EXECUTION
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INTERCREDITOR AGREEMENT
DATED AS OF April 21, 1998
AMONG
WILMINGTON TRUST COMPANY,
NOT IN ITS INDIVIDUAL CAPACITY
BUT SOLELY AS TRUSTEE UNDER THE
CONTINENTAL AIRLINES PASS THROUGH TRUST 0000-0X,
XXXXXXXXXXX XXXXXXXX XXXX THROUGH TRUST 1998-2B
AND
CONTINENTAL AIRLINES PASS THROUGH TRUST 1998-2C
WESTDEUTSCHE LANDESBANK GIROZENTRALE,
ACTING THROUGH ITS NEW YORK BRANCH
AS CLASS A LIQUIDITY PROVIDER,
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
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TABLE OF CONTENTS
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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.................................. 19
SECTION 2.2. Trust Accounts........................................ 19
SECTION 2.3. Deposits to the Collection Account and Special
Payments Account...................................... 21
SECTION 2.4. Distributions of Special Payments..................... 21
SECTION 2.5. Designated Representatives............................ 24
SECTION 2.6. Controlling Party..................................... 24
ARTICLE III - RECEIPT, DISTRIBUTION AND APPLICATION OF AMOUNTS RECEIVED
SECTION 3.1. Written Notice of Distribution........................ 26
SECTION 3.2. Distribution of Amounts on Deposit in the
Collection Account.................................... 28
SECTION 3.3. Distribution of Amounts on Deposit Following a
Triggering Event...................................... 29
SECTION 3.4. Other Payments........................................ 31
SECTION 3.5. Payments to the Trustees and the Liquidity
Providers............................................. 32
SECTION 3.6. Liquidity Facilities.................................. 32
ARTICLE IV - EXERCISE OF REMEDIES
SECTION 4.1. Directions from the Controlling Party................. 39
SECTION 4.2. Remedies Cumulative................................... 40
SECTION 4.3. Discontinuance of Proceedings......................... 40
SECTION 4.4. Right of Certificateholders to Receive Payments
Not to Be Impaired.................................... 41
SECTION 4.5. Undertaking for Costs................................. 41
ARTICLE V - DUTIES OF THE SUBORDINATION AGENT; AGREEMENTS OF TRUSTEES, ETC.
SECTION 5.1. Notice of Indenture Default or Triggering Event....... 41
TABLE OF CONTENTS
(Continued)
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SECTION 5.2. Indemnification....................................... 42
SECTION 5.3. No Duties Except as Specified in Intercreditor
Agreement............................................. 42
SECTION 5.4. Notice from the Liquidity Providers and Trustees...... 42
ARTICLE VI - THE SUBORDINATION AGENT
SECTION 6.1. Authorization; Acceptance of Trusts and Duties........ 43
SECTION 6.2. Absence of Duties..................................... 43
SECTION 6.3. No Representations or Warranties as to Documents...... 43
SECTION 6.4. No Segregation of Monies; No Interest................. 43
SECTION 6.5. Reliance; Agents; Advice of Counsel................... 44
SECTION 6.6. Capacity in Which Acting.............................. 44
SECTION 6.7. Compensation.......................................... 44
SECTION 6.8. May Become Certificateholder.......................... 44
SECTION 6.9. Subordination Agent Required; Eligibility............. 45
SECTION 6.10. Money to Be Held in Trust............................. 45
ARTICLE VII - INDEMNIFICATION OF SUBORDINATION AGENT
SECTION 7.1. Scope of Indemnification.............................. 45
ARTICLE VIII - SUCCESSOR SUBORDINATION AGENT
SECTION 8.1. Replacement of Subordination Agent; Appointment
of Successor.......................................... 46
ARTICLE IX - SUPPLEMENTS AND AMENDMENTS
SECTION 9.1. Amendments, Waivers, etc.............................. 47
SECTION 9.2. Subordination Agent Protected......................... 48
SECTION 9.3. Effect of Supplemental Agreements..................... 48
SECTION 9.4. Notice to Rating Agencies............................. 48
ARTICLE X - MISCELLANEOUS
SECTION 10.1. Termination of Intercreditor Agreement................ 48
SECTION 10.2. Intercreditor Agreement for Benefit of Trustees,
Liquidity Providers and Subordination Agent........... 49
SECTION 10.3. Notices............................................... 49
SECTION 10.4. Severability.......................................... 50
SECTION 10.5. No Oral Modifications or Continuing Waivers........... 50
TABLE OF CONTENTS
(Continued)
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SECTION 10.6. Successors and Assigns................................ 50
SECTION 10.7. Headings.............................................. 51
SECTION 10.8. Counterpart Form...................................... 51
SECTION 10.9. Subordination......................................... 51
SECTION 10.10. Governing Law......................................... 52
SECTION 10.11. Submission to Jurisdiction; Waiver of Jury Trial;
Waiver of Immunity.................................... 52
INTERCREDITOR AGREEMENT
INTERCREDITOR AGREEMENT dated as of April 21, 1998, among WILMINGTON
TRUST COMPANY, a Delaware corporation ("WTC"), not in its individual capacity
but solely as Trustee of each Trust (each as defined below); WESTDEUTSCHE
LANDESBANK GIROZENTRALE ("WESTLB"), a bank organized under the laws of the State
of North Rhine-Westphalia, Germany, acting through its New York Branch, as Class
A Liquidity Provider, 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, the related Owner Trustee will
issue on a nonrecourse basis three series of Equipment Notes to finance the
purchase of the Aircraft;
WHEREAS, pursuant to the Participation Agreements, each Trust will
acquire Equipment Notes having an interest rate equal to the interest rate
applicable to the Certificates to be issued by such Trust;
WHEREAS, pursuant to each Trust Agreement, the Trust created thereby
proposes to issue a single class of Certificates (a "CLASS") bearing the
interest rate and having the final distribution date described in such Trust
Agreement on the terms and subject to the conditions set forth therein;
WHEREAS, pursuant to the Underwriting Agreement, the Underwriters
propose to purchase the Certificates issued by each Trust in the aggregate face
amount set forth opposite the name of such Trust on Schedule I thereto on the
terms and subject to the conditions set forth therein;
WHEREAS, the Liquidity Provider proposes to enter into three separate
revolving credit agreements (each, a "Liquidity Facility") with the
Subordination Agent, as agent for the Trustee of each Trust, respectively, for
the benefit of the Certificateholders of such Trust; and
WHEREAS, it is a condition precedent to the obligations of the
Underwriters under the Underwriting Agreement that the Subordination Agent, the
Trustees and the Liquidity Provider 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 Provider, 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 (after giving effect to any
Escrowed Funds Interest Distribution to be made on such Current Distribution
Date with respect to such Certificates) and (y) the greater of:
(A) the difference between (x) the Pool Balance of such Certificates
as of the immediately preceding Distribution Date (or, if the Current
Distribution Date is the first Distribution Date, the original aggregate
face amount of the Certificates of such Trust) less (if applicable) the
aggregate amount of Escrowed Funds (as defined in the Trust Agreement for
such Trust) for such Class of Certificates as of such immediately
preceding Distribution Date (or, if the Current Distribution Date is the
first Distribution Date, as of the Issuance Date) thereafter distributed
to the Certificateholders of such Class in accordance with Section 2.02(b)
of the Trust Agreement for such Trust (excluding the interest component of
any such distribution) 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, and
(B) the amount of the excess, if any, of (i) the amount described in
sub-clause (A)(x) above, 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.
