distributions of Special Payments 25
SECTION 2.5. Designated Representatives 28
SECTION 2.6. Controlling Party 29
ARTICLE III RECEIPT, DISTRIBUTION AND APPLICATION OF AMOUNTS RECEIVED
SECTION 3.1. Written Notice of Distribution 30
SECTION 3.2. Distribution of Amounts on Deposit in the Collection Account 32
SECTION 3.3. Distribution of Amounts on Deposit Following a Triggering Event 34
SECTION 3.4. Other Payments 36
SECTION 3.5. Payments to the Trustees and the Liquidity Providers 37
SECTION 3.6. Liquidity Facilities 37
ARTICLE IV EXERCISE OF REMEDIES
SECTION 4.1. Directions from the Controlling Party 44
SECTION 4.2. Remedies Cumulative 46
SECTION 4.3. Discontinuance of Proceedings 46
SECTION 4.4. Right of Certificateholders to Receive Payments Not to Be Impaired 46
SECTION 4.5. Undertaking for Costs 46
ARTICLE V DUTIES OF THE SUBORDINATION AGENT; AGREEMENTS OF TRUSTEES, ETC. 47
SECTION 5.1. Notice of Indenture Event of Default or Triggering Event 47
SECTION 5.2. Indemnification 47
SECTION 5.3. No Duties Except as Specified in Intercreditor Agreement 48
SECTION 5.4. Notice from the Liquidity Providers and Trustees 48
ARTICLE VI THE SUBORDINATION AGENT
SECTION 6.1. Authorization; Acceptance of Trusts and Duties 48
SECTION 6.2. Absence of Duties 49
SECTION 6.3. No Representations or Warranties as to Documents 49
SECTION 6.4. No Segregation of Monies; No Interest 49
SECTION 6.5. Reliance; Agents; Advice of Counsel 49
SECTION 6.6. Capacity in Which Acting 50
SECTION 6.7. Compensation 50
SECTION 6.8. May Become Certificateholder 50
</TABLE>
<PAGE> 3
<TABLE>
<S> <C>
SECTION 6.9. Subordination Agent Required; Eligibility 50
SECTION 6.10. Money to Be Held in Trust 51
ARTICLE VII INDEMNIFICATION OF SUBORDINATION AGENT
SECTION 7.1. Scope of Indemnification 51
ARTICLE VIII SUCCESSOR SUBORDINATION AGENT
SECTION 8.1. Replacement of Subordination Agent; Appointment of Successor 51
ARTICLE IX SUPPLEMENTS AND AMENDMENTS
SECTION 9.1. Amendments, Waivers, etc. 52
SECTION 9.2. Subordination Agent Protected 54
SECTION 9.3. Effect of Supplemental Agreements 54
SECTION 9.4. Notice to Rating Agencies 55
ARTICLE X MISCELLANEOUS
SECTION 10.1. Termination of Intercreditor Agreement 55
SECTION 10.2. Intercreditor Agreement for Benefit of Trustees, Liquidity Providers
and Subordination Agent 55
SECTION 10.3. Notices 55
SECTION 10.4. Severability 57
SECTION 10.5. No Oral Modifications or Continuing Waivers 57
SECTION 10.6. Successors and Assigns 57
SECTION 10.7. Headings 57
SECTION 10.8. Counterpart Form 57
SECTION 10.9. Subordination 57
SECTION 10.10. Governing Law 59
SECTION 10.11. Submission to Jurisdiction; Waiver of Jury Trial; Waiver of Immunity 59
</TABLE>
<PAGE> 4
INTERCREDITOR AGREEMENT
INTERCREDITOR AGREEMENT dated as of January 28, 2000, 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);
Westdeutsche Landesbank Girozentrale, a German banking institution organized
under the law of the State of North Rhine-Westphalia, acting through its New
York Branch ("WESTLB"), as Class A 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 four 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 Placement Agreement, the Placement
Agents 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, WESTLB (with respect to the Class A 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
Subordination Agent, as agent for the Trustee of such Trusts, respectively, for
the benefit of the Certificateholders of such Trusts;
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
<PAGE> 5
"Guarantee Agreement"), the obligations of MSCS under the Class B Liquidity
Facility and the Class C Liquidity Facility, respectively; and
WHEREAS, it is a condition precedent to the obligations of the
Placement Agents under the Placement 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".
"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:
2
<PAGE> 6
(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.
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.
3
<PAGE> 7
"Aggregate LTV Collateral Amount" for any Class of
Certificates for any Distribution Date means the product of (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.
"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.
"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
4
<PAGE> 8
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 the Maximum Commitment (as
defined in such Liquidity Facility) of such Liquidity Facility at such time.
"AvS" means Aviation Solutions Inc.
"Basic Agreement" means the Pass Through Trust Agreement dated
as of January 28, 2000 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, 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 Cash Collateral
Account, the Class B Cash Collateral Account or the Class C Cash Collateral
Account, as applicable.
"Certificate" means a Class A 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.
5
<PAGE> 9
"Class A 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 Liquidity Facility pursuant to Section
3.6(c), 3.6(d) or 3.6(i) shall be deposited.
"Class A Certificateholder" means, at any time, any holder of
one or more Class A Certificates.
"Class A Certificates" means the certificates issued by the
Class A Trust, substantially in the form of Exhibit A to the Class A Trust
Agreement, and authenticated by the Class A Trustee, representing fractional
undivided interests in the Class A Trust, and any certificates issued in
exchange therefor or replacement thereof pursuant to the terms of the Class A
Trust Agreement.
"Class A 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 Trustee, and WESTLB 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 Liquidity Provider" means WESTLB, together with any
Replacement Liquidity Provider which has issued a Replacement Liquidity Facility
to replace the Class A Liquidity Facility pursuant to Section 3.6(e).
"Class A Trust" means the Atlas Air Pass Through Trust 2000-1A
created and administered pursuant to the Class A Trust Agreement.
"Class A Trust Agreement" means the Basic Agreement, as
supplemented by Supplement No. 2000-1A thereto dated as of the date hereof,
governing the creation and administration of the Atlas Air Pass Through Trust
2000-1A and the issuance of the Class A Certificates, as the same may be
amended, supplemented or otherwise modified from time to time in accordance with
its terms.
"Class A Trustee" means WTC, not in its individual capacity
except as expressly set forth in the Class A Trust Agreement, but solely as
trustee under the Class A 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.
6
<PAGE> 10
"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).
"Class B Trust" means the Atlas Air Pass Through Trust 2000-1B
created and administered pursuant to the Class B Trust Agreement.
"Class B Trust Agreement" means the Basic Agreement, as
supplemented by Supplement No. 2000-1B thereto dated as of the date hereof,
governing the creation and administration of the Atlas Air Pass Through Trust
2000-1B 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
7
<PAGE> 11
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 2000-1C
created and administered pursuant to the Class C Trust Agreement.
"Class C Trust Agreement" means the Basic Agreement, as
supplemented by Supplement No. 2000-1C thereto dated as of the date hereof,
governing the creation and administration of the Atlas Air Pass Through Trust
2000-1C and the issuance of the Class C Certificates, as the same may be
amended, supplemented or otherwise modified from time to time in accordance with
its terms.
"Class C Trustee" means 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
2000-1D, if and when established.
"Closing Date" means January 28, 2000.
"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.
8
<PAGE> 12
"DCR" means Duff & Phelps Credit Rating Co.
"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 Westdeutsche Landesbank Girozentrale,
acting through its New York Branch, as depositary under each Deposit Agreement.
"Deposit" with respect to any Class, shall have the meaning
set forth in the Deposit Agreement pertaining to such Class.
"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
9
<PAGE> 13
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 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 P-1 and A-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 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.
10
<PAGE> 14
"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 Placement Agents, 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.
"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 WESTLB 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 Deposit for such Class of Certificates as of such
preceding Distribution Date other than any portion of such Deposit 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
11
<PAGE> 15
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).
"Final Legal Distribution Date" means (i) with respect to the
Class A Certificates, July 2, 2021 (ii) with respect to the Class B
Certificates, July 2, 2017 and (iii) with respect to the Class C Certificates,
July 2, 2011.
"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 each 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.
12
<PAGE> 16
"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.
"Lending Office" means, with respect to any Liquidity
Facility, the lending office of such Liquidity Provider thereunder, presently
located at New York, New York, for WESTLB and MSCS, 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 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 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 such Class of Certificates multiplied by the
Appraised Current Market Value of such Aircraft (or with
13
<PAGE> 17
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 Certificates 39.0%, for the
Class B Certificates 53.0%, and for the Class C Certificates, 68.0%.
"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).
"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.
14
<PAGE> 18
"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 Placement 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.
"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.
15
<PAGE> 19
"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.
"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.
"Placement Agents" means Morgan Stanley & Co. Incorporated,
Deutsche Bank Securities Inc. and Salomon Smith Barney Inc.
"Placement Agreement" means the Placement Agreement dated
January 20, 2000 among the Placement Agents and Atlas, relating to the purchase
of the Certificates by the
16
<PAGE> 20
Placement Agents, as the same may be amended, supplemented or otherwise modified
from time to time in accordance with its terms.
"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.
"Registration Event" has the meaning assigned to such term in
the Registration Rights Agreement.
"Registration Rights Agreement" means the Registration Rights
Agreement dated as of January 28, 2000 among the Placement Agents, Atlas and the
Trustees.
"Regular Distribution Dates" means each January 2 and July 2,
commencing on July 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 in effect for the
17
<PAGE> 21
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.
"Scheduled Payment Date" means, with respect to any Scheduled
Payment, the date on which such Scheduled Payment is scheduled to be made.
18
<PAGE> 22
"Series A Equipment Notes" means the 8.707% Series A 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 B Equipment Notes" means the 9.057% 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 9.702% 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
Certificates, 8.707% per annum, (ii) with respect to the Class B Certificates,
9.057% per annum and (iii) with respect to the Class C Certificates, 9.702% per
annum, plus, in each case, an additional margin equal to 0.50% per annum, from
and including the 210th day after the Closing Date, in the event no Registration
Event occurs on or prior to the 210th day after the Closing Date (provided that
any such additional margin shall cease to be in effect from and including the
date on which such Registration Event occurs); provided that if the Shelf
Registration Statement (as defined in the Registration Rights Agreement) ceases
to be effective at any time during the period specified by Section 2(b) of the
Registration Rights Agreement for more than 60 days, whether or not consecutive,
during any 12-month period, the Stated Rate shall be increased by 0.50% per
annum from the 61st day of the applicable 12-month period such Shelf
Registration Statement ceases to be effective until such time as the Shelf
Registration Statement again becomes effective.
19
<PAGE> 23
"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 WESTLB with respect to the Class A 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
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.
"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
20
<PAGE> 24
Notes (provided that during the Delivery Period the aggregate principal amount
of such Equipment Notes exceeds $100,000,000) or (z) the occurrence of an Atlas
Bankruptcy Event.
"Trust" means any of the Class A 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 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 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).
"WESTLB" has the meaning assigned to such term in the recital
of the parties to this Agreement.
"WESTLB Fee Letter" means the Fee Letter dated the date hereof
between WESTLB and the Subordination Agent with respect to the Class A Liquidity
Facility.
"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.
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
21
<PAGE> 25
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, or payments under Section
9.1 of the Leased Aircraft Participation Agreements, Section 8.1 of the Owned
Aircraft Participation Agreements or payments under Section 6 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. 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, 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 amounts on deposit in the related
Cash Collateral
22
<PAGE> 26
Account in Eligible Investments at the direction of the Liquidity Provider for
such Liquidity Facility; 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 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
23
<PAGE> 27
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 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
24
<PAGE> 28
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 Certificates on such Special
Distribution Date shall be distributed to the Class A Trustee;
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)".
Notwithstanding the priority of payments specified above, in the event
any Investment Earnings on amounts on deposit in any Cash Collateral Account
resulting from an Unapplied Provider Advance are deposited in the Collection
Account, such Investment Earnings shall be applied in satisfaction of interest
payable in respect such Unapplied Provider Advance to the extent of such
Investment Earnings.
25
<PAGE> 29
(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 (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
26
<PAGE> 30
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.
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: (x) the Class A Trustee, (y) upon payment of
Final Distributions to the holders of Class A 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.
27
<PAGE> 31
The Subordination Agent shall give written notice to all of
the other parties to this Agreement promptly upon a change in the identity of
the Controlling Party. Each of the parties hereto agrees that it shall not
exercise any of the rights of the Controlling Party at such time as it is not
the Controlling Party hereunder; provided, however, that nothing herein
contained shall prevent or prohibit any Non-Controlling Party from exercising
such rights as shall be specifically granted to such Non-Controlling Party
hereunder and under the other Operative Agreements.
(c) Notwithstanding the foregoing, at any time after 18 months
from the 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 Provider with the greatest amount of unreimbursed Liquidity
Obligations owed to it 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 Certificates, the Class A
Trustee 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;
(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;
28
<PAGE> 32
(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;
(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 Certificates, the Class A
Trustee shall separately set forth the amounts to be paid in accordance
with clauses "first" (to reimburse payments made by the Class A
Certificateholders pursuant to subclause (iii) of clause "first" of
Section 3.3 hereof) and "seventh" of Section 3.3 hereof;
(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
(v) Each Trustee shall set forth the amounts to be paid in
accordance with clause "sixth" of Section 3.3 hereof.
29
<PAGE> 33
(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.
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:
30
<PAGE> 34
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;
fifth, such amount as shall be required to pay in full Expected
Distributions to the holders of the Class A Certificates on such
Distribution Date shall be distributed to the Class A Trustee;
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;
31
<PAGE> 35
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.
Notwithstanding the priority of payments specified above, in the event
any Investment Earnings on amounts on deposit in any Cash Collateral Account
resulting from an Unapplied Provider Advance are deposited in the Collection
Account, such Investment Earnings shall be applied in satisfaction of interest
payable in respect such Unapplied Provider Advance to the extent of such
Investment Earnings.
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;
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;
32
<PAGE> 36
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;
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
33
<PAGE> 37
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 Certificates shall be
distributed to the Class A Trustee;
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.
Notwithstanding the priority of payments specified above, in the event
any Investment Earnings on amounts on deposit in any Cash Collateral Account
resulting from an Unapplied Provider Advance are deposited in the Collection
Account, such Investment Earnings shall be applied in satisfaction of interest
payable in respect such Unapplied Provider Advance to the extent of such
Investment Earnings.
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.
(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.
34
<PAGE> 38
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 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
Liquidity Facility and all amounts withdrawn by the Subordination Agent from the
Class A Cash Collateral Account, and payable in each case to the Class A
Certificateholders or the Class A Trustee, shall be promptly distributed to the
Class A Trustee, (ii) 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 (iii) 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
35
<PAGE> 39
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 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.
36
<PAGE> 40
(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 WESTLB 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 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,
37
<PAGE> 41
interests or obligations of the Class A 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 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
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 Cash Collateral Account, the Class B Cash Collateral
Account or the Class C Cash Collateral Account,
38
<PAGE> 42
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 each Cash Collateral
Account shall be deposited in the Collection Account on each Interest Payment
Date under the related Liquidity Facility and applied on such Interest Payment
Date in accordance with Section 2.4, 3.2, 3.3 or 3.4 (as applicable). The
Subordination Agent shall deliver a written statement to Atlas and each
Liquidity Provider one day prior to each Interest Payment Date setting forth the
aggregate amount of Investment Earnings held in the applicable 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 Certificates (at the
Stated Interest Rate for the Class A Certificates) from any other
source, withdraw from the Class A Cash Collateral Account, and pay to
the Class A 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 Certificates) on such Class A Certificates and (y)
the amount on deposit in the Class A 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 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;
(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 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;
(iv) on each date on which the Pool Balance of the Class A
Trust shall have been reduced by payments made to the Class A
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
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 Cash Collateral Account on such
date), an amount equal to the sum of the Required Amount (with respect
to the Class A Liquidity Facility) plus Investment Earnings on deposit
in such Cash Collateral Account will be on deposit in the Class A Cash
Collateral Account and shall first, pay such
39
<PAGE> 43
amount to the relevant Class A Liquidity Provider until the Liquidity
Obligations (with respect to the Class A Certificates) owing to such
Liquidity Provider shall have been paid in full, and second, deposit
any remaining amount in the Collection Account;
(v) 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;
(vi) 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 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;
(vii) 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
(viii) 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
40
<PAGE> 44
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) or (iii) 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.
(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.
41
<PAGE> 45
(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, 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.
42
<PAGE> 46
(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 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.
43
<PAGE> 47
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 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, DCR, 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.
44
<PAGE> 48
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 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 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
45
<PAGE> 49
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.
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
46
<PAGE> 50
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, 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
47
<PAGE> 51
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.
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 Leased Aircraft Participation Agreements, Section 8.1 of the
Owned Aircraft Participation Agreements and Section 6 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
48
<PAGE> 52
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 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
49
<PAGE> 53
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 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 and the Class A 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:
50
<PAGE> 54
(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 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 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.
51
<PAGE> 55
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 and to DCR.
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
(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
52
<PAGE> 56
(iii) if to WESTLB as Liquidity Provider, addressed to it at its
offices at:
Westdeutsche Landesbank Girozentrale,
New York Branch
1211 Avenue of the Americas
New York, NY 10036
Attention: Martine Nowicki
Telecopier: (212) 852-6300
(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
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.
53
<PAGE> 57
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 (i) between the Liquidity
Providers, on the one hand, and the Trustees and the Certificateholders, on the
other hand, and (ii) among the Trustee and Certificateholders of each Class this
Agreement shall be a subordination agreement for purposes of Section 510 of the
United States Bankruptcy Code, as amended from time to time.
(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
54
<PAGE> 58
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,
(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
55
<PAGE> 59
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 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.
56
<PAGE> 60
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
Name:
Title:
WESTDEUTSCHE LANDESBANK GIROZENTRALE,
New York Branch,
as Class A Liquidity Provider
By
Name:
Title:
By
Name:
Title:
MORGAN STANLEY CAPITAL SERVICES, INC.
as Class B Liquidity Provider
and Class C Liquidity Provider
By
Name:
Title:
WILMINGTON TRUST COMPANY,
not in its individual
capacity except as
expressly set forth
herein, but solely as
Subordination Agent
and Trustee
By
Name:
Title:
57
<PAGE> 1
EXHIBIT 4.19
NOTE PURCHASE AGREEMENT
Dated as of January 28, 2000
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> 2
INDEX TO NOTE PURCHASE AGREEMENT
<TABLE>
<CAPTION>
Page
----
<S> <C> <C>
SECTION 1. Financing of Aircraft 3
SECTION 2. Conditions Precedent 6
SECTION 3. Representations and Warranties 7
SECTION 4. Covenants 10
SECTION 5. Notices 11
SECTION 6. Expenses 11
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
</TABLE>
<PAGE> 3
NOTE PURCHASE AGREEMENT
This NOTE PURCHASE AGREEMENT, dated as of January 28, 2000,
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 two
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 Placement Agreement
dated January 20, 2000 (the "Placement Agreement") with the several placement
agents (the "Placement Agents") named therein, which provides that the Company
will cause each Pass Through Trustee to issue and sell the Certificates to the
Placement Agents;
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 Placement Agents to make the
deposit referred to therein on the Issuance Date (each a "Deposit") and to
permit the applicable Pass Through Trustee to re-deposit amounts from time to
time thereafter, (ii) the Company and the Depositary entered into the Indemnity
Agreement, dated as
<PAGE> 4
of the date hereof (the "Indemnity Agreement") and (iii) the Pass Through
Trustees, the Placement Agents, 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 Placement Agents
agreed to deliver an amount equal to the amount of the Deposits to the
Depositary on behalf of each applicable Escrow Agent and (b) each 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 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 all or a
portion of the Deposit 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) Westdeutsche Landesbank Girozentrale, a German banking
institution organized under the law of the State of North Rhine-Westphalia,
acting through its New York Branch, entered into a revolving credit agreement
for the benefit of the Certificateholders of the Class A 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 (Westdeutsche Landesbank Girozentrale, New York 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
2
<PAGE> 5
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 and DCR
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
3
<PAGE> 6
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 DCR, 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
all or a portion of the Deposit 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.
(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
4
<PAGE> 7
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 the Deposit 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 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.
5
<PAGE> 8
(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 Deposit
then available for withdrawal in respect of such Equipment Notes 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
(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
6
<PAGE> 9
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 its obligations under this Agreement and each
Financing Agreement to which it is or will be a party;
7
<PAGE> 10
(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.
8
<PAGE> 11
(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:
(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,
9
<PAGE> 12
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 hereto at
its address or facsimile number set forth below the signature of such party at
the foot of this Agreement.
10
<PAGE> 13
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 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, 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.
11
<PAGE> 14
(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 Placement Agents 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 Placement Agents 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]
12
<PAGE> 15
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:
--------------------------------
Name:
Title:
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:
--------------------------------
Name:
Title:
Address: One Rodney Square
1100 North Market Street
Wilmington, Delaware
19890-0001
Attention: Corporate Trust Admin.
FIRST SECURITY BANK, NATIONAL ASSOCIATION,
as Escrow Agent
By:
--------------------------------
Name:
Title:
Address: 79 South Main Street
Salt Lake City, Utah 84111
Attention: Corporate Trust Department
13
<PAGE> 16
SCHEDULE I to
Note Purchase Agreement
AIRCRAFT AND SCHEDULED DELIVERY MONTHS
<TABLE>
<CAPTION>
Scheduled Expected
Delivery Registration Manufacturer's
Aircraft Type Month Number Serial Number
- ------------- ----- ------ -------------
<S> <C> <C> <C>
Boeing 747-400F July 2000 N409MC 30558
Boeing 747-400F August 2000 N412MC 30559
</TABLE>
<PAGE> 17
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 2000-1A.
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 2000-1B.
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 2000-1C.
<PAGE> 18
SCHEDULE III to
Note Purchase Agreement
DEPOSIT AGREEMENTS
Deposit Agreement (Class A) 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> 19
SCHEDULE IV to
Note Purchase Agreement
ESCROW AND PAYING AGENT AGREEMENTS
Escrow and Paying Agent Agreement (Class A) dated as of the Issuance Date among
the Escrow Agent, the Placement Agents, 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 Placement Agents, 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 Placement Agents, the Pass Through Trustee and the Paying
Agent.
<PAGE> 20
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> 21
SCHEDULE VI to
Note Purchase Agreement
MANDATORY ECONOMIC TERMS
Equipment Notes
Obligor: Atlas Air, Inc. 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 Offering Memorandum
in "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 $217,317,000
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 Offering Memorandum in "Summary--Equipment Notes and
the Aircraft" under the column "Appraised Base Value"):
<PAGE> 22
Series A: 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 Offering Memorandum) as of any Regular Distribution Date
(assuming no default in the payment of the Equipment Notes):
Series A: 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: not less than 11.0 years or more than 13.5 years
Series B: not less than 6.5 years or more than 9.5 years
Series C: not less than 2.5 years or more than 4.25 years
Average Life (in years):
As of the Delivery Period Termination Date, the average life of each Class
of Certificates 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):
Class A: not less than 11.0 years or more than 13.5 years
Class B: not less than 7.5 years or more than 9.0 years
Class C: not less than 3.0 years or more than 4.0 years
Final Expected Regular Distribution Date:
Series A: January 2, 2020
Series B: January 2, 2016
Series C: January 2, 2010
Debt Rate (computed on the basis of a 360-day year consisting of twelve 30-day
months, payable semi-annually in arrears):
Series A: 8.707%
Series B: 9.057%
Series C: 9.702%
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.
<PAGE> 23
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 Equipment Notes
LeasePayment 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
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
<PAGE> 24
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> 25
SCHEDULE VII to
Note Purchase Agreement
AGGREGATE AMORTIZATION SCHEDULE
<TABLE>
<CAPTION>
2000-1A Trust 2000-1B Trust 2000-1C Trust
Scheduled Principal Scheduled Principal Scheduled Principal
Date Payment Payment Payment
---- ------- ------- -------
<S> <C> <C> <C>
January 2, 2001 $ 10,384,326 $ 8,948,200 $ 9,587,400
January 2, 2002 0 0 5,787,514
January 2, 2003 832,183 0 7,698,129
January 2, 2004 3,739,203 0 5,637,012
January 2, 2005 3,739,203 0 6,553,968
January 2, 2006 3,739,203 379,549 7,183,589
January 2, 2007 3,739,203 7,032,058 0
January 2, 2008 3,739,203 4,993,949 0
January 2, 2009 3,739,203 636,279 2,360,008
January 2, 2010 3,739,203 0 3,129,380
January 2, 2011 3,739,203 3,550,493 0
January 2, 2012 3,739,203 4,311,527 0
January 2, 2013 3,739,203 4,480,179 0
January 2, 2014 3,739,203 5,495,282 0
January 2, 2015 3,739,203 4,813,484 0
January 2, 2016 3,739,203 100,000 0
January 2, 2017 3,739,203 0 0
January 2, 2018 21,177,982 0 0
July 2, 2018 20,473,746 0 0
January 2, 2019 19,321,921 0 0
January 2, 2020 100,000 0 0
</TABLE>
<PAGE> 26
ANNEX A to
Note Purchase Agreement
DEFINITIONS
"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 Certificates, 195 basis points, (ii)
Class B Certificates, 230 basis points and, (iii) Class C Certificates, 310
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 January 28, 2000 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 or Salt Lake City, Utah.
"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.
<PAGE> 27
"Class" means the class of Certificates issued by each Pass Through
Trust.
"Class A Pass Through Trust" means the Atlas Air Pass Through Trust,
2000-1A.
"Class B Pass Through Trust" means the Atlas Air Pass Through Trust,
2000-1B.
"Class C Pass Through Trust" means the Atlas Air Pass Through Trust,
2000-1C.
"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.
"DCR" means Duff & Phelps Credit Rating Co.
"Delivery Date" means the Business Day on which an Aircraft is
delivered to and accepted by the Company.
"Delivery Period Termination Date" means December 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.
"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 Class of Certificates'
proportionate share (in the same proportion that the amount of unused Deposit
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
<PAGE> 28
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 Westdeutsche Landesbank Girozentrale, a German
banking institution organized under the law of the State of North
Rhine-Westphalia, 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.
"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.
<PAGE> 29
"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.
"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.
<PAGE> 30
"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.
"Offering Memorandum" means the Offering Memorandum dated January 20,
2000 relating to the Certificates.
"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.
"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 $5 million.
<PAGE> 31
"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.
"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.
"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.
<PAGE> 32
"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 July 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 Equipment Notes" means Equipment Notes issued under an
Indenture and designated as "Series A" 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.
"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.
<PAGE> 33
"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> 34
EXHIBIT A-1 to
Note Purchase Agreement
FORM OF LEASED AIRCRAFT PARTICIPATION AGREEMENT
<PAGE> 35
EXHIBIT A-2 to
Note Purchase Agreement
FORM OF LEASE
<PAGE> 36
EXHIBIT A-3 to
Note Purchase Agreement
FORM OF LEASED AIRCRAFT INDENTURE
<PAGE> 37
EXHIBIT A-4 to
Note Purchase Agreement
FORM OF AIRCRAFT PURCHASE AGREEMENT ASSIGNMENT
<PAGE> 38
EXHIBIT A-5 to
Note Purchase Agreement
FORM OF LEASED AIRCRAFT TRUST AGREEMENT
<PAGE> 39
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
55 Water Street
New York, N.Y. 10041
Attention:
Duff & Phelps Credit Rating Co.
17 State Street, 12th Floor
New York, NY 10004
Attention:
Re: Atlas Air, Inc.
Gentlemen:
Reference is made to the Note Purchase Agreement dated as of January
28, 2000 (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.
<PAGE> 40
(ii) Atlas will treat the Aircraft as a [Leased] [Owned] Aircraft.
(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 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 $[_______].
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:
--------------------------------------
Title:
- --------
(1) Include for Leased Aircraft only
<PAGE> 41
EXHIBIT C-1 to
Note Purchase Agreement
FORM OF OWNED AIRCRAFT PARTICIPATION AGREEMENT
<PAGE> 42
EXHIBIT C-2 to
Note Purchase Agreement
FORM OF OWNED AIRCRAFT INDENTURE
<PAGE> 1
EXHIBIT 4.20
EXHIBIT A-1 to
Note Purchase Agreement
FORM OF LEASED AIRCRAFT PARTICIPATION AGREEMENT
<PAGE> 2
CONFIDENTIAL: Subject to Restrictions on Dissemination
Set Forth in Section 8 of this Agreement
===============================================================================
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> 3
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
----
<S> <C> <C> <C> <C>
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
</TABLE>
-i-
<PAGE> 4
<TABLE>
<CAPTION>
Page
----
<S> <C> <C> <C> <C>
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 ..................................................................................84
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.........................................................................89
ANNEX, SCHEDULES AND EXHIBITS
ANNEX A - Definitions
</TABLE>
-ii-
<PAGE> 5
<TABLE>
<S> <C> <C> <C> <C> <C> <C>
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
</TABLE>
-iii-
<PAGE> 6
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> 7
-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> 8
-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> 9
-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> 10
-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> 11
-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> 12
-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> 13
-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, respectively, which authorize the
execution, delivery and performance by Owner Participant, First Security
and WTC,
<PAGE> 14
-9-
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> 15
-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 LLP, 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,
<PAGE> 16
-11-
and (B) in the case of parties other than Owner Participant and its special
counsel, the Tax Indemnity Agreement.
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
<PAGE> 17
-12-
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 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.
<PAGE> 18
-13-
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 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.
<PAGE> 19
-14-
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 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
<PAGE> 20
-15-
failure of any such condition to be satisfied is the result of any action or
inaction by Owner Trustee.
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
<PAGE> 21
-16-
to receive any such agreement, instrument, certificate or document is the result
of any action or inaction by Lessee.
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.
<PAGE> 22
-17-
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.
<PAGE> 23
-18-
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 Lessee's
<PAGE> 24
-19-
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] or [at
2000 Westchester Avenue, White Plains, New York 10560].
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.
<PAGE> 25
-20-
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.
<PAGE> 26
-21-
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
<PAGE> 27
-22-
(other than any violation or default that would not result 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
On the Delivery Date, there are no Lessor Liens attributable to Owner
Participant in respect of all or any part of the Trust Estate.
<PAGE> 28
-23-
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.
<PAGE> 29
-24-
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
<PAGE> 30
-25-
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.
<PAGE> 31
-26-
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> 32
-27-
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.
<PAGE> 33
-28-
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 respect
<PAGE> 34
-29-
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.
<PAGE> 35
-30-
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 assets
<PAGE> 36
-31-
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.
<PAGE> 37
-32-
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 law of any other applicable jurisdiction (with respect to such other
documents).
<PAGE> 38
-33-
(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
<PAGE> 39
-34-
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 obligations
<PAGE> 40
-35-
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.
<PAGE> 41
-36-
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.
<PAGE> 42
-37-
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
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.
<PAGE> 43
-38-
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:
<PAGE> 44
-39-
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, penalties
<PAGE> 45
-40-
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:
<PAGE> 46
-41-
(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
<PAGE> 47
-42-
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 Sublessee's rights in accordance with the Lease to the
quiet enjoyment, possession and use of the Aircraft during the Term.
<PAGE> 48
-43-
(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
<PAGE> 49
-44-
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
<PAGE> 50
-45-
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;
<PAGE> 51
-46-
(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
<PAGE> 52
-47-
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,
<PAGE> 53
-48-
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
<PAGE> 54
-49-
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, 2A, 2B, 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
<PAGE> 55
-50-
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) environmental
<PAGE> 56
-51-
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 remedies under
<PAGE> 57
-52-
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 distributable by it in accordance with the Trust Indenture,
<PAGE> 58
-53-
(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 of funds received and distributable by it in
accordance with any Escrow Agreement;
<PAGE> 59
-54-
(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;
(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
<PAGE> 60
-55-
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.
<PAGE> 61
-56-
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,
<PAGE> 62
-57-
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 respect
<PAGE> 63
-58-
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.
<PAGE> 64
-59-
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
exercise
<PAGE> 65
-60-
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.
<PAGE> 66
-61-
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
<PAGE> 67
-62-
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
<PAGE> 68
-63-
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;
<PAGE> 69
-64-
(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
<PAGE> 70
-65-
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
<PAGE> 71
-66-
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
<PAGE> 72
-67-
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
<PAGE> 73
-68-
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 and be
<PAGE> 74
-69-
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 receipt
<PAGE> 75
-70-
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.
<PAGE> 76
-71-
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.
<PAGE> 77
-72-
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.
<PAGE> 78
-73-
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 provision
<PAGE> 79
-74-
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
<PAGE> 80
-75-
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
<PAGE> 81
-76-
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
Mortgagee,
<PAGE> 82
-77-
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,
<PAGE> 83
-78-
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) 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) and (ii) if such an
opinion can be given, 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.
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.
<PAGE> 84
-79-
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.
<PAGE> 85
-80-
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-
<PAGE> 86
-81-
outstanding principal amount of such Equipment Notes, accrued 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
<PAGE> 87
-82-
transaction where the New Debt is sold in a public offering 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 Offering
Memorandum 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
<PAGE> 88
-83-
United States, or it makes public disclosure of circumstances 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.
<PAGE> 89
-84-
13.4 MORTGAGEE
Upon WTC giving any notice in accordance with Section 13.1(a),
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 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
<PAGE> 90
-85-
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.
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
<PAGE> 91
-86-
the regular course of business) and any enlargement, facsimile or further
reproduction of such reproduction likewise is admissible in evidence.
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
<PAGE> 92
-87-
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.
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
<PAGE> 93
-88-
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.
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.
<PAGE> 94
-89-
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.
[This space intentionally left blank]
<PAGE> 95
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> 96
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, 2000-__
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, 2000-__
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, 2000-__
By:
-----------------------------------------
Name:
Title:
<PAGE> 97
WILMINGTON TRUST COMPANY,
not in its individual capacity, except as
expressly provided herein, but solely as
Subordination Agent
By:
-----------------------------------------
Name:
Title:
<PAGE> 1
EXHIBIT 4.21
EXHIBIT A-2 to
Note Purchase Agreement
FORM OF LEASE
<PAGE> 2
CONFIDENTIAL: Annexes B, C and D and Schedules 1, 2A, 2B, 3 and 4 of
this Lease Agreement are subject to Restrictions on Dissemination Set
Forth in Section 8 of the Participation Agreement (as defined herein)
================================================================================
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> 3
TABLE OF CONTENTS
<TABLE>
<S> <C>
SECTION 1. DEFINITIONS AND CONSTRUCTION......................................................................1
SECTION 2. DELIVERY AND ACCEPTANCE...........................................................................2
2.1 Delivery and Lease of Aircraft........................................................................2
2.2 Acceptance by Lessee..................................................................................2
SECTION 3. TERM AND RENT.....................................................................................3
3.1 Term .................................................................................................3
3.2 Rent .................................................................................................3
3.3 Payments..............................................................................................7
SECTION 4. DISCLAIMER; CERTAIN AGREEMENTS OF LESSOR; SECTION 1110 MATTERS....................................8
4.1 Disclaimer............................................................................................8
4.2 Certain Agreements of Lessor..........................................................................9
4.3 Quiet Enjoyment.......................................................................................9
4.4 Investment of Funds Held as Security.................................................................10
4.5 Title Transfers by Lessor............................................................................11
4.6 Lessor's Interest in Certain Engines.................................................................12
4.7 Lease for U.S. Federal Income Tax Law Purposes; Section 1110 of Bankruptcy Code......................12
SECTION 5. RETURN OF AIRCRAFT...............................................................................13
5.1 Compliance with Annex B..............................................................................13
5.2 Storage and Related Matters..........................................................................13
5.3 Return of Other Engines..............................................................................14
5.4 Fuel ................................................................................................14
SECTION 6. LIENS ...........................................................................................14
SECTION 7. REGISTRATION, OPERATION, POSSESSION, SUBLEASING AND RECORDS......................................16
7.1 Registration and Operation...........................................................................16
7.2 Possession...........................................................................................18
7.3 Certain Limitations on Subleasing or Other Relinquishment of Possession..............................23
SECTION 8. MAINTENANCE; REPLACEMENT AND POOLING OF PARTS; ALTERATIONS, MODIFICATIONS
AND ADDITIONS; OTHER LESSEE COVENANTS...............................................25
8.1 Maintenance; Replacement and Pooling of Parts; Alterations, Modifications and
Additions....................................................................................25
8.2 Information, Certificates, Notices and Reports.......................................................25
</TABLE>
-i-
<PAGE> 4
<TABLE>
<S> <C>
SECTION 9. VOLUNTARY TERMINATION UPON OBSOLESCENCE..........................................................27
9.1 Right of Termination.................................................................................27
9.2 Election by Lessor to Sell...........................................................................29
9.3 Retention of Aircraft by Lessor......................................................................32
SECTION 10. LOSS, DESTRUCTION, REQUISITION, ETC.............................................................34
10.1 Event of Loss With Respect to Aircraft..............................................................34
10.2 Event of Loss With Respect to an Engine.............................................................37
10.3 Conditions to any Replacement.......................................................................38
10.4 Conveyance to Lessee................................................................................41
10.5 Application of Payments.............................................................................41
10.6 Requisition of Aircraft for Use.....................................................................42
10.7 Requisition of an Engine for Use....................................................................43
10.8 Application of Payments.............................................................................43
10.9 Application of Payments During Existence of a Special Default.......................................44
SECTION 11. INSURANCE ......................................................................................44
11.1 Lessee's Obligation to Insure.......................................................................44
11.2 Insurance for Own Account...........................................................................45
11.3 Indemnification by Government in Lieu of Insurance..................................................45
11.4 Application of Insurance Proceeds...................................................................45
11.5 Application of Payments During Existence of a Special Default.......................................46
SECTION 12. INSPECTION .....................................................................................46
SECTION 13. ASSIGNMENT; MERGER; SUCCESSOR OWNER TRUSTEE.....................................................47
13.1 In General..........................................................................................47
13.2 Merger of Lessee....................................................................................48
13.3 Assignment Security for Lessor's Obligations........................................................49
13.4 Successor Owner Trustee.............................................................................50
SECTION 14. LEASE EVENTS OF DEFAULT.........................................................................50
14.1 Payments............................................................................................50
14.2 Insurance...........................................................................................51
14.3 Other Covenants.....................................................................................51
14.4 Representations and Warranties......................................................................51
14.5 Bankruptcy and Insolvency...........................................................................52
SECTION 15. REMEDIES AND WAIVERS............................................................................53
15.1 Remedies............................................................................................53
15.2 Limitations Under CRAF..............................................................................57
15.3 Right to Perform for Lessee.........................................................................58
15.4 Determination of Fair Market Rental Value and Fair Market Sales Value...............................58
</TABLE>
-ii-
<PAGE> 5
<TABLE>
<S> <C>
15.5 Remedies Cumulative.................................................................................59
SECTION 16. LESSEE'S OBLIGATIONS; NO SETOFF, COUNTERCLAIM, ETC..............................................59
SECTION 17. RENEWAL AND PURCHASE OPTIONS....................................................................60
17.1 Preliminary Notices.................................................................................60
17.2 Renewal Options.....................................................................................61
17.3 Purchase Option.....................................................................................63
17.4 Appraisals..........................................................................................65
SECTION 18. MISCELLANEOUS...................................................................................66
18.1 Amendments..........................................................................................66
18.2 Severability........................................................................................67
18.3 Third-Party Beneficiary.............................................................................67
18.4 Reproduction of Documents...........................................................................67
18.5 Counterparts........................................................................................68
18.6 Notices.............................................................................................68
18.7 GOVERNING LAW; SUBMISSION TO JURISDICTION; VENUE....................................................69
18.8 Survival............................................................................................70
18.9 No Waiver...........................................................................................70
18.10 Entire Agreement....................................................................................71
</TABLE>
EXHIBITS, SCHEDULES AND ANNEXES
EXHIBIT A Form of Lease Supplement
EXHIBIT B Form of Return Acceptance Supplement
SCHEDULE 1 Certain Terms
SCHEDULE 2A Basic Rent
SCHEDULE 2B Basic Rent Allocation
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> 6
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, commencing
<PAGE> 7
-2-
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).
<PAGE> 8
-3-
(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
<PAGE> 9
-4-
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,
<PAGE> 10
-5-
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
<PAGE> 11
-6-
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
<PAGE> 12
-7-
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.
<PAGE> 13
-8-
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
<PAGE> 14
-9-
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.
<PAGE> 15
-10-
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 commencing
<PAGE> 16
-11-
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,
<PAGE> 17
-12-
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.
<PAGE> 18
-13-
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
<PAGE> 19
-14-
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 circumstances,
<PAGE> 20
-15-
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
<PAGE> 21
-16-
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
<PAGE> 22
-17-
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 favorable
<PAGE> 23
-18-
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;
<PAGE> 24
-19-
(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;
<PAGE> 25
-20-
(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
<PAGE> 26
-21-
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> 27
-22-
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 Lessee
<PAGE> 28
-23-
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> 29
-24-
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, payable
<PAGE> 30
-25-
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 Lessee's
<PAGE> 31
-26-
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
<PAGE> 32
-27-
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.
<PAGE> 33
-28-
(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 (i) an Event of Default
has occurred and is continuing or (ii) if a Lease Event of Default under Section
14.5 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
<PAGE> 34
-29-
(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).
<PAGE> 35
-30-
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 satisfactory
<PAGE> 36
-31-
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;
<PAGE> 37
-32-
(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 allow
<PAGE> 38
-33-
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:
<PAGE> 39
-34-
(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
respect
<PAGE> 40
-35-
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.
<PAGE> 41
-36-
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
<PAGE> 42
-37-
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
<PAGE> 43
-38-
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 enforceable
<PAGE> 44
-39-
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
<PAGE> 45
-40-
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 written
<PAGE> 46
-41-
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
<PAGE> 47
-42-
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 Section 5
<PAGE> 48
-43-
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:
<PAGE> 49
-44-
(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
<PAGE> 50
-45-
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
<PAGE> 51
-46-
(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
<PAGE> 52
-47-
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
<PAGE> 53
-48-
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> 54
-49-
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
<PAGE> 55
-50-
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 Section 17.2.2.
<PAGE> 56
-51-
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
<PAGE> 57
-52-
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
<PAGE> 58
-53-
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,
terminate
<PAGE> 59
-54-
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 original
<PAGE> 60
-55-
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> 61
-56-
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.
<PAGE> 62
-57-
(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.
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
<PAGE> 63
-58-
hereto with respect to such subject matter are hereby superseded in their
entireties.
[This space intentionally left blank.]
<PAGE> 64
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> 65
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> 1
EXHIBIT 4.22
EXHIBIT A-3 to
Note Purchase Agreement
FORM OF LEASED AIRCRAFT INDENTURE
<PAGE> 2
- --------------------------------------------------------------------------------
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> 3
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
----
<S> <C>
GRANTING CLAUSE.......................................................................................2
ARTICLE I
DEFINITIONS
ARTICLE II
THE EQUIPMENT NOTES
c
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..............................................................19
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........................................22
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........................................................................26
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...............38
SECTION 3.03. Payments After Event of Default......................................................29
SECTION 3.04. Certain Payments.....................................................................32
</TABLE>
i
<PAGE> 4
<TABLE>
<S> <C>
SECTION 3.05. Other Payments.......................................................................33
SECTION 3.06. Payments to Owner Trustee............................................................33
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.......................................................................37
SECTION 4.04. Remedies.............................................................................39
SECTION 4.05. Return of Aircraft, Etc..............................................................42
SECTION 4.06. Remedies Cumulative..................................................................43
SECTION 4.07. Discontinuance of Proceedings........................................................43
SECTION 4.08. Waiver of Past Defaults..............................................................44
SECTION 4.09. Appointment of Receiver..............................................................44
SECTION 4.10. Mortgagee Authorized to Execute Bills of Sale, Etc...................................44
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...........................................................45
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.....................49
SECTION 5.05. No Action Except Under Lease, Trust Indenture or Instructions........................50
SECTION 5.06. Replacement Airframes and Replacement Engines........................................50
SECTION 5.07. Indenture Supplements for Replacements...............................................50
SECTION 5.08. Effect of Replacement................................................................50
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......................................................51
SECTION 6.02. Absence of Duties....................................................................52
</TABLE>
ii
<PAGE> 5
<TABLE>
<S> <C>
SECTION 6.03. No Representations or Warranties as to Aircraft or Documents.........................52
SECTION 6.04. No Segregation of Monies; No Interest................................................53
SECTION 6.05. Reliance; Agreements; Advice of Counsel..............................................53
SECTION 6.06. Capacity in Which Acting.............................................................54
SECTION 6.07. Compensation.........................................................................54
SECTION 6.08. Instructions from Note Holders.......................................................54
ARTICLE VII
INDEMNIFICATION OF MORTGAGEE BY OWNER TRUSTEE
SECTION 7.01. Scope of Indemnification.............................................................55
ARTICLE VIII
SUCCESSOR AND SEPARATE TRUSTEES
SECTION 8.01. Notice of Successor Owner Trustee....................................................56
SECTION 8.02. Resignation of Mortgagee; Appointment of Successor...................................56
SECTION 8.03. Appointment of Additional and Separate Trustees......................................57
ARTICLE IX
SUPPLEMENTS AND AMENDMENTS TO THIS TRUST
INDENTURE AND OTHER DOCUMENTS
SECTION 9.01. Instructions of Majority; Limitations................................................59
SECTION 9.02. Trustees Protected...................................................................61
SECTION 9.03. Documents Mailed to Note Holders.....................................................62
SECTION 9.04. No Request Necessary for Lease Supplement or Trust Indenture Supplement..............62
ARTICLE X
MISCELLANEOUS
SECTION 10.01. Termination of Trust Indenture.......................................................62
SECTION 10.02. No Legal Title to Trust Indenture Estate in Note Holders.............................63
SECTION 10.03. Sale of Aircraft by Mortgagee Is Binding.............................................63
SECTION 10.04. Trust Indenture for Benefit of Owner Trustee,
Mortgagee, Owner Participant, Note Holders and
the Other Indenture Indemnitees...................................................63
</TABLE>
iii
<PAGE> 6
<TABLE>
<S> <C>
SECTION 10.05. Notices..............................................................................63
SECTION 10.06. Severability.........................................................................64
SECTION 10.07. No Oral Modification or Continuing Waivers...........................................64
SECTION 10.08. Successors and Assigns...............................................................64
SECTION 10.09. Headings.............................................................................65
SECTION 10.10. Normal Commercial Relations..........................................................65
SECTION 10.11. Governing Law; Counterpart Form......................................................65
SECTION 10.12. Voting By Note Holders...............................................................66
SECTION 10.13. Bankruptcy...........................................................................66
EXHIBIT A Form of Trust Indenture and Mortgage Supplement
SCHEDULE I Equipment Notes Amortization and Interest Rates
</TABLE>
iv
<PAGE> 7
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
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;
<PAGE> 8
-2-
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 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,
<PAGE> 9
-3-
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;
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
<PAGE> 10
-4-
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 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
<PAGE> 11
-5-
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 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
<PAGE> 12
-6-
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 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)
<PAGE> 13
-7-
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.
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:
<PAGE> 14
-8-
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_____.
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
<PAGE> 15
-9-
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 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
<PAGE> 16
-10-
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.
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,
<PAGE> 17
-11-
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.
[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 Equipment Notes](1)
[Series A 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
- ---------------------
(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.
<PAGE> 18
-12-
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:
- ------------------------
(3) To be inserted for each Equipment Note other than any Series A Equipment
Note.
<PAGE> 19
-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, 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 semiannual installments
<PAGE> 20
-14-
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
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 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
Equipment Note, Series B Equipment Note or Series C Equipment Note, (x) the
excess, if any, of (1) the 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
<PAGE> 21
-15-
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 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 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 upon any Equipment Notes be conclusive
evidence, and the only evidence, that such Equipment Note has been duly
authenticated and delivered hereunder.
<PAGE> 22
-16-
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 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
<PAGE> 23
-17-
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 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
<PAGE> 24
-18-
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.
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
<PAGE> 25
-19-
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.
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
<PAGE> 26
-20-
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 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,
<PAGE> 27
-21-
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 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
<PAGE> 28
-22-
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.
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.
<PAGE> 29
-23-
(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 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
<PAGE> 30
-24-
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 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.
<PAGE> 31
-25-
(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
nominee 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,
<PAGE> 32
-26-
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.
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), 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
<PAGE> 33
-27-
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 until the Secured Obligations in respect of
Series A Equipment Notes have been paid in full and (ii) after the Secured
Obligations in respect of Series A 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) then due under all Series A Equipment
Notes shall be distributed to the Note Holders of Series A
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 Equipment Note bears to the aggregate
amount of the payments then due under all Series A 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
<PAGE> 34
-28-
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 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:
<PAGE> 35
-29-
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 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 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
<PAGE> 36
-30-
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, 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 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 Equipment Notes
(other than Make-Whole Amount) to the date of distribution,
<PAGE> 37
-31-
shall be distributed to the Note Holders of Series A, 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 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
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 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
<PAGE> 38
-32-
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.
(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.
<PAGE> 39
-33-
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 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.
<PAGE> 40
-34-
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 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
<PAGE> 41
-35-
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 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
<PAGE> 42
-36-
(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
(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
<PAGE> 43
-37-
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).
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
<PAGE> 44
-38-
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 performance 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
<PAGE> 45
-39-
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, 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
<PAGE> 46
-40-
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 Lessee'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
<PAGE> 47
-41-
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 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
<PAGE> 48
-42-
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 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,
<PAGE> 49
-43-
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, 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.
<PAGE> 50
-44-
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; 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.
<PAGE> 51
-45-
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.
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.
<PAGE> 52
-46-
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 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
<PAGE> 53
-47-
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 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
<PAGE> 54
-48-
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 (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.
<PAGE> 55
-49-
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 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 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.
<PAGE> 56
-50-
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, 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
<PAGE> 57
-51-
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 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
<PAGE> 58
-52-
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 Participation
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
<PAGE> 59
-53-
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 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
<PAGE> 60
-54-
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 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
<PAGE> 61
-55-
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 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,
<PAGE> 62
-56-
action, suit, cost, expense or disbursement indemnified against pursuant to this
Section 7.01 to the extent not reimbursed by Lessee or others, but without
releasing any of them from their respective agreements of reimbursement; and to
secure the same 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
<PAGE> 63
-57-
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 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
<PAGE> 64
-58-
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 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 jurisdiction in which any
<PAGE> 65
-59-
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 herein
notwithstanding,
<PAGE> 66
-60-
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 Trustee (in its individual capacity) or the Mortgagee, as
<PAGE> 67
-61-
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.
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
<PAGE> 68
-62-
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 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
<PAGE> 69
-63-
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.
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)
<PAGE> 70
-64-
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.
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
<PAGE> 71
-65-
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 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.
- ----------------
4 Insert bracketed language if the Lease provides for the assignment of a
permitted sublease.
<PAGE> 72
-66-
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> 73
-67-
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> 74
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:
<TABLE>
<CAPTION>
FAA
Registration Manufacturer's
Manufacturer Model Number Serial Number
- ------------------ --------- ------------ --------------
<S> <C> <C> <C>
The Boeing Company 747-47UF
</TABLE>
<PAGE> 75
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:
<TABLE>
<CAPTION>
Manufacturer Manufacturer's Model Serial Number
------------ -------------------- -------------
<S> <C> <C>
General Electric CF6-80C2B5FGO4
General Electric CF6-80C2B5FGO4
General Electric CF6-80C2B5FGO4
General Electric CF6-80C2B5FGO4
</TABLE>
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.
Notwithstanding any provision hereof, no Excluded Payment shall
constitute security for any of the aforementioned obligations.
<PAGE> 76
A-3
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> 77
TRUST INDENTURE AND MORTGAGE
SCHEDULE I
<TABLE>
<CAPTION>
ORIGINAL AMOUNT INTEREST RATE
--------------- -------------
<S> <C> <C>
Series A: %
Series B: %
Series C: %
</TABLE>
<PAGE> 78
Trust Indenture and Mortgage
Equipment Note Amortization
SERIES A
<TABLE>
<CAPTION>
Percentage of
Original Amount
Payment Date to Be Paid
------------ ---------------
<S> <C>
</TABLE>
<PAGE> 79
Trust Indenture and Mortgage
Equipment Note Amortization
SERIES B
<TABLE>
<CAPTION>
Percentage of
Original Amount
Payment Date to Be Paid
------------ ---------------
<S> <C>
</TABLE>
<PAGE> 80
Trust Indenture and Mortgage
Equipment Note Amortization
SERIES C
<TABLE>
<CAPTION>
Percentage of
Original Amount
Payment Date to Be Paid
------------ ---------------
<S> <C>
</TABLE>
<PAGE> 1
EXHIBIT 4.23
EXHIBIT A-5 to
Note Purchase Agreement
FORM OF LEASED AIRCRAFT TRUST AGREEMENT
<PAGE> 2
================================================================================
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> 3
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
----
<S> <C> <C>
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..................................................... 7
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......................................... 9
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
</TABLE>
-i-
<PAGE> 4
<TABLE>
<CAPTION>
Page
----
<S> <C> <C>
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.................................................................. 14
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.............................. 18
9.1.3 Qualifications........................................................ 18
9.1.4 Merger, Etc........................................................... 19
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
</TABLE>
-ii-
<PAGE> 5
<TABLE>
<CAPTION>
Page
----
<S> <C> <C>
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
</TABLE>
-iii-
<PAGE> 6
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);
<PAGE> 7
-2-
(b) subject to the terms of this Trust Agreement, exercise (i) its
rights and perform its duties under the 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
<PAGE> 8
-3-
(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 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
<PAGE> 9
-4-
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 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
<PAGE> 10
-5-
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 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
<PAGE> 11
-6-
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 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.
<PAGE> 12
-7-
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 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
<PAGE> 13
-8-
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 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.
<PAGE> 14
-9-
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.
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
<PAGE> 15
-10-
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 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. Section 47.45 and 14
C.F.R. Section 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.
<PAGE> 16
-11-
(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 duplicates 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
<PAGE> 17
-12-
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.
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
<PAGE> 18
-13-
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 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.
<PAGE> 19
-14-
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 request 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)
<PAGE> 20
-15-
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 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
<PAGE> 21
-16-
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 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
<PAGE> 22
-17-
of this Trust Agreement pursuant to Section 11.2 may be effected upon the
election of any Owner Participant.
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.
<PAGE> 23
-18-
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 successor Owner Trustee,
without further act, shall become vested with all the estates, properties,
rights, powers, duties and trusts of the predecessor Owner Trustee in the trusts
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).
<PAGE> 24
-19-
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 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
<PAGE> 25
-20-
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
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
<PAGE> 26
-21-
Law, vest in and be exercised by Owner Trustee, without the appointment of a
successor to such separate trustee.
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> 27
-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> 28
-23-
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> 29
-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> 30
-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> 31
-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> 32
-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> 33
-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:
<PAGE> 1
EXHIBIT 4.24
EXHIBIT C-1 to
Note Purchase Agreement
OWNED AIRCRAFT PARTICIPATION AGREEMENT
<PAGE> 2
CONFIDENTIAL: SUBJECT TO RESTRICTIONS ON DISSEMINATION
SET FORTH IN SECTION 7 OF THIS AGREEMENT
================================================================================
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> 3
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
----
<S> <C> <C>
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 .....................................................8
4.4. Post-Registration Opinion ......................................9
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 ...............................16
6.1. Covenants of Owner ............................................16
6.2. Covenants of WTC ..............................................17
6.3. Covenants of Note Holders .....................................18
6.4. Agreements ....................................................20
SECTION 7. CONFIDENTIALITY ......................................................23
SECTION 8. INDEMNIFICATION AND EXPENSES .........................................24
8.1. General Indemnity .............................................24
8.2. Expenses ......................................................30
8.3. General Tax Indemnity .........................................31
8.4. Payments ......................................................41
8.5. Interest ......................................................41
8.6. Benefit of Indemnities ........................................41
</TABLE>
-i-
<PAGE> 4
<TABLE>
<S> <C> <C>
SECTION 9. ASSIGNMENT OR TRANSFER OF INTEREST ...................................42
9.1. Note Holders ..................................................42
9.2. Effect of Transfer ............................................42
SECTION 10. SECTION 1110 ........................................................43
SECTION 11. CHANGE OF CITIZENSHIP ...............................................43
11.1. Generally ....................................................43
11.2. Mortgagee ....................................................43
SECTION 12. MISCELLANEOUS .......................................................43
12.1. Amendments ...................................................43
12.2. Severability .................................................43
12.3. Survival .....................................................44
12.4. Reproduction of Documents ....................................44
12.5. Counterparts .................................................44
12.6. No Waiver ....................................................44
12.7. Notices ......................................................45
12.8. GOVERNING LAW; SUBMISSION TO
JURISDICTION; VENUE ........................................45
12.9. Third-Party Beneficiary ......................................47
12.10. Entire Agreement ............................................47
12.11. Further Assurances ..........................................47
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
</TABLE>
-ii-
<PAGE> 5
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.
<PAGE> 6
-2-
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.
<PAGE> 7
-3-
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;
<PAGE> 8
-4-
(iv) the broker's report and insurance certificates required by
Section 4.06 of the Trust Indenture;
(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 LLP, special
counsel to Mortgagee and to the Pass Through Trustees, substantially
in the form of Exhibit D;
<PAGE> 9
-5-
(E) an opinion of Crowe & Dunlevy, special counsel in Oklahoma
City, Oklahoma, substantially in the form of Exhibit E-1; and
(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.
<PAGE> 10
-6-
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.
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,
<PAGE> 11
-7-
restrain, enjoin or prevent the completion and consummation of this Agreement or
any other Operative Agreement or the transactions contemplated hereby or
thereby.
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.
<PAGE> 12
-8-
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.
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.
<PAGE> 13
-9-
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.
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
<PAGE> 14
-10-
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.
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
<PAGE> 15
-11-
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.
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] or [at
2000 Westchester Avenue, White Plains, New York 10560].
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.
<PAGE> 16
-12-
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.
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
<PAGE> 17
-13-
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 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.
<PAGE> 18
-14-
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 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.
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
<PAGE> 19
-15-
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.
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.
<PAGE> 20
-16-
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.
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
<PAGE> 21
-17-
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 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
<PAGE> 22
-18-
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 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.
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
<PAGE> 23
-19-
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 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).
<PAGE> 24
-20-
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 Indenture
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:
<PAGE> 25
-21-
(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;
(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);
<PAGE> 26
-22-
(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
(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
<PAGE> 27
-23-
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 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
<PAGE> 28
-24-
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
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
<PAGE> 29
-25-
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:
(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
<PAGE> 30
-26-
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 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
<PAGE> 31
-27-
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 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.
<PAGE> 32
-28-
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.
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
<PAGE> 33
-29-
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 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.
<PAGE> 34
-30-
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 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
<PAGE> 35
-31-
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 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
<PAGE> 36
-32-
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 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
<PAGE> 37
-33-
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;
(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;
<PAGE> 38
-34-
(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;
(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
<PAGE> 39
-35-
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.
(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, judg-
<PAGE> 40
-36-
ment, 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 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
<PAGE> 41
-37-
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, 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
<PAGE> 42
-38-
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 involve 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
<PAGE> 43
-39-
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 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.
<PAGE> 44
-40-
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 statement 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.
<PAGE> 45
-41-
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 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.
<PAGE> 46
-42-
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 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.
<PAGE> 47
-43-
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
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
<PAGE> 48
-44-
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
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.
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
<PAGE> 49
-45-
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 Agreement, 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
<PAGE> 50
-46-
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.
(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> 51
-47-
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
effectually 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
<PAGE> 52
-48-
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 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
<PAGE> 53
-49-
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 July 2, 2001, 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 either (i) 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 income taxation as a
result of such assumption and release or (ii) agrees to provide indemnification
to the Note Holders in form and substance reasonably satisfactory to the
Mortgagee. In addition, in connection with any Sale/Leaseback Transaction the
Owner agrees to (i) comply with Section 1(c) of the Note Purchase Agreement and
(ii) obtain from Standard & Poor's a confirmation that such Sale/Leaseback
Transaction 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.
<PAGE> 54
-50-
[This space intentionally left blank]
<PAGE> 55
-51-
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, 2000-.
By
------------------------------------------
Name:
Title:
<PAGE> 56
-52-
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, 2000-
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, 2000-
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> 1
EXHIBIT 4.25
EXHIBIT C-2 to
Note Purchase Agreement
-----------------------
FORM OF OWNED AIRCRAFT INDENTURE
<PAGE> 2
- --------------------------------------------------------------------------------
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> 3
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
----
<S> <C> <C>
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].............................................13
SECTION 2.04. Method of Payment...................................................13
SECTION 2.05. Application of Payments.............................................16
SECTION 2.06. Termination of Interest in Collateral...............................16
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............................19
SECTION 2.12. Redemptions; Notice of Redemption...................................20
SECTION 2.13. Subordination.......................................................21
SECTION 2.14. Assumption of Equipment Notes.......................................21
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.....................................24
SECTION 3.04. Certain Payments....................................................27
SECTION 3.05. Other Payments......................................................28
ARTICLE IV COVENANTS OF THE OWNER
SECTION 4.01. Liens...............................................................28
SECTION 4.02. Possession, Operation and Use, Maintenance and Repair,
Registration and Markings........................................28
SECTION 4.03. Inspection..........................................................34
</TABLE>
-i-
<PAGE> 4
<TABLE>
<CAPTION>
Page
----
<S> <C> <C>
SECTION 4.04. Replacement and Pooling of Parts, Alterations, Modifications
and Additions; Substitution of Engines...........................35
SECTION 4.05. Loss, Destruction or Requisition....................................39
SECTION 4.06. Insurance...........................................................44
SECTION 4.07. Merger of Owner.....................................................45
ARTICLE V EVENTS OF DEFAULT; REMEDIES OF MORTGAGEE
SECTION 5.01. Event of Default....................................................46
SECTION 5.02. Remedies............................................................48
SECTION 5.03. Return of Aircraft, Etc.............................................49
SECTION 5.04. Remedies Cumulative.................................................50
SECTION 5.05. Discontinuance of Proceedings.......................................51
SECTION 5.06. Waiver of Past Defaults.............................................51
SECTION 5.07. Appointment of Receiver.............................................51
SECTION 5.08. Mortgagee Authorized to Execute Bills of Sale, Etc..................52
SECTION 5.09. Rights of Note Holders to Receive Payment...........................52
ARTICLE VI DUTIES OF THE MORTGAGEE
SECTION 6.01. Notice of Event of Default..........................................52
SECTION 6.02. Action upon Instructions; Certain Rights and Limitations............53
SECTION 6.03. Indemnification.....................................................53
SECTION 6.04. No Duties Except as Specified in Trust Indenture or Instructions....54
SECTION 6.05. No Action Except Under Trust Indenture or Instructions..............54
SECTION 6.06. Investment of Amounts Held by Mortgagee.............................55
ARTICLE VII THE MORTGAGEE
SECTION 7.01. Acceptance of Trusts and Duties.....................................55
SECTION 7.02. Absence of Duties...................................................56
SECTION 7.03. No Representations or Warranties as to Aircraft or Documents........56
SECTION 7.04. No Segregation of Monies; No Interest...............................57
SECTION 7.05. Reliance; Agreements; Advice of Counsel.............................57
SECTION 7.06. Compensation........................................................57
SECTION 7.07. Instructions from Note Holders......................................58
ARTICLE VIII INDEMNIFICATION
SECTION 8.01. Scope of Indemnification............................................58
</TABLE>
-ii-
<PAGE> 5
<TABLE>
<CAPTION>
Page
----
<S> <C> <C>
ARTICLE IX SUCCESSOR AND SEPARATE TRUSTEES
SECTION 9.01. Resignation of Mortgagee; Appointment of Successor..................58
SECTION 9.02. Appointment of Additional and Separate Trustees.....................60
ARTICLE X SUPPLEMENTS AND AMENDMENTS TO THIS TRUST INDENTURE AND OTHER DOCUMENTS
SECTION 10.01. Instructions of Majority; Limitations...............................62
SECTION 10.02. Mortgagee Protected.................................................63
SECTION 10.03. Documents Mailed to Note Holders....................................63
SECTION 10.04. No Request Necessary for Trust Indenture Supplement.................64
ARTICLE XI MISCELLANEOUS
SECTION 11.01. Termination of Trust Indenture......................................64
SECTION 11.02. No Legal Title to Collateral in Note Holders........................64
SECTION 11.03. Sale of Aircraft by Mortgagee Is Binding............................64
SECTION 11.04. Trust Indenture for Benefit of Owner, Mortgagee, Note Holders
and the Other Indenture Indemnitees..............................65
SECTION 11.05. Notices.............................................................65
SECTION 11.06. Severability........................................................66
SECTION 11.07. No Oral Modification or Continuing Waivers..........................66
SECTION 11.08. Successors and Assigns..............................................66
SECTION 11.09. Headings............................................................66
SECTION 11.10. Normal Commercial Relations.........................................66
SECTION 11.11. Governing Law; Counterpart Form.....................................67
SECTION 11.12. Voting by Note Holders..............................................67
SECTION 11.13. Bankruptcy..........................................................67
ANNEX A Definitions
ANNEX B Insurance
EXHIBIT A Form of Trust Indenture and Mortgage Supplement
SCHEDULE I Equipment Notes Amortization and Interest Rates
</TABLE>
-iii-
<PAGE> 6
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, sold,
assigned, transferred,
<PAGE> 7
-2-
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 other things which the Owner is or
<PAGE> 8
-3-
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, date of maturity
<PAGE> 9
-4-
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:
<PAGE> 10
-5-
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 2000-1 ____ EQUIPMENT NOTE DUE _______ ISSUED IN CONNECTION WITH THE
BOEING MODEL 747-47UF FREIGHTER AIRCRAFT BEARING UNITED STATES REGISTRATION
NUMBER N MC.
No. Date: ,
------------ ---------------- -- ----
<PAGE> 11
-6-
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. 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 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.
<PAGE> 12
-7-
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.
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
<PAGE> 13
-8-
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 Equipment Notes](1)
[Series A and Series B Equipment Notes](2) [Series A, Series B and Series C
Equipment Notes](3) 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.](4)
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 has caused this Equipment Note to be
executed in its corporate name by its officer thereunto duly authorized on the
date hereof.
- ------------------
(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 in the case of a Series D Equipment Note.
(4) To be inserted for each Equipment Note other than any Series A Equipment
Note.
<PAGE> 14
-9-
ATLAS AIR, INC.
By:
--------------------------------
Name:
Title:
<PAGE> 15
-10-
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
* * *
<PAGE> 16
-11-
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 (or if the Series D is issued, four
separate series) consisting of Series A, 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). 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 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). 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.
<PAGE> 17
-12-
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 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 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 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 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 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 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
<PAGE> 18
-13-
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.
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
<PAGE> 19
-14-
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.
(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
<PAGE> 20
-15-
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 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,
<PAGE> 21
-16-
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.
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
<PAGE> 22
-17-
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 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
<PAGE> 23
-18-
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, 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
<PAGE> 24
-19-
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 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.
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.
<PAGE> 25
-20-
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 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.
<PAGE> 26
-21-
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), 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 until the Secured Obligations in respect of
Series A Equipment Notes have been paid in full, (ii) after the Secured
Obligations in respect of Series A 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.
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.
<PAGE> 27
-22-
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 Equipment Notes shall be distributed to the
Note Holders of Series A 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 Equipment Note bears to the
aggregate amount of the payments then due under all Series A
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 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
<PAGE> 28
-23-
(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 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 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;
<PAGE> 29
-24-
(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 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
<PAGE> 30
-25-
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 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 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 Equipment Notes (other than Make-Whole Amount) to
the date of distribution, shall be distributed to the Note Holders
of Series A, 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 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 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;
<PAGE> 31
-26-
(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 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
<PAGE> 32
-27-
(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 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
<PAGE> 33
-28-
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.
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
<PAGE> 34
-29-
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;
(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;
<PAGE> 35
-30-
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 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
<PAGE> 36
-31-
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-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
and Standard & Poor's (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
<PAGE> 37
-32-
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 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,
<PAGE> 38
-33-
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 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
<PAGE> 39
-34-
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 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
<PAGE> 40
-35-
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)).
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
<PAGE> 41
-36-
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.
(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
<PAGE> 42
-37-
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 airworthiness.
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
<PAGE> 43
-38-
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 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;
<PAGE> 44
-39-
(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 Replacement 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
<PAGE> 45
-40-
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
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).
<PAGE> 46
-41-
(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 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
<PAGE> 47
-42-
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);
(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
<PAGE> 48
-43-
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:
(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
<PAGE> 49
-44-
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.
(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
<PAGE> 50
-45-
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 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
<PAGE> 51
-46-
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.
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;
<PAGE> 52
-47-
(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 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.
<PAGE> 53
-48-
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 acceleration) and its
<PAGE> 54
-49-
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 take possession of and remove
such Collateral.
<PAGE> 55
-50-
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 pursuance of any remedy
<PAGE> 56
-51-
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.
<PAGE> 57
-52-
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 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
<PAGE> 58
-53-
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.
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
<PAGE> 59
-54-
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 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
<PAGE> 60
-55-
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.
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.
<PAGE> 61
-56-
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.
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.
<PAGE> 62
-57-
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.
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
<PAGE> 63
-58-
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.
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
<PAGE> 64
-59-
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 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.
<PAGE> 65
-60-
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).
<PAGE> 66
-61-
(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.
<PAGE> 67
-62-
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.
(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
<PAGE> 68
-63-
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.
<PAGE> 69
-64-
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 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
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
<PAGE> 70
-65-
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 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.
<PAGE> 71
-66-
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 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.
<PAGE> 72
-67-
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.
SECTION 11.13. BANKRUPTCY
It is the intention of the parties that the Mortgagee 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 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:
<PAGE> 73
-68-
WILMINGTON TRUST COMPANY,
not in its individual capacity, except as
provided herein, but solely as Mortgagee
By:
---------------------------------------
Name:
Title:
<PAGE> 1
EXHIBIT 5.1
May 4, 2000
(212) 701-3000
Atlas Air, Inc.
538 Commons Drive
Golden, Colorado 80401
Ladies and Gentlemen:
We have examined a copy of the Registration Statement on Form
S-4 (No. 333- ) (the "Registration Statement"), filed by Atlas Air, Inc. (the
"Company") with the Securities and Exchange Commission (the "Commission") on
May 4, 2000 and relating to the registration pursuant to the provisions of
the Securities Act of 1933, as amended ( the "Act"), of Pass Through
Certificates, Series 2000-1 in the principal amount of $217,317,000 (the "New
Certificates"). The New Certificates, which upon the effectiveness of the
Registration Statement will be registered under the Act, will be issued in
exchange for a like principal amount of the outstanding Pass Through
Certificates, Series 2000-1 (the "Old Certificates"), which are not registered
under the Act. Each of the New Certificates represents a fractional undivided
interest in one of the three Atlas Air 2000-1 Pass Through Trusts (the "Trusts")
and will be issued pursuant to three separate Pass Through Trust Agreements
(collectively, the "Pass Through Trust Agreements") dated as of January 28,
2000, between the Company and Wilmington Trust Company. In rendering this
opinion, we have reviewed such documents and made such investigations as we have
deemed appropriate.
<PAGE> 2
-2-
Based on the foregoing, and subject to the further assumptions
and qualifications set forth below, it is our opinion that when the New
Certificates have been duly executed and authenticated in accordance with the
Pass Through Trust Agreements, and duly issued and delivered by the Trusts in
exchange for an equal principal amount of Old Certificates pursuant to the terms
of the Registration Rights Agreement filed as an exhibit to the Registration
Statement, the New Certificates will be legal, valid, binding and enforceable
obligations of the applicable Trust, entitled to the benefits of the applicable
Pass Through Trust Agreement, subject to applicable bankruptcy, insolvency and
similar laws affecting creditors' rights generally and to general principles of
equity.