"AGGREGATE LTV COLLATERAL AMOUNT" for any Class of Certificates for
any Distribution Date means the sum of the applicable LTV Collateral Amounts for
each Aircraft, minus the Pool Balance for each Class of Certificates, if any,
senior to such Class, after giving effect to any distribution of principal on
such Distribution Date with respect to such senior Class or Classes.
"AIRCRAFT" means, with respect to each Indenture, the "Aircraft"
referred to therein.
"APPRAISAL" means a fair market value appraisal (which may be a
"desktop" appraisal) performed by any Appraiser or any other nationally
recognized appraiser on the basis of an arm's-length transaction between an
informed and willing purchaser under no compulsion to buy and an informed and
willing seller under no compulsion to sell and both having knowledge of all
relevant facts.
"APPRAISED CURRENT MARKET VALUE" of any Aircraft means the lower of
the average and the median of the three most recent Appraisals of such Aircraft.
"APPRAISERS" means Aircraft Information Services, Inc., BK
Associates, Inc. and Xxxxxx Xxxxx and Xxxxx, Inc.
"AVAILABLE AMOUNT" means, with respect to any Liquidity Facility on
any drawing date, subject to the proviso contained in the first sentence of
Section 3.6(g) hereof, an amount equal to (a) the Stated Amount of such
Liquidity Facility at such time, LESS (b) the aggregate amount of each Interest
Drawing honored by the Liquidity Provider under such Liquidity Facility on or
prior to such date which has not been reimbursed or reinstated as of such date;
PROVIDED that, following a Downgrade Drawing, a Non-Extension Drawing or a Final
Drawing under such Liquidity Facility, the Available Amount of such Liquidity
Facility shall be zero.
"BASIC AGREEMENT" means the Pass Through Trust Agreement dated as of
September 25, 1997 between Continental 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 Houston, Texas,
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. "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 the initial Class A Liquidity Provider,
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
any Class A Liquidity Facility pursuant to Section 3.6(e).
"CLASS A TRUST" means the Continental Airlines Pass Through Trust
1998-2A created and administered pursuant to the Class A Trust Agreement.
"CLASS A TRUST AGREEMENT" means the Basic Agreement, as supplemented
by the Trust Supplement No. 1998-2A thereto dated as of the date hereof,
governing the creation and administration of the Continental Airlines Pass
Through Trust 1998-2A 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.
"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 the initial Class B Liquidity Provider,
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 WestLB, together with any
Replacement Liquidity Provider which has issued a Replacement Liquidity Facility
to replace any Class B Liquidity Facility pursuant to Section 3.6(e).
"CLASS B TRUST" means the Continental Airlines Pass Through Trust
1998-2B created and administered pursuant to the Class B Trust Agreement.
"CLASS B TRUST AGREEMENT" means the Basic Agreement, as supplemented
by the Trust Supplement No. 1998-2B thereto dated as of the date hereof,
governing the creation and administration of the Continental Airlines Pass
Through Trust 1998-2B and the issuance of the Class B Certificates, as the same
may be amended, supplemented or otherwise modified from time to time in
accordance with its terms.
"CLASS B TRUSTEE" means WTC, not in its individual capacity except as
expressly set forth in the Class B Trust Agreement, but solely as trustee under
the Class B Trust Agreement, together with any successor trustee appointed
pursuant thereto.
"CLASS C CASH COLLATERAL ACCOUNT" means an Eligible Deposit Account
in the name of the Subordination Agent and maintained at an Eligible
Institution, which shall be the Subordination Agent if it shall so qualify, into
which all amounts drawn under the Class C Liquidity Facility pursuant to Section
3.6(c), 3.6(d) or 3.6(i) shall be deposited.
"CLASS C CERTIFICATEHOLDER" means, at any time, any holder of one or
more Class C Certificates.
"CLASS C CERTIFICATES" means the certificates issued by the Class C
Trust, substantially in the form of Exhibit A to the Class C Trust Agreement,
and authenticated by the Class C Trustee, representing fractional undivided
interests in the Class C Trust, and any certificates issued in exchange therefor
or replacement thereof pursuant to the terms of the Class C Trust Agreement.
"CLASS C LIQUIDITY FACILITY" means, initially, the Revolving Credit
Agreement dated as of the date hereof, between the Subordination Agent, as agent
and trustee for the Class C Trustee, and the initial Class C Liquidity Provider,
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 WestLB, together with any
Replacement Liquidity Provider which has issued a Replacement Liquidity Facility
to replace any Class C Liquidity Facility pursuant to Section 3.6(e).
"CLASS C TRUST" means the Continental Airlines Pass Through Trust
1998-2C created and administered pursuant to the Class C Trust Agreement.
"CLASS C TRUST AGREEMENT" means the Basic Agreement, as supplemented
by the Trust Supplement No. 1998-2C thereto dated as of the date hereof,
governing the creation and administration of the Continental Airlines Pass
Through Trust 1998-2C 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.
"CLOSING DATE" means April 21, 1998.
"CODE" means the Internal Revenue Code of 1986, as amended from time
to time, and the 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.
"CONTINENTAL" means Continental Airlines, Inc., a Delaware
corporation, and its successors and assigns.
"CONTINENTAL BANKRUPTCY EVENT" means the occurrence and continuation
of any of the following:
(a) Continental 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 Continental 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 Continental 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 Continental
in any such case, or Continental 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 Continental shall seek an agreement,
composition, extension or adjustment with its creditors under such laws,
or Continental's 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 Continental, a
receiver, trustee or liquidator of Continental or of any substantial part
of its property, or any substantial part of the property of Continental
shall be sequestered, or granting any other relief in respect of
Continental 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 Continental 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 Continental, any court of competent
jurisdiction assumes jurisdiction, custody or control of Continental 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.
"CONTINENTAL PROVISIONS" has the meaning specified in Section 9.1(a).
"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.
"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" or "$" 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 Continental holds any participation in the
related Liquidity Facility unless written confirmation shall have been received
from each Rating Agency prior to such time to the effect that such maintenance
of the Cash Collateral Account with the Liquidity Provider will not result in a
withdrawal or downgrading of the ratings of the Certificates.
"ELIGIBLE INSTITUTION" means (a) the corporate trust department of
the Subordination Agent or any Trustee, as applicable, or (b) a depository
institution organized under the laws of the United States of America or any one
of the states thereof or the District of Columbia (or any U.S. branch of a
foreign bank), which has a long-term unsecured debt rating from each Rating
Agency of at least A-3 or its equivalent; PROVIDED that a Liquidity Provider
shall not qualify as an Eligible Institution at any time Continental 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 Standard & Poor's of at least A-1 and P-1, respectively,
having maturities no later than 90 days following the date of such investment or
(c) investments in negotiable certificates of deposit, time deposits, banker's
acceptances, commercial paper or other direct obligations of, or obligations
guaranteed by, commercial banks organized under the laws of the United States or
of any political subdivision thereof (or any U.S. branch of a foreign bank) with
issuer ratings of at least B/C by Thomson Bankwatch, having maturities no later
than 90 days following the date of such investment; PROVIDED, HOWEVER, that (x)
all Eligible Investments that are bank obligations shall be denominated in U.S.
dollars; and (y) the aggregate amount of Eligible Investments at any one time
that are bank obligations issued by any one bank shall not be in excess of 5% of
such bank's capital surplus; PROVIDED FURTHER that (1) any investment of the
types described in clauses (a), (b) and (c) above may be made through a
repurchase agreement in commercially reasonable form with a bank or other
financial institution qualifying as an Eligible Institution so long as such
investment is held by a third party custodian also qualifying as an Eligible
Institution, and (2) all such investments set forth in clause (a), (b) or (c)
above mature no later than the Business Day immediately preceding the next
Regular Distribution Date; PROVIDED FURTHER, HOWEVER, that in the case of any
Eligible Investment issued by a domestic branch of a foreign bank, the income
from such investment shall be from sources within the United States for purposes
of the Code. Notwithstanding the foregoing, no investment of the types described
in clause (b) or (c) above which is issued or guaranteed by a Liquidity Provider
or Continental 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 Continental 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.
"ESCROWED FUNDS INTEREST DISTRIBUTION" means, with respect to the
Certificates of any Class, the interest component of any distribution to the
Certificateholders of such Class pursuant to Section 2.02(b) of the Trust
Agreement for such Class of Certificates.
"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 (after giving effect to any Escrowed Funds
Interest Distribution to be made on such Current Distribution Date with respect
to such Certificates) and (y) the difference between (A) the Pool Balance of
such Certificates as of the immediately preceding Distribution Date (or, if the
Current Distribution Date is the first Distribution Date, the original aggregate
face amount of the Certificates of such Trust) less (if applicable) the
aggregate amount of Escrowed Funds (as defined in the Trust Agreement for such
Trust) for such Class of Certificates as of such immediately preceding
Distribution Date (or, if the Current Distribution Date is the first
Distribution Date, as of the Issuance Date) thereafter distributed to the
holders of such Certificates (excluding the interest component of any such
distribution) in accordance with Section 2.02(b) of the Trust Agreement for 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. 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 the Fee Letter dated April 21, 1998 between WestLB
and the Subordination Agent with respect to the initial Liquidity Facilities 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 and (y) the Pool Balance of
such Certificates as of the immediately preceding Distribution Date. For
purposes of calculating Final Distributions with respect to the Certificates of
any Trust, any premium paid on the Equipment Notes held in such Trust which has
not been distributed to the Certificateholders of such Trust (other than such
premium or a portion thereof applied to the payment of interest on the
Certificates of such Trust or the reduction of the Pool Balance of such Trust)
shall be added to the amount of such Final Distributions.
"FINAL DRAWING" has the meaning assigned to such term in Section
3.6(i).
"FINAL LEGAL DISTRIBUTION DATE" means (i) with respect to the Class A
Certificates, October 15, 2008, (ii) with respect to the Class B Certificates,
April 15, 2006, and (iii) with respect to the Class C Certificates, April 15,
2004.
"INDENTURE" means each of the Trust Indentures entered into by the
Loan Trustee, and the Owner Trustee, in each case as the same may be amended,
supplemented or otherwise modified from time to time in accordance with its
terms.
"INDENTURE 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 such Liquidity
Facility on a Downgrade Drawing, Non-Extension Drawing or Final Drawing
thereunder, other than any such date on which interest is due and payable under
such Liquidity Facility only on an Applied Provider Advance (as such term is
defined in such Liquidity Facility).
"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, the "Lease" referred
to therein.
"LENDING OFFICE" means, with respect to any Liquidity Facility, the
lending office of such Liquidity Provider thereunder, presently located at New
York, New York, 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
9 of the Participation Agreements or the Fee Letter.
"LIQUIDITY PROVIDER" means, at any time, any Class A Liquidity
Provider, any Class B Liquidity Provider or any Class C Liquidity Provider, as
applicable.
"LOAN TRUSTEE" means, with respect to any Indenture, the indenture
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 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, 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 38.0%, for the Class B
Certificates 52.0% and for the Class C Certificates 67.2%.
"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 Xxxxx'x Investors Service, Inc.
"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 issued
pursuant to an Indenture that is not a Performing Equipment Note.