We are members of the bar of the State of New York and do not
purport to be experts in, or to express any opinion concerning, the laws of any
jurisdiction other than the law of the State of New York, the Delaware General
Corporation Law and the federal laws of the United States of America.
Neither this opinion nor any part hereof may be delivered to,
used or relied upon by any person other than you without our prior written
consent.
We hereby consent to the filing of this opinion with the
Commission as an exhibit to the Registration Statement and to the reference to
our firm under the caption "Legal Matters" in the Registration Statement and
related prospectus. Our consent to such reference does not constitute a consent
under Section 7 of the Securities Act, and in consenting to such reference we
have not certified any part of the Registration Statement and do not otherwise
come within the categories of persons whose consent is required under said
Section 7 or under the rules and regulations of the Commission thereunder.
Very truly yours,
/s/ CAHILL GORDON & REINDEL
<PAGE> 1
EXHIBIT 10.20
EMPLOYMENT AGREEMENT
WHEREAS Richard H. Shuyler (hereinafter referred to as "Employee") and
Atlas Air, Inc. ("Atlas") wish to enter an Employment Agreement; and
WHEREAS Atlas believes Employee has proven his ability and value to
Atlas, and it is in the best interests of Atlas to retain the services of
Employee, and Employee desires affiliation with Atlas;
WHEREAS Employee warrants that he is entering voluntarily into this
Agreement, and that no promises or inducements for this Agreement have been made
outside of the terms and conditions referred to herein, and Employee enters into
this Agreement without reliance upon any statement or representation by Atlas or
any other person, concerning any fact material hereto.
NOW, THEREFORE, in consideration of the covenants contained herein,
Employee and Atlas agree to this Employment Agreement as of the 1st day of
April, 2000.
<PAGE> 2
-2-
1. DEFINITIONS
1.1 "Cause", as used herein, means (i) an act or acts of personal
dishonesty taken by the Employee and intended to result in substantial personal
enrichment of the Employee at the expense of Atlas, (ii) repeated violations by
the Employee of the Employee's obligations under this Agreement which are
demonstrably willful and deliberate on the Employee's part and which are not
remedied in a reasonable period of time after receipt of written notice from
Atlas (iii) failure of the Employee to use all reasonable efforts to support the
efforts of the chief executive officer of Atlas to effect acquisitions or joint
ventures designated by the chief executive officer or to serve, if requested by
the chief executive officer, as the Executive Vice President and chief financial
officer of any acquired entity/and or Atlas reporting directly to Michael
Chowdry, which failure is not remedied in a reasonable period of time after
receipt by Employee of written notice from Atlas, or (iv) the conviction of the
Employee of a felony.
1.2 The "Employment Period" shall be defined as the period commencing
on the date hereof and extending until March 31, 2001, subject to earlier
termination as set forth in
<PAGE> 3
-3-
Section 4 below and extension as provided in the next succeeding sentence. On
March 31, 2001 and on each anniversary thereafter, the Employment Period shall
be automatically extended for an additional one year unless Atlas gives notice
in writing to the Employee or the Employee gives notice in writing to Atlas at
least two months prior to March 31, 2001 or such anniversary, as the case may
be, that the Employment Period is not to be so extended.
1.3 "Permanent Disability" as used herein shall be deemed to have been
sustained by Employee if he shall have been continuously disabled from
performing the duties assigned to him during the Employment Period for a period
of six consecutive calendar months, and such Permanent Disability shall be
deemed to have commenced on the day following the end of such six consecutive
calendar months.
1.4 "Confidential or Proprietary" as used herein shall refer to all
information relative to Atlas' plans, structure and practices, including
information relating to its customers, contracts and aircraft, except:
(a) information that is or becomes a matter of public knowledge
through no fault of the Employee; or
(b) information rightfully received by the Employee from a third
party without a duty of confidentiality; or
<PAGE> 4
-4-
(c) information independently developed by the Employee; or
(d) information disclosed to Employee with Atlas' prior written
approval for public dissemination.
1.5 "Good Reason", as used herein, means reduction by Atlas during the
term of this Agreement in base salary or substantial reduction in the Employee's
title or job responsibilities (from the job responsibilities existing on April
1, 2000 which responsibilities were to advise the chief executive officer on
mergers, acquisitions, joint ventures and long term strategic planning).
2. EMPLOYMENT AND OBLIGATIONS OF EMPLOYEE
Atlas and Employee agree to the following rights, obligations and
duties with respect to employment:
2.1 Employment. During the Employment Period, Atlas agrees to employ
the Employee as Executive Vice President of Atlas. Employee shall not be
entitled to any additional compensation for serving in any other office for
Atlas or any subsidiary or affiliate of Atlas.
2.2 Obligations of Employee. During the Employment Period, the Employee
agrees, except when prevented by illness
<PAGE> 5
-5-
or Permanent Disability or during a period of vacation, to devote substantially
all of his business time and attention to the good faith performance of such
services.
2.3 Principal Residence of Employee. During the Employment Period,
Employee shall maintain a residence in the Denver, Colorado area. Employee also
agrees, if requested by Michael Chowdry, to maintain a residence in the Seattle,
Washington area or the White Plains, New York area.
3. COMPENSATION
During the Employment Period, Atlas will pay Employee as follows:
3.1 Base Annual Salary. Atlas will pay Employee a base annual salary
(the "Base Annual Salary") of no less than $250,000 per annum, payable in
semi-monthly installments, which amount shall increase to an amount not less
than $325,000 upon (i) the consummation of an acquisition by Atlas of an entity
for an acquisition price of in excess of $500,000,000 or (ii) Employee's
establishing a residence, at the request of the chief executive officer, in the
Seattle, Washington or White Plains, New York area.
<PAGE> 6
-6-
3.2 Incentive Bonus Payments. The Employee will be eligible to receive
an Incentive Bonus payment based on performance for each calendar year during
the Employment Period upon approval of the compensation Committee of the Board
of Directors of Atlas (the "Compensation Committee"). Such Incentive Bonus, if
any, shall be payable no later than December 31 of the succeeding year. In the
event of such approval, payment shall be made in cash or stock of Atlas as
determined by the Compensation Committee, at the time such Incentive Bonus is
approved.
3.3 Benefits. Employee and his dependents shall be entitled to
participate in the Atlas health insurance plan, and Atlas will pay Employee's
monthly premium. Atlas reserves the right to discontinue participation in any
health insurance plan at any time with the understanding that Atlas will comply
in full measure with all state and federal laws regarding the changes of
insurance coverage by private employers and notification under the Consolidated
Omnibus Budget Reconciliation Act. Employee also shall be entitled, to the same
extent and at a level commensurate with the corporate officers of Atlas, to
participate in any other benefit plans or arrangements of Atlas.
<PAGE> 7
-7-
3.4 Fringe Benefits. Employee also will be entitled to professional and
personal use of a company vehicle initially blue-book valued at up to, or actual
value not to exceed, $40,000.00. Atlas will be responsible for all insurance
premium payments related to the vehicle, and Employee will pay the costs of
fuel.
3.5 Pass Privileges. To the extent that Atlas is able to negotiate pass
privileges with other air carriers or foreign air carriers, it will use its best
efforts to obtain pass privileges for Employee at a pass classification that is
consistent with Employee's job classification. Such privileges shall be
applicable to Employee's family if available.
3.6 Expenses. During the Employment Period, the Employee shall be
entitled to receive promptly reimbursement for all reasonable expenses incurred
by the Employee in accordance with the most favorable expense reimbursement
policies, practices and procedures in effect with respect to key executives of
Atlas and its subsidiaries.
<PAGE> 8
-8-
4. TERMINATION OF EMPLOYMENT PERIOD
The Employment Period shall terminate under the following terms and
conditions:
4.1 At Will Arrangement. Atlas may terminate the Employment Period upon
written notice to the Employee at any time and for any reason. Both Atlas and
Employee expressly understand and agree that the employment relationship is
at-will. Atlas is entitled to sever the employment relationship for any reason.
4.2 Rights Following Termination.
(a) If the Employment Period is terminated by Atlas for reasons
other than Cause or if the Employment Period is terminated by the Employee for
Good Reason, the Employee shall be entitled to receive: (i) in a single lump sum
payment within 10 business days after such termination, an amount equal to
$325,000, (ii) an amount equal to $650,000, payable quarterly, in advance, over
the twenty-four month period commencing twelve months following Employee's
termination, (iii) an amount equal to $250,000 payable quarterly, in advance,
over the twelve month period commencing thirty-six months following Employee's
<PAGE> 9
-9-
termination, and (iv) continued coverage and rights and benefits available under
the employee benefit programs of Atlas as provided in Section 3.3 above for a
period of three years from the date of termination; provided, however, that any
such continued coverage shall be offset by comparable coverage provided to
Employee in connection with subsequent employment, and to the extent Atlas is
unable to continue such coverage, Atlas shall provide the Employee with
economically equivalent benefits determined on an after-tax basis.
(b) Upon the death or Permanent Disability of the Employee, the
Employment Period shall terminate and the Employee's Base Annual Salary which is
accrued but unpaid as of the date of such death or Permanent Disability shall be
paid to the Employee or his personal representative.
(c) If the Employment Period is terminated by Atlas for Cause or
by the Employee for other than Good Reason, the Employee shall be entitled to
receive his Base Annual Salary which is accrued but unpaid as of the date of
termination.
(d) If Employee's employment with Atlas is terminated as a result
of the failure of Atlas or Employee to renew this Employment Agreement by giving
the notice called for in
<PAGE> 10
-10-
Section 1.2 hereof, Employee shall be deemed to have been terminated by Atlas
without "Cause" for the purpose of (i) the vesting of Employee's outstanding
options and restricted stock awards and (ii) the severance payments and benefit
coverage referred to in Section 4.2 (a).
4.3 Non-Competition Provision. Employee covenants and agrees that he
will not, at any time before five years after his termination of employment with
Atlas, reveal, divulge or make known to any third party any confidential or
proprietary records, data, trade secrets, pricing policies, strategy, rate
structure, personnel policy, management methods, financial reports, methods or
practice of obtaining or doing business, or any other confidential or
proprietary information of Atlas or any of its affiliates which is not in the
public domain. In addition, Employee agrees that, at no time before three years
after his termination of employment with Atlas, will he engage in any of the
following activities directly or indirectly, for any reason, whether for his own
account or for the account of any other person, firm, corporation or other
organization:
(a) solicit, employ or otherwise interfere with any of Atlas'
contracts or relationships with any client, employee,
officer, director or any independent contractor whether the
person is employed by or associated with Atlas on the date of
this Agreement or at any time thereafter; or
<PAGE> 11
-11-
(b) solicit, accept or otherwise interfere with any of Atlas'
contracts or relationships with any independent contractor,
customer, client or supplier, or any person who is a bona
fide prospective independent contractor, customer, client or
supplier of Atlas;
(c) accept employment with, or give advice to, any air cargo
carrier or an air cargo division or affiliate of any other
airline.
The parties agree and intend that breach of this non-competition clause shall
subject Employee to the full measure of contract and equitable damages including
punitive damages.
5. EXCISE TAX GROSS-UP
5.1 (a) Anything in this Agreement to the contrary notwithstanding, in
the event it shall be determined that any payment or distribution made, or
benefit provided, by Atlas to or for the benefit of the Employee (whether paid
or payable or distributed or distributable pursuant to the terms of this
Agreement or otherwise, but determined without regard to any additional payments
required under this Section 5.1) (a "Payment") would be subject to the excise
tax imposed by Section 4999 of the Internal Revenue Code of 1986, as amended and
then in effect (the "Code") (or any similar excise tax) or any
<PAGE> 12
-12-
interest or penalties are incurred by the Employee with respect to such excise
tax (such excise tax, together with any such interest and penalties, are
hereinafter collectively referred to as the "Excise Tax"), then the Employee
shall be entitled to receive an additional payment (a "Gross-Up Payment") in an
amount such that after payment by the Employee of all Federal, state, local or
other taxes (including any interest or penalties imposed with respect to any
such taxes), including, without limitation, any such income taxes (and any
interest and penalties imposed with respect thereto) and Excise Tax imposed upon
the Gross-Up Payment, the Employee retains an amount of the Gross-Up Payment
equal to the Excise Tax imposed upon the Payments.
(b) Subject to the provisions of paragraph (c) of this Section
5.1, all determinations required to be made under this Section 5.1, including
whether and when a Gross-Up Payment is required and the amount of such Gross-Up
Payment and the assumptions to be utilized in arriving at such determination,
shall be made by Arthur Andersen (the "Accounting Firm") which shall provide
detailed supporting calculations both to Atlas and the Employee within 20
calendar days of the receipt of written notice from the Employee that there has
been a Payment,
<PAGE> 13
-13-
or such earlier time as is requested by Atlas. In the event that the Accounting
Firm is serving as accountant or auditor for the individual, entity or group
effecting the change in control, the Employee shall have the right by written
notice to Atlas to appoint another nationally recognized accounting firm to make
the determinations required hereunder (which accounting firm shall then be
referred to as the Accounting Firm hereunder). All fees and expenses of the
Accounting Firm shall be borne solely by Atlas and shall be paid by Atlas upon
demand of the Employee as incurred or billed by the Accounting Firm. Any
Gross-Up Payment, as determined pursuant to this Section 5.1, shall be paid by
Atlas to the Employee within five days of the receipt of the Accounting Firm's
determination. If the Accounting Firm determines that no Excise Tax is payable
by the Employee, it shall furnish the Employee with an unqualified written
opinion in form and substance satisfactory to the Employee that failure to
report the Excise Tax on the Employee's applicable federal income tax return
would not result in the imposition of a negligence or similar penalty. As a
result of the uncertainty in the application of Section 4999 of the Code at the
time of the initial determination by the Accounting Firm hereunder, it is
possible that Gross-Up Payments which will not have been made by Atlas should
have been made ("Underpayment"),
<PAGE> 14
-14-
consistent with the calculations required to be made hereunder. In the event
that Atlas exhausts its remedies described in paragraph (c) of this Section 5.1
and the Employee thereafter is required to make a payment of any Excise Tax, the
Accounting Firm shall determine the amount of the Underpayment that has occurred
and any such Underpayment shall be paid by Atlas to or for the benefit of the
Employee within five days of the receipt of the Accounting Firm's determination.
All determinations made by the Accounting Firm in connection with any Gross-Up
Payment or Underpayment shall be final and binding upon Atlas and the Employee.
(c) The Employee shall notify Atlas in writing of any claim
asserted in writing by the Internal Revenue Service to the Employee that, if
successful, would require the payment by Atlas of the Gross-Up Payment. Such
notification shall be given as soon as practicable but not later than 60 days
after the Employee is informed in writing of such claim and shall apprise Atlas
of the nature of such claim and the date on which such claim is requested to be
paid. The Employee shall not pay such claim prior to the expiration of the
30-day period following the date on which it gives such notice to Atlas (or such
shorter period ending on the date that any payment of taxes
<PAGE> 15
-15-
with respect to such claim is due). If Atlas notifies the Employee in writing
prior to the expiration of such period that it desires to contest such claim,
the Employee shall at Atlas' expense:
(i) give Atlas any information reasonably requested by Atlas
relating to such claim,
(ii) take such action in connection with contesting such
claim as Atlas shall reasonably request in writing from time to time,
including, without limitation, accepting legal representation with
respect to such claim by an attorney reasonably selected by Atlas,
(iii) cooperate with Atlas in good faith in order effectively
to contest such claim, and
(iv) permit Atlas to participate in any proceedings relating
to such claim;
provided, however, that Atlas shall bear and pay directly as incurred all costs
and expenses (including additional interest and penalties) incurred in
connection with such contest and shall indemnify and hold the Employee harmless,
on an after-tax basis, for any Excise Tax or any Federal, state, local or other
income or other tax (including interest and penalties with respect thereto)
imposed as a result of such representation and payment of costs and expenses.
Without limitation on the foregoing provisions of this Section 5.1, Atlas shall
control all proceedings taken in connection with such contest and, at its sole
option, may pursue or forego any and all administrative
<PAGE> 16
-16-
appeals, proceedings, hearings and conferences with the taxing authority in
respect of such claim and may, at its sole option, either direct the Employee to
pay the tax claimed and sue for a refund or contest the claim in any permissible
manner, and the Employee agrees to prosecute such contest to a determination
before any administrative tribunal, in a court of initial jurisdiction and in
one or more appellate courts, as Atlas shall determine; provided, however, that
if Atlas directs the Employee to pay such claim and sue for a refund, Atlas
shall advance the amount of such payment to the Employee, on an interest-free
basis and shall indemnify and hold the Employee harmless, on an after-tax basis,
from any Excise Tax or Federal, state, local or other income or other tax
(including interest or penalties with respect thereto) imposed with respect to
such advance or with respect to any imputed income with respect to such advance;
and further provided that any extension of the statute of limitations relating
to payment of taxes for the taxable year of the Employee with respect to which
such contested amount is claimed to be due is limited solely to such contested
amount. Furthermore, Atlas' control of the contest shall be limited to issues
with respect to which a Gross-Up Payment would be payable hereunder and the
Employee shall be entitled to settle or contest, as the case may be, any other
issue raised by the Internal Revenue Service or any other taxing authority.
<PAGE> 17
-17-
(d) If, after the receipt by the Employee of an amount advanced by
Atlas pursuant to paragraph (c) of this Section 5.1, the Employee becomes
entitled to receive any refund with respect to such claim, the Employee shall
(subject to Atlas' complying with the requirements of paragraph (ii) of this
Section 5.1) promptly pay to Atlas the amount of such refund (together with any
interest paid or credited thereon after taxes applicable thereto) upon receipt
thereof. If, after the receipt by the Employee of an amount advanced by Atlas
pursuant to paragraph (c) of this Section 5.1, a determination is made that the
Employee shall not be entitled to any refund with respect to such claim and
Atlas does not notify the Employee in writing of its intent to contest such
denial of refund prior to the expiration of 30 days after such determination,
then such advance shall be forgiven and shall not be required to be repaid and
the amount of such advance shall offset, to the extent thereof, the amount of
Gross-Up Payment required to be paid.
<PAGE> 18
-18-
6. CHOICE OF LAW
This Agreement shall be governed by and construed in accordance with
the laws of the State of Delaware, without reference to principles of conflict
of laws.
7. SEVERABILITY AND ENFORCEABILITY
It is expressly acknowledged and agreed that the covenants and
provisions hereof are separable; that the enforceability of one covenant or
provision shall in no event affect the full enforceability of any other covenant
or provision herein. Further, it is agreed that, in the event any covenant or
provision of this Agreement is found by any court of competent jurisdiction to
be unenforceable, illegal or invalid, such invalidity, illegality or
unenforceability shall not affect any other term or condition of this Agreement.
Rather, the Agreement shall be construed as if such invalid or illegal or
unenforceable term or condition had never been contained herein. The invalidity
or unenforceability of any provision of this Agreement shall not affect the
validity or enforceability of any other provision of this Agreement.
<PAGE> 19
-19-
8. MISCELLANEOUS
8.1 No Mitigation. The amounts to be paid Employee are net to Employee,
without any reduction or duty to mitigate, except for taxes, other governmental
charges or amounts owed to Atlas by Employee.
8.2 Pro-Ration. In the event the Employment Period is terminated in the
middle of any calendar month, the amount due for such month shall be pro-rated
on a daily basis.
8.3 No Waiver Except in Writing. No waiver or modification of this
Agreement or any of the terms and conditions set forth herein shall be effective
unless submitted to a writing duly executed by the parties.
8.4 Successors and Assigns. This Agreement shall be binding on Atlas
and any successor thereto, whether by reason of merger, consolidation or
otherwise. The duties and obligations of Employee may not be assigned by
Employee.
8.5 Confidentiality of Terms. Atlas and Employee agree that the terms
and conditions of this Agreement are confidential and that they will not
disclose the terms of this Agreement to any third parties, other than the
Employee's
<PAGE> 20
-20-
spouse, their attorneys, auditors, accountants or as required by law or as may
be necessary to enforce this Agreement.
8.6 Full Understanding. Employee declares and represents that he has
carefully read and fully understands the terms of this Agreement, has had the
opportunity to obtain advice and assistance of counsel with respect thereto, and
knowingly and of his own free will, without any duress, being fully informed and
after due deliberation, voluntarily accepts the terms of this Agreement.
8.7 Entire Agreement. This Agreement sets forth the entire agreement
and understanding between the parties with respect to the subject matter hereof
and supersedes all prior agreements, arrangements, and understandings between
the parties with respect to the subject matter hereof.
EMPLOYEE ATLAS AIR, INC.
/s/ Richard H. Shuyler /s/ Michael A. Chowdry
- ---------------------------------- ------------------------------------
<PAGE> 1
EXHIBIT 10.58
FOURTH AMENDED AND RESTATED
CREDIT AGREEMENT
DATED AS OF APRIL 25, 2000
AMONG
ATLAS AIR, INC.,
AS BORROWER,
THE LENDERS LISTED HEREIN,
AS LENDERS,
AND
BANKERS TRUST COMPANY,
AS ADMINISTRATIVE AGENT
ARRANGED BY:
DEUTSCHE BANK SECURITIES INC.
ATLAS AIR, INC.
FOURTH AMENDED AND RESTATED
CREDIT AGREEMENT
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C> <C>
SECTION 1. DEFINITIONS...........................................................................2
1.1 Certain Defined Terms.................................................................2
1.2 Accounting Terms; Utilization of GAAP for Purposes of Calculations Under
Agreement............................................................................27
1.3 Other Definitional Provisions........................................................27
SECTION 2. AMOUNTS AND TERMS OF COMMITMENTS AND LOANS...........................................27
2.1 Commitments; Making of Loans; Notes; Register........................................27
2.2 Interest on the Loans................................................................31
2.3 Fees.................................................................................35
2.4 Repayments, Prepayments and Reductions in Loans and Revolving Loan
Commitments; General Provisions Regarding Payments...................................35
2.5 Use of Proceeds......................................................................42
2.6 Special Provisions Governing Eurodollar Rate Loans...................................42
2.7 Increased Costs; Taxes; Capital Adequacy.............................................44
2.8 Obligation of Lenders to Mitigate....................................................48
2.9 Release of Collateral................................................................49
SECTION 3. CONDITIONS TO LOANS..................................................................49
3.1 Conditions to Effectiveness and the Existing Aircraft Extended Loans.................49
3.2 Conditions to Loans to Finance Aircraft Acquisition..................................51
3.3 Condition to Loans to Finance Cargo Conversion.......................................54
3.4 Conditions to All Loans..............................................................55
SECTION 4. COMPANY'S REPRESENTATIONS AND WARRANTIES.............................................57
4.1 Organization, Powers, Qualification, Good Standing, Business and Subsidiaries........57
4.2 Authorization of Borrowing, etc......................................................58
4.3 Financial Condition..................................................................59
</TABLE>
-i-
<PAGE> 3
<TABLE>
<CAPTION>
PAGE
----
<S> <C> <C>
4.4 No Material Adverse Change; No Restricted Junior Payments............................59
4.5 Title to Properties; Liens...........................................................59
4.6 Litigation; Adverse Facts............................................................60
4.7 Payment of Taxes.....................................................................60
4.8 Performance of Agreements; Materially Adverse Agreements.............................60
4.9 Governmental Regulation..............................................................61
4.10 Securities Activities................................................................61
4.11 Employee Benefit Plans...............................................................61
4.12 Certain Fees.........................................................................61
4.13 Environmental Protection.............................................................61
4.14 Employee Matters.....................................................................62
4.15 Solvency.............................................................................62
4.16 Disclosure...........................................................................62
SECTION 5. COMPANY'S AFFIRMATIVE COVENANTS......................................................62
5.1 Financial Statements and Other Reports...............................................63
5.2 Corporate Existence..................................................................67
5.3 Payment of Taxes and Claims; Tax Consolidation.......................................67
5.4 Maintenance of Properties; Insurance.................................................68
5.5 Inspection; Lender Meeting...........................................................68
5.6 Compliance with Laws, etc............................................................68
5.7 Environmental Indemnity..............................................................69
5.8 Company's Remedial Action Regarding Hazardous Materials..............................69
5.9 Further Assurances; New Subsidiaries; Holding Company................................69
5.10 Appraisals...........................................................................70
5.11 Maintenance Contracts................................................................70
5.12 Employee Benefit Plans...............................................................70
5.13 Registration of Foreign Leased Aircraft with FAA.....................................71
5.14 Corporate Separateness...............................................................71
</TABLE>
-ii-
<PAGE> 4
<TABLE>
<CAPTION>
PAGE
----
<S> <C> <C>
SECTION 6. COMPANY'S NEGATIVE COVENANTS.........................................................71
6.1 Indebtedness.........................................................................71
6.2 Liens and Related Matters............................................................73
6.3 Investments; Joint Ventures..........................................................73
6.4 Contingent Obligations...............................................................74
6.5 Restricted Junior Payments...........................................................75
6.6 Financial Covenants..................................................................76
6.7 Restriction on Fundamental Changes; Asset Sales and Acquisitions; New
Subsidiaries.........................................................................78
6.8 Amendments of Material Agreements....................................................80
6.9 Restriction on Leases................................................................81
6.10 Sales and Lease-Backs................................................................81
6.11 Sale or Discount of Receivables......................................................81
6.12 Transactions with Shareholders and Affiliates........................................82
6.13 Disposal of Subsidiary Stock.........................................................82
6.14 Conduct of Business..................................................................82
SECTION 7. EVENTS OF DEFAULT....................................................................83
7.1 Failure to Make Payments When Due....................................................83
7.2 Default in Other Agreements..........................................................83
7.3 Breach of Certain Covenants..........................................................83
7.4 Breach of Warranty...................................................................83
7.5 Other Defaults Under Loan Documents..................................................84
7.6 Involuntary Bankruptcy; Appointment of Receiver, etc.................................84
7.7 Voluntary Bankruptcy; Appointment of Receiver, etc...................................84
7.8 Judgments and Attachments............................................................85
7.9 Dissolution..........................................................................85
7.10 Change in Control....................................................................85
7.11 Failure of Security..................................................................86
7.12 Certificated as Air Carrier..........................................................86
7.13 Material Agreements..................................................................86
7.14 "Change of Control" Put Payments.....................................................86
</TABLE>
-iii-
<PAGE> 5
<TABLE>
<CAPTION>
PAGE
----
<S> <C> <C>
SECTION 8. AGENT................................................................................87
8.1 Appointment..........................................................................87
8.2 Powers and Duties; General Immunity..................................................87
8.3 Representations and Warranties; No Responsibility For Appraisal of
Creditworthiness.....................................................................89
8.4 Right to Indemnity...................................................................89
8.5 Collateral Documents.................................................................89
8.6 Successor Administrative Agent.......................................................90
SECTION 9. MISCELLANEOUS........................................................................90
9.1 Assignments and Participations in Loans..............................................90
9.2 Expenses.............................................................................92
9.3 Indemnity............................................................................93
9.4 Set-Off..............................................................................93
9.5 Ratable Sharing......................................................................94
9.6 Amendments and Waivers...............................................................94
9.7 Independence of Covenants............................................................96
9.8 Notices..............................................................................96
9.9 Survival of Representations, Warranties and Agreements...............................96
9.10 Failure or Indulgence Not Waiver; Remedies Cumulative................................96
9.11 Marshalling; Payments Set Aside......................................................96
9.12 Severability.........................................................................97
9.13 Obligations Several; Independent Nature of Lenders' Rights...........................97
9.14 Headings.............................................................................97
9.15 Applicable Law.......................................................................97
9.16 Successors and Assigns...............................................................97
9.17 Consent to Jurisdiction and Service of Process.......................................98
9.18 Waiver of Jury Trial.................................................................98
9.19 Confidentiality......................................................................99
9.20 Counterparts; Effectiveness; Effect if Agreement Does Not Become Effective...........99
9.21 Cooperation in Refinancing, Syndication and Assignment...............................99
Signature pages........................................................................................S-1
</TABLE>
-iv-
<PAGE> 6
PAGE
----
EXHIBITS
I FORM OF NOTICE OF BORROWING
II FORM OF NOTICE OF CONVERSION/CONTINUATION
IIIA FORM OF EXISTING AIRCRAFT EXTENSION NOTE
IIIB FORM OF NEW AIRCRAFT NOTE
IV FORM OF COMPLIANCE CERTIFICATE
VA FORM OF OPINION OF CAHILL GORDON & REINDEL
VB FORM OF SECTION 1110 OPINION
VC FORM OF OPINION OF THOMAS G.SCOTT
VI INTENTIONALLY OMITTED
VII FORM OF ASSIGNMENT AGREEMENT
VIII FORM OF CERTIFICATE RE NON-BANK STATUS
IX FORM OF FINANCIAL CONDITION CERTIFICATE
X FORM OF FIRST AIRCRAFT CHATTEL MORTGAGE
XI FORM OF SECOND AIRCRAFT CHATTEL MORTGAGE
-v-
<PAGE> 7
PAGE
----
SCHEDULES
1.1 EXISTING AIRCRAFT AND EXISTING AIRCRAFT LOAN EXTENSION AMOUNTS
2.1 LENDERS' COMMITMENTS AND PRO RATA SHARES
5.1 SUBSIDIARIES OF COMPANY
6.1 CERTAIN EXISTING INDEBTEDNESS
6.2 CERTAIN EXISTING LIENS
6.3 CERTAIN EXISTING INVESTMENTS
6.4 CERTAIN EXISTING CONTINGENT OBLIGATIONS
-vi-
<PAGE> 8
ATLAS AIR, INC.
FOURTH AMENDED AND RESTATED
CREDIT AGREEMENT
This FOURTH AMENDED AND RESTATED CREDIT AGREEMENT is dated as
of April 25, 2000 and entered into by and among ATLAS AIR, INC., a Delaware
corporation ("Company"), THE FINANCIAL INSTITUTIONS LISTED ON THE SIGNATURE
PAGES HEREOF (each individually referred to herein as a "Lender" and
collectively as "Lenders"), and BANKERS TRUST COMPANY ("Bankers Trust"), as
administrative agent for Lenders (in such capacity, "Administrative Agent").
R E C I T A L S
WHEREAS, pursuant to that certain Third Amended and Restated
Credit Agreement dated as of September 5, 1997 as amended by the First Amendment
thereto dated as of July 8, 1998, as further amended by the Second Amendment
thereto dated as of August 14, 1998 and as further amended by the Third
Amendment thereto dated as of June 14, 1999, by and among Company, as Borrower,
the financial institutions listed on the signature pages thereof, Goldman Sachs
Credit Partners L.P., as Syndication Agent and Administrative Agent (the
"Existing Agreement"), Lenders have made certain credit facilities available to
Company for the purpose of acquisition and modification of certain aircraft to
be used in Company's air cargo business;
WHEREAS, the parties of the Existing Agreement desire to amend
and restate the Existing Agreement in order to (i) extend the maturity of the
Loans, (ii) decrease the Revolving Loan Commitments by $25,000,000 to
$175,000,000, (iii) adjust the financial covenants, and (iv) make certain other
amendments to the Existing Agreement;
WHEREAS, it is the intention of Company, Administrative Agent
and each of the Lenders that such amendment and restatement of the Existing
Agreement shall not constitute a refinancing of the Loans outstanding on the
Fourth Restatement Date and that, with respect to the Loans outstanding as of
the Fourth Restatement Date, the First Aircraft Chattel Mortgages shall continue
to constitute purchase-money security interests subject to Section 1110 of the
Bankruptcy Code; and
WHEREAS, the Lenders identified on the signature pages hereof
hold all of the "Revolving Loans" and "Revolving Commitments" under the Existing
Agreement as identified on Schedule 2.1.
NOW THEREFORE, in consideration of the premises and
agreements, provisions and covenants herein contained, Company, Lenders and
Administrative Agent hereby agree that the Existing Agreement shall be amended
and restated in its entirety as follows:
<PAGE> 9
SECTION 1.
DEFINITIONS.
1.1 CERTAIN DEFINED TERMS.
The following terms used in this Agreement shall have the following
meanings:
"ACMI CONTRACT" means (i) any contract entered into by Company
pursuant to which Company furnishes the aircraft, crew, maintenance and
insurance and customers bear all other operating expenses and (ii) any similar
contract in which the customer provides the flight crew, all in accordance with
Company's historical practices.
"ACMI CONTRACTED AIRCRAFT" means an aircraft acquired by Company
or its Subsidiaries and dedicated to a new ACMI Contract entered into in
connection with the acquisition of such aircraft (which ACMI Contract shall not
represent a renewal or replacement of a prior ACMI Contract unless the aircraft
dedicated to such prior ACMI Contract was operated under an operating lease and
returned to the lessor) which is in effect on the date of calculation and has a
remaining term of one year or more on the date such aircraft was dedicated to
such ACMI Contract (subject to cancellation terms, which may include the right
to cancel on six months notice). When making any calculation on a Pro Forma
Basis effect shall be given to the acquisition of an ACMI Contracted Aircraft by
adding to the appropriate components of Consolidated Adjusted EBITDA (i) the net
projected annualized revenues from the operation of the ACMI Contracted Aircraft
under such ACMI Contract for that portion of the period for which Consolidated
Adjusted EBITDA is being calculated prior to the acquisition of such aircraft,
assuming operation for the minimum guaranteed number of block hours (less any
block hours subject to cancellation) at the minimum guaranteed rate under such
ACMI Contract less (ii) the projected annualized cash operating expenses from
such operation for the same period for which the related projected revenues are
determined in clause (i) above; provided that such projected cash operating
expenses shall not be less on a per block hour basis than the average historical
per block hour operating expenses of Company for the four full fiscal quarters
immediately preceding the date of calculation, and provided, further, that if
such aircraft is of a model other than a Boeing 747 freighter, such projected
cash operating expenses shall include maintenance costs which shall not be less
than the average for such aircraft type disclosed on the most recently available
DOT Forms 41 with respect to such aircraft type or any summary of such data as
reported in a nationally recognized industry publication. For purposes of this
definition, "ACMI CONTRACT" shall include contracts pursuant to which Company
does not pay any crew costs, in which event pro forma effect shall be given as
described above but excluding from the projected annualized cash operating
expenses all crew costs. Cash operating expenses means for purposes of this
definition consolidated operating expenses, less consolidated depreciation and
amortization and Consolidated Rental Payments, to the extent included in
computing consolidated operating expenses.
"ADJUSTED CONSOLIDATED WORKING CAPITAL" means, as at any date of
determination, Consolidated Current Assets (excluding Cash and Cash Equivalents)
less Consolidated Current Liabilities.
-2-
<PAGE> 10
"ADJUSTED EURODOLLAR RATE" means, for any Interest Rate
Determination Date, (x) until such time as Reference Lenders are determined in
accordance with the definition thereof, the rate per annum obtained by dividing
the offered rate (expressed as a rate per annum and rounded upward to the
nearest 1/16 of one percent) appearing on the Dow Jones/Telerate Monitor on
Telerate Access Service Page 3750 (British Bankers Association Settlement Rate)
(or such other page as may, in the opinion of Administrative Agent, replace such
page on that system for the purpose of displaying such rate) at or about 11:00
a.m. (London time) on such Interest Rate Determination Date for U.S. dollar
deposits of amounts in same day funds comparable to the principal amount of the
Eurodollar Rate Loan for which the Adjusted Eurodollar Rate is then being
determined with maturities comparable to the Interest Period for which such
Adjusted Eurodollar Rate will apply by (ii) a percentage equal to 100% minus the
stated maximum rate of all reserve requirements (including, without limitation,
any marginal, emergency, supplemental, special or other reserves) applicable on
such Interest Rate Determination Date to any member bank of the Federal Reserve
System in respect of "Eurodollar liabilities" as defined in Regulation D (or any
successor category of liabilities under Regulation D) and (y) thereafter, the
rate per annum obtained by dividing (i) the arithmetic average (rounded upward
to the nearest 1/16 of one percent) of the offered quotation, if any, to first
class banks in the interbank Eurodollar market by each of the Reference Lenders
for U.S. dollar deposits of amounts in same day funds comparable to the
principal amount of the Eurodollar Rate Loan of that Reference Lender for which
the Adjusted Eurodollar Rate is then being determined with maturities comparable
to such Interest Period as of approximately 10:00 A.M. (New York time) on such
Interest Rate Determination Date by (ii) a percentage equal to 100% minus the
stated maximum rate of all reserve requirements (including, without limitation,
any marginal, emergency, supplemental, special or other reserves) applicable on
such Interest Rate Determination Date to any member bank of the Federal Reserve
System in respect of "Eurocurrency liabilities" as defined in Regulation D (or
any successor category of liabilities under Regulation D); provided that if any
Reference Lender fails to provide Administrative Agent with its aforementioned
quotation then the Adjusted Eurodollar Rate shall be determined based on the
quotation(s) provided to Administrative Agent by the other Reference Lender(s).
"ADMINISTRATIVE AGENT" has the meaning assigned to that term in
the introduction to this Agreement and also means and includes any successor
Administrative Agent appointed pursuant to subsection 8.6.
"AERONAUTICAL AUTHORITY" means, at any date, the Federal Aviation
Administration or other governmental airworthiness authority having jurisdiction
over any Eligible Aircraft or Airframe or Engine under the laws of the country
in which the Airframe is then registered.
"AFFECTED LENDER" has the meaning assigned to that term in
subsection 2.6C.
-3-
<PAGE> 11
"AFFECTED LOANS" has the meaning assigned to that term in
subsection 2.6C.
"AFFILIATE" means, as applied to any Person, any other Person
directly or indirectly controlling, controlled by, or under common control with,
that Person. For the purposes of this definition, "control" (including, with
correlative meanings, the terms "controlling", "controlled by" and "under common
control with"), as applied to any Person, means the possession, directly or
indirectly, of the power to direct or cause the direction of the management and
policies of that Person, whether through the ownership of voting securities or
by contract or otherwise.
"AFL" means Atlas Freighter Leasing, Inc., a Delaware corporation,
whose common stock is wholly owned by Company.
"AFL FINANCING AGREEMENT" means that certain Credit Agreement
dated as of May 29, 1997 by and among AFL, the lenders party thereto and Bankers
Trust Company, as Agent, as such agreement may be amended, modified or
supplemented from time to time in accordance with the terms thereof.
"AFL II" means Atlas Freighter Leasing II, Inc., a Delaware
corporation, whose common stock is wholly owned by Company.
"AFL II FINANCING AGREEMENT" means that certain Credit Agreement
dated as of September 5, 1997 by and among AFL II, the lenders party thereto,
Goldman Sachs Credit Partners L.P., as Syndication Agent, and Bankers Trust
Company, as Administrative Agent, as such agreement may be amended, modified or
supplemented from time to time in accordance with the terms thereof.
"AFL III" means Atlas Freighter Leasing III, Inc., a Delaware
corporation, whose common stock is wholly owned by Company, the sole business of
which is the ownership of the AFL III Equipment and the leasing of the AFL III
Equipment to Company pursuant to the AFL III Leases and obtaining financing with
respect thereto.
"AFL III EQUIPMENT" means (i) eleven Boeing 747-200 aircraft
(including the engines attached thereto) with registration numbers N505MC,
N507MC, N508MC, N509MC, N516MC, N517MC, N523MC, N524MC, N526MC, N527MC and
N528MC, (ii) nine General Electric CF6-50E2 engines and (iii) three General
Electric CF6-80C2 engines.
"AFL III FINANCING" means indebtedness in an aggregate principal
amount of $300,000,000 incurred by AFL III as of April 25, 2000 pursuant to the
AFL III Financing Agreement.
"AFL III FINANCING AGREEMENT" means that certain Credit Agreement
dated as of April 25, 2000 by and among AFL III, the lenders party thereto and
Bankers Trust Company, as Agent, as such agreement may be amended, modified or
supplemented from time to time in accordance with the terms thereof.
"AFL III LEASES" means one or more triple net leases by and
between Company and AFL III with respect to the AFL III Equipment providing for
fair market rental rates sufficient to provide for principal and interest
payments under the AFL III Financing Agreement and a market rate of return on
the equity interest of AFL III, as lessor thereunder, as such leases may be
amended, modified or supplemented from time to time in accordance with the
provisions of this Agreement.
-4-
<PAGE> 12
"AFL III RESTRUCTURING" means the following transactions which
occurred concurrently on the Fourth Restatement Date: (i) the contribution of
the AFL III Equipment to AFL III as a capital contribution, (ii) the incurrence
of indebtedness pursuant to the AFL III Financing Agreement and the simultaneous
repayment of amounts outstanding under the AFL Financing Agreement and the AFL
II Financing Agreement and the release of all Liens arising thereunder and (iii)
the entering into of the AFL III Leases.
"AGREEMENT" means this Fourth Amended and Restated Credit
Agreement dated as of April 25, 2000, as it may be amended, supplemented or
otherwise modified from time to time.
"AIRCRAFT CHATTEL MORTGAGE" means any or all of the First Aircraft
Chattel Mortgages and the Second Aircraft Chattel Mortgages.
"AIRFRAME" means, as the context requires, an Airframe as defined
in a particular Aircraft Chattel Mortgage or all Airframes as defined in all
Aircraft Chattel Mortgages.
"APPLICABLE MARGIN" has the meaning assigned to that term in
subsection 2.2A.
"APPRAISED VALUE" means, with respect to any Financed Aircraft,
the average of the appraised value of such Financed Aircraft by two Approved
Appraisers as most recently determined pursuant to subsection 5.10.
"APPROVED APPRAISER" means any of the following: AvSolutions,
Inc., BK Associates, Jack B. Feir Associates, Morton Beyer & Agnew, Inc.,
Airclaims, Ltd., Aircraft Information Services, Inc., Simat, Helleisen &
Eichner, Inc. and AVITAS, Inc.
"APPROVED LEASE" means, with respect to any Financed Aircraft, any
lease designated as an Approved Lease by Administrative Agent in its sole
discretion; provided that, the term of any such lease shall not exceed 36
months.
"ASSET SALE" means the sale (including any sale-leaseback
transaction other than sale-leaseback transactions permitted by subsections 6.9
and 6.10 hereof) by Company or any of its Subsidiaries to any other Person of
(i) any of the stock of any of Company's
-5-
<PAGE> 13
Subsidiaries, (ii) substantially all of the assets of any division or line of
business of Company or any of its Subsidiaries, or (iii) any other assets
(whether tangible or intangible) of Company or any of its Subsidiaries outside
of the ordinary course of business excluding (A) any such other assets to the
extent that the aggregate value of such assets sold in any single transaction or
related series of transactions is equal to $5,000,000 or less, (B) transactions
related to aircraft engines, components, parts or spare parts pursuant to
customary pooling, exchange or similar arrangements, (C) asset swaps involving
aircraft engines, components, parts or spare parts (other than any engines
encumbered pursuant to an Aircraft Chattel Mortgage); provided that the assets
received by the Company or any Subsidiary have a fair market value at least
equal to the assets transferred (provided that with respect to any asset swap or
series of related asset swaps involving assets of Company or any Subsidiary with
a fair market value exceeding $10,000,000, such determination shall be made by
the Board of Directors of Company)), (D) asset sales involving obsolete,
worn-out, excess or redundant equipment as long as the proceeds therefrom are
used to replace or to upgrade the aircraft or the equipment installed thereon,
(E) transactions permitted by subsection 9.21 of the AFL III Financing Agreement
and (F) the sale by AFL III of a single aircraft pursuant to subsection 6.6(ii)
of the AFL III Financing Agreement.
"ASSIGNEE NOTES" means any promissory notes issued by Company (i)
at the request of a Lender pursuant to subsection 2.1D hereof or (ii) pursuant
to the last sentence of subsection 9.1B(i) in connection with assignments of the
Commitments, Existing Aircraft Extended Loans or New Aircraft Loans of any
Lenders, substantially in the form of Exhibit IIIA or Exhibit IIIB annexed
hereto, as the case may be, as they may be amended, supplemented or otherwise
modified from time to time.
"ASSIGNMENT AGREEMENT" means an Assignment Agreement in
substantially the form of Exhibit VII annexed hereto.
"ATLAS ONE" means Atlas One, Inc., a Delaware corporation.
"BANKERS TRUST" has the meaning assigned to that term in the
introduction to this Agreement.
"BANKRUPTCY CODE" means Title 11 of the United States Code
entitled "Bankruptcy", as now and hereafter in effect, or any successor statute.
"BASE RATE" means, at any time, the higher of (x) the Prime Rate
or (y) the rate which is 1/2 of 1% in excess of the Federal Funds Effective
Rate.
"BASE RATE LOANS" means Loans bearing interest at rates determined
by reference to the Base Rate as provided in subsection 2.2A.
"BFE AGREEMENT" means any agreement entered into by Company,
relating to buyer furnished equipment to be installed on any Financed Aircraft
in form and substance
-6-
<PAGE> 14
satisfactory to Administrative Agent, as amended, restated, supplement or
otherwise modified from time to time in accordance with this Agreement.
"BUSINESS DAY" means any day excluding Saturday, Sunday and any
day which is a legal holiday under the laws of the States of New York or
Colorado or is a day on which banking institutions located in either such state
are authorized or required by law or other governmental action to close.
"CAPITAL LEASE", as applied to any Person, means any lease of any
property (whether real, personal or mixed) by that Person as lessee that, in
conformity with GAAP, is accounted for as a capital lease on the balance sheet
of that Person.
"CASH" means money, currency or a credit balance in a Deposit
Account.
"CASH EQUIVALENTS" means, as at any date of determination, (i)
marketable securities (a) issued or directly and unconditionally guaranteed as
to interest and principal by the United States Government or (b) issued by any
agency of the United States the obligations of which are backed by the full
faith and credit of the United States, in each case maturing within one year
after such date; (ii) marketable direct obligations issued by any state of the
United States of America or any political subdivision of any such state or any
public instrumentality thereof, in each case maturing within one year after such
date and having, at the time of the acquisition thereof, the highest rating
obtainable from either S&P or Moody's; (iii) commercial paper maturing no more
than one year from the date of creation thereof and having, at the time of the
acquisition thereof, a rating of at least A-1 from S&P or at least P-1 from
Moody's; (iv) certificates of deposit or bankers' acceptances maturing within
one year after such date and issued or accepted by any Lender or by any
commercial bank organized under the laws of the United States of America or any
state thereof or the District of Columbia that (a) is at least "adequately
capitalized" (as defined in the regulations of its primary Federal banking
regulator) and (b) has Tier 1 capital (as defined in such regulations) of not
less than $100,000,000; and (v) shares of any money market mutual fund that (a)
has at least 95% of its assets invested continuously in the types of investments
referred to in clauses (i) and (ii) above, (b) has net assets of not less than
$500,000,000, and (c) has the highest rating obtainable from either S&P or
Moody's.
"CASH PROCEEDS" means, with respect to any Asset Sale, Cash
payments (including any Cash received by way of deferred payment pursuant to, or
monetization of, a note receivable or otherwise, but only as and when so
received) received from such Asset Sale.
"CERTIFICATE RE NON-BANK STATUS" means a certificate substantially
in the form of Exhibit VIII annexed hereto delivered by a Lender to
Administrative Agent pursuant to subsection 2.7B(iii).
-7-
<PAGE> 15
"CERTIFICATED AIR CARRIER" means a United States "air carrier"
within the meaning of the Federal Aviation Act, operating pursuant to a
certificate issued under Section 401 of such Act, or a carrier of comparable
status under any successor law or provision.
"COLLATERAL" means all of the properties and assets in which Liens
are purported to be granted by the Collateral Documents.
"COLLATERAL DOCUMENTS" means each First Aircraft Chattel Mortgage
and each Second Aircraft Chattel Mortgage and any security agreement executed
pursuant to subsection 5.9.
"COMMITMENTS" means the commitments of Lenders to maintain, make
and convert Loans as set forth in subsection 2.1A.
"COMPANY" has the meaning assigned to that term in the
introduction to this Agreement.
"COMPANY COMMON STOCK" means the common stock of Company, par
value $0.01 per share.
"COMPLIANCE CERTIFICATE" means a certificate substantially in the
form of Exhibit IV annexed hereto delivered to Administrative Agent and Lenders
by Company pursuant to subsection 5.1(iv).
"CONDEMNATION PROCEEDS" has the meaning assigned to that term in
subsection 2.4B(iii)(c).
"CONSOLIDATED ADJUSTED EBITDA" means, for any period, the sum of
the amounts for such period of (i) Consolidated Net Income, (ii) Consolidated
Interest Expense, (iii) provisions for taxes based on income, (iv) total
depreciation expense, (v) total amortization expense, and (vi) other non-cash
items reducing Consolidated Net Income less other non-cash items increasing
Consolidated Net Income, all of the foregoing as determined on a consolidated
basis for Company and its Subsidiaries in conformity with GAAP.
"CONSOLIDATED CAPITAL EXPENDITURES" means, for any period, the sum
of (i) the aggregate of all expenditures (whether paid in cash or other
consideration or accrued as a liability and including that portion of Capital
Leases which is capitalized on the consolidated balance sheet of Company and its
Subsidiaries) by Company and its Subsidiaries during that period that, in
conformity with GAAP, are included in "additions to property, plant or
equipment" or comparable items reflected in the consolidated statement of cash
flows of Company and its Subsidiaries plus (ii) to the extent not covered by
clause (i) of this definition, the aggregate of all expenditures by Company and
its Subsidiaries during that period to acquire (by purchase or otherwise) the
business, property or fixed assets of any Person, or the stock or other evidence
of beneficial ownership of any Person that, as a result of such acquisition,
becomes a Subsidiary of Company.
-8-
<PAGE> 16
"CONSOLIDATED CURRENT ASSETS" means, as at any date of
determination, the total assets of Company and its Subsidiaries on a
consolidated basis which may properly be classified as current assets in
conformity with GAAP.
"CONSOLIDATED CURRENT LIABILITIES" means, as at any date of
determination, the total liabilities of Company and its Subsidiaries on a
consolidated basis which may properly be classified as current liabilities in
conformity with GAAP but excluding the current portion of any Indebtedness of
the Company which would otherwise be included therein.
"CONSOLIDATED EXCESS CASH FLOW" means, for any Fiscal Year, an
amount equal to the sum of Consolidated Adjusted EBITDA for such Fiscal Year and
the Consolidated Working Capital Adjustment for such Fiscal Year, minus the sum
of the amounts for such Fiscal Year of (i) scheduled repayments of principal of
Indebtedness, mandatory prepayments of the principal of Indebtedness (other than
from the proceeds of Asset Sales), voluntary prepayments of the principal of
Indebtedness to the extent that such amount is not simultaneously reborrowed,
and other permanent reductions in the availability of revolving credit
facilities (ii) Consolidated Interest Expense, (iii) permitted Consolidated
Capital Expenditures (net of any proceeds of any related financing with respect
to such Consolidated Capital Expenditures) other than Consolidated Capital
Expenditures made pursuant to the reinvestment provisions of subsection
2.4B(iii)(a), and (iv) the portion of taxes based on income or revenues actually
paid in cash.
"CONSOLIDATED INTEREST EXPENSE" means, for any period, total net
interest expense (to be computed by reducing interest expense by the amount of
interest income) (including that portion attributable to Capital Leases in
accordance with GAAP and capitalized interest) of Company and its Subsidiaries
on a consolidated basis with respect to all outstanding Indebtedness of Company
and its Subsidiaries, including, without limitation, all commissions, discounts
and other fees and charges owed with respect to letters of credit and bankers'
acceptance financing and net costs under Interest Rate Agreements and Currency
Agreements, but excluding, however, any amounts referred to in subsection 2.3
payable to Syndication Agent, Administrative Agent and/or Lenders on or before
the Fourth Restatement Date.
"CONSOLIDATED NET INCOME" means, for any period, the net income
(or loss) of Company and its Subsidiaries on a consolidated basis for such
period taken as a single accounting period determined in conformity with GAAP;
provided that there shall be excluded (i) the income (or loss) of any Person
(other than a Subsidiary of Company) in which any other Person (other than
Company or any of its Subsidiaries) has a joint interest, except to the extent
of the amount of dividends or other distributions actually paid to Company or
any of its Subsidiaries by such Person during such period, (ii) the income (or
loss) of any Person accrued prior to the date it becomes a Subsidiary of Company
or is merged into or consolidated with Company or any of its Subsidiaries or
that Person's assets are acquired by Company or any of its Subsidiaries, (iii)
the income of any Subsidiary of Company to the extent that the declaration or
payment of dividends or similar distributions by that Subsidiary
-9-
<PAGE> 17
of that income is not at the time permitted by operation of the terms of its
charter or any agreement, instrument, judgment, decree, order, statute, rule or
governmental regulation applicable to that Subsidiary, (iv) any after-tax gains
or losses attributable to Asset Sales or returned surplus assets of any pension
plan, and (v) (to the extent not included in clauses (i) through (iv) above) any
net extraordinary gains or net non-cash extraordinary losses.
"CONSOLIDATED NET WORTH" means, as at any date of determination,
the sum of the capital stock and additional paid-in capital plus retained
earnings (or minus accumulated deficits) of Company and its Subsidiaries on a
consolidated basis determined in conformity with GAAP.
"CONSOLIDATED RENTAL PAYMENTS" means, for any period, the
aggregate amount of all rents paid or payable by Company and its Subsidiaries on
a consolidated basis during that period under all Capital Leases and Operating
Leases to which Company or any of its Subsidiaries is a party as lessee (net of
sublease income other than income from ACMI Contracts). For the avoidance of
doubt, all rental payments to AFL III shall not be included in Consolidated
Rental Payments.
"CONSOLIDATED TOTAL DEBT" means, as at any date of determination,
the aggregate stated balance sheet amount of all Indebtedness of Company and its
Subsidiaries, determined on a consolidated basis in accordance with GAAP.
"CONSOLIDATED WORKING CAPITAL ADJUSTMENT" means, for any Fiscal
Year on a consolidated basis, the amount (which may be a negative number) by
which the Adjusted Consolidated Working Capital of Company and its Subsidiaries
as of the beginning of the period exceeds (or is less than) the Adjusted
Consolidated Working Capital of Company and its Subsidiaries as of the end of
such period.
"CONTINGENT OBLIGATION" means, as applied to any Person, any
direct or indirect liability, contingent or otherwise, of that Person (i) with
respect to any Indebtedness, lease, dividend or other obligation of another if
the primary purpose or intent thereof by the Person incurring the Contingent
Obligation is to provide assurance to the obligee of such obligation of another
that such obligation of another will be paid or discharged, or that any
agreements relating thereto will be complied with, or that the holders of such
obligation will be protected (in whole or in part) against loss in respect
thereof, (ii) with respect to any letter of credit issued for the account of
that Person or as to which that Person is otherwise liable for reimbursement of
drawings, or (iii) under Interest Rate Agreements and Currency Agreements.
Contingent Obligations shall include, without limitation, (a) the direct or
indirect guaranty, endorsement (otherwise than for collection or deposit in the
ordinary course of business), co-making, discounting with recourse or sale with
recourse by such Person of the obligation of another, (b) the obligation to make
take-or-pay or similar payments if required regardless of non-performance by any
other party or parties to an agreement, and (c) any liability of such Person for
the obligation of another through any agreement (contingent or otherwise) (X) to
purchase, repurchase or otherwise acquire such obligation or any security
-10-
<PAGE> 18
therefor, or to provide funds for the payment or discharge of such obligation
(whether in the form of loans, advances, stock purchases, capital contributions
or otherwise) or (Y) to maintain the solvency or any balance sheet item, level
of income or financial condition of another if, in the case of any agreement
described under subclauses (X) or (Y) of this sentence, the primary purpose or
intent thereof is as described in the preceding sentence. The amount of any
Contingent Obligation shall be equal to the amount of the obligation so
guaranteed or otherwise supported or, if less, the amount to which such
Contingent Obligation is specifically limited.
"CONTINUING DIRECTORS" shall mean the directors of a Person on the
Fourth Restatement Date and each other director, if such other director's
nomination for election to the Board of Directors of such Person is recommended
by a majority of the then Continuing Directors.
"CONTRACTUAL OBLIGATION", as applied to any Person, means any
provision of any Security issued by that Person or of any material indenture,
mortgage, deed of trust, contract, undertaking, agreement or other instrument to
which that Person is a party or by which it or any of its properties is bound or
to which it or any of its properties is subject.
"CURRENCY AGREEMENT" means any foreign exchange contract, currency
swap agreement, futures contract, option contract, synthetic cap or other
similar agreement or arrangement designed to protect Company or any of its
Subsidiaries against fluctuations in currency values.
"DEPOSIT ACCOUNT" means a demand, time, savings, passbook or like
account with a bank, savings and loan association, credit union or like
organization, other than an account evidenced by a negotiable certificate of
deposit.
"DESIGNATED INDEBTEDNESS" means Indebtedness incurred pursuant to
the Pass Through Trust Documents, the FINOVA Agreement, the Senior Note
Documents, the NationsBanc/Bank of America Agreement, the AFL III Financing
Agreement, any Permitted Extension Indebtedness and any Other Permitted
Indebtedness.
"DETERMINATION DATE" has the meaning assigned to that term in
subsection 6.1(vi).
"DOLLARS" and the sign "$" mean the lawful money of the United
States of America.
"ELIGIBLE AIRCRAFT" means a Boeing 747-200, 747-300, 747-400 or
MD-11 aircraft, including any engines installed thereon and any spare engines of
the same type and model, which (i) is in a cargo configuration capable of
immediate operation in the business of Company or is eligible for delivery under
any Modification Agreement with a delivery slot available within a six month
period (or is leased in accordance with the Collateral Documents
-11-
<PAGE> 19
for a period of longer than six months until a delivery slot is available), and
(ii) has a maximum gross take-off weight ("MTOW") of at least 800,000 pounds, in
the case of any 747-200, 747-300, or 747-400 aircraft and 630,000 pounds in the
case of any MD-11 aircraft.
"ELIGIBLE ASSIGNEE" means (A) (i) a commercial bank organized
under the laws of the United States or any state thereof; (ii) a savings and
loan association or savings bank organized under the laws of the United States
or any state thereof; (iii) a commercial bank organized under the laws of any
other country or a political subdivision thereof; provided that (x) such bank is
acting through a branch or agency located in the United States or (y) such bank
is organized under the laws of a country that is a member of the Organization
for Economic Cooperation and Development or a political subdivision of such
country; and (iv) any other entity which is an "accredited investor" (as defined
in Regulation D under the Securities Act) which extends credit or buys loans as
one of its businesses including, but not limited to, insurance companies, mutual
funds and lease financing companies, in each case (under clauses (i) through
(iv) above) that is reasonably acceptable to Administrative Agent; and (B) any
Lender and any Affiliate of any Lender; provided that no Affiliate of Company
shall be an Eligible Assignee.
"EMPLOYEE BENEFIT PLAN" means any "employee benefit plan" as
defined in Section 3(3) of ERISA which is, or was at any time, maintained or
contributed to by Company or any of its ERISA Affiliates.
"ENGINE" means, as the context requires, an Engine as defined in a
particular Aircraft Chattel Mortgage, Engines as defined in all Aircraft Chattel
Mortgages, a Replacement Engine, all Replacement Engines or all of any of the
foregoing.
"ENVIRONMENTAL CLAIM" means any investigation, notice, claim, suit
or order, by any governmental authority or any Person arising in connection with
any alleged or actual violation of Environmental Laws or with any Hazardous
Material, or any actual or alleged damage, or harm to health, safety or the
environment.
"ENVIRONMENTAL LAWS" means any and all current or future statutes,
ordinances, orders, rules, regulations, guidance documents, judgments,
governmental authorizations, or any other requirement of governmental
authorities relating to environmental matters, including, without limitation,
those relating to any Hazardous Materials Activity.
"EQUITY PROCEEDS" means the cash proceeds (net of underwriting
discounts and commissions and other reasonable costs associated therewith) from
the issuance of any equity Securities of Company including, without limitation,
additional issuances of Company Common Stock.
"ERISA" means the Employee Retirement Income Security Act of 1974,
as amended from time to time, and any successor statute.
-12-
<PAGE> 20
"ERISA AFFILIATE" means, as applied to any Person, (i) any
corporation which is, or was at any time, a member of a controlled group of
corporations within the meaning of Section 414(b) of the Internal Revenue Code
of which that Person is, or was at any time, a member; (ii) any trade or
business (whether or not incorporated) which is, or was at any time, a member of
a group of trades or businesses under common control within the meaning of
Section 414(c) of the Internal Revenue Code of which that Person is, or was at
any time, a member; and (iii) any member of an affiliated service group within
the meaning of Section 414(m) or (o) of the Internal Revenue Code of which that
Person, any corporation described in clause (i) above or any trade or business
described in clause (ii) above is, or was at any time, a member.
"EURODOLLAR RATE LOANS" means Loans bearing interest at rates
determined by reference to the Adjusted Eurodollar Rate as provided in
subsection 2.2A.
"EVENT OF DEFAULT" means each of the events set forth in Section
7.
"EVENT OF LOSS" shall mean any of the following events with
respect to any Financed Aircraft (whether the Airframe or an Engine of such
Financed Aircraft or Spare Engine or both): (A) loss of such Financed Aircraft
or Spare Engine or the use thereof due to theft or disappearance of such
Financed Aircraft or Spare Engine which shall result in the loss of possession
thereof for a period of 120 days (or for a shorter period ending on the date on
which there is an insurance settlement for a total loss on the basis of the
theft or disappearance of such Financed Aircraft or Spare Engine); (B) the
destruction, damage beyond repair or rendition of such Financed Aircraft or
Spare Engine permanently unfit for normal use for any reason whatsoever; (C) the
condemnation, confiscation or seizure of, or requisition of title to, or use or
possession (other than use by the United States Government if Company obtains
adequate compensation from the United States Government) of such Financed
Aircraft or Spare Engine; (D) as a result of any rule, regulation, order or
other action by the FAA or other governmental body having jurisdiction, the use
of such Financed Aircraft or Spare Engine in the normal course of interstate air
transportation of persons or cargo shall have been prohibited for a period of
more than nine consecutive months unless Company, prior to the expiration of
such nine month period, shall have undertaken and shall be diligently carrying
forward all steps which are necessary or desirable to permit the normal use of
such property by Company or, in any event, if such use shall have been
prohibited for a period of twelve consecutive months; (E) the operation or
location of such Financed Aircraft or Spare Engine, while under requisition for
use by the United States or any instrumentality or agency thereof, in any area
excluded from coverage by any insurance policy in effect with respect to such
Financed Aircraft or Spare Engine, if Company shall be unable to obtain
indemnity in lieu thereof from the United States; (F) any damage which results
in an insurance settlement with respect to such Financed Aircraft or Spare
Engine on the basis of an actual or constructive total loss or (G) a divestiture
of such Airframe or Spare Engine as described in Section 4(d)(iii), Section
4(d)(vi), Section 4(d)(vii)(B) or Section 4(d)(viii)(B) of any Aircraft Chattel
Mortgage. An Event of Loss with respect to any Financed Aircraft shall be deemed
to have occurred if an Event of Loss occurs with respect to the Airframe of such
Financed Aircraft.
-13-
<PAGE> 21
"EXCHANGE ACT" means the Securities Exchange Act of 1934, as
amended from time to time, and any successor statute.
"EXISTING AGREEMENT" has the meaning assigned to that term in the
Recitals hereto.
"EXISTING AIRCRAFT" means the aircraft identified on Schedule 1.1
annexed hereto.
"EXISTING AIRCRAFT EXTENDED LOANS" means Loans deemed made by
Lenders to Company pursuant to subsection 2.1A(i).
"EXISTING AIRCRAFT EXTENDED NOTES" means (i) the promissory notes
of Company issued pursuant to subsection 2.1D on the Fourth Restatement Date and
(ii) any promissory notes issued by Company pursuant to the last sentence of
subsection 9.1B(i) in connection with assignments of Existing Aircraft Extended
Loans of any Lenders, in each case substantially in the form of Exhibit IIIA
annexed hereto, as they may be amended, supplemented or otherwise modified from
time to time.
"EXISTING AIRCRAFT LOAN EXTENSION AMOUNT" means, for each Existing
Aircraft, the amount shown on Schedule 1.1 annexed hereto.
"EXISTING AIRCRAFT LOAN REPAYMENT AMOUNTS" means, for each
Existing Aircraft Loan Repayment Date for each Existing Aircraft Extended Loan,
an amount equal to 10% of the Existing Aircraft Loan Extension Amount.
"EXISTING AIRCRAFT LOAN REPAYMENT DATE" means, for each Existing
Aircraft Extended Loan, the three-year anniversary date of the Fourth
Restatement Date and each 3-month anniversary date thereafter; provided that,
notwithstanding anything in the foregoing to the contrary, the unpaid amount of
all Existing Aircraft Extended Notes shall be due and payable on the Final
Scheduled Maturity Date.
"FACILITIES" means any and all real property now, hereafter or
heretofore owned, leased, operated or used by Company or any of its
predecessors.
"FEDERAL AVIATION ACT" means the Federal Aviation Act of 1958, as
amended and as recodified in Title 49, United States Code, or any similar
legislation of the United States enacted to supersede, amend or supplement such
Act and the rules and regulations promulgated thereunder.
-14-
<PAGE> 22
"FEDERAL AVIATION ADMINISTRATION" or "FAA" means the United States
Federal Aviation Administration or any successor thereto administering the
functions of the Federal Aviation Administration under the Federal Aviation Act.
"FEDERAL FUNDS EFFECTIVE RATE" means, for any period, a
fluctuating interest rate equal for each day during such period to the weighted
average of the rates on overnight Federal funds transactions with members of the
Federal Reserve System arranged by Federal funds brokers, as published for such
day (or, if such day is not a Business Day, for the next preceding Business Day)
by the Federal Reserve Bank of New York, or, if such rate is not so published
for any day on which is a Business Day, the average of the quotations for such
day on such transactions received by Administrative Agent from three Federal
funds brokers of recognized standing selected by Administrative Agent.
"FINAL SCHEDULED MATURITY DATE" means the five-year anniversary
date of the Fourth Restatement Date.
"FINANCED AIRCRAFT" means all Eligible Aircraft, including the
airframes and engines, purchased by Company with proceeds of Existing Aircraft
Extended Loans deemed made and New Aircraft Loans made under this Agreement and
with respect to which a First Aircraft Chattel Mortgage has been executed and
delivered.
"FINOVA AGREEMENT" means that certain Secured Loan Agreement dated
as of April 11, 1996 between FINOVA and Company, as amended, restated,
supplemented or otherwise modified from time to time in accordance with this
Agreement.
"FIRST AIRCRAFT CHATTEL MORTGAGE" means, with respect to each
Eligible Aircraft purchased with the proceeds of Loans, a Security Agreement and
Chattel Mortgage (Aircraft No. ___) substantially in the form of Exhibit X
annexed hereto granting to Administrative Agent for the benefit of Lenders a
purchase money first priority security interest in such Eligible Aircraft, as
such First Aircraft Chattel Mortgage may be amended, restated, supplemented or
otherwise modified from time to time in accordance with the terms hereof and
thereof.
"FISCAL YEAR" means Company's fiscal year ending on December 31 of
each year.
"FOREIGN LEASED AIRCRAFT" means a Leased Aircraft that is
registered in a country other than the United States during the term of the
applicable Approved Lease.
"FOURTH RESTATEMENT DATE" means the date on or before April 25,
2000 on which the conditions to effectiveness set forth in subsection 3.1 are
satisfied and the Existing Aircraft Extended Loans are deemed made.
"FUNDING AND PAYMENT OFFICE" means the office of Administrative
Agent located at 130 Liberty Street, New York, New York 10006, Attention:
Marguerite Sutton.
"FUNDING DATE" means the date of the funding of a Loan.
-15-
<PAGE> 23
"GAAP" means, subject to the limitations on the application
thereof set forth in subsection 1.2, generally accepted accounting principles
set forth in opinions and pronouncements of the Accounting Principles Board of
the American Institute of Certified Public Accountants and statements and
pronouncements of the Financial Accounting Standards Board or in such other
statements by such other entity as may be approved by a significant segment of
the accounting profession. Financial statements and other information required
to be delivered by Company to Lenders pursuant to clauses (ii) and (iii) of
subsection 5.1 shall be prepared in accordance with GAAP as in effect at the
time of such preparation (and delivered together with the reconciliation
statements provided for in subsection 5.1(v)). Calculations in connection with
the definitions, covenants and other provisions of this Agreement shall utilize
accounting principles and policies in conformity with those used to prepare the
financial statements referred to in subsection 4.3.
"GOVERNMENTAL AUTHORIZATION" means any permit, license,
authorization, plan, directive, consent order or consent decree of or from any
federal, state or local governmental authority, agency or court.
"HAZARDOUS MATERIALS" means any chemical or other material or
substance, exposure to which is now or hereafter prohibited, limited or
regulated under any law.
"HAZARDOUS MATERIALS ACTIVITY" means any past, current, proposed,
or threatened use, storage, release, generation, treatment, remediation or
transportation of any Hazardous Material (i) from, under, in, into or on the
Facilities or surrounding property; and (ii) caused by, or undertaken by or on
behalf of, Company.
"HOLDING COMPANY" has the meaning assigned to such term in the
definition of "Holding Company Reorganization."
"HOLDING COMPANY REORGANIZATION" means the acquisition, in one
transaction or a series of transactions, of all of the outstanding Securities of
Company that are entitled to vote in the election of directors other than
Securities having such power only by reason of the happening of a contingency
(and all other Securities convertible into such Securities) by another
corporation (the "Holding Company"); provided that the Holding Company
Reorganization may involve more than one Holding Company of Company so long as
the ultimate Holding Company directly or indirectly owns 100% of the Company;
provided further, in connection with the Holding Company Reorganization, the
Company and its Subsidiaries shall not incur any material obligations or
liabilities of any type other than those permitted to be paid without causing an
Event of Default under subsection 7.14.
"HOLDING COMPANY SUBSIDIARY" means any Subsidiary of a Holding
Company other than the Company and its Subsidiaries.
"INDEBTEDNESS" means, as applied to any Person, (i) all
indebtedness for borrowed money, (ii) that portion of obligations with respect
to Capital Leases that is properly classified as a liability on a balance sheet
in conformity with GAAP, (iii) notes payable and
-16-
<PAGE> 24
drafts accepted representing extensions of credit whether or not representing
obligations for borrowed money, (iv) any obligation owed for all or any part of
the deferred purchase price of property or services (excluding any such
obligations incurred under ERISA), which purchase price is (a) due more than six
months from the date of incurrence of the obligation in respect thereof or (b)
evidenced by a note or similar written instrument, and (v) all indebtedness
secured by any Lien on any property or asset owned or held by that Person
regardless of whether the indebtedness secured thereby shall have been assumed
by that Person or is nonrecourse to the credit of that Person. Obligations under
Interest Rate Agreements and Currency Agreements constitute Contingent
Obligations and not Indebtedness.
"INDEMNITEE" has the meaning assigned to that term in subsection
9.3.
"INITIAL CLOSING DATE" means the date on or before May 8, 1996 on
which the initial Loans were made.
"INSURANCE PROCEEDS" has the meaning assigned to that term in
subsection 2.4B(iii)(c).
"INTEREST PAYMENT DATE" means (i) with respect to any Base Rate
Loan, each March 31, June 30, September 30 and December 31 of each year,
commencing on the first such date to occur after the Fourth Restatement Date,
and (ii) with respect to any Eurodollar Rate Loan, the last day of each Interest
Period applicable to such Loan; provided that in the case of each Interest
Period of six months "Interest Payment Date" shall also include the date that is
three months after the commencement of such Interest Period.
"INTEREST PERIOD" has the meaning assigned to that term in
subsection 2.2B.
"INTEREST RATE AGREEMENT" means any interest rate swap agreement,
interest rate cap agreement, interest rate collar agreement or other similar
agreement or arrangement designed to protect Company or any of its Subsidiaries
against fluctuations in interest rates.
"INTEREST RATE DETERMINATION DATE" means, with respect to any
Interest Period, the second Business Day prior to the first day of such Interest
Period.
"INTERNAL REVENUE CODE" means the Internal Revenue Code of 1986,
as amended to the date hereof and from time to time hereafter.
"INVESTMENT" means (i) any direct or indirect purchase or other
acquisition by Company or any of its Subsidiaries of, or of a beneficial
interest in, any Securities of any other Person, (ii) any direct or indirect
redemption, retirement, purchase or other acquisition for value, by any
Subsidiary of Company from any Person other than Company or any of its
Subsidiaries, of any equity Securities of such Subsidiary, or (iii) any direct
or indirect loan, advance (other than advances to employees for moving,
entertainment and travel expenses, drawing accounts and similar expenditures in
the ordinary course of business) or capital
-17-
<PAGE> 25
contribution by Company or any of its Subsidiaries to any other Person (other
than a wholly owned Subsidiary of Company), including all indebtedness and
accounts receivable from that other Person that are not current assets or did
not arise from sales to that other Person in the ordinary course of business.
The amount of any Investment shall be the original cost of such Investment plus
the cost of all additions thereto, without any adjustments for increases or
decreases in value, or write-ups, write-downs or write-offs with respect to such
Investment.
"JOINT VENTURE" means a joint venture, partnership or other
similar arrangement, whether in corporate, partnership or other legal form;
provided that in no event shall any corporate Subsidiary of any Person be
considered to be a Joint Venture to which such Person is a party.
"LEASED AIRCRAFT" means a Financed Aircraft subject to an Approved
Lease.
"LENDER" and "LENDERS" means the persons identified as "Lenders"
and listed on the signature pages of this Agreement, together with their
successors and permitted assigns pursuant to subsection 9.1.
"LEVERAGE RATIO" means, as of the last day of any fiscal quarter
of the Company, the ratio of (i) Consolidated Total Debt as of such date (less
Cash and Cash Equivalents held by Company in excess of $25 million as of such
date) plus seven times Consolidated Rental Payments (for the four fiscal quarter
period ending as of such date) to (ii) Consolidated Adjusted EBITDA plus
Consolidated Rental Payments for the four fiscal quarter period ending as of
such date.
"LIEN" means any lien, mortgage, pledge, assignment, security
interest, charge, hypothecation, preference, priority, privilege, lease or
encumbrance of any kind (including any conditional sale or other title retention
agreement, any lease in the nature thereof, and any agreement to give any
security interest) and any option, trust or other preferential arrangement
having the practical effect of any of the foregoing.
"LOAN" or "LOANS" means one or more of the Existing Aircraft
Extended Loans or New Aircraft Loans or any combination thereof.
"LOAN DOCUMENTS" means this Agreement, the Notes, any guaranty
entered into pursuant to subsection 5.9 and the Collateral Documents.
"LOAN EXPOSURE" means, with respect to any Lender as of any date
of determination the sum of that Lender's Existing Aircraft Extended Loans, that
Lender's New Aircraft Loans and the unfunded portion of that Lender's Revolving
Loan Commitment.
"LOAN PARTIES" means Company and any persons who enter into
guaranties pursuant to subsection 5.9.
"MARGIN STOCK" has the meaning assigned to that term in Regulation
U of the Board of Governors of the Federal Reserve System as in effect from time
to time.
-18-
<PAGE> 26
"MATERIAL ADVERSE EFFECT" means (i) a material adverse effect upon
the business, operations, properties, assets, condition (financial or otherwise)
or prospects of Company or of Company and its Subsidiaries taken as a whole or
(ii) the impairment of the ability of any Loan Party to perform the Obligations,
or the impairment, as a result of actions or inaction by Company, of the ability
of Administrative Agent or Lenders to enforce the Obligations.
"MATERIAL AGREEMENT" means any or all of the Pass Through Trust
Documents, the FINOVA Agreement, the Senior Note Documents, the NationsBanc/Bank
of America Agreement, each Purchase Agreement, any Modification Agreement, any
BFE Agreement, the AFL III Leases, each Approved Lease and agreements in respect
of Permitted Extension Indebtedness and Other Permitted Indebtedness.
"MAXIMUM NOTE AMOUNT" means, with respect to any Eligible
Aircraft, 80% of the Appraised Value of such Eligible Aircraft based on
appraisals obtained pursuant to subsection 5.10 of such Eligible Aircraft made
within 30 days prior to the purchase thereof and giving effect to the proposed
modifications of such Eligible Aircraft pursuant to a Modification Agreement.
"MODIFICATION AGREEMENT" means any modification agreement entered
into by Company with respect to the modification of any Financed Aircraft in
form and substance satisfactory to Administrative Agent.
"MOODY'S" means Moody's Investors Service, Inc.
"NATIONSBANC/BANK OF AMERICA AGREEMENT" means the Loan Agreement,
dated as of March 28, 1997, between Company, as Borrower and NationsBanc Leasing
Corporation, as Lender, as further amended, supplemented and modified in
accordance with this Agreement.
"NET CASH PROCEEDS" means, with respect to any Asset Sale, Cash
Proceeds of such Asset Sale net of bona fide direct costs of sale including (i)
income taxes reasonably estimated to be actually payable as a result of such
Asset Sale within two years of the date of such Asset Sale and (ii) payment of
the outstanding principal amount of, premium or penalty, if any, and interest on
any Indebtedness (other than the Loans) that is secured by a Lien on the stock
or assets of Company and that is required to be repaid under the terms thereof
as a result of such Asset Sale.
"NEW AIRCRAFT" means a Financed Aircraft acquired by Company after
the Fourth Restatement Date.
"NEW AIRCRAFT LOAN" means a New Aircraft Revolving Loan or a New
Aircraft Term Loan.
-19-
<PAGE> 27
"NEW AIRCRAFT LOAN CONVERSION DATE" means, with respect to New
Aircraft Revolving Loans in respect of a Related Aircraft, the three-year
anniversary of the date on which the initial New Aircraft Revolving Loans were
made with respect to that Related Aircraft.
"NEW AIRCRAFT NOTES" means (i) the promissory notes of Company
issued pursuant to subsection 2.1D on the initial Funding Date of each New
Aircraft Revolving Loan and (ii) any promissory notes issued by Company pursuant
to the last sentence of subsection 9.1B(i) in connection with assignments of the
Revolving Loan Commitments and New Aircraft Loans of any Lenders, in each case
substantially in the form of Exhibit IIIA annexed hereto as they may be amended,
supplemented or otherwise modified from time to time.
"NEW AIRCRAFT REVOLVING LOAN" means a Revolving Loan made after
the Fourth Restatement Date prior to the time such Loan is converted into a New
Aircraft Term Loan on its New Aircraft Loan Conversion Date.
"NEW AIRCRAFT TERM LOAN" means a Loan made after the Fourth
Restatement Date after its conversion on its New Aircraft Loan Conversion Date.
"NEW AIRCRAFT TERM LOAN REPAYMENT AMOUNT" means, for each New
Aircraft Loan Repayment Date for all New Aircraft Term Loans for each Related
Aircraft, an amount equal to 10% of the principal amount of all such New
Aircraft Term Loans outstanding on the New Aircraft Loan Conversion Date with
respect to that Related Aircraft.
"NEW AIRCRAFT TERM LOAN REPAYMENT DATE" means, for New Aircraft
Term Loans made with respect to a New Aircraft, the three-year anniversary of
the date on which the initial New Aircraft Revolving Loans were made with
respect to such New Aircraft and each three-month anniversary date thereafter;
provided that, notwithstanding anything in the foregoing to the contrary, the
unpaid amount of all New Aircraft Term Loans shall be due and payable on the
Final Scheduled Maturity Date.
"9 1/4% SENIOR NOTE DOCUMENTS" means the Indenture, dated as of
April 9, 1998 between Company and State Street Bank and Trust Company relating
to the 9 1/4% Senior Notes and any and all related agreements, as the same may
be amended, restated, supplemented or otherwise modified from time to time in
accordance with this Agreement.
"9 1/4% SENIOR NOTES" means the 9 1/4% Senior Notes due April 15,
2008 of Company issued pursuant to the 9 1/4% Senior Note Documents.
"9 3/8% SENIOR NOTE DOCUMENTS" means the Indenture, dated as of
November 18, 1998 between Company and State Street Bank and Trust Company
relating to the 9 3/8% Senior Notes due and any and all related agreements, as
the same may be amended, restated, supplemented or otherwise modified from time
to time in accordance with this Agreement.
-20-
<PAGE> 28
"9 3/8% SENIOR NOTES" means the 9 3/8% Senior Notes due November
15, 2006 of Company issued pursuant to the 9 3/8% Senior Note Documents.
"1998 PASS THROUGH TRUST DOCUMENTS" means that certain Pass
Through Trust Agreement dated as of February 9, 1998 between Atlas Air, Inc. and
Wilmington Trust Company, as Trustee (the "1998 PASS THROUGH TRUST AGREEMENT")
and any trust indenture and security agreements including any related trust
indenture and security agreement supplements which related to the equipment
notes to be held in trust pursuant to the 1998 Pass Through Trust Agreement and
all related agreements, as the same may be amended, restated, supplemented or
otherwise modified from time to time in accordance with this Agreement.
"1999 PASS THROUGH TRUST DOCUMENTS" means that certain Pass
Through Trust Agreement dated as of April 13, 1999 between Atlas Air, Inc. and
Wilmington Trust Company, as Trustee (the "1999 PASS THROUGH TRUST AGREEMENT")
and any trust indenture and security agreements including any related trust
indenture and security agreement supplements which related to the equipment
notes to be held in trust pursuant to the 1999 Pass Through Trust Agreement and
all related agreements, as the same may be amended, restated, supplemented or
otherwise modified from time to time in accordance with this Agreement."
"NON-US LENDER" has the meaning assigned to that term in
subsection 2.7B(iii)(a).
"NOTES" means one or more of the Existing Aircraft Extended Notes,
the New Aircraft Notes or the Assignee Notes, as the context requires.
"NOTICE OF BORROWING" means a notice substantially in the form of
Exhibit I annexed hereto delivered by Company to Administrative Agent pursuant
to subsection 2.1B with respect to a proposed borrowing.
"NOTICE OF CONVERSION/CONTINUATION" means a notice substantially
in the form of Exhibit II annexed hereto delivered by Company to Administrative
Agent pursuant to subsection 2.2D with respect to a proposed conversion or
continuation of the applicable basis for determining the interest rate with
respect to the Loans specified therein.
"OBLIGATIONS" means all obligations of every nature of each Loan
Party from time to time owed to Administrative Agent, Lenders or any of them
under the Loan Documents, whether for principal, interest, fees, expenses,
indemnification or otherwise.
"OFFICERS' CERTIFICATE" means, as applied to any corporation, a
certificate executed on behalf of such corporation by its chairman of the board
(if an officer) or its president or one of its vice presidents and by its chief
financial officer or its treasurer; provided that every Officers' Certificate
with respect to the compliance with a condition
-21-
<PAGE> 29
precedent to the making of any Loans hereunder shall include (i) a statement
that the officer or officers making or giving such Officers' Certificate have
read such condition and any definitions or other provisions contained in this
Agreement relating thereto, (ii) a statement that, in the opinion of the
signers, they have made or have caused to be made such examination or
investigation as is necessary to enable them to express an informed opinion as
to whether or not such condition has been complied with, and (iii) a statement
as to whether, in the opinion of the signers, such condition has been complied
with.
"OPERATING LEASE" means, as applied to any Person, any lease
(including, without limitation, leases that may be terminated by the lessee at
any time) of any property (whether real, personal or mixed) that is not a
Capital Lease other than any such lease under which that Person is the lessor.
"OTHER PERMITTED INDEBTEDNESS" means Indebtedness incurred for the
purpose of financing the acquisition of aircraft so long as (i) any such
Indebtedness bears interest at a rate which does not exceed 15% per annum, (ii)
such Indebtedness has a final stated maturity later than the Final Scheduled
Maturity Date of the Notes and (iii) the amortization and the other terms,
provisions, conditions, covenants and events of default thereof taken as a whole
shall be no more onerous or restrictive from the perspective of Company and its
Subsidiaries or any less favorable, from the perspective of Lenders, than any
other Designated Indebtedness.
"PART" means, as the context requires, a Part as defined in a
particular Aircraft Chattel Mortgage or Parts as defined in all Aircraft Chattel
Mortgages.
"PASS THROUGH TRUST DOCUMENTS" means the 1998 Pass Through Trust
Agreement, the 1999 Pass Through Trust Agreement and the 2000 Pass Through Trust
Agreement (the "PASS THROUGH TRUST AGREEMENTS") and any trust indenture and
security agreements including any related trust indenture and security agreement
supplements which related to the equipment notes to be held in trust pursuant to
the Pass Through Trust Agreements and all related agreements, as the same may be
amended, restated, supplemented or otherwise modified from time to time in
accordance with this Agreement.
"PERMITTED ENCUMBRANCES" means the following types of Liens (other
than any such Lien imposed pursuant to Section 401(a)(29) or 412(n) of the
Internal Revenue Code or by ERISA):
(i) Liens for taxes, assessments or governmental charges or
claims the payment of which is not, at the time, required by
subsection 5.3;
(ii) statutory Liens of landlords and Liens of carriers,
warehousemen, mechanics and materialmen and other Liens imposed by
law incurred in the ordinary course of business for sums not yet
delinquent or being contested in good faith by appropriate
proceedings that do not involve any danger of the sale, forfeiture
or loss of any Collateral, if such reserve or
-22-
<PAGE> 30
other appropriate provision, if any, as shall be required by GAAP
shall have been made therefor;
(iii) Liens incurred or deposits made in the ordinary course
of business in connection with workers' compensation, unemployment
insurance and other types of social security, or to secure the
performance of tenders, statutory obligations, surety and appeal
bonds, bids, leases, government contracts, trade contracts,
performance and return-of-money bonds and other similar
obligations (exclusive of obligations for the payment of borrowed
money);
(iv) any attachment or judgment Lien not constituting an
Event of Default under subsection 7.8;
(v) easements, rights-of-way, restrictions, minor defects,
encroachments or irregularities in title and other similar charges
or encumbrances not interfering in any material respect with the
ordinary conduct of the business of Company or any of its
Subsidiaries;
(vi) any (a) interest or title of a lessor or sublessor under
any lease permitted by subsection 6.9, (b) restriction or
encumbrance that the interest or title of such lessor or sublessor
may be subject to, or (c) subordination of the interest of the
lessee or sublessee under such lease to any restriction or
encumbrance referred to in the preceding clause (b);
(vii) Liens arising from filing UCC financing statements
relating solely to leases permitted by this Agreement;
(viii) Liens in favor of customs and revenue authorities
arising as a matter of law to secure payment of customs duties in
connection with the importation of goods;
(ix) the rights of others under agreements or arrangements to
the extent expressly permitted by the terms of Sections 4(d) and
4(e) of the First Aircraft Chattel Mortgages;
(x) Liens described in Schedule 6.2 annexed hereto;
(xi) Liens arising pursuant to the NationsBanc/Bank of
America Agreement; provided that such Liens encumber only assets
acquired or refinanced with the proceeds of Indebtedness incurred
pursuant to the NationsBanc Agreement;
(xii) Liens arising pursuant to the AFL III Financing
Agreement; provided that such Liens do not encumber any assets
other than the AFL III Equipment and other assets of AFL III;
(xiii) Liens securing Indebtedness incurred in accordance
with subsection 6.1(xii);
(xiv) The rights of others under agreements or arrangements
to the extent expressly permitted by the terms of Sections 4(d)
and 4(e) of any aircraft chattel mortgages entered into in
connection with the AFL III Financing Agreement
(xv) Liens granted pursuant to the Collateral Documents.
-23-
<PAGE> 31
"PERMITTED EXTENSION INDEBTEDNESS" means renewals, extensions,
substitutions, refinancings or replacements (each an "EXTENSION") by Company of
any Indebtedness of Company, including any such successive transactions by
Company, so long as (i) any such Indebtedness bears interest at a rate which
does not exceed 15% per annum, (ii) any such Permitted Extension Indebtedness
shall be in a principal amount that does not exceed the principal amount
immediately prior to such extension, plus the amount of any premium required to
be paid in connection with such extension pursuant to the terms of such
Indebtedness, plus the amount of expenses of Company reasonably incurred in
connection with such extension, (iii) in the case of any extension of
subordinated Indebtedness, such Permitted Extension Indebtedness is made
subordinate to the Obligations at least to the same extent as the Indebtedness
immediately prior to such extension, (iv) such Permitted Extension Indebtedness
has a final stated maturity later than the Final Stated Maturity Date of the
Notes and (v) the amortization and the other terms, provisions, conditions,
covenants and events of default thereof taken as a whole shall be no more
onerous or restrictive from the perspective of Company and its Subsidiaries or
any less favorable, from the perspective of Lenders than those contained in the
Indebtedness immediately prior to such extension.
"PERMITTED HOLDERS" means Michael A. Chowdry, his spouse, his
descendant(s) or any entity controlled by any of the foregoing, or any trust
solely for the benefit of any of the foregoing.
"PERSON" means and includes natural persons, corporations, limited
partnerships, general partnerships, limited liability companies, joint stock
companies, Joint Ventures, associations, companies, trusts, banks, trust
companies, land trusts, business trusts or other organizations, whether or not
legal entities, and governments and agencies and political subdivisions thereof.
"POTENTIAL EVENT OF DEFAULT" means a condition or event that,
after notice or the expiration of any grace period or both, would constitute an
Event of Default.
"PRICING CERTIFICATE" has the meaning assigned to that term in
subsection 5.1(xvi).
"PRICING REDUCTION" means, if at any time Company's "Senior
Secured Debt Rating" or "Senior Secured Rating" as assigned by Moody's or S&P,
as applicable, are at the levels specified below, a pricing reduction equal to
the per annum percentage corresponding to the applicable rating set forth in the
chart below:
<TABLE>
<CAPTION>
Rating Pricing Reduction
- ------------------------------------------- -----------------
<S> <C>
Ba1 or higher by Moody's and 0.125%
BB- or higher by S&P
Ba1 or higher by Moody's and 0.250%
BB or higher by S&P
</TABLE>
-24-
<PAGE> 32
The Pricing Reduction shall be determined with reference to the
most recent Pricing Certificate delivered by Company to Administrative Agent
pursuant to subsection 5.1(xvi). Any changes to the Pricing Reduction shall
become effective on the day following the delivery of the relevant Pricing
Certificate to Administrative Agent and shall remain in effect through the next
date a Pricing Certificate is required to be delivered. It is understood and
agreed that the Pricing Reduction percentages provided are not cumulative.
Notwithstanding anything to the contrary herein, at any time an Event of Default
shall have occurred and be continuing, the Pricing Reduction shall be zero.
"PRIME RATE" means the rate that Administrative Agent announces
from time to time as its prime lending rate, as in effect from time to time. The
Prime Rate is a reference rate and does not necessarily represent the lowest or
best rate actually charged to any customer. Administrative Agent or any other
Lender may make commercial loans or other loans at rates of interest at, above
or below the Prime Rate.
"PRO FORMA BASIS" means, with respect to compliance with any
covenant hereunder, compliance with such covenant after giving effect to any
proposed incurrence of Indebtedness by Company or any of its Subsidiaries and
the application of the proceeds thereof, the acquisition (whether by purchase,
merger or otherwise) or disposition (whether by sale, merger or otherwise) of
any company, entity or business or any asset (including any ACMI Contracted
Aircraft) by Company or any of its Subsidiaries or any other related action
which requires compliance on a Pro Forma Basis. In making any determination of
compliance on a Pro Forma Basis, such determination shall be performed after
good faith consultation with Administrative Agent using the consolidated
financial statements of Company and its Subsidiaries which shall be reformulated
as if any such incurrence of Indebtedness and the application of proceeds,
acquisition, disposition or other related action had been consummated at the
beginning of the period specified in the covenant with respect to which Pro
Forma Basis compliance is required.
"PRO RATA SHARE" means, with respect to each Lender, the
percentage obtained by dividing the Loan Exposure of that Lender by the
aggregate Loan Exposure of all Lenders, as such percentage may be adjusted by
assignments permitted pursuant to subsection 9.1. The Pro Rata Share of each
Lender as of the date hereof is set forth opposite the name of that Lender in
Schedule 2.1 annexed hereto.
"PROCEEDINGS" has the meaning assigned to that term in subsection
5.1(x).
"PURCHASE AGREEMENT" means, with respect to the purchase of any
Eligible Aircraft to be financed with the proceeds of New Aircraft Loans, an
aircraft purchase agreement and any related bill of sale providing, among other
things, for the sale to Company of such Eligible Aircraft in form and substance
satisfactory to Administrative Agent.
"REFERENCE LENDERS" means Bankers Trust and one or more other
Lenders designated by Administrative Agent and reasonably satisfactory to
Company.
-25-
<PAGE> 33
"REGISTER" has the meaning assigned to that term in subsection
2.1.E.
"REGULATION D" means Regulation D of the Board of Governors of the
Federal Reserve System, as in effect from time to time.
"RELATED AIRCRAFT" means an Existing Aircraft or a New Aircraft in
respect of which Existing Aircraft Extended Loans are deemed made or New
Aircraft Loans are made, respectively.
"RELEASE" means any release, spill, emission, leaking, pumping,
pouring, injection, escaping, deposit, disposal, discharge, dispersal, dumping,
leaching or migration of Hazardous Materials into the indoor or outdoor
environment (including, without limitation, the abandonment or disposal of any
barrels, containers or other closed receptacles containing any Hazardous
Materials), or into or out of any Facility, including the movement of any
Hazardous Material through the air, soil, surface water, groundwater or
property.
"REPLACEMENT ENGINE" has the meaning assigned to that term in
subsection 9.22A.
"REQUISITE LENDERS" means Lenders having or holding 50.1% or more
of the aggregate Loan Exposure of all Lenders.
"RESTRICTED JUNIOR PAYMENT" means (i) any dividend or other
distribution, direct or indirect, on account of any shares of any class of stock
of Company now or hereafter outstanding, except a dividend payable solely in
shares of that class of stock to the holders of that class, (ii) any redemption,
retirement, sinking fund or similar payment, purchase or other acquisition for
value, direct or indirect, of any shares of any class of stock of Company now or
hereafter outstanding, (iii) any payment made to retire, or to obtain the
surrender of, any outstanding warrants, options or other rights to acquire
shares of any class of stock of Company now or hereafter outstanding, and (iv)
any payment or prepayment of principal of, premium, if any, or interest on, or
redemption, purchase, retirement, defeasance (including in-substance or legal
defeasance), sinking fund or similar payment with respect to, any Designated
Indebtedness.
"REVOLVING LOAN COMMITMENT" means the commitment of a Lender to
make New Aircraft Revolving Loans and New Aircraft Term Loans to Company
pursuant to subsection 2.1A(ii), and "REVOLVING LOAN COMMITMENTS" means such
commitments of all Lenders in the aggregate.
"REVOLVING LOAN COMMITMENT TERMINATION DATE" means the Final
Scheduled Maturity Date.
"REVOLVING LOANS" means the Loans made by Lenders to Company
pursuant to subsection 2.1A(ii).
-26-
<PAGE> 34
"S&P" means Standard & Poor's Rating Services.
"SECOND AIRCRAFT CHATTEL MORTGAGE" means with respect to each
Eligible Aircraft purchased with the proceeds of Loans, a Second Security
Agreement and Chattel Mortgage (Aircraft No. _____) and substantially in the
form of Exhibit XI annexed hereto, granting a security interest in such Eligible
Aircraft and Parts securing all Obligations that are not secured by the First
Chattel Mortgage entered into concurrently therewith, as such Second Aircraft
Chattel Mortgage may be amended, restated, supplemented or otherwise modified
from time to time in accordance with the terms hereof and thereof.
"SECURITIES" means any stock, shares, partnership interests,
voting trust certificates, certificates of interest or participation in any
profit-sharing agreement or arrangement, options, warrants, bonds, debentures,
notes, or other evidences of indebtedness, secured or unsecured, convertible,
subordinated or otherwise, or in general any instruments commonly known as
"securities" or any certificates of interest, shares or participations in
temporary or interim certificates for the purchase or acquisition of, or any
right to subscribe to, purchase or acquire, any of the foregoing.
"SECURITIES ACT" means the Securities Act of 1933, as amended from
time to time, and any successor statute.
"SENIOR NOTES" means the 10 3/4% Senior Notes, the 9 1/4% Senior
Notes and the 9 3/8% Senior Notes.
"SENIOR NOTE DOCUMENTS" means the 10 3/4% Senior Note Documents,
the 9 1/4% Senior Note Documents and the 9 3/8% Senior Note Documents.
"SOLVENT" means, with respect to any Person, that as of the date
of determination both (A) (i) the then fair saleable value of the property of
such Person is (y) greater than the total amount of liabilities (including
contingent liabilities) of such Person and (z) not less than the amount that
will be required to pay the probable liabilities on such Person's then existing
debts as they become absolute and matured considering all financing alternatives
and potential asset sales reasonably available to such Person; (ii) such
Person's capital is not unreasonably small in relation to its business or any
contemplated or undertaken transaction; and (iii) such Person does not intend to
incur, or believe (nor should it reasonably believe) that it will incur, debts
beyond its ability to pay such debts as they become due; and (B) such Person is
"solvent" within the meaning given that term and similar terms under applicable
laws relating to fraudulent transfers and conveyances. For purposes of this
definition, the amount of any contingent liability at any time shall be computed
as the amount that, in light of all of the facts and circumstances existing at
such time, represents the amount that can reasonably be expected to become an
actual or matured liability.
"SPARE ENGINE" means, as the context requires, a Spare Engine as
defined in a particular Aircraft Chattel Mortgage or all Spare Engines as
defined in all Aircraft Chattel Mortgages.
-27-
<PAGE> 35
"SPECIAL PURPOSE SUBSIDIARY" means (i) a Subsidiary of Company
formed solely for the purpose of refinancing Notes associated with a Financed
Aircraft or acquiring or refinancing other aircraft with Other Permitted
Indebtedness the only assets of which are such Financed Aircraft and
contributions to capital of such Subsidiary, which together with all other
contributions to capital made to other such Subsidiaries, are not in excess of
15% of the consolidated book value of the assets of the Company and its
Subsidiaries, and the only liability of which is the Permitted Extension
Indebtedness incurred to refinance such Notes; provided that Company
beneficially owns and controls at least 95% of the issued and outstanding
capital stock of such Subsidiary or (ii) a wholly owned Subsidiary formed
pursuant to subsection 9.21.
"SUBSIDIARY" means, with respect to any Person, any corporation,
partnership, association, joint venture or other business entity of which more
than 50% of the total voting power of shares of stock or other ownership
interests entitled (without regard to the occurrence of any contingency) to vote
in the election of the Person or Persons (whether directors, managers, trustees
or other Persons performing similar functions) having the power to direct or
cause the direction of the management and policies thereof is at the time owned
or controlled, directly or indirectly, by that Person or one or more of the
other Subsidiaries of that Person or a combination thereof.
"SUPPLEMENTAL TYPE CERTIFICATES" has the meaning assigned to that
term in the First Aircraft Chattel Mortgage.
"SYNDICATION AGENT" means Goldman Sachs Credit Partners L.P. in
its capacity as syndication agent under the Existing Agreement.
"TAX" or "TAXES" means any present or future tax, levy, impost,
duty, charge, fee, deduction or withholding of any nature and whatever called,
by whomsoever, on whomsoever and wherever imposed, levied, collected, withheld
or assessed; provided that "TAX ON THE OVERALL NET INCOME" of a Person shall be
construed as a reference to a tax imposed by the jurisdiction in which that
Person's principal office (and/or, in the case of a Lender, its lending office)
is located or in which that Person is deemed to be doing business on all or part
of the net income, profits or gains of that Person (whether worldwide, or only
insofar as such income, profits or gains are considered to arise in or to relate
to a particular jurisdiction, or otherwise).
"10 3/4% SENIOR NOTES" means the 10 3/4% Senior Notes due 2005 of
Company issued pursuant to the 10 3/4% Senior Note Documents.
"10 3/4% SENIOR NOTE DOCUMENTS" means the Indenture, dated as of
August 13, 1997 between Company and State Street Bank and Trust Company relating
to the 10 3/4% Senior Notes and any and all related agreements, as the same may
be amended, restated, supplemented or otherwise modified from time to time in
accordance with this Agreement.
-28-
<PAGE> 36
"2000 PASS THROUGH TRUST DOCUMENTS" means that certain Pass
Through Trust Agreement dated as of January 28, 2000 between Atlas Air, Inc. and
Wilmington Trust Company, as Trustee (the "2000 PASS THROUGH TRUST AGREEMENT")
and any trust indenture and security agreements including any related trust
indenture and security agreement supplements which related to the equipment
notes to be held in trust pursuant to the 2000 Pass Through Trust Agreement and
all related agreements, as the same may be amended, restated, supplemented or
otherwise modified from time to time in accordance with this Agreement."
"UCC" means the Uniform Commercial Code (or any similar or
equivalent legislation) as in effect in any jurisdiction.
"UNITED STATES CITIZEN" has the meaning assigned to that term in
subsection 4.1B.
1.2 ACCOUNTING TERMS; UTILIZATION OF GAAP FOR PURPOSES OF CALCULATIONS UNDER
AGREEMENT.
Except as otherwise expressly provided in this Agreement, all
accounting terms not otherwise defined herein shall have the meanings assigned
to them in conformity with GAAP.
1.3 OTHER DEFINITIONAL PROVISIONS.
References to "Sections" and "subsections" shall be to Sections
and subsections, respectively, of this Agreement unless otherwise specifically
provided. Any of the terms defined in subsection 1.1 may, unless the context
otherwise requires, be used in the singular or the plural, depending on the
reference.
SECTION 2.
AMOUNTS AND TERMS OF COMMITMENTS AND LOANS
2.1 COMMITMENTS; MAKING OF LOANS; NOTES; REGISTER.
A. COMMITMENTS. Subject to the terms and conditions of this Agreement
and in reliance upon the representations and warranties of Company herein set
forth, each Lender hereby severally agrees to make the Loans described in this
subsection 2.1A.
(i) Existing Aircraft Extended Loans. Prior to the date hereof,
Lenders have made "Revolving Loans" under the Existing Agreement in the
aggregate principal amount of $87,916,000, the proceeds of which were
used to purchase and modify the Existing Aircraft. The principal amount
of all "Revolving Loans" anticipated to be outstanding on the Fourth
Restatement Date with respect to each Related Aircraft is set forth on
Schedule 1.1 annexed hereto and shown as the
-29-
<PAGE> 37
"Existing Aircraft Loan Extension Amount" for such Existing Aircraft
and each such "Revolving Loan" shall be deemed to be an "Existing
Aircraft Extended Loan" in such principal amount upon the satisfaction
of the conditions set forth in subsection 3.1 and the effectiveness of
this Agreement. From and after the Fourth Restatement Date, each Lender
severally agrees, subject to the terms and conditions of this Agreement
to maintain and extend its Pro Rata Share of Existing Aircraft Extended
Loans and such Loans shall be repaid as provided in subsection 2.4A(i).
(ii) New Aircraft Loans. Each Lender severally agrees, subject to
the conditions set forth in Section 3 and subject to the limitations
set forth below, to lend to Company from time to time during the period
from the Fourth Restatement Date to but excluding the Revolving Loan
Commitment Termination Date an aggregate amount, together with its Pro
Rata Share of the aggregate principal amount of all Existing Aircraft
Extended Loans outstanding, not exceeding its Pro Rata Share of the
aggregate amount of the Revolving Loan Commitments to be used for the
purposes identified in subsection 2.5B. The amount of each Lender's
Revolving Loan Commitment is set forth on Schedule 2.1 annexed hereto
and the aggregate amount of the Revolving Loan Commitments is
$175,000,000; provided that, in no event shall the aggregate amount of
all Existing Aircraft Extended Loans, New Aircraft Revolving Loans and
New Aircraft Term Loans at any time outstanding exceed $175,000,000;
provided further that the Revolving Loan Commitments of Lenders shall
be adjusted to give effect to any assignments of the Revolving Loan
Commitments pursuant to subsection 9.1B; and provided, still further
that the amount of the Revolving Loan Commitments shall be reduced from
time to time by the amount of any reductions thereto made pursuant to
subsection 2.4B(ii). Each Loan made after the Fourth Restatement Date
shall constitute a New Aircraft Loan and shall be made with respect to
a Related Aircraft. New Aircraft Loans made with respect to a Related
Aircraft may be made through but excluding the third anniversary of the
first New Aircraft Loan made with respect to such Related Aircraft;
provided, however, that no New Aircraft Loans may be made on or after
the Revolving Loan Commitment Termination Date. New Aircraft Loans
shall be repaid as provided in subsections 2.4A(ii) and 2.4A(iii).
Anything to the contrary in this Agreement notwithstanding, the
New Aircraft Loans shall be subject to the limitation that in no event shall the
Lenders lend an amount in excess of (x) on the date of acquisition of a New
Aircraft the lesser of (i) an amount equal to the purchase price of such New
Aircraft and (ii) 80% of the Appraised Value of such New Aircraft as of the date
of acquisition (but without giving effect to the contemplated modifications) or
(y) on any date New Aircraft Loans are made to finance the modification of a New
Aircraft, the lesser of (i) 80% of the cost thereof as reflected in invoices
delivered to Administrative Agent pursuant to subsection 3.3A (or 100% of the
costs of modification associated with the final New Aircraft Loan to complete
the modification of such New Aircraft) and (ii) an amount which when added to
all other New Aircraft Loans made with respect to such New Aircraft does not
exceed 80% of the Appraised Value as set forth in appraisals delivered pursuant
to subsection 3.2 after giving effect to completion of
-30-
<PAGE> 38
modification. Further, in no event shall the aggregate amount of all Existing
Aircraft Extended Loans, New Aircraft Revolving Loans and New Aircraft Term
Loans at any time outstanding exceed $175,000,000.
B. BORROWING MECHANICS. Revolving Loans made on any Funding Date shall
be in an aggregate minimum amount of $1,500,000. Whenever Company desires that
Lenders make Revolving Loans it shall deliver to Administrative Agent a Notice
of Borrowing no later than 12:00 Noon (New York time) at least three Business
Days in advance of the proposed Funding Date (in the case of a Eurodollar Rate
Loan) or at least one Business Day in advance of the proposed Funding Date (in
the case of a Base Rate Loan). The Notice of Borrowing shall specify (i) the
proposed Funding Date (which shall be a Business Day), (ii) the amount of Loans
requested, (iii) whether such Loans shall be Base Rate Loans or Eurodollar Rate
Loans, (iv) in the case of any Loans requested to be made as Eurodollar Rate
Loans, the initial Interest Period requested therefor, (v) whether such Loans
are for the purpose of the purchase or the modification of an Eligible Aircraft
and (vi) the identification of the Related Aircraft. Revolving Loans and Term
Loans may be continued as or converted into Base Rate Loans and Eurodollar Rate
Loans in the manner provided in subsection 2.2D. In lieu of delivering the
above-described Notice of Borrowing, Company may give Administrative Agent
telephonic notice by the required time of any proposed borrowing under this
subsection 2.1B; provided that such notice shall be promptly confirmed in
writing by delivery of a Notice of Borrowing to Administrative Agent on or
before the applicable Funding Date.
Neither Administrative Agent nor any Lender shall incur any liability
to Company in acting upon any telephonic notice referred to above that
Administrative Agent believes in good faith to have been given by a duly
authorized officer or other person authorized to borrow on behalf of Company or
for otherwise acting in good faith under this subsection 2.1B, and upon funding
of Loans by Lenders in accordance with this Agreement pursuant to any such
telephonic notice Company shall have effected Loans hereunder.
Company shall notify Administrative Agent prior to the funding of any
Loans in the event that any of the matters to which Company is required to
certify in the applicable Notice of Borrowing is no longer true and correct as
of the applicable Funding Date, and the acceptance by Company of the proceeds of
any Loans shall constitute a re-certification by Company, as of the applicable
Funding Date, as to the matters to which Company is required to certify in the
applicable Notice of Borrowing.
Except as otherwise provided in subsections 2.6B, 2.6C and 2.6G, a
Notice of Borrowing for a Eurodollar Rate Loan (or telephonic notice in lieu
thereof) shall be irrevocable on and after the related Interest Rate
Determination Date, and Company shall be bound to make a borrowing in accordance
therewith.
C. DISBURSEMENT OF FUNDS. All Revolving Loans under this Agreement
shall be made by Lenders simultaneously and proportionately to their respective
Pro Rata Shares, it being understood that no Lender shall be responsible for any
default by any other Lender in
-31-
<PAGE> 39
that other Lender's obligation to make a Loan requested hereunder nor shall the
Commitment of any Lender to make the particular type of Loan requested be
increased or decreased as a result of a default by any other Lender in that
other Lender's obligation to make a Loan requested hereunder. Promptly after
receipt by Administrative Agent of a Notice of Borrowing pursuant to subsection
2.1B (or telephonic notice in lieu thereof), Administrative Agent shall notify
each Lender of the proposed borrowing. Each Lender shall make the amount of its
Loan available to Administrative Agent not later than 12:00 Noon (New York time)
on the applicable Funding Date, in each case in same day funds in Dollars, at
the Funding and Payment Office.
Unless Administrative Agent shall have been notified by any Lender
prior to the Funding Date for any Loans that such Lender does not intend to make
available to Administrative Agent the amount of such Lender's Loan requested on
such Funding Date, Administrative Agent may assume that such Lender has made
such amount available to Administrative Agent on such Funding Date and
Administrative Agent may, in its sole discretion, but shall not be obligated to,
make available to Company a corresponding amount on such Funding Date. If such
corresponding amount is not in fact made available to Administrative Agent by
such Lender, Administrative Agent shall be entitled to recover such
corresponding amount on demand from such Lender together with interest thereon,
for each day from such Funding Date until the date such amount is paid to
Administrative Agent, at the customary rate set by Administrative Agent for the
correction of errors among banks for three Business Days and thereafter at the
Base Rate. If such Lender does not pay such corresponding amount forthwith upon
Administrative Agent's demand therefor, Administrative Agent shall promptly
notify Company and Company shall immediately pay such corresponding amount to
Administrative Agent together with interest thereon, for each day from such
Funding Date until the date such amount is paid to Administrative Agent, at the
rate payable under this Agreement for Base Rate Loans. Nothing in this
subsection 2.1C shall be deemed to relieve any Lender from its obligation to
fulfill its Commitments hereunder or to prejudice any rights that Company may
have against any Lender as a result of any default by such Lender hereunder.
D. NOTES.
(i) Existing Aircraft Extended Notes. Each of the outstanding
"Revolving Notes" under the Existing Agreement shall be deemed amended
and restated on the Fourth Restatement Date to reflect the extension of
the maturity from September 30, 2000 to the Final Scheduled Maturity
Date. Company shall execute and deliver on the Fourth Restatement Date
to each Lender (or to Administrative Agent for that Lender) Existing
Aircraft Extension Notes substantially in the form of Exhibit IIIA
annexed hereto to evidence that Lender's Existing Aircraft Extended
Loans in respect of each Existing Aircraft and the amendment and
restatement of such "Revolving Notes".
(ii) New Aircraft Notes. Following the Fourth Restatement Date, on
each date on which Company delivers a Notice of Borrowing pursuant to
subsection 2.1B
-32-
<PAGE> 40
for the purpose of financing the purchase of a New Aircraft, Company
shall execute and deliver on such date to each Lender (or to
Administrative Agent for that Lender) with respect to such New Aircraft
a New Aircraft Note substantially in the form of Exhibit IIIB annexed
hereto to evidence that Lender's New Aircraft Revolving Loans and New
Aircraft Term Loans in respect of such New Aircraft in such Lender's
Pro Rata Share of the aggregate principal amount of such New Aircraft's
Maximum Note Amount with other appropriate insertions.
E. THE REGISTER.
(i) Administrative Agent shall maintain, at its address referred
to in subsection 9.8, a register for the recordation of the names and
addresses of Lenders and the Commitments and Loans of each Lender from
time to time (the "REGISTER"). The Register shall be available for
inspection by Company or any Lender at any reasonable time and from
time to time upon reasonable prior notice.
(ii) Administrative Agent shall record in the Register the
Revolving Loan Commitment and the Existing Aircraft Extended Loans and
New Aircraft Loans from time to time of each Lender and each repayment
or prepayment in respect of the principal amount of the Existing
Aircraft Extended Loans and New Aircraft Loans of each Lender. Any such
recordation shall be conclusive and binding on Company and each Lender,
absent manifest error; provided that failure to make any such
recordation, or any error in such recordation, shall not affect
Company's Obligations in respect of the applicable Loans.
(iii) Each Lender shall record on its internal records (including,
without limitation the Notes held by such Lender) the amount of each
Loan made by it and each payment in respect thereof. Any such
recordation shall be conclusive and binding on Company, absent manifest
error; provided that failure to make any such recordation, or any error
in such recordation, shall not affect Company's Obligations in respect
of the applicable Loans; and provided, further, that in the event of
any inconsistency between the Register and any Lender's records, the
recordations in the Register shall govern.
(iv) Company, Administrative Agent and Lenders shall deem and
treat the Persons listed as Lenders in the Register as the holders and
owners of the corresponding Commitments and Loans listed therein for
all purposes hereof, and no assignment or transfer of any such
Commitment or Loan shall be effective, in each case unless and until an
Assignment Agreement effecting the assignment or transfer thereof shall
have been accepted by Administrative Agent and recorded in the Register
as provided in subsection 9.1B(ii). Prior to such recordation, all
amounts owed with respect to the applicable Commitment or Loan shall be
owed to the Lender listed in the Register as the owner thereof, and any
request, authority or consent of any Person who, at the time of making
such request or giving such authority or consent, is listed in the
-33-
<PAGE> 41
Register as a Lender shall be conclusive and binding on any subsequent
holder, assignee or transferee of the corresponding Commitments or
Loans.
(v) Company hereby designates Administrative Agent to serve as
Company's agent solely for purposes of maintaining the Register as
provided in this subsection 2.1E, and Company hereby agrees that, to
the extent Administrative Agent serves in such capacity, Administrative
Agent and its officers, directors, employees, agents and affiliates
shall constitute Indemnities for all purposes under subsection 9.3.
2.2 INTEREST ON THE LOANS.
A. RATE OF INTEREST. Subject to the provisions of subsections 2.6 and
2.7, each Loan shall bear interest on the unpaid principal amount thereof from
the date made through maturity (whether by acceleration or otherwise) at a rate
determined by reference to the Base Rate or the Adjusted Eurodollar Rate, as the
case may be. The applicable basis for determining the rate of interest with
respect to any Loan shall be selected by Company initially at the time a Notice
of Borrowing is given with respect to such Loan pursuant to subsection 2.1B. The
basis for determining the interest rate with respect to any Loan may be changed
from time to time pursuant to subsection 2.2D. If on any day a Loan is
outstanding with respect to which notice has not been delivered to
Administrative Agent in accordance with the terms of this Agreement specifying
the applicable basis for determining the rate of interest, then for that day
that Loan shall bear interest determined by reference to the Base Rate.
Subject to the provisions of subsections 2.2E and 2.7, each Loan shall
bear interest through maturity as follows:
(i) if a Base Rate Loan, then at the sum of the Base Rate plus the
Applicable Margin per annum; or
(ii) if a Eurodollar Rate Loan, then at the sum of the Adjusted
Eurodollar Rate plus the Applicable Margin per annum.
-34-
<PAGE> 42
The "APPLICABLE MARGIN" for each Base Rate Loan and Eurodollar Rate
Loan shall be the percentage set forth below for that type of Loan for the
periods set forth below.
<TABLE>
<CAPTION>
APPLICABLE MARGIN
--------------------------
BASE RATE EURODOLLAR
TIME PERIOD LOAN RATE LOAN
--------- ----------
<S> <C> <C>
From the Second Amendment Effective Date 1.00% 2.00%
through the Fourth Restatement Date
From the Fourth Restatement Date and 0.75% 1.75%
Thereafter
</TABLE>
Notwithstanding the foregoing, the Applicable Margin shall be reduced
in an amount equal to the applicable Pricing Reduction effective from the date
following the delivery by Company to Administrative Agent of a Pricing
Certificate through the date a subsequent Pricing Certificate is required to be
delivered. If Company fails to deliver a Pricing Certificate or delivers an
incorrect Pricing Certificate, no Pricing Reduction shall be effective until
Company delivers a correct Pricing Certificate.
B. INTEREST PERIODS. In connection with each Eurodollar Rate Loan,
Company may, pursuant to the applicable Notice of Borrowing or Notice of
Conversion/Continuation, as the case may be, select an interest period (each an
"INTEREST PERIOD") to be applicable to such Loan, which Interest Period shall
be, at Company's option, either a one, two, three or six month period; provided
that:
(i) the initial Interest Period for any Eurodollar Rate Loan shall
commence on the Funding Date in respect of such Loan, in the case of a
Loan initially made as a Eurodollar Rate Loan, or on the date specified
in the applicable Notice of Conversion/Continuation, in the case of a
Loan converted to a Eurodollar Rate Loan;
(ii) in the case of immediately successive Interest Periods
applicable to a Eurodollar Rate Loan continued as such pursuant to a
Notice of Conversion/Continuation, each successive Interest Period
shall commence on the day on which the next preceding Interest Period
expires;
(iii) if an Interest Period would otherwise expire on a day that
is not a Business Day, such Interest Period shall expire on the next
succeeding Business Day; provided that, if any Interest Period would
otherwise expire on a day that is not a Business Day but is a day of
the month after which no further Business Day occurs in such month,
such Interest Period shall expire on the next preceding Business Day;
(iv) any Interest Period that begins on the last Business Day of a
calendar month (or on a day for which there is no numerically
corresponding day in the calendar month at the end of such Interest
Period) shall, subject to clause (v) of this subsection 2.2B, end on
the last Business Day of a calendar month;
-35-
<PAGE> 43
(v) no Interest Period with respect to any portion of the Loans
shall extend beyond the Final Scheduled Maturity Date.
(vi) no Interest Period with respect to any portion of the Loans
shall extend beyond a date on which Company is required to make a
scheduled payment of principal of the Loans unless the sum of (a) the
aggregate principal amount of Loans that are Base Rate Loans plus (b)
the aggregate principal amount of Loans that are Eurodollar Rate Loans
with Interest Periods expiring on or before such date equals or exceeds
the principal amount required to be paid on the Loans on such date;
(vii) there shall be no more than twelve Interest Periods
outstanding at any time;
(viii) in the event Company fails to specify an Interest Period
for any Eurodollar Rate Loan in the applicable Notice of Borrowing or
Notice of Conversion/Continuation, Company shall be deemed to have
selected an Interest Period of one month; and
(ix) prior to the date that is three months from the Fourth
Restatement Date, no Interest Period with respect to any portion of the
Loans shall exceed one month.
C. INTEREST PAYMENTS. Subject to the provisions of subsection 2.2E,
interest on each Loan shall be payable in arrears on and to each Interest
Payment Date applicable to that Loan, upon any prepayment of that Loan (to the
extent accrued on the amount being prepaid) and at maturity (including final
maturity).
D. CONVERSION OR CONTINUATION. Subject to the provisions of subsection
2.6, Company shall have the option (i) to convert at any time all or any part of
its outstanding Loans equal to $3,000,000 and integral multiples of $100,000 in
excess of that amount from Loans bearing interest at a rate determined by
reference to one basis to Loans bearing interest at a rate determined by
reference to an alternative basis or (ii) upon the expiration of any Interest
Period applicable to a Eurodollar Rate Loan, to continue all or any portion of
such Loan equal to $3,000,000 and integral multiples of $100,000 in excess of
that amount as a Eurodollar Rate Loan; provided, however, that a Eurodollar Rate
Loan may only be converted into a Base Rate Loan on the expiration date of an
Interest Period applicable thereto.
Company shall deliver a Notice of Conversion/Continuation to
Administrative Agent no later than 12:00 Noon (New York time) at least one
Business Day in advance of the proposed conversion date (in the case of a
conversion to a Base Rate Loan) and at least three Business Days in advance of
the proposed conversion/continuation date (in the case of a conversion to, or a
continuation of, a Eurodollar Rate Loan). A Notice of Conversion/Continuation
shall specify (i) the proposed conversion/continuation date (which shall be a
Business Day), (ii) the amount and type of the Loan to be converted/continued,
(iii) the nature of the proposed conversion/continuation, (iv) in the case of a
conversion to, or a continuation of, a Eurodollar Rate Loan, the requested
Interest Period, and (v) in the case of a conversion to, or
-36-
<PAGE> 44
a continuation of, a Eurodollar Rate Loan, that no Potential Event of Default or
Event of Default has occurred and is continuing. In lieu of delivering the
above-described Notice of Conversion/Continuation, Company may give
Administrative Agent telephonic notice by the required time of any proposed
conversion/continuation under this subsection 2.2D; provided that such notice
shall be promptly confirmed in writing by delivery of a Notice of
Conversion/Continuation to Administrative Agent on or before the proposed
conversion/continuation date.
Neither Administrative Agent nor any Lender shall incur any liability
to Company in acting upon any telephonic notice referred to above that
Administrative Agent believes in good faith to have been given by a duly
authorized officer or other person authorized to act on behalf of Company or for
otherwise acting in good faith under this subsection 2.2D, and upon conversion
or continuation of the applicable basis for determining the interest rate with
respect to any Loans in accordance with this Agreement pursuant to any such
telephonic notice Company shall have effected a conversion or continuation, as
the case may be, hereunder.
Except as otherwise provided in subsections 2.6B, 2.6C and 2.6G, a
Notice of Conversion/Continuation for conversion to, or continuation of, a
Eurodollar Rate Loan (or telephonic notice in lieu thereof) shall be irrevocable
on and after the related Interest Rate Determination Date, and Company shall be
bound to effect a conversion or continuation in accordance therewith.
E. DEFAULT RATE. Upon the occurrence and during the continuation of any
Event of Default, the outstanding principal amount of all Loans and, to the
extent permitted by applicable law, any interest payments thereon not paid when
due and any fees and other amounts then due and payable hereunder, shall
thereafter bear interest (including post-petition interest in any proceeding
under the Bankruptcy Code or other applicable bankruptcy laws) payable upon
demand at a rate that is 2% per annum in excess of the interest rate otherwise
payable under this Agreement with respect to the applicable Loans (or, in the
case of any such fees and other amounts, at a rate which is 2% per annum in
excess of the interest rate otherwise payable under this Agreement for Base Rate
Loans) ; provided that, in the case of Eurodollar Rate Loans, upon the
expiration of the Interest Period in effect at the time any such increase in
interest rate is effective such Eurodollar Rate Loans shall thereupon become
Base Rate Loans and shall thereafter bear interest payable upon demand at a rate
which is 2% per annum in excess of the interest rate otherwise payable under
this Agreement for Base Rate Loans. Payment or acceptance of the increased rates
of interest provided for in this subsection 2.2E is not a permitted alternative
to timely payment and shall not constitute a waiver of any Event of Default or
otherwise prejudice or limit any rights or remedies of Administrative Agent or
any Lender.
F. COMPUTATION OF INTEREST. Interest on each Loan shall be computed on
the basis of a 360-day year, in each case for the actual number of days elapsed
in the period
-37-
<PAGE> 45
during which it accrues. In computing interest on any Loan, the date of the
making of such Loan or the first day of an Interest Period applicable to such
Loan or, with respect to a Base Rate Loan being converted from a Eurodollar Rate
Loan, the date of conversion of such Eurodollar Rate Loan to such Base Rate
Loan, as the case may be, shall be included, and the date of payment of such
Loan or the expiration date of an Interest Period applicable to such Loan or,
with respect to a Base Rate Loan being converted to a Eurodollar Rate Loan, the
date of conversion of such Base Rate Loan to such Eurodollar Rate Loan, as the
case may be, shall be excluded; provided that if a Loan is repaid on the same
day on which it is made, one day's interest shall be paid on that Loan.
2.3 FEES.
A. COMMITMENT FEES. Company agrees to pay to Administrative Agent, for
distribution to each Lender in proportion to that Lender's Pro Rata Share,
commitment fees for the period from and including the Fourth Restatement Date to
and excluding the Revolving Loan Commitment Termination Date equal to the
average of the daily excess of the Revolving Loan Commitments over the aggregate
principal amount of Loans outstanding multiplied by (y) if a Pricing Reduction
is not then in effect, 0.50% per annum or (z) if a Pricing Reduction is then in
effect, 0.375% per annum, such commitment fees to be calculated on the basis of
a 360-day year and the actual number of days elapsed and to be payable quarterly
in arrears on March 31, June 30, September 30 and December 31 of each year,
commencing on the first such date to occur after the Fourth Restatement Date,
and on the Revolving Loan Commitment Termination Date.
B. ADMINISTRATIVE FEE. Company agrees to pay to Administrative Agent,
an Administrative Agent's fee in the amount as from time to time agreed upon by
Company and Administrative Agent.
C. OTHER FEES. Company agrees to pay to Administrative Agent such other
fees in the amounts and at the times separately agreed upon between Company and
Administrative Agent.
2.4 REPAYMENTS, PREPAYMENTS AND REDUCTIONS IN LOANS AND REVOLVING LOAN
COMMITMENTS; GENERAL PROVISIONS REGARDING PAYMENTS.
A. SCHEDULED REPAYMENTS
(i) Scheduled Repayments of Existing Aircraft Extended Loans.
Company shall make principal payments of the Existing Aircraft Extended
Loans in installments on each Existing Aircraft Loan Repayment Date in
an amount equal to the applicable Existing Aircraft Loan Repayment
Amount; provided that such scheduled installments of principal of the
Existing Aircraft Extended Loans shall be reduced in connection with
voluntary or mandatory prepayments of the Existing Aircraft Extended
Loans in accordance with subsection 2.4B; and provided, further that
the Existing Aircraft
-38-
<PAGE> 46
Extended Loans and all other amounts owed hereunder with respect to the
Existing Aircraft Extended Loans shall be paid in full no later than
the Final Stated Maturity Date, and the final installment payable by
Company in respect of the Existing Aircraft Extended Loans on such date
shall be in an amount sufficient to repay all amounts owing by Company
under this Agreement with respect to the Existing Aircraft Extended
Loans. Any payment pursuant to this subsection 2.4A(i) will be applied
ratably among the Existing Aircraft Extended Notes relating to all
Existing Aircraft; provided that, at Administrative Agent's election,
any prepayment may be deemed first to pay Existing Aircraft Extended
Loans made to finance labor costs associated with conversion of the
Financed Aircraft, if any, second to pay Existing Aircraft Extended
Loans made to finance other costs of such conversion, and thereafter to
all other Existing Aircraft Extended Loans.
(ii) Scheduled Repayments of New Aircraft Term Loans. Company
shall make principal payments of each New Aircraft Term Loan in
installments on each New Aircraft Term Loan Repayment Date in an amount
equal to the applicable New Aircraft Term Loan Repayment Amount for
such New Aircraft Term Loan; provided that such scheduled installments
of principal of the New Aircraft Term Loans shall be reduced in
connection with voluntary or mandatory prepayments of the New Aircraft
Term Loans in accordance with subsection 2.4B; and provided, further,
that the New Aircraft Term Loans and all other amounts owed hereunder
with respect to the New Aircraft Term Loans shall be paid in full no
later than the Final Stated Maturity Date, and the final installment
payable by Company in respect of the New Aircraft Term Loans on such
date shall be in an amount sufficient to repay all amounts owing by
Company under this Agreement with respect to the New Aircraft Term
Loans. Any payment pursuant to this subsection 2.4A(ii) will be applied
ratably among the New Aircraft Term Notes relating to the Related
Aircraft; provided that, at Administrative Agent's election, any
prepayment may be deemed first to pay New Aircraft Term Loans made to
finance labor costs associated with conversion of such Related
Aircraft, if any, second to pay New Aircraft Term Loans made to finance
other costs of such conversion, and thereafter to all other New
Aircraft Term Loans.
(iii) Mandatory Repayments of New Aircraft Revolving Loans.
Company shall make principal payments on the Final Stated Maturity Date
of the full amount of all New Aircraft Revolving Loans. Any repayment
pursuant to this subsection 2.4A(iii) will be applied ratably among the
New Aircraft Notes relating to the Related Aircraft; provided that, at
Administrative Agent's election, any prepayment may be deemed first to
pay New Aircraft Revolving Loans made to finance labor costs associated
with conversion of such Related Aircraft, if any, second to pay New
Aircraft Revolving Loans made to finance other costs of such
conversion, and thereafter to all other New Aircraft Revolving Loans.
-39-
<PAGE> 47
B. PREPAYMENTS AND UNSCHEDULED REDUCTIONS IN REVOLVING LOAN
COMMITMENTS.
(i) Voluntary Prepayments. Company may, upon not less than three
Business Days' prior written or telephonic notice given to
Administrative Agent by 12:00 Noon (New York time) on the date required
and, if given by telephone, promptly confirmed in writing to
Administrative Agent (which original written or telephonic notice
Administrative Agent will promptly transmit by telefacsimile or
telephone to each Lender), at any time and from time to time prepay,
without premium or penalty (other than pursuant to subsection 2.6D),
any Loans on any Business Day in whole or in part in an aggregate
minimum amount of $3,000,000 and integral multiples of $100,000 in
excess of that amount; provided, however, that a Eurodollar Rate Loan
may only be prepaid on the expiration of the Interest Period applicable
thereto. Notice of prepayment having been given as aforesaid, the
principal amount of the Loans specified in such notice shall become due
and payable on the prepayment date specified therein. Any such
voluntary prepayment shall be applied as specified in subsection
2.4B(iv).
(ii) Voluntary Reductions of Revolving Loan Commitments. Company
may, upon not less than three Business Days' prior written or
telephonic notice confirmed in writing to Administrative Agent (which
original written or telephonic notice Administrative Agent will
promptly transmit by telefacsimile or telephone to each Lender), at any
time and from time to time terminate in whole or permanently reduce in
part, without premium or penalty (other than pursuant to subsection
2.6D), the Revolving Loan Commitments in an amount up to the amount by
which the Revolving Loan Commitments exceed the aggregate amount of all
Existing Aircraft Extended Loans and New Aircraft Loans outstanding at
the time of such proposed termination or reduction; provided that any
such partial reduction of the Revolving Loan Commitments shall be in an
aggregate minimum amount of $3,000,000 and integral multiples of
$100,000 in excess of that amount. Company's notice to Administrative
Agent shall designate the date (which shall be a Business Day) of such
termination or reduction and the amount of any partial reduction, and
such termination or reduction of the Revolving Loan Commitments shall
be effective on the date specified in Company's notice and shall reduce
the Revolving Loan Commitment of each Lender proportionately to its Pro
Rata Share.
(iii) Mandatory Prepayments and Mandatory Reductions of Revolving
Loan Commitments.
(a) Prepayments and Reductions from Asset Sales. No later
than the second Business Day following the date of receipt by
Company or any of its Subsidiaries of Cash Proceeds of any Asset
Sale, Company shall prepay, without premium or penalty (other than
pursuant to subsection 2.6D), the Loans in an amount equal to the
Net Cash Proceeds of such Asset Sale; provided that, with respect
to Asset Sales which do not include the sale of a Financed
Aircraft, so long as no Potential Event of Default or Event of
Default has occurred and is continuing, (i) Company shall have the
option to use the
-40-
<PAGE> 48
Net Cash Proceeds within one hundred eighty (180) days of receipt
thereof for the purpose of making Consolidated Capital
Expenditures otherwise permitted by this Agreement and (ii) to the
extent such Net Cash Proceeds are not reinvested pursuant to
clause (i), Company may retain Net Cash Proceeds in respect of
such Asset Sales of up to $10 million in any Fiscal Year and $20
million in the aggregate; provided further that, with respect to
any Asset Sale involving the sale of a Financed Aircraft, so long
as no Potential Event of Default or Event of Default has occurred
and is continuing, the Company may retain any Net Cash Proceeds in
excess of the amount equal to the sum of (x) the amount required
to repay all amounts outstanding under the Notes relating to such
Financed Aircraft and (y) the amount required to prepay any
remaining Loans to the extent necessary so that the outstanding
principal amount of any Loans made to finance the acquisition or
conversion of a Financed Aircraft shall not exceed 80% of the
Appraised Value of such Financed Aircraft as determined by
appraisals to be provided at the time of such mandatory prepayment
by two Approved Appraisers. Concurrently with any prepayment of
the Loans pursuant to this subsection 2.4B(iii)(a), Company shall
deliver to Administrative Agent an Officers' Certificate
demonstrating the derivation of the Net Cash Proceeds of the
correlative Asset Sale from the gross sales price thereof and the
amount required to be prepaid pursuant to this subsection
2.4B(iii)(a). In the event that Company shall, at any time after
receipt of Cash Proceeds of any Asset Sale requiring a prepayment
pursuant to this subsection 2.4B(iii)(a), determine that the
prepayments previously made in respect of such Asset Sale were in
an aggregate amount less than that required by the terms of this
subsection 2.4B(iii)(a), Company shall promptly make an additional
prepayment of the Loans in the manner described above in an amount
equal to the amount of any such deficit, and Company shall
concurrently therewith deliver to Administrative Agent an
Officers' Certificate demonstrating the derivation of the
additional Net Cash Proceeds resulting in such deficit and the
additional amount required to be prepaid pursuant to this
subsection 2.4B(iii)(a). Any mandatory prepayments pursuant to
this subsection 2.4B(iii)(a) shall be applied as specified in
subsection 2.4B(iv). Notwithstanding the foregoing, so long as the
AFL III Financing remains outstanding, Cash Proceeds from the sale
or other disposition of the AFL III Equipment shall not be subject
to the provisions of this subsection 2.4(B)(iii)(a) to the extent
that such Cash Proceeds are applied in accordance with the terms
of the AFL III Financing Agreement.
(b) Prepayments and Reductions Due to Issuance of Certain
Indebtedness. On the date of receipt by Company of the cash
proceeds (net of underwriting discounts and commissions and other
reasonable costs associated therewith) from the issuance of
Permitted Extension Indebtedness with respect to a Financed
Aircraft, Company shall prepay, without premium or penalty
-41-
<PAGE> 49
(other than pursuant to subsection 2.6D), the Loans in an amount
equal to such net cash proceeds. Any such mandatory prepayments
shall be applied as specified in subsection 2.4B(iv).
Notwithstanding the foregoing, any such cash proceeds received
pursuant to the AFL III Financing Agreement shall not be subject
to the provisions of this subsection 2.4(B)(iii)(b).
(c) Prepayments and Reductions Due to Insurance and
Condemnation Proceeds. No later than the second Business Day
following the date of receipt by Company or any of its
Subsidiaries of any cash payments under any of the casualty
insurance policies covering damage to or loss of property
maintained pursuant to subsection 5.4 resulting from damage to or
loss of all or any portion of the Collateral or any other tangible
asset (net of actual and documented reasonable costs incurred by
Company in connection with adjustment and settlement thereof,
"INSURANCE PROCEEDS") or any proceeds resulting from the taking of
assets by the power of eminent domain, condemnation or otherwise
(net of actual and documented reasonable costs incurred by Company
in connection with adjustment and settlement thereof,
"CONDEMNATION Proceeds") (other than (x) the portion of such
proceeds promptly applied to repair or replace the property in
respect of which such proceeds were paid, (y) the portion of such
proceeds required to be paid to Lien holders on aircraft other
than Financed Aircraft or (z) proceeds applied pursuant to
subsection 2.4B(iii)(d)), Company shall prepay, without premium or
penalty (other than pursuant to subsection 2.6D), the Loans in an
amount equal to such proceeds. Company shall, no later than 180
days after receipt of any such Insurance Proceeds or Condemnation
Proceeds that have not theretofore been applied to the
Obligations, make an additional prepayment of Loans, in the manner
described above, in the full amount of all such proceeds that have
not then been applied to repair or replace the property in respect
of which such proceeds were paid. Any such mandatory prepayments
shall be applied as specified in subsection 2.4B(iv).
Notwithstanding the foregoing so long as (i) the AFL III Financing
remains outstanding, Insurance Proceeds and Condemnation Proceeds
with respect to the AFL III Equipment shall not be subject to the
provisions of this subsection 2.4(B)(iii)(c) to the extent such
proceeds are applied in accordance with the terms of the AFL III
Financing Agreement.
(d) Prepayments and Reductions Due to an Event of Loss. No
later than the earlier of (x) the second Business Day following
the date of receipt by Company or any of its Subsidiaries of any
Insurance Proceeds or Condemnation Proceeds with respect to a
Financed Aircraft or (y) 180 days following an Event of Loss with
respect to a Financed Aircraft, Company shall prepay, without
premium or penalty (other than pursuant to subsection 2.6D), the
Loans associated with such Financed Aircraft; provided that
Company and its Subsidiaries shall not be required to make a
-42-
<PAGE> 50
prepayment pursuant to this subsection 2.4B(iii)(d) with respect
to any proceeds applied pursuant to Section 4(f)(vi)(A) or
4(f)(vi)(B) of any Aircraft Chattel Mortgage.
(e) Prepayments and Reductions from Consolidated Excess Cash
Flow. In the event that there shall be Consolidated Excess Cash
Flow for any Fiscal Year, within 100 days after the last day of
such Fiscal Year Company shall prepay, without premium or penalty
(other than pursuant to subsection 2.6D), the Loans in an amount
equal to 50% of such Consolidated Excess Cash Flow; provided that,
if as of the last day of such Fiscal Year, the aggregate principal
amount of all Loans was less than 60% of the aggregate Appraised
Value of all Financed Aircraft, no prepayment will be required
under this subsection 2.4B(iii)(e). Any such mandatory prepayments
shall be applied as specified in subsection 2.4B(iv).
(f) Prepayments Due to Reductions in Appraised Value. Company
shall from time to time prepay, without premium or penalty (other
than pursuant to subsection 2.6D), the Loans to the extent
necessary so that the outstanding principal amount of any Loans
made to finance the acquisition or conversion of a Financed
Aircraft shall not at any time exceed 80% of the Appraised Value
of such Financed Aircraft as most recently determined pursuant to
subsection 5.10; provided that, in lieu of making a prepayment
hereunder, Company may provide Administrative Agent for the
benefit of Lenders with cash collateral or a letter of credit in
the amount of such prepayment pursuant to arrangements in form and
substance satisfactory to Administrative Agent.
(g) Prepayments Due to Failure to Register Aircraft with the
FAA. In the event that, with respect to any Financed Aircraft,
Administrative Agent's security interest in such Financed Aircraft
is not fully perfected within five (5) Business Days of the
funding of Loans with respect to such Financed Aircraft, Company
shall prepay the full amount of such Loans.
(iv) Application of Prepayments.
(a) Application of Voluntary Prepayments by Type of Loans and
Order of Maturity. Any voluntary prepayments pursuant to
subsection 2.4B(i) shall be applied ratably among the Notes
relating to all of the Financed Aircraft; provided that, Company
may elect to apply any such prepayment first to the Loans made
with respect to a specific Financed Aircraft so long as no Event
of Default has occurred and continuing; provided further that, at
Administrative Agent's election, any prepayment may be deemed
first to prepay Loans made to finance labor costs associated with
conversion, if any, second to prepay Loans made to finance other
costs of conversion of a Financed Aircraft and thereafter to all
other Loans. Any voluntary
-43-
<PAGE> 51
prepayments of the Existing Aircraft Loans and the New Aircraft
Term Loans pursuant to subsection 2.4B(i) shall be applied to
reduce the scheduled installments of principal of the Existing
Aircraft Loans or the New Aircraft Term Loans, as the case may be,
in inverse order of maturity.
(b) Application of Mandatory Prepayments of Loans. Any
mandatory prepayments of the Loans pursuant to subsection
2.4B(iii) shall be applied ratably among the Notes relating to all
of the Financed Aircraft; provided that in the event a prepayment
pursuant to subsection 2.4B(iii)(a) relates to Financed Aircraft,
such prepayment shall be applied first to the Notes relating to
such Financed Aircraft, second to Notes relating to the remaining
Financed Aircraft as required to reduce the amount of the Loans
financing such Financed Aircraft to no more that 80% of the
Appraised Value of such Financed Aircraft as determined by the
Appraised as required by subsection 2.4B(iii)(a) and third ratably
among the Notes relating to all remaining Financed Aircraft;
provided further that in the event a prepayment pursuant to
subsection 2.4B(iii)(b), (c), (d), (f) or (g) relates to Financed
Aircraft, such prepayment shall be applied first to the Notes
relating to such Financed Aircraft and second ratably among the
Notes relating to all other Financed Aircraft; provided further
that, at Administrative Agent's election, any such prepayment may
be deemed first to prepay Loans made to finance labor costs
associated with conversion, if any, second to prepay Loans made to
finance other costs of conversion of a Financed Aircraft and
thereafter to all other Loans. Any mandatory prepayments of the
Existing Aircraft Loans and the New Aircraft Term Loans pursuant
to subsection 2.4B(iii) shall be applied to reduce the scheduled
installments of principal of the Existing Aircraft Loans or the
New Aircraft Term Loans, as the case may be, in inverse order of
maturity.
(c) Application of Prepayments to Base Rate Loans and
Eurodollar Rate Loans. Any prepayment of Loans shall be applied
first to Base Rate Loans to the full extent thereof before
application to Eurodollar Rate Loans, in each case in a manner
which minimizes the amount of any payments required to be made by
Company pursuant to subsection 2.6D.
C. GENERAL PROVISIONS REGARDING PAYMENTS.
(i) Manner and Time of Payment. All payments by Company of
principal, interest, fees and other Obligations hereunder and under the
Notes shall be made in Dollars in same day funds, without defense,
set-off or counterclaim, free of any restriction or condition, and
delivered to Administrative Agent not later than 12:00 Noon (New York
time) on the date due at the Funding and Payment Office for the account
of Lenders; funds received by Administrative Agent after that time on
such due date shall be deemed to have been paid by Company on the next
succeeding Business Day. Company hereby authorizes Administrative Agent
to charge its
-44-
<PAGE> 52
accounts with Administrative Agent in order to cause timely payment to
be made to Administrative Agent of all principal, interest, fees and
expenses due hereunder (subject to sufficient funds being available in
its accounts for that purpose).
(ii) Application of Payments to Principal and Interest. All
payments in respect of the principal amount of any Loan shall include
payment of accrued interest on the principal amount being repaid or
prepaid, and all such payments shall be applied to the payment of
interest before application to principal.
(iii) Apportionment of Payments. Aggregate principal and interest
payments in respect of Loans shall be apportioned among all outstanding
Loans to which such payments relate, in each case proportionately to
Lenders' respective Pro Rata Shares. Administrative Agent shall
promptly distribute to each Lender, at its primary address set forth
below its name on the appropriate signature page hereof or at such
other address as such Lender may request, its Pro Rata Share of all
such payments received by Administrative Agent and the commitment fees
of such Lender when received by Administrative Agent pursuant to
subsection 2.3. Notwithstanding the foregoing provisions of this
subsection 2.4C(iii), if, pursuant to the provisions of subsection
2.6C, any Notice of Conversion/Continuation is withdrawn as to any
Affected Lender or if any Affected Lender makes Base Rate Loans in lieu
of its Pro Rata Share of any Eurodollar Rate Loans, Administrative
Agent shall give effect thereto in apportioning payments received
thereafter.