"OFFICER'S CERTIFICATE" of any Person means a certification signed by
a Responsible Officer of such Person.
"OPERATIVE AGREEMENTS" means this Agreement, the Liquidity
Facilities, the Indentures, the Trust Agreements, the Underwriting Agreement,
the Participation 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 Continental 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 Continental 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.
"OWNER TRUSTEE" means, with respect to any Indenture, 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, with respect to each Indenture, the
"Participation Agreement" referred to therein.
"PAYEE" has the meaning assigned to such term in Section 2.4(e).
"PERFORMING EQUIPMENT NOTE" means an Equipment Note issued pursuant
to an Indenture with respect to which no payment default has occurred and is
continuing (without giving effect to any Acceleration); provided that in the
event of a bankruptcy proceeding involving Continental 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 Continental refuses to
assume or agree to perform its obligations under the Lease related to such
Equipment Note 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.
"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 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 the 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, collectively, at any time, each nationally
recognized rating agency which shall have been requested to rate the
Certificates and which shall then be rating the Certificates. The initial Rating
Agencies will be Moody's and Standard & Poor's.
"RATINGS CONFIRMATION" means, with respect to any action proposed to
be taken, a written confirmation from each of the Rating Agencies that such
action would not result in (i) a reduction of the rating for any Class of
Certificates below the then current rating for such Class of Certificates or
(ii) a withdrawal or suspension of the rating of any Class of Certificates.
"REGULAR DISTRIBUTION DATES" means each April 15 and October 15,
commencing on October 15, 1998; 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,
one or more irrevocable revolving credit agreement or agreements issued by one
or more Persons in substantially the form of the initial Liquidity Facility for
the related Trust, 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 related
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 both 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 Legal Distribution 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.
"SERIES A EQUIPMENT NOTES" means the 6.410% Series A Equipment Notes
issued pursuant to each Indenture by the related Owner Trustee 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 6.465% Series B Equipment Notes
issued pursuant to each Indenture by the related Owner Trustee 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 6.331% Series C Equipment Notes
issued pursuant to each Indenture by the related Owner Trustee 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 XxXxxx-Xxxx Companies, Inc.
"STATED AMOUNT" with respect to any Liquidity Facility, means the
Maximum Commitment (as defined in such Liquidity Facility) of the applicable
Liquidity Provider thereunder.
"STATED EXPIRATION DATE" has the meaning specified in Section 3.6(d).
"STATED INTEREST RATE" means (i) with respect to the Class A
Certificates, 6.410% per annum, (ii) with respect to the Class B Certificates,
6.465% per annum, and (iii) with respect to the Class C Certificates, 6.331% per
annum.
"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).
"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, each of the three Tax Letters,
dated as of April 21, 1998, between Continental and WestLB with respect to the
Liquidity Facilities and all tax letters entered into between Continental 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 Class B 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
C Liquidity Provider.
"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 Default
under all of the Indentures resulting in a PTC Event of Default with respect to
the most senior Class of Certificates then Outstanding, (y) the Acceleration of
all of the outstanding Equipment Notes or (z) the occurrence of a Continental
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).
"UNDERWRITERS" means Chase Securities Inc., Xxxxxx Xxxxxxx & Co.
Incorporated and Credit Suisse First Boston Corporation.
"UNDERWRITING AGREEMENT" means the Underwriting Agreement dated April
15, 1998 among the Underwriters and Continental, relating to the purchase of the
Certificates by the Underwriters, as the same may be amended, supplemented or
otherwise modified from time to time in accordance with its terms.
"WESTLB" has the meaning assigned to such term in the recital of the
parties to this Agreement.
"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 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 of the
Participation Agreements, 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 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 (with respect to such Liquidity Facility, the
"Relevant Amount"), (A) in the case of a portion of the Relevant Amount equal to
the amount scheduled to be paid to the Liquidity Provider with respect to such
Liquidity Facility on the Regular Distribution Date next following the date of
such investment in accordance with clause (iv), (v) or (vi) of Section 3.6(f),
the Business Day immediately preceding such Regular Distribution Date, or (B) in
the case of a portion of the Relevant Amount equal to the Relevant Amount minus
the amount described in clause (A) above, the Business Day immediately preceding
the scheduled Interest Payment Date with respect to such Liquidity Facility next
following the date of such investment); PROVIDED, HOWEVER, that following the
making of a Downgrade Drawing or a Non-Extension Drawing under any Liquidity
Facility, the Subordination Agent shall invest and reinvest such amounts in
Eligible Investments at the direction of Continental (or, if and to the extent
so specified to the Subordination Agent by Continental with respect to any
Liquidity Facility, the Liquidity Provider with respect to such Liquidity
Facility); PROVIDED further, HOWEVER, that following the making of a Downgrade
Drawing or Non-Extension Drawing under any initial Liquidity Facility, (i) the
Subordination Agent shall invest and reinvest the amounts in the Cash Collateral
Account with respect to such Liquidity Facility in Eligible Investments pursuant
to the written instructions of the Liquidity Provider funding such Drawing,
which instructions shall be reasonably acceptable to Continental, and (ii) if
the Subordination Agent shall be investing such amounts in the Cash Collateral
Account in Eligible Investments in accordance with the instructions of such
Liquidity Provider pursuant to clause (i) above, such Liquidity Provider shall
use reasonable efforts to cause the amounts in the Cash Collateral Account with
respect to such Liquidity Facility to be invested in Eligible Investments which
yield at least an amount equal to the interest (excluding the Applicable Margin
(as defined in the relevant Liquidity Facility)) that is payable to such
Liquidity Provider in respect of such Downgrade Drawing or Non-Extension Drawing
pursuant to Section 3.07 of such Liquidity Facility (it being understood that it
may not be feasible to obtain such a yield); PROVIDED FURTHER, 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 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
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)(i), clause (x) of the definition of
"Expected Distributions" shall be deemed to read as follows: "(x) accrued, due
and unpaid interest on such Certificates (after giving effect to any Escrowed
Funds Interest Distribution to be made on such Current Distribution Date with
respect to 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)".
(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 Continental in respect of any Trustee or
any Liquidity Provider (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 Continental under any Operative Agreement in
respect of any Payee, directly to the Payee entitled thereto.