(iv) Payments on Business Days. Whenever any payment to be made
hereunder shall be stated to be due on a day that is not a Business
Day, such payment shall be made on the next succeeding Business Day and
such extension of time shall be included in the computation of the
payment of interest hereunder or of the commitment fees hereunder, as
the case may be.
(v) Notation of Payment. Each Lender agrees that before disposing
of any Note held by it, or any part thereof (other than by granting
participations therein), that Lender will make a notation thereon of
all Loans evidenced by that Note and all principal payments previously
made thereon and of the date to which interest thereon has been paid;
provided that the failure to make (or any error in the making of) a
notation of any Loan made under such Note shall not limit or otherwise
affect the obligations of Company hereunder or under such Note with
respect to any Loan or any payments of principal or interest on such
Note.
2.5 USE OF PROCEEDS.
A. EXISTING AIRCRAFT EXTENDED LOANS. The proceeds of the Existing
Aircraft Extended Loans were used to finance the purchase and renovation of the
Existing Aircraft as shown on Schedule 1.1 annexed hereto.
-45-
<PAGE> 53
B. NEW AIRCRAFT LOANS. The proceeds of New Aircraft Loans shall be
applied to finance (i) the purchase of an Eligible Aircraft pursuant to a
Purchase Agreement in an amount up to the lesser of the purchase price of such
Eligible Aircraft and 80% of the Appraised Value of such Eligible Aircraft (but
without giving effect to any contemplated modifications) and/or (ii) the cost of
making a Financed Aircraft usable by Company as a cargo aircraft by paying for
those modifications identified in any Modification Agreement and any BFE
Agreement (but not for maintenance costs) in an amount that when added to the
amount financed in (i) does not exceed 80% the Appraised Value of such modified
Eligible Aircraft; provided that the final Revolving Loan to finance the
modification of such Eligible Aircraft may be in an amount equal to the lesser
of (x) 100% of the costs of modification associated with such final Revolving
Loan and (y) an amount which, when added to all other Revolving Loans made with
respect to such Eligible Aircraft, does not exceed 80% of the Appraised Value of
such Eligible Aircraft after giving effect to the completion of modification.
C. MARGIN REGULATIONS. No portion of the proceeds of any borrowing
under this Agreement shall be used by Company or any of its Subsidiaries in any
manner that might cause the borrowing or the application of such proceeds to
violate Regulation U, Regulation T or Regulation X of the Board of Governors of
the Federal Reserve System or any other regulation of such Board or to violate
the Exchange Act, in each case as in effect on the date or dates of such
borrowing and such use of proceeds.
2.6 SPECIAL PROVISIONS GOVERNING EURODOLLAR RATE LOANS.
Notwithstanding any other provision of this Agreement to the contrary,
the following provisions shall govern with respect to Eurodollar Rate Loans as
to the matters covered:
A. DETERMINATION OF APPLICABLE INTEREST RATE. As soon as practicable
after 10:00 A.M. (New York time) on each Interest Rate Determination Date,
Administrative Agent shall determine (which determination shall, absent manifest
error, be final, conclusive and binding upon all parties) the interest rate that
shall apply to the Eurodollar Rate Loans for which an interest rate is then
being determined for the applicable Interest Period and shall promptly give
notice thereof (in writing or by telephone confirmed in writing) to Company and
each Lender.
B. INABILITY TO DETERMINE APPLICABLE INTEREST RATE. In the event that
Administrative Agent shall have determined (which determination shall be final
and conclusive and binding upon all parties hereto), on any Interest Rate
Determination Date with respect to any Eurodollar Rate Loans, that by reason of
circumstances affecting the interbank Eurodollar market adequate and fair means
do not exist for ascertaining the interest rate applicable to such Loans on the
basis provided for in the definition of Adjusted Eurodollar Rate, Administrative
Agent shall on such date give notice (by telefacsimile or by telephone confirmed
in writing) to Company and each Lender of such determination, whereupon (i) no
Loans may be made as, or converted to, Eurodollar Rate Loans until such time as
-46-
<PAGE> 54
Administrative Agent notifies Company and Lenders that the circumstances giving
rise to such notice no longer exist and (ii) any Notice of Borrowing or Notice
of Conversion/Continuation given by Company with respect to the Loans in respect
of which such determination was made shall be deemed to be rescinded by Company.
C. ILLEGALITY OR IMPRACTICABILITY OF EURODOLLAR RATE LOANS. In the
event that on any date any Lender shall have determined (which determination
shall be final and conclusive and binding upon all parties hereto but shall be
made only after consultation with Company and Administrative Agent) that the
making, maintaining or continuation of its Eurodollar Rate Loans (i) has become
unlawful as a result of compliance by such Lender in good faith with any law,
treaty, governmental rule, regulation, guideline or order (or would conflict
with any such treaty, governmental rule, regulation, guideline or order not
having the force of law even though the failure to comply therewith would not be
unlawful) or (ii) has become impracticable, or would cause such Lender material
hardship, as a result of contingencies occurring after the date of this
Agreement which materially and adversely affect the interbank Eurodollar market
or the position of such Lender in that market, then, and in any such event, such
Lender shall be an "AFFECTED LENDER" and it shall on that day give notice (by
telefacsimile or by telephone confirmed in writing) to Company and
Administrative Agent of such determination (which notice Agent shall promptly
transmit to each other Lender). Thereafter (a) the obligation of the Affected
Lender to make Loans as, or to convert Loans to, Eurodollar Rate Loans shall be
suspended until such notice shall be withdrawn by the Affected Lender, (b) to
the extent such determination by the Affected Lender relates to a Eurodollar
Rate Loan then being requested by Company pursuant to a Notice of Borrowing or a
Notice of Conversion/Continuation, the Affected Lender shall make such Loan as
(or convert such Loan to, as the case may be) a Base Rate Loan, (c) the Affected
Lender's obligation to maintain its outstanding Eurodollar Rate Loans (the
"AFFECTED LOANS") shall be terminated at the earlier to occur of the expiration
of the Interest Period then in effect with respect to the Affected Loans or when
required by law, and (d) the Affected Loans shall automatically convert into
Base Rate Loans on the date of such termination. Notwithstanding the foregoing,
to the extent a determination by an Affected Lender as described above relates
to a Eurodollar Rate Loan then being requested by Company pursuant to a Notice
of Borrowing or a Notice of Conversion/Continuation, Company shall have the
option, subject to the provisions of subsection 2.6D, to rescind such Notice of
Borrowing or Notice of Conversion/Continuation as to all Lenders by giving
notice (by telefacsimile or by telephone confirmed in writing) to Administrative
Agent of such rescission on the date on which the Affected Lender gives notice
of its determination as described above (which notice of rescission
Administrative Agent shall promptly transmit to each other Lender). Except as
provided in the immediately preceding sentence, nothing in this subsection 2.6C
shall affect the obligation of any Lender other than an Affected Lender to make
or maintain Loans as, or to convert Loans to, Eurodollar Rate Loans in
accordance with the terms of this Agreement.
D. COMPENSATION FOR BREAKAGE OR NON-COMMENCEMENT OF INTEREST PERIODS.
Company shall compensate each Lender, upon written request by that Lender (which
request shall set forth the basis for requesting such amounts), for all
reasonable losses, expenses and
-47-
<PAGE> 55
liabilities (including, without limitation, any interest paid by that Lender to
lenders of funds borrowed by it to make or carry its Eurodollar Rate Loans and
any loss, expense or liability sustained by that Lender in connection with the
liquidation or re-employment of such funds) which that Lender may sustain: (i)
if for any reason (other than a default by that Lender) a borrowing of any
Eurodollar Rate Loan does not occur on a date specified therefor in a Notice of
Borrowing or a telephonic request for borrowing, or a conversion to or
continuation of any Eurodollar Rate Loan does not occur on a date specified
therefor in a Notice of Conversion/Continuation or a telephonic request for
conversion or continuation, (ii) if any prepayment or other principal payment or
any conversion of any of its Eurodollar Rate Loans occurs on a date prior to the
last day of an Interest Period applicable to that Loan, (iii) if any prepayment
of any of its Eurodollar Rate Loans is not made on any date specified in a
notice of prepayment given by Company, or (iv) as a consequence of any other
default by Company in the repayment of its Eurodollar Rate Loans when required
by the terms of this Agreement.
E. BOOKING OF EURODOLLAR RATE LOANS. Any Lender may make, carry or
transfer Eurodollar Rate Loans at, to, or for the account of any of its branch
offices or the office of an Affiliate of that Lender.
F. ASSUMPTIONS CONCERNING FUNDING OF EURODOLLAR RATE LOANS. Calculation
of all amounts payable to a Lender under this subsection 2.6 and under
subsection 2.7A shall be made as though that Lender had actually funded each of
its relevant Eurodollar Rate Loans through the purchase of a Eurodollar deposit
bearing interest at the rate obtained pursuant to clause (i) of the definition
of Adjusted Eurodollar Rate in an amount equal to the amount of such Eurodollar
Rate Loan and having a maturity comparable to the relevant Interest Period and
through the transfer of such Eurodollar deposit from an offshore office of that
Lender to a domestic office of that Lender in the United States of America;
provided, however, that each Lender may fund each of its Eurodollar Rate Loans
in any manner it sees fit and the foregoing assumptions shall be utilized only
for the purposes of calculating amounts payable under this subsection 2.6 and
under subsection 2.7A.
G. EURODOLLAR RATE LOANS AFTER DEFAULT. After the occurrence of and
during the continuation of a Potential Event of Default or an Event of Default,
(i) Company may not elect to have a Loan be made or maintained as, or converted
to, a Eurodollar Rate Loan after the expiration of any Interest Period then in
effect for that Loan and (ii) subject to the provisions of subsection 2.6D, any
Notice of Borrowing or Notice of Conversion/Continuation given by Company with
respect to a requested borrowing or conversion/continuation that has not yet
occurred shall be deemed to be rescinded by Company.
2.7 INCREASED COSTS; TAXES; CAPITAL ADEQUACY.
A. COMPENSATION FOR INCREASED COSTS AND TAXES. Subject to the
provisions of subsection 2.7B, in the event that any Lender shall determine
(which determination shall, absent manifest error, be final and conclusive and
binding upon all parties hereto) that any law, treaty or governmental rule,
regulation or order, or any change therein or in the interpretation,
-48-
<PAGE> 56
administration or application thereof (including the introduction of any new
law, treaty or governmental rule, regulation or order), or any determination of
a court or governmental authority, in each case that becomes effective after the
date hereof, or compliance by such Lender with any guideline, request or
directive issued or made after the date hereof by any central bank or other
governmental or quasi-governmental authority (whether or not having the force of
law):
(i) subjects such Lender (or its applicable lending office) to any
additional Tax (other than any Tax on the overall net income of such
Lender) with respect to this Agreement or any of its obligations
hereunder or any payments to such Lender (or its applicable lending
office) of principal, interest, fees or any other amount payable
hereunder;
(ii) imposes, modifies or holds applicable any reserve (including
without limitation any marginal, emergency, supplemental, special or
other reserve), special deposit, compulsory loan, FDIC insurance or
similar requirement against assets held by, or deposits or other
liabilities in or for the account of, or advances or loans by, or other
credit extended by, or any other acquisition of funds by, any office of
such Lender (other than any such reserve or other requirements with
respect to Eurodollar Rate Loans that are reflected in the definition
of Adjusted Eurodollar Rate); or
(iii) imposes any other condition (other than with respect to a
Tax matter) on or affecting such Lender (or its applicable lending
office) or its obligations hereunder or the interbank Eurodollar
market;
and the result of any of the foregoing is to increase the cost to such Lender of
agreeing to make, making or maintaining Loans hereunder or to reduce any amount
received or receivable by such Lender (or its applicable lending office) with
respect thereto; then, in any such case, Company shall promptly pay to such
Lender, upon receipt of the statement referred to in the next sentence, such
additional amount or amounts (in the form of an increased rate of, or a
different method of calculating, interest or otherwise as such Lender in its
sole discretion shall determine) as may be necessary to compensate such Lender
for any such increased cost or reduction in amounts received or receivable
hereunder. Such Lender shall deliver to Company (with a copy to Administrative
Agent) a written statement, setting forth in reasonable detail the basis for
calculating the additional amounts owed to such Lender under this subsection
2.7A, which statement shall be conclusive and binding upon all parties hereto
absent manifest error.
B. WITHHOLDING OF TAXES.
(i) Payments to Be Free and Clear. All sums payable by Company
under this Agreement and the other Loan Documents shall be paid free
and clear of and (except to the extent required by law) without any
deduction or withholding on account of any Tax (other than a Tax on the
overall net income of any Lender)
-49-
<PAGE> 57
imposed, levied, collected, withheld or assessed by or within the
United States of America or any political subdivision in or of the
United States of America or any other jurisdiction from or to which a
payment is made by or on behalf of Company or by any federation or
organization of which the United States of America or any such
jurisdiction is a member at the time of payment.
(ii) Grossing-up of Payments. If Company or any other Person is
required by law to make any deduction or withholding on account of any
such Tax from any sum paid or payable by Company to Administrative
Agent or any Lender under any of the Loan Documents:
(a) Company shall notify Administrative Agent of any such
requirement or any change in any such requirement as soon as
Company becomes aware of it;
(b) Company shall pay any such Tax before the date on which
penalties attach thereto, such payment to be made (if the
liability to pay is imposed on Company) for its own account or (if
that liability is imposed on Administrative Agent or such Lender,
as the case may be) on behalf of and in the name of Administrative
Agent or such Lender;
(c) the sum payable by Company in respect of which the
relevant deduction, withholding or payment is required shall be
increased to the extent necessary to ensure that, after the making
of that deduction, withholding or payment, Administrative Agent or
such Lender, as the case may be, receives on the due date a net
sum equal to what it would have received had no such deduction,
withholding or payment been required or made; and
(d) within 30 days after paying any sum from which it is
required by law to make any deduction or withholding, and within
30 days after the due date of payment of any Tax which it is
required by clause (b) above to pay, Company shall deliver to
Administrative Agent evidence satisfactory to the other affected
parties of such deduction, withholding or payment and of the
remittance thereof to the relevant taxing or other authority;
provided that no such additional amount shall be required to be paid to
any Lender under clause (c) above except to the extent that any change
after the date hereof (in the case of each Lender listed on the
signature pages hereof) or after the date of the Assignment Agreement
pursuant to which such Lender became a Lender (in the case of each
other Lender) in any such requirement for a deduction, withholding or
payment as is mentioned therein shall result in an increase in the rate
of such deduction, withholding or payment from that in effect at the
date of this Agreement or at the date of such Assignment Agreement, as
the case may be, in respect of payments to such Lender.
-50-
<PAGE> 58
(iii) Evidence of Exemption from U.S. Withholding Tax.
(a) Each Lender that is organized under the laws of any
jurisdiction other than the United States or any state or other
political subdivision thereof (for purposes of this subsection
2.7B(iii), a "NON-US LENDER") shall deliver to Administrative
Agent for transmission to Company, on or prior to the Fourth
Restatement Date (in the case of each Lender listed on the
signature pages hereof) or on the date of the Assignment Agreement
pursuant to which it becomes a Lender (in the case of each other
Lender), and at such other times as may be necessary in the
determination of Company or Administrative Agent (each in the
reasonable exercise of its discretion), (1) two original copies of
Internal Revenue Service Form 1001 or 4224 (or any successor
forms), properly completed and duly executed by such Lender,
together with any other certificate or statement of exemption
required under the Internal Revenue Code or the regulations issued
thereunder to establish that such Lender is not subject to
deduction or withholding of United States federal income tax with
respect to any payments to such Lender of principal, interest,
fees or other amounts payable under any of the Loan Documents or
(2) if such Lender is not a "bank" or other Person described in
Section 881(c)(3) of the Internal Revenue Code and cannot deliver
either Internal Revenue Service Form 1001 or 4224 pursuant to
clause (1) above, a Certificate re Non-Bank Status together with
two original copies of Internal Revenue Service Form W-8 (or any
successor form), properly completed and duly executed by such
Lender, together with any other certificate or statement of
exemption required under the Internal Revenue Code or the
regulations issued thereunder to establish that such Lender is not
subject to deduction or withholding of United States federal
income tax with respect to any payments to such Lender of interest
payable under any of the Loan Documents.
(b) Each Lender required to deliver any forms, certificates
or other evidence with respect to United States federal income tax
withholding matters pursuant to subsection 2.7B(iii)(a) hereby
agrees, from time to time after the initial delivery by such
Lender of such forms, certificates or other evidence, whenever a
lapse in time or change in circumstances renders such forms,
certificates or other evidence obsolete or inaccurate in any
material respect, such Lender shall (1) deliver to Administrative
Agent for transmission to Company two new original copies of
Internal Revenue Service Form 1001 or 4224, or a Certificate re
Non-Bank Status and two original copies of Internal Revenue
Service Form W-8, as the case may be, properly completed and duly
executed by such Lender, together with any other certificate or
statement of exemption required in order to confirm or establish
that such Lender is not subject to deduction or withholding of
United States federal income tax with respect to payments to such
Lender under the Loan Documents or (2) immediately notify
Administrative Agent and Company of its inability to deliver any
such forms, certificates or other evidence.
-51-
<PAGE> 59
(c) Company shall not be required to pay any additional
amount to any Non-US Lender under clause (c) of subsection
2.7B(ii) if such Lender shall have failed to satisfy the
requirements of subsection 2.7B(iii)(a); provided that if such
Lender shall have satisfied such requirements on the Fourth
Restatement Date (in the case of each Lender listed on the
signature pages hereof) or on the date of the Assignment Agreement
pursuant to which it became a Lender (in the case of each other
Lender), nothing in this subsection 2.7B(iii)(c) shall relieve
Company of its obligation to pay any additional amounts pursuant
to clause (c) of subsection 2.7B(ii) in the event that, as a
result of any change in any applicable law, treaty or governmental
rule, regulation or order, or any change in the interpretation,
administration or application thereof, such Lender is no longer
properly entitled to deliver forms, certificates or other evidence
at a subsequent date establishing the fact that such Lender is not
subject to withholding as described in subsection 2.7B(iii)(a).
C. CAPITAL ADEQUACY ADJUSTMENT. If any Lender shall have determined
that the adoption, effectiveness, phase-in or applicability after the date
hereof of any law, rule or regulation (or any provision thereof) regarding
capital adequacy, or any change therein or 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 any Lender (or its applicable lending office) with any guideline, request or
directive regarding capital adequacy (whether or not having the force of law) of
any such governmental authority, central bank or comparable agency, has or would
have the effect of reducing the rate of return on the capital of such Lender or
any corporation controlling such Lender as a consequence of, or with reference
to, such Lender's Loans or Commitments or other obligations hereunder to a level
below that which such Lender or such controlling corporation could have achieved
but for such adoption, effectiveness, phase-in, applicability, change or
compliance (taking into consideration the policies of such Lender or such
controlling corporation with regard to capital adequacy), then from time to
time, within five Business Days after receipt by Company from such Lender of the
statement referred to in the next sentence, Company shall pay to such Lender
such additional amount or amounts as will compensate such Lender or such
controlling corporation on an after-tax basis for such reduction. Such Lender
shall deliver to Company (with a copy to Administrative Agent) a written
statement, setting forth in reasonable detail the basis of the calculation of
such additional amounts, which statement shall be conclusive and binding upon
all parties hereto absent manifest error.
D. SUBSTITUTE LENDERS. In the event Company is required under the
provisions of this subsection 2.7 to make payments in a material amount to any
Lender or in the event any Lender fails to lend to Company in accordance with
this Agreement, Company may, so long as no Event of Default or Potential Event
of Default shall have occurred and be continuing, elect to terminate such Lender
as a party to this Agreement; provided that, concurrently with
-52-
<PAGE> 60
such termination, (i) Company shall pay that Lender all principal, interest and
fees and other amounts (including without limitation, amounts, if any, owed
under this subsection 2.7) owed to such Lender through such date of termination,
(ii) another financial institution satisfactory to Company and Administrative
Agent (or if Administrative Agent is also the Lender to be terminated, the
successor Administrative Agent) shall agree, as of such date, to become a Lender
for all purposes under this Agreement (whether by assignment or amendment) and
to assume all obligations of the Lender to be terminated as of such date, and
(iii) all documents and supporting materials necessary, in the judgment of
Administrative Agent (or if Administrative Agent is also the Lender to be
terminated, the successor Administrative Agent) to evidence the substitution of
such Lender shall have been received and approved by Administrative Agent as of
such date.
2.8 OBLIGATION OF LENDERS TO MITIGATE.
Each Lender agrees that, as promptly as practicable after the officer
of such Lender responsible for administering the Loans of such Lender becomes
aware of the occurrence of an event or the existence of a condition that would
cause such Lender to become an Affected Lender or that would entitle such Lender
to receive payments under subsection 2.7, it will, to the extent not
inconsistent with the internal policies of such Lender and any applicable legal
or regulatory restrictions, use reasonable efforts (i) to make, issue, fund or
maintain the Commitments of such Lender or the affected Loans of such Lender
through another lending office of such Lender, or (ii) take such other measures
as such Lender may deem reasonable, if as a result thereof the circumstances
which would cause such Lender to be an Affected Lender would cease to exist or
the additional amounts which would otherwise be required to be paid to such
Lender pursuant to subsection 2.7 would be materially reduced and if, as
determined by such Lender in its sole discretion, the making, issuing, funding
or maintaining of such Commitments or Loans through such other lending office or
in accordance with such other measures, as the case may be, would not otherwise
materially adversely affect such Commitments or Loans or the interests of such
Lender; provided that such Lender will not be obligated to utilize such other
lending office pursuant to this subsection 2.8 unless Company agrees to pay all
incremental expenses incurred by such Lender as a result of utilizing such other
lending office as described in clause (i) above. A certificate as to the amount
of any such expenses payable by Company pursuant to this subsection 2.8 (setting
forth in reasonable detail the basis for requesting such amount) submitted by
such Lender to Company (with a copy to Administrative Agent) shall be conclusive
absent manifest error.
2.9 RELEASE OF COLLATERAL.
Upon the prepayment of all Loans made with respect to a specific
Financed Aircraft pursuant to subsection 2.4B(iv)(a) hereof, Administrative
Agent, at the reasonable expense of Company, agrees to execute and deliver to
Company such documents as shall be reasonably satisfactory to Company to
evidence the release of the Liens granted pursuant to the Collateral Documents
with respect to such Financed Aircraft and shall use its best efforts to return
the originals of all Notes representing such Loans to Company, marked "Paid."
-53-
<PAGE> 61
SECTION 3.
CONDITIONS TO LOANS
The obligations of Administrative Agent and Lenders to make Loans
hereunder are subject to the satisfaction of the following conditions:
3.1 CONDITIONS TO EFFECTIVENESS AND THE EXISTING AIRCRAFT EXTENDED LOANS.
The effectiveness of this Agreement and the obligation of the Lenders
to maintain the Existing Aircraft Extended Loans are subject to the satisfaction
of all of the following conditions:
(i) each of the parties hereto shall have executed and delivered
counterparts of this Agreement to Administrative Agent;
(ii) Company shall have delivered to Lenders (or to Administrative
Agent for Lenders) executed originals of the Existing Aircraft Extended
Notes, duly executed in accordance with subsection 2.1D, drawn to the
order of each Lender and with appropriate insertions;
(iii) Company shall have to delivered to Administrative Agent the
following, each, unless otherwise noted, dated the Fourth Restatement
Date:
(a) certified copies of the certificate of incorporation of
Company, together with a good standing certificate from the
Secretary of State of the State of Delaware and each other state
in which Company is qualified as a foreign corporation to do
business and, to the extent generally available, a certificate or
other evidence of good standing as to payment of any applicable
franchise or similar taxes from the appropriate taxing authority
of each of such states, each dated a recent date prior to the
Fourth Restatement Date;
(b) copies of the bylaws of Company, certified as of the
Fourth Restatement Date by its corporate secretary or an assistant
secretary
(c) resolutions of the Board of Directors of Company
approving and authorizing the execution, delivery and performance
of this Agreement and the other Loan Documents certified as of the
Fourth Restatement Date by Company's corporate secretary or
assistant secretary as being in full force and effect without
modification or amendment;
(d) signature and incumbency certificate of the officer of
Company executing this Agreement and any other Loan Documents; and
(e) such other document as Administrative Agent may
reasonably request.
-54-
<PAGE> 62
(iv) Company shall have delivered to Administrative Agent a
Financial Condition Certificate executed by its Chief Executive
Officer, Chief Financial Officer or Executive Vice President--Strategic
Planning and Treasurer and dated the Fourth Restatement Date,
substantially in the form annexed hereto as Exhibit IX with appropriate
attachments demonstrating that, after giving effect to the full amounts
which will be available under this Agreement, Company and its
Subsidiaries, taken as a whole, are Solvent;
(v) Lenders and their respective counsel shall have received (A)
originally executed copies of one or more favorable written opinions of
Cahill Gordon & Reindel, counsel for Company, in form and substance
reasonably satisfactory to Administrative Agent and its counsel, dated
as of the Fourth Restatement Date and setting forth substantially the
matters in the opinions designated in Exhibit VA annexed hereto and as
to such other matters as Administrative Agent acting on behalf of
Lenders may reasonably request, (B) the opinion of Cahill Gordon &
Reindel regarding Section 1110 of the Bankruptcy Code, dated the Fourth
Restatement Date and setting forth substantially the matters in the
opinions designated in Exhibit VB annexed hereto, and (C) evidence
satisfactory to Administrative Agent that Company has requested such
counsel to deliver such opinions to Lenders;
(vi) Lenders and their respective counsel shall have received
executed copies of one or more favorable written opinions of David
Brictson, Assistant General Counsel of Company, in form and substance
reasonably satisfactory to Administrative Agent and its counsel, dated
the Fourth Restatement Date, and setting forth substantially the
matters in the opinions designated in Exhibit VC annexed hereto;
(vii) Company shall have delivered to Administrative Agent
appraisals from two Approved Appraisers, in form and substance
satisfactory to Administrative Agent demonstrating that the outstanding
principal amount of each Existing Aircraft Extended Loan does not
exceed 80% of the Appraised Value of the Related Aircraft as of the
Fourth Restatement Date.
(viii) After giving effect to the transactions contemplated hereby
(including the payment of, or taking reserves for, all transactions
fees and expenses), Company shall not have less than $400 million cash
on its consolidated balance sheet;
(ix) Administrative Agent shall be satisfied with the capital,
organization, ownership and management structure of Company and its
Subsidiaries and with the form and substance of the ACMI Contracts, any
Modification Agreements, any BFE Agreements, aircraft lease
arrangements, Purchase Agreements, existing financing agreements and
intercreditor arrangements (including, without limitation, the Senior
Note Documents and the Pass Through Trust Documents);
-55-
<PAGE> 63
(x) The AFL III Restructuring shall have been completed or shall
be completed concurrently under terms and conditions reasonably
satisfactory to Administrative Agent and Lenders; and
(xi) Company shall have taken such actions and delivered to
Administrative Agent such documents as Administrative Agent may
reasonably request and all such documents shall be in form and
substance reasonably satisfactory to Administrative Agent.
3.2 CONDITIONS TO LOANS TO FINANCE AIRCRAFT ACQUISITION.
The obligations of Lenders to make Loans to finance the acquisition of
an aircraft on any Funding Date are subject to the following conditions:
(i) Company shall deliver to Administrative Agent an Officer's
Certificate and such supportive documents as may be requested by
Administrative Agent, certifying that the aircraft to be acquired is an
Eligible Aircraft;
(ii) as of the date of purchase of such Eligible Aircraft,
Administrative Agent shall be reasonably satisfied that Company and its
Subsidiaries have entered into binding ACMI Contracts sufficient to
ensure the continued employment (consistent with past practices) of
substantially all other aircraft owned and operated by Company and its
Subsidiaries other than the new aircraft being acquired;
(iii) on the date of purchase of any such Eligible Aircraft,
Administrative Agent, on behalf of Lenders, shall have been granted a
first priority Lien on such Eligible Aircraft, spare parts and related
assets (including, without limitation, the Purchase Agreement and any
Modification Agreement) and the Purchase Agreement, any Modification
Agreement and any BFE Agreements shall have been assigned to
Administrative Agent and any Persons whose consent is necessary for an
effective assignment of such agreements shall have so consented, in
each case, pursuant to documentation and procedures acceptable to
Administrative Agent;
(iv) Company shall have delivered to Administrative Agent
appraisals from two Approved Appraisers, in form and substance
satisfactory to Administrative Agent, demonstrating that the amount of
the Revolving Loan requested does not exceed 80% of the Appraised Value
of the Eligible Aircraft to be acquired as of the Funding Date and
that, after giving effect to all proposed modifications of such
Eligible Aircraft, the Maximum Note Amount shall not exceed 80% of the
Appraised Value of such Eligible Aircraft as so modified;
(v) a First Aircraft Chattel Mortgage and a Second Aircraft
Chattel Mortgage with respect to the Eligible Aircraft shall have been
filed in such order for recordation with the FAA under the Federal
Aviation Act;
-56-
<PAGE> 64
(vi) Uniform Commercial Code Financing Statements naming
Administrative Agent as the secured party covering such Eligible
Aircraft and spare parts shall have been duly executed and delivered
and duly filed in all jurisdictions necessary or desirable to perfect a
security interest in the Collateral;
(vii) the FAA Bill of Sale shall have been delivered for
recordation with the FAA pursuant to the Federal Aviation Act;
(viii) the Eligible Aircraft shall have been registered with the
FAA in the name of Company or if not previously registered in the
United States, an application for registration shall have been filed;
(ix) Administrative Agent shall have received originally executed
copies of one or more favorable written opinions of counsel to Company
in form and substance satisfactory to Administrative Agent dated as of
the Funding Date and setting forth the matters designated in the
opinions in Exhibits VA, VB and VC and such other matters as
Administrative Agent may reasonably request.
(x) Administrative Agent shall have received originally executed
copies of one or more favorable written opinions of FAA counsel or
other counsel in form and substance satisfactory to Administrative
Agent dated as of the Funding Date or the date such Eligible Aircraft
is registered with the FAA if such registration occurs after the
Funding Date and setting forth such matters related to the FAA or other
Aeronautical Authority having jurisdiction over the Eligible Aircraft
being acquired as Administrative Agent may reasonably request;
(xi) Administrative Agent shall have received evidence
satisfactory to it to the effect that as of such Funding Date Company
is an air carrier certificated under Sections 401 and 604(b) of the
Federal Aviation Act; with respect to any Eligible Aircraft,
certificates of airworthiness with respect to the Eligible Aircraft
shall have been duly issued by the Aeronautical Authority pursuant to
the Federal Aviation Act or, in the case of a Foreign Leased Aircraft,
its foreign equivalent and shall be in full force and effect; and each
Engine shall be in compliance with all airworthiness standards of such
Aeronautical Authority or shall be maintained in accordance with a
program approved by such Aeronautical Authority;
(xii) Company shall have good and marketable title to and a valid
ownership interest in the Collateral free and clear of all Liens other
than Liens permitted by subsection 6.2;
(xiii) no Event of Loss with respect to the Airframe or any Engine
to be delivered shall have occurred and no event or condition which
with the giving of notice or lapse of time or both, would result in any
such Event of Loss shall have occurred and be continuing;
-57-
<PAGE> 65
(xiv) Company shall have delivered to Administrative Agent
certificates of insurance naming Administrative Agent on behalf of
Administrative Agent and Lenders as loss payee under casualty insurance
policies with respect to the Eligible Aircraft to be acquired and a
broker's report evidencing compliance with the requirements of the
First Aircraft Chattel Mortgage with respect to such Eligible Aircraft;
(xv) Company shall have delivered to Administrative Agent all
documents executed in connection with the Purchase Agreement related to
such aircraft and such documents shall be in form and substance
satisfactory to Administrative Agent;
(xvi) any Revolving Loan made to finance the purchase of a
Financed Aircraft shall be made no later than ten days after the later
of Company's payment of the purchase price with respect to or
acquisition of title to such Financed Aircraft; and
(xvii) Company shall have delivered to Administrative Agent such
other documents as Administrative Agent may reasonably request and all
such documents shall be in form and substance reasonably satisfactory
to Administrative Agent.
(xviii) In addition to the foregoing conditions, with respect to
the Loans made to finance the acquisition of a Leased Aircraft, Company
shall have delivered to Administrative Agent a copy of the Approved
Lease in form and substance satisfactory to Administrative Agent
including, without limitation, provisions permitting the grant to
Administrative Agent on behalf of Lenders of the Liens contemplated by
subdivision (iii) of this subsection 3.2, and satisfaction of the
requirements of subdivision (xiv) of this subsection 3.2. In addition,
the form of Mortgages delivered with respect to a Leased Aircraft will
permit such Approved Lease and include provisions granting security
interests to the Administrative Agent, on behalf of Lenders, in the
Approved Lease and all rights and privileges of Company thereunder and
will require that ground and flight all-risk hull insurance be
maintained on such Leased Aircraft in an amount equal to the greater of
(x) 100% of the Appraised Value of such Leased Aircraft and (y) the
purchase price of such Leased Aircraft. Finally, Company will not be
required to enter into a Modification Agreement with respect to a
Leased Aircraft or to assign such Modification Agreement to
Administrative Agent for the benefit of Lenders; provided that, if such
Leased Aircraft requires Conversion, Company will enter into a
Modification Agreement with respect to such Leased Aircraft and will
assign such Modification Agreement to Administrative Agent for the
benefit of Lenders prior to or concurrently with the termination of
such Approved Lease;
(xix) the aggregate amount of Revolving Loans made in respect of
all Leased Aircraft shall not exceed 50% of the Revolving Loan
Commitments; and
-58-
<PAGE> 66
(xx) with respect to any Foreign Leased Aircraft, Administrative
Agent shall have received originally executed copies of one or more
favorable written opinions of counsel located in the jurisdiction where
such Foreign Leased Aircraft is registered and setting forth such
matters related to the Aeronautical Authority having jurisdiction over
such Foreign Leased Aircraft as Administrative Agent may reasonably
request.
Notwithstanding the foregoing, Administrative Agent may (provided that
no Event of Default has occurred or is continuing) in its sole and absolute
discretion waive the conditions set forth in clauses (iii), (v), (vii), (viii)
and (x) to the extent necessary by reason of the fact that Company is unable to
obtain a deregistration certificate with respect to the applicable Eligible
Aircraft prior to the purchase of such Eligible Aircraft; provided that, if
Administrative Agent's security interest in such Eligible Aircraft is not fully
perfected within five (5) Business Days of full funding of the Loans with
respect to such Eligible Aircraft, Company shall prepay such Loans in accordance
with subsection 2.4B(iii)(g); provided further, that Administrative Agent may
not waive such conditions with respect to more than one Eligible Aircraft at any
time; provided further, that, notwithstanding anything to the contrary contained
herein, the conditions set forth in clauses (v), (vii) and (viii) above shall
not apply to a Foreign Leased Aircraft.
3.3 CONDITION TO LOANS TO FINANCE CARGO CONVERSION.
The obligations of Lenders to make Loans to finance the costs of
conversion of a Financed Aircraft on any Funding Date are subject to the
additional conditions set forth below:
A. CONDITIONS TO EACH LOAN TO FINANCE THE COSTS OF CONVERSION.
(i) Administrative Agent shall have received an invoice and bill
of sale with respect to any Parts delivered in connection with the
modification of Financed Aircraft and with respect to any buyer
furnished equipment, and an invoice for any services or other costs
associated with the modification of such Financed Aircraft and/or such
other information and materials as may be reasonably requested by
Administrative Agent confirming the name of the vendor performing the
service, the Parts or service to be financed by such Revolving Loan,
the amount due from or previously paid by Company, the satisfactory
completion of the services for which such Revolving Loan proceeds shall
be applied and such other information regarding such service as
Administrative Agent may request. To the extent practicable, each
Revolving Loan made shall be allocated only to the costs of conversion
other than labor costs associated with such conversion; and
(ii) with respect to any Revolving Loan to finance the purchase of
a Part, such Revolving Loan shall be made no later than ten days after
the later of Company's payment for or acquisition of title to such
Part.
-59-
<PAGE> 67
B. CONDITIONS TO THE FINAL LOAN TO FINANCE THE COST OF CONVERSION.
(i) If there has been any material deviation from the terms of the
Modification Agreement entered into by Company with respect to a
Financed Aircraft after the date of the appraisals delivered pursuant
to subsection 3.2(iv), Company shall have delivered to Administrative
Agent appraisals demonstrating that the amount of the Revolving Loans
requested when added to all previous Revolving Loans made with respect
to the Financed Aircraft which has been converted as of the Funding
Date does not exceed the lesser of (x) 100% of the remaining costs of
conversion and (y) 80% of the Appraised Value of the Financed Aircraft;
(ii) Company shall deliver to Administrative Agent an Officer's
Certificate (x) certifying that the conversion of the Financed Aircraft
has been completed and that all obligations of Company with respect to
the modifications of the Financed Aircraft under a Modification
Agreement and any BFE Agreement have been satisfied and (y) stating the
total cost of the purchase and modification of such Financed Aircraft,
which shall not be less than all Loans made in respect of such Financed
Aircraft.
(iii) Company shall deliver to Administrative Agent (a) a copy of
the Aircraft re-delivery receipt and evidence of transfer of title to
each Part included in the modification, (b) copies of any Supplemental
Types Certificates issued by the FAA, and (c) copies of any FAA Form
337s to be filed in connection with such modification;
(iv) Administrative Agent shall have received evidence
satisfactory to it to the effect that as of such Funding Date Company
is an air carrier certificated under Sections 401 and 604(b) of the
Federal Aviation Act; certificates of airworthiness with respect to the
Eligible Aircraft shall have been duly issued pursuant to the Federal
Aviation Act and shall be in full force and effect; and each Engine
shall be in compliance with all airworthiness standards of the FAA or
shall be maintained in accordance with an FAA approved program; and
(v) Company shall have delivered to Administrative Agent such
other documents as Administrative Agent may reasonably request and all
such documents shall be in form and substance reasonably satisfactory
to Administrative Agent.
3.4 CONDITIONS TO ALL LOANS.
The obligations of Lenders to make Loans on each Funding Date are
subject to the following further conditions precedent:
A. Administrative Agent shall have received before that Funding Date,
in accordance with the provisions of subsection 2.1B, an originally executed
Notice of Borrowing, in each case signed by the chief executive officer, the
chief financial officer or the
-60-
<PAGE> 68
treasurer of Company or by any executive officer of Company designated by any of
the above-described officers on behalf of Company in a writing delivered to
Administrative Agent.
B. As of that Funding Date:
(i) the representations and warranties contained herein and in the
other Loan Documents shall be true, correct and complete in all
material respects on and as of that Funding Date to the same extent as
though made on and as of that date, except to the extent such
representations and warranties specifically relate to an earlier date,
in which case such representations and warranties shall have been true,
correct and complete in all material respects on and as of such earlier
date; provided that, with respect to any Funding Date referred to in
subsection 3.3, Company's representations and warranties shall be to
its best knowledge;
(ii) no event shall have occurred and be continuing or would
result from the consummation of the borrowing contemplated by such
Notice of Borrowing that would constitute an Event of Default or a
Potential Event of Default;
(iii) Company shall have performed in all material respects all
agreements and satisfied all conditions which this Agreement provides
shall be performed or satisfied by it on or before that Funding Date;
(iv) no order, judgment or decree of any court, arbitrator or
governmental authority shall purport to enjoin or restrain any Lender
from making the Loans to be made by it on that Funding Date;
(v) the making of the Loans requested on such Funding Date shall
not violate any law including, without limitation, Regulation T,
Regulation U or Regulation X of the Board of Governors of the Federal
Reserve System; and
(vi) there shall not be pending or, to the knowledge of Company,
threatened, any action, suit, proceeding, governmental investigation or
arbitration against or affecting Company or any of its Subsidiaries or
any property of Company or any of its Subsidiaries that has not been
disclosed by Company in writing pursuant to subsection 4.6 or 5.1(x)
prior to the making of the last preceding Loans (or, in the case of the
initial Loans, prior to the execution of this Agreement), and there
shall have occurred no development not so disclosed in any such action,
suit, proceeding, governmental investigation or arbitration so
disclosed, that, in either event, in the opinion of Administrative
Agent or of Requisite Lenders, would be expected to have a Material
Adverse Effect; and no injunction or other restraining order shall have
been issued and no hearing to cause an injunction or other restraining
order to be issued shall be pending or noticed with respect to any
action, suit or proceeding seeking to enjoin or otherwise prevent the
consummation of, or to recover any damages or obtain relief as a result
of, the transactions contemplated by this Agreement or the making of
Loans hereunder.
-61-
<PAGE> 69
C. With respect to any Revolving Loans made on a Funding Date for the
purpose of reborrowing an amount equal to the amount of mandatory prepayments
made pursuant to subsection 2.4B(iii)(e), Administrative Agent shall have
received an opinion of Cahill Gordon & Reindel, or such other counsel as may be
acceptable to Administrative Agent, dated as of such Funding Date confirming the
applicability of Section 1110 of the Bankruptcy Code, to such Revolving Loans
made on such Funding Date, in form and substance satisfactory to Administrative
Agent.
D. In the case of an initial Revolving Loan with respect to a New
Aircraft, Company shall have delivered to Lenders (or to Administrative Agent
for Lenders) executed originals of the New Aircraft Notes, duly executed in
accordance with subsection 2.1D, drawn to the order of each Lender and with
appropriate insertions.
SECTION 4.
COMPANY'S REPRESENTATIONS AND WARRANTIES
In order to induce Lenders to enter into this Agreement and to make the
Loans, Company represents and warrants to each Lender, on the date of this
Agreement and on each Funding Date, that the following statements are true,
correct and complete:
4.1 ORGANIZATION, POWERS, QUALIFICATION, GOOD STANDING, BUSINESS AND
SUBSIDIARIES.
A. ORGANIZATION AND POWERS. Company is a corporation duly organized,
validly existing and in good standing under the laws of the State of Delaware.
Company has all requisite corporate power and authority to own and operate its
properties, to carry on its business as now conducted and as proposed to be
conducted, to enter into the Loan Documents and to carry out the transactions
contemplated thereby.
B. QUALIFICATION AND GOOD STANDING; AIR CARRIER CERTIFICATION. Company
is qualified to do business and in good standing in every jurisdiction where its
assets are located and wherever necessary to carry out its business and
operations, except in jurisdictions where the failure to be so qualified or in
good standing has not had and will not have a Material Adverse Effect. Company
is a "citizen of the United States" within the meaning of the Federal Aviation
Act (a "UNITED STATES CITIZEN") and holds an air carrier operating certificate
under the Federal Aviation Act for aircraft capable of carrying 10 or more
individuals or 6,000 pounds or more of cargo.
C. SUBSIDIARIES. All of the Subsidiaries of Company as of the Fourth
Restatement Date are identified in Schedule 4.1 annexed hereto, as said Schedule
4.1 may be supplemented from time to time pursuant to the provisions of
subsection 5.1(xvii). The capital stock of each of the Subsidiaries of Company
identified in Schedule 4.1 annexed hereto (as so supplemented) is duly
authorized, validly issued, fully paid and nonassessable
-62-
<PAGE> 70
and none of such capital stock constitutes Margin Stock. Each of the
Subsidiaries of Company identified in Schedule 4.1 annexed hereto (as so
supplemented) is a corporation duly organized, validly existing and in good
standing under the laws of its respective jurisdiction of incorporation set
forth therein, has all requisite corporate power and authority to own and
operate its properties and to carry on its business as now conducted and as
proposed to be conducted, and is qualified to do business and in good standing
in every jurisdiction where its assets are located and wherever necessary to
carry out its business and operations, in each case except where failure to be
so qualified or in good standing or a lack of such corporate power and authority
has not had and will not have a Material Adverse Effect. Schedule 4.1 annexed
hereto (as so supplemented) correctly sets forth the ownership interest of
Company and each of its Subsidiaries in each of the Subsidiaries of Company
identified therein.
D. COLLATERAL DOCUMENTS. The security interests created in favor of
Administrative Agent under the Collateral Documents have at all times from and
after the Initial Closing Date constituted and will continue to constitute, as
security for the obligations purported to be secured thereby, a legal, valid and
enforceable security interest in and Lien on all of the Collateral referred to
therein in favor of Administrative Agent for the benefit of the Lenders,
perfected and prior to the rights of all third persons in accordance with the
requirements of all applicable Collateral Documents. Each Loan Party has good
and marketable title to its respective Collateral, and all such Collateral is
free and clear of all Liens except for Liens permitted by subsection 6.2. No
consents, filings or recordings are required in order to perfect (or maintain
the perfection or priority of) the security interests purported to be created by
any of the Collateral Documents, other than such as have been obtained and which
remain in full force and effect and UCC financing statements to be filed, or
delivered to Administrative Agent for filing, on the Fourth Restatement Date and
periodic UCC continuation filings or as is specifically otherwise permitted by
the terms of any applicable Collateral Document.
4.2 AUTHORIZATION OF BORROWING, ETC.
A. AUTHORIZATION OF BORROWING. The execution, delivery and performance
of the Loan Documents have been duly authorized by all necessary corporate
action on the part of each Loan Party.
B. NO CONFLICT. The execution, delivery and performance by the Loan
Parties of the Loan Documents and the consummation of the transactions
contemplated by the Loan Documents do not and will not (i) violate any provision
of any law or any governmental rule or regulation applicable to Company or any
of its Subsidiaries, the Certificate or Articles of Incorporation or Bylaws of
Company or any of its Subsidiaries or any order, judgment or decree of any court
or other agency of government binding on Company or any of its Subsidiaries,
(ii) conflict with in any material respect, result in a material breach of or
constitute (with due notice or lapse of time or both) a material default under
any Contractual Obligation of Company or any of its Subsidiaries, (iii) result
in or require the creation or
-63-
<PAGE> 71
imposition of any Lien upon any of the properties or assets of Company or any of
its Subsidiaries (other than any Liens created under any of the Loan Documents
in favor of Administrative Agent on behalf of Lenders), or (iv) require any
approval of stockholders or any approval or consent of any Person under any
Contractual Obligation of Company or any of its Subsidiaries, except for such
approvals or consents which will be obtained on or before the Fourth Restatement
Date and disclosed in writing to Lenders.
C. GOVERNMENTAL CONSENTS. The execution, delivery and performance by
the Loan Parties of the Loan Documents and the consummation of the transactions
contemplated by the Loan Documents do not and will not require any registration
with, consent or approval of, or notice to, or other action to, with or by, any
federal, state or other governmental authority or regulatory body which has not
been obtained or made on or prior to the date required to be obtained or made
unless waived by Administrative Agent in accordance with this Agreement.
D. BINDING OBLIGATION. Each of the Loan Documents has been duly
executed and delivered by each of the Loan Parties party thereto and is the
legally valid and binding obligation of each such Loan Party, enforceable
against such Loan Party in accordance with its respective terms, except as may
be limited by bankruptcy, insolvency, reorganization, moratorium or similar laws
relating to or limiting creditors' rights generally or by equitable principles
relating to enforceability.
4.3 FINANCIAL CONDITION.
Company has heretofore delivered to Lenders, at Lenders' request, the
following financial statements and information: the audited consolidated balance
sheets of Company and its Subsidiaries as at December 31, 1999, and the related
consolidated statements of income, stockholders' equity and cash flows of
Company and its Subsidiaries for the Fiscal Year then ended. All such statements
were prepared in conformity with GAAP and fairly present the financial position
(on a consolidated basis) of the entities described in such financial statements
as at the respective dates thereof and the results of operations and cash flows
(on a consolidated basis) of the entities described therein for each of the
periods then ended, subject, in the case of any such unaudited financial
statements, to changes resulting from audit and normal year-end adjustments.
Company does not have any Contingent Obligation, contingent liability or
liability for taxes, long-term lease or unusual forward or long-term commitment
that is not reflected in the foregoing financial statements or the notes thereto
and which in any such case is material in relation to the business, operations,
properties, assets, condition (financial or otherwise) or prospects of Company
or of Company and its Subsidiaries taken as a whole.
4.4 NO MATERIAL ADVERSE CHANGE; NO RESTRICTED JUNIOR PAYMENTS.
Since December 31, 1999, no event or change has occurred that has
caused or evidences, either in any case or in the aggregate, a Material Adverse
Effect. Since
-64-
<PAGE> 72
December 31, 1999, neither Company nor any of its Subsidiaries has directly or
indirectly declared, ordered, paid or made, or set apart any sum or property
for, any Restricted Junior Payment or agreed to do so except as permitted by
subsection 6.5.
4.5 TITLE TO PROPERTIES; LIENS.
A. Company and its Subsidiaries have (i) good, sufficient and legal
title to (in the case of fee interests in real property), (ii) valid leasehold
interests in (in the case of leasehold interests in real or personal property),
or (iii) good title to (in the case of all other personal property), all of the
properties and assets reflected in the financial statements referred to in
subsection 4.3 or in the most recent financial statements delivered pursuant to
subsection 5.1, in each case except for assets disposed of since the date of
such financial statements in the ordinary course of business or as otherwise
permitted under subsection 6.7. Except as permitted by this Agreement, all such
properties and assets are free and clear of Liens.
B. Each Financed Aircraft operated in the United States has a current
and valid airworthiness certificate issued by the FAA pursuant to the Federal
Aviation Act in effect and is in such condition as may be necessary to enable
the airworthiness certificate to be maintained in good standing. Each Engine has
a rated takeoff horsepower greater than 750 horsepower, or the equivalent of
such horsepower. Each Financed Aircraft operated in the United States is
registered with the FAA in the name of Company, and Company has authority to
operate such Financed Aircraft. Company has good title to such Financed
Aircraft, free and clear of all Liens other than Liens permitted by subsection
6.2.
4.6 LITIGATION; ADVERSE FACTS.
There are no actions, suits, proceedings, arbitrations or governmental
investigations (whether or not purportedly on behalf of Company or any of its
Subsidiaries) at law or in equity or before or by any federal, state, municipal
or other governmental department, commission, board, bureau, agency or
instrumentality, domestic or foreign, pending or, to the knowledge of Company,
threatened against or affecting Company or any of its Subsidiaries or any
property of Company or any of its Subsidiaries that, individually or in the
aggregate, could reasonably be expected to result in a Material Adverse Effect.
Neither Company nor any of its Subsidiaries is (i) in violation of any
applicable laws that, individually or in the aggregate, could reasonably be
expected to result in a Material Adverse Effect or (ii) subject to or in default
with respect to any final judgments, writs, injunctions, decrees, rules or
regulations of any court or any federal, state, municipal or other governmental
department, commission, board, bureau, agency or instrumentality, domestic or
foreign, that, individually or in the aggregate, could reasonably be expected to
result in a Material Adverse Effect.
4.7 PAYMENT OF TAXES.
Except to the extent permitted by subsection 5.3, all tax returns and
reports of Company and its Subsidiaries required to be filed by any of them have
been timely filed, and
-65-
<PAGE> 73
all taxes, assessments, fees and other governmental charges upon Company and its
Subsidiaries and upon their respective properties, assets, income, businesses
and franchises which are due and payable have been paid when due and payable.
Company does not know of any proposed tax assessment against Company or any of
its Subsidiaries which is not being actively contested by Company or such
Subsidiary in good faith and by appropriate proceedings; provided that such
reserves or other appropriate provisions, if any, for liabilities for taxes as
shall be required in conformity with GAAP shall have been made or provided in
the financial statements of Company. There are no agreements with respect to
taxes between Company and any tax agency or authority.
4.8 PERFORMANCE OF AGREEMENTS; MATERIALLY ADVERSE AGREEMENTS.
A. Neither Company nor any of its Subsidiaries is in default in the
performance, observance or fulfillment of any of the obligations, covenants or
conditions contained in any of its Contractual Obligations, and no condition
exists that, with the giving of notice or the lapse of time or both, would
constitute such a default, except where the consequences, direct or indirect, of
such default or defaults, if any, would not have a Material Adverse Effect.
B. Neither Company nor any of its Subsidiaries is a party to or is
otherwise subject to any agreements or instruments or any charter or other
internal restrictions which, individually or in the aggregate, could reasonably
be expected to result in a Material Adverse Effect.
4.9 GOVERNMENTAL REGULATION.
Neither Company nor any of its Subsidiaries is subject to regulation
under the Public Utility Holding Company Act of 1935, the Federal Power Act, the
Interstate Commerce Act or the Investment Company Act of 1940 or under any other
federal or state statute or regulation which may limit its ability to incur
Indebtedness or which may otherwise render all or any portion of the Obligations
unenforceable.
4.10 SECURITIES ACTIVITIES.
A. Neither Company nor any of its Subsidiaries is engaged principally,
or as one of its important activities, in the business of extending credit for
the purpose of purchasing or carrying any Margin Stock.
B. Following application of the proceeds of each Loan, not more than
25% of the value of the assets (either of Company only or of Company and its
Subsidiaries on a consolidated basis) subject to the provisions of subsection
6.2 or 6.7 or subject to any restriction contained in any agreement or
instrument, between any Loan Party, on the one had, and any Lender or any
Affiliate of any Lender, on the other hand, relating to Indebtedness and within
the scope of subsection 7.2, will be Margin Stock.
-66-
<PAGE> 74
4.11 EMPLOYEE BENEFIT PLANS.
Company maintains a qualified retirement plan under Section 401(k) of
the Internal Revenue Code (the "Company 401(k) Plan"). Company's 401(k) Plan has
no unfunded liabilities in excess of $10,000,000, and Company is in compliance
with all applicable provisions and requirements of ERISA and the regulations and
published interpretations thereunder with respect to each Employee Benefit Plan
and has performed all its obligations under such Employee Benefit Plan in all
material respects. The Company has no Employee Benefit Plans, other than the
Company 401(k) Plan. The Company has no ERISA Affiliates that sponsor, maintain,
contribute to or are liable with respect to any Employee Benefit Plans.
4.12 CERTAIN FEES.
No broker's or finder's fee or commission will be payable with respect
to this Agreement or any of the transactions contemplated hereby, and Company
hereby indemnifies Lenders against, and agrees that it will hold Lenders
harmless from, any claim, demand or liability for any such broker's or finder's
fees alleged to have been incurred in connection herewith or therewith and any
expenses (including reasonable fees, expenses and disbursements of counsel)
arising in connection with any such claim, demand or liability.
4.13 ENVIRONMENTAL PROTECTION.
A. All Facilities and operations of the Company are, and have been to
the best of Company's knowledge, in compliance in all material respects with all
Environmental Laws.
B. There are no, and have been no, conditions, occurrences, or
Hazardous Materials Activity (a) arising at any Facilities or at any other
location or (b) arising in connection with the operations of Company (including
the transportation of Hazardous Materials in accordance with applicable
regulations), which conditions, occurrences or Hazardous Materials Activity
could reasonably be expected to form the basis of an Environmental Claim against
Company and which, individually or in the aggregate, could reasonably be
expected to have a Material Adverse Effect.
C. To the best of Company's knowledge, there are no pending or
threatened Environmental Claims against Company, and Company has received no
notices, inquiries, or requests for information with respect to any
Environmental Claims.
4.14 EMPLOYEE MATTERS.
There is no strike or work stoppage in existence or threatened
involving Company or any of its Subsidiaries that could reasonably be expected
to have a Material Adverse Effect.
4.15 SOLVENCY.
Company and each of its Subsidiaries is and, upon the incurrence of any
Obligations by Company on any date on which this representation is made, will
be, Solvent.
-67-
<PAGE> 75
4.16 DISCLOSURE.
No representation or warranty of Company or any of its Subsidiaries
contained in any Loan Document or in any other document, certificate or written
statement furnished to Lenders by or on behalf of Company or any of its
Subsidiaries for use in connection with the transactions contemplated by this
Agreement contains any untrue statement of a material fact or omits to state a
material fact (known to Company, in the case of any document not furnished by
Company) necessary in order to make the statements contained herein or therein
not misleading in light of the circumstances in which the same were made. Any
projections and pro forma financial information contained in such materials are
based upon good faith estimates and assumptions believed by Company to be
reasonable at the time made, it being recognized by Lenders that such
projections as to future events are not to be viewed as facts and that actual
results during the period or periods covered by any such projections may differ
from the projected results. There are no facts known (or which should upon the
reasonable exercise of diligence be known) to Company (other than matters of a
general economic nature) that, individually or in the aggregate, could
reasonably be expected to result in a Material Adverse Effect and that have not
been disclosed herein or in such other documents, certificates and statements
furnished to Lenders for use in connection with the transactions contemplated
hereby.
SECTION 5.
COMPANY'S AFFIRMATIVE COVENANTS
Company covenants and agrees that, so long as any of the Commitments
hereunder shall remain in effect and until payment in full of all of the Loans
and other Obligations unless Requisite Lenders shall otherwise give prior
written consent, Company shall perform, and shall cause each of its Subsidiaries
to perform, all covenants in this Section 5.
5.1 FINANCIAL STATEMENTS AND OTHER REPORTS.
Company will maintain, and cause each of its Subsidiaries to maintain,
a system of accounting established and administered in accordance with sound
business practices to permit preparation of financial statements in conformity
with GAAP. Company will deliver to Administrative Agent and Lenders:
(i) [Intentionally Omitted]
(ii) Quarterly Financials: as soon as available and in any event
within 45 days after the end of each fiscal quarter of each Fiscal
Year, (a) the consolidated balance sheet of Company and its
Subsidiaries as at the end of such fiscal quarter and the related
consolidated statement of income, stockholders' equity and cash flows
of Company and its Subsidiaries for such fiscal quarter and for the
period from the
-68-
<PAGE> 76
beginning of the then current Fiscal Year to the end of such fiscal
quarter, setting forth in each case in comparative form the
corresponding figures for the corresponding periods of the previous
Fiscal Year, all in reasonable detail and certified by the chief
financial officer of Company that they fairly present the financial
condition of Company and its Subsidiaries as at the dates indicated and
the results of their operations and their cash flows for the periods
indicated, subject to changes resulting from audit and normal year-end
adjustments, and (b) a narrative report describing the operations of
Company and its Subsidiaries in the form prepared for presentation to
senior management for such fiscal quarter and for the period from the
beginning of the then current Fiscal Year to the end of such fiscal
quarter; provided that delivery of Company's Form 10-Q for such fiscal
quarter shall be deemed to satisfy the requirements of this subsection
5.1(ii);
(iii) Year-End Financials: as soon as available and in any event
within 90 days after the end of each Fiscal Year, (a) the consolidated
balance sheet of Company and its Subsidiaries as at the end of such
Fiscal Year and the related consolidated statement of income,
stockholders' equity and cash flows of Company and its Subsidiaries for
such Fiscal Year, setting forth in each case in comparative form the
corresponding figures for the previous Fiscal Year, all in reasonable
detail and certified by the chief financial officer of Company that
they fairly present the financial condition of Company and its
Subsidiaries as at the dates indicated and the results of their
operations and their cash flows for the periods indicated, (b) a
narrative report describing the operations of Company and its
Subsidiaries in the form prepared for presentation to senior management
for such Fiscal Year, and (c) in the case of such consolidated
financial statements, a report thereon of Arthur Andersen LLP or other
independent certified public accountants of recognized national
standing selected by Company and satisfactory to Administrative Agent,
which report shall be unqualified, shall express no doubts about the
ability of Company and its Subsidiaries to continue as a going concern,
and shall state that such consolidated financial statements fairly
present the consolidated financial position of Company and its
Subsidiaries as at the dates indicated and the results of their
operations and their cash flows for the periods indicated in conformity
with GAAP applied on a basis consistent with prior years (except as
otherwise disclosed in such financial statements) and that the
examination by such accountants in connection with such consolidated
financial statements has been made in accordance with generally
accepted auditing standards; provided that delivery of Company's Form
10-K for such Fiscal Year shall be deemed to satisfy the requirements
of clauses (a) and (b) of this subsection 5.1(iii);
(iv) Officers' and Compliance Certificates: together with each
delivery of financial statements of Company and its Subsidiaries
pursuant to subdivisions (ii) and (iii) above after the Fourth
Restatement Date, (a) an Officers' Certificate of Company stating that
the signers have reviewed the terms of this Agreement and have made, or
caused to be made under their supervision, a review in reasonable
detail of the transactions and condition of Company and its
Subsidiaries during the accounting
-69-
<PAGE> 77
period covered by such financial statements and that such review has
not disclosed the existence during or at the end of such accounting
period, and that the signers do not have knowledge of the existence as
at the date of such Officers' Certificate, of any condition or event
that constitutes an Event of Default or Potential Event of Default, or,
if any such condition or event existed or exists, specifying the nature
and period of existence thereof and what action Company has taken, is
taking and proposes to take with respect thereto; and (b) a Compliance
Certificate demonstrating in reasonable detail compliance during and at
the end of the applicable quarterly and annual accounting periods with
the restrictions contained in Section 6;
(v) Reconciliation Statements: if, as a result of any change in
accounting principles and policies from those used in the preparation
of the audited financial statements referred to in subsection 4.3, the
consolidated financial statements of Company and its Subsidiaries
delivered pursuant to subdivisions (ii) or (iii) of this subsection 5.1
will differ in any material respect from the consolidated financial
statements that would have been delivered pursuant to such subdivisions
had no such change in accounting principles and policies been made,
then (a) together with the first delivery of financial statements
pursuant to subdivision (ii) or (iii) of this subsection 5.1 following
such change, consolidated financial statements of Company and its
Subsidiaries for (y) the current Fiscal Year to the effective date of
such change and (z) the two full Fiscal Years immediately preceding the
Fiscal Year in which such change is made, in each case prepared on a
pro forma basis as if such change had been in effect during such
periods, and (b) together with each delivery of financial statements
pursuant to subdivision (ii) or (iii) of this subsection 5.1 following
such change, a written statement of the chief accounting officer or
chief financial officer of Company setting forth the differences which
would have resulted if such financial statements had been prepared
without giving effect to such change;
(vi) Accountants' Certification: together with each delivery of
consolidated financial statements of Company and its Subsidiaries
pursuant to subdivision (iii) above, a written statement by the
independent certified public accountants giving the report thereon (a)
stating that their audit examination has included a review of the terms
of this Agreement and the other Loan Documents as they relate to
accounting matters, (b) stating whether, in connection with their audit
examination, any condition or event that constitutes an Event of
Default or Potential Event of Default has come to their attention and,
if such a condition or event has come to their attention, specifying
the nature and period of existence thereof; provided that such
accountants shall not be liable by reason of any failure to obtain
knowledge of any such Event of Default or Potential Event of Default
that would not be disclosed in the course of their audit examination,
and (c) stating that based on their audit examination nothing has come
to their attention that causes them to believe either or both that the
information contained in the certificates delivered therewith pursuant
to subdivision (iv) above is not correct or that the matters set forth
in the Compliance Certificates delivered therewith pursuant to clause
(b) of subdivision (iv) above for the applicable Fiscal Year are not
stated in accordance with the terms of this Agreement;
-70-
<PAGE> 78
(vii) Accountants' Reports: promptly upon receipt thereof (unless
restricted by applicable professional standards), copies of all reports
submitted to Company by independent certified public accountants in
connection with each annual, interim or special audit of the financial
statements of Company and its Subsidiaries made by such accountants,
including, without limitation, any comment letter submitted by such
accountants to management in connection with their annual audit;
(viii) SEC Filings and Press Releases: promptly upon their
becoming available, copies of (a) all financial statements, reports,
notices and proxy statements sent or made available generally by
Company to its security holders, (b) all regular and periodic reports
and all registration statements (other than on Form S-8 or a similar
form) and prospectuses, if any, filed by Company or any of its
Subsidiaries with any securities exchange or with the Securities and
Exchange Commission or any governmental or private regulatory
authority, and (c) all press releases and other statements made
available generally by Company or any of its Subsidiaries to the public
concerning material developments in the business of Company or any of
its Subsidiaries;
(ix) Events of Default, etc.: promptly upon any officer of Company
obtaining knowledge (a) of any condition or event that constitutes an
Event of Default or Potential Event of Default, or becoming aware that
any Lender has given any notice (other than to Administrative Agent) or
taken any other action with respect to a claimed Event of Default or
Potential Event of Default, (b) that any Person has given any notice to
Company or any of its Subsidiaries or taken any other action with
respect to a claimed default or event or condition of the type referred
to in subsection 7.2, (c) of any condition or event that would be
required to be disclosed in a current report filed by Company with the
Securities and Exchange Commission on Form 8-K (Items 1, 2, 4, 5 and 6
of such Form as in effect on the date hereof), or (d) of the occurrence
of any event or change that has caused or evidences, either in any case
or in the aggregate, a Material Adverse Effect, an Officers'
Certificate specifying the nature and period of existence of such
condition, event or change, or specifying the notice given or action
taken by any such Person and the nature of such claimed Event of
Default, Potential Event of Default, default, event or condition, and
what action Company has taken, is taking and proposes to take with
respect thereto;
(x) Litigation or Other Proceedings: (a) promptly upon any officer
of Company obtaining knowledge of (X) the institution of, or
non-frivolous threat of, any action, suit, proceeding (whether
administrative, judicial or otherwise), governmental investigation or
arbitration against or affecting Company or any of its Subsidiaries or
any property of Company or any of its Subsidiaries (collectively,
"PROCEEDINGS") not previously disclosed in writing by Company to
Lenders or (Y) any material development in any Proceeding that, in any
case:
-71-
<PAGE> 79
(1) if adversely determined, has a reasonable possibility of
giving rise to a Material Adverse Effect; or
(2) seeks to enjoin or otherwise prevent the consummation of,
or to recover any damages or obtain relief as a result of, the
transactions contemplated hereby;
written notice thereof together with such other information as may be
reasonably available to Company to enable Lenders and their counsel to
evaluate such matters; and (b) within twenty days after the end of each
fiscal quarter of Company, a schedule of all Proceedings involving an
alleged liability of, or claims against or affecting, Company or any of
its Subsidiaries equal to or greater than $1,000,000 and promptly after
request by Administrative Agent such other information as may be
reasonably requested by Administrative Agent to enable Administrative
Agent and its counsel to evaluate any of such Proceedings;
(xi) 401K Plan Notices: promptly upon becoming aware of the
occurrence of or forthcoming occurrence of any material and adverse
event with respect to Company's 401(k) Plan (as defined in subsection
4.11), a written notice specifying the nature thereof, what action
Company has taken, is taking or proposes to take with respect thereto,
and, when known, any action taken or threatened by the Internal Revenue
Service, the Department of Labor or the PBGC with respect thereto;
(xii) [intentionally omitted]
(xiii) Insurance: as soon as practicable and in any event by the
last day of each Fiscal Year, a report in form and substance
satisfactory to Administrative Agent outlining all material insurance
coverage maintained as of the date of such report by Company and its
Subsidiaries and all material insurance coverage planned to be
maintained by Company and its Subsidiaries in the immediately
succeeding Fiscal Year;
(xiv) Environmental Audits and Reports: as soon as practicable
following receipt thereof, copies of all environmental audits and
reports, whether prepared by personnel of Company or any of its
Subsidiaries or by independent consultants, with respect to significant
environmental matters at any Facility or which relate to an
Environmental Claim which could result in a Material Adverse Effect;
(xv) Special Purpose Subsidiaries: promptly upon any Special
Purpose Subsidiary becoming a Subsidiary of Company, a written notice
setting forth with respect to such Special Purpose Subsidiary (a) the
date on which such Special Purpose Subsidiary became a Subsidiary of
Company and (b) all of the data required to be set forth in Schedule
4.1 annexed hereto with respect to all Subsidiaries of Company (it
being understood that such written notice shall be deemed to supplement
Schedule 4.1 annexed hereto for all purposes of this Agreement);
-72-
<PAGE> 80
(xvi) Pricing Certificates: (a) together with each delivery of
financial statements of Company and its Subsidiaries pursuant to
subdivisions (ii) and (iii) above, (b) within one Business Day after
any public release by S&P or Moody's lowering Company's "Senior Secured
Debt Rating" or "Senior Secured Rating," as applicable, and (c) at such
additional times as Company may elect, a certificate setting forth its
"Senior Secured Debt Rating" and "Senior Secured Rating," as assigned
by S&P or Moody's, as applicable (each, a "Pricing Certificate");
(xvii) Holding Company: at least five Business Days prior to the
consummation thereof, the terms of the Holding Company Reorganization
and, on and after the consummation of the Holding Company
Reorganization, in addition to the information requirements of this
subsection 5.1 with respect to the Company, the same information shall
be delivered (and at the same times) with respect to the Holding
Company and Holding Company Subsidiaries; and
(xviii) Other Information: with reasonable promptness, such other
information and data with respect to Company or any of its Subsidiaries
as from time to time may be reasonably requested by Administrative
Agent or any Lender.
5.2 CORPORATE EXISTENCE.
Except as permitted under subsection 6.7, Company will, and will cause
each of its Subsidiaries to, at all times preserve and keep in full force and
effect its corporate existence and all rights and franchises material to its
business; provided, however, that the corporate existence of any such Subsidiary
may be terminated if such termination is in the best interests of Company and
its Subsidiaries and is not materially disadvantageous to any Lender. Company
will, and will cause each of its Subsidiaries to, at all times maintain its
corporate existence as a United States Citizen.
5.3 PAYMENT OF TAXES AND CLAIMS; TAX CONSOLIDATION.
A. Company will, and will cause its Subsidiaries to, pay all taxes,
assessments and other governmental charges imposed upon it or any of its
properties or assets or in respect of any of its income, businesses or
franchises before any penalty, fine or interest accrues thereon, and all claims
(including, without limitation, claims for labor, services, materials and
supplies) for sums that have become due and payable and that by law have or may
become a Lien upon any of its properties or assets, prior to the time when any
penalty fine or interest shall be incurred with respect thereto; provided that
no such charge or claim need be paid if being contested in good faith by
appropriate proceedings promptly instituted and diligently conducted and if such
reserve or other appropriate provision, if any, with respect to any liability
for taxes, as shall be required in conformity with GAAP shall have been made
therefor in the financial statements of the Company.
-73-
<PAGE> 81
B. Company will not, and will not permit any of its Subsidiaries to,
file or consent to the filing of any consolidated income tax return with any
Person (other than any Subsidiary of Company or Company and other than the
Holding Company and Holding Company Subsidiaries).
5.4 MAINTENANCE OF PROPERTIES; INSURANCE.
Company will, and will cause its Subsidiaries to, maintain or cause to
be maintained in good repair, working order and condition, ordinary wear and
tear excepted, all material properties used or useful in the business of Company
and its Subsidiaries and from time to time will make or cause to be made all
appropriate repairs, renewals and replacements thereof. Company will maintain or
cause to be maintained, with insurers of recognized responsibility and
reputation, insurance with respect to its properties and business and the
properties and businesses of its Subsidiaries against loss or damage (including,
without limitation, flood insurance, if necessary or advisable) of the kinds
customarily carried or maintained under similar circumstances by corporations
engaged in similar businesses and Company will, with respect to each Financed
Aircraft, maintain the insurance specified in the First Aircraft Chattel
Mortgage with respect to such Financed Aircraft.
Company may self-insure, by way of deductible or equivalent structures
or provisions in insurance policies, the risks required to be insured against
pursuant to this subsection 5.4 in such reasonable amounts as are then
applicable to other similar aircraft or spare engines in Company's fleet, and as
are not substantially greater than amounts self-insured by corporations engaged
in the same or similar business and similarly situated with Company; provided,
however, that Company may not self-insure in an amount in excess of $1,000,000
per Financed Aircraft without the prior written consent of Administrative Agent.
5.5 INSPECTION; LENDER MEETING.
Company will, and will cause its Subsidiaries to, permit any authorized
representatives designated by any Lender to visit and inspect any of the
properties of Company or any of its Subsidiaries, including its and their
financial and accounting records, and, with the permission of Company which
shall not be unreasonably withheld, to make copies and take extracts therefrom,
and to discuss its and their affairs, finances and accounts with its and their
officers and independent public accountants (provided that Company may, if it so
chooses, be present at or participate in any such discussion), all upon
reasonable notice and at such reasonable times during normal business hours and
as often as may be reasonably requested; provided that so long as no Event of
Default shall have occurred and be continuing, such inspection shall not be
disruptive to Company's business, as reasonably determined by Company. Within
120 days after the end of each Fiscal Year, senior management of Company shall
participate in a meeting of Lenders during which senior management will review,
among other matters, the financial results of Company and its Subsidiaries for
such Fiscal Year and outline the prospects for Company for the current Fiscal
Year and report on any major changes in the business strategy of Company
anticipated to occur during the term of this Agreement.
-74-
<PAGE> 82
5.6 COMPLIANCE WITH LAWS, ETC.
Company will, and will cause its Subsidiaries to, comply with the
requirements of all applicable laws, rules, regulations and orders of any
governmental authority (including, without limitation, Environmental Laws),
noncompliance with which could reasonably be expected to cause a Material
Adverse Effect. Company shall not conduct, and shall not permit the conduct of,
any Hazardous Materials Activity at any Facility or at any other location which
could reasonably be expected to form the basis of an Environmental Claim against
Company and which could reasonably be expected to have a Material Adverse
Effect.
5.7 ENVIRONMENTAL INDEMNITY.
Company agrees to indemnify, defend, and hold harmless Administrative
Agent and Lenders, and the officers, directors, employees, agents and affiliates
of Administrative Agent and Lenders from and against any and all losses, claims,
liability or expenses arising in connection with Environmental Claims against
Company or with any Hazardous Materials Activity.
5.8 COMPANY'S REMEDIAL ACTION REGARDING HAZARDOUS MATERIALS.
Company will promptly take, and will cause each of its Subsidiaries
promptly to take, any and all necessary remedial action in connection with the
presence, storage, use, disposal, transportation or Release of any Hazardous
Materials on, under or about any Facility in order to comply with all applicable
Environmental Laws and Governmental Authorizations. In the event Company or any
of its Subsidiaries undertakes any remedial action with respect to any Hazardous
Materials on, under or about any Facility, Company or such Subsidiary will
conduct and complete such remedial action in compliance with all applicable
Environmental Laws, and in accordance with the policies, orders and directives
of all federal, state and local governmental authorities except when, and only
to the extent that, Company's or such Subsidiary's liability for such presence,
storage, use, disposal, transportation or discharge of any Hazardous Materials
is being contested in good faith by Company or such Subsidiary.
5.9 FURTHER ASSURANCES; NEW SUBSIDIARIES; HOLDING COMPANY.
A. At any time or from time to time upon the request of Administrative
Agent, Company will, at its expense, promptly execute, acknowledge and deliver
such further documents and do such other acts and things as Administrative Agent
may reasonably request in order to effect fully the purposes of the Loan
Documents and to provide for payment of the Obligations in accordance with the
terms of this Agreement, the Notes and the other Loan Documents.
B. In furtherance and not in limitation of the foregoing, Company will
cause any Subsidiary whose total assets exceed 15% of the consolidated total
assets of Company, in each case determined in accordance with GAAP (other than a
Special Purpose Subsidiary or Atlas
-75-
<PAGE> 83
One), to take such actions as Administrative Agent may reasonably request from
time to time to ensure that the Obligations are guarantied by any such
Subsidiary. If, after the Fourth Restatement Date, Company or any of its
Subsidiaries (other than a Special Purpose Subsidiary or Atlas One) acquires any
asset, other than an aircraft financed with Loans hereunder or with Other
Permitted Indebtedness, with a fair market value in excess of $5 million, or the
value of spare parts of Company and its Subsidiaries not subject to Liens
securing Designated Indebtedness exceeds $25 million in the aggregate, Company
shall so notify Administrative Agent and take, or cause such Subsidiaries to
take, such actions as Administrative Agent may reasonably request from time to
time (including, without limitation, the execution and delivery of guaranties,
security agreements, mortgages, deeds of trust, financing statements and other
documents, the filing or recording of any of the foregoing, title insurance with
respect to any of the foregoing that relates to an interest in real property,
and the delivery of stock certificates and other collateral with respect to
which perfection is obtained by possession) to ensure that the Obligations are
secured by a first priority security interest in such asset or spare parts
(other than capital stock of a Subsidiary), as the case may be; provided that,
in the case of any engine otherwise subject to such security interest, such Lien
may be released at the request of Company in connection with a refinancing
thereof with Other Permitted Indebtedness. Notwithstanding the foregoing, so
long as the AFL III Financing remains outstanding nothing herein shall cause or
give rise to an obligation on the part of the Company or AFL III to require a
guaranty or grant of security interest in the assets of AFL III. The Lenders
acknowledge that the security interests and Liens created by the Collateral
Documents do not extend to the assets of AFL III now existing or hereafter
acquired.
C. In furtherance and not in limitation of the foregoing, if Company
interposes a Holding Company, Company will cause the Holding Company to take
such actions (including, without limitation, the execution and delivery of a
guaranty, pledge agreement, financing statements and other documents, the filing
or recording of any of the foregoing, and the delivery of stock certificates
properly endorsed for transfer or accompanied by duly executed stock powers) as
Administrative Agent and Lenders may reasonably request to ensure that the
Obligations are guarantied by the Holding Company and that the Obligations are
secured by a first priority security interest in all of the capital stock of
Company. Company agrees that the Holding Company will not incur, directly or
indirectly, any Indebtedness and will not engage in any business or activity or
own any assets other than (1) holding the capital stock of Company or other
Subsidiaries formed by the Holding Company, and performing its obligations
incidental thereto, (2) employing certain management employees and pilots and
performing its obligations incidental thereto, (3) paying general administrative
costs and expenses in the ordinary course of business and (4) such other
activities as may be consented to from time to time by Requisite Lenders.
5.10 APPRAISALS.
At the request of Administrative Agent or Requisite Lenders (but no
more than once each calendar year), Company will obtain appraisals of each of
the Financed Aircraft from two
-76-
<PAGE> 84
Approved Appraisers, in form and substance satisfactory to Administrative Agent;
provided that, upon the occurrence and during the continuance of an Event of
Default, Company will obtain such additional appraisals with respect to the
Financed Aircraft as Administrative Agent or Requisite Lenders may request.
5.11 MAINTENANCE CONTRACTS.
Company shall maintain contracts with respect to the maintenance of
each Financed Aircraft sufficient to insure compliance with the Federal Aviation
Act, in form and substance reasonably satisfactory to Administrative Agent.
5.12 EMPLOYEE BENEFIT PLANS.
Company will not establish or permit to be established any Employee
Benefit Plans for Company or any of its employees and will not permit any ERISA
Affiliate to establish any Employee Benefit Plan which, in either case, could
result in a liability for Company, under ERISA, in excess of $10 million.
5.13 REGISTRATION OF FOREIGN LEASED AIRCRAFT WITH FAA.
Upon termination of an Approved Lease to which a Foreign Leased
Aircraft is subject, Company shall cause such Foreign Leased Aircraft to be
deregistered in such country and registered under the Federal Aviation Act and
file for recordation with the FAA following such deregistration a First Aircraft
Chattel Mortgage and Second Aircraft Chattel Mortgage with respect to such
Foreign Leased Aircraft and shall cause FAA counsel to deliver an opinion in
form and substance satisfactory to Administrative Agent.
5.14 CORPORATE SEPARATENESS.
Following the creation of a Holding Company, Company will take all such
action as is necessary to keep its operations separate and apart from those of
Holding Company or any of its Affiliates, including, without limitation,
ensuring that all customary corporate formalities, including the maintenance of
separate corporate records and documents and holding regular meetings are
followed. Any financial statements distributed to any creditors of Company shall
clearly establish the corporate separateness of Company from Holding Company and
each Holding Company Subsidiary. Company shall not take any action or conduct
its affairs in a manner that is likely to result in the corporate existence of
Company on the one hand and of Holding Company or any Holding Company Subsidiary
on the other hand being disregarded, or in the assets and liabilities of Holding
Company or any Holding Company Subsidiary being substantively consolidated with
those of Company in a bankruptcy, reorganization or other insolvency proceeding.
Company shall maintain its principal executive office separate from Holding
Company or any of its Affiliates.
-77-
<PAGE> 85
SECTION 6.
COMPANY'S NEGATIVE COVENANTS
Company covenants and agrees that, so long as any of the Commitments
hereunder shall remain in effect and until payment in full of all of the Loans
and other Obligations, unless Requisite Lenders shall otherwise give prior
written consent, Company shall perform, and shall cause each of its Subsidiaries
to perform, all covenants in this Section 6.
6.1 INDEBTEDNESS.
Company shall not, and shall not permit any of its Subsidiaries to,
directly or indirectly, create, incur, assume or guaranty, or otherwise become
or remain directly or indirectly liable with respect to, any Indebtedness,
except:
(i) Company may become and remain liable with respect to the
Obligations;
(ii) Company and its Subsidiaries may become and remain liable
with respect to Contingent Obligations permitted by subsection 6.4 and,
upon any matured obligations actually arising pursuant thereto, the
Indebtedness corresponding to the Contingent Obligations so
extinguished;
(iii) Company and its Subsidiaries may become and remain liable
with respect to Indebtedness in respect of Capital Leases; provided
that such Capital Leases are permitted under the terms of subsection
6.9;
(iv) Company and its Subsidiaries, as applicable, may remain
liable with respect to Indebtedness described in Schedule 6.1 annexed
hereto;
(v) Company may become and remain liable with respect to Permitted
Extension Indebtedness; provided, that with respect to any transaction
in which Permitted Extension Indebtedness is incurred with respect to
any Financed Aircraft, the cash proceeds from such Permitted Extension
Indebtedness are sufficient to repay in full the Notes associated with
such Financed Aircraft;
(vi) so long as no Event of Default or Potential Event of Default
shall have occurred and be continuing or would result therefrom and
Company delivers an Officers' Certificate to Administrative Agent and
Lenders, in form and substance reasonably satisfactory to
Administrative Agent, confirming that, on a Pro Forma Basis after
giving effect to such incurrence of Indebtedness, (i) the ratio of
Consolidated Total Debt (less Cash and Cash Equivalents held by Company
in excess of $25 million) as of the last day of the most recently ended
fiscal quarter (the "Determination Date") plus seven times Consolidated
Rental Payments to Consolidated Adjusted EBITDA plus Consolidated
Rental Payments for the four fiscal quarter period ending on such
Determination Date does not exceed the ratio set forth
-78-
<PAGE> 86
in subsection 6.6B for the fiscal quarter in which such Indebtedness is
to be incurred, (ii) the ratio of Consolidated Adjusted EBITDA for such
four fiscal quarter period to Consolidated Interest Expense for such
four-fiscal quarter period is not less than the ratio set forth in
subsection 6.6A for the fiscal quarter in which such Indebtedness is to
be incurred;
(vii) Company may become and remain liable with respect to
Indebtedness under the NationsBanc/Bank of America Agreement;
(viii) AFL III may become and remain liable with respect to all of
the obligations under the AFL III Financing documents and Company may
become and remain liable with respect to the AFL III Leases;
(ix) Company may become and remain liable with respect to the
Senior Notes and the Pass Through Trust Agreements; and
(x) Company and its Subsidiaries may become and remain liable with
respect to other Indebtedness in an aggregate principal amount not to
exceed, without duplication, when added to the maximum aggregate
liability, contingent or otherwise, of Company and its Subsidiaries
outstanding in accordance with subsection 6.4(vi), $50 million at any
time outstanding;
provided that, notwithstanding the foregoing, Company may not become or remain
liable, directly or indirectly, for any Indebtedness of any Holding Company
Subsidiary.
6.2 LIENS AND RELATED MATTERS.
A. PROHIBITION ON LIENS. Company shall not, and shall not permit any of
its Subsidiaries to, directly or indirectly, create, incur, assume or permit to
exist any Lien on or with respect to any property or asset of any kind
(including any document or instrument in respect of goods or accounts
receivable) of Company or any of its Subsidiaries, whether now owned or
hereafter acquired, or any income or profits therefrom, or file or permit the
filing of, or permit to remain in effect, any financing statement or other
similar notice of any Lien with respect to any such property, asset, income or
profits under the Uniform Commercial Code of any state or under any similar
recording or notice statute, except:
(i) Permitted Encumbrances;
(ii) Liens in respect of Permitted Extension Indebtedness and
Other Permitted Indebtedness; provided that such Liens encumber only
assets subject to purchase money Liens securing such Indebtedness; and
(iii) other Liens securing Indebtedness in an aggregate amount not
to exceed $10 million at any time outstanding.
-79-
<PAGE> 87
B. EQUITABLE LIEN IN FAVOR OF LENDERS. If Company or any of its
Subsidiaries shall create or assume any Lien upon any of its properties or
assets, whether now owned or hereafter acquired, other than Liens excepted by
the provisions of subsection 6.2A, it shall make or cause to be made effective
provision whereby the Obligations will be secured by such Lien equally and
ratably with any and all other Indebtedness secured thereby as long as any such
Indebtedness shall be so secured; provided that, notwithstanding the foregoing,
this covenant shall not be construed as a consent by Requisite Lenders to the
creation or assumption of any such Lien not permitted by the provisions of
subsection 6.2A.
C. NO RESTRICTIONS ON SUBSIDIARY DISTRIBUTIONS TO COMPANY OR OTHER
SUBSIDIARIES. Except (i) as provided herein, as (ii) described on Schedule 6.2
annexed hereto, (iii) with respect to Special Purpose Subsidiaries and (iv)
pursuant to the AFL III Financing Agreement, Company will not, and will not
permit any of its Subsidiaries to, create or otherwise cause or suffer to exist
or become effective any consensual encumbrance or restriction of any kind on the
ability of any such Subsidiary to (i) pay dividends or make any other
distributions on any of such Subsidiary's capital stock owned by Company or any
other Subsidiary of Company, (ii) repay or prepay any Indebtedness owed by such
Subsidiary to Company or any other Subsidiary of Company, (iii) make loans or
advances to Company or any other Subsidiary of Company, or (iv) transfer any of
its property or assets to Company or any other Subsidiary of Company.
6.3 INVESTMENTS; JOINT VENTURES.
Company shall not, and shall not permit any of its Subsidiaries to,
directly or indirectly, make or own any Investment in any Person, including any
Joint Venture, except:
(i) Company may make and own Investments in Cash Equivalents;
(ii) Company and its Subsidiaries may continue to own the
Investments owned by them as of the Fourth Restatement Date in any
Subsidiaries of Company;
(iii) Company may make and own Investments in Special Purpose
Subsidiaries; provided that Company delivers to Administrative Agent an
Officer's Certificate in form and substance satisfactory to
Administrative Agent demonstrating that such Special Purpose Subsidiary
meets the requirements set forth in the definition thereof;
(iv) Company may make Investments in Joint Ventures in an
aggregate amount not to exceed (A) $50 million plus (B) 20% of
Consolidated Net Income for the period commencing January 1, 2000 and
ending on the last day of the Fiscal Year immediately preceding the
date of determination (taken as a single accounting period) less (C)
the sum of (x) the aggregate amount of Restricted Junior Payments with
respect to Company Common Stock declared or paid during such period
(excluding Restricted Junior Payments made in accordance with
subsection 6.5(iii)) and (y) the
-80-
<PAGE> 88
aggregate amount contributed to capital of Special Purpose Subsidiaries
during such period; provided that Company shall not incur liabilities
related to any such Joint Venture in excess of Company's Investment
therein;
(v) Company and its Subsidiaries may continue to own the
Investments owned by them and described in Schedule 6.3 annexed hereto
and Investments made in compliance with subsection 6.3(iv);
(vi) Company, AFL and AFL II may make the contributions to AFL III
of the AFL III Equipment and cash contemplated pursuant to the AFL III
Restructuring; and
(vii) Company and its Subsidiaries may make and own other
Investments in an aggregate amount not to exceed $15 million at any
time outstanding.
Notwithstanding the foregoing, (1) except in connection with the AFL
III Restructuring, neither Company nor its Subsidiaries may make any direct or
indirect loan, advance or capital contribution to AFL III and (2) neither
Company nor its Subsidiaries may make any direct or indirect loan or advance to
a Holding Company.
6.4 CONTINGENT OBLIGATIONS.
Company shall not, and shall not permit any of its Subsidiaries to,
directly or indirectly, create or become or remain liable with respect to any
Contingent Obligation, except:
(i) any Subsidiary may become and remain liable with respect to
Contingent Obligations arising under their guaranties of the
Obligations;
(ii) Company may become and remain liable with respect to
Contingent Obligations under Interest Rate Agreements and Currency
Agreements with a Lender;
(iii) Company and its Subsidiaries may become and remain liable
with respect to Contingent Obligations in respect of customary
indemnification and purchase price adjustment obligations incurred in
connection with Asset Sales or other sales of assets or securities;
(iv) Company and its Subsidiaries, as applicable, may remain
liable with respect to Contingent Obligations described in Schedule 6.4
annexed hereto;
(v) Company and its Subsidiaries may become and remain liable with
respect to Contingent Obligations to the extent such Contingent
Obligations are permitted pursuant to subsections 6.9 and 6.10; and
-81-
<PAGE> 89
(vi) Company and its Subsidiaries may become and remain liable
with respect to other Contingent Obligations; provided that the maximum
aggregate liability, contingent or otherwise, of Company and its
Subsidiaries in respect of all such Contingent Obligations when added,
without duplication, to the aggregate principal amount of Indebtedness
outstanding in accordance with subsection 6.1(x) shall at no time
exceed $30 million.
6.5 RESTRICTED JUNIOR PAYMENTS.
Company shall not, and shall not permit any of its Subsidiaries to,
directly or indirectly, declare, order, pay, make or set apart any sum for any
Restricted Junior Payment; provided that Company may make scheduled payments of
principal and interest or mandatory prepayments of principal (including through
the exercise of remedies) from time to time on Designated Indebtedness; and
provided, further, that so long as no Event of Default or Potential Event of
Default has occurred and is continuing, or would result therefrom:
(i) Company may prepay Designated Indebtedness from the proceeds
of Permitted Extension Indebtedness or Other Permitted Indebtedness;
(ii) Company may make Restricted Junior Payments with respect to
Company Common Stock not to exceed in any Fiscal Year, the lesser of
20% of Consolidated Net Income for such Fiscal Year and $15 million;
(iii) Company may repurchase Company Common Stock in an amount not
to exceed in any Fiscal Year $15 million for purposes of establishing
or contributing to an employee compensation plan; provided that any
such repurchased Company Common Stock resold to employees of Company
shall, to the extent of the price paid for such Company Common Stock by
such employee, be excluded from the calculation of the $15 million
limit set forth above;
(iv) Company may apply Equity Proceeds to prepay Designated
Indebtedness;
(v) Company and AFL III shall be permitted to consummate the AFL
III Restructuring; and
(vi) Company may repurchase or redeem all or any portion of the
Senior Notes for aggregate cash consideration not to exceed, when
aggregated with any "change of control" put payments arising as a
result of the Holding Company Reorganization, $75,000,000; provided
that, (A) after giving effect to the proposed repurchase or redemption,
Company shall have not less than $150,000,000 in Cash or Cash
Equivalents on its balance sheet and (B) the Leverage Ratio (calculated
on a pro forma basis as if the proposed repurchase or redemption had
been consummated on the last day of the most recent four fiscal quarter
period) shall not exceed the lower of 4.25:1.00 or the ratio required
to be met in accordance with subsection 6.6B for the immediately
succeeding fiscal quarter end.
-82-
<PAGE> 90
6.6 FINANCIAL COVENANTS.
A. MINIMUM INTEREST COVERAGE RATIO. Company shall not permit the ratio
of (i) Consolidated Adjusted EBITDA to (ii) Consolidated Interest Expense for
the four fiscal quarter period ending as of the last day of any fiscal quarter
of Company set forth below to be less than the correlative ratio indicated:
<TABLE>
<CAPTION>
MINIMUM
INTEREST
FISCAL QUARTER ENDING COVERAGE RATIO
- --------------------- --------------
<S> <C>
March 31, 2000 2.10:1.00
June 30, 2000 2.10:1.00
September 30, 2000 2.20:1.00
December 31, 2000 2.20:1.00
March 31, 2001 2.40:1.00
June 30, 2001 2.40:1.00
September 30, 2001 2.50:1.00
December 31, 2001 2.50:1.00
March 31, 2002 2.50:1.00
June 30, 2002 2.50:1.00
September 30, 2002 2.50:1.00
December 31, 2002 2.50:1.00
March 31, 2003 2.50:1.00
June 30, 2003 2.75:1.00
September 30, 2003 2.75:1.00
December 31, 2003 2.75:1.00
March 31, 2004 2.75:1.00
June 30, 2004 2.75:1.00
September 30, 2004 2.75:1.00
December 31, 2004 2.75:1.00
March 31, 2005 2.75:1.00
</TABLE>
B. MAXIMUM LEVERAGE RATIO. Company shall not permit the ratio of (i)
Consolidated Total Debt as of each date set forth below (less Cash and Cash
Equivalents held
-83-
<PAGE> 91
by Company in excess of $25 million as of such date) plus seven times
Consolidated Rental Payments (for the four fiscal quarter period ending with the
most recently ended fiscal quarter) to (ii) Consolidated Adjusted EBITDA plus
Consolidated Rental Payments for the four fiscal quarter period ending as of the
last day of any fiscal quarter of Company set forth below to exceed the
correlative ratio indicated:
<TABLE>
<CAPTION>
MAXIMUM
LEVERAGE
FISCAL QUARTER ENDING RATIO
- --------------------- ---------
<S> <C>
March 31, 2000 4.75:1.00
June 30, 2000 4.75:1.00
September 30, 2000 4.75:1.00
December 31, 2000 4.75:1.00
March 31, 2001 4.75:1.00
June 30, 2001 4.50:1.00
September 30, 2001 4.50:1.00
December 31, 2001 4.50:1.00
March 31, 2002 4.50:1.00
June 30, 2002 4.50:1.00
September 30, 2002 4.50:1.00
December 31, 2002 4.25:1.00
March 31, 2003 4.25:1.00
June 30, 2003 4.25:1.00
September 30, 2003 4.25:1.00
December 31, 2003 4.00:1.00
March 31, 2004 4.00:1.00
June 30, 2004 4.00:1.00
September 30, 2004 4.00:1.00
December 31, 2004 3.75:1.00
March 31, 2005 3.75:1.00
</TABLE>
C. MINIMUM CONSOLIDATED NET WORTH. Company shall not permit
Consolidated Net Worth at any time during any of the periods set forth below to
be less than the correlative amount indicated:
-84-
<PAGE> 92
<TABLE>
<CAPTION>
MINIMUM CONSOLIDATED
FISCAL QUARTER ENDING NET WORTH
- --------------------- --------------------
<S> <C>
March 31, 2000 $300 million
June 30, 2000 $300 million
September 30, 2000 $325 million
December 31, 2000 $325 million
March 31, 2001 $350 million
June 30, 2001 $350 million
September 30, 2001 $350 million
December 31, 2001 $350 million
March 31, 2002 $400 million
June 30, 2002 $400 million
September 30, 2002 $400 million
December 31, 2002 $400 million
March 31, 2003 $450 million
June 30, 2003 $450 million
September 30, 2003 $450 million
December 31, 2003 $450 million
March 31, 2004 $450 million
June 30, 2004 $450 million
September 30, 2004 $450 million
December 31, 2004 $450 million
March 31, 2005 $450 million
</TABLE>
6.7 RESTRICTION ON FUNDAMENTAL CHANGES; ASSET SALES AND ACQUISITIONS; NEW
SUBSIDIARIES.
Company shall not, and shall not permit any of its Subsidiaries to,
enter into any transaction of merger or consolidation, or liquidate, wind-up or
dissolve itself (or suffer any liquidation or dissolution), or convey, sell,
lease, sub-lease, transfer or otherwise dispose of, in
-85-
<PAGE> 93
one transaction or a series of transactions, all or any part of its business,
property or fixed assets, whether now owned or hereafter acquired, or acquire by
purchase or otherwise all or any portion of the business, property or fixed
assets of, or stock or other evidence of beneficial ownership of, any Person or
any division or line of business of any Person, except:
(i) any Subsidiary of Company may be merged with or into Company
or any wholly owned Subsidiary of Company that has entered into a valid
and effective guaranty and security agreement to the extent required by
subsection 5.9, or be liquidated, wound up or dissolved, or all or any
part of its business, property or assets may be conveyed, sold, leased,
transferred or otherwise disposed of, in one transaction or a series of
transactions, to Company or any such wholly owned Subsidiary of
Company; provided that, in the case of such a merger, Company or such
wholly owned Subsidiary shall be the continuing or surviving
corporation;
(ii) Company and its Subsidiaries may sell or otherwise dispose of
assets in transactions that do not constitute Asset Sales; provided
that the consideration received for such assets shall be in an amount
at least equal to the fair market value thereof;
(iii) subject to subsection 6.13, Company and its Subsidiaries may
make Asset Sales of assets having a fair market value not in excess of
$100 million in any Fiscal Year or $500 million in the aggregate;
provided that (w) with respect to the sale of any Financed Aircraft,
the cash proceeds of the sale of such Financed Aircraft are sufficient
to repay in full the Notes associated with such Financed Aircraft; (x)
the consideration received for such assets shall be in an amount at
least equal to the fair market value thereof; (y) the consideration
received shall be at least 75% cash; and (z) the proceeds of such Asset
Sales shall be applied as required by subsection 2.4B(iii)(a);
(iv) Company may lease or transfer any Financed Aircraft to the
extent expressly permitted by Section 4(d) of the First Aircraft
Chattel Mortgage with respect to such Financed Aircraft or as
contemplated by subsection 9.21;
(v) Company may make acquisitions of the capital stock of another
Person or all or substantially all of the assets of a division or line
of business of another Person provided that, (a) the acquisition
primarily involves the acquisition of assets to be used in the business
of Company, (b) if such acquisition is structured as a merger or as a
stock or other equity acquisition, then either (i) the Person so
acquired becomes a wholly owned Subsidiary of the Company or (ii) such
Person is merged with and into the Company or a wholly owned Subsidiary
of the Company (with the Company or such wholly owned Subsidiary being
the surviving corporation of such merger), (c) if such acquisition is
structured as an asset acquisition, then such assets are acquired
either by the Company directly or by a wholly owned Subsidiary of
Company, (d) to the extent required by subsection 5.9, such wholly
owned Subsidiary of Company shall execute a guaranty of the Obligations
and Company or such wholly owned Subsidiary of Company shall
-86-
<PAGE> 94
grant a security interest in the assets acquired to Administrative
Agent for the benefit of Lenders which may be subordinate to debt
incurred in such acquisition, (e) immediately before and after giving
effect thereto, no Potential Event of Default or Event of Default shall
have occurred and be continuing, (f) immediately after giving effect to
the acquisition, Company shall be in compliance on a Pro Forma Basis
with financial covenants in subsection 6.6 and such compliance shall be
evidenced by an Officer's Certificate demonstrating such compliance,
(g) Administrative Agent shall have reviewed and be reasonably
satisfied with the nature and amount of all contingent liabilities or
other liabilities not on the balance sheet of Company assumed in
connection with such acquisition and (h) the aggregate amount of cash
payments made in connection with all such acquisitions, other than with
the proceeds from sales or issuances of equity by Company, does not
exceed $100,000,000;
(vi) Company and its Subsidiaries may make Consolidated Capital
Expenditures in connection with the purchase of up to twelve Eligible
Aircraft during each Fiscal Year, such number of Eligible Aircraft
permitted during any Fiscal Year to be increased by any number of
Eligible Aircraft permitted to be purchased, but not purchased, during
the previous Fiscal Year (but in no event shall any such number of
Eligible Aircraft once carried forward to the next Fiscal Year be
carried forward to any Fiscal Year thereafter) together with
Consolidated Capital Expenditures with respect to the acquisition, in
the normal course of business, of spare parts and spare engines
associated with such Eligible Aircraft;
(vii) Company and its Subsidiaries may make Consolidated Capital
Expenditures with respect to maintenance of aircraft in the normal
course of business;
(viii) Company and its Subsidiaries may make other Consolidated
Capital Expenditures not in excess of $10 million during any Fiscal
Year; provided that, any amount of such other Consolidated Capital
Expenditures permitted, but not made, in any Fiscal Year may be carried
forward to and made during the immediately succeeding Fiscal Year (but
no amount once carried forward to the next Fiscal Year may be carried
forward to any Fiscal Year thereafter);
(ix) Company and AFL III shall be permitted to consummate the AFL
III Restructuring;
(x) Company shall be permitted to dispose of or acquire assets
pursuant to the consolidation and relocation of its offices and
operations to Colorado; provided that the aggregate consideration paid
with respect to the acquisition of assets shall be in an amount not to
exceed $20 million; and
(xi) the Holding Company Reorganization shall be permitted so long
as in connection therewith Company complies with, and causes Holding
Company to comply with, subsection 5.9 hereof.
-87-
<PAGE> 95
6.8 AMENDMENTS OF MATERIAL AGREEMENTS.
Company shall not permit (i) the certificate or articles of
incorporation or bylaws of any Loan Party to be amended or otherwise modified in
any manner which could reasonably be expected to have a Material Adverse Effect
or (ii) any Material Agreement to be amended or otherwise modified in any manner
with respect to any provision providing material representations and warranties
to Company, indemnification rights to Company, or limiting Company's remedies or
rights upon the other party to such agreements failure to perform or which could
otherwise reasonably be expected to have Material Adverse Effect on the value of
any Financed Aircraft.
6.9 RESTRICTION ON LEASES.
Company shall not, and shall not permit any of its Subsidiaries to,
become liable in any way, whether directly or by assignment or as a guarantor or
other surety, for the obligations of the lessee under any lease, whether an
Operating Lease or a Capital Lease (other than intercompany leases between
Company and its wholly owned Subsidiaries); provided however that Company may
become so obligated to the extent that, and only to the extent that, immediately
after giving effect to the incurrence of liability with respect to such lease,
the Consolidated Rental Payments at the time in effect during the then current
Fiscal Year do not exceed $35 million plus the amount of Consolidated Rental
Payments made during such Fiscal Year in respect of up to six 747-400F aircraft
subject to Operating Leases as of the Fourth Restatement Date plus the amount of
Consolidated Rental Payments in respect of up to two 747-400F aircraft per year,
subject to the agreement dated June 9, 1997 between Company and The Boeing
Company regarding the purchase of twelve new 747-400F aircraft and the option to
purchase eight additional new 747-400F aircraft, plus an amount not to exceed
$15 million during any Fiscal Year, equal to Consolidated Rental Payments
incurred in connection with sale and leaseback transactions described in
subsection 6.10, plus Consolidated Rental Payments assumed pursuant to
acquisitions permitted under subsection 6.7(v). Notwithstanding the foregoing,
the AFL III Leases shall be permitted hereunder and shall not be taken into
account for purposes of determining compliance with the foregoing provisions of
this subsection 6.9.
6.10 SALES AND LEASE-BACKS.
Company shall not, and shall not permit any of its Subsidiaries to,
directly or indirectly, become or remain liable as lessee or as a guarantor or
other surety with respect to any lease, whether an Operating Lease or a Capital
Lease, of any property (whether real, personal or mixed), whether now owned or
hereafter acquired, (i) which Company or any of its Subsidiaries has sold or
transferred or is to sell or transfer to any other Person (other than Company or
any of its Subsidiaries) or (ii) which Company or any of its Subsidiaries
intends
-88-
<PAGE> 96
to use for substantially the same purpose as any other property which has been
or is to be sold or transferred by Company or any of its Subsidiaries to any
Person (other than Company or any of its Subsidiaries) in connection with such
lease; provided that Company and its Subsidiaries may become and remain liable
as lessee, guarantor or other surety with respect to any such lease if and to
the extent that Company or any of its Subsidiaries would be permitted to enter
into, and remain liable under, such lease under subsection 6.9. Notwithstanding
the foregoing provisions of this subsection 6.10, this subsection 6.10 shall not
restrict or prohibit in any manner consummation of the AFL III Restructuring.
6.11 SALE OR DISCOUNT OF RECEIVABLES.
Company shall not, and shall not permit any of its Subsidiaries to,
directly or indirectly, sell with recourse, or discount or otherwise sell for
less than the face value thereof, any of its notes or accounts receivable.
6.12 TRANSACTIONS WITH SHAREHOLDERS AND AFFILIATES.
Company shall not, and shall not permit any of its Subsidiaries to,
directly or indirectly, enter into or permit to exist any transaction
(including, without limitation, the purchase, sale, lease or exchange of any
property or the rendering of any service) with any holder of 10% or more of any
class of equity Securities of Company or with any Affiliate of Company or of any
such holder, on terms that are less favorable to Company or that Subsidiary, as
the case may be, than those that might be obtained at the time from Persons who
are not such a holder or Affiliate Holding Company; provided that the foregoing
restrictions shall not apply to (i) reasonable and customary fees paid to and
indemnification of members of the Boards of Directors of Company and its
Subsidiaries, (ii) reasonable and customary salaries, bonuses and other
compensation paid to and indemnification of employees of Company or any of its
Subsidiaries in accordance with past practice or approved by the compensation
committee of Company, (iii) transactions contemplated in connection with the AFL
III Restructuring or (iv) the Holding Company Reorganization.
6.13 DISPOSAL OF SUBSIDIARY STOCK.
Company shall not:
(i) directly or indirectly sell, assign, pledge or otherwise
encumber or dispose of any shares of capital stock or other equity
Securities of any of its Subsidiaries, except to qualify directors if
required by applicable law or to a wholly owned Subsidiary of Company;
or
(ii) permit any of its Subsidiaries directly or indirectly to
sell, assign, pledge or otherwise encumber or dispose of any shares of
capital stock or other equity Securities of any of its Subsidiaries
(including such Subsidiary), except to Company, another wholly owned
Subsidiary of Company, or to qualify directors if required by
applicable law.
-89-
<PAGE> 97
Notwithstanding the foregoing, AFL III shall be permitted to issue preferred
stock in an amount not to exceed $100,000 to a third party.
6.14 CONDUCT OF BUSINESS.
From and after the Fourth Restatement Date, Company shall not, and
shall not permit any of its Subsidiaries to, engage in any business other than
(i) the businesses engaged in by Company and its Subsidiaries on the Fourth
Restatement Date and similar or related businesses and (ii) such other lines of
business as may be consented to by Requisite Lenders.
6.15 CHANGE OF CHIEF EXECUTIVE OFFICE.
Company shall not, and shall not permit any of its Subsidiaries to,
change its chief executive office without giving 30 days' prior written notice
to the Administrative Agent.
SECTION 7.
EVENTS OF DEFAULT
If any of the following conditions or events ("EVENTS OF DEFAULT")
shall occur:
7.1 FAILURE TO MAKE PAYMENTS WHEN DUE.
Failure by Company to pay any installment of principal of any Loan when
due, whether at stated maturity, by acceleration, by notice of voluntary
prepayment, by mandatory prepayment or otherwise; or failure by Company to pay
any interest on any Loan or any fee or any other amount due under this Agreement
within five days after the date due; or
7.2 DEFAULT IN OTHER AGREEMENTS.
(i) Failure of Company or any of its Subsidiaries to pay when due
following applicable grace periods (a) any principal of or interest on any
Indebtedness (other than Indebtedness referred to in subsection 7.1) in an
individual principal amount of $5 million or more or any items of Indebtedness
with an aggregate principal amount of $10 million or more or (b) any Contingent
Obligation in an individual principal amount of $5 million or more or any
Contingent Obligations with an aggregate principal amount of $10 million or
more, in each case beyond the end of any grace period provided therefor; or (ii)
breach or default by Company or any of its Subsidiaries with respect to any
other material term of (a) any evidence of any Indebtedness in an individual
principal amount of $5 million or more or any items of Indebtedness with an
aggregate principal amount of $10 million or more or any Contingent Obligation
in an individual principal amount of $5 million or more or any Contingent
Obligations with an aggregate principal amount of $10 million or more or (b) any
loan agreement, mortgage, indenture or other agreement relating to such
Indebtedness or Contingent Obligation(s), if the effect of such breach or
default is to cause, or to permit the holder or holders of that Indebtedness or
Contingent Obligation(s) (or a trustee on behalf of such holder or holders) to
cause, that Indebtedness or Contingent Obligation(s) to become or be declared
due and payable prior to its stated maturity or the stated maturity of any
-90-
<PAGE> 98
underlying obligation, as the case may be (upon the giving or receiving of
notice, lapse of time, both, or otherwise); provided that the foregoing shall
not apply to Indebtedness under the AFL III Financing Agreement; or
7.3 BREACH OF CERTAIN COVENANTS.
Failure of Company to perform or comply in any material respect with
any term or condition contained in subsection 2.5 or 5.2 or subsection 6.1, 6.2
(as it relates to prohibitions on Liens on Financed Aircraft), 6.5, 6.7 (as it
relates to the sale of any Financed Aircraft or all or substantially all of the
assets of Company or to the merger of Company into any other Person), 6.8, 6.10
and 6.13 of this Agreement or in clauses (i) and (ii) of Section 4(c), Section
4(d) or Section 4(g) of any First Aircraft Chattel Mortgage; or
7.4 BREACH OF WARRANTY.
Any representation, warranty, certification or other statement made by
Company or any of its Subsidiaries in any Loan Document or in any statement or
certificate at any time given by Company or any of its Subsidiaries in writing
pursuant hereto or thereto or in connection herewith or therewith shall be false
in any material respect on the date as of which made; or
7.5 OTHER DEFAULTS UNDER LOAN DOCUMENTS.
(i) Any Loan Party shall default in the performance of or compliance
with any term contained in this Agreement or any of the other Loan Documents,
other than any such term referred to in any other subsection of this Section 7,
and such default shall not have been remedied or waived (x) within 15 days after
the earlier of (a) an officer of Company becoming aware of such default or (b)
receipt by Company of notice from Administrative Agent or any Lender of such
default or (y) with respect to a default under subsection 6.6, the earlier of
(a) an officer of Company becoming aware of the default after the applicable
measurement date and (b) the delivery of financial statements pursuant to
subsection 5.1 or (ii) a guaranty, if any, of the Obligations for any reason
ceases to be in full force and effect; or
7.6 INVOLUNTARY BANKRUPTCY; APPOINTMENT OF RECEIVER, ETC.
(i) A court having jurisdiction in the premises shall enter a decree or
order for relief in respect of Company or any of its Subsidiaries in an
involuntary case under the Bankruptcy Code or under any other applicable
bankruptcy, insolvency or similar law now or hereafter in effect, which decree
or order is not stayed; or any other similar relief shall be granted under any
applicable federal or state law; or (ii) an involuntary case shall be commenced
against Company or any of its material Subsidiaries under the Bankruptcy Code or
under any other applicable bankruptcy, insolvency or similar law now or
hereafter in effect; or a decree or order of a court having jurisdiction in the
premises for the appointment of a receiver, liquidator, sequestrator, trustee,
custodian or other officer having similar powers over
-91-
<PAGE> 99
Company or any of its Subsidiaries, or over all or a substantial part of its
property, shall have been entered; or there shall have occurred the involuntary
appointment of an interim receiver, trustee or other custodian of Company or any
of its Subsidiaries for all or a substantial part of its property; or a warrant
of attachment, execution or similar process shall have been issued against any
substantial part of the property of Company or any of its Subsidiaries, and any
such event described in this clause (ii) shall continue for 60 days unless
dismissed, bonded or discharged; or
7.7 VOLUNTARY BANKRUPTCY; APPOINTMENT OF RECEIVER, ETC.
(i) Company or any of its material Subsidiaries shall have an order for
relief entered with respect to it or commence a voluntary case under the
Bankruptcy Code or under any other applicable bankruptcy, insolvency or similar
law now or hereafter in effect, or shall consent to the entry of an order for
relief in an involuntary case, or to the conversion of an involuntary case to a
voluntary case, under any such law, or shall consent to the appointment of or
taking possession by a receiver, trustee or other custodian for all or a
substantial part of its property; or Company or any of its Subsidiaries shall
make any assignment for the benefit of creditors; or (ii) Company or any of its
Subsidiaries shall be unable, or shall fail generally, or shall admit in writing
its inability, to pay its debts as such debts become due; or the Board of
Directors of Company or any of its Subsidiaries (or any committee thereof) shall
adopt any resolution or otherwise authorize any action to approve any of the
actions referred to in clause (i) above or this clause (ii); or
7.8 JUDGMENTS AND ATTACHMENTS.
Any money judgment, writ or warrant of attachment or similar process
involving (i) in any individual case an amount in excess of $5 million or (ii)
in the aggregate at any time an amount in excess of $10 million (in either case
not adequately covered by insurance as to which a solvent and unaffiliated
insurance company has acknowledged coverage) shall be entered or filed against
Company or any of its Subsidiaries or any of their respective assets and shall
remain undischarged, unvacated, unbonded or unstayed for a period of 60 days (or
in any event later than five days prior to the date of any proposed sale
thereunder); or
7.9 DISSOLUTION.
Any order, judgment or decree shall be entered against Company or any
of its material Subsidiaries decreeing the dissolution or split up of Company or
that Subsidiary and such order shall remain undischarged or unstayed for a
period in excess of 30 days; or
7.10 CHANGE IN CONTROL.
(i) (a) Permitted Holders shall cease to beneficially own and control
shares of capital stock of Company representing at least 30% of the combined
voting power of all Securities of Company entitled to vote in the election of
directors, other than Securities having such power
-92-
<PAGE> 100
only by reason of the happening of a contingency, or (b) any Person or any two
or more Persons acting in concert (in any such case, excluding Permitted
Holders) shall have acquired beneficial ownership (within the meaning of Rule
13d-3 of the Securities and Exchange Commission under the Exchange Act),
directly or indirectly, of Securities of Company (or other Securities
convertible into such Securities) representing 20% or more of the combined
voting power of all Securities of Company entitled to vote in the election of
directors, other than Securities having such power only by reason of the
happening of a contingency or (c) the Board of Directors of Company shall not
consist of a majority Continuing Directors or (ii) a "Change of Control" shall
occur under any of the Pass Through Trust Documents, any of the Senior Note
Documents or any other Material Agreement (as in effect on the date of such
occurrence); provided that, following consummation of the Holding Company
Reorganization (x) the references in clause (i) above to Company shall be deemed
to be reference to the Holding Company and (y) it shall also be an Event of
Default if at any time Holding Company ceases to own directly or indirectly 100%
of the outstanding Securities of Company; provided further, that an Event of
Default under clause (ii) above arising as a result of the Holding Company
Reorganization shall not constitute an "Event of Default"; provided further,
that in the event that Permitted Holders cease to own 30% of the combined voting
power of all Securities of Company (or the Holding Company, as the case may be)
because of the issuance of Securities of Company (or the Holding Company, as the
case may be) (as opposed to the Permitted Holders selling Securities) then the
failure to maintain the 30% ownership level shall not constitute an Event of
Default unless the Permitted Holders shall cease to own shares of capital stock
constituting 25% of the combined voting power of all Securities of Company (or
the Holding Company, as the case may be); or
7.11 FAILURE OF SECURITY.
Upon execution and delivery thereof, any Collateral Document shall, at
any time, cease to be in full force and effect (other than by reason of a
release of Collateral thereunder in accordance with the terms hereof or thereof,
the satisfaction in full of the Obligations or any other termination of such
Collateral Document in accordance with the terms hereof or thereof) or shall be
declared null and void, or the validity or enforceability thereof shall be
contested in writing by any Loan Party, or Administrative Agent shall not have
or shall cease to have a valid security interest in any Collateral purported to
be covered thereby, perfected and with the priority required by the relevant
Collateral Document, for any reason other than the failure of Administrative
Agent or any Lender to take any action within its control, subject only to Liens
permitted under the applicable Collateral Documents; or
7.12 CERTIFICATED AS AIR CARRIER.
Company for any reason ceases to be a United States Citizen or to hold
an air carrier operating certificate under the Federal Aviation Act for aircraft
capable of carrying 10 or more individuals or 6,000 pounds or more of cargo; or
-93-
<PAGE> 101
7.13 MATERIAL AGREEMENTS.
Any Material Agreement, other than any Approved Lease, shall at any
time be terminated other than by its terms or cease to be in full force and
effect other than by its terms, or any party to the Modification Agreement or
any Purchase Agreement shall default in the observance or performance of any
material covenants or agreements contained in any such agreement; or
7.14 "CHANGE OF CONTROL" PUT PAYMENTS.
Company becomes obligated to make any "change of control" put payments
in connection with the Holding Company Reorganization that, when aggregated with
all payments made under subsection 6.5(vi), exceed $75,000,000 or, after giving
effect to such "change of control" put payments, (A) Company shall have less
than $150,000,000 in Cash or Cash Equivalents on its balance sheet or (B) its
Leverage Ratio (calculated on a pro forma basis as if the proposed payment had
been consummated on the last day of the most recent four fiscal quarter period)
shall exceed the lower of 4.25:1.00 or the ratio to be met in accordance with
subsection 6.6B for the immediately succeeding fiscal quarter end:
THEN (i) upon the occurrence of any Event of Default described in subsection 7.6
or 7.7, each of (a) the unpaid principal amount of and accrued interest on the
Loans and (b) all other Obligations shall automatically become immediately due
and payable, without presentment, demand, protest or other requirements of any
kind, all of which are hereby expressly waived by Company, and the obligation of
each Lender to make any Loan shall thereupon terminate and (ii) upon the
occurrence and during the continuation of any other Event of Default,
Administrative Agent shall, upon the written request or with the written consent
of Requisite Lenders, by written notice to Company, declare all or any portion
of the amounts described in clauses (a) and (b) above to be, and the same shall
forthwith become, immediately due and payable, and the obligation of each Lender
to make any Loan shall thereupon terminate.
Notwithstanding anything contained in the second preceding paragraph,
if at any time within 60 days after an acceleration of the Loans pursuant to
such paragraph Company shall pay all arrears of interest and all payments on
account of principal which shall have become due otherwise than as a result of
such acceleration (with interest on principal and, to the extent permitted by
law, on overdue interest, at the rates specified in this Agreement) and all
Events of Default and Potential Events of Default (other than non-payment of the
principal of and accrued interest on the Loans, in each case which is due and
payable solely by virtue of acceleration) shall be remedied or waived pursuant
to subsection 9.6, then Requisite Lenders, by written notice to Company, may at
their option rescind and annul such acceleration and its consequences; but such
action shall not affect any subsequent Event of Default or Potential Event of
Default or impair any right consequent thereon. The provisions of this paragraph
are intended merely to bind Lenders to a decision which may be made at the
election of Requisite Lenders and are not intended to benefit Company and do not
grant Company the right to require Lenders to rescind or annul any acceleration
hereunder, even if the conditions set forth herein are met.
-94-
<PAGE> 102
SECTION 8.
AGENT
8.1 APPOINTMENT.
Bankers Trust is hereby appointed Administrative Agent hereunder and
under the other Loan Documents and each Lender hereby authorizes Administrative
Agent to act as its agent in accordance with the terms of this Agreement and the
other Loan Documents. Administrative Agent agrees to act upon the express
conditions contained in this Agreement and the other Loan Documents, as
applicable. The provisions of this Section 8 are solely for the benefit of
Administrative Agent and Lenders and Company shall have no rights as a third
party beneficiary of any of the provisions thereof. In performing its functions
and duties under this Agreement, Administrative Agent shall act solely as an
agent of Lenders and does not assume and shall not be deemed to have assumed any
obligation towards or relationship of agency or trust with or for Company or any
of its Subsidiaries.
8.2 POWERS AND DUTIES; GENERAL IMMUNITY.
A. POWERS; DUTIES SPECIFIED. Each Lender irrevocably authorizes
Administrative Agent to take such action on such Lender's behalf and to exercise
such powers, rights and remedies hereunder and under the other Loan Documents as
are specifically delegated or granted to Administrative Agent by the terms
hereof and thereof, together with such powers, rights and remedies as are
reasonably incidental thereto. Administrative Agent shall have only those duties
and responsibilities that are expressly specified in this Agreement and the
other Loan Documents. Administrative Agent may exercise such powers, rights and
remedies and perform such duties by or through its agents or employees.
Administrative Agent shall not have, by reason of this Agreement or any of the
other Loan Documents, a fiduciary relationship in respect of any Lender; and
nothing in this Agreement or any of the other Loan Documents, expressed or
implied, is intended to or shall be so construed as to impose upon
Administrative Agent any obligations in respect of this Agreement or any of the
other Loan Documents except as expressly set forth herein or therein.
B. NO RESPONSIBILITY FOR CERTAIN MATTERS. Administrative Agent shall
not be responsible to any Lender for the execution, effectiveness, genuineness,
validity, enforceability, collectibility or sufficiency of this Agreement or any
other Loan Document or for any representations, warranties, recitals or
statements made herein or therein or made in any written or oral statements or
in any financial or other statements, instruments, reports or certificates or
any other documents furnished or made by Administrative Agent to Lenders or by
or on behalf of Company to Administrative Agent or any Lender in connection with
the Loan Documents and the transactions contemplated thereby or for the
financial condition or business affairs of Company or any other Person liable
for the payment of any Obligations, nor shall Administrative Agent be required
to ascertain or inquire as to the performance or
-95-
<PAGE> 103
observance of any of the terms, conditions, provisions, covenants or agreements
contained in any of the Loan Documents or as to the use of the proceeds of the
Loans or as to the existence or possible existence of any Event of Default or
Potential Event of Default. Anything contained in this Agreement to the contrary
notwithstanding, Administrative Agent shall not have any liability arising from
confirmations of the amount of outstanding Loans or the component amounts
thereof.
C. EXCULPATORY PROVISIONS. Neither of Administrative Agent nor any of
its officers, directors, partners, employees or agents shall be liable to
Lenders for any action taken or omitted by Administrative Agent under or in
connection with any of the Loan Documents except to the extent caused by
Administrative Agent's gross negligence or willful misconduct. If Administrative
Agent shall request instructions from Lenders with respect to any act or action
(including the failure to take an action) in connection with this Agreement or
any of the other Loan Documents, Administrative Agent shall be entitled to
refrain from such act or taking such action unless and until Administrative
Agent shall have received instructions from Requisite Lenders. Without prejudice
to the generality of the foregoing, (i) Administrative Agent shall be entitled
to rely, and shall be fully protected in relying, upon any communication,
instrument or document believed by it to be genuine and correct and to have been
signed or sent by the proper person or persons, and shall be entitled to rely
and shall be protected in relying on opinions and judgments of attorneys (who
may be attorneys for Company and its Subsidiaries), accountants, experts and
other professional advisors selected by it; and (ii) no Lender shall have any
right of action whatsoever against Administrative Agent as a result of
Administrative Agent acting or (where so instructed) refraining from acting
under this Agreement or any of the other Loan Documents in accordance with the
instructions of Requisite Lenders. Administrative Agent shall be entitled to
refrain from exercising any power, discretion or authority vested in it under
this Agreement or any of the other Loan Documents unless and until it has
obtained the instructions of Requisite Lenders.
D. ADMINISTRATIVE AGENT ENTITLED TO ACT AS LENDER. The agency hereby
created shall in no way impair or affect any of the rights and powers of, or
impose any duties or obligations upon, Administrative Agent in its individual
capacity as a Lender hereunder. With respect to its participations in the Loans,
Administrative Agent shall have the same rights and powers hereunder as any
other Lender and may exercise the same as though it were not performing the
duties and functions delegated to it hereunder, and the term "Lender" or
"Lenders" or any similar term shall, unless the context clearly otherwise
indicates, include Administrative Agent in its individual capacity.
Administrative Agent and its Affiliates may accept deposits from, lend money to
and generally engage in any kind of banking, trust, financial advisory or other
business with Company or any of its Affiliates as if it were not performing the
duties specified herein, and may accept fees and other consideration from
Company for services in connection with this Agreement and otherwise without
having to account for the same to Lenders.
-96-
<PAGE> 104
8.3 REPRESENTATIONS AND WARRANTIES; NO RESPONSIBILITY FOR APPRAISAL OF
CREDITWORTHINESS.
Each Lender represents and warrants that it has made its own
independent investigation of the financial condition and affairs of Company and
its Subsidiaries in connection with the making of the Loans hereunder and that
it has made and shall continue to make its own appraisal of the creditworthiness
of Company and its Subsidiaries. Administrative Agent shall have no duty or
responsibility, either initially or on a continuing basis, to make any such
investigation or any such appraisal on behalf of Lenders or to provide any
Lender with any credit or other information with respect thereto, whether coming
into its possession before the making of the Loans or at any time or times
thereafter, and Administrative Agent shall not have responsibility with respect
to the accuracy of or the completeness of any information provided to Lenders.
8.4 RIGHT TO INDEMNITY.
Each Lender, in proportion to its Pro Rata Share, severally agrees to
indemnify Administrative Agent (and its respective affiliates and partners), to
the extent that Administrative Agent shall not have been reimbursed by Company,
for and against any and all liabilities, obligations, losses, damages,
penalties, actions, judgments, suits, costs, expenses (including, without
limitation, counsel fees and disbursements) or disbursements of any kind or
nature whatsoever which may be imposed on, incurred by or asserted against
Administrative Agent in exercising its powers, rights and remedies or performing
its duties hereunder or under the other Loan Documents or otherwise in its
capacity as Administrative Agent, in any way relating to or arising out of this
Agreement or the other Loan Documents; provided that no Lender shall be liable
for any portion of such liabilities, obligations, losses, damages, penalties,
actions, judgments, suits, costs, expenses or disbursements resulting from
Administrative Agent's gross negligence or willful misconduct.
8.5 COLLATERAL DOCUMENTS.
Without limiting the generality of subsection 8.1, each Lender hereby
further authorizes Administrative Agent to enter into the Collateral Documents
as secured party on behalf of and for the benefit of such Lender and agrees to
be bound by the terms of each of the Collateral Documents; provided that, except
as otherwise provided below, Administrative Agent shall not enter into or
consent to any amendment, modification, termination or waiver of any provision
contained in any Collateral Document without prior written consent of Requisite
Lenders. Anything contained in any of the Loan Documents to the contrary
notwithstanding, each Lender agrees that no Lender shall have any right
individually to realize upon any of the collateral under any Collateral
Document, it being understood and agreed that all powers, rights and remedies
under the Collateral Documents may be exercised solely by Administrative Agent
for the benefit of Lenders in accordance with the terms thereof. Each Lender
hereby authorizes Administrative Agent (i) to release or subordinate Collateral
as permitted or required under this Agreement or the Collateral Documents, and
agrees that a
-97-
<PAGE> 105
certificate executed by Administrative Agent evidencing such release of
Collateral shall be conclusive evidence of such release as to any third party
and (ii) to enter into any amendments of the Collateral Documents to cure any
ambiguity, defect or inconsistency or to amend provisions relating to
ministerial or administrative matters which do not materially adversely affect
the rights of the Lenders thereunder.
8.6 SUCCESSOR ADMINISTRATIVE AGENT.
Administrative Agent may resign at any time by giving 30 days' prior
written notice thereof to Lenders and Company. Upon any such notice of
resignation, Requisite Lenders shall have the right, upon consultation with
Company, to appoint a successor Administrative Agent. Upon the acceptance of any
appointment hereunder by a successor Administrative Agent, that successor
Administrative Agent shall thereupon succeed to and become vested with all the
rights, powers, privileges and duties of the retiring Administrative Agent and
the retiring or removed Administrative Agent shall be discharged from its duties
and obligations under this Agreement. After any retiring Administrative Agent's
resignation hereunder as Administrative Agent, the provisions of this Section 8
shall inure to its benefit as to any actions taken or omitted to be taken by it
while it was Administrative Agent under this Agreement.
SECTION 9.
MISCELLANEOUS
9.1 ASSIGNMENTS AND PARTICIPATIONS IN LOANS.
A. GENERAL. Each Lender shall have the right at any time to (i) sell,
assign or transfer to any Eligible Assignee, or (ii) sell participations to any
Person in, all or any part of its Commitments or any Loan or Loans made by it or
any other interest herein or in any other Obligations owed to it; provided that
no such sale, assignment, transfer or participation shall, without the consent
of Company, require Company to file a registration statement with the Securities
and Exchange Commission or apply to qualify such sale, assignment, transfer or
participation under the securities laws of any state; provided, further that no
such sale, assignment or transfer described in clause (i) above shall be
effective unless and until (a) an Assignment Agreement effecting such sale,
assignment or transfer shall have been accepted by Administrative Agent and
recorded in the Register as provided in subsection 9.1B(ii) or (b) the sale,
assignment or transfer is made in accordance with subsection 9.21. Except as
otherwise provided in this subsection 9.1, no Lender shall, as between Company
and such Lender, be relieved of any of its obligations hereunder as a result of
any sale, assignment or transfer of, or any granting of participations in, all
or any part of its Commitments or the Loans, or the other Obligations owed to
such Lender.
-98-
<PAGE> 106
B. ASSIGNMENTS.
(i) Amounts and Terms of Assignments. Each Commitment, Loan or
other Obligation may (a) be assigned in any amount to another Lender,
or to an Affiliate of the assigning Lender or another Lender, with the
giving of notice to Company and Administrative Agent or (b) be assigned
in an aggregate amount of not less than $5,000,000 (or such lesser
amount as shall constitute the aggregate amount of the Commitments,
Loans, and other Obligations of the assigning Lender) to any other
Eligible Assignee with the giving of notice to Company and with the
consent of Administrative Agent and Company (which consent shall not be
unreasonably withheld). Any assignment of Loans hereunder shall effect
a pro rata assignment of the Notes with respect to each Financed
Aircraft. To the extent of any such assignment in accordance with
either clause (a) or (b) above, the assigning Lender shall be relieved
of its obligations with respect to its Commitments, Loans, or other
Obligations or the portion thereof so assigned. The parties to each
such assignment shall execute and deliver to Administrative Agent, for
its acceptance and recording in the Register, an Assignment Agreement,
together with a processing and recordation fee of $3,000 and such
forms, certificates or other evidence, if any, with respect to United
States federal income tax withholding matters as the assignee under
such Assignment Agreement may be required to deliver to Administrative
Agent pursuant to subsection 2.7B(iii)(a); provided, however that such
processing fee shall not be required where the assignee is an existing
Lender. Upon such execution, delivery and acceptance, from and after
the effective date specified in such Assignment Agreement, (y) the
assignee thereunder shall be a party hereto and, to the extent that
rights and obligations hereunder have been assigned to it pursuant to
such Assignment Agreement, shall have the rights and obligations of a
Lender hereunder and (z) the assigning Lender thereunder shall, to the
extent that rights and obligations hereunder have been assigned by it
pursuant to such Assignment Agreement, relinquish its rights and be
released from its obligations under this Agreement (and, in the case of
an Assignment Agreement covering all or the remaining portion of an
assigning Lender's rights and obligations under this Agreement, such
Lender shall cease to be a party hereto). The Commitments hereunder
shall be modified to reflect the Commitment of such assignee and any
remaining Commitment of such assigning Lender and, if any such
assignment occurs after the issuance of the Notes hereunder, the
assigning Lender shall, upon the effectiveness of such assignment or as
promptly thereafter as practicable, surrender its applicable Notes to
Administrative Agent for cancellation, and thereupon new Notes shall be
issued to the assignee substantially in the form of Exhibit IIIA
annexed hereto or Exhibit IIIB, as the case may be, with appropriate
insertions, to reflect the new Commitments and/or outstanding Loans, as
the case may be, of the assignee and/or the assigning Lender.
(ii) Acceptance by Administrative Agent; Recordation in Register.
Upon its receipt of an Assignment Agreement executed by an assigning
Lender and an assignee representing that it is an Eligible Assignee,
together with the processing and recordation fee referred to in
subsection 9.1B(i) and any forms, certificates or other evidence with
respect to United States federal income tax withholding matters that
-99-
<PAGE> 107
such assignee may be required to deliver to Administrative Agent
pursuant to subsection 2.7B(iii)(a), Administrative Agent shall, if
such Assignment Agreement has been completed and is in substantially
the form of Exhibit VII hereto and if Administrative Agent has
consented to the assignment evidenced thereby to the extent such
consent is required pursuant to subsection 9.1B(i)), (a) accept such
Assignment Agreement by executing a counterpart thereof as provided
therein (which acceptance shall evidence any required consent of
Administrative Agent to such assignment), (b) record the information
contained therein in the Register and (c) give prompt notice thereof to
Company. Administrative Agent shall maintain a copy of each Assignment
Agreement delivered to and accepted by it as provided in this
subsection 9.1B(ii).
C. PARTICIPATIONS. The holder of any participation, other than an
Affiliate of the Lender granting such participation, shall not be entitled to
require such Lender to take or omit to take any action hereunder except action
directly affecting (i) the extension of the scheduled final maturity date of any
Loan allocated to such participation, (ii) a reduction of the principal amount
of or the rate of interest payable on any Loan allocated to such participation
or (iii) a release of Collateral, and all amounts payable by Company hereunder
(including without limitation amounts payable to such Lender pursuant to
subsections 2.6D and 2.7) shall be determined as if such Lender had not sold
such participation. Company and each Lender hereby acknowledge and agree that,
solely for purposes of subsection 9.5, (a) any participation will give rise to a
direct obligation of Company to the participant and (b) the participant shall be
considered to be a "Lender".
D. ASSIGNMENTS TO FEDERAL RESERVE BANKS. In addition to the assignments
and participations permitted under the foregoing provisions of this subsection
9.1, any Lender may assign and pledge all or any portion of its Loans, the other
Obligations owed to such Lender, and its Notes to any Federal Reserve Bank 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 (i) no Lender shall, as between Company and such Lender, be
relieved of any of its obligations hereunder as a result of any such assignment
and pledge and (ii) in no event shall such Federal Reserve Bank be considered to
be a "Lender" or be entitled to require the assigning Lender to take or omit to
take any action hereunder.
E. INFORMATION. Each Lender may furnish any information concerning
Company and its Subsidiaries in the possession of that Lender from time to time
to assignees and participants (including prospective assignees and
participants), subject to subsection 9.19.
9.2 EXPENSES.
Whether or not the transactions contemplated hereby shall be
consummated, Company agrees to pay promptly (i) all the actual and reasonable
costs and expenses of preparation of the Loan Documents; (ii) all the costs of
furnishing all opinions by counsel for Company (including without limitation any
opinions requested by Lenders as to any legal matters arising hereunder) and of
Company's performance of and compliance with all agreements and
-100-
<PAGE> 108
conditions on its part to be performed or complied with under this Agreement and
the other Loan Documents including, without limitation, with respect to
confirming compliance with environmental and insurance requirements; (iii) the
reasonable fees, expenses and disbursements of counsel to Administrative Agent
in connection with the negotiation, preparation, execution and administration of
the Loan Documents and the Loans and any consents, amendments, waivers or other
modifications hereto or thereto and any other documents or matters requested by
Company; (iv) all the costs and expenses of creating and perfecting the Liens in
favor of Administrative Agent for the benefit of Lenders pursuant to the Loan
Documents, including filing and recording fees and expenses, title insurance,
fees and expenses of counsel for providing such opinions as Lenders may
reasonably request and fees and expenses of legal counsel to Administrative
Agent (including local counsel); (v) all other actual and reasonable costs and
expenses incurred by Administrative Agent in connection with the syndication of
the Commitments and the negotiation, preparation and execution of the Loan
Documents and the transactions contemplated hereby and thereby; provided that
such costs and expenses of syndication shall not exceed $10,000; and (vi) after
the occurrence of an Event of Default, all costs and expenses, including
reasonable attorneys' fees (including allocated costs of internal counsel) and
costs of settlement, incurred by Administrative Agent and Lenders in enforcing
any Obligations of or in collecting any payments due from Company hereunder or
under the other Loan Documents by reason of such Event of Default or in
connection with any refinancing or restructuring of the credit arrangements
provided under this Agreement in the nature of a "work-out" or pursuant to any
insolvency or bankruptcy proceedings.
9.3 INDEMNITY.
In addition to the payment of expenses pursuant to subsection 9.2,
whether or not the transactions contemplated hereby shall be consummated,
Company agrees to defend, indemnify, pay and hold harmless Administrative Agent
and Lenders, and the officers, directors, partners, employees, agents and
affiliates of Administrative Agent and Lenders (collectively called the
"INDEMNITIES") from and against any and all other liabilities, obligations,
losses, damages, penalties, actions, judgments, suits, claims, costs, expenses
and disbursements of any kind or nature whatsoever (including without limitation
the reasonable fees and disbursements of counsel for such Indemnities in
connection with any investigative, administrative or judicial proceeding
commenced or threatened by any Person, whether or not any such Indemnitee shall
be designated as a party or a potential party thereto), whether direct, indirect
or consequential and whether based on any federal, state or foreign laws,
statutes, rules or regulations (including without limitation securities and
commercial laws, statutes, rules or regulations and Environmental Laws), on
common law or equitable cause or on contract or otherwise, that may be imposed
on, incurred by, or asserted against any such Indemnitee, in any manner relating
to or arising out of this Agreement or the other Loan Documents or the
transactions contemplated hereby or thereby (including without limitation
Lenders' agreement to make the Loans hereunder or the use or intended use of the
proceeds of any of the Loans) or the statements contained in the commitment
letter delivered by any Lender to Company with respect thereto (collectively
called the "INDEMNIFIED LIABILITIES");
-101-
<PAGE> 109
provided that Company shall not have any obligation to any Indemnitee hereunder
with respect to any Indemnified Liabilities to the extent such Indemnified
Liabilities arise solely from the gross negligence or willful misconduct of that
Indemnitee as determined by a final judgment of a court of competent
jurisdiction. To the extent that the undertaking to defend, indemnify, pay and
hold harmless set forth in the preceding sentence may be unenforceable because
it is violative of any law or public policy, Company shall contribute the
maximum portion that it is permitted to pay and satisfy under applicable law to
the payment and satisfaction of all Indemnified Liabilities incurred by the
Indemnities or any of them.
9.4 SET-OFF.
In addition to any rights now or hereafter granted under applicable law
and not by way of limitation of any such rights, upon the occurrence of any
Event of Default each Lender is hereby authorized by Company at any time or from
time to time, without notice to Company or to any other Person, any such notice
being hereby expressly waived, to set off and to appropriate and to apply any
and all deposits (general or special, including, but not limited to,
Indebtedness evidenced by certificates of deposit, whether matured or unmatured,
but not including trust accounts) and any other Indebtedness at any time held or
owing by that Lender to or for the credit or the account of Company against and
on account of the obligations and liabilities of Company to that Lender under
this Agreement, the Notes, and the other Loan Documents, including, but not
limited to, all claims of any nature or description arising out of or connected
with this Agreement, the Notes, or any other Loan Document, irrespective of
whether or not (i) that Lender shall have made any demand hereunder or (ii) the
principal of or the interest on the Loans or any other amounts due hereunder
shall have become due and payable pursuant to Section 7 and although said
obligations and liabilities, or any of them, may be contingent or unmatured.
9.5 RATABLE SHARING.
Lenders hereby agree among themselves that if any of them shall,
whether by voluntary payment, by realization upon security, through the exercise
of any right of set-off or banker's lien, by counterclaim or cross action or by
the enforcement of any right under the Loan Documents or otherwise, or as
adequate protection of a deposit treated as cash collateral under the Bankruptcy
Code, receive payment or reduction of a proportion of the aggregate amount of
principal, interest, fees and other amounts then due and owing to that Lender
hereunder or under the other Loan Documents (collectively, the "AGGREGATE
AMOUNTS DUE" to such Lender) which is greater than the proportion received by
any other Lender in respect of the Aggregate Amounts Due to such other Lender,
then the Lender receiving such proportionately greater payment shall (i) notify
Administrative Agent and each other Lender of the receipt of such payment and
(ii) apply a portion of such payment to purchase participations (which it shall
be deemed to have purchased from each seller of a participation simultaneously
upon the receipt by such seller of its portion of such payment) in the Aggregate
Amounts Due to the other Lenders so that all such recoveries of Aggregate
Amounts Due shall be shared by all Lenders in proportion to the Aggregate
Amounts Due to
-102-
<PAGE> 110
them; provided that if all or part of such proportionately greater payment
received by such purchasing Lender is thereafter recovered from such Lender upon
the bankruptcy or reorganization of Company or otherwise, those purchases shall
be rescinded and the purchase prices paid for such participations shall be
returned to such purchasing Lender ratably to the extent of such recovery, but
without interest. Company expressly consents to the foregoing arrangement and
agrees that any holder of a participation so purchased may exercise any and all
rights of banker's lien, set-off or counterclaim with respect to any and all
monies owing by Company to that holder with respect thereto as fully as if that
holder were owed the amount of the participation held by that holder.
9.6 AMENDMENTS AND WAIVERS.
A. No amendment, modification, termination or waiver of any provision
of this Agreement or of the Notes, or consent to any departure by Company
therefrom, shall in any event be effective without the written concurrence of
Requisite Lenders; provided that any such amendment, modification, termination,
waiver or consent which: increases the amount of any of the Commitments or
reduces the principal amount of any of the Loans; changes any Lender's Pro Rata
Share; changes in any manner the definition of "Requisite Lenders"; changes in
any manner any provision of this Agreement which, by its terms, expressly
requires the approval or concurrence of all Lenders; postpones the Final
Scheduled Maturity Date (but not the date of any scheduled installment of
principal) of any of the Loans; postpones the date on which any interest or any
fees are payable; decreases the interest rate borne by any of the Loans (other
than any waiver of any increase in the interest rate applicable to any of the
Loans pursuant to subsection 2.2E) or the amount of any fees payable hereunder;
increases the maximum duration of Interest Periods permitted hereunder; releases
all or substantially all of the Collateral; or changes in any manner the
provisions contained in subsection 7.1 or this subsection 9.6 shall be effective
only if evidenced by a writing signed by or on behalf of all Lenders to whom are
owed Obligations being directly affected by such amendment, modification,
termination, waiver or consent. In addition, (i) any amendment, modification,
termination or waiver of any of the provisions contained in Section 3 shall be
effective only if evidenced by a writing signed by or on behalf of
Administrative Agent and Requisite Lenders, (ii) no amendment, modification,
termination or waiver of any provision of any Note shall be effective without
the written concurrence of the Lender which is the holder of that Note, (iii) no
increase in the Commitments of any Lender over the amount thereof then in effect
shall be effective without the written concurrence of that Lender, it being
understood and agreed that in no event shall waivers or modifications of
conditions precedent, covenants, Events of Default, Potential Events of Default
or of a mandatory prepayment or a reduction of any or all of the Commitments be
deemed to constitute an increase of the Commitment of any Lender and that an
increase in the available portion of any Commitment of any Lender shall not be
deemed to constitute an increase in the Commitment of such Lender, and (iv) no
amendment, modification, termination or waiver of any provision of Section 7 or
of any other provision of this Agreement which, by its terms, expressly requires
the approval or concurrence of Administrative Agent shall be effective without
the written concurrence of Administrative Agent. Administrative Agent may, but
shall have no obligation to, with the
-103-
<PAGE> 111
concurrence of any Lender, execute amendments, modifications, waivers or
consents on behalf of that Lender. Any waiver or consent shall be effective only
in the specific instance and for the specific purpose for which it was given. No
notice to or demand on Company in any case shall entitle Company to any other or
further notice or demand in similar or other circumstances. Any amendment,
modification, termination, waiver or consent effected in accordance with this
subsection 9.6 shall be binding upon each Lender at the time outstanding, each
future Lender and, if signed by Company, on Company. Notwithstanding anything in
this subsection 9.6A to the contrary, the Notes and Aircraft Chattel Mortgages
may be amended in the manner and for the purposes set forth in subsection 9.21
without the consents required by this subsection 9.6A.