SECTION 2.5. DESIGNATED REPRESENTATIVES. (a) With the delivery of
this Agreement, the Subordination Agent shall furnish to each Liquidity Provider
and each Trustee, and from time to time thereafter may furnish to each Liquidity
Provider and each Trustee, at the Subordination Agent's discretion, or upon any
Liquidity Provider's or Trustee's request (which request shall not be made more
than one time in any 12-month period), a certificate (a "SUBORDINATION AGENT
INCUMBENCY CERTIFICATE") of a Responsible Officer of the Subordination Agent
certifying as to the incumbency and specimen signatures of the officers of the
Subordination Agent and the attorney-in-fact and agents of the Subordination
Agent (the "SUBORDINATION AGENT REPRESENTATIVES") authorized to give Written
Notices on behalf of the Subordination Agent hereunder. Until each Liquidity
Provider and Trustee receives a subsequent Subordination Agent Incumbency
Certificate, it shall be entitled to rely on the last Subordination Agent
Incumbency Certificate delivered to it hereunder.
(b) With the delivery of this Agreement, each Trustee shall furnish
to the Subordination Agent, and from time to time thereafter may furnish to the
Subordination Agent, at such Trustee's discretion, or upon the Subordination
Agent's request (which request shall not be made more than one time in any
12-month period), a certificate (a "TRUSTEE INCUMBENCY Certificate") of a
Responsible Officer of such Trustee certifying as to the incumbency and specimen
signatures of the officers of such Trustee and the attorney-in-fact and agents
of such Trustee (the "TRUSTEE REPRESENTATIVES") authorized to give Written
Notices on behalf of such Trustee hereunder. Until the Subordination Agent
receives a subsequent Trustee Incumbency Certificate, it shall be entitled to
rely on the last Trustee Incumbency Certificate delivered to it hereunder.
(c) With the delivery of this Agreement, each Liquidity Provider
shall furnish to the Subordination Agent, and from time to time thereafter may
furnish to the Subordination Agent, at such Liquidity Provider's discretion, or
upon the Subordination Agent's request (which request shall not be made more
than one time in any 12-month period), a certificate (an "LP INCUMBENCY
CERTIFICATE") of any Responsible Officer of such Liquidity Provider certifying
as to the incumbency and specimen signatures of any officer, attorney-in-fact,
agent or other designated representative of such Liquidity Provider (the "LP
REPRESENTATIVES" and, together with the Subordination Agent Representatives and
the Trustee Representatives, the "DESIGNATED REPRESENTATIVES") authorized to
give Written Notices on behalf of such Liquidity Provider hereunder. Until the
Subordination Agent receives a subsequent LP Incumbency Certificate, it shall be
entitled to rely on the last LP Incumbency Certificate delivered to it
hereunder.
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 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 Default thereunder (which 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.
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 under any Liquidity Facility shall have become and remain "Applied
Downgrade Advances" or "Applied Non-Extension Advances", as the case may be,
under and as defined in such Liquidity Facility and (iii) the date on which all
Equipment Notes shall have been Accelerated, the Liquidity Provider or Liquidity
Providers holding more than 50% of the outstanding amount of Liquidity
Obligations shall have the right to elect, by Written Notice to the
Subordination Agent and each of the Trustees, to become the Controlling Party
hereunder with respect to any Indenture at any time from and including the last
day of such 18-month period.
(d) The exercise of remedies by the Controlling Party under this
Agreement shall be expressly limited by Section 4.1(a)(ii) hereof.
(e) The Controlling Party shall not be entitled to require or
obligate any Non-Controlling Party to provide funds necessary to exercise any
right or remedy hereunder.
ARTICLE III
RECEIPT, DISTRIBUTION AND APPLICATION
OF AMOUNTS RECEIVED
SECTION 3.1. WRITTEN NOTICE OF DISTRIBUTION. (a) No later than 3:00
P.M. (New York City time) on the Business Day immediately preceding each Regular
Distribution Date (or Special Distribution Date for purposes of Section 2.4(b)
hereof, as the case may be), each of the following Persons shall deliver to the
Subordination Agent a Written Notice setting forth the following information as
at the close of business on such Business Day:
(i) With respect to the Class A 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;
(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.
(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:
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;
EIGHTH, such amount as shall be required to pay in full the aggregate
unpaid amount of fees and expenses payable as of such Distribution Date to
the Subordination Agent and each Trustee pursuant to the terms of this
Agreement and the Trust Agreements, as the case may be, shall be
distributed to the Subordination Agent and such Trustee; and
NINTH, the balance, if any, of any such amount remaining thereafter
shall be held in the Collection Account for later distribution in
accordance with this Article III.