B. If, in connection with any proposed change, waiver, discharge or
termination to any of the provision of this Agreement as contemplated by the
proviso in the first sentence of this subsection 9.6, the consent of Requisite
Lenders is obtained but consent of one or more of such other Lenders whose
consent is required is not obtained, then Company may, so long as all
non-consenting Lenders are so treated, elect to terminate such Lender as a party
to this Agreement; provided that, concurrently with such termination, (i)
Company shall pay that Lender all principal, interest and fees and other amounts
owed to such Lender through such date of termination, (ii) another financial
institution satisfactory to Company and Administrative Agent (or if
Administrative Agent is also the Lender to be terminated, the successor
Administrative Agent) shall agree, as of such date, to become a Lender for all
purposes under this Agreement (whether by assignment or amendment) and to assume
all obligations of the Lender to be terminated as of such date, and (iii) all
documents and supporting materials necessary, in the judgment of Administrative
Agent (or if Administrative Agent is also the Lender to be terminated, the
successor Administrative Agent) to evidence the substitution of such Lender
shall have been received and approved by Administrative Agent as of such date.
9.7 INDEPENDENCE OF COVENANTS.
All covenants under this Agreement shall be given independent effect so
that if a particular action or condition is not permitted by any of such
covenants, the fact that it would be permitted by an exception to, or would
otherwise be within the limitations of, another covenant shall not avoid the
occurrence of an Event of Default or Potential Event of Default if such action
is taken or condition exists.
9.8 NOTICES.
Unless otherwise specifically provided herein, any notice or other
communication herein required or permitted to be given shall be in writing and
may be personally served, telexed or sent by telefacsimile or United States mail
or courier service and shall be deemed to have been given when delivered in
person or by courier service, upon receipt of telefacsimile or telex, or three
Business Days after depositing it in the United States mail with postage prepaid
and properly addressed; provided that notices to Administrative Agent shall not
be
-104-
<PAGE> 112
effective until received. For the purposes hereof, the address of each party
hereto shall be as set forth under such party's name on the signature pages
hereof or (i) as to Company and Administrative Agent, such other address as
shall be designated by such Person in a written notice delivered to the other
parties hereto and (ii) as to each other party, such other address as shall be
designated by such party in a written notice delivered to Administrative Agent.
9.9 SURVIVAL OF REPRESENTATIONS, WARRANTIES AND AGREEMENTS.
A. All representations, warranties and agreements made herein shall
survive the execution and delivery of this Agreement and the making of the Loans
hereunder.
B. Notwithstanding anything in this Agreement or implied by law to the
contrary, the agreements of Company set forth in subsections 2.6D, 2.7, 9.2, 9.3
and 9.4 and the agreements of Lenders set forth in subsections 8.2C, 8.4 and 9.5
shall survive the payment of the Loans, and the termination of this Agreement.
9.10 FAILURE OR INDULGENCE NOT WAIVER; REMEDIES CUMULATIVE.
No failure or delay on the part of Administrative Agent or any Lender
in the exercise of any power, right or privilege hereunder or under any other
Loan Document shall impair such power, right or privilege or be construed to be
a waiver of any default or acquiescence therein, nor shall any single or partial
exercise of any such power, right or privilege preclude other or further
exercise thereof or of any other power, right or privilege. All rights and
remedies existing under this Agreement and the other Loan Documents are
cumulative to, and not exclusive of, any rights or remedies otherwise available.
9.11 MARSHALLING; PAYMENTS SET ASIDE.
Neither Administrative Agent nor any Lender shall be under any
obligation to marshal any assets in favor of Company or any other party or
against or in payment of any or all of the Obligations. To the extent that
Company makes a payment or payments to Administrative Agent or Lenders (or to
Administrative Agent for the benefit of Lenders), or Administrative Agent or
Lenders enforce any security interests or exercise their rights of set-off, and
such payment or payments or the proceeds of such enforcement or set-off or any
part thereof are subsequently invalidated, declared to be fraudulent or
preferential, set aside and/or required to be repaid to a trustee, receiver or
any other party under any bankruptcy law, any other state or federal law, common
law or any equitable cause, then, to the extent of such recovery, the obligation
or part thereof originally intended to be satisfied, and all Liens, rights and
remedies therefor or related thereto, shall be revived and continued in full
force and effect as if such payment or payments had not been made or such
enforcement or set-off had not occurred.
9.12 SEVERABILITY.
In case any provision in or obligation under this Agreement or the
Notes shall be invalid, illegal or unenforceable in any jurisdiction, the
validity, legality and enforceability of
-105-
<PAGE> 113
the remaining provisions or obligations, or of such provision or obligation in
any other jurisdiction, shall not in any way be affected or impaired thereby.
9.13 OBLIGATIONS SEVERAL; INDEPENDENT NATURE OF LENDERS' RIGHTS.
The obligations of Lenders hereunder are several and no Lender shall be
responsible for the obligations or Commitments of any other Lender hereunder.
Nothing contained herein or in any other Loan Document, and no action taken by
Lenders pursuant hereto or thereto, shall be deemed to constitute Lenders as a
partnership, an association, a joint venture or any other kind of entity. The
amounts payable at any time hereunder to each Lender shall be a separate and
independent debt, and each Lender shall be entitled to protect and enforce its
rights arising out of this Agreement and it shall not be necessary for any other
Lender to be joined as an additional party in any proceeding for such purpose.
9.14 HEADINGS.
Section and subsection 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 or be given any substantive effect.
9.15 APPLICABLE LAW.
THIS AGREEMENT SHALL BE GOVERNED BY, AND SHALL BE CONSTRUED AND
ENFORCED IN ACCORDANCE WITH, THE INTERNAL LAWS OF THE STATE OF NEW YORK, WITHOUT
REGARD TO CONFLICTS OF LAWS PRINCIPLES.
9.16 SUCCESSORS AND ASSIGNS.
This Agreement shall be binding upon the parties hereto and their
respective successors and assigns and shall inure to the benefit of the parties
hereto and the successors and assigns of Lenders (it being understood that
Lenders' rights of assignment are subject to subsection 9.1). Neither Company's
rights or obligations hereunder nor any interest therein may be assigned or
delegated by Company without the prior written consent of all Lenders.
9.17 CONSENT TO JURISDICTION AND SERVICE OF PROCESS.
ALL JUDICIAL PROCEEDINGS BROUGHT AGAINST COMPANY ARISING OUT OF OR
RELATING TO THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT OR ANY OBLIGATION MAY BE
BROUGHT IN ANY STATE OR FEDERAL COURT OF COMPETENT JURISDICTION IN THE STATE OF
NEW YORK, AND BY EXECUTION AND DELIVERY OF THIS AGREEMENT COMPANY ACCEPTS FOR
ITSELF AND IN CONNECTION WITH ITS PROPERTIES, GENERALLY AND UNCONDITIONALLY, THE
NONEXCLUSIVE JURISDICTION OF THE AFORESAID COURTS AND WAIVES ANY DEFENSE OF
-106-
<PAGE> 114
FORUM NON CONVENIENS AND IRREVOCABLY AGREES TO BE BOUND BY ANY JUDGMENT RENDERED
THEREBY IN CONNECTION WITH THIS AGREEMENT, SUCH OTHER LOAN DOCUMENT OR SUCH
OBLIGATION (SUBJECT TO ANY RIGHT TO APPEAL TO A COURT IN THE STATE OF NEW YORK).
Company hereby agrees that service of all process in any such proceeding in any
such court may be made by registered or certified mail, return receipt
requested, to Company at its address provided in subsection 9.8, such service
being hereby acknowledged by Company to be sufficient for personal jurisdiction
in any action against Company in any such court and to be otherwise effective
and binding service in every respect. Nothing herein shall affect the right to
serve process in any other manner permitted by law or shall limit the right of
any Lender to bring proceedings against Company in the courts of any other
jurisdiction.
9.18 WAIVER OF JURY TRIAL.
EACH OF THE PARTIES TO THIS AGREEMENT 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 OF THE OTHER LOAN DOCUMENTS OR ANY DEALINGS
BETWEEN THEM RELATING TO THE SUBJECT MATTER OF THIS LOAN TRANSACTION OR THE
LENDER/BORROWER RELATIONSHIP THAT IS BEING ESTABLISHED. The scope of this waiver
is intended to be all-encompassing of any and all disputes that may be filed in
any court and that relate to the subject matter of this transaction, including
without limitation contract claims, tort claims, breach of duty claims and all
other common law and statutory claims. Each party hereto acknowledges that this
waiver is a material inducement to enter into a business relationship, that each
has already relied on this waiver in entering into this Agreement, and that each
will continue to rely on this waiver in their related future dealings. Each
party hereto further 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 legal counsel. THIS WAIVER IS
IRREVOCABLE, MEANING THAT IT MAY NOT BE MODIFIED EITHER ORALLY OR IN WRITING,
AND THIS WAIVER SHALL APPLY TO ANY SUBSEQUENT AMENDMENTS, RENEWALS, SUPPLEMENTS
OR MODIFICATIONS TO THIS AGREEMENT OR ANY OF THE OTHER LOAN DOCUMENTS OR TO ANY
OTHER DOCUMENTS OR AGREEMENTS RELATING TO THE LOANS MADE HEREUNDER. In the event
of litigation, this Agreement may be filed as a written consent to a trial by
the court.
9.19 CONFIDENTIALITY.
Each Lender shall hold all non-public information obtained pursuant to
the requirements of this Agreement which has been identified as confidential by
Company in accordance with such Lender's customary procedures for handling
confidential information of this nature, it being understood and agreed by
Company that in any event a Lender may make disclosures to any Person who
evaluates, approves, structures or administers the Loans on
-107-
<PAGE> 115
behalf of a Lender and who is subject to this confidentiality provision, or,
reasonably required by any bona fide assignee, transferee or participant in
connection with the contemplated assignment or transfer by such Lender of any
Loans or any participation therein or as required or requested by any
governmental or regulatory agency (including, without limitation, the National
Association of Insurance Commissioners) or representative thereof or pursuant to
legal process or in accordance with any applicable law or regulation; provided
that, unless specifically prohibited by applicable law or court order, each
Lender shall notify Company of any request by any governmental or regulatory
agency or representative thereof (other than any such request in connection with
any examination of the financial condition of such Lender by such governmental
or regulatory agency) for disclosure of any such non-public information prior to
disclosure of such information; and provided, further that in no event shall any
Lender be obligated or required to return any materials furnished by Company or
any of its Subsidiaries.
9.20 COUNTERPARTS; EFFECTIVENESS; EFFECT IF AGREEMENT DOES NOT BECOME EFFECTIVE.
This Agreement and any amendments, waivers, consents or supplements
hereto or in connection herewith may be executed in any number of counterparts
and by different parties hereto in separate counterparts, each of which when so
executed and delivered shall be deemed an original, but all such counterparts
together shall constitute but one and the same instrument; signature pages may
be detached from multiple separate counterparts and attached to a single
counterpart so that all signature pages are physically attached to the same
document. This Agreement shall become effective upon the execution of a
counterpart hereof by each of the parties hereto and receipt by Company and
Administrative Agent of written or telephonic notification of such execution and
authorization of delivery thereof and the satisfaction (or waiver) of each of
the conditions set forth in subsection 3.1. Until this Agreement becomes
effective, the Existing Agreement remains in full force and effect and, in the
event this Agreement does not become effective on or before April 18, 2000, the
execution and delivery of this Agreement shall be disregarded and this Agreement
shall be deemed null and void for all purposes.
9.21 COOPERATION IN REFINANCING, SYNDICATION AND ASSIGNMENT.
Company, Administrative Agent and Lenders agree that, in connection
with the refinancing, syndication or assignment of the Notes, to the extent
deemed reasonably necessary by Company or Administrative Agent, some or all of
the Financed Aircraft may be transferred to a Special Purpose Subsidiary which
will lease such aircraft to Company under arrangements reasonably acceptable to
Company and Administrative Agent all in a manner designed to retain the economic
obligations and benefits of the Company, Administrative Agent and Lenders
hereunder and under the other Loan Documents. Company, Administrative Agent and
Lenders further agree that, in connection with an assignment of Loans and Notes
to a Person who will not become a Lender hereunder, Administrative Agent and
Lenders shall agree to any amendments to the Loans and Notes to be assigned and
the related Aircraft Chattel Mortgages and/or releases of the related First
Aircraft Chattel
-108-
<PAGE> 116
Mortgage and Second Aircraft Chattel Mortgage, in each case, as requested by
Company; provided that the terms of such amended Notes and Aircraft Chattel
Mortgages do not violate any term of this Agreement and provided, further, that
such amendments shall be effective only upon and simultaneous with (i) the
assignment of such Notes and Aircraft Chattel Mortgages to such Person, (ii)
indefeasible payment in full to Lenders of an amount equal to all amounts owing
under such Notes and (iii) releases from any liability relating to such Notes
and Aircraft Chattel Mortgages of Administrative Agent and Lenders in form and
substance satisfactory to Administrative Agent. Assignments made in accordance
with the foregoing sentence will result in such assigned Loans and Notes being
deemed not "outstanding" hereunder and such assigned Loans and Notes will not
reduce the Revolving Loan Commitments of the Lenders otherwise available
hereunder.
9.22 REPLACEMENT ENGINES.
A. ENGINES. So long as no Event of Default or Potential Event of
Default has occurred and is continuing, Company may, upon not less than five (5)
Business Days prior written notice to Administrative Agent, replace any Engine
which is the subject of an Aircraft Chattel Mortgage with another engine (the
"Replacement Engine") meeting the requirements of the applicable Aircraft
Chattel Mortgage. In addition to the preceding sentence, 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 any Airframe, and
that has a value, utility and remaining useful life (including with respect to
hours and cycles remaining until overhaul) at least equal to the Engine to be
replaced thereby.
The Lenders agree to release the Lien created by the applicable
Aircraft Chattel Mortgage for any Engine to be replaced by a Replacement Engine
promptly upon (i) presentation by Company of documentation necessary to create a
legal, valid and enforceable first priority security interest in and to the
Replacement Engine, (ii) delivery to Administrative Agent of an opinion of
Cahill Gordon & Reindel, or such other counsel as may be acceptable to
Administrative Agent, confirming that Administrative Agent will continue to be
entitled to the benefits of Section 1110 of the Bankruptcy Code with respect to
such Replacement Engine free of all Liens (other than Permitted Encumbrances)
and (iii) receipt of all other deliveries required by Section 4(f)(iii) of the
applicable Aircraft Chattel Mortgage.
B. Further Assurances. Company shall, in addition to the actions
required by the preceding subsection 9.21 A, take all necessary actions to
provide that Administrative Agent will continue to be entitled to the benefits
of Section 1110 of the Bankruptcy Code with respect to each Replacement Engine,
free of all Liens (other than Permitted Encumbrances).
[Remainder of page intentionally left blank]
-109-
<PAGE> 117
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed and delivered by their respective officers thereunto duly
authorized as of the date first written above.
COMPANY:
ATLAS AIR, INC.
By:
--------------------------------------
Name:
Title:
Notice Address:
538 Commons Drive
Golden, Colorado 80401
Attention: Thomas G. Scott
Senior Vice President,
General Counsel and Secretary
ADMINISTRATIVE AGENT:
BANKERS TRUST COMPANY,
AS ADMINISTRATIVE AGENT AND LENDER
By:
--------------------------------------
Name:
Title:
Notice Address:
Bankers Trust Company
130 Liberty Street
New York, New York 10006
Attention: Marguerite Sutton
<PAGE> 118
LENDERS:
CITY NATIONAL BANK
By:
--------------------------------------
Name:
Title:
Notice Address:
400 North Roxbury Drive
Third Floor
Beverly Hills, California 90210
Attention: James Benko
-2-
<PAGE> 119
FIRST SECURITY BANK
By:
--------------------------------------
Name:
Title:
Notice Address:
15 East 100 South St.
Second Floor
Salt Lake City, Utah 84111
Attention: Judy Callister
-3-
<PAGE> 120
FLEET NATIONAL BANK
By:
--------------------------------------
Name:
Title:
Notice Address:
100 Federal Street
Boston, Massachusetts 02110
Attention: Margot Downing
-4-
<PAGE> 121
GMAC COMMERCIAL CREDIT LLC
By:
--------------------------------------
Name:
Title:
Notice Address:
1290 Avenue of the Americas
New York, New York 10104
Attention: Frank Imperato
Senior Vice President
-5-
<PAGE> 122
IMPERIAL BANK, A CALIFORNIA BANKING
CORPORATION
By:
--------------------------------------
Name:
Title:
Notice Address:
9920 South La Cienega Boulevard
14th Floor, Department 2405
Inglewood, California 90301
Attention: Ray Vadalma
-6-
<PAGE> 123
NORWEST BANK COLORADO NATIONAL ASSOCIATION
By:
--------------------------------------
Name:
Title:
Notice Address:
1740 Broadway
Denver, Colorado 80274
Attention: Darlene Evans
-7-
<PAGE> 124
SUMMIT BANK
By:
--------------------------------------
Name:
Title:
Notice Address:
750 Walnut Avenue
Aircraft Department, Third Floor
Cranford, New Jersey 07016
Attention: Robert Ewing
-8-
<PAGE> 125
TRANSAMERICA BUSINESS CREDIT CORP.
By:
--------------------------------------
Name:
Title:
Notice Address:
555 Theodore Fremd Avenue
C301
Rye, New York 10580
Attention: Michael Kerneklian
-9-
<PAGE> 126
UNION BANK OF CALIFORNIA, N.A.
By:
--------------------------------------
Name:
Title:
Notice Address:
350 California Street
6th Floor
San Francisco, California 94104
Attention: Alison Mason
-10-
<PAGE> 127
UNION PLANTERS BANK N.A.
By:
--------------------------------------
Name:
Title:
Notice Address:
2800 Ponce De Leon Boulevard
9th Floor
Coral Gables, Florida 33134
Attention: Carlos Rodriguez
-11-
<PAGE> 128
U.S. BANK
By:
--------------------------------------
Name:
Title:
Notice Address:
918 Seventeenth Street
Denver, Colorado 80202
Attention: Melissa Forbes
-12-
<PAGE> 1
EXHIBIT 23.1
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the
incorporation by reference in this registration statement of our report dated
January 25, 2000 in Atlas Air, Inc.'s Form 10-K for the year ended December 31,
1999 and to all references to our Firm included in this registration statement.
ARTHUR ANDERSEN LLP
Denver, Colorado
May 3, 2000
<PAGE> 1
EXHIBIT 25.1
Registration No.
================================================================================
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM T-1
STATEMENT OF ELIGIBILITY UNDER THE TRUST INDENTURE ACT OF 1939
OF A CORPORATION DESIGNATED TO ACT AS TRUSTEE
CHECK IF AN APPLICATION TO DETERMINE ELIGIBILITY OF A TRUSTEE PURSUANT TO
SECTION 305(b)(2)
---
WILMINGTON TRUST COMPANY
(Exact name of trustee as specified in its charter)
Delaware 51-0055023
(State of incorporation) (I.R.S. employer identification no.)
Rodney Square North
1100 North Market Street
Wilmington, Delaware 19890
(Address of principal executive offices)
Cynthia L. Corliss
Vice President and Trust Counsel
Wilmington Trust Company
Rodney Square North
Wilmington, Delaware 19890
(302) 651-8516
(Name, address and telephone number of agent for service)
Atlas Air, Inc.
(Exact name of obligor as specified in its charter)
Delaware 84-1207329
(State of incorporation) (I.R.S. employer identification no.)
538 Commons Drive
Golden, Colorado 80401
(Address of principal executive offices) (Zip Code)
($124,639,000 Pass Through Certificates, Series 2000-1A)
================================================================================
<PAGE> 2
ITEM 1. GENERAL INFORMATION.
Furnish the following information as to the trustee:
(a) Name and address of each examining or supervising authority
to which it is subject.
Federal Deposit Insurance Co. State Bank Commissioner
Five Penn Center Dover, Delaware
Suite #2901
Philadelphia, PA
(b) Whether it is authorized to exercise corporate trust powers.
The trustee is authorized to exercise corporate trust
powers.
ITEM 2. AFFILIATIONS WITH THE OBLIGOR.
If the obligor is an affiliate of the trustee, describe each
affiliation:
Based upon an examination of the books and records of the
trustee and upon information furnished by the obligor, the obligor
is not an affiliate of the trustee.
ITEM 3. LIST OF EXHIBITS.
List below all exhibits filed as part of this Statement of
Eligibility and Qualification.
A. Copy of the Charter of Wilmington Trust Company, which
includes the certificate of authority of Wilmington Trust
Company to commence business and the authorization of
Wilmington Trust Company to exercise corporate trust powers.
B. Copy of By-Laws of Wilmington Trust Company.
C. Consent of Wilmington Trust Company required by
Section 321(b) of Trust Indenture Act.
D. Copy of most recent Report of Condition of Wilmington Trust
Company.
Pursuant to the requirements of the Trust Indenture Act of 1939, as
amended, the trustee, Wilmington Trust Company, a corporation organized and
existing under the laws of Delaware, has duly caused this Statement of
Eligibility to be signed on its behalf by the undersigned, thereunto duly
authorized, all in the City of Wilmington and State of Delaware on the 2nd day
of May, 2000.
WILMINGTON TRUST COMPANY
[SEAL]
Attest: /s/ Robert P. Hines, Jr. By: /s/David A. Vanaskey, Jr.
------------------------------ --------------------------------
Assistant Secretary Name: David A. Vanaskey, Jr.
Title: Vice President
2
<PAGE> 3
EXHIBIT A
AMENDED CHARTER
WILMINGTON TRUST COMPANY
WILMINGTON, DELAWARE
AS EXISTING ON MAY 9, 1987
<PAGE> 4
AMENDED CHARTER
OR
ACT OF INCORPORATION
OF
WILMINGTON TRUST COMPANY
WILMINGTON TRUST COMPANY, originally incorporated by an Act of the
General Assembly of the State of Delaware, entitled "An Act to Incorporate the
Delaware Guarantee and Trust Company", approved March 2, A.D. 1901, and the name
of which company was changed to "WILMINGTON TRUST COMPANY" by an amendment filed
in the Office of the Secretary of State on March 18, A.D. 1903, and the Charter
or Act of Incorporation of which company has been from time to time amended and
changed by merger agreements pursuant to the corporation law for state banks and
trust companies of the State of Delaware, does hereby alter and amend its
Charter or Act of Incorporation so that the same as so altered and amended shall
in its entirety read as follows:
FIRST: - The name of this corporation is WILMINGTON TRUST COMPANY.
SECOND: - The location of its principal office in the State of
Delaware is at Rodney Square North, in the City of Wilmington,
County of New Castle; the name of its resident agent is WILMINGTON
TRUST COMPANY whose address is Rodney Square North, in said City. In
addition to such principal office, the said corporation maintains
and operates branch offices in the City of Newark, New Castle
County, Delaware, the Town of Newport, New Castle County, Delaware,
at Claymont, New Castle County, Delaware, at Greenville, New Castle
County Delaware, and at Milford Cross Roads, New Castle County,
Delaware, and shall be empowered to open, maintain and operate
branch offices at Ninth and Shipley Streets, 418 Delaware Avenue,
2120 Market Street, and 3605 Market Street, all in the City of
Wilmington, New Castle County, Delaware, and such other branch
offices or places of business as may be authorized from time to time
by the agency or agencies of the government of the State of Delaware
empowered to confer such authority.
THIRD: - (a) The nature of the business and the objects and purposes
proposed to be transacted, promoted or carried on by this
Corporation are to do any or all of the things herein mentioned as
fully and to the same extent as natural persons might or could do
and in any part of the world, viz.:
(1) To sue and be sued, complain and defend in any Court of
law or equity and to make and use a common seal, and alter
the seal at pleasure, to hold, purchase, convey, mortgage or
otherwise deal in real and personal estate and property, and
to appoint such officers and agents as the business of the
Corporation shall require, to make by-laws not inconsistent
with the Constitution or laws of the United States or of
this State, to discount bills, notes or other evidences of
debt, to receive deposits of money, or securities for money,
to buy gold and silver bullion and foreign coins, to buy and
sell bills of exchange, and generally to use,
<PAGE> 5
exercise and enjoy all the powers, rights, privileges and
franchises incident to a corporation which are proper or
necessary for the transaction of the business of the
Corporation hereby created.
(2) To insure titles to real and personal property, or any
estate or interests therein, and to guarantee the holder of
such property, real or personal, against any claim or
claims, adverse to his interest therein, and to prepare and
give certificates of title for any lands or premises in the
State of Delaware, or elsewhere.
(3) To act as factor, agent, broker or attorney in the
receipt, collection, custody, investment and management of
funds, and the purchase, sale, management and disposal of
property of all descriptions, and to prepare and execute all
papers which may be necessary or proper in such business.
(4) To prepare and draw agreements, contracts, deeds,
leases, conveyances, mortgages, bonds and legal papers of
every description, and to carry on the business of
conveyancing in all its branches.
(5) To receive upon deposit for safekeeping money, jewelry,
plate, deeds, bonds and any and all other personal property
of every sort and kind, from executors, administrators,
guardians, public officers, courts, receivers, assignees,
trustees, and from all fiduciaries, and from all other
persons and individuals, and from all corporations whether
state, municipal, corporate or private, and to rent boxes,
safes, vaults and other receptacles for such property.
(6) To act as agent or otherwise for the purpose of
registering, issuing, certificating, countersigning,
transferring or underwriting the stock, bonds or other
obligations of any corporation, association, state or
municipality, and may receive and manage any sinking fund
therefor on such terms as may be agreed upon between the two
parties, and in like manner may act as Treasurer of any
corporation or municipality.
(7) To act as Trustee under any deed of trust, mortgage,
bond or other instrument issued by any state, municipality,
body politic, corporation, association or person, either
alone or in conjunction with any other person or persons,
corporation or corporations.
(8) To guarantee the validity, performance or effect of any
contract or agreement, and the fidelity of persons holding
places of responsibility or trust; to become surety for any
person, or persons, for the faithful performance of any
trust, office, duty, contract or agreement, either by itself
or in conjunction with any other person, or persons,
corporation, or corporations, or in like manner become
surety upon any bond, recognizance, obligation, judgment,
suit, order, or decree to be entered in any court of record
within the State of Delaware or elsewhere, or which may now
or hereafter be required by any law, judge, officer or court
in the State of Delaware or elsewhere.
2
<PAGE> 6
(9) To act by any and every method of appointment as
trustee, trustee in bankruptcy, receiver, assignee, assignee
in bankruptcy, executor, administrator, guardian, bailee, or
in any other trust capacity in the receiving, holding,
managing, and disposing of any and all estates and property,
real, personal or mixed, and to be appointed as such
trustee, trustee in bankruptcy, receiver, assignee, assignee
in bankruptcy, executor, administrator, guardian or bailee
by any persons, corporations, court, officer, or authority,
in the State of Delaware or elsewhere; and whenever this
Corporation is so appointed by any person, corporation,
court, officer or authority such trustee, trustee in
bankruptcy, receiver, assignee, assignee in bankruptcy,
executor, administrator, guardian, bailee, or in any other
trust capacity, it shall not be required to give bond with
surety, but its capital stock shall be taken and held as
security for the performance of the duties devolving upon it
by such appointment.
(10) And for its care, management and trouble, and the
exercise of any of its powers hereby given, or for the
performance of any of the duties which it may undertake or
be called upon to perform, or for the assumption of any
responsibility the said Corporation may be entitled to
receive a proper compensation.
(11) To purchase, receive, hold and own bonds, mortgages,
debentures, shares of capital stock, and other securities,
obligations, contracts and evidences of indebtedness, of any
private, public or municipal corporation within and without
the State of Delaware, or of the Government of the United
States, or of any state, territory, colony, or possession
thereof, or of any foreign government or country; to
receive, collect, receipt for, and dispose of interest,
dividends and income upon and from any of the bonds,
mortgages, debentures, notes, shares of capital stock,
securities, obligations, contracts, evidences of
indebtedness and other property held and owned by it, and to
exercise in respect of all such bonds, mortgages,
debentures, notes, shares of capital stock, securities,
obligations, contracts, evidences of indebtedness and other
property, any and all the rights, powers and privileges of
individual owners thereof, including the right to vote
thereon; to invest and deal in and with any of the moneys of
the Corporation upon such securities and in such manner as
it may think fit and proper, and from time to time to vary
or realize such investments; to issue bonds and secure the
same by pledges or deeds of trust or mortgages of or upon
the whole or any part of the property held or owned by the
Corporation, and to sell and pledge such bonds, as and when
the Board of Directors shall determine, and in the promotion
of its said corporate business of investment and to the
extent authorized by law, to lease, purchase, hold, sell,
assign, transfer, pledge, mortgage and convey real and
personal property of any name and nature and any estate or
interest therein.
(b) In furtherance of, and not in limitation, of the powers
conferred by the laws of the State of Delaware, it is hereby
expressly provided that the said Corporation shall also have the
following powers:
(1) To do any or all of the things herein set forth, to the
same extent as natural
3
<PAGE> 7
persons might or could do, and in any part of the world.
(2) To acquire the good will, rights, property and
franchises and to undertake the whole or any part of the
assets and liabilities of any person, firm, association or
corporation, and to pay for the same in cash, stock of this
Corporation, bonds or otherwise; to hold or in any manner to
dispose of the whole or any part of the property so
purchased; to conduct in any lawful manner the whole or any
part of any business so acquired, and to exercise all the
powers necessary or convenient in and about the conduct and
management of such business.
(3) To take, hold, own, deal in, mortgage or otherwise lien,
and to lease, sell, exchange, transfer, or in any manner
whatever dispose of property, real, personal or mixed,
wherever situated.
(4) To enter into, make, perform and carry out contracts of
every kind with any person, firm, association or
corporation, and, without limit as to amount, to draw, make,
accept, endorse, discount, execute and issue promissory
notes, drafts, bills of exchange, warrants, bonds,
debentures, and other negotiable or transferable
instruments.
(5) To have one or more offices, to carry on all or any of
its operations and businesses, without restriction to the
same extent as natural persons might or could do, to
purchase or otherwise acquire, to hold, own, to mortgage,
sell, convey or otherwise dispose of, real and personal
property, of every class and description, in any State,
District, Territory or Colony of the United States, and in
any foreign country or place.
(6) It is the intention that the objects, purposes and
powers specified and clauses contained in this paragraph
shall (except where otherwise expressed in said paragraph)
be nowise limited or restricted by reference to or inference
from the terms of any other clause of this or any other
paragraph in this charter, but that the objects, purposes
and powers specified in each of the clauses of this
paragraph shall be regarded as independent objects, purposes
and powers.
FOURTH: - (a) The total number of shares of all classes of stock
which the Corporation shall have authority to issue is forty-one
million (41,000,000) shares, consisting of:
(1) One million (1,000,000) shares of Preferred stock, par
value $10.00 per share (hereinafter referred to as
"Preferred Stock"); and
(2) Forty million (40,000,000) shares of Common Stock, par
value $1.00 per share (hereinafter referred to as "Common
Stock").
(b) Shares of Preferred Stock may be issued from time to time in one
or more series as may from time to time be determined by the Board
of Directors each of said series to be distinctly designated. All
shares of any one series of Preferred Stock shall be alike in every
particular, except that there may be different dates from which
dividends, if
4
<PAGE> 8
any, thereon shall be cumulative, if made cumulative. The voting
powers and the preferences and relative, participating, optional and
other special rights of each such series, and the qualifications,
limitations or restrictions thereof, if any, may differ from those
of any and all other series at any time outstanding; and, subject to
the provisions of subparagraph 1 of Paragraph (c) of this Article
FOURTH, the Board of Directors of the Corporation is hereby
expressly granted authority to fix by resolution or resolutions
adopted prior to the issuance of any shares of a particular series
of Preferred Stock, the voting powers and the designations,
preferences and relative, optional and other special rights, and the
qualifications, limitations and restrictions of such series,
including, but without limiting the generality of the foregoing, the
following:
(1) The distinctive designation of, and the number of shares
of Preferred Stock which shall constitute such series, which
number may be increased (except where otherwise provided by
the Board of Directors) or decreased (but not below the
number of shares thereof then outstanding) from time to time
by like action of the Board of Directors;
(2) The rate and times at which, and the terms and
conditions on which, dividends, if any, on Preferred Stock
of such series shall be paid, the extent of the preference
or relation, if any, of such dividends to the dividends
payable on any other class or classes, or series of the same
or other class of stock and whether such dividends shall be
cumulative or non-cumulative;
(3) The right, if any, of the holders of Preferred Stock of
such series to convert the same into or exchange the same
for, shares of any other class or classes or of any series
of the same or any other class or classes of stock of the
Corporation and the terms and conditions of such conversion
or exchange;
(4) Whether or not Preferred Stock of such series shall be
subject to redemption, and the redemption price or prices
and the time or times at which, and the terms and conditions
on which, Preferred Stock of such series may be redeemed.
(5) The rights, if any, of the holders of Preferred Stock of
such series upon the voluntary or involuntary liquidation,
merger, consolidation, distribution or sale of assets,
dissolution or winding-up, of the Corporation.
(6) The terms of the sinking fund or redemption or purchase
account, if any, to be provided for the Preferred Stock of
such series; and
(7) The voting powers, if any, of the holders of such series
of Preferred Stock which may, without limiting the
generality of the foregoing include the right, voting as a
series or by itself or together with other series of
Preferred Stock or all series of Preferred Stock as a class,
to elect one or more directors of the Corporation if there
shall have been a default in the payment of dividends on any
one or more series of Preferred Stock or under such
circumstances and on such conditions as the Board of
Directors may determine.
5
<PAGE> 9
(c) (1) After the requirements with respect to preferential
dividends on the Preferred Stock (fixed in accordance with the
provisions of section (b) of this Article FOURTH), if any, shall
have been met and after the Corporation shall have complied with all
the requirements, if any, with respect to the setting aside of sums
as sinking funds or redemption or purchase accounts (fixed in
accordance with the provisions of section (b) of this Article
FOURTH), and subject further to any conditions which may be fixed in
accordance with the provisions of section (b) of this Article
FOURTH, then and not otherwise the holders of Common Stock shall be
entitled to receive such dividends as may be declared from time to
time by the Board of Directors.
(2) After distribution in full of the preferential amount,
if any, (fixed in accordance with the provisions of section
(b) of this Article FOURTH), to be distributed to the
holders of Preferred Stock in the event of voluntary or
involuntary liquidation, distribution or sale of assets,
dissolution or winding-up, of the Corporation, the holders
of the Common Stock shall be entitled to receive all of the
remaining assets of the Corporation, tangible and
intangible, of whatever kind available for distribution to
stockholders ratably in proportion to the number of shares
of Common Stock held by them respectively.
(3) Except as may otherwise be required by law or by the
provisions of such resolution or resolutions as may be
adopted by the Board of Directors pursuant to section (b) of
this Article FOURTH, each holder of Common Stock shall have
one vote in respect of each share of Common Stock held on
all matters voted upon by the stockholders.
(d) No holder of any of the shares of any class or series of stock
or of options, warrants or other rights to purchase shares of any
class or series of stock or of other securities of the Corporation
shall have any preemptive right to purchase or subscribe for any
unissued stock of any class or series or any additional shares of
any class or series to be issued by reason of any increase of the
authorized capital stock of the Corporation of any class or series,
or bonds, certificates of indebtedness, debentures or other
securities convertible into or exchangeable for stock of the
Corporation of any class or series, or carrying any right to
purchase stock of any class or series, but any such unissued stock,
additional authorized issue of shares of any class or series of
stock or securities convertible into or exchangeable for stock, or
carrying any right to purchase stock, may be issued and disposed of
pursuant to resolution of the Board of Directors to such persons,
firms, corporations or associations, whether such holders or others,
and upon such terms as may be deemed advisable by the Board of
Directors in the exercise of its sole discretion.
(e) The relative powers, preferences and rights of each series of
Preferred Stock in relation to the relative powers, preferences and
rights of each other series of Preferred Stock shall, in each case,
be as fixed from time to time by the Board of Directors in the
resolution or resolutions adopted pursuant to authority granted in
section (b) of this Article FOURTH and the consent, by class or
series vote or otherwise, of the holders of such of the series of
Preferred Stock as are from time to time outstanding shall not be
required for the issuance by the Board of Directors of any other
series of Preferred
6
<PAGE> 10
Stock whether or not the powers, preferences and rights of such
other series shall be fixed by the Board of Directors as senior to,
or on a parity with, the powers, preferences and rights of such
outstanding series, or any of them; provided, however, that the
Board of Directors may provide in the resolution or resolutions as
to any series of Preferred Stock adopted pursuant to section (b) of
this Article FOURTH that the consent of the holders of a majority
(or such greater proportion as shall be therein fixed) of the
outstanding shares of such series voting thereon shall be required
for the issuance of any or all other series of Preferred Stock.
(f) Subject to the provisions of section (e), shares of any series
of Preferred Stock may be issued from time to time as the Board of
Directors of the Corporation shall determine and on such terms and
for such consideration as shall be fixed by the Board of Directors.
(g) Shares of Common Stock may be issued from time to time as the
Board of Directors of the Corporation shall determine and on such
terms and for such consideration as shall be fixed by the Board of
Directors.
(h) The authorized amount of shares of Common Stock and of Preferred
Stock may, without a class or series vote, be increased or decreased
from time to time by the affirmative vote of the holders of a
majority of the stock of the Corporation entitled to vote thereon.
FIFTH: - (a) The business and affairs of the Corporation shall be
conducted and managed by a Board of Directors. The number of
directors constituting the entire Board shall be not less than five
nor more than twenty-five as fixed from time to time by vote of a
majority of the whole Board, provided, however, that the number of
directors shall not be reduced so as to shorten the term of any
director at the time in office, and provided further, that the
number of directors constituting the whole Board shall be
twenty-four until otherwise fixed by a majority of the whole Board.
(b) The Board of Directors shall be divided into three classes, as
nearly equal in number as the then total number of directors
constituting the whole Board permits, with the term of office of one
class expiring each year. At the annual meeting of stockholders in
1982, directors of the first class shall be elected to hold office
for a term expiring at the next succeeding annual meeting, directors
of the second class shall be elected to hold office for a term
expiring at the second succeeding annual meeting and directors of
the third class shall be elected to hold office for a term expiring
at the third succeeding annual meeting. Any vacancies in the Board
of Directors for any reason, and any newly created directorships
resulting from any increase in the directors, may be filled by the
Board of Directors, acting by a majority of the directors then in
office, although less than a quorum, and any directors so chosen
shall hold office until the next annual election of directors. At
such election, the stockholders shall elect a successor to such
director to hold office until the next election of the class for
which such director shall have been chosen and until his successor
shall be elected and qualified. No decrease in the number of
directors shall shorten the term of any incumbent director.
7
<PAGE> 11
(c) Notwithstanding any other provisions of this Charter or Act of
Incorporation or the By-Laws of the Corporation (and notwithstanding
the fact that some lesser percentage may be specified by law, this
Charter or Act of Incorporation or the By-Laws of the Corporation),
any director or the entire Board of Directors of the Corporation may
be removed at any time without cause, but only by the affirmative
vote of the holders of two-thirds or more of the outstanding shares
of capital stock of the Corporation entitled to vote generally in
the election of directors (considered for this purpose as one class)
cast at a meeting of the stockholders called for that purpose.
(d) Nominations for the election of directors may be made by the
Board of Directors or by any stockholder entitled to vote for the
election of directors. Such nominations shall be made by notice in
writing, delivered or mailed by first class United States mail,
postage prepaid, to the Secretary of the Corporation not less than
14 days nor more than 50 days prior to any meeting of the
stockholders called for the election of directors; provided,
however, that if less than 21 days' notice of the meeting is given
to stockholders, such written notice shall be delivered or mailed,
as prescribed, to the Secretary of the Corporation not later than
the close of the seventh day following the day on which notice of
the meeting was mailed to stockholders. Notice of nominations which
are proposed by the Board of Directors shall be given by the
Chairman on behalf of the Board.
(e) Each notice under subsection (d) shall set forth (i) the name,
age, business address and, if known, residence address of each
nominee proposed in such notice, (ii) the principal occupation or
employment of such nominee and (iii) the number of shares of stock
of the Corporation which are beneficially owned by each such
nominee.
(f) The Chairman of the meeting may, if the facts warrant, determine
and declare to the meeting that a nomination was not made in
accordance with the foregoing procedure, and if he should so
determine, he shall so declare to the meeting and the defective
nomination shall be disregarded.
(g) No action required to be taken or which may be taken at any
annual or special meeting of stockholders of the Corporation may be
taken without a meeting, and the power of stockholders to consent in
writing, without a meeting, to the taking of any action is
specifically denied.
SIXTH: - The Directors shall choose such officers, agents and
servants as may be provided in the By-Laws as they may from time to
time find necessary or proper.
SEVENTH: - The Corporation hereby created is hereby given the same
powers, rights and privileges as may be conferred upon corporations
organized under the Act entitled "An Act Providing a General
Corporation Law", approved March 10, 1899, as from time to time
amended.
EIGHTH: - This Act shall be deemed and taken to be a private Act.
NINTH: - This Corporation is to have perpetual existence.
8
<PAGE> 12
TENTH: - The Board of Directors, by resolution passed by a majority
of the whole Board, may designate any of their number to constitute
an Executive Committee, which Committee, to the extent provided in
said resolution, or in the By-Laws of the Company, shall have and
may exercise all of the powers of the Board of Directors in the
management of the business and affairs of the Corporation, and shall
have power to authorize the seal of the Corporation to be affixed to
all papers which may require it.
ELEVENTH: - The private property of the stockholders shall not be
liable for the payment of corporate debts to any extent whatever.
TWELFTH: - The Corporation may transact business in any part of the
world.
THIRTEENTH: - The Board of Directors of the Corporation is expressly
authorized to make, alter or repeal the By-Laws of the Corporation
by a vote of the majority of the entire Board. The stockholders may
make, alter or repeal any By-Law whether or not adopted by them,
provided however, that any such additional By-Laws, alterations or
repeal may be adopted only by the affirmative vote of the holders of
two-thirds or more of the outstanding shares of capital stock of the
Corporation entitled to vote generally in the election of directors
(considered for this purpose as one class).
FOURTEENTH: - Meetings of the Directors may be held outside
of the State of Delaware at such places as may be from time to time
designated by the Board, and the Directors may keep the books of the
Company outside of the State of Delaware at such places as may be
from time to time designated by them.
FIFTEENTH: - (a) (1) In addition to any affirmative vote required by
law, and except as otherwise expressly provided in sections (b) and
(c) of this Article FIFTEENTH:
(A) any merger or consolidation of the Corporation or any
Subsidiary (as hereinafter defined) with or into (i) any
Interested Stockholder (as hereinafter defined) or (ii) any
other corporation (whether or not itself an Interested
Stockholder), which, after such merger or consolidation,
would be an Affiliate (as hereinafter defined) of an
Interested Stockholder, or
(B) any sale, lease, exchange, mortgage, pledge, transfer or
other disposition (in one transaction or a series of related
transactions) to or with any Interested Stockholder or any
Affiliate of any Interested Stockholder of any assets of the
Corporation or any Subsidiary having an aggregate fair
market value of $1,000,000 or more, or
(C) the issuance or transfer by the Corporation or any
Subsidiary (in one transaction or a series of related
transactions) of any securities of the Corporation or any
Subsidiary to any Interested Stockholder or any Affiliate of
any Interested Stockholder in exchange for cash, securities
or other property (or a combination thereof) having an
aggregate fair market value of $1,000,000 or more, or
(D) the adoption of any plan or proposal for the liquidation
or dissolution of the Corporation, or
9
<PAGE> 13
(E) any reclassification of securities (including any
reverse stock split), or recapitalization of the
Corporation, or any merger or consolidation of the
Corporation with any of its Subsidiaries or any similar
transaction (whether or not with or into or otherwise
involving an Interested Stockholder) which has the effect,
directly or indirectly, of increasing the proportionate
share of the outstanding shares of any class of equity or
convertible securities of the Corporation or any Subsidiary
which is directly or indirectly owned by any Interested
Stockholder, or any Affiliate of any Interested Stockholder,
shall require the affirmative vote of the holders of at least two-thirds of the
outstanding shares of capital stock of the Corporation entitled to vote
generally in the election of directors, considered for the purpose of this
Article FIFTEENTH as one class ("Voting Shares"). Such affirmative vote shall be
required notwithstanding the fact that no vote may be required, or that some
lesser percentage may be specified, by law or in any agreement with any national
securities exchange or otherwise.
(2) The term "business combination" as used in this
Article FIFTEENTH shall mean any transaction which is
referred to in any one or more of clauses (A) through (E)
of paragraph 1 of the section (a).
(b) The provisions of section (a) of this Article FIFTEENTH
shall not be applicable to any particular business
combination and such business combination shall require only
such affirmative vote as is required by law and any other
provisions of the Charter or Act of Incorporation or By-Laws
if such business combination has been approved by a majority
of the whole Board.
(c) For the purposes of this Article FIFTEENTH:
(1) A "person" shall mean any individual, firm, corporation or other
entity.
(2) "Interested Stockholder" shall mean, in respect of any business
combination, any person (other than the Corporation or any
Subsidiary) who or which as of the record date for the determination
of stockholders entitled to notice of and to vote on such business
combination, or immediately prior to the consummation of any such
transaction:
(A) is the beneficial owner, directly or indirectly, of more
than 10% of the Voting Shares, or
(B) is an Affiliate of the Corporation and at any time
within two years prior thereto was the beneficial owner,
directly or indirectly, of not less than 10% of the then
outstanding voting Shares, or
(C) is an assignee of or has otherwise succeeded in any
share of capital stock of the Corporation which were at any
time within two years prior thereto
10
<PAGE> 14
beneficially owned by any Interested Stockholder, and such
assignment or succession shall have occurred in the course
of a transaction or series of transactions not involving a
public offering within the meaning of the Securities Act of
1933.
(3) A person shall be the "beneficial owner" of any Voting Shares:
(A) which such person or any of its Affiliates and
Associates (as hereafter defined) beneficially own, directly
or indirectly, or
(B) which such person or any of its Affiliates or Associates
has (i) the right to acquire (whether such right is
exercisable immediately or only after the passage of time),
pursuant to any agreement, arrangement or understanding or
upon the exercise of conversion rights, exchange rights,
warrants or options, or otherwise, or (ii) the right to vote
pursuant to any agreement, arrangement or understanding, or
(C) which are beneficially owned, directly or indirectly, by
any other person with which such first mentioned person or
any of its Affiliates or Associates has any agreement,
arrangement or understanding for the purpose of acquiring,
holding, voting or disposing of any shares of capital stock
of the Corporation.
(4) The outstanding Voting Shares shall include shares deemed owned
through application of paragraph (3) above but shall not include any
other Voting Shares which may be issuable pursuant to any agreement,
or upon exercise of conversion rights, warrants or options or
otherwise.
(5) "Affiliate" and "Associate" shall have the respective meanings
given those terms in Rule 12b-2 of the General Rules and Regulations
under the Securities Exchange Act of 1934, as in effect on December
31, 1981.
(6) "Subsidiary" shall mean any corporation of which a majority of
any class of equity security (as defined in Rule 3a11-1 of the
General Rules and Regulations under the Securities Exchange Act of
1934, as in effect on December 31, 1981) is owned, directly or
indirectly, by the Corporation; provided, however, that for the
purposes of the definition of Investment Stockholder set forth in
paragraph (2) of this section (c), the term "Subsidiary" shall mean
only a corporation of which a majority of each class of equity
security is owned, directly or indirectly, by the Corporation.
(d) majority of the directors shall have the power and duty
to determine for the purposes of this Article FIFTEENTH on
the basis of information known to them, (1) the number of
Voting Shares beneficially owned by any person (2) whether a
person is an Affiliate or Associate of another, (3) whether
a person has an agreement, arrangement or understanding with
another as to the matters referred to in paragraph (3) of
section (c), or (4) whether the assets subject to any
business combination or the consideration received for the
issuance or transfer of securities by the Corporation, or
any Subsidiary has an aggregate fair market
11
<PAGE> 15
value of $1,000,000 or more.
(e) Nothing contained in this Article FIFTEENTH shall be
construed to relieve any Interested Stockholder from any
fiduciary obligation imposed by law.
SIXTEENTH: Notwithstanding any other provision of this Charter or
Act of Incorporation or the By-Laws of the Corporation (and in
addition to any other vote that may be required by law, this Charter
or Act of Incorporation by the By-Laws), the affirmative vote of the
holders of at least two-thirds of the outstanding shares of the
capital stock of the Corporation entitled to vote generally in the
election of directors (considered for this purpose as one class)
shall be required to amend, alter or repeal any provision of
Articles FIFTH, THIRTEENTH, FIFTEENTH or SIXTEENTH of this Charter
or Act of Incorporation.
SEVENTEENTH: (a) a Director of this Corporation shall not be liable
to the Corporation or its stockholders for monetary damages for
breach of fiduciary duty as a Director, except to the extent such
exemption from liability or limitation thereof is not permitted
under the Delaware General Corporation Laws as the same exists or
may hereafter be amended.
(b) Any repeal or modification of the foregoing paragraph
shall not adversely affect any right or protection of a
Director of the Corporation existing hereunder with respect
to any act or omission occurring prior to the time of such
repeal or modification."
12
<PAGE> 16
EXHIBIT B
BY-LAWS
WILMINGTON TRUST COMPANY
WILMINGTON, DELAWARE
AS EXISTING ON JANUARY 20, 2000
<PAGE> 17
BY-LAWS OF WILMINGTON TRUST COMPANY
ARTICLE I
STOCKHOLDERS' MEETINGS
Section 1. The Annual Meeting of Stockholders shall be held on the
third Thursday in April each year at the principal office at the Company or at
such other date, time, or place as may be designated by resolution by the Board
of Directors.
Section 2. Special meetings of all stockholders may be called at any
time by the Board of Directors, the Chairman of the Board or the President.
Section 3. Notice of all meetings of the stockholders shall be given by
mailing to each stockholder at least ten (10) days before said meeting, at his
last known address, a written or printed notice fixing the time and place of
such meeting.
Section 4. A majority in the amount of the capital stock of the Company
issued and outstanding on the record date, as herein determined, shall
constitute a quorum at all meetings of stockholders for the transaction of any
business, but the holders of a small number of shares may adjourn, from time to
time, without further notice, until a quorum is secured. At each annual or
special meeting of stockholders, each stockholder shall be entitled to one vote,
either in person or by proxy, for each share of stock registered in the
stockholder's name on the books of the Company on the record date for any such
meeting as determined herein.
ARTICLE II
DIRECTORS
Section 1. The number and classification of the Board of Directors
shall be as set forth in the Charter of the Bank. No more than two Directors may
also be employees of the Company or any affiliate thereof.
Section 2. No person who has attained the age of seventy-two (72) years
shall be nominated for election to the Board of Directors of the Company,
provided, however, that this limitation shall not apply to any person who was
serving as director of the Company on September 16, 1971. The Chairman of the
Board of Directors shall not be qualified to continue to serve as a Director
upon the termination for any reason of his or her services in that office.
Section 3. The class of Directors so elected shall hold office for
three years or until their successors are elected and qualified.
Section 4. The affairs and business of the Company shall be managed and
conducted by the Board of Directors.
Section 5. The Board of Directors shall meet at the principal office of
the Company or elsewhere in its discretion at such times to be determined by a
majority of its members, or at the call of the Chairman of the Board of
Directors or the President.
<PAGE> 18
Section 6. Special meetings of the Board of Directors may be called at
any time by the Chairman of the Board of Directors or by the President, and
shall be called upon the written request of a majority of the directors.
Section 7. A majority of the directors elected and qualified shall be
necessary to constitute a quorum for the transaction of business at any meeting
of the Board of Directors.
Section 8. Written notice shall be sent by mail to each director of any
special meeting of the Board of Directors, and of any change in the time or
place of any regular meeting, stating the time and place of such meeting, which
shall be mailed not less than two days before the time of holding such meeting.
Section 9. In the event of the death, resignation, removal, inability
to act, or disqualification of any director, the Board of Directors, although
less than a quorum, shall have the right to elect the successor who shall hold
office for the remainder of the full term of the class of directors in which the
vacancy occurred, and until such director's successor shall have been duly
elected and qualified.
Section 10. The Board of Directors at its first meeting after its
election by the stockholders shall appoint an Executive Committee, a Trust
Committee, an Audit Committee and a Compensation Committee, and shall elect from
its own members a Chairman of the Board of Directors and a President who may be
the same person. The Board of Directors shall also elect at such meeting a
Secretary and a Treasurer, who may be the same person, may appoint at any time
such other committees and elect or appoint such other officers as it may deem
advisable. The Board of Directors may also elect at such meeting one or more
Associate Directors.
Section 11. The Board of Directors may at any time remove, with or
without cause, any member of any Committee appointed by it or any associate
director or officer elected by it and may appoint or elect his successor.
Section 12. The Board of Directors may designate an officer to be in
charge of such of the departments or divisions of the Company as it may deem
advisable.
2
<PAGE> 19
ARTICLE III
COMMITTEES
Section 1. Executive Committee
(A) The Executive Committee shall be composed of
not more than nine members who shall be selected by the Board of Directors from
its own members and who shall hold office during the pleasure of the Board.
(B) The Executive Committee shall have all the
powers of the Board of Directors when it is not in session to transact all
business for and in behalf of the Company that may be brought before it.
(C) The Executive Committee shall meet at the
principal office of the Company or elsewhere in its discretion at such times to
be determined by a majority of its members, or at the call of the Chairman of
the Executive Committee or at the call of the Chairman of the Board of
Directors. The majority of its members shall be necessary to constitute a quorum
for the transaction of business. Special meetings of the Executive Committee may
be held at any time when a quorum is present.
(D) Minutes of each meeting of the Executive
Committee shall be kept and submitted to the Board of Directors at its next
meeting.
(E) The Executive Committee shall advise and
superintend all investments that may be made of the funds of the Company, and
shall direct the disposal of the same, in accordance with such rules and
regulations as the Board of Directors from time to time make.
(F) In the event of a state of disaster of
sufficient severity to prevent the conduct and management of the affairs and
business of the Company by its directors and officers as contemplated by these
By-Laws any two available members of the Executive Committee as constituted
immediately prior to such disaster shall constitute a quorum of that Committee
for the full conduct and management of the affairs and business of the Company
in accordance with the provisions of Article III of these By-Laws; and if less
than three members of the Trust Committee is constituted immediately prior to
such disaster shall be available for the transaction of its business, such
Executive Committee shall also be empowered to exercise all of the powers
reserved to the Trust Committee under Article III Section 2 hereof. In the event
of the unavailability, at such time, of a minimum of two members of such
Executive Committee, any three available directors shall constitute the
Executive Committee for the full conduct and management of the affairs and
business of the Company in accordance with the foregoing provisions of this
Section. This By-Law shall be subject to implementation by Resolutions of the
Board of Directors presently existing or hereafter passed from time to time for
that purpose, and any provisions of these By-Laws (other than this Section) and
any resolutions which are contrary to the provisions of this Section or to the
provisions of any such implementary Resolutions shall be suspended during such a
disaster period until it shall be determined by any interim Executive
3
<PAGE> 20
Committee acting under this section that it shall be to the advantage of the
Company to resume the conduct and management of its affairs and business under
all of the other provisions of these By-Laws.
Section 2. Audit Committee
(A) The Audit Committee shall be composed of five
members who shall be selected by the Board of Directors from its own members,
none of whom shall be an officer of the Company, and shall hold office at the
pleasure of the Board.
(B) The Audit Committee shall have general
supervision over the Audit Division in all matters however subject to the
approval of the Board of Directors; it shall consider all matters brought to its
attention by the officer in charge of the Audit Division, review all reports of
examination of the Company made by any governmental agency or such independent
auditor employed for that purpose, and make such recommendations to the Board of
Directors with respect thereto or with respect to any other matters pertaining
to auditing the Company as it shall deem desirable.
(C) The Audit Committee shall meet whenever and
wherever the majority of its members shall deem it to be proper for the
transaction of its business, and a majority of its Committee shall constitute a
quorum.
Section 3. Compensation Committee
(A) The Compensation Committee shall be composed of
not more than five (5) members who shall be selected by the Board of Directors
from its own members who are not officers of the Company and who shall hold
office during the pleasure of the Board.
(B) The Compensation Committee shall in general
advise upon all matters of policy concerning the Company brought to its
attention by the management and from time to time review the management of the
Company, major organizational matters, including salaries and employee benefits
and specifically shall administer the Executive Incentive Compensation Plan.
(C) Meetings of the Compensation Committee may be
called at any time by the Chairman of the Compensation Committee, the Chairman
of the Board of Directors, or the President of the Company.
4
<PAGE> 21
Section 4. Associate Directors
(A) Any person who has served as a director may be
elected by the Board of Directors as an associate director, to serve during the
pleasure of the Board.
(B) An associate director shall be entitled to
attend all directors meetings and participate in the discussion of all matters
brought to the Board, with the exception that he would have no right to vote. An
associate director will be eligible for appointment to Committees of the
Company, with the exception of the Executive Committee, Audit Committee and
Compensation Committee, which must be comprised solely of active directors.
Section 5. Absence or Disqualification of Any Member of a Committee
(A) In the absence or disqualification of any
member of any Committee created under Article III of the By-Laws of this
Company, the member or members thereof present at any meeting and not
disqualified from voting, whether or not he or they constitute a quorum, may
unanimously appoint another member of the Board of Directors to act at the
meeting in the place of any such absent or disqualified member.
ARTICLE IV
OFFICERS
Section 1. The Chairman of the Board of Directors shall preside at all
meetings of the Board and shall have such further authority and powers and shall
perform such duties as the Board of Directors may from time to time confer and
direct. He shall also exercise such powers and perform such duties as may from
time to time be agreed upon between himself and the President of the Company.
Section 2. The Vice Chairman of the Board. The Vice Chairman of the
Board of Directors shall preside at all meetings of the Board of Directors at
which the Chairman of the Board shall not be present and shall have such further
authority and powers and shall perform such duties as the Board of Directors or
the Chairman of the Board may from time to time confer and direct.
Section 3. The President shall have the powers and duties pertaining to
the office of the President conferred or imposed upon him by statute or assigned
to him by the Board of Directors. In the absence of the Chairman of the Board
the President shall have the powers and duties of the Chairman of the Board.
Section 4. The Chairman of the Board of Directors or the President as
designated by the Board of Directors, shall carry into effect all legal
directions of the Executive Committee and of the Board of Directors, and shall
at all times exercise general supervision over the interest, affairs and
operations of the Company and perform all duties incident to his office.
5
<PAGE> 22
Section 5. There may be one or more Vice Presidents, however
denominated by the Board of Directors, who may at any time perform all the
duties of the Chairman of the Board of Directors and/or the President and such
other powers and duties as may from time to time be assigned to them by the
Board of Directors, the Executive Committee, the Chairman of the Board or the
President and by the officer in charge of the department or division to which
they are assigned.
Section 6. The Secretary shall attend to the giving of notice of
meetings of the stockholders and the Board of Directors, as well as the
Committees thereof, to the keeping of accurate minutes of all such meetings and
to recording the same in the minute books of the Company. In addition to the
other notice requirements of these By-Laws and as may be practicable under the
circumstances, all such notices shall be in writing and mailed well in advance
of the scheduled date of any other meeting. He shall have custody of the
corporate seal and shall affix the same to any documents requiring such
corporate seal and to attest the same.
Section 7. The Treasurer shall have general supervision over all assets
and liabilities of the Company. He shall be custodian of and responsible for all
monies, funds and valuables of the Company and for the keeping of proper records
of the evidence of property or indebtedness and of all the transactions of the
Company. He shall have general supervision of the expenditures of the Company
and shall report to the Board of Directors at each regular meeting of the
condition of the Company, and perform such other duties as may be assigned to
him from time to time by the Board of Directors of the Executive Committee.
Section 8. There may be a Controller who shall exercise general
supervision over the internal operations of the Company, including accounting,
and shall render to the Board of Directors at appropriate times a report
relating to the general condition and internal operations of the Company.
There may be one or more subordinate accounting or controller officers
however denominated, who may perform the duties of the Controller and such
duties as may be prescribed by the Controller.
Section 9. The officer designated by the Board of Directors to be in
charge of the Audit Division of the Company with such title as the Board of
Directors shall prescribe, shall report to and be directly responsible only to
the Board of Directors.
There shall be an Auditor and there may be one or more Audit Officers,
however denominated, who may perform all the duties of the Auditor and such
duties as may be prescribed by the officer in charge of the Audit Division.
Section 10. There may be one or more officers, subordinate in rank to
all Vice Presidents with such functional titles as shall be determined from time
to time by the Board of Directors, who shall ex officio hold the office
Assistant Secretary of this Company and who may perform such duties as may be
prescribed by the officer in charge of the department or division to whom they
are assigned.
6
<PAGE> 23
Section 11. The powers and duties of all other officers of the Company
shall be those usually pertaining to their respective offices, subject to the
direction of the Board of Directors, the Executive Committee, Chairman of the
Board of Directors or the President and the officer in charge of the department
or division to which they are assigned.
ARTICLE V
STOCK AND STOCK CERTIFICATES
Section 1. Shares of stock shall be transferrable on the books of the
Company and a transfer book shall be kept in which all transfers of stock shall
be recorded.
Section 2. Certificates of stock shall bear the signature of the
President or any Vice President, however denominated by the Board of Directors
and countersigned by the Secretary or Treasurer or an Assistant Secretary, and
the seal of the corporation shall be engraved thereon. Each certificate shall
recite that the stock represented thereby is transferrable only upon the books
of the Company by the holder thereof or his attorney, upon surrender of the
certificate properly endorsed. Any certificate of stock surrendered to the
Company shall be cancelled at the time of transfer, and before a new certificate
or certificates shall be issued in lieu thereof. Duplicate certificates of stock
shall be issued only upon giving such security as may be satisfactory to the
Board of Directors or the Executive Committee.
Section 3. The Board of Directors of the Company is authorized to fix
in advance a record date for the determination of the stockholders entitled to
notice of, and to vote at, any meeting of stockholders and any adjournment
thereof, or entitled to receive payment of any dividend, or to any allotment or
rights, or to exercise any rights in respect of any change, conversion or
exchange of capital stock, or in connection with obtaining the consent of
stockholders for any purpose, which record date shall not be more than 60 nor
less than 10 days proceeding the date of any meeting of stockholders or the date
for the payment of any dividend, or the date for the allotment of rights, or the
date when any change or conversion or exchange of capital stock shall go into
effect, or a date in connection with obtaining such consent.
ARTICLE VI
SEAL
Section 1. The corporate seal of the Company shall be in the following
form:
Between two concentric circles the words
"Wilmington Trust Company" within the inner circle
the words "Wilmington, Delaware."
7
<PAGE> 24
ARTICLE VII
FISCAL YEAR
Section 1. The fiscal year of the Company shall be the calendar year.
ARTICLE VIII
EXECUTION OF INSTRUMENTS OF THE COMPANY
Section 1. The Chairman of the Board, the President or any Vice
President, however denominated by the Board of Directors, shall have full power
and authority to enter into, make, sign, execute, acknowledge and/or deliver and
the Secretary or any Assistant Secretary shall have full power and authority to
attest and affix the corporate seal of the Company to any and all deeds,
conveyances, assignments, releases, contracts, agreements, bonds, notes,
mortgages and all other instruments incident to the business of this Company or
in acting as executor, administrator, guardian, trustee, agent or in any other
fiduciary or representative capacity by any and every method of appointment or
by whatever person, corporation, court officer or authority in the State of
Delaware, or elsewhere, without any specific authority, ratification, approval
or confirmation by the Board of Directors or the Executive Committee, and any
and all such instruments shall have the same force and validity as though
expressly authorized by the Board of Directors and/or the Executive Committee.
ARTICLE IX
COMPENSATION OF DIRECTORS AND MEMBERS OF COMMITTEES
Section 1. Directors and associate directors of the Company, other than
salaried officers of the Company, shall be paid such reasonable honoraria or
fees for attending meetings of the Board of Directors as the Board of Directors
may from time to time determine. Directors and associate directors who serve as
members of committees, other than salaried employees of the Company, shall be
paid such reasonable honoraria or fees for services as members of committees as
the Board of Directors shall from time to time determine and directors and
associate directors may be employed by the Company for such special services as
the Board of Directors may from time to time determine and shall be paid for
such special services so performed reasonable compensation as may be determined
by the Board of Directors.
ARTICLE X
INDEMNIFICATION
Section 1. (A) The Corporation shall indemnify and hold harmless, to
the fullest extent permitted by applicable law as it presently exists or may
hereafter be amended, any person who was or is made or is threatened to be made
a party or is otherwise involved in any action, suit or proceeding, whether
civil, criminal, administrative or investigative (a "proceeding") by reason of
the fact that he, or a person for whom he is the legal representative, is or was
a director, officer, employee or agent of the Corporation or is or was serving
at the request of the Corporation as a director, officer, employee, fiduciary or
agent of another corporation or of a partnership, joint venture, trust,
enterprise or non-profit entity, including service with respect to employee
benefit
8
<PAGE> 25
plans, against all liability and loss suffered and expenses reasonably incurred
by such person. The Corporation shall indemnify a person in connection with a
proceeding initiated by such person only if the proceeding was authorized by the
Board of Directors of the Corporation.
(B) The Corporation shall pay the expenses incurred
in defending any proceeding in advance of its final disposition, provided,
however, that the payment of expenses incurred by a Director or officer in his
capacity as a Director or officer in advance of the final disposition of the
proceeding shall be made only upon receipt of an undertaking by the Director or
officer to repay all amounts advanced if it should be ultimately determined that
the Director or officer is not entitled to be indemnified under this Article or
otherwise.
(C) If a claim for indemnification or payment of
expenses, under this Article X is not paid in full within ninety days after a
written claim therefor has been received by the Corporation the claimant may
file suit to recover the unpaid amount of such claim and, if successful in whole
or in part, shall be entitled to be paid the expense of prosecuting such claim.
In any such action the Corporation shall have the burden of proving that the
claimant was not entitled to the requested indemnification of payment of
expenses under applicable law.
(D) The rights conferred on any person by this
Article X shall not be exclusive of any other rights which such person may have
or hereafter acquire under any statute, provision of the Charter or Act of
Incorporation, these By-Laws, agreement, vote of stockholders or disinterested
Directors or otherwise.
(E) Any repeal or modification of the foregoing
provisions of this Article X shall not adversely affect any right or protection
hereunder of any person in respect of any act or omission occurring prior to the
time of such repeal or modification.
ARTICLE XI
AMENDMENTS TO THE BY-LAWS
Section 1. These By-Laws may be altered, amended or repealed, in whole
or in part, and any new By-Law or By-Laws adopted at any regular or special
meeting of the Board of Directors by a vote of the majority of all the members
of the Board of Directors then in office.
9
<PAGE> 26
EXHIBIT C
SECTION 321(b) CONSENT
Pursuant to Section 321(b) of the Trust Indenture Act of 1939, as
amended, Wilmington Trust Company hereby consents that reports of examinations
by Federal, State, Territorial or District authorities may be furnished by such
authorities to the Securities and Exchange Commission upon requests therefor.
WILMINGTON TRUST COMPANY
Dated: May 2, 2000 By: /s/ David A. Vanaskey, Jr.
-------------------------------
Name: David A. Vanaskey, Jr.
Title: Vice President
<PAGE> 27
EXHIBIT D
NOTICE
This form is intended to assist state nonmember banks and
savings banks with state publication requirements. It has not
been approved by any state banking authorities. Refer to your
appropriate state banking authorities for your state
publication requirements.
R E P O R T O F C O N D I T I O N
Consolidating domestic subsidiaries of the
WILMINGTON TRUST COMPANY of WILMINGTON
- --------------------------------------------------------- ---------------------
Name of Bank City
in the State of DELAWARE , at the close of business on December 31, 1999.
-------------
<TABLE>
<CAPTION>
ASSETS
Thousands of dollars
<S> <C>
Cash and balances due from depository institutions:
Noninterest-bearing balances and currency and coins.............................................213,700
Interest-bearing balances........................................................................... 0
Held-to-maturity securities................................................................................. 30,232
Available-for-sale securities.............................................................................1,628,889
Federal funds sold and securities purchased under agreements to resell......................................390,650
Loans and lease financing receivables:
Loans and leases, net of unearned income............. 4,374,777
LESS: Allowance for loan and lease losses........... 71,368
LESS: Allocated transfer risk reserve............... 0
Loans and leases, net of unearned income, allowance, and reserve..............................4,303,409
Assets held in trading accounts...................................................................................0
Premises and fixed assets (including capitalized leases)....................................................122,273
</TABLE>
<PAGE> 28
<TABLE>
<S> <C>
Other real estate owned...................................................................................... 576
Investments in unconsolidated subsidiaries and associated companies...........................................1,511
Customers' liability to this bank on acceptances outstanding......................................................0
Intangible assets............................................................................................ 5,100
Other assets................................................................................................133,449
Total assets..............................................................................................6,829,789
</TABLE>
CONTINUED ON NEXT PAGE
2
<PAGE> 29
<TABLE>
<S> <C>
LIABILITIES
Deposits:
In domestic offices.......................................................................................5,186,079
Noninterest-bearing................ 986,667
Interest-bearing................... 4,199,412
Federal funds purchased and Securities sold under agreements to repurchase................................. 269,343
Demand notes issued to the U.S. Treasury.....................................................................95,000
Trading liabilities (from Schedule RC-D)..........................................................................0
Other borrowed money:.......................................................................................///////
With original maturity of one year or less......................................................670,000
With original maturity of more than one year.....................................................43,000
Bank's liability on acceptances executed and outstanding..........................................................0
Subordinated notes and debentures.................................................................................0
Other liabilities (from Schedule RC-G).................................................................... 151,436
Total liabilities.........................................................................................6,414,858
EQUITY CAPITAL
Perpetual preferred stock and related surplus.....................................................................0
Common Stock....................................................................................................500
Surplus (exclude all surplus related to preferred stock).....................................................62,118
Undivided profits and capital reserves......................................................................386,485
Net unrealized holding gains (losses) on available-for-sale securities.....................................(34,172)
Total equity capital........................................................................................414,931
Total liabilities, limited-life preferred stock, and equity capital.......................................6,829,789
</TABLE>
3
<PAGE> 1
EXHIBIT 25.2
Registration No.
================================================================================
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM T-1
STATEMENT OF ELIGIBILITY UNDER THE TRUST INDENTURE ACT OF 1939
OF A CORPORATION DESIGNATED TO ACT AS TRUSTEE
CHECK IF AN APPLICATION TO DETERMINE ELIGIBILITY OF A TRUSTEE PURSUANT TO
SECTION 305(b)(2)
---
WILMINGTON TRUST COMPANY
(Exact name of trustee as specified in its charter)
Delaware 51-0055023
(State of incorporation) (I.R.S. employer identification no.)
Rodney Square North
1100 North Market Street
Wilmington, Delaware 19890
(Address of principal executive offices)
Cynthia L. Corliss
Vice President and Trust Counsel
Wilmington Trust Company
Rodney Square North
Wilmington, Delaware 19890
(302) 651-8516
(Name, address and telephone number of agent for service)
Atlas Air, Inc.
(Exact name of obligor as specified in its charter)
Delaware 84-1207329
(State of incorporation) (I.R.S. employer identification no.)
538 Commons Drive
Golden, Colorado 80401
(Address of principal executive offices) (Zip Code)
($44,741,000 Pass Through Certificates, Series 2000-1B)
================================================================================
<PAGE> 2
ITEM 1. GENERAL INFORMATION.
Furnish the following information as to the trustee:
(a) Name and address of each examining or supervising authority
to which it is subject.
Federal Deposit Insurance Co. State Bank Commissioner
Five Penn Center Dover, Delaware
Suite #2901
Philadelphia, PA
(b) Whether it is authorized to exercise corporate trust powers.
The trustee is authorized to exercise corporate trust
powers.
ITEM 2. AFFILIATIONS WITH THE OBLIGOR.
If the obligor is an affiliate of the trustee, describe each
affiliation:
Based upon an examination of the books and records of the
trustee and upon information furnished by the obligor, the obligor
is not an affiliate of the trustee.
ITEM 3. LIST OF EXHIBITS.
List below all exhibits filed as part of this Statement of
Eligibility and Qualification.
A. Copy of the Charter of Wilmington Trust Company, which
includes the certificate of authority of Wilmington Trust
Company to commence business and the authorization of
Wilmington Trust Company to exercise corporate trust powers.
B. Copy of By-Laws of Wilmington Trust Company.
C. Consent of Wilmington Trust Company required by
Section 321(b) of Trust Indenture Act.
D. Copy of most recent Report of Condition of Wilmington Trust
Company.
Pursuant to the requirements of the Trust Indenture Act of 1939, as
amended, the trustee, Wilmington Trust Company, a corporation organized and
existing under the laws of Delaware, has duly caused this Statement of
Eligibility to be signed on its behalf by the undersigned, thereunto duly
authorized, all in the City of Wilmington and State of Delaware on the 2nd day
of May, 2000.
WILMINGTON TRUST COMPANY
[SEAL]
Attest: /s/ Robert P. Hines, Jr. By: /s/ David A. Vanaskey, Jr.
--------------------------- ------------------------------------
Assistant Secretary Name: David A. Vanaskey, Jr.
Title: Vice President
2
<PAGE> 3
EXHIBIT A
AMENDED CHARTER
WILMINGTON TRUST COMPANY
WILMINGTON, DELAWARE
AS EXISTING ON MAY 9, 1987
<PAGE> 4
AMENDED CHARTER
OR
ACT OF INCORPORATION
OF
WILMINGTON TRUST COMPANY
WILMINGTON TRUST COMPANY, originally incorporated by an Act of the
General Assembly of the State of Delaware, entitled "An Act to Incorporate the
Delaware Guarantee and Trust Company", approved March 2, A.D. 1901, and the name
of which company was changed to "WILMINGTON TRUST COMPANY" by an amendment filed
in the Office of the Secretary of State on March 18, A.D. 1903, and the Charter
or Act of Incorporation of which company has been from time to time amended and
changed by merger agreements pursuant to the corporation law for state banks and
trust companies of the State of Delaware, does hereby alter and amend its
Charter or Act of Incorporation so that the same as so altered and amended shall
in its entirety read as follows:
FIRST: - The name of this corporation is WILMINGTON TRUST COMPANY.
SECOND: - The location of its principal office in the State of
Delaware is at Rodney Square North, in the City of Wilmington,
County of New Castle; the name of its resident agent is WILMINGTON
TRUST COMPANY whose address is Rodney Square North, in said City. In
addition to such principal office, the said corporation maintains
and operates branch offices in the City of Newark, New Castle
County, Delaware, the Town of Newport, New Castle County, Delaware,
at Claymont, New Castle County, Delaware, at Greenville, New Castle
County Delaware, and at Milford Cross Roads, New Castle County,
Delaware, and shall be empowered to open, maintain and operate
branch offices at Ninth and Shipley Streets, 418 Delaware Avenue,
2120 Market Street, and 3605 Market Street, all in the City of
Wilmington, New Castle County, Delaware, and such other branch
offices or places of business as may be authorized from time to time
by the agency or agencies of the government of the State of Delaware
empowered to confer such authority.
THIRD: - (a) The nature of the business and the objects and purposes
proposed to be transacted, promoted or carried on by this
Corporation are to do any or all of the things herein mentioned as
fully and to the same extent as natural persons might or could do
and in any part of the world, viz.:
(1) To sue and be sued, complain and defend in any Court of
law or equity and to make and use a common seal, and alter
the seal at pleasure, to hold, purchase, convey, mortgage or
otherwise deal in real and personal estate and property, and
to appoint such officers and agents as the business of the
Corporation shall require, to make by-laws not inconsistent
with the Constitution or laws of the United States or of
this State, to discount bills, notes or other evidences of
debt, to receive deposits of money, or securities for money,
to buy gold and silver bullion and foreign coins, to buy and
sell bills of exchange, and generally to use,
<PAGE> 5
exercise and enjoy all the powers, rights, privileges and
franchises incident to a corporation which are proper or
necessary for the transaction of the business of the
Corporation hereby created.
(2) To insure titles to real and personal property, or any
estate or interests therein, and to guarantee the holder of
such property, real or personal, against any claim or
claims, adverse to his interest therein, and to prepare and
give certificates of title for any lands or premises in the
State of Delaware, or elsewhere.
(3) To act as factor, agent, broker or attorney in the
receipt, collection, custody, investment and management of
funds, and the purchase, sale, management and disposal of
property of all descriptions, and to prepare and execute all
papers which may be necessary or proper in such business.
(4) To prepare and draw agreements, contracts, deeds,
leases, conveyances, mortgages, bonds and legal papers of
every description, and to carry on the business of
conveyancing in all its branches.
(5) To receive upon deposit for safekeeping money, jewelry,
plate, deeds, bonds and any and all other personal property
of every sort and kind, from executors, administrators,
guardians, public officers, courts, receivers, assignees,
trustees, and from all fiduciaries, and from all other
persons and individuals, and from all corporations whether
state, municipal, corporate or private, and to rent boxes,
safes, vaults and other receptacles for such property.
(6) To act as agent or otherwise for the purpose of
registering, issuing, certificating, countersigning,
transferring or underwriting the stock, bonds or other
obligations of any corporation, association, state or
municipality, and may receive and manage any sinking fund
therefor on such terms as may be agreed upon between the two
parties, and in like manner may act as Treasurer of any
corporation or municipality.
(7) To act as Trustee under any deed of trust, mortgage,
bond or other instrument issued by any state, municipality,
body politic, corporation, association or person, either
alone or in conjunction with any other person or persons,
corporation or corporations.
(8) To guarantee the validity, performance or effect of any
contract or agreement, and the fidelity of persons holding
places of responsibility or trust; to become surety for any
person, or persons, for the faithful performance of any
trust, office, duty, contract or agreement, either by itself
or in conjunction with any other person, or persons,
corporation, or corporations, or in like manner become
surety upon any bond, recognizance, obligation, judgment,
suit, order, or decree to be entered in any court of record
within the State of Delaware or elsewhere, or which may now
or hereafter be required by any law, judge, officer or court
in the State of Delaware or elsewhere.
2
<PAGE> 6
(9) To act by any and every method of appointment as
trustee, trustee in bankruptcy, receiver, assignee, assignee
in bankruptcy, executor, administrator, guardian, bailee, or
in any other trust capacity in the receiving, holding,
managing, and disposing of any and all estates and property,
real, personal or mixed, and to be appointed as such
trustee, trustee in bankruptcy, receiver, assignee, assignee
in bankruptcy, executor, administrator, guardian or bailee
by any persons, corporations, court, officer, or authority,
in the State of Delaware or elsewhere; and whenever this
Corporation is so appointed by any person, corporation,
court, officer or authority such trustee, trustee in
bankruptcy, receiver, assignee, assignee in bankruptcy,
executor, administrator, guardian, bailee, or in any other
trust capacity, it shall not be required to give bond with
surety, but its capital stock shall be taken and held as
security for the performance of the duties devolving upon it
by such appointment.
(10) And for its care, management and trouble, and the
exercise of any of its powers hereby given, or for the
performance of any of the duties which it may undertake or
be called upon to perform, or for the assumption of any
responsibility the said Corporation may be entitled to
receive a proper compensation.
(11) To purchase, receive, hold and own bonds, mortgages,
debentures, shares of capital stock, and other securities,
obligations, contracts and evidences of indebtedness, of any
private, public or municipal corporation within and without
the State of Delaware, or of the Government of the United
States, or of any state, territory, colony, or possession
thereof, or of any foreign government or country; to
receive, collect, receipt for, and dispose of interest,
dividends and income upon and from any of the bonds,
mortgages, debentures, notes, shares of capital stock,
securities, obligations, contracts, evidences of
indebtedness and other property held and owned by it, and to
exercise in respect of all such bonds, mortgages,
debentures, notes, shares of capital stock, securities,
obligations, contracts, evidences of indebtedness and other
property, any and all the rights, powers and privileges of
individual owners thereof, including the right to vote
thereon; to invest and deal in and with any of the moneys of
the Corporation upon such securities and in such manner as
it may think fit and proper, and from time to time to vary
or realize such investments; to issue bonds and secure the
same by pledges or deeds of trust or mortgages of or upon
the whole or any part of the property held or owned by the
Corporation, and to sell and pledge such bonds, as and when
the Board of Directors shall determine, and in the promotion
of its said corporate business of investment and to the
extent authorized by law, to lease, purchase, hold, sell,
assign, transfer, pledge, mortgage and convey real and
personal property of any name and nature and any estate or
interest therein.
(b) In furtherance of, and not in limitation, of the powers
conferred by the laws of the State of Delaware, it is hereby
expressly provided that the said Corporation shall also have the
following powers:
(1) To do any or all of the things herein set forth, to the
same extent as natural
3
<PAGE> 7
persons might or could do, and in any part of the world.
(2) To acquire the good will, rights, property and
franchises and to undertake the whole or any part of the
assets and liabilities of any person, firm, association or
corporation, and to pay for the same in cash, stock of this
Corporation, bonds or otherwise; to hold or in any manner to
dispose of the whole or any part of the property so
purchased; to conduct in any lawful manner the whole or any
part of any business so acquired, and to exercise all the
powers necessary or convenient in and about the conduct and
management of such business.
(3) To take, hold, own, deal in, mortgage or otherwise lien,
and to lease, sell, exchange, transfer, or in any manner
whatever dispose of property, real, personal or mixed,
wherever situated.
(4) To enter into, make, perform and carry out contracts of
every kind with any person, firm, association or
corporation, and, without limit as to amount, to draw, make,
accept, endorse, discount, execute and issue promissory
notes, drafts, bills of exchange, warrants, bonds,
debentures, and other negotiable or transferable
instruments.
(5) To have one or more offices, to carry on all or any of
its operations and businesses, without restriction to the
same extent as natural persons might or could do, to
purchase or otherwise acquire, to hold, own, to mortgage,
sell, convey or otherwise dispose of, real and personal
property, of every class and description, in any State,
District, Territory or Colony of the United States, and in
any foreign country or place.
(6) It is the intention that the objects, purposes and
powers specified and clauses contained in this paragraph
shall (except where otherwise expressed in said paragraph)
be nowise limited or restricted by reference to or inference
from the terms of any other clause of this or any other
paragraph in this charter, but that the objects, purposes
and powers specified in each of the clauses of this
paragraph shall be regarded as independent objects, purposes
and powers.
FOURTH: - (a) The total number of shares of all classes of stock
which the Corporation shall have authority to issue is forty-one
million (41,000,000) shares, consisting of:
(1) One million (1,000,000) shares of Preferred stock, par
value $10.00 per share (hereinafter referred to as
"Preferred Stock"); and
(2) Forty million (40,000,000) shares of Common Stock, par
value $1.00 per share (hereinafter referred to as "Common
Stock").
(b) Shares of Preferred Stock may be issued from time to time in one
or more series as may from time to time be determined by the Board
of Directors each of said series to be distinctly designated. All
shares of any one series of Preferred Stock shall be alike in every
particular, except that there may be different dates from which
dividends, if
4
<PAGE> 8
any, thereon shall be cumulative, if made cumulative. The voting
powers and the preferences and relative, participating, optional and
other special rights of each such series, and the qualifications,
limitations or restrictions thereof, if any, may differ from those
of any and all other series at any time outstanding; and, subject to
the provisions of subparagraph 1 of Paragraph (c) of this Article
FOURTH, the Board of Directors of the Corporation is hereby
expressly granted authority to fix by resolution or resolutions
adopted prior to the issuance of any shares of a particular series
of Preferred Stock, the voting powers and the designations,
preferences and relative, optional and other special rights, and the
qualifications, limitations and restrictions of such series,
including, but without limiting the generality of the foregoing, the
following:
(1) The distinctive designation of, and the number of shares
of Preferred Stock which shall constitute such series, which
number may be increased (except where otherwise provided by
the Board of Directors) or decreased (but not below the
number of shares thereof then outstanding) from time to time
by like action of the Board of Directors;
(2) The rate and times at which, and the terms and
conditions on which, dividends, if any, on Preferred Stock
of such series shall be paid, the extent of the preference
or relation, if any, of such dividends to the dividends
payable on any other class or classes, or series of the same
or other class of stock and whether such dividends shall be
cumulative or non-cumulative;
(3) The right, if any, of the holders of Preferred Stock of
such series to convert the same into or exchange the same
for, shares of any other class or classes or of any series
of the same or any other class or classes of stock of the
Corporation and the terms and conditions of such conversion
or exchange;
(4) Whether or not Preferred Stock of such series shall be
subject to redemption, and the redemption price or prices
and the time or times at which, and the terms and conditions
on which, Preferred Stock of such series may be redeemed.
(5) The rights, if any, of the holders of Preferred Stock of
such series upon the voluntary or involuntary liquidation,
merger, consolidation, distribution or sale of assets,
dissolution or winding-up, of the Corporation.
(6) The terms of the sinking fund or redemption or purchase
account, if any, to be provided for the Preferred Stock of
such series; and
(7) The voting powers, if any, of the holders of such series
of Preferred Stock which may, without limiting the
generality of the foregoing include the right, voting as a
series or by itself or together with other series of
Preferred Stock or all series of Preferred Stock as a class,
to elect one or more directors of the Corporation if there
shall have been a default in the payment of dividends on any
one or more series of Preferred Stock or under such
circumstances and on such conditions as the Board of
Directors may determine.
5
<PAGE> 9
(c) (1) After the requirements with respect to preferential
dividends on the Preferred Stock (fixed in accordance with the
provisions of section (b) of this Article FOURTH), if any, shall
have been met and after the Corporation shall have complied with all
the requirements, if any, with respect to the setting aside of sums
as sinking funds or redemption or purchase accounts (fixed in
accordance with the provisions of section (b) of this Article
FOURTH), and subject further to any conditions which may be fixed in
accordance with the provisions of section (b) of this Article
FOURTH, then and not otherwise the holders of Common Stock shall be
entitled to receive such dividends as may be declared from time to
time by the Board of Directors.
(2) After distribution in full of the preferential amount,
if any, (fixed in accordance with the provisions of section
(b) of this Article FOURTH), to be distributed to the
holders of Preferred Stock in the event of voluntary or
involuntary liquidation, distribution or sale of assets,
dissolution or winding-up, of the Corporation, the holders
of the Common Stock shall be entitled to receive all of the
remaining assets of the Corporation, tangible and
intangible, of whatever kind available for distribution to
stockholders ratably in proportion to the number of shares
of Common Stock held by them respectively.
(3) Except as may otherwise be required by law or by the
provisions of such resolution or resolutions as may be
adopted by the Board of Directors pursuant to section (b) of
this Article FOURTH, each holder of Common Stock shall have
one vote in respect of each share of Common Stock held on
all matters voted upon by the stockholders.
(d) No holder of any of the shares of any class or series of stock
or of options, warrants or other rights to purchase shares of any
class or series of stock or of other securities of the Corporation
shall have any preemptive right to purchase or subscribe for any
unissued stock of any class or series or any additional shares of
any class or series to be issued by reason of any increase of the
authorized capital stock of the Corporation of any class or series,
or bonds, certificates of indebtedness, debentures or other
securities convertible into or exchangeable for stock of the
Corporation of any class or series, or carrying any right to
purchase stock of any class or series, but any such unissued stock,
additional authorized issue of shares of any class or series of
stock or securities convertible into or exchangeable for stock, or
carrying any right to purchase stock, may be issued and disposed of
pursuant to resolution of the Board of Directors to such persons,
firms, corporations or associations, whether such holders or others,
and upon such terms as may be deemed advisable by the Board of
Directors in the exercise of its sole discretion.
(e) The relative powers, preferences and rights of each series of
Preferred Stock in relation to the relative powers, preferences and
rights of each other series of Preferred Stock shall, in each case,
be as fixed from time to time by the Board of Directors in the
resolution or resolutions adopted pursuant to authority granted in
section (b) of this Article FOURTH and the consent, by class or
series vote or otherwise, of the holders of such of the series of
Preferred Stock as are from time to time outstanding shall not be
required for the issuance by the Board of Directors of any other
series of Preferred
6
<PAGE> 10
Stock whether or not the powers, preferences and rights of such
other series shall be fixed by the Board of Directors as senior to,
or on a parity with, the powers, preferences and rights of such
outstanding series, or any of them; provided, however, that the
Board of Directors may provide in the resolution or resolutions as
to any series of Preferred Stock adopted pursuant to section (b) of
this Article FOURTH that the consent of the holders of a majority
(or such greater proportion as shall be therein fixed) of the
outstanding shares of such series voting thereon shall be required
for the issuance of any or all other series of Preferred Stock.
(f) Subject to the provisions of section (e), shares of any series
of Preferred Stock may be issued from time to time as the Board of
Directors of the Corporation shall determine and on such terms and
for such consideration as shall be fixed by the Board of Directors.
(g) Shares of Common Stock may be issued from time to time as the
Board of Directors of the Corporation shall determine and on such
terms and for such consideration as shall be fixed by the Board of
Directors.
(h) The authorized amount of shares of Common Stock and of Preferred
Stock may, without a class or series vote, be increased or decreased
from time to time by the affirmative vote of the holders of a
majority of the stock of the Corporation entitled to vote thereon.
FIFTH: - (a) The business and affairs of the Corporation shall be
conducted and managed by a Board of Directors. The number of
directors constituting the entire Board shall be not less than five
nor more than twenty-five as fixed from time to time by vote of a
majority of the whole Board, provided, however, that the number of
directors shall not be reduced so as to shorten the term of any
director at the time in office, and provided further, that the
number of directors constituting the whole Board shall be
twenty-four until otherwise fixed by a majority of the whole Board.
(b) The Board of Directors shall be divided into three classes, as
nearly equal in number as the then total number of directors
constituting the whole Board permits, with the term of office of one
class expiring each year. At the annual meeting of stockholders in
1982, directors of the first class shall be elected to hold office
for a term expiring at the next succeeding annual meeting, directors
of the second class shall be elected to hold office for a term
expiring at the second succeeding annual meeting and directors of
the third class shall be elected to hold office for a term expiring
at the third succeeding annual meeting. Any vacancies in the Board
of Directors for any reason, and any newly created directorships
resulting from any increase in the directors, may be filled by the
Board of Directors, acting by a majority of the directors then in
office, although less than a quorum, and any directors so chosen
shall hold office until the next annual election of directors. At
such election, the stockholders shall elect a successor to such
director to hold office until the next election of the class for
which such director shall have been chosen and until his successor
shall be elected and qualified. No decrease in the number of
directors shall shorten the term of any incumbent director.
7
<PAGE> 11
(c) Notwithstanding any other provisions of this Charter or Act of
Incorporation or the By-Laws of the Corporation (and notwithstanding
the fact that some lesser percentage may be specified by law, this
Charter or Act of Incorporation or the By-Laws of the Corporation),
any director or the entire Board of Directors of the Corporation may
be removed at any time without cause, but only by the affirmative
vote of the holders of two-thirds or more of the outstanding shares
of capital stock of the Corporation entitled to vote generally in
the election of directors (considered for this purpose as one class)
cast at a meeting of the stockholders called for that purpose.
(d) Nominations for the election of directors may be made by the
Board of Directors or by any stockholder entitled to vote for the
election of directors. Such nominations shall be made by notice in
writing, delivered or mailed by first class United States mail,
postage prepaid, to the Secretary of the Corporation not less than
14 days nor more than 50 days prior to any meeting of the
stockholders called for the election of directors; provided,
however, that if less than 21 days' notice of the meeting is given
to stockholders, such written notice shall be delivered or mailed,
as prescribed, to the Secretary of the Corporation not later than
the close of the seventh day following the day on which notice of
the meeting was mailed to stockholders. Notice of nominations which
are proposed by the Board of Directors shall be given by the
Chairman on behalf of the Board.
(e) Each notice under subsection (d) shall set forth (i) the name,
age, business address and, if known, residence address of each
nominee proposed in such notice, (ii) the principal occupation or
employment of such nominee and (iii) the number of shares of stock
of the Corporation which are beneficially owned by each such
nominee.
(f) The Chairman of the meeting may, if the facts warrant, determine
and declare to the meeting that a nomination was not made in
accordance with the foregoing procedure, and if he should so
determine, he shall so declare to the meeting and the defective
nomination shall be disregarded.
(g) No action required to be taken or which may be taken at any
annual or special meeting of stockholders of the Corporation may be
taken without a meeting, and the power of stockholders to consent in
writing, without a meeting, to the taking of any action is
specifically denied.
SIXTH: - The Directors shall choose such officers, agents and
servants as may be provided in the By-Laws as they may from time to
time find necessary or proper.
SEVENTH: - The Corporation hereby created is hereby given the same
powers, rights and privileges as may be conferred upon corporations
organized under the Act entitled "An Act Providing a General
Corporation Law", approved March 10, 1899, as from time to time
amended.
EIGHTH: - This Act shall be deemed and taken to be a private Act.
NINTH: - This Corporation is to have perpetual existence.
8
<PAGE> 12
TENTH: - The Board of Directors, by resolution passed by a majority
of the whole Board, may designate any of their number to constitute
an Executive Committee, which Committee, to the extent provided in
said resolution, or in the By-Laws of the Company, shall have and
may exercise all of the powers of the Board of Directors in the
management of the business and affairs of the Corporation, and shall
have power to authorize the seal of the Corporation to be affixed to
all papers which may require it.
ELEVENTH: - The private property of the stockholders shall not be
liable for the payment of corporate debts to any extent whatever.
TWELFTH: - The Corporation may transact business in any part of the
world.
THIRTEENTH: - The Board of Directors of the Corporation is expressly
authorized to make, alter or repeal the By-Laws of the Corporation
by a vote of the majority of the entire Board. The stockholders may
make, alter or repeal any By-Law whether or not adopted by them,
provided however, that any such additional By-Laws, alterations or
repeal may be adopted only by the affirmative vote of the holders of
two-thirds or more of the outstanding shares of capital stock of the
Corporation entitled to vote generally in the election of directors
(considered for this purpose as one class).
FOURTEENTH: - Meetings of the Directors may be held outside
of the State of Delaware at such places as may be from time to time
designated by the Board, and the Directors may keep the books of the
Company outside of the State of Delaware at such places as may be
from time to time designated by them.
FIFTEENTH: - (a) (1) In addition to any affirmative vote required by
law, and except as otherwise expressly provided in sections (b) and
(c) of this Article FIFTEENTH:
(A) any merger or consolidation of the Corporation or any
Subsidiary (as hereinafter defined) with or into (i) any
Interested Stockholder (as hereinafter defined) or (ii) any
other corporation (whether or not itself an Interested
Stockholder), which, after such merger or consolidation,
would be an Affiliate (as hereinafter defined) of an
Interested Stockholder, or
(B) any sale, lease, exchange, mortgage, pledge, transfer or
other disposition (in one transaction or a series of related
transactions) to or with any Interested Stockholder or any
Affiliate of any Interested Stockholder of any assets of the
Corporation or any Subsidiary having an aggregate fair
market value of $1,000,000 or more, or
(C) the issuance or transfer by the Corporation or any
Subsidiary (in one transaction or a series of related
transactions) of any securities of the Corporation or any
Subsidiary to any Interested Stockholder or any Affiliate of
any Interested Stockholder in exchange for cash, securities
or other property (or a combination thereof) having an
aggregate fair market value of $1,000,000 or more, or
(D) the adoption of any plan or proposal for the liquidation
or dissolution of the Corporation, or
9
<PAGE> 13
(E) any reclassification of securities (including any
reverse stock split), or recapitalization of the
Corporation, or any merger or consolidation of the
Corporation with any of its Subsidiaries or any similar
transaction (whether or not with or into or otherwise
involving an Interested Stockholder) which has the effect,
directly or indirectly, of increasing the proportionate
share of the outstanding shares of any class of equity or
convertible securities of the Corporation or any Subsidiary
which is directly or indirectly owned by any Interested
Stockholder, or any Affiliate of any Interested Stockholder,
shall require the affirmative vote of the holders of at least two-thirds of the
outstanding shares of capital stock of the Corporation entitled to vote
generally in the election of directors, considered for the purpose of this
Article FIFTEENTH as one class ("Voting Shares"). Such affirmative vote shall be
required notwithstanding the fact that no vote may be required, or that some
lesser percentage may be specified, by law or in any agreement with any national
securities exchange or otherwise.
(2) The term "business combination" as used in this
Article FIFTEENTH shall mean any transaction which is
referred to in any one or more of clauses (A) through (E)
of paragraph 1 of the section (a).
(b) The provisions of section (a) of this Article FIFTEENTH
shall not be applicable to any particular business
combination and such business combination shall require only
such affirmative vote as is required by law and any other
provisions of the Charter or Act of Incorporation or By-Laws
if such business combination has been approved by a majority
of the whole Board.
(c) For the purposes of this Article FIFTEENTH:
(1) A "person" shall mean any individual, firm, corporation or other
entity.
(2) "Interested Stockholder" shall mean, in respect of any business
combination, any person (other than the Corporation or any
Subsidiary) who or which as of the record date for the determination
of stockholders entitled to notice of and to vote on such business
combination, or immediately prior to the consummation of any such
transaction:
(A) is the beneficial owner, directly or indirectly, of more
than 10% of the Voting Shares, or
(B) is an Affiliate of the Corporation and at any time
within two years prior thereto was the beneficial owner,
directly or indirectly, of not less than 10% of the then
outstanding voting Shares, or
(C) is an assignee of or has otherwise succeeded in any
share of capital stock of the Corporation which were at any
time within two years prior thereto
10
<PAGE> 14
beneficially owned by any Interested Stockholder, and such
assignment or succession shall have occurred in the course
of a transaction or series of transactions not involving a
public offering within the meaning of the Securities Act of
1933.
(3) A person shall be the "beneficial owner" of any Voting Shares:
(A) which such person or any of its Affiliates and
Associates (as hereafter defined) beneficially own, directly
or indirectly, or
(B) which such person or any of its Affiliates or Associates
has (i) the right to acquire (whether such right is
exercisable immediately or only after the passage of time),
pursuant to any agreement, arrangement or understanding or
upon the exercise of conversion rights, exchange rights,
warrants or options, or otherwise, or (ii) the right to vote
pursuant to any agreement, arrangement or understanding, or
(C) which are beneficially owned, directly or indirectly, by
any other person with which such first mentioned person or
any of its Affiliates or Associates has any agreement,
arrangement or understanding for the purpose of acquiring,
holding, voting or disposing of any shares of capital stock
of the Corporation.
(4) The outstanding Voting Shares shall include shares deemed owned
through application of paragraph (3) above but shall not include any
other Voting Shares which may be issuable pursuant to any agreement,
or upon exercise of conversion rights, warrants or options or
otherwise.
(5) "Affiliate" and "Associate" shall have the respective meanings
given those terms in Rule 12b-2 of the General Rules and Regulations
under the Securities Exchange Act of 1934, as in effect on December
31, 1981.
(6) "Subsidiary" shall mean any corporation of which a majority of
any class of equity security (as defined in Rule 3a11-1 of the
General Rules and Regulations under the Securities Exchange Act of
1934, as in effect on December 31, 1981) is owned, directly or
indirectly, by the Corporation; provided, however, that for the
purposes of the definition of Investment Stockholder set forth in
paragraph (2) of this section (c), the term "Subsidiary" shall mean
only a corporation of which a majority of each class of equity
security is owned, directly or indirectly, by the Corporation.
(d) majority of the directors shall have the power and duty
to determine for the purposes of this Article FIFTEENTH on
the basis of information known to them, (1) the number of
Voting Shares beneficially owned by any person (2) whether a
person is an Affiliate or Associate of another, (3) whether
a person has an agreement, arrangement or understanding with
another as to the matters referred to in paragraph (3) of
section (c), or (4) whether the assets subject to any
business combination or the consideration received for the
issuance or transfer of securities by the Corporation, or
any Subsidiary has an aggregate fair market
11
<PAGE> 15
value of $1,000,000 or more.
(e) Nothing contained in this Article FIFTEENTH shall be
construed to relieve any Interested Stockholder from any
fiduciary obligation imposed by law.
SIXTEENTH: Notwithstanding any other provision of this Charter or
Act of Incorporation or the By-Laws of the Corporation (and in
addition to any other vote that may be required by law, this Charter
or Act of Incorporation by the By-Laws), the affirmative vote of the
holders of at least two-thirds of the outstanding shares of the
capital stock of the Corporation entitled to vote generally in the
election of directors (considered for this purpose as one class)
shall be required to amend, alter or repeal any provision of
Articles FIFTH, THIRTEENTH, FIFTEENTH or SIXTEENTH of this Charter
or Act of Incorporation.
SEVENTEENTH: (a) a Director of this Corporation shall not be liable
to the Corporation or its stockholders for monetary damages for
breach of fiduciary duty as a Director, except to the extent such
exemption from liability or limitation thereof is not permitted
under the Delaware General Corporation Laws as the same exists or
may hereafter be amended.
(b) Any repeal or modification of the foregoing paragraph
shall not adversely affect any right or protection of a
Director of the Corporation existing hereunder with respect
to any act or omission occurring prior to the time of such
repeal or modification."
12
<PAGE> 16
EXHIBIT B
BY-LAWS
WILMINGTON TRUST COMPANY
WILMINGTON, DELAWARE
AS EXISTING ON JANUARY 20, 2000
<PAGE> 17
BY-LAWS OF WILMINGTON TRUST COMPANY
ARTICLE I
STOCKHOLDERS' MEETINGS
Section 1. The Annual Meeting of Stockholders shall be held on the
third Thursday in April each year at the principal office at the Company or at
such other date, time, or place as may be designated by resolution by the Board
of Directors.
Section 2. Special meetings of all stockholders may be called at any
time by the Board of Directors, the Chairman of the Board or the President.
Section 3. Notice of all meetings of the stockholders shall be given by
mailing to each stockholder at least ten (10) days before said meeting, at his
last known address, a written or printed notice fixing the time and place of
such meeting.
Section 4. A majority in the amount of the capital stock of the Company
issued and outstanding on the record date, as herein determined, shall
constitute a quorum at all meetings of stockholders for the transaction of any
business, but the holders of a small number of shares may adjourn, from time to
time, without further notice, until a quorum is secured. At each annual or
special meeting of stockholders, each stockholder shall be entitled to one vote,
either in person or by proxy, for each share of stock registered in the
stockholder's name on the books of the Company on the record date for any such
meeting as determined herein.
ARTICLE II
DIRECTORS
Section 1. The number and classification of the Board of Directors
shall be as set forth in the Charter of the Bank. No more than two Directors may
also be employees of the Company or any affiliate thereof.
Section 2. No person who has attained the age of seventy-two (72) years
shall be nominated for election to the Board of Directors of the Company,
provided, however, that this limitation shall not apply to any person who was
serving as director of the Company on September 16, 1971. The Chairman of the
Board of Directors shall not be qualified to continue to serve as a Director
upon the termination for any reason of his or her services in that office.
Section 3. The class of Directors so elected shall hold office for
three years or until their successors are elected and qualified.
Section 4. The affairs and business of the Company shall be managed and
conducted by the Board of Directors.
Section 5. The Board of Directors shall meet at the principal office of
the Company or elsewhere in its discretion at such times to be determined by a
majority of its members, or at the call of the Chairman of the Board of
Directors or the President.
<PAGE> 18
Section 6. Special meetings of the Board of Directors may be called at
any time by the Chairman of the Board of Directors or by the President, and
shall be called upon the written request of a majority of the directors.
Section 7. A majority of the directors elected and qualified shall be
necessary to constitute a quorum for the transaction of business at any meeting
of the Board of Directors.
Section 8. Written notice shall be sent by mail to each director of any
special meeting of the Board of Directors, and of any change in the time or
place of any regular meeting, stating the time and place of such meeting, which
shall be mailed not less than two days before the time of holding such meeting.
Section 9. In the event of the death, resignation, removal, inability
to act, or disqualification of any director, the Board of Directors, although
less than a quorum, shall have the right to elect the successor who shall hold
office for the remainder of the full term of the class of directors in which the
vacancy occurred, and until such director's successor shall have been duly
elected and qualified.
Section 10. The Board of Directors at its first meeting after its
election by the stockholders shall appoint an Executive Committee, a Trust
Committee, an Audit Committee and a Compensation Committee, and shall elect from
its own members a Chairman of the Board of Directors and a President who may be
the same person. The Board of Directors shall also elect at such meeting a
Secretary and a Treasurer, who may be the same person, may appoint at any time
such other committees and elect or appoint such other officers as it may deem
advisable. The Board of Directors may also elect at such meeting one or more
Associate Directors.
Section 11. The Board of Directors may at any time remove, with or
without cause, any member of any Committee appointed by it or any associate
director or officer elected by it and may appoint or elect his successor.
Section 12. The Board of Directors may designate an officer to be in
charge of such of the departments or divisions of the Company as it may deem
advisable.
2
<PAGE> 19
ARTICLE III
COMMITTEES
Section 1. Executive Committee
(A) The Executive Committee shall be composed of
not more than nine members who shall be selected by the Board of Directors from
its own members and who shall hold office during the pleasure of the Board.
(B) The Executive Committee shall have all the
powers of the Board of Directors when it is not in session to transact all
business for and in behalf of the Company that may be brought before it.
(C) The Executive Committee shall meet at the
principal office of the Company or elsewhere in its discretion at such times to
be determined by a majority of its members, or at the call of the Chairman of
the Executive Committee or at the call of the Chairman of the Board of
Directors. The majority of its members shall be necessary to constitute a quorum
for the transaction of business. Special meetings of the Executive Committee may
be held at any time when a quorum is present.
(D) Minutes of each meeting of the Executive
Committee shall be kept and submitted to the Board of Directors at its next
meeting.
(E) The Executive Committee shall advise and
superintend all investments that may be made of the funds of the Company, and
shall direct the disposal of the same, in accordance with such rules and
regulations as the Board of Directors from time to time make.
(F) In the event of a state of disaster of
sufficient severity to prevent the conduct and management of the affairs and
business of the Company by its directors and officers as contemplated by these
By-Laws any two available members of the Executive Committee as constituted
immediately prior to such disaster shall constitute a quorum of that Committee
for the full conduct and management of the affairs and business of the Company
in accordance with the provisions of Article III of these By-Laws; and if less
than three members of the Trust Committee is constituted immediately prior to
such disaster shall be available for the transaction of its business, such
Executive Committee shall also be empowered to exercise all of the powers
reserved to the Trust Committee under Article III Section 2 hereof. In the event
of the unavailability, at such time, of a minimum of two members of such
Executive Committee, any three available directors shall constitute the
Executive Committee for the full conduct and management of the affairs and
business of the Company in accordance with the foregoing provisions of this
Section. This By-Law shall be subject to implementation by Resolutions of the
Board of Directors presently existing or hereafter passed from time to time for
that purpose, and any provisions of these By-Laws (other than this Section) and
any resolutions which are contrary to the provisions of this Section or to the
provisions of any such implementary Resolutions shall be suspended during such a
disaster period until it shall be determined by any interim Executive
3
<PAGE> 20
Committee acting under this section that it shall be to the advantage of the
Company to resume the conduct and management of its affairs and business under
all of the other provisions of these By-Laws.
Section 2. Audit Committee
(A) The Audit Committee shall be composed of five
members who shall be selected by the Board of Directors from its own members,
none of whom shall be an officer of the Company, and shall hold office at the
pleasure of the Board.
(B) The Audit Committee shall have general
supervision over the Audit Division in all matters however subject to the
approval of the Board of Directors; it shall consider all matters brought to its
attention by the officer in charge of the Audit Division, review all reports of
examination of the Company made by any governmental agency or such independent
auditor employed for that purpose, and make such recommendations to the Board of
Directors with respect thereto or with respect to any other matters pertaining
to auditing the Company as it shall deem desirable.
(C) The Audit Committee shall meet whenever and
wherever the majority of its members shall deem it to be proper for the
transaction of its business, and a majority of its Committee shall constitute a
quorum.
Section 3. Compensation Committee
(A) The Compensation Committee shall be composed of
not more than five (5) members who shall be selected by the Board of Directors
from its own members who are not officers of the Company and who shall hold
office during the pleasure of the Board.
(B) The Compensation Committee shall in general
advise upon all matters of policy concerning the Company brought to its
attention by the management and from time to time review the management of the
Company, major organizational matters, including salaries and employee benefits
and specifically shall administer the Executive Incentive Compensation Plan.
(C) Meetings of the Compensation Committee may be
called at any time by the Chairman of the Compensation Committee, the Chairman
of the Board of Directors, or the President of the Company.
4
<PAGE> 21
Section 4. Associate Directors
(A) Any person who has served as a director may be
elected by the Board of Directors as an associate director, to serve during the
pleasure of the Board.
(B) An associate director shall be entitled to
attend all directors meetings and participate in the discussion of all matters
brought to the Board, with the exception that he would have no right to vote. An
associate director will be eligible for appointment to Committees of the
Company, with the exception of the Executive Committee, Audit Committee and
Compensation Committee, which must be comprised solely of active directors.
Section 5. Absence or Disqualification of Any Member of a Committee
(A) In the absence or disqualification of any
member of any Committee created under Article III of the By-Laws of this
Company, the member or members thereof present at any meeting and not
disqualified from voting, whether or not he or they constitute a quorum, may
unanimously appoint another member of the Board of Directors to act at the
meeting in the place of any such absent or disqualified member.
ARTICLE IV
OFFICERS
Section 1. The Chairman of the Board of Directors shall preside at all
meetings of the Board and shall have such further authority and powers and shall
perform such duties as the Board of Directors may from time to time confer and
direct. He shall also exercise such powers and perform such duties as may from
time to time be agreed upon between himself and the President of the Company.
Section 2. The Vice Chairman of the Board. The Vice Chairman of the
Board of Directors shall preside at all meetings of the Board of Directors at
which the Chairman of the Board shall not be present and shall have such further
authority and powers and shall perform such duties as the Board of Directors or
the Chairman of the Board may from time to time confer and direct.
Section 3. The President shall have the powers and duties pertaining to
the office of the President conferred or imposed upon him by statute or assigned
to him by the Board of Directors. In the absence of the Chairman of the Board
the President shall have the powers and duties of the Chairman of the Board.
Section 4. The Chairman of the Board of Directors or the President as
designated by the Board of Directors, shall carry into effect all legal
directions of the Executive Committee and of the Board of Directors, and shall
at all times exercise general supervision over the interest, affairs and
operations of the Company and perform all duties incident to his office.
5
<PAGE> 22
Section 5. There may be one or more Vice Presidents, however
denominated by the Board of Directors, who may at any time perform all the
duties of the Chairman of the Board of Directors and/or the President and such
other powers and duties as may from time to time be assigned to them by the
Board of Directors, the Executive Committee, the Chairman of the Board or the
President and by the officer in charge of the department or division to which
they are assigned.
Section 6. The Secretary shall attend to the giving of notice of
meetings of the stockholders and the Board of Directors, as well as the
Committees thereof, to the keeping of accurate minutes of all such meetings and
to recording the same in the minute books of the Company. In addition to the
other notice requirements of these By-Laws and as may be practicable under the
circumstances, all such notices shall be in writing and mailed well in advance
of the scheduled date of any other meeting. He shall have custody of the
corporate seal and shall affix the same to any documents requiring such
corporate seal and to attest the same.
Section 7. The Treasurer shall have general supervision over all assets
and liabilities of the Company. He shall be custodian of and responsible for all
monies, funds and valuables of the Company and for the keeping of proper records
of the evidence of property or indebtedness and of all the transactions of the
Company. He shall have general supervision of the expenditures of the Company
and shall report to the Board of Directors at each regular meeting of the
condition of the Company, and perform such other duties as may be assigned to
him from time to time by the Board of Directors of the Executive Committee.
Section 8. There may be a Controller who shall exercise general
supervision over the internal operations of the Company, including accounting,
and shall render to the Board of Directors at appropriate times a report
relating to the general condition and internal operations of the Company.
There may be one or more subordinate accounting or controller officers
however denominated, who may perform the duties of the Controller and such
duties as may be prescribed by the Controller.
Section 9. The officer designated by the Board of Directors to be in
charge of the Audit Division of the Company with such title as the Board of
Directors shall prescribe, shall report to and be directly responsible only to
the Board of Directors.
There shall be an Auditor and there may be one or more Audit Officers,
however denominated, who may perform all the duties of the Auditor and such
duties as may be prescribed by the officer in charge of the Audit Division.
Section 10. There may be one or more officers, subordinate in rank to
all Vice Presidents with such functional titles as shall be determined from time
to time by the Board of Directors, who shall ex officio hold the office
Assistant Secretary of this Company and who may perform such duties as may be
prescribed by the officer in charge of the department or division to whom they
are assigned.
6
<PAGE> 23
Section 11. The powers and duties of all other officers of the Company
shall be those usually pertaining to their respective offices, subject to the
direction of the Board of Directors, the Executive Committee, Chairman of the
Board of Directors or the President and the officer in charge of the department
or division to which they are assigned.
ARTICLE V
STOCK AND STOCK CERTIFICATES
Section 1. Shares of stock shall be transferrable on the books of the
Company and a transfer book shall be kept in which all transfers of stock shall
be recorded.
Section 2. Certificates of stock shall bear the signature of the
President or any Vice President, however denominated by the Board of Directors
and countersigned by the Secretary or Treasurer or an Assistant Secretary, and
the seal of the corporation shall be engraved thereon. Each certificate shall
recite that the stock represented thereby is transferrable only upon the books
of the Company by the holder thereof or his attorney, upon surrender of the
certificate properly endorsed. Any certificate of stock surrendered to the
Company shall be cancelled at the time of transfer, and before a new certificate
or certificates shall be issued in lieu thereof. Duplicate certificates of stock
shall be issued only upon giving such security as may be satisfactory to the
Board of Directors or the Executive Committee.
Section 3. The Board of Directors of the Company is authorized to fix
in advance a record date for the determination of the stockholders entitled to
notice of, and to vote at, any meeting of stockholders and any adjournment
thereof, or entitled to receive payment of any dividend, or to any allotment or
rights, or to exercise any rights in respect of any change, conversion or
exchange of capital stock, or in connection with obtaining the consent of
stockholders for any purpose, which record date shall not be more than 60 nor
less than 10 days proceeding the date of any meeting of stockholders or the date
for the payment of any dividend, or the date for the allotment of rights, or the
date when any change or conversion or exchange of capital stock shall go into
effect, or a date in connection with obtaining such consent.
ARTICLE VI
SEAL
Section 1. The corporate seal of the Company shall be in the following
form:
Between two concentric circles the words
"Wilmington Trust Company" within the inner circle
the words "Wilmington, Delaware."
7
<PAGE> 24
ARTICLE VII
FISCAL YEAR
Section 1. The fiscal year of the Company shall be the calendar year.
ARTICLE VIII
EXECUTION OF INSTRUMENTS OF THE COMPANY
Section 1. The Chairman of the Board, the President or any Vice
President, however denominated by the Board of Directors, shall have full power
and authority to enter into, make, sign, execute, acknowledge and/or deliver and
the Secretary or any Assistant Secretary shall have full power and authority to
attest and affix the corporate seal of the Company to any and all deeds,
conveyances, assignments, releases, contracts, agreements, bonds, notes,
mortgages and all other instruments incident to the business of this Company or
in acting as executor, administrator, guardian, trustee, agent or in any other
fiduciary or representative capacity by any and every method of appointment or
by whatever person, corporation, court officer or authority in the State of
Delaware, or elsewhere, without any specific authority, ratification, approval
or confirmation by the Board of Directors or the Executive Committee, and any
and all such instruments shall have the same force and validity as though
expressly authorized by the Board of Directors and/or the Executive Committee.
ARTICLE IX
COMPENSATION OF DIRECTORS AND MEMBERS OF COMMITTEES
Section 1. Directors and associate directors of the Company, other than
salaried officers of the Company, shall be paid such reasonable honoraria or
fees for attending meetings of the Board of Directors as the Board of Directors
may from time to time determine. Directors and associate directors who serve as
members of committees, other than salaried employees of the Company, shall be
paid such reasonable honoraria or fees for services as members of committees as
the Board of Directors shall from time to time determine and directors and
associate directors may be employed by the Company for such special services as
the Board of Directors may from time to time determine and shall be paid for
such special services so performed reasonable compensation as may be determined
by the Board of Directors.
ARTICLE X
INDEMNIFICATION
Section 1. (A) The Corporation shall indemnify and hold harmless, to
the fullest extent permitted by applicable law as it presently exists or may
hereafter be amended, any person who was or is made or is threatened to be made
a party or is otherwise involved in any action, suit or proceeding, whether
civil, criminal, administrative or investigative (a "proceeding") by reason of
the fact that he, or a person for whom he is the legal representative, is or was
a director, officer, employee or agent of the Corporation or is or was serving
at the request of the Corporation as a director, officer, employee, fiduciary or
agent of another corporation or of a partnership, joint venture, trust,
enterprise or non-profit entity, including service with respect to employee
benefit
8
<PAGE> 25
plans, against all liability and loss suffered and expenses reasonably incurred
by such person. The Corporation shall indemnify a person in connection with a
proceeding initiated by such person only if the proceeding was authorized by the
Board of Directors of the Corporation.
(B) The Corporation shall pay the expenses incurred
in defending any proceeding in advance of its final disposition, provided,
however, that the payment of expenses incurred by a Director or officer in his
capacity as a Director or officer in advance of the final disposition of the
proceeding shall be made only upon receipt of an undertaking by the Director or
officer to repay all amounts advanced if it should be ultimately determined that
the Director or officer is not entitled to be indemnified under this Article or
otherwise.
(C) If a claim for indemnification or payment of
expenses, under this Article X is not paid in full within ninety days after a
written claim therefor has been received by the Corporation the claimant may
file suit to recover the unpaid amount of such claim and, if successful in whole
or in part, shall be entitled to be paid the expense of prosecuting such claim.
In any such action the Corporation shall have the burden of proving that the
claimant was not entitled to the requested indemnification of payment of
expenses under applicable law.
(D) The rights conferred on any person by this
Article X shall not be exclusive of any other rights which such person may have
or hereafter acquire under any statute, provision of the Charter or Act of
Incorporation, these By-Laws, agreement, vote of stockholders or disinterested
Directors or otherwise.
(E) Any repeal or modification of the foregoing
provisions of this Article X shall not adversely affect any right or protection
hereunder of any person in respect of any act or omission occurring prior to the
time of such repeal or modification.
ARTICLE XI
AMENDMENTS TO THE BY-LAWS
Section 1. These By-Laws may be altered, amended or repealed, in whole
or in part, and any new By-Law or By-Laws adopted at any regular or special
meeting of the Board of Directors by a vote of the majority of all the members
of the Board of Directors then in office.
9
<PAGE> 26
EXHIBIT C
SECTION 321(b) CONSENT
Pursuant to Section 321(b) of the Trust Indenture Act of 1939, as
amended, Wilmington Trust Company hereby consents that reports of examinations
by Federal, State, Territorial or District authorities may be furnished by such
authorities to the Securities and Exchange Commission upon requests therefor.
WILMINGTON TRUST COMPANY
Dated: May 2, 2000 By: /s/ David A. Vanaskey, Jr.
-------------------------------
Name: David A. Vanaskey, Jr.
Title: Vice President
<PAGE> 27
EXHIBIT D
NOTICE
This form is intended to assist state nonmember banks and
savings banks with state publication requirements. It has not
been approved by any state banking authorities. Refer to your
appropriate state banking authorities for your state
publication requirements.
R E P O R T O F C O N D I T I O N
Consolidating domestic subsidiaries of the
WILMINGTON TRUST COMPANY of WILMINGTON
- --------------------------------------------------------- ---------------------
Name of Bank City
in the State of DELAWARE , at the close of business on December 31, 1999.
-------------
<TABLE>
<CAPTION>
ASSETS
Thousands of dollars
<S> <C>
Cash and balances due from depository institutions:
Noninterest-bearing balances and currency and coins.............................................213,700
Interest-bearing balances........................................................................... 0
Held-to-maturity securities................................................................................. 30,232
Available-for-sale securities.............................................................................1,628,889
Federal funds sold and securities purchased under agreements to resell......................................390,650
Loans and lease financing receivables:
Loans and leases, net of unearned income............. 4,374,777
LESS: Allowance for loan and lease losses........... 71,368
LESS: Allocated transfer risk reserve............... 0
Loans and leases, net of unearned income, allowance, and reserve..............................4,303,409
Assets held in trading accounts...................................................................................0
Premises and fixed assets (including capitalized leases)....................................................122,273
</TABLE>
<PAGE> 28
<TABLE>
<S> <C>
Other real estate owned...................................................................................... 576
Investments in unconsolidated subsidiaries and associated companies...........................................1,511
Customers' liability to this bank on acceptances outstanding......................................................0
Intangible assets............................................................................................ 5,100
Other assets................................................................................................133,449
Total assets..............................................................................................6,829,789
</TABLE>
CONTINUED ON NEXT PAGE
2
<PAGE> 29
<TABLE>
<S> <C>
LIABILITIES
Deposits:
In domestic offices.......................................................................................5,186,079
Noninterest-bearing................ 986,667
Interest-bearing................... 4,199,412
Federal funds purchased and Securities sold under agreements to repurchase................................. 269,343
Demand notes issued to the U.S. Treasury.....................................................................95,000
Trading liabilities (from Schedule RC-D)..........................................................................0
Other borrowed money:.......................................................................................///////
With original maturity of one year or less......................................................670,000
With original maturity of more than one year.....................................................43,000
Bank's liability on acceptances executed and outstanding..........................................................0
Subordinated notes and debentures.................................................................................0
Other liabilities (from Schedule RC-G).................................................................... 151,436
Total liabilities.........................................................................................6,414,858
EQUITY CAPITAL
Perpetual preferred stock and related surplus.....................................................................0
Common Stock....................................................................................................500
Surplus (exclude all surplus related to preferred stock).....................................................62,118
Undivided profits and capital reserves......................................................................386,485
Net unrealized holding gains (losses) on available-for-sale securities.....................................(34,172)
Total equity capital........................................................................................414,931
Total liabilities, limited-life preferred stock, and equity capital.......................................6,829,789
</TABLE>
3
<PAGE> 1
EXHIBIT 25.3
Registration No.
================================================================================
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM T-1
STATEMENT OF ELIGIBILITY UNDER THE TRUST INDENTURE ACT OF 1939
OF A CORPORATION DESIGNATED TO ACT AS TRUSTEE
CHECK IF AN APPLICATION TO DETERMINE ELIGIBILITY OF A TRUSTEE PURSUANT TO
SECTION 305(b)(2)
---
WILMINGTON TRUST COMPANY
(Exact name of trustee as specified in its charter)
Delaware 51-0055023
(State of incorporation) (I.R.S. employer identification no.)
Rodney Square North
1100 North Market Street
Wilmington, Delaware 19890
(Address of principal executive offices)
Cynthia L. Corliss
Vice President and Trust Counsel
Wilmington Trust Company
Rodney Square North
Wilmington, Delaware 19890
(302) 651-8516
(Name, address and telephone number of agent for service)
Atlas Air, Inc.
(Exact name of obligor as specified in its charter)
Delaware 84-1207329
(State of incorporation) (I.R.S. employer identification no.)
538 Commons Drive
Golden, Colorado 80401
(Address of principal executive offices) (Zip Code)
($47,937,000 Pass Through Certificates, Series 2000-1C)
================================================================================
<PAGE> 2
ITEM 1. GENERAL INFORMATION.
Furnish the following information as to the trustee:
(a) Name and address of each examining or supervising authority
to which it is subject.
Federal Deposit Insurance Co. State Bank Commissioner
Five Penn Center Dover, Delaware
Suite #2901
Philadelphia, PA
(b) Whether it is authorized to exercise corporate trust powers.
The trustee is authorized to exercise corporate trust
powers.
ITEM 2. AFFILIATIONS WITH THE OBLIGOR.
If the obligor is an affiliate of the trustee, describe each
affiliation:
Based upon an examination of the books and records of the
trustee and upon information furnished by the obligor, the obligor
is not an affiliate of the trustee.
ITEM 3. LIST OF EXHIBITS.
List below all exhibits filed as part of this Statement of
Eligibility and Qualification.
A. Copy of the Charter of Wilmington Trust Company, which
includes the certificate of authority of Wilmington Trust
Company to commence business and the authorization of
Wilmington Trust Company to exercise corporate trust powers.
B. Copy of By-Laws of Wilmington Trust Company.
C. Consent of Wilmington Trust Company required by
Section 321(b) of Trust Indenture Act.
D. Copy of most recent Report of Condition of Wilmington Trust
Company.
Pursuant to the requirements of the Trust Indenture Act of 1939, as
amended, the trustee, Wilmington Trust Company, a corporation organized and
existing under the laws of Delaware, has duly caused this Statement of
Eligibility to be signed on its behalf by the undersigned, thereunto duly
authorized, all in the City of Wilmington and State of Delaware on the 2nd day
of May, 2000.
WILMINGTON TRUST COMPANY
[SEAL]
Attest: /s/ Robert P. Hines, Jr. By: /s/ David A. Vanaskey, Jr.
---------------------------- ------------------------------------
Assistant Secretary Name: David A. Vanaskey, Jr.
Title: Vice President
2
<PAGE> 3
EXHIBIT A
AMENDED CHARTER
WILMINGTON TRUST COMPANY
WILMINGTON, DELAWARE
AS EXISTING ON MAY 9, 1987
<PAGE> 4
AMENDED CHARTER
OR
ACT OF INCORPORATION
OF
WILMINGTON TRUST COMPANY
WILMINGTON TRUST COMPANY, originally incorporated by an Act of the
General Assembly of the State of Delaware, entitled "An Act to Incorporate the
Delaware Guarantee and Trust Company", approved March 2, A.D. 1901, and the name
of which company was changed to "WILMINGTON TRUST COMPANY" by an amendment filed
in the Office of the Secretary of State on March 18, A.D. 1903, and the Charter
or Act of Incorporation of which company has been from time to time amended and
changed by merger agreements pursuant to the corporation law for state banks and
trust companies of the State of Delaware, does hereby alter and amend its
Charter or Act of Incorporation so that the same as so altered and amended shall
in its entirety read as follows:
FIRST: - The name of this corporation is WILMINGTON TRUST COMPANY.
SECOND: - The location of its principal office in the State of
Delaware is at Rodney Square North, in the City of Wilmington,
County of New Castle; the name of its resident agent is WILMINGTON
TRUST COMPANY whose address is Rodney Square North, in said City. In
addition to such principal office, the said corporation maintains
and operates branch offices in the City of Newark, New Castle
County, Delaware, the Town of Newport, New Castle County, Delaware,
at Claymont, New Castle County, Delaware, at Greenville, New Castle
County Delaware, and at Milford Cross Roads, New Castle County,
Delaware, and shall be empowered to open, maintain and operate
branch offices at Ninth and Shipley Streets, 418 Delaware Avenue,
2120 Market Street, and 3605 Market Street, all in the City of
Wilmington, New Castle County, Delaware, and such other branch
offices or places of business as may be authorized from time to time
by the agency or agencies of the government of the State of Delaware
empowered to confer such authority.
THIRD: - (a) The nature of the business and the objects and purposes
proposed to be transacted, promoted or carried on by this
Corporation are to do any or all of the things herein mentioned as
fully and to the same extent as natural persons might or could do
and in any part of the world, viz.:
(1) To sue and be sued, complain and defend in any Court of
law or equity and to make and use a common seal, and alter
the seal at pleasure, to hold, purchase, convey, mortgage or
otherwise deal in real and personal estate and property, and
to appoint such officers and agents as the business of the
Corporation shall require, to make by-laws not inconsistent
with the Constitution or laws of the United States or of
this State, to discount bills, notes or other evidences of
debt, to receive deposits of money, or securities for money,
to buy gold and silver bullion and foreign coins, to buy and
sell bills of exchange, and generally to use,
<PAGE> 5
exercise and enjoy all the powers, rights, privileges and
franchises incident to a corporation which are proper or
necessary for the transaction of the business of the
Corporation hereby created.
(2) To insure titles to real and personal property, or any
estate or interests therein, and to guarantee the holder of
such property, real or personal, against any claim or
claims, adverse to his interest therein, and to prepare and
give certificates of title for any lands or premises in the
State of Delaware, or elsewhere.
(3) To act as factor, agent, broker or attorney in the
receipt, collection, custody, investment and management of
funds, and the purchase, sale, management and disposal of
property of all descriptions, and to prepare and execute all
papers which may be necessary or proper in such business.
(4) To prepare and draw agreements, contracts, deeds,
leases, conveyances, mortgages, bonds and legal papers of
every description, and to carry on the business of
conveyancing in all its branches.
(5) To receive upon deposit for safekeeping money, jewelry,
plate, deeds, bonds and any and all other personal property
of every sort and kind, from executors, administrators,
guardians, public officers, courts, receivers, assignees,
trustees, and from all fiduciaries, and from all other
persons and individuals, and from all corporations whether
state, municipal, corporate or private, and to rent boxes,
safes, vaults and other receptacles for such property.
(6) To act as agent or otherwise for the purpose of
registering, issuing, certificating, countersigning,
transferring or underwriting the stock, bonds or other
obligations of any corporation, association, state or
municipality, and may receive and manage any sinking fund
therefor on such terms as may be agreed upon between the two
parties, and in like manner may act as Treasurer of any
corporation or municipality.
(7) To act as Trustee under any deed of trust, mortgage,
bond or other instrument issued by any state, municipality,
body politic, corporation, association or person, either
alone or in conjunction with any other person or persons,
corporation or corporations.
(8) To guarantee the validity, performance or effect of any
contract or agreement, and the fidelity of persons holding
places of responsibility or trust; to become surety for any
person, or persons, for the faithful performance of any
trust, office, duty, contract or agreement, either by itself
or in conjunction with any other person, or persons,
corporation, or corporations, or in like manner become
surety upon any bond, recognizance, obligation, judgment,
suit, order, or decree to be entered in any court of record
within the State of Delaware or elsewhere, or which may now
or hereafter be required by any law, judge, officer or court
in the State of Delaware or elsewhere.
2
<PAGE> 6
(9) To act by any and every method of appointment as
trustee, trustee in bankruptcy, receiver, assignee, assignee
in bankruptcy, executor, administrator, guardian, bailee, or
in any other trust capacity in the receiving, holding,
managing, and disposing of any and all estates and property,
real, personal or mixed, and to be appointed as such
trustee, trustee in bankruptcy, receiver, assignee, assignee
in bankruptcy, executor, administrator, guardian or bailee
by any persons, corporations, court, officer, or authority,
in the State of Delaware or elsewhere; and whenever this
Corporation is so appointed by any person, corporation,
court, officer or authority such trustee, trustee in
bankruptcy, receiver, assignee, assignee in bankruptcy,
executor, administrator, guardian, bailee, or in any other
trust capacity, it shall not be required to give bond with
surety, but its capital stock shall be taken and held as
security for the performance of the duties devolving upon it
by such appointment.
(10) And for its care, management and trouble, and the
exercise of any of its powers hereby given, or for the
performance of any of the duties which it may undertake or
be called upon to perform, or for the assumption of any
responsibility the said Corporation may be entitled to
receive a proper compensation.
(11) To purchase, receive, hold and own bonds, mortgages,
debentures, shares of capital stock, and other securities,
obligations, contracts and evidences of indebtedness, of any
private, public or municipal corporation within and without
the State of Delaware, or of the Government of the United
States, or of any state, territory, colony, or possession
thereof, or of any foreign government or country; to
receive, collect, receipt for, and dispose of interest,
dividends and income upon and from any of the bonds,
mortgages, debentures, notes, shares of capital stock,
securities, obligations, contracts, evidences of
indebtedness and other property held and owned by it, and to
exercise in respect of all such bonds, mortgages,
debentures, notes, shares of capital stock, securities,
obligations, contracts, evidences of indebtedness and other
property, any and all the rights, powers and privileges of
individual owners thereof, including the right to vote
thereon; to invest and deal in and with any of the moneys of
the Corporation upon such securities and in such manner as
it may think fit and proper, and from time to time to vary
or realize such investments; to issue bonds and secure the
same by pledges or deeds of trust or mortgages of or upon
the whole or any part of the property held or owned by the
Corporation, and to sell and pledge such bonds, as and when
the Board of Directors shall determine, and in the promotion
of its said corporate business of investment and to the
extent authorized by law, to lease, purchase, hold, sell,
assign, transfer, pledge, mortgage and convey real and
personal property of any name and nature and any estate or
interest therein.
(b) In furtherance of, and not in limitation, of the powers
conferred by the laws of the State of Delaware, it is hereby
expressly provided that the said Corporation shall also have the
following powers:
(1) To do any or all of the things herein set forth, to the
same extent as natural
3
<PAGE> 7
persons might or could do, and in any part of the world.
(2) To acquire the good will, rights, property and
franchises and to undertake the whole or any part of the
assets and liabilities of any person, firm, association or
corporation, and to pay for the same in cash, stock of this
Corporation, bonds or otherwise; to hold or in any manner to
dispose of the whole or any part of the property so
purchased; to conduct in any lawful manner the whole or any
part of any business so acquired, and to exercise all the
powers necessary or convenient in and about the conduct and
management of such business.
(3) To take, hold, own, deal in, mortgage or otherwise lien,
and to lease, sell, exchange, transfer, or in any manner
whatever dispose of property, real, personal or mixed,
wherever situated.
(4) To enter into, make, perform and carry out contracts of
every kind with any person, firm, association or
corporation, and, without limit as to amount, to draw, make,
accept, endorse, discount, execute and issue promissory
notes, drafts, bills of exchange, warrants, bonds,
debentures, and other negotiable or transferable
instruments.
(5) To have one or more offices, to carry on all or any of
its operations and businesses, without restriction to the
same extent as natural persons might or could do, to
purchase or otherwise acquire, to hold, own, to mortgage,
sell, convey or otherwise dispose of, real and personal
property, of every class and description, in any State,
District, Territory or Colony of the United States, and in
any foreign country or place.
(6) It is the intention that the objects, purposes and
powers specified and clauses contained in this paragraph
shall (except where otherwise expressed in said paragraph)
be nowise limited or restricted by reference to or inference
from the terms of any other clause of this or any other
paragraph in this charter, but that the objects, purposes
and powers specified in each of the clauses of this
paragraph shall be regarded as independent objects, purposes
and powers.
FOURTH: - (a) The total number of shares of all classes of stock
which the Corporation shall have authority to issue is forty-one
million (41,000,000) shares, consisting of:
(1) One million (1,000,000) shares of Preferred stock, par
value $10.00 per share (hereinafter referred to as
"Preferred Stock"); and
(2) Forty million (40,000,000) shares of Common Stock, par
value $1.00 per share (hereinafter referred to as "Common
Stock").
(b) Shares of Preferred Stock may be issued from time to time in one
or more series as may from time to time be determined by the Board
of Directors each of said series to be distinctly designated. All
shares of any one series of Preferred Stock shall be alike in every
particular, except that there may be different dates from which
dividends, if
4
<PAGE> 8
any, thereon shall be cumulative, if made cumulative. The voting
powers and the preferences and relative, participating, optional and
other special rights of each such series, and the qualifications,
limitations or restrictions thereof, if any, may differ from those
of any and all other series at any time outstanding; and, subject to
the provisions of subparagraph 1 of Paragraph (c) of this Article
FOURTH, the Board of Directors of the Corporation is hereby
expressly granted authority to fix by resolution or resolutions
adopted prior to the issuance of any shares of a particular series
of Preferred Stock, the voting powers and the designations,
preferences and relative, optional and other special rights, and the
qualifications, limitations and restrictions of such series,
including, but without limiting the generality of the foregoing, the
following:
(1) The distinctive designation of, and the number of shares
of Preferred Stock which shall constitute such series, which
number may be increased (except where otherwise provided by
the Board of Directors) or decreased (but not below the
number of shares thereof then outstanding) from time to time
by like action of the Board of Directors;
(2) The rate and times at which, and the terms and
conditions on which, dividends, if any, on Preferred Stock
of such series shall be paid, the extent of the preference
or relation, if any, of such dividends to the dividends
payable on any other class or classes, or series of the same
or other class of stock and whether such dividends shall be
cumulative or non-cumulative;
(3) The right, if any, of the holders of Preferred Stock of
such series to convert the same into or exchange the same
for, shares of any other class or classes or of any series
of the same or any other class or classes of stock of the
Corporation and the terms and conditions of such conversion
or exchange;
(4) Whether or not Preferred Stock of such series shall be
subject to redemption, and the redemption price or prices
and the time or times at which, and the terms and conditions
on which, Preferred Stock of such series may be redeemed.
(5) The rights, if any, of the holders of Preferred Stock of
such series upon the voluntary or involuntary liquidation,
merger, consolidation, distribution or sale of assets,
dissolution or winding-up, of the Corporation.
(6) The terms of the sinking fund or redemption or purchase
account, if any, to be provided for the Preferred Stock of
such series; and
(7) The voting powers, if any, of the holders of such series
of Preferred Stock which may, without limiting the
generality of the foregoing include the right, voting as a
series or by itself or together with other series of
Preferred Stock or all series of Preferred Stock as a class,
to elect one or more directors of the Corporation if there
shall have been a default in the payment of dividends on any
one or more series of Preferred Stock or under such
circumstances and on such conditions as the Board of
Directors may determine.
5
<PAGE> 9
(c) (1) After the requirements with respect to preferential
dividends on the Preferred Stock (fixed in accordance with the
provisions of section (b) of this Article FOURTH), if any, shall
have been met and after the Corporation shall have complied with all
the requirements, if any, with respect to the setting aside of sums
as sinking funds or redemption or purchase accounts (fixed in
accordance with the provisions of section (b) of this Article
FOURTH), and subject further to any conditions which may be fixed in
accordance with the provisions of section (b) of this Article
FOURTH, then and not otherwise the holders of Common Stock shall be
entitled to receive such dividends as may be declared from time to
time by the Board of Directors.
(2) After distribution in full of the preferential amount,
if any, (fixed in accordance with the provisions of section
(b) of this Article FOURTH), to be distributed to the
holders of Preferred Stock in the event of voluntary or
involuntary liquidation, distribution or sale of assets,
dissolution or winding-up, of the Corporation, the holders
of the Common Stock shall be entitled to receive all of the
remaining assets of the Corporation, tangible and
intangible, of whatever kind available for distribution to
stockholders ratably in proportion to the number of shares
of Common Stock held by them respectively.
(3) Except as may otherwise be required by law or by the
provisions of such resolution or resolutions as may be
adopted by the Board of Directors pursuant to section (b) of
this Article FOURTH, each holder of Common Stock shall have
one vote in respect of each share of Common Stock held on
all matters voted upon by the stockholders.
(d) No holder of any of the shares of any class or series of stock
or of options, warrants or other rights to purchase shares of any
class or series of stock or of other securities of the Corporation
shall have any preemptive right to purchase or subscribe for any
unissued stock of any class or series or any additional shares of
any class or series to be issued by reason of any increase of the
authorized capital stock of the Corporation of any class or series,
or bonds, certificates of indebtedness, debentures or other
securities convertible into or exchangeable for stock of the
Corporation of any class or series, or carrying any right to
purchase stock of any class or series, but any such unissued stock,
additional authorized issue of shares of any class or series of
stock or securities convertible into or exchangeable for stock, or
carrying any right to purchase stock, may be issued and disposed of
pursuant to resolution of the Board of Directors to such persons,
firms, corporations or associations, whether such holders or others,
and upon such terms as may be deemed advisable by the Board of
Directors in the exercise of its sole discretion.
(e) The relative powers, preferences and rights of each series of
Preferred Stock in relation to the relative powers, preferences and
rights of each other series of Preferred Stock shall, in each case,
be as fixed from time to time by the Board of Directors in the
resolution or resolutions adopted pursuant to authority granted in
section (b) of this Article FOURTH and the consent, by class or
series vote or otherwise, of the holders of such of the series of
Preferred Stock as are from time to time outstanding shall not be
required for the issuance by the Board of Directors of any other
series of Preferred
6
<PAGE> 10
Stock whether or not the powers, preferences and rights of such
other series shall be fixed by the Board of Directors as senior to,
or on a parity with, the powers, preferences and rights of such
outstanding series, or any of them; provided, however, that the
Board of Directors may provide in the resolution or resolutions as
to any series of Preferred Stock adopted pursuant to section (b) of
this Article FOURTH that the consent of the holders of a majority
(or such greater proportion as shall be therein fixed) of the
outstanding shares of such series voting thereon shall be required
for the issuance of any or all other series of Preferred Stock.
(f) Subject to the provisions of section (e), shares of any series
of Preferred Stock may be issued from time to time as the Board of
Directors of the Corporation shall determine and on such terms and
for such consideration as shall be fixed by the Board of Directors.
(g) Shares of Common Stock may be issued from time to time as the
Board of Directors of the Corporation shall determine and on such
terms and for such consideration as shall be fixed by the Board of
Directors.
(h) The authorized amount of shares of Common Stock and of Preferred
Stock may, without a class or series vote, be increased or decreased
from time to time by the affirmative vote of the holders of a
majority of the stock of the Corporation entitled to vote thereon.
FIFTH: - (a) The business and affairs of the Corporation shall be
conducted and managed by a Board of Directors. The number of
directors constituting the entire Board shall be not less than five
nor more than twenty-five as fixed from time to time by vote of a
majority of the whole Board, provided, however, that the number of
directors shall not be reduced so as to shorten the term of any
director at the time in office, and provided further, that the
number of directors constituting the whole Board shall be
twenty-four until otherwise fixed by a majority of the whole Board.
(b) The Board of Directors shall be divided into three classes, as
nearly equal in number as the then total number of directors
constituting the whole Board permits, with the term of office of one
class expiring each year. At the annual meeting of stockholders in
1982, directors of the first class shall be elected to hold office
for a term expiring at the next succeeding annual meeting, directors
of the second class shall be elected to hold office for a term
expiring at the second succeeding annual meeting and directors of
the third class shall be elected to hold office for a term expiring
at the third succeeding annual meeting. Any vacancies in the Board
of Directors for any reason, and any newly created directorships
resulting from any increase in the directors, may be filled by the
Board of Directors, acting by a majority of the directors then in
office, although less than a quorum, and any directors so chosen
shall hold office until the next annual election of directors. At
such election, the stockholders shall elect a successor to such
director to hold office until the next election of the class for
which such director shall have been chosen and until his successor
shall be elected and qualified. No decrease in the number of
directors shall shorten the term of any incumbent director.
7
<PAGE> 11
(c) Notwithstanding any other provisions of this Charter or Act of
Incorporation or the By-Laws of the Corporation (and notwithstanding
the fact that some lesser percentage may be specified by law, this
Charter or Act of Incorporation or the By-Laws of the Corporation),
any director or the entire Board of Directors of the Corporation may
be removed at any time without cause, but only by the affirmative
vote of the holders of two-thirds or more of the outstanding shares
of capital stock of the Corporation entitled to vote generally in
the election of directors (considered for this purpose as one class)
cast at a meeting of the stockholders called for that purpose.