SECTION 3.3. DISTRIBUTION OF AMOUNTS ON DEPOSIT FOLLOWING A
TRIGGERING EVENT. (a) Except as otherwise provided in Sections 3.1(f) and 3.6(b)
hereof, upon the occurrence of a Triggering Event and at all times thereafter,
all funds in the Collection Account or the Special Payments Account shall be
promptly distributed by the Subordination Agent in the following order of
priority:
FIRST, such amount as shall be required to reimburse (i) the
Subordination Agent for any out-of-pocket costs and expenses actually
incurred by it (to the extent not previously reimbursed) in the protection
of, or the realization of the value of, the Equipment Notes or any Trust
Indenture Estate, shall be applied by the Subordination Agent in
reimbursement of such costs and expenses, (ii) each Trustee for any
amounts of the nature described in clause (i) above actually incurred by
it under the applicable Trust Agreement (to the extent not previously
reimbursed), shall be distributed to such Trustee, and (iii) any Liquidity
Provider or Certificateholder for payments, if any, made by it to the
Subordination Agent or any Trustee in respect of amounts described in
clause (i) above, shall be distributed to such Liquidity Provider or to
the applicable Trustee for the account of such Certificateholder, in each
such case, pari passu on the basis of all amounts described in clauses (i)
through (iii) above;
SECOND, such amount remaining as shall be required to pay all accrued
and unpaid Liquidity Expenses shall be distributed to each Liquidity
Provider pari passu on the basis of the amount of Liquidity Expenses owed
to each Liquidity Provider;
THIRD, such amount remaining as shall be required to pay accrued and
unpaid interest on the Liquidity Obligations as provided in the Liquidity
Facilities shall be distributed to each Liquidity Provider pari passu on
the basis of the amount of such accrued and unpaid interest owed to each
Liquidity Provider;
FOURTH, such amount remaining as shall be required (A) if any Cash
Collateral Account had been previously funded as provided in Section
3.6(f), unless (i) a Performing Note Deficiency exists and a Liquidity
Event of Default shall have occurred and be continuing with respect to the
relevant Liquidity Facility or (ii) a Final Drawing shall have occurred
with respect to such Liquidity Facility, to fund such Cash Collateral
Account up to its Required Amount (less the amount of any repayments of
Interest Drawings under such Liquidity Facility while subclause (A)(i)
above is applicable) shall be deposited in such Cash Collateral Account,
(B) if any Liquidity Facility shall become a Downgraded Facility or a
Non-Extended Facility at a time when unreimbursed Interest Drawings under
such Liquidity Facility have reduced the Available Amount thereunder to
zero, unless (i) a Performing Note Deficiency exists and a Liquidity Event
of Default shall have occurred and be continuing with respect to the
relevant Liquidity Facility or (ii) a Final Drawing shall have occurred
with respect to such Liquidity Facility, to deposit into the related Cash
Collateral Account an amount equal to such Cash Collateral Account's
Required Amount (less the amount of any repayments of Interest Drawings
under such Liquidity Facility while subclause (B)(i) above is applicable)
shall be deposited in such Cash Collateral Account, and (C) if, with
respect to any particular Liquidity Facility, neither subclause (A) nor
subclause (B) of this clause "fourth" are applicable, to pay in full the
outstanding amount of all Liquidity Obligations then due under such
Liquidity Facility (other than amounts payable pursuant to clause "SECOND"
or "THIRD" of this Section 3.3) shall be distributed to such Liquidity
Provider, pari passu on the basis of the amounts of all such deficiencies
and/or unreimbursed Liquidity Obligations;
FIFTH, if, with respect to any particular Liquidity Facility, any
amounts are to be distributed pursuant to either subclause (A) or (B) of
clause "FOURTH" above, then the Liquidity Provider with respect to such
Liquidity Facility shall be paid the excess of (x) the aggregate
outstanding amount of unreimbursed Advances (whether or not then due)
under such Liquidity Facility over (y) the Required Amount for the
relevant Class (less the amount of any repayments of Interest Drawings
under such Liquidity Facility while subclause (A)(i) or (B)(i), as the
case may be, of clause "FOURTH" above is applicable), pari passu on the
basis of such amounts in respect of each Liquidity Provider;
SIXTH, such amount as shall be required to reimburse or pay (i) the
Subordination Agent for any Tax (other than Taxes imposed on compensation
paid hereunder), expense, fee, charge or other loss incurred by or any
other amount payable to the Subordination Agent in connection with the
transactions contemplated hereby (to the extent not previously
reimbursed), shall be applied by the Subordination Agent in reimbursement
of such amount, (ii) each Trustee for any Tax (other than Taxes imposed on
compensation paid under the applicable Trust Agreement), expense, fee,
charge, loss or any other amount payable to such Trustee under the
applicable Trust Agreements (to the extent not previously reimbursed),
shall be distributed to such Trustee, and (iii) each Certificateholder for
payments, if any, made by it pursuant to Section 5.2 hereof in respect of
amounts described in clause (i) above, shall be distributed to the
applicable Trustee for the account of such Certificateholder, in each such
case, pari passu on the basis of all amounts described in clauses (i)
through (iii) above;
SEVENTH, such amount remaining as shall be required to pay in full
Adjusted Expected Distributions on the Class A 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.
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.
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 12:00 noon
(New York City time) on the Business Day following such Distribution Date, the
Subordination Agent shall request a drawing (each such drawing, an "INTEREST
DRAWING") under the Liquidity Facility with respect to such Class of
Certificates in an amount equal to the lesser of (i) 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, 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 the short-term unsecured debt
rating of any Liquidity Provider issued by either Rating Agency is lower than
the applicable Threshold Rating, within 10 days after receiving notice of such
downgrading (but not later than the expiration date of the Liquidity Facility
issued by the downgraded Liquidity Provider (the "DOWNGRADED FACILITY")), such
Liquidity Provider or Continental may arrange for a Replacement Liquidity
Provider to issue and deliver a Replacement Liquidity Facility to the
Subordination Agent. If a Downgraded Facility has not been replaced in
accordance with the terms of this paragraph, the Subordination Agent shall, on
such 10th day (or if such 10th 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 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 with such Liquidity Facility). The 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. 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 the 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.
(e) ISSUANCE OF REPLACEMENT LIQUIDITY FACILITY. (i) At any time,
Continental 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 WestLB shall not be
replaced by Continental as a Liquidity Provider with respect to any Class of
Certificates (x) prior to the fifth anniversary of the Closing Date unless (A)
there shall have become due to WestLB, or WestLB 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 WestLB would reduce or eliminate the
obligation to pay such amounts or Continental determines in good faith that
there is a substantial likelihood that WestLB will have the right to claim any
such amounts (unless WestLB waives, in writing, any right it may have to claim
such amounts), which determination shall be set forth in a certificate delivered
by Continental to WestLB setting forth the basis for such determination and
accompanied by an opinion of outside counsel selected by Continental and
reasonably acceptable to WestLB 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 WestLB (or
its Lending Office) to maintain or fund its LIBOR Advances as described in
Section 3.10 of any Liquidity Facility, (C) the short-term unsecured debt rating
of WestLB is downgraded by Standard & Poor's from A-1+ to A-1 and there is a
resulting downgrade in the rating by any Rating Agency of any Class of
Certificates, (D) any Liquidity Facility of WestLB shall become a Downgraded
Facility or a Non-Extended Facility or a Downgrade Drawing or a Non-Extension
Drawing shall have occurred under any Liquidity Facility of WestLB or (E) WestLB
shall have breached any of its payment (including, without limitation, funding)
obligations under any Liquidity Facility and (y) after the fifth anniversary of
the Closing Date unless (A) WestLB is replaced as Liquidity Provider with
respect to all Classes of Certificates or (B) the Liquidity Facility for such
Class of Certificates shall become a Downgraded Facility or Non-Extended
Facility or a Downgrade Drawing or a Non-Extension Drawing shall have occurred
under such 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 Continental
or a Liquidity Provider in accordance with clause (i) or (ii) above or
pursuant to Section 3.6(c), respectively, shall become effective and no
such Replacement Liquidity Facility shall be deemed a "Liquidity Facility"
under the Operative Agreements, unless and until (A) each of the
conditions referred to in sub-clauses (iv)(x) and (z) below shall have
been satisfied, (B) if such Replacement Liquidity Facility shall
materially adversely affect the rights, remedies, interests or obligations
of the Class A 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) or pursuant to Section 3.6(c), such Replacement
Liquidity Facility is acceptable to Continental.