(d) Nominations for the election of directors may be made by the
Board of Directors or by any stockholder entitled to vote for the
election of directors. Such nominations shall be made by notice in
writing, delivered or mailed by first class United States mail,
postage prepaid, to the Secretary of the Corporation not less than
14 days nor more than 50 days prior to any meeting of the
stockholders called for the election of directors; provided,
however, that if less than 21 days' notice of the meeting is given
to stockholders, such written notice shall be delivered or mailed,
as prescribed, to the Secretary of the Corporation not later than
the close of the seventh day following the day on which notice of
the meeting was mailed to stockholders. Notice of nominations which
are proposed by the Board of Directors shall be given by the
Chairman on behalf of the Board.
(e) Each notice under subsection (d) shall set forth (i) the name,
age, business address and, if known, residence address of each
nominee proposed in such notice, (ii) the principal occupation or
employment of such nominee and (iii) the number of shares of stock
of the Corporation which are beneficially owned by each such
nominee.
(f) The Chairman of the meeting may, if the facts warrant, determine
and declare to the meeting that a nomination was not made in
accordance with the foregoing procedure, and if he should so
determine, he shall so declare to the meeting and the defective
nomination shall be disregarded.
(g) No action required to be taken or which may be taken at any
annual or special meeting of stockholders of the Corporation may be
taken without a meeting, and the power of stockholders to consent in
writing, without a meeting, to the taking of any action is
specifically denied.
SIXTH: - The Directors shall choose such officers, agents and
servants as may be provided in the By-Laws as they may from time to
time find necessary or proper.
SEVENTH: - The Corporation hereby created is hereby given the same
powers, rights and privileges as may be conferred upon corporations
organized under the Act entitled "An Act Providing a General
Corporation Law", approved March 10, 1899, as from time to time
amended.
EIGHTH: - This Act shall be deemed and taken to be a private Act.
NINTH: - This Corporation is to have perpetual existence.
8
<PAGE> 12
TENTH: - The Board of Directors, by resolution passed by a majority
of the whole Board, may designate any of their number to constitute
an Executive Committee, which Committee, to the extent provided in
said resolution, or in the By-Laws of the Company, shall have and
may exercise all of the powers of the Board of Directors in the
management of the business and affairs of the Corporation, and shall
have power to authorize the seal of the Corporation to be affixed to
all papers which may require it.
ELEVENTH: - The private property of the stockholders shall not be
liable for the payment of corporate debts to any extent whatever.
TWELFTH: - The Corporation may transact business in any part of the
world.
THIRTEENTH: - The Board of Directors of the Corporation is expressly
authorized to make, alter or repeal the By-Laws of the Corporation
by a vote of the majority of the entire Board. The stockholders may
make, alter or repeal any By-Law whether or not adopted by them,
provided however, that any such additional By-Laws, alterations or
repeal may be adopted only by the affirmative vote of the holders of
two-thirds or more of the outstanding shares of capital stock of the
Corporation entitled to vote generally in the election of directors
(considered for this purpose as one class).
FOURTEENTH: - Meetings of the Directors may be held outside
of the State of Delaware at such places as may be from time to time
designated by the Board, and the Directors may keep the books of the
Company outside of the State of Delaware at such places as may be
from time to time designated by them.
FIFTEENTH: - (a) (1) In addition to any affirmative vote required by
law, and except as otherwise expressly provided in sections (b) and
(c) of this Article FIFTEENTH:
(A) any merger or consolidation of the Corporation or any
Subsidiary (as hereinafter defined) with or into (i) any
Interested Stockholder (as hereinafter defined) or (ii) any
other corporation (whether or not itself an Interested
Stockholder), which, after such merger or consolidation,
would be an Affiliate (as hereinafter defined) of an
Interested Stockholder, or
(B) any sale, lease, exchange, mortgage, pledge, transfer or
other disposition (in one transaction or a series of related
transactions) to or with any Interested Stockholder or any
Affiliate of any Interested Stockholder of any assets of the
Corporation or any Subsidiary having an aggregate fair
market value of $1,000,000 or more, or
(C) the issuance or transfer by the Corporation or any
Subsidiary (in one transaction or a series of related
transactions) of any securities of the Corporation or any
Subsidiary to any Interested Stockholder or any Affiliate of
any Interested Stockholder in exchange for cash, securities
or other property (or a combination thereof) having an
aggregate fair market value of $1,000,000 or more, or
(D) the adoption of any plan or proposal for the liquidation
or dissolution of the Corporation, or
9
<PAGE> 13
(E) any reclassification of securities (including any
reverse stock split), or recapitalization of the
Corporation, or any merger or consolidation of the
Corporation with any of its Subsidiaries or any similar
transaction (whether or not with or into or otherwise
involving an Interested Stockholder) which has the effect,
directly or indirectly, of increasing the proportionate
share of the outstanding shares of any class of equity or
convertible securities of the Corporation or any Subsidiary
which is directly or indirectly owned by any Interested
Stockholder, or any Affiliate of any Interested Stockholder,
shall require the affirmative vote of the holders of at least two-thirds of the
outstanding shares of capital stock of the Corporation entitled to vote
generally in the election of directors, considered for the purpose of this
Article FIFTEENTH as one class ("Voting Shares"). Such affirmative vote shall be
required notwithstanding the fact that no vote may be required, or that some
lesser percentage may be specified, by law or in any agreement with any national
securities exchange or otherwise.
(2) The term "business combination" as used in this
Article FIFTEENTH shall mean any transaction which is
referred to in any one or more of clauses (A) through (E)
of paragraph 1 of the section (a).
(b) The provisions of section (a) of this Article FIFTEENTH
shall not be applicable to any particular business
combination and such business combination shall require only
such affirmative vote as is required by law and any other
provisions of the Charter or Act of Incorporation or By-Laws
if such business combination has been approved by a majority
of the whole Board.
(c) For the purposes of this Article FIFTEENTH:
(1) A "person" shall mean any individual, firm, corporation or other
entity.
(2) "Interested Stockholder" shall mean, in respect of any business
combination, any person (other than the Corporation or any
Subsidiary) who or which as of the record date for the determination
of stockholders entitled to notice of and to vote on such business
combination, or immediately prior to the consummation of any such
transaction:
(A) is the beneficial owner, directly or indirectly, of more
than 10% of the Voting Shares, or
(B) is an Affiliate of the Corporation and at any time
within two years prior thereto was the beneficial owner,
directly or indirectly, of not less than 10% of the then
outstanding voting Shares, or
(C) is an assignee of or has otherwise succeeded in any
share of capital stock of the Corporation which were at any
time within two years prior thereto
10
<PAGE> 14
beneficially owned by any Interested Stockholder, and such
assignment or succession shall have occurred in the course
of a transaction or series of transactions not involving a
public offering within the meaning of the Securities Act of
1933.
(3) A person shall be the "beneficial owner" of any Voting Shares:
(A) which such person or any of its Affiliates and
Associates (as hereafter defined) beneficially own, directly
or indirectly, or
(B) which such person or any of its Affiliates or Associates
has (i) the right to acquire (whether such right is
exercisable immediately or only after the passage of time),
pursuant to any agreement, arrangement or understanding or
upon the exercise of conversion rights, exchange rights,
warrants or options, or otherwise, or (ii) the right to vote
pursuant to any agreement, arrangement or understanding, or
(C) which are beneficially owned, directly or indirectly, by
any other person with which such first mentioned person or
any of its Affiliates or Associates has any agreement,
arrangement or understanding for the purpose of acquiring,
holding, voting or disposing of any shares of capital stock
of the Corporation.
(4) The outstanding Voting Shares shall include shares deemed owned
through application of paragraph (3) above but shall not include any
other Voting Shares which may be issuable pursuant to any agreement,
or upon exercise of conversion rights, warrants or options or
otherwise.
(5) "Affiliate" and "Associate" shall have the respective meanings
given those terms in Rule 12b-2 of the General Rules and Regulations
under the Securities Exchange Act of 1934, as in effect on December
31, 1981.
(6) "Subsidiary" shall mean any corporation of which a majority of
any class of equity security (as defined in Rule 3a11-1 of the
General Rules and Regulations under the Securities Exchange Act of
1934, as in effect on December 31, 1981) is owned, directly or
indirectly, by the Corporation; provided, however, that for the
purposes of the definition of Investment Stockholder set forth in
paragraph (2) of this section (c), the term "Subsidiary" shall mean
only a corporation of which a majority of each class of equity
security is owned, directly or indirectly, by the Corporation.
(d) majority of the directors shall have the power and duty
to determine for the purposes of this Article FIFTEENTH on
the basis of information known to them, (1) the number of
Voting Shares beneficially owned by any person (2) whether a
person is an Affiliate or Associate of another, (3) whether
a person has an agreement, arrangement or understanding with
another as to the matters referred to in paragraph (3) of
section (c), or (4) whether the assets subject to any
business combination or the consideration received for the
issuance or transfer of securities by the Corporation, or
any Subsidiary has an aggregate fair market
11
<PAGE> 15
value of $1,000,000 or more.
(e) Nothing contained in this Article FIFTEENTH shall be
construed to relieve any Interested Stockholder from any
fiduciary obligation imposed by law.
SIXTEENTH: Notwithstanding any other provision of this Charter or
Act of Incorporation or the By-Laws of the Corporation (and in
addition to any other vote that may be required by law, this Charter
or Act of Incorporation by the By-Laws), the affirmative vote of the
holders of at least two-thirds of the outstanding shares of the
capital stock of the Corporation entitled to vote generally in the
election of directors (considered for this purpose as one class)
shall be required to amend, alter or repeal any provision of
Articles FIFTH, THIRTEENTH, FIFTEENTH or SIXTEENTH of this Charter
or Act of Incorporation.
SEVENTEENTH: (a) a Director of this Corporation shall not be liable
to the Corporation or its stockholders for monetary damages for
breach of fiduciary duty as a Director, except to the extent such
exemption from liability or limitation thereof is not permitted
under the Delaware General Corporation Laws as the same exists or
may hereafter be amended.
(b) Any repeal or modification of the foregoing paragraph
shall not adversely affect any right or protection of a
Director of the Corporation existing hereunder with respect
to any act or omission occurring prior to the time of such
repeal or modification."
12
<PAGE> 16
EXHIBIT B
BY-LAWS
WILMINGTON TRUST COMPANY
WILMINGTON, DELAWARE
AS EXISTING ON JANUARY 20, 2000
<PAGE> 17
BY-LAWS OF WILMINGTON TRUST COMPANY
ARTICLE I
STOCKHOLDERS' MEETINGS
Section 1. The Annual Meeting of Stockholders shall be held on the
third Thursday in April each year at the principal office at the Company or at
such other date, time, or place as may be designated by resolution by the Board
of Directors.
Section 2. Special meetings of all stockholders may be called at any
time by the Board of Directors, the Chairman of the Board or the President.
Section 3. Notice of all meetings of the stockholders shall be given by
mailing to each stockholder at least ten (10) days before said meeting, at his
last known address, a written or printed notice fixing the time and place of
such meeting.
Section 4. A majority in the amount of the capital stock of the Company
issued and outstanding on the record date, as herein determined, shall
constitute a quorum at all meetings of stockholders for the transaction of any
business, but the holders of a small number of shares may adjourn, from time to
time, without further notice, until a quorum is secured. At each annual or
special meeting of stockholders, each stockholder shall be entitled to one vote,
either in person or by proxy, for each share of stock registered in the
stockholder's name on the books of the Company on the record date for any such
meeting as determined herein.
ARTICLE II
DIRECTORS
Section 1. The number and classification of the Board of Directors
shall be as set forth in the Charter of the Bank. No more than two Directors may
also be employees of the Company or any affiliate thereof.
Section 2. No person who has attained the age of seventy-two (72) years
shall be nominated for election to the Board of Directors of the Company,
provided, however, that this limitation shall not apply to any person who was
serving as director of the Company on September 16, 1971. The Chairman of the
Board of Directors shall not be qualified to continue to serve as a Director
upon the termination for any reason of his or her services in that office.
Section 3. The class of Directors so elected shall hold office for
three years or until their successors are elected and qualified.
Section 4. The affairs and business of the Company shall be managed and
conducted by the Board of Directors.
Section 5. The Board of Directors shall meet at the principal office of
the Company or elsewhere in its discretion at such times to be determined by a
majority of its members, or at the call of the Chairman of the Board of
Directors or the President.
<PAGE> 18
Section 6. Special meetings of the Board of Directors may be called at
any time by the Chairman of the Board of Directors or by the President, and
shall be called upon the written request of a majority of the directors.
Section 7. A majority of the directors elected and qualified shall be
necessary to constitute a quorum for the transaction of business at any meeting
of the Board of Directors.
Section 8. Written notice shall be sent by mail to each director of any
special meeting of the Board of Directors, and of any change in the time or
place of any regular meeting, stating the time and place of such meeting, which
shall be mailed not less than two days before the time of holding such meeting.
Section 9. In the event of the death, resignation, removal, inability
to act, or disqualification of any director, the Board of Directors, although
less than a quorum, shall have the right to elect the successor who shall hold
office for the remainder of the full term of the class of directors in which the
vacancy occurred, and until such director's successor shall have been duly
elected and qualified.
Section 10. The Board of Directors at its first meeting after its
election by the stockholders shall appoint an Executive Committee, a Trust
Committee, an Audit Committee and a Compensation Committee, and shall elect from
its own members a Chairman of the Board of Directors and a President who may be
the same person. The Board of Directors shall also elect at such meeting a
Secretary and a Treasurer, who may be the same person, may appoint at any time
such other committees and elect or appoint such other officers as it may deem
advisable. The Board of Directors may also elect at such meeting one or more
Associate Directors.
Section 11. The Board of Directors may at any time remove, with or
without cause, any member of any Committee appointed by it or any associate
director or officer elected by it and may appoint or elect his successor.
Section 12. The Board of Directors may designate an officer to be in
charge of such of the departments or divisions of the Company as it may deem
advisable.
2
<PAGE> 19
ARTICLE III
COMMITTEES
Section 1. Executive Committee
(A) The Executive Committee shall be composed of
not more than nine members who shall be selected by the Board of Directors from
its own members and who shall hold office during the pleasure of the Board.
(B) The Executive Committee shall have all the
powers of the Board of Directors when it is not in session to transact all
business for and in behalf of the Company that may be brought before it.
(C) The Executive Committee shall meet at the
principal office of the Company or elsewhere in its discretion at such times to
be determined by a majority of its members, or at the call of the Chairman of
the Executive Committee or at the call of the Chairman of the Board of
Directors. The majority of its members shall be necessary to constitute a quorum
for the transaction of business. Special meetings of the Executive Committee may
be held at any time when a quorum is present.
(D) Minutes of each meeting of the Executive
Committee shall be kept and submitted to the Board of Directors at its next
meeting.
(E) The Executive Committee shall advise and
superintend all investments that may be made of the funds of the Company, and
shall direct the disposal of the same, in accordance with such rules and
regulations as the Board of Directors from time to time make.
(F) In the event of a state of disaster of
sufficient severity to prevent the conduct and management of the affairs and
business of the Company by its directors and officers as contemplated by these
By-Laws any two available members of the Executive Committee as constituted
immediately prior to such disaster shall constitute a quorum of that Committee
for the full conduct and management of the affairs and business of the Company
in accordance with the provisions of Article III of these By-Laws; and if less
than three members of the Trust Committee is constituted immediately prior to
such disaster shall be available for the transaction of its business, such
Executive Committee shall also be empowered to exercise all of the powers
reserved to the Trust Committee under Article III Section 2 hereof. In the event
of the unavailability, at such time, of a minimum of two members of such
Executive Committee, any three available directors shall constitute the
Executive Committee for the full conduct and management of the affairs and
business of the Company in accordance with the foregoing provisions of this
Section. This By-Law shall be subject to implementation by Resolutions of the
Board of Directors presently existing or hereafter passed from time to time for
that purpose, and any provisions of these By-Laws (other than this Section) and
any resolutions which are contrary to the provisions of this Section or to the
provisions of any such implementary Resolutions shall be suspended during such a
disaster period until it shall be determined by any interim Executive
3
<PAGE> 20
Committee acting under this section that it shall be to the advantage of the
Company to resume the conduct and management of its affairs and business under
all of the other provisions of these By-Laws.
Section 2. Audit Committee
(A) The Audit Committee shall be composed of five
members who shall be selected by the Board of Directors from its own members,
none of whom shall be an officer of the Company, and shall hold office at the
pleasure of the Board.
(B) The Audit Committee shall have general
supervision over the Audit Division in all matters however subject to the
approval of the Board of Directors; it shall consider all matters brought to its
attention by the officer in charge of the Audit Division, review all reports of
examination of the Company made by any governmental agency or such independent
auditor employed for that purpose, and make such recommendations to the Board of
Directors with respect thereto or with respect to any other matters pertaining
to auditing the Company as it shall deem desirable.
(C) The Audit Committee shall meet whenever and
wherever the majority of its members shall deem it to be proper for the
transaction of its business, and a majority of its Committee shall constitute a
quorum.
Section 3. Compensation Committee
(A) The Compensation Committee shall be composed of
not more than five (5) members who shall be selected by the Board of Directors
from its own members who are not officers of the Company and who shall hold
office during the pleasure of the Board.
(B) The Compensation Committee shall in general
advise upon all matters of policy concerning the Company brought to its
attention by the management and from time to time review the management of the
Company, major organizational matters, including salaries and employee benefits
and specifically shall administer the Executive Incentive Compensation Plan.
(C) Meetings of the Compensation Committee may be
called at any time by the Chairman of the Compensation Committee, the Chairman
of the Board of Directors, or the President of the Company.
4
<PAGE> 21
Section 4. Associate Directors
(A) Any person who has served as a director may be
elected by the Board of Directors as an associate director, to serve during the
pleasure of the Board.
(B) An associate director shall be entitled to
attend all directors meetings and participate in the discussion of all matters
brought to the Board, with the exception that he would have no right to vote. An
associate director will be eligible for appointment to Committees of the
Company, with the exception of the Executive Committee, Audit Committee and
Compensation Committee, which must be comprised solely of active directors.
Section 5. Absence or Disqualification of Any Member of a Committee
(A) In the absence or disqualification of any
member of any Committee created under Article III of the By-Laws of this
Company, the member or members thereof present at any meeting and not
disqualified from voting, whether or not he or they constitute a quorum, may
unanimously appoint another member of the Board of Directors to act at the
meeting in the place of any such absent or disqualified member.
ARTICLE IV
OFFICERS
Section 1. The Chairman of the Board of Directors shall preside at all
meetings of the Board and shall have such further authority and powers and shall
perform such duties as the Board of Directors may from time to time confer and
direct. He shall also exercise such powers and perform such duties as may from
time to time be agreed upon between himself and the President of the Company.
Section 2. The Vice Chairman of the Board. The Vice Chairman of the
Board of Directors shall preside at all meetings of the Board of Directors at
which the Chairman of the Board shall not be present and shall have such further
authority and powers and shall perform such duties as the Board of Directors or
the Chairman of the Board may from time to time confer and direct.
Section 3. The President shall have the powers and duties pertaining to
the office of the President conferred or imposed upon him by statute or assigned
to him by the Board of Directors. In the absence of the Chairman of the Board
the President shall have the powers and duties of the Chairman of the Board.
Section 4. The Chairman of the Board of Directors or the President as
designated by the Board of Directors, shall carry into effect all legal
directions of the Executive Committee and of the Board of Directors, and shall
at all times exercise general supervision over the interest, affairs and
operations of the Company and perform all duties incident to his office.
5
<PAGE> 22
Section 5. There may be one or more Vice Presidents, however
denominated by the Board of Directors, who may at any time perform all the
duties of the Chairman of the Board of Directors and/or the President and such
other powers and duties as may from time to time be assigned to them by the
Board of Directors, the Executive Committee, the Chairman of the Board or the
President and by the officer in charge of the department or division to which
they are assigned.
Section 6. The Secretary shall attend to the giving of notice of
meetings of the stockholders and the Board of Directors, as well as the
Committees thereof, to the keeping of accurate minutes of all such meetings and
to recording the same in the minute books of the Company. In addition to the
other notice requirements of these By-Laws and as may be practicable under the
circumstances, all such notices shall be in writing and mailed well in advance
of the scheduled date of any other meeting. He shall have custody of the
corporate seal and shall affix the same to any documents requiring such
corporate seal and to attest the same.
Section 7. The Treasurer shall have general supervision over all assets
and liabilities of the Company. He shall be custodian of and responsible for all
monies, funds and valuables of the Company and for the keeping of proper records
of the evidence of property or indebtedness and of all the transactions of the
Company. He shall have general supervision of the expenditures of the Company
and shall report to the Board of Directors at each regular meeting of the
condition of the Company, and perform such other duties as may be assigned to
him from time to time by the Board of Directors of the Executive Committee.
Section 8. There may be a Controller who shall exercise general
supervision over the internal operations of the Company, including accounting,
and shall render to the Board of Directors at appropriate times a report
relating to the general condition and internal operations of the Company.
There may be one or more subordinate accounting or controller officers
however denominated, who may perform the duties of the Controller and such
duties as may be prescribed by the Controller.
Section 9. The officer designated by the Board of Directors to be in
charge of the Audit Division of the Company with such title as the Board of
Directors shall prescribe, shall report to and be directly responsible only to
the Board of Directors.
There shall be an Auditor and there may be one or more Audit Officers,
however denominated, who may perform all the duties of the Auditor and such
duties as may be prescribed by the officer in charge of the Audit Division.
Section 10. There may be one or more officers, subordinate in rank to
all Vice Presidents with such functional titles as shall be determined from time
to time by the Board of Directors, who shall ex officio hold the office
Assistant Secretary of this Company and who may perform such duties as may be
prescribed by the officer in charge of the department or division to whom they
are assigned.
6
<PAGE> 23
Section 11. The powers and duties of all other officers of the Company
shall be those usually pertaining to their respective offices, subject to the
direction of the Board of Directors, the Executive Committee, Chairman of the
Board of Directors or the President and the officer in charge of the department
or division to which they are assigned.
ARTICLE V
STOCK AND STOCK CERTIFICATES
Section 1. Shares of stock shall be transferrable on the books of the
Company and a transfer book shall be kept in which all transfers of stock shall
be recorded.
Section 2. Certificates of stock shall bear the signature of the
President or any Vice President, however denominated by the Board of Directors
and countersigned by the Secretary or Treasurer or an Assistant Secretary, and
the seal of the corporation shall be engraved thereon. Each certificate shall
recite that the stock represented thereby is transferrable only upon the books
of the Company by the holder thereof or his attorney, upon surrender of the
certificate properly endorsed. Any certificate of stock surrendered to the
Company shall be cancelled at the time of transfer, and before a new certificate
or certificates shall be issued in lieu thereof. Duplicate certificates of stock
shall be issued only upon giving such security as may be satisfactory to the
Board of Directors or the Executive Committee.
Section 3. The Board of Directors of the Company is authorized to fix
in advance a record date for the determination of the stockholders entitled to
notice of, and to vote at, any meeting of stockholders and any adjournment
thereof, or entitled to receive payment of any dividend, or to any allotment or
rights, or to exercise any rights in respect of any change, conversion or
exchange of capital stock, or in connection with obtaining the consent of
stockholders for any purpose, which record date shall not be more than 60 nor
less than 10 days proceeding the date of any meeting of stockholders or the date
for the payment of any dividend, or the date for the allotment of rights, or the
date when any change or conversion or exchange of capital stock shall go into
effect, or a date in connection with obtaining such consent.
ARTICLE VI
SEAL
Section 1. The corporate seal of the Company shall be in the following
form:
Between two concentric circles the words
"Wilmington Trust Company" within the inner circle
the words "Wilmington, Delaware."
7
<PAGE> 24
ARTICLE VII
FISCAL YEAR
Section 1. The fiscal year of the Company shall be the calendar year.
ARTICLE VIII
EXECUTION OF INSTRUMENTS OF THE COMPANY
Section 1. The Chairman of the Board, the President or any Vice
President, however denominated by the Board of Directors, shall have full power
and authority to enter into, make, sign, execute, acknowledge and/or deliver and
the Secretary or any Assistant Secretary shall have full power and authority to
attest and affix the corporate seal of the Company to any and all deeds,
conveyances, assignments, releases, contracts, agreements, bonds, notes,
mortgages and all other instruments incident to the business of this Company or
in acting as executor, administrator, guardian, trustee, agent or in any other
fiduciary or representative capacity by any and every method of appointment or
by whatever person, corporation, court officer or authority in the State of
Delaware, or elsewhere, without any specific authority, ratification, approval
or confirmation by the Board of Directors or the Executive Committee, and any
and all such instruments shall have the same force and validity as though
expressly authorized by the Board of Directors and/or the Executive Committee.
ARTICLE IX
COMPENSATION OF DIRECTORS AND MEMBERS OF COMMITTEES
Section 1. Directors and associate directors of the Company, other than
salaried officers of the Company, shall be paid such reasonable honoraria or
fees for attending meetings of the Board of Directors as the Board of Directors
may from time to time determine. Directors and associate directors who serve as
members of committees, other than salaried employees of the Company, shall be
paid such reasonable honoraria or fees for services as members of committees as
the Board of Directors shall from time to time determine and directors and
associate directors may be employed by the Company for such special services as
the Board of Directors may from time to time determine and shall be paid for
such special services so performed reasonable compensation as may be determined
by the Board of Directors.
ARTICLE X
INDEMNIFICATION
Section 1. (A) The Corporation shall indemnify and hold harmless, to
the fullest extent permitted by applicable law as it presently exists or may
hereafter be amended, any person who was or is made or is threatened to be made
a party or is otherwise involved in any action, suit or proceeding, whether
civil, criminal, administrative or investigative (a "proceeding") by reason of
the fact that he, or a person for whom he is the legal representative, is or was
a director, officer, employee or agent of the Corporation or is or was serving
at the request of the Corporation as a director, officer, employee, fiduciary or
agent of another corporation or of a partnership, joint venture, trust,
enterprise or non-profit entity, including service with respect to employee
benefit
8
<PAGE> 25
plans, against all liability and loss suffered and expenses reasonably incurred
by such person. The Corporation shall indemnify a person in connection with a
proceeding initiated by such person only if the proceeding was authorized by the
Board of Directors of the Corporation.
(B) The Corporation shall pay the expenses incurred
in defending any proceeding in advance of its final disposition, provided,
however, that the payment of expenses incurred by a Director or officer in his
capacity as a Director or officer in advance of the final disposition of the
proceeding shall be made only upon receipt of an undertaking by the Director or
officer to repay all amounts advanced if it should be ultimately determined that
the Director or officer is not entitled to be indemnified under this Article or
otherwise.
(C) If a claim for indemnification or payment of
expenses, under this Article X is not paid in full within ninety days after a
written claim therefor has been received by the Corporation the claimant may
file suit to recover the unpaid amount of such claim and, if successful in whole
or in part, shall be entitled to be paid the expense of prosecuting such claim.
In any such action the Corporation shall have the burden of proving that the
claimant was not entitled to the requested indemnification of payment of
expenses under applicable law.
(D) The rights conferred on any person by this
Article X shall not be exclusive of any other rights which such person may have
or hereafter acquire under any statute, provision of the Charter or Act of
Incorporation, these By-Laws, agreement, vote of stockholders or disinterested
Directors or otherwise.
(E) Any repeal or modification of the foregoing
provisions of this Article X shall not adversely affect any right or protection
hereunder of any person in respect of any act or omission occurring prior to the
time of such repeal or modification.
ARTICLE XI
AMENDMENTS TO THE BY-LAWS
Section 1. These By-Laws may be altered, amended or repealed, in whole
or in part, and any new By-Law or By-Laws adopted at any regular or special
meeting of the Board of Directors by a vote of the majority of all the members
of the Board of Directors then in office.
9
<PAGE> 26
EXHIBIT C
SECTION 321(b) CONSENT
Pursuant to Section 321(b) of the Trust Indenture Act of 1939, as
amended, Wilmington Trust Company hereby consents that reports of examinations
by Federal, State, Territorial or District authorities may be furnished by such
authorities to the Securities and Exchange Commission upon requests therefor.
WILMINGTON TRUST COMPANY
Dated: May 2, 2000 By: /s/ David A. Vanaskey, Jr.
-------------------------------
Name: David A. Vanaskey, Jr.
Title: Vice President
<PAGE> 27
EXHIBIT D
NOTICE
This form is intended to assist state nonmember banks and
savings banks with state publication requirements. It has not
been approved by any state banking authorities. Refer to your
appropriate state banking authorities for your state
publication requirements.
R E P O R T O F C O N D I T I O N
Consolidating domestic subsidiaries of the
WILMINGTON TRUST COMPANY of WILMINGTON
- --------------------------------------------------------- ---------------------
Name of Bank City
in the State of DELAWARE , at the close of business on December 31, 1999.
-------------
<TABLE>
<CAPTION>
ASSETS
Thousands of dollars
<S> <C>
Cash and balances due from depository institutions:
Noninterest-bearing balances and currency and coins.............................................213,700
Interest-bearing balances........................................................................... 0
Held-to-maturity securities................................................................................. 30,232
Available-for-sale securities.............................................................................1,628,889
Federal funds sold and securities purchased under agreements to resell......................................390,650
Loans and lease financing receivables:
Loans and leases, net of unearned income............. 4,374,777
LESS: Allowance for loan and lease losses........... 71,368
LESS: Allocated transfer risk reserve............... 0
Loans and leases, net of unearned income, allowance, and reserve..............................4,303,409
Assets held in trading accounts...................................................................................0
Premises and fixed assets (including capitalized leases)....................................................122,273
</TABLE>
<PAGE> 28
<TABLE>
<S> <C>
Other real estate owned...................................................................................... 576
Investments in unconsolidated subsidiaries and associated companies...........................................1,511
Customers' liability to this bank on acceptances outstanding......................................................0
Intangible assets............................................................................................ 5,100
Other assets................................................................................................133,449
Total assets..............................................................................................6,829,789
</TABLE>
CONTINUED ON NEXT PAGE
2
<PAGE> 29
<TABLE>
<S> <C>
LIABILITIES
Deposits:
In domestic offices.......................................................................................5,186,079
Noninterest-bearing................ 986,667
Interest-bearing................... 4,199,412
Federal funds purchased and Securities sold under agreements to repurchase................................. 269,343
Demand notes issued to the U.S. Treasury.....................................................................95,000
Trading liabilities (from Schedule RC-D)..........................................................................0
Other borrowed money:.......................................................................................///////
With original maturity of one year or less......................................................670,000
With original maturity of more than one year.....................................................43,000
Bank's liability on acceptances executed and outstanding..........................................................0
Subordinated notes and debentures.................................................................................0
Other liabilities (from Schedule RC-G).................................................................... 151,436
Total liabilities.........................................................................................6,414,858
EQUITY CAPITAL
Perpetual preferred stock and related surplus.....................................................................0
Common Stock....................................................................................................500
Surplus (exclude all surplus related to preferred stock).....................................................62,118
Undivided profits and capital reserves......................................................................386,485
Net unrealized holding gains (losses) on available-for-sale securities.....................................(34,172)
Total equity capital........................................................................................414,931
Total liabilities, limited-life preferred stock, and equity capital.......................................6,829,789
</TABLE>
3
<PAGE> 1
EXHIBIT 99.1
LETTER OF TRANSMITTAL
ATLAS AIR, INC.
Offer to Exchange
Pass Through Certificates, Series 2000-1,
which have been Registered under the
Securities Act of 1933, as amended,
for any and all Outstanding
Pass Through Certificates, Series 2000-1
Pursuant to the Prospectus, dated _____________, 2000
THE EXCHANGE OFFER WILL EXPIRE AT 5:00 P.M. NEW YORK CITY TIME,
ON , 2000, UNLESS EXTENDED (THE "EXPIRATION DATE"),
TENDERS MAY BE WITHDRAWN PRIOR TO 5:00 P.M., NEW YORK CITY TIME,
ON THE EXPIRATION DATE.
By Mail, Overnight Delivery: By Hand:
Wilmington Trust Company Wilmington Trust Company
1100 North Market Street 1105 North Market Street
Wilmington, Delaware 19890-0001 1st Floor
Attention: Corporate Trust Wilmington, Delaware 19890
Operations -- Atlas Air -- Attention: Corporate Trust
2000 EETC Exchange Offer Operations -- Atlas
Air -- 2000 EETC
Exchange Offer
Facsimile Transmission:
(302) 651-1079
Corporate Trust Operations
Confirm by Telephone:
(302) 651-8474
Corporate Trust Operations
Delivery of this instrument to an address other than as set
forth above, or transmission of instructions via facsimile other than as set
forth above, will not constitute a valid delivery.
The undersigned acknowledges receipt of the Prospectus, dated
___________, 2000 (the "Prospectus"), of Atlas Air, Inc., a Delaware corporation
(the "Company"), and this Letter
<PAGE> 2
-2-
of Transmittal (this "Letter"), which together constitute the offer (the
"Exchange Offer") to exchange an aggregate principal amount of up to
$217,317,000 of Pass Through Certificates, Series 2000-1 (the "New
Certificates") for an equal principal amount of the outstanding Pass Through
Certificates, Series 2000-1 (the "Old Certificates").
For each Old Certificate accepted for exchange, the holder of
such Old Certificate will receive a New Certificate having a principal amount at
maturity equal to that of the surrendered Old Certificate. The New Certificates
will accrue interest at the applicable per annum rate for such Trust as set
forth on the cover page of the Prospectus, from the last date on which interest
was paid on the Old Certificates surrendered in exchange therefor. Interest on
the New Certificates is payable on January 2 and July 2 of each year commencing
upon the consummation of this Exchange Offer, subject to the terms of the
Intercreditor Agreement (as defined in the Prospectus). In the event that
neither the consummation of the Exchange Offer nor the declaration by the
Commission of the Shelf Registration Statement to be effective (each a
"Registration Event") occurs on or prior to the 210th calendar day after the
Issue Date, the interest rate per annum borne by the Equipment Notes and passed
through to holders of Old Certificates shall be increased by 0.50% from and
including August 25, 2000, but excluding the date on which a Registration Event
occurs. In the event that the Shelf Registration Statement ceases to be
effective at any time, during the period the Company is required to keep such
Shelf Registration Statement effective, for more than 60 days, whether or not
consecutive, during any 12-month period, the interest rate per annum borne by
the Equipment Notes shall be increased by 0.50% from the 61st day of the
applicable 12-month period such Shelf Registration Statement ceases to be
effective until such time as the Shelf Registration Statement again becomes
effective. The Company reserves the right, at any time or from time to time, to
extend the Exchange Offer at its discretion, in which event the term "Expiration
Date" shall mean the latest time and date to which the Exchange Offer is
extended. The Company shall notify the holders of the Old Certificates of any
extension by means of a press release or other public announcement prior to 9:00
A.M., New York City time, on the next business day after the previously
scheduled Expiration Date.
<PAGE> 3
-3-
This Letter is to be completed by a holder of Old Certificates
either if Old Certificates are to be forwarded herewith or if a tender of Old
Certificates, if available, is to be made by book-entry transfer to the account
maintained by the Exchange Agent at The Depository Trust Company (the
"Book-Entry Transfer Facility") pursuant to the procedure set forth in "The
Exchange Offer" section of the Prospectus. Holders of Old Certificates whose
certificates are not immediately available, or who are unable to deliver their
certificates or confirmation of the book-entry tender of their Old Certificates
into the Exchange Agent's account at the Book-Entry Transfer Facility (a
"Book-Entry Confirmation") and all other documents required by this Letter to
the Exchange Agent on or prior to the Expiration Date, must tender their Old
Certificates according to the guaranteed delivery procedures set forth in "The
Exchange Offer - Guaranteed Delivery Procedures" section of the Prospectus. See
Instruction 1. Delivery of documents to the Book-Entry Transfer Facility does
not constitute delivery to the Exchange Agent.
The undersigned has completed the appropriate boxes below and
signed this Letter to indicate the action the undersigned desires to take with
respect to the Exchange Offer.
List below the Old Certificates to which this Letter relates.
If the space provided below is inadequate, the certificate numbers and principal
amount of Old Certificates should be listed on a separate signed schedule
affixed hereto.
<TABLE>
<CAPTION>
DESCRIPTION OF OLD CERTIFICATES 1 2 3
<S> <C> <C> <C>
Name(s) and
Address(es) of Aggregate
Registered Holder(s) Principal Principal
(Please fill in, Certificate Amount of Old Amount
if blank) Number(s)* Certificate(s) Tendered*
- ------------------------------------------------------------------------------------------------------
-------------------------------------------------------------
-------------------------------------------------------------
-------------------------------------------------------------
Total
- ------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE> 4
-4-
* Need not be completed if Old Certificates are being tendered by
book-entry transfer.
** Unless otherwise indicated in this column, a holder will be deemed to
have tendered ALL of the Old Certificates represented by the Old
Certificates indicated in column 2. See Instruction 2. Old Certificates
tendered hereby must be in denominations of principal amount of $1,000
and any integral multiple thereof. See Instruction 1.
- --------------------------------------------------------------------------------
_____ CHECK HERE IF TENDERED OLD CERTIFICATES ARE BEING DELIVERED BY BOOK-ENTRY
TRANSFER MADE TO THE ACCOUNT MAINTAINED BY THE EXCHANGE AGENT WITH THE
BOOK-ENTRY TRANSFER FACILITY AND COMPLETE THE FOLLOWING:
Name of Tendering Institution__________________________________
Account Number______________ Transaction Code Number___________
_____ CHECK HERE IF TENDERED OLD CERTIFICATES ARE BEING DELIVERED PURSUANT TO A
NOTICE OF GUARANTEED DELIVERY PREVIOUSLY SENT TO THE EXCHANGE AGENT AND COMPLETE
THE FOLLOWING:
Name of Tendering Institution__________________________________
Account Number______________ Transaction Code Number___________
_____ CHECK HERE IF TENDERED OLD CERTIFICATES ARE BEING DELIVERED PURSUANT TO A
NOTICE OF GUARANTEED DELIVERY PREVIOUSLY SENT TO THE EXCHANGE AGENT AND COMPLETE
THE FOLLOWING:
Name(s) of Registered Holder(s)________________________________
Window Ticket Number (if any)__________________________________
Date of Execution of Notice of Guaranteed Delivery_____________
Name of Institution which guaranteed delivery__________________
If Delivered by Book-Entry Transfer, Complete the Following:
Account Number:_____________ Transaction Code Number:__________
<PAGE> 5
-5-
_____ CHECK HERE IF YOU ARE A BROKER-DEALER AND WISH TO RECEIVE 10 ADDITIONAL
COPIES OF THE PROSPECTUS AND 10 COPIES OF ANY AMENDMENTS OR SUPPLEMENTS THERETO.
Name:__________________________________________________________________________
Address:_______________________________________________________________________
_______________________________________________________________________________
<PAGE> 6
-6-
PLEASE READ THE ACCOMPANYING INSTRUCTIONS CAREFULLY
Ladies and Gentlemen:
Upon the terms and subject to the conditions of the Exchange
Offer, the undersigned hereby tenders to the Company the aggregate principal
amount of Old Certificates indicated above. Subject to, and effective upon, the
acceptance for exchange of the Old Certificates tendered hereby, the undersigned
hereby sells, assigns and transfers to, or upon the order of, the Company all
right, title and interest in and to such Old Certificates as are being tendered
hereby.
The undersigned hereby represents and warrants that the
undersigned has full power and authority to tender, sell, assign and transfer
the Old Certificates tendered hereby and that the Company will acquire good and
unencumbered title thereto, free and clear of all liens, restrictions, charges
and encumbrances and not subject to any adverse claim when the same are accepted
by the Company. The undersigned hereby further represents that any New
Certificates acquired in exchange for Old Certificates tendered hereby will have
been acquired in the ordinary course of business of the person receiving such
New Certificates, whether or not such person is the undersigned, that neither
the holder of such Old Certificates nor any such other person is engaged in, or
intends to engage in a distribution of such New Certificates, or has an
arrangement or understanding with any person to participate in the distribution
of such New Certificates, and that neither the holder of such Old Certificates
nor any such other person is an "affiliate," as defined in Rule 405 under the
Securities Act of 1933, as amended (the "Securities Act"), of the Company.
The undersigned also acknowledges that this Exchange Offer is
being made based upon the Company's understanding of an interpretation by the
Staff of the Securities and Exchange Commission (the "Commission") as set forth
in no-action letters issued to third parties, including Exxon Capital Holdings
Corporation, SEC No-Action Letter (available May 13, 1988) (the "Exxon Capital
Letter"), Morgan Stanley & Co. Incorporated, SEC No-Action Letter (available
June 5, 1991) (the "Morgan Stanley Letter") and Shearman & Sterling, SEC
No-Action Letter (available July 2, 1993) (the "Shearman & Sterling Letter"),
that the New Certificates issued in exchange for the Old Certificates pursuant
to the Exchange Offer may be offered for resale,
<PAGE> 7
-7-
resold and otherwise transferred by holders thereof (other than a broker-dealer
who acquires such New Certificates directly from the Company for resale pursuant
to Rule 144A under the Securities Act or any other available exemption under the
Securities Act or any such holder that is an "affiliate" of the Company within
the meaning of Rule 405 under the Securities Act), without compliance with the
registration and prospectus delivery provisions of the Securities Act, provided
that such New Certificates are acquired in the ordinary course of such holders'
business and such holders are not engaged in, and do not intend to engage in, a
distribution of such New Certificates and have no arrangement with any person to
participate in the distribution of such New Certificates. If a holder of Old
Certificates is engaged in or intends to engage in a distribution of the New
Certificates or has any arrangement or understanding with respect to the
distribution of the New Certificates to be acquired pursuant to the Exchange
Offer, such holder could not rely on the applicable interpretations of the Staff
of the Commission and must comply with the registration and prospectus delivery
requirements of the Securities Act in connection with any secondary resale
transaction. If the undersigned is a broker-dealer that will receive New
Certificates for its own account in exchange for the Old Certificates, it
represents that the Old Certificates to be exchanged for the New Certificates
were acquired by it as a result of market-making activities or other trading
activities and acknowledges that it will deliver a prospectus meeting the
requirements of the Securities Act in connection with any resale of such New
Certificates; however, by so acknowledging and by delivering a prospectus, the
undersigned will not be deemed to admit that it is an "underwriter" within the
meaning of the Securities Act.
The undersigned will, upon request, execute and deliver any
additional documents deemed by the Company to be necessary or desirable to
complete the sale, assignment and transfer of the Old Certificates tendered
hereby. All authority conferred or agreed to be conferred in this Letter and
every obligation of the undersigned hereunder shall be binding upon the
successors, assigns, heirs, executors, administrators, trustees in bankruptcy
and legal representatives of the undersigned and shall not be affected by, and
shall survive, the death or incapacity of the undersigned. This tender may be
withdrawn only in accordance with the procedures set forth in "The Exchange
Offer -- Withdrawal of Tenders" section of the Prospectus.
<PAGE> 8
-8-
Unless otherwise indicated herein in the box entitled "Special
Issuance Instructions" below, please deliver the New Certificates (and, if
applicable, substitute certificates representing Old Certificates for any Old
Certificates not exchanged) in the name of the undersigned or, in the case of a
book-entry delivery of Old Certificates, please credit the account indicated
above maintained at the Book-Entry Transfer Facility. Similarly, unless
otherwise indicated under the box entitled "Special Delivery Instructions"
below, please send the New Certificates (and, if applicable, substitute
certificates representing Old Certificates for any Old Certificates not
exchanged) to the undersigned at the address shown above in the box entitled
"Description of Old Certificates."
THE UNDERSIGNED, BY COMPLETING THE BOX ENTITLED "DESCRIPTION
OF OLD CERTIFICATES" ABOVE AND SIGNING THIS LETTER, WILL BE DEEMED TO HAVE
TENDERED THE OLD CERTIFICATES AS SET FORTH IN SUCH BOX ABOVE.
<PAGE> 9
-9-
- --------------------------------------------------------------------------------
SPECIAL ISSUANCE INSTRUCTIONS
(See Instructions 3 and 4)
To be completed ONLY if certificates for Old Certificates not exchanged and/or
New Certificates are to be issued in the name of and sent to someone other than
the person(s) whose signature(s) appear(s) on this Letter above, or if Old
Certificates delivered by book-entry transfer which are not accepted for
exchange are to be returned by credit to an account maintained at the Book-Entry
Transfer Facility other than the account indicated above.
Issue New Certificates and/or Old Certificates to:
Name(s):
-------------------------------------------
(Please Type or Print)
- ---------------------------------------------------
(Please Type or Print)
Address:
-------------------------------------------
- ---------------------------------------------------
(Including Zip Code)
(Complete accompanying Substitute Form W-9)
Credit unexchanged Old Certificates delivered by book-entry transfer to the
Book-Entry Transfer Facility account set forth below.
- -------------------------------------------------------------------------------
(Book-Entry Transfer Facility Account Number, if applicable)
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
SPECIAL DELIVERY INSTRUCTIONS
(See Instructions 3 and 4)
<PAGE> 10
-10-
To be completed ONLY if certificates for Old Certificates not exchanged
and/or New Certificates are to be sent to someone other than the person(s) whose
signature(s) appear(s) at an address other than shown in the box entitled
"Description of Old Certificates" on this Letter above.
Mail New Certificates and/or Old Certificates to:
Name(s):
-------------------------------------------
(Please Type or Print)
- ---------------------------------------------------
(Please Type or Print)
Address:
-------------------------------------------
- ---------------------------------------------------
(Including Zip Code)
- ---------------------------------------------------
IMPORTANT: THIS LETTER OR A FACSIMILE HEREOF (TOGETHER WITH THE CERTIFICATES FOR
OLD CERTIFICATES OR A BOOK-ENTRY CONFIRMATION AND ALL OTHER REQUIRED DOCUMENTS
OR THE NOTICE OF GUARANTEED DELIVERY) MUST BE RECEIVED BY THE EXCHANGE AGENT
PRIOR TO 5:00 P.M., NEW YORK CITY TIME, ON THE EXPIRATION DATE.
PLEASE READ THIS LETTER OF TRANSMITTAL
CAREFULLY BEFORE COMPLETING ANY BOX ABOVE.
<PAGE> 11
-11-
- -------------------------------------------------------------------------------
PLEASE SIGN HERE
(TO BE COMPLETED BY ALL TENDERING HOLDERS)
(Complete accompanying Substitute Form W-9)
Dated: , 2000
-------------------------------------------------------------------
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
(Signature(s) of Owner) (Date)
Area Code and Telephone Number:
------------------------------------------------
If a holder is tendering any Old Certificates, this Letter must be
signed by the registered holder(s) as the name(s) appear(s) on the
certificate(s) for the Old Certificates or by any person(s) authorized to become
registered holder(s) by endorsements and documents transmitted herewith. If
signature is by a trustee, executor, administrator, guardian, officer or other
person acting in a fiduciary or representative capacity, please set forth full
title. See Instruction 3.
Name(s):
-----------------------------------------------------------------------
- -------------------------------------------------------------------------------
(Please Type or Print)
Capacity:
----------------------------------------------------------------------
Address:
-----------------------------------------------------------------------
- -------------------------------------------------------------------------------
(Including Zip Code)
SIGNATURE GUARANTEE
(if required by Instruction 3)
Signature(s) Guaranteed by an Eligible
Institution:
-------------------------------------------------------------------
(Authorized Signature)
- -------------------------------------------------------------------------------
(Title)
- -------------------------------------------------------------------------------
(Name and Firm)
Dated: , 2000
-------------------------------------------------------------------
- -------------------------------------------------------------------------------
<PAGE> 12
-12-
INSTRUCTIONS
Forming Part of the Terms and Conditions of the
Offer to Exchange Atlas Air, Inc. Pass Through
Certificates, Series 2000-1 which have been registered
under the Securities Act of 1933, as amended,
for any and all Outstanding Atlas Air, Inc.
Pass Through Certificates, Series 2000-1.
1. Delivery of this Letter and Old Certificates; Guaranteed Delivery
Procedures.
This Letter is to be completed by holders of Old Certificates
either if certificates are to be forwarded herewith or if tenders are to be made
pursuant to the procedures for delivery by book-entry transfer set forth in "The
Exchange Offer -- Book-Entry Transfer" section of the Prospectus. Certificates
for all physically tendered Old Certificates, or Book-Entry Confirmation, as the
case may be, as well as a properly completed and duly executed Letter of
Transmittal (or facsimile thereof) and any other documents required by this
Letter, must be received by the Exchange Agent at the address set forth herein
on or prior to the Expiration Date, or the tendering holder must comply with the
guaranteed delivery procedures set forth below. Old Certificates tendered hereby
must be in denominations of principal amount at maturity of $1,000 and any
integral multiple thereof.
Holders of Old Certificates whose certificates for Old
Certificates are not immediately available or who cannot deliver their
certificates and all other required documents to the Exchange Agent on or prior
to the Expiration Date, or who cannot complete the procedure for book-entry
transfer on a timely basis, may tender their Old Certificates pursuant to the
guaranteed delivery procedures set forth in "The Exchange Offer -- Guaranteed
Delivery Procedures" section of the Prospectus. Pursuant to such procedures: (i)
such tender must be made through an Eligible Institution (as defined below),
(ii) prior to the Expiration Date, the Exchange Agent must receive from such
Eligible Institution a properly completed and duly executed Letter of
Transmittal (or facsimile thereof) and Notice of Guaranteed Delivery,
substantially in the form provided by the Company by facsimile transmission,
mail or hand delivery, setting forth the name and address of the holder of
<PAGE> 13
-13-
Old Certificates and the amount of Old Certificates tendered, stating that the
tender is being made thereby and guaranteeing that within three New York Stock
Exchange ("NYSE") trading days after the date of execution of the Notice of
Guaranteed Delivery, the certificates for all physically tendered Old
Certificates, or a Book-Entry Confirmation, as the case may be, and any other
documents required by this Letter will be deposited by the Eligible Institution
with the Exchange Agent, and (iii) the certificates for all physically tendered
Old Certificates, in proper form for transfer, or Book-Entry Confirmation, as
the case may be, and all other documents required by this Letter, are received
by the Exchange Agent within three NYSE trading days after the date of execution
of the Notice of Guaranteed Delivery.
The method of delivery of this Letter, the Old Certificates
and all other required documents is at the election and risk of the tendering
holders, but the delivery will be deemed made only when actually received or
confirmed by the Exchange Agent. If Old Certificates are sent by mail, it is
suggested that the mailing be made sufficiently in advance of the Expiration
Date to permit delivery to the Exchange Agent prior to 5:00 p.m., New York City
time, on the Expiration Date.
See "The Exchange Offer" section of the Prospectus.
2. Partial Tenders (not applicable to holders of Old Certificates who
tender by book-entry transfer).
If less than all of the Old Certificates evidenced by a
submitted certificate are to be tendered, the tendering holder(s) should fill in
the aggregate principal amount of Old Certificates to be tendered in the box
above entitled "Description of Old Certificates -- Principal Amount Tendered." A
reissued certificate representing the balance of nontendered Old Certificates
will be sent to such tendering holder, unless otherwise provided in the
appropriate box on this Letter, promptly after the Expiration Date. All of the
Old Certificates delivered to the Exchange Agent will be deemed to have been
tendered unless otherwise indicated.
3. Signatures of this Letter; Bond Powers and Endorsements; Guarantee of
Signatures.
If this Letter is signed by the registered holder of the Old
Certificates tendered hereby, the signature must
<PAGE> 14
-14-
correspond exactly with the name as written on the face of the certificates
without any change whatsoever.
If any tendered Old Certificates are owned of record by two or
more joint owners, all such owners must sign this Letter.
If any tendered Old Certificates are registered in different
names on several certificates, it will be necessary to complete, sign and submit
as many separate copies of this Letter as there are different registrations of
certificates.
When this Letter is signed by the registered holder of the Old
Certificates specified herein and tendered hereby, no endorsements of
certificates or separate bond powers are required. If, however, the New
Certificates are to be issued, or any untendered Old Certificates are to be
reissued, to a person other than the registered holder, then endorsements of any
certificates transmitted hereby or separate bond powers are required. Signatures
on such certificates must be guaranteed by an Eligible Institution.
If this Letter is signed by a person other than the registered
holder of any certificates specified herein, such certificates must be endorsed
or accompanied by appropriate bond powers, in either case signed exactly as the
name of the registered holder appears on the certificates and the signatures on
such certificates must be guaranteed by an Eligible Institution.
If this Letter or any certificates or bond powers are signed
by trustees, executors, administrators, guardians, attorneys-in-fact, officers
of corporations or others acting in a fiduciary or representative capacity, such
persons should so indicate when signing, and, unless waived by the Company,
proper evidence satisfactory to the Company of their authority to so act must be
submitted.
Endorsements on certificates for Old Certificates or
signatures on bond powers required by this Instruction 3 must be guaranteed by a
firm which is a member of a registered national securities exchange or a member
of the National Association of Securities Dealers, Inc., by a commercial bank or
trust company having an office or correspondent in the United States or by an
"eligible guarantor" institution within the meaning of
<PAGE> 15
-15-
Rule 17Ad-15 under the Securities Exchange Act Of 1934 (an "Eligible
Institution").
Signatures on this Letter need not be guaranteed by an
Eligible Institution, provided the Old Certificates are tendered: (i) by a
registered holder of Old Certificates (which term, for purposes of the Exchange
Offer, includes any participant in the Book-Entry Transfer Facility system whose
name appears on a security position listing as the holder of such Old
Certificates) tendered who has not completed the box entitled "Special Issuance
Instructions" or "Special Delivery Instructions" on this Letter, or (ii) for the
account of an Eligible Institution.
4. Special Issuance and Delivery Instructions.
Tendering holders of Old Certificates should indicate in the
applicable box the name and address to which New Certificates issued pursuant to
the Exchange Offer and/or substitute certificates evidencing Old Certificates
not exchanged are to be issued or sent, if different from the name or address of
the person signing this Letter. In the case of issuance in a different name, the
employer identification or social security number of the person named must also
be indicated. A holder of Old Certificates tendering Old Certificates by
book-entry transfer may request that Old certificates not exchanged be credited
to such account maintained at the Book-Entry Transfer Facility as such holder of
Old Certificates may designate hereon. If no such instructions are given, such
Old Certificates not exchanged will be returned to the name or address of the
person signing this Letter.
5. Tax Identification Number.
Federal income tax law generally requires that a tendering
holder whose Old Certificates are accepted for exchange must provide the Company
(as payor) with such Holder's correct Taxpayer Identification Number ("TIN") on
Substitute Form W-9 below, which, in the case of a tendering holder who is an
individual, is his or her social security number. If the Company is not provided
with the current TIN or an adequate basis for an exemption, such tendering
holder may be subject to a $50 penalty imposed by the Internal Revenue Service.
In addition, delivery of New Certificates to such tendering holder may be
subject to backup withholding in an amount equal to 31% of all
<PAGE> 16
-16-
reportable payments made after the exchange. If withholding results in an
overpayment of taxes, a refund may be obtained.
Exempt holders of Old Certificates (including, among others,
all corporations and certain foreign individuals) are not subject to these
backup withholding and reporting requirements. See the enclosed Guidelines of
Certification of Taxpayer Identification Number on Substitute Form W-9 (the "W-9
Guidelines") for additional instructions.
To prevent backup withholding, each tendering holder of Old
Certificates must provide its correct TIN by completing the "Substitute Form
W-9" set forth below, certifying that the TIN provided is correct (or that such
holder is awaiting a TIN) and that (i) the holder is exempt from backup
withholding, (ii) the holder has not been notified by the Internal Revenue
Service that such holder is subject to a backup withholding as a result of a
failure to report all interest or dividends or (iii) the Internal Revenue
Service has notified the holder that such holder is no longer subject to backup
withholding. If the tendering holder of Old Certificates is a nonresident alien
or foreign entity not subject to backup withholding, such holder must give the
Company a completed Form W-8, Certificate of Foreign Status. These forms may be
obtained from the Exchange Agent. If the Old Certificates are in more than one
name or are not in the name of the actual owner, such holder should consult the
W-9 Guidelines for information on which TIN to report. If such holder does not
have a TIN, such holder should consult the W-9 Guidelines for instructions on
applying for a TIN, check the box in Part 2 of the Substitute Form W-9 and write
"applied for" in lieu of its TIN. Note: checking this box and writing "applied
for" on the form means that such holder has already applied for a TIN or that
such holder intends to apply for one in the near future. If such holder does not
provide its TIN to the Company within 60 days, backup withholding will begin and
continue until such holder furnishes its TIN to the Company.
6. Transfer Taxes.
The Company will pay all transfer taxes, if any, applicable to
the transfer of Old Certificates to it or its order pursuant to the Exchange
Offer. If, however, New Certificates and/or substitute Old Certificates not
exchanged are to be delivered to, or are to be registered or issued in the name
of,
<PAGE> 17
-17-
any person other than the registered holder of the Old Certificates tendered
hereby, or if tendered Old Certificates are registered in the name of any person
other than the person signing this Letter, or if a transfer tax is imposed for
any reason other than the transfer of Old Certificates to the Company or its
order pursuant to the Exchange Offer, the amount of any such transfer taxes
(whether imposed on the registered holder or any other persons) will be payable
by the tendering holder. If satisfactory evidence of payment of such taxes or
exemption therefrom is not submitted herewith, the amount of such transfer taxes
will be billed directly to such tendering holder.
Except as provided in this Instruction 6, it is not necessary
for transfer tax stamps to be affixed to the Old Certificates specified in this
Letter.
7. Waiver of Conditions.
The Company reserves the absolute right to waive satisfaction
of any or all conditions enumerated in the Prospectus.
8. No Conditional Tenders.
No alternative, conditional, irregular or contingent tenders
will be accepted. All tendering holders of Old Certificates, by execution of
this Letter, shall waive any right to receive notice of the acceptance of their
Old Certificates for exchange.
Neither the Company, the Exchange Agent nor any other person
is obligated to give notice of any defect or irregularity with respect to any
tender of Old Certificates nor shall any of them incur any liability for failure
to give any such notice.
9. Mutilated, Lost, Stolen or Destroyed Old Certificates.
Any holder whose Old Certificates have been mutilated, lost,
stolen or destroyed should contact the Exchange Agent at the address indicated
above for further instructions.
10. Requests for Assistance or Additional Copies.
Questions relating to the procedure for tendering, as well as
requests for additional copies of the Prospectus and this Letter, may be
directed to the Exchange Agent, at the address and telephone number indicated
above.
<PAGE> 18
-18-
TO BE COMPLETED BY ALL TENDERING HOLDERS
(See Instruction 5)
PAYOR'S NAME: ATLAS AIR, INC.
<TABLE>
<S> <C> <C>
SUBSTITUTE Part 1 -- PLEASE PROVIDE YOUR TIN TIN: _______________
Form W-9 IN THE BOX AT RIGHT AND CERTIFY BY (Social Security Number or Employer
SIGNING AND DATING BELOW. Identification Number)
Department of the Treasury Part 2 -- TIN Applied For --[ ]
Internal Revenue Service CERTIFICATION: UNDER THE PENALTIES OF PERJURY, I CERTIFY THAT:
Payor's Request for Taxpayer (1) the number shown on this form is my correct Taxpayer
Identification Number ("TIN") and Identification Number Payor's Request Form (or I am waiting for a number
Certification to be issued to me),
(2) I am not subject to backup withholding either because: (a) I am
exempt from Identification Number Backup Withholding, or (b) I have not
been notified by the Internal Revenue Service and (the "IRS") that I am
subject to backup withholding as a result of a failure to report all
interest or dividends, or (c) the IRS has notified me that I am no longer
subject to backup withholding, and
(3) any other information provided on this form is true and correct.
SIGNATURE: DATE:
-------------------------------------- ------------
</TABLE>
- --------------------------------------------------------------------------------
You must cross out item (2) of the above certification if you have been notified
by the IRS that you are subject to backup withholding because of underreporting
of interest or dividends on your tax return and you have not been notified by
the IRS that you are no longer subject to backup withholding.
<PAGE> 19
-19-
- --------------------------------------------------------------------------------
YOU MUST COMPLETE THE FOLLOWING CERTIFICATE IF YOU CHECKED
THE BOX IN PART 2 OF SUBSTITUTE FORM W-9
- --------------------------------------------------------------------------------
CERTIFICATE OF AWAITING TAXPAYER IDENTIFICATION NUMBER
I certify under penalties of perjury that a taxpayer identification number has
not been issued to me, and either (a) I have mailed or delivered an application
to receive a taxpayer identification number to the appropriate Internal Revenue
Service Center or Social Security Administration Office or (b) I intend to mail
or deliver an application in the near future. I understand that if I do not
provide a taxpayer identification number by the time of the exchange, 31 percent
of all reportable payments made to me thereafter will be withheld until I
provide a number.
- --------------------------------------------------------------------------------
Signature Date
- --------------------------------------------------------------------------------
<PAGE> 1
EXHIBIT 99.2
NOTICE OF GUARANTEED DELIVERY FOR
ATLAS AIR, INC.
This form or one substantially equivalent hereto must be used
to accept the Exchange Offer of Atlas Air, Inc. (the "Company") made pursuant to
the prospectus, dated __________, 2000 (the "Prospectus"), and the enclosed
letter of transmittal (the "Letter of Transmittal") if certificates for Old
Certificates are not immediately available or if the procedure for book-entry
transfer cannot be completed on a timely basis or time will not permit all
required documents to reach the Company prior to 5:00 P.M., New York City time,
on the Expiration Date of the Exchange Offer. Such form may be delivered or
transmitted by facsimile transmission, mail or hand delivery to Wilmington Trust
Company (the "Exchange Agent") as set forth below. In addition, in order to
utilize the guaranteed delivery procedure to tender Old Certificates pursuant to
the Exchange Offer, a completed, signed and dated Letter of Transmittal (or
facsimile thereof) must also be received by the Exchange Agent prior to 5:00
P.M., New York City time, on the Expiration Date. Capitalized terms not defined
herein are defined in the Prospectus.
Delivery to: Wilmington Trust Company, Exchange Agent
By Mail, Overnight Delivery: By Hand:
Wilmington Trust Company Wilmington Trust Company
1100 North Market Street 1105 North Market Street
Wilmington, 1st Floor
Delaware 19890-0001 Wilmington, Delaware 19890
Attention: Corporate Trust Attention: Corporate Trust
Operations -- Atlas Air -- Operations -- Atlas
2000 EETC Exchange Offer Air -- 2000 EETC
Exchange Offer
Facsimile Transmission:
(302) 651-1079
Confirm by Telephone:
(302) 651-8474
Corporate Trust Operations
Delivery of this instrument to an address other than as set
forth above, or transmission of instructions via
<PAGE> 2
-2-
facsimile other than as set forth above, will not constitute a valid delivery.
Ladies and Gentlemen:
Upon the terms and conditions set forth in the Prospectus and
the accompanying Letter of Transmittal, the undersigned hereby tenders to the
Company the principal amount of Old Certificates set forth below, pursuant to
the guaranteed delivery procedure described in "The Exchange Offer -- Guaranteed
Delivery Procedures" section of the Prospectus.
Principal Amount of Old Certificates Name(s) of Record Holder(s):
Tendered:
$ ------------------------------
-----------------------------
------------------------------
Certificate Nos. (if available) Address(es):
- ------------------------------ ------------------------------
- ------------------------------ ------------------------------
If Old Certificates will be
delivered by book-entry transfer to Area Code and Telephone Number(s):
The Depository Trust Company,
provide account number.
------------------------------
Signature(s):
Account
Number
------------------------ ------------------------------
------------------------------
THE ACCOMPANYING GUARANTEE MUST BE COMPLETED.
<PAGE> 3
-3-
GUARANTEE
(Not to be used for signature guarantee)
The undersigned, a firm that is a member firm of a registered national
securities exchange or of the National Association of Securities Dealers, Inc.,
a commercial bank or trust company having an office correspondent in the United
States or any "eligible guarantor" institution within the meaning of Rule
17Ad-15 of the Exchange Act of 1934, as amended, hereby (a) guarantees to
deliver to the Exchange Agent, at one of its addresses set forth above, the
certificates representing all tendered Old Certificates, in proper form for
transfer, or a Book-Entry Confirmation, together with a properly completed and
duly executed Letter of Transmittal (or facsimile thereof), with any required
signature guarantees, and any other documents required by the Letter of
Transmittal within three New York Stock Exchange, Inc. trading days after the
date of execution of this Notice of Guaranteed Delivery.
Name of Firm:
----------------- ------------------------------
Address: (Authorized Signature)
----------------------
- ------------------------------
Area Code and Telephone
Number:
-----------------------
Title:
------------------------
Name:
-------------------------
Date:
-------------------------
<PAGE> 1
EXHIBIT 99.3
ATLAS AIR, INC.
Offer to Exchange
Pass Through Certificates, Series 2000-1,
which have been registered under the
Securities Act of 1933, as amended,
for any and all Outstanding
Pass Through Certificates, Series 2000-1
To: Brokers, Dealers, Commercial Banks,
Trust Companies and Other Nominees
Upon and subject to the terms and conditions set forth in the
prospectus, dated ____________, 2000 (the "Prospectus"), and the enclosed letter
of transmittal (the "Letter of Transmittal"), an offer to exchange (the
"Exchange Offer") the registered Pass Through Certificates, Series 2000-1 (the
"New Certificates") for any and all outstanding Pass Through Certificates,
Series 2000-1 (the "Old Certificates") (CUSIP Nos. 049164AY2, U04885AG1,
049164BA3, U04885AH9, 049164BC9 and U04885AJ5) is being made pursuant to such
Prospectus. The Exchange Offer is being made in order to satisfy certain
obligations of Atlas Air, Inc. (the "Company") contained in the Registration
Rights Agreement dated as of January 28, 2000, between the Company and the
Initial Purchasers.
We are requesting that you contact your clients for whom you
hold Old Certificates regarding the Exchange Offer. For your information and for
forwarding to your clients for whom you hold Old Certificates registered in your
name or in the name of your nominee, or who hold Old Certificates registered in
their own names, we are enclosing the following documents:
1. Prospectus dated ______________, 2000;
2. The Letter of Transmittal for your use and for the
information of your clients;
3. A Notice of Guaranteed Delivery to be used to accept the
Exchange Offer if certificates for Old Certificates
<PAGE> 2
-2-
are not immediately available or time will not permit all required documents to
reach the Exchange Agent prior to the Expiration Date (as defined below) or if
the procedure for book-entry transfer cannot be completed on a timely basis; and
4. A form of letter which may be sent to your clients for
whose account you hold Old Certificates registered in your name or the name of
your nominee, with space provided for obtaining such clients' instructions with
regard to the Exchange Offer.
Your prompt action is requested. The Exchange Offer will
expire at 5:00 P.M., New York City time, on __________, 2000 (the "Expiration
Date") (30 calendar days following the commencement of the Exchange Offer),
unless extended by the Company. The Old Certificates tendered pursuant to the
Exchange Offer may be withdrawn at any time before 5:00 P.M. New York City time
on the Expiration Date.
To participate in the Exchange Offer, a duly executed and
properly completed Letter of Transmittal (or facsimile thereof), with any
required signature guarantees and any other required documents, should be sent
to the Exchange Agent and certificates representing the Old Certificates should
be delivered to the Exchange Agent, all in accordance with the instructions set
forth in the Letter of Transmittal and the Prospectus.
If holders of Old Certificates wish to tender, but it is
impracticable for them to forward their certificates for Old Certificates prior
to the expiration of the Exchange Offer or to comply with the book-entry
transfer procedures on a timely basis, a tender may be effected by following the
guaranteed delivery procedures described in the Prospectus under "The Exchange
Offer -- Guaranteed Delivery Procedures."
Additional copies of the enclosed material may be obtained
from Wilmington Trust Company, the Exchange Agent, at 1100 North Market Street,
Wilmington, Delaware 19890-0001, Attention: Robert Hines, Phone (302) 651-8816
and facsimile (302) 651-1079.
ATLAS AIR, INC.
<PAGE> 1
EXHIBIT 99.4
ATLAS AIR, INC.
Offer to Exchange
Pass Through Certificates, Series 2000-1
which have been registered under the Securities Act
of 1933, as amended,
for any and all Outstanding
Pass Through Certificates, Series 2000-1
To Our Clients:
Enclosed for your consideration is a prospectus of Atlas Air,
Inc., a Delaware corporation (the "Company" or "Atlas"), dated _____________,
2000 (the "Prospectus"), and the enclosed letter of transmittal (the "Letter of
Transmittal") relating to the offer to exchange (the "Exchange Offer")
registered Pass Through Certificates, Series 2000-1 (the "New Certificates") for
any and all outstanding Pass Through Certificates, Series 2000-1 (the "Old
Certificates") (CUSIP Nos. 049164AY2, U04885AG1, 049164BA3, U04885AH9, 049164BC9
and U04885AJ5), upon the terms and subject to the conditions described in the
Prospectus. The Exchange Offer is being made in order to satisfy certain
obligations of Atlas contained in the Registration Rights Agreement dated as of
January 28, 2000, between the Company and the Initial Purchasers.
This material is being forwarded to you as the beneficial
owner of the Old Certificates carried by us in your account but not registered
in your name. A tender of such Old Certificates may only be made by us as the
holder of record and pursuant to your instructions.
Accordingly, we request instructions as to whether you wish us
to tender on your behalf the Old Certificates held by us for your account,
pursuant to the terms and conditions set forth in the enclosed Prospectus and
Letter of Transmittal.
Your instructions should be forwarded to us as promptly as
possible in order to permit us to tender the Old Certificates on your behalf in
accordance with the provisions of the Exchange Offer. The Exchange Offer will
expire at 5:00
<PAGE> 2
-2-
P.M., New York City time, on _______________, 2000 (the "Expiration Date") (30
calendar days following the commencement of the Exchange Offer), unless extended
by the Company. Any Old Certificates tendered pursuant to the Exchange Offer may
be withdrawn at any time before 5:00 P.M., New York City time on the Expiration
Date.
Your attention is directed to the following:
1. The Exchange Offer is for any and all Old Certificates.
2. The Exchange Offer is subject to certain conditions set
forth in the Prospectus in the section captioned "The Exchange Offer--
Conditions."
3. Any transfer taxes incident to the transfer of Old
Certificates from the holder to the Company will be paid by the Company, except
as otherwise provided in the Instructions in the Letter of Transmittal.
4. The Exchange Offer expires at 5:00 P.M., New York City
time, on the Expiration Date unless extended by the Company.
If you wish to have us tender your Old Certificates, please so
instruct us by completing, executing and returning to us the instruction form
set forth below. The Letter of Transmittal is furnished to you for information
only and may not be used directly by you to tender Old Certificates.
<PAGE> 3
-3-
Instructions with Respect to the Exchange Offer
The undersigned acknowledge(s) receipt of your letter enclosing the
Prospectus, dated _________________, 2000, of Atlas Air, Inc., a Delaware
corporation, and the related specimen Letter of Transmittal.
- --------------------------------------------------------------------------------
This will instruct you to tender the number of Old Certificates
indicated below held by you for the account of the undersigned, pursuant to the
terms and conditions set forth in the Prospectus and the related Letter of
Transmittal. (Check one)
Box 1 [ ] Please tender my Old Certificates held by you for my account.
If I do not wish to tender all of the Old Certificates held by
you for my account, I have identified on a signed schedule
attached hereto the number of Old Certificates that I do not
wish tendered.
Box 2 [ ] Please do not tender any Old Certificates held by you for my
account.
- --------------------------------------------------------------------------------
Date: , 2000
----- ---------------------------------------------
Signature(s)
---------------------------------------------
Please print name(s) here
---------------------------------------------
Area Code and Telephone No.
Unless a specific contrary instruction is given in the space
provided, your signature(s) hereon shall constitute an instruction to us to
tender all Old Certificates.