(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 Continental 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, respectively. All amounts on
deposit in each Cash Collateral Account shall be invested and reinvested in
Eligible Investments in accordance with Section 2.2(b) hereof. Investment
Earnings on amounts on deposit in the Cash Collateral Account with respect to
each Liquidity Facility shall be deposited in the Collection Account on each
Interest Payment Date under such Liquidity Facility and applied on such Interest
Payment Date in accordance with Section 3.2, 3.3 or 3.4 (as applicable). The
Subordination Agent shall deliver a written statement to Continental and the
Liquidity Provider one day prior to each Interest Payment Date setting forth the
aggregate amount of Investment Earnings held in the Cash Collateral Accounts as
of such date. In addition, from and after the date funds are so deposited, the
Subordination Agent shall make withdrawals from such account as follows:
(i) on each Distribution Date, the Subordination Agent shall, to
the extent it shall not have received funds to pay accrued and unpaid
interest due and owing on the Class A 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, 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) and any transfer of Investment Earnings from such Cash
Collateral Account to the Collection 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 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, 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) and any transfer of Investment Earnings from such Cash
Collateral Account to the Collection 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 relevant 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, 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) and any transfer of Investment Earnings from such Cash
Collateral Account to the Collection 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 relevant 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
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 Stated Amount for 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 if
such reductions are not automatic, request such Liquidity Provider for such
Class of Certificates to reduce such Stated Amount to an amount equal to the
Required Amount with respect to such Liquidity Facility (as calculated by the
Subordination Agent after giving effect to such payment). Each such request
shall be made in accordance with the provisions of the applicable Liquidity
Facility.
(k) RELATION TO SUBORDINATION PROVISIONS. Interest Drawings under the
Liquidity Facilities and withdrawals from the Cash Collateral Accounts, in each
case, in respect of interest on the Certificates of any Class, will be
distributed to the Trustee for such Class of Certificates, notwithstanding
Sections 3.2, 3.3 and 3.6(h) hereof.
(l) ASSIGNMENT OF LIQUIDITY FACILITY. The Subordination Agent agrees
not to consent to the assignment by any Liquidity Provider of any of its rights
or obligations under any Liquidity Facility or any interest therein, unless (i)
Continental shall have consented to such assignment, such consent not to be
unreasonably withheld, and (ii) each Rating Agency shall have provided a Ratings
Confirmation in respect of such assignment.
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 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, 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 Default with respect thereto, the
Controlling Party may sell, assign, contract to sell or otherwise dispose of and
deliver all (but not less than all) of such Equipment Notes to any Person at
public or private sale, at any location at the option of the Controlling Party,
all upon such terms and conditions as it may reasonably deem advisable in
accordance with applicable law.
(ii) Subject to the Owner Trustees' and the Owner Participants'
rights, if any, 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 Continental 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) the amount and payment dates of rentals
payable by Continental 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 Continental 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 Default
(and before the occurrence of a Triggering Event) commission LTV
Appraisals with respect to the Aircraft subject to such Indenture.
(iv) After a Triggering Event occurs and any Equipment Note becomes a
Non-Performing Equipment Note, the Subordination Agent shall obtain
Appraisals with respect to all of the Aircraft (the "LTV APPRAISALS") as
soon as practicable and additional LTV Appraisals on or prior to each
anniversary of the date of such initial LTV Appraisals; provided that if
the Controlling Party reasonably objects to the appraised value of the
Aircraft shown in such LTV Appraisals, the Controlling Party shall have
the right to obtain or cause to be obtained substitute 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.
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 DEFAULT OR TRIGGERING EVENT. (a) In
the event the Subordination Agent shall have actual knowledge of the occurrence
of an Indenture Default or a Triggering Event, as promptly as practicable, and
in any event within 10 days after obtaining knowledge thereof, the Subordination
Agent shall transmit by mail or courier to the Rating Agencies, the Liquidity
Providers and the Trustees notice of such Indenture Default or Triggering Event,
unless such Indenture 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 Default or Triggering Event unless
notified in writing by one or more Trustees, one or more Liquidity Providers or
one or more Certificateholders.
(b) OTHER NOTICES. The Subordination Agent will furnish to each
Liquidity Provider and Trustee, promptly upon receipt thereof, duplicates or
copies of all reports, notices, requests, demands, certificates, financial
statements and other instruments furnished to the Subordination Agent as
registered holder of the Equipment Notes or otherwise in its capacity as
Subordination Agent to the extent the same shall not have been otherwise
directly distributed to such Liquidity Provider or Trustee, as applicable,
pursuant to the express provision of any other Operative Agreement.
SECTION 5.2. INDEMNIFICATION. The Subordination Agent shall not be
required to take any action or refrain from taking any action under Section 5.1
(other than the first sentence thereof) or Article IV hereof unless the
Subordination Agent shall have been indemnified (to the extent and in the manner
reasonably satisfactory to the Subordination Agent) against any liability, cost
or expense (including counsel fees and expenses) which may be incurred in
connection therewith. The Subordination Agent shall not be under any obligation
to take any action under this Agreement and nothing contained in this Agreement
shall require the Subordination Agent to expend or risk its own funds or
otherwise incur any financial liability in the performance of any of its duties
hereunder or in the exercise of any of its rights or powers if it shall have
reasonable grounds for believing that repayment of such funds or adequate
indemnity against such risk or liability is not reasonably assured to it. The
Subordination Agent shall not be required to take any action under Section 5.1
(other than the first sentence thereof) or Article IV hereof, nor shall any
other provision of this Agreement be 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 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 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 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 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
of the Participation Agreements. 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 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 and
the last sentence of this Section 9.1(a), 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 any Trustee if such
supplement, amendment or modification cures an ambiguity or inconsistency or
does not materially adversely affect such Trustee or the holders of the related
Class of Certificates; PROVIDED FURTHER, HOWEVER, that, if such supplement,
amendment or modification would (x) directly or indirectly modify or supersede,
or otherwise conflict with, Section 2.2(b), Section 3.6(e), Section 3.6(f)(other
than the last sentence thereof), Section 3.6(l), the last sentence of this
Section 9.1(a), the second sentence of Section 10.6 or this proviso
(collectively, the "CONTINENTAL Provisions") or (y) otherwise adversely affect
the interests of a potential Replacement Liquidity Provider or of Continental
with respect to its ability to replace any Liquidity Facility or with respect to
its payment obligations under any Operative Agreement, then such supplement,
amendment or modification shall not be effective without the additional written
consent of Continental. Notwithstanding the foregoing, without the consent of
each Certificateholder and each Liquidity Provider, no supplement, amendment or
modification of this Agreement may (i) reduce the percentage of the interest in
any Trust evidenced by the Certificates issued by such Trust necessary to
consent to modify or amend any provision of this Agreement or to waive
compliance therewith or (ii) 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. If the Replacement Liquidity Facility for any Liquidity Facility
in accordance with Section 3.6(e) hereof is to be comprised of more than one
instrument as contemplated by the definition of the term "Replacement Liquidity
Facility", then each of the parties hereto agrees to amend this Agreement to
incorporate appropriate mechanics for multiple Liquidity Facilities for an
individual Trust.
(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
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 Default (which 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 Continental under any
Lease.
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.
SECTION 9.4. NOTICE TO RATING AGENCIES. Promptly following its
receipt of each amendment, consent, modification, supplement or waiver
contemplated by this Article IX, the Subordination Agent shall send a copy
thereof to each Rating Agency.
ARTICLE X
MISCELLANEOUS
SECTION 10.1. TERMINATION OF INTERCREDITOR AGREEMENT. Following
payment of Final Distributions with respect to each Class of Certificates and
the payment in full of all Liquidity Obligations to the Liquidity Providers and
PROVIDED that there shall then be no other amounts due to the
Certificateholders, the Trustees, the Liquidity Providers and the Subordination
Agent hereunder or under the Trust Agreements, and that the commitment of the
Liquidity Providers under the Liquidity Facilities shall have expired or been
terminated, this Agreement and the trusts created hereby shall terminate and
this Agreement shall be of no further force or effect. Except as aforesaid or
otherwise provided, this Agreement and the trusts created hereby shall continue
in full force and effect in accordance with the terms hereof.
SECTION 10.2. INTERCREDITOR AGREEMENT FOR BENEFIT OF TRUSTEES,
LIQUIDITY PROVIDERS AND SUBORDINATION AGENT 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 Xxxxxx Square
0000 X. Xxxxxx Xxxxxx
Xxxxxxxxxx, XX 00000-0000
Attention: Corporate Trust Trustee
Administration
Telecopy: (000) 000-0000
(ii) if to any Trustee, addressed to it at its office at:
WILMINGTON TRUST COMPANY
One Xxxxxx Square
0000 X. Xxxxxx Xxxxxx
Xxxxxxxxxx, XX 00000-0000
Attention: Corporate Trust Trustee
Administration
Telecopy: (000) 000-0000
(iii) if to WestLB as Liquidity Provider, addressed to it at its
office at:
Westdeutsche Landesbank Girozentrale
Global Structured Finance
0000 Xxxxxx xx xxx Xxxxxxxx
Xxx Xxxx, XX 00000
Attention: Xxxxxx Xxxxxx
Telephone: (000) 000-0000
Telecopy: (000) 000-0000
with a copy to:
Westdeutsche Landesbank Girozentrale
Loan Administration
0000 Xxxxxx xx xxx Xxxxxxxx
Xxx Xxxx, XX 00000
Attention: Xxxxxx Xxxxxx
Telephone: (000) 000-0000
Telecopy: (000) 000-0000
Whenever any notice in writing is required to be given by any Trustee or
Liquidity Provider or the Subordination Agent to any of the other of them, such
notice shall be deemed given and such requirement satisfied when such notice is
received. Any party hereto may change the address to which notices to such party
will be sent by giving notice of such change to the other parties to this
Agreement.
SECTION 10.4. SEVERABILITY. Any provision of this Agreement which is
prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction,
be ineffective to the extent of such prohibition or unenforceability without
invalidating the remaining provisions hereof, and any such prohibition or
unenforceability in any jurisdiction shall not invalidate or render
unenforceable such provision in any other jurisdiction.
SECTION 10.5. NO ORAL MODIFICATIONS OR CONTINUING WAIVERS. No terms
or provisions of this Agreement may be changed, waived, discharged or terminated
orally, but only by an instrument in writing signed by the party or other Person
against whom enforcement of the change, waiver, discharge or termination is
sought and any other party or other Person whose consent is required pursuant to
this Agreement and any waiver of the terms hereof shall be effective only in the
specific instance and for the specific purpose given.
SECTION 10.6. SUCCESSORS AND ASSIGNS67. 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 Continental Provisions shall inure to the benefit of
Continental and its successors and assigns, and (without limitation of the
foregoing) Continental is hereby constituted, and agreed to be, an express third
party beneficiary of the Continental Provisions.
SECTION 10.7. HEADINGS. The headings of the various Articles and
Sections herein and in the table of contents hereto are for convenience of
reference only and shall not define or limit any of the terms or provisions
hereof.
SECTION 10.8. COUNTERPART FORM. This Agreement may be executed by the
parties hereto in separate counterparts, each of which when so executed and
delivered shall be an original, but all such counterparts shall together
constitute but one and the same agreement.
SECTION 10.9. SUBORDINATION. (a) As between the Liquidity Providers,
on the one hand, and the Trustees and the Certificateholders, on the other hand,
this Agreement shall be a subordination agreement for purposes of Xxxxxxx 000 xx
xxx Xxxxxx Xxxxxx 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 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 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 xxx 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) The 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.
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, acting
through its New York Branch
as Class A Liquidity Provider, Class B
Liquidity Provider and Class C
Liquidity Provider
By__________________________________________
Name:
Title:
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:
