Exhibit 10.6
INTERCREDITOR AGREEMENT
Dated as of
September 27, 2000
BY AND AMONG
ALLFIRST BANK,
not in its individual capacity
but solely as Trustee under the
Midway Airlines Pass Through Trust 0000-0X,
Xxxxxx Xxxxxxxx Xxxx Through Trust 2000-1B
and
Midway Airlines Pass Through Trust 2000-1C
XXXXXX XXXXXXX CAPITAL SERVICES INC.
as Class A Liquidity Provider,
Class B Liquidity Provider
and
Class C Liquidity Provider
AND
ALLFIRST BANK,
not in its individual capacity except
as expressly set forth herein but
solely as Subordination Agent and trustee hereunder
TABLE OF CONTENTS
Page
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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............. 21
SECTION 2.2 Trust Accounts...................................................................... 21
SECTION 2.3 Deposits to the Collection Account and Special Payments Account..................... 23
SECTION 2.4 Distributions of Special Payments................................................... 23
SECTION 2.5 Designated Representatives.......................................................... 25
SECTION 2.6 Controlling Party................................................................... 26
ARTICLE III
RECEIPT, DISTRIBUTION AND APPLICATION OF
AMOUNTS RECEIVED
SECTION 3.1 Written Notice of Distribution...................................................... 28
SECTION 3.2 Distribution of Amounts on Deposit in the Collection Account........................ 30
SECTION 3.3 Distribution of Amounts on Deposit Following a Triggering Event..................... 31
SECTION 3.4 Other Payments...................................................................... 34
SECTION 3.5 Payments to the Trustees and the Liquidity Providers................................ 34
SECTION 3.6 Liquidity Facilities................................................................ 34
ARTICLE IV
EXERCISE OF REMEDIES
SECTION 4.1 Directions from the Controlling Party............................................... 41
SECTION 4.2 Remedies Cumulative................................................................. 43
SECTION 4.3 Discontinuance of Proceedings....................................................... 43
SECTION 4.4 Right of Certificateholders to Receive Payments Not to Be Impaired.................. 43
SECTION 4.5 Undertaking for Costs............................................................... 43
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ARTICLE V
DUTIES OF THE SUBORDINATION AGENT;
AGREEMENTS OF TRUSTEES, ETC.
SECTION 5.1 Notice of Indenture Default or Triggering Event...................................... 44
SECTION 5.2 Indemnification...................................................................... 44
SECTION 5.3 No Duties Except as Specified in Intercreditor Agreement............................. 45
SECTION 5.4 Notice from the Liquidity Providers and Trustees..................................... 45
ARTICLE VI
THE SUBORDINATION AGENT
SECTION 6.1 Authorization; Acceptance of Trusts and Duties....................................... 45
SECTION 6.2 Absence of Duties.................................................................... 46
SECTION 6.3 No Representations or Warranties as to Documents..................................... 46
SECTION 6.4 No Segregation of Monies; No Interest................................................ 46
SECTION 6.5 Reliance; Agents; Advice of Counsel.................................................. 46
SECTION 6.6 Capacity in Which Acting............................................................. 47
SECTION 6.7 Compensation......................................................................... 47
SECTION 6.8 May Become Certificateholder......................................................... 47
SECTION 6.9 Subordination Agent Required; Eligibility............................................ 47
SECTION 6.10 Money to Be Held in Trust............................................................ 48
ARTICLE VII
INDEMNIFICATION OF SUBORDINATION AGENT
SECTION 7.1 Scope of Indemnification............................................................. 48
ARTICLE VIII
SUCCESSOR SUBORDINATION AGENT
SECTION 8.1 Replacement of Subordination Agent; Appointment of Successor......................... 48
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ARTICLE IX
SUPPLEMENTS AND AMENDMENTS
SECTION 9.1 Amendments, Waivers, Etc.................................................................... 49
SECTION 9.2 Subordination Agent Protected............................................................... 50
SECTION 9.3 Effect of Supplemental Agreements........................................................... 51
SECTION 9.4 Notice to Rating Agencies................................................................... 51
ARTICLE X
MISCELLANEOUS
SECTION 10.1 Termination of Intercreditor Agreement...................................................... 51
SECTION 10.2 Intercreditor Agreement for Benefit of Trustees, Liquidity Providers and
Subordination Agent......................................................................... 51
SECTION 10.3 Notices..................................................................................... 51
SECTION 10.4 Severability................................................................................ 52
SECTION 10.5 No Oral Modifications or Continuing Waivers................................................. 53
SECTION 10.6 Successors and Assigns...................................................................... 53
SECTION 10.7 Headings.................................................................................... 53
SECTION 10.8 Counterpart Form............................................................................ 53
SECTION 10.9 Subordination............................................................................... 53
SECTION 10.10 Governing Law............................................................................... 54
SECTION 10.11 Submission to Jurisdiction; Waiver of Jury Trial; Waiver of Immunity........................ 54
INTERCREDITOR AGREEMENT
INTERCREDITOR AGREEMENT dated as of September 27, 2000, among ALLFIRST
BANK, a Maryland state-chartered commercial bank ("Allfirst"), not in its
individual capacity but solely as Trustee of each Trust (each as defined below),
XXXXXX XXXXXXX CAPITAL SERVICES INC. ("MSCS"), a Delaware corporation, as Class
A Liquidity Provider, as Class B Liquidity Provider and as Class C Liquidity
Provider, and ALLFIRST BANK, a Maryland state-chartered commercial bank, 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").
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WHEREAS, all capitalized terms used herein shall have the respective
meanings referred to in Article I hereof;
WHEREAS, pursuant to each Indenture (i) in the case of each Aircraft
that is owned by Midway at the time such Indenture is entered into (the "Owned
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Aircraft"), Midway will issue on a recourse basis three series of Equipment
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Notes to finance the purchase of such Aircraft, and (ii) in the case of each
Aircraft that is leased to Midway pursuant to a related Lease at the time such
Indenture is entered into (the "Leased Aircraft"), the related Owner Trustee
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will issue on a nonrecourse basis three series of Equipment Notes to finance the
purchase of such Aircraft;
WHEREAS, pursuant to the Financing Agreements, each Trust will acquire
Equipment Notes having an interest rate equal to the interest rate applicable to
the Certificates to be issued by such Trust;
WHEREAS, pursuant to each Trust Agreement, the Trust created thereby
proposes to issue a single class of Certificates (a "Class") bearing the
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interest rate and having the final distribution date described in such Trust
Agreement on the terms and subject to the conditions set forth therein;
WHEREAS, pursuant to the Placement Agreement, the Placement Agents
propose to purchase the Certificates issued by each Trust in the aggregate face
amount set forth opposite the name of such Trust on Schedule I thereto on the
terms and subject to the conditions set forth therein;
WHEREAS, each Liquidity Provider proposes to enter into a revolving
credit agreement (each, a "Liquidity Facility") with the Subordination Agent, as
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agent for the Trustee of each Trust, for the benefit of the Certificateholders
of such Trust;
WHEREAS, Xxxxxx Xxxxxxx Xxxx Xxxxxx & Co. (the "Guarantor") will
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guarantee in full, pursuant to separate Guarantee Agreements dated as of the
date hereof (each, a "Guarantee Agreement"), the obligations of MSCS under the
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Class A Liquidity Facility, the Class B Liquidity Facility and the Class C
Liquidity Facility, respectively; and
WHEREAS, it is a condition precedent to the obligations of the
Placement Agents under the Placement Agreement that the Subordination Agent, the
Trustees and the Liquidity Providers agree to the terms of subordination set
forth in this Agreement in respect of each Class of Certificates, and the
Subordination Agent, the Trustees and the Liquidity Providers, by entering into
this Agreement, hereby acknowledge and agree to such terms of subordination and
the other provisions of this Agreement.
NOW, THEREFORE, in consideration of the mutual agreements herein
contained, and of other good and valuable consideration, the receipt and
adequacy of which are hereby acknowledged, the parties hereto agree as follows:
ARTICLE I
DEFINITIONS
SECTION 1.1 Definitions. For all purposes of this Agreement, except
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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".
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"Acceleration" means, with respect to the amounts payable in respect of the
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Equipment Notes issued under any Indenture, the declaration or deemed
declaration of such amounts to be immediately due and payable. "Accelerate" and
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"Accelerated" have meanings correlative to the foregoing.
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"Adjusted Expected Distributions" means with respect to the Certificates of
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any Class on any Current Distribution Date the sum of (x) the amount of accrued
and unpaid interest on such Certificates (excluding interest, if any, payable
with respect to the Deposits related to such Trust) plus (y) the greater of:
(A) the difference between (x) the Pool Balance of such Certificates
as of the immediately preceding Distribution Date (or if the Current
Distribution Date is the first Distribution Date, the original aggregate
face amount of the Certificates of such Trust) and (y) the Pool Balance of
such Certificates as of the Current Distribution Date calculated on the
basis that (i) the principal of the Non-Performing Equipment Notes held in
such Trust has been paid in full and such payments have been distributed to
the holders of such Certificates, (ii) the principal of the Performing
Equipment Notes has been paid when due (but without giving effect to any
Acceleration of Performing Equipment Notes except to the extent moneys are
received as a result of such Acceleration) and has been distributed to the
holders of such Certificates and (iii) the principal of any Equipment Notes
formerly held in such Trust which have been sold pursuant to the terms
hereof have been paid in full and such payments have been distributed to
the holders of such Certificates but without giving effect to any reduction
in the Pool Balance as a result of any distribution attributable to
Deposits occurring after the immediately preceding Distribution Date (or,
if the Current Distribution Date is the first Distribution Date, occurring
after the initial issuance of the Certificates of such Trust) and
(B) the amount of the excess, if any, by which (i) the Pool Balance
of such Class of Certificates as of the immediately preceding Distribution
Date (or, if the Current Distribution Date is the first Distribution Date,
the original aggregate face amount of the Certificates of such Trust) less
the amount of the Deposits for such Class of Certificates as of such
preceding Distribution Date (or, if the Current Distribution Date is the
first Distribution Date, the original aggregate amount of the Deposits for
such Class of Certificates) other than any portion of such Deposits
thereafter used to acquire Equipment Notes pursuant to the Note Purchase
Agreement, over (ii) the Aggregate LTV Collateral Amount for such Class of
Certificates for the Current Distribution Date;
provided that, until the date of the initial LTV Appraisals for all of the
Aircraft, clause (B) above shall not be applicable.
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
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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.
"Affiliate" means, with respect to any Person, any other Person directly or
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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" means for any Class of Certificates for
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any Distribution Date the sum of the applicable LTV Collateral Amounts for each
Leased Aircraft and Owned 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 but in no event an amount less than zero.
"Aircraft" means, with respect to any Indenture, the "Aircraft" referred to
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therein.
"Applicable Margin" has the meaning assigned thereto in each of the
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Liquidity Facilities.
"Appraised Current Market Value" of any Leased Aircraft or Owned Aircraft
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means the lower of the average and the median of the most recent three LTV
Appraisals of such Aircraft.
"Appraisers" means Aircraft Information Services, Inc., Xxxxxx Xxxxx and
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Xxxxx, Inc., and Simat, Helliesen & Xxxxxxx, Inc.
"Available Amount" means, with respect to any Liquidity Facility on any
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drawing date, an amount equal to (a) the Stated Amount of such Liquidity
Facility, less (b) the amount of each Interest Drawing honored by the Liquidity
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Provider under such Liquidity Facility on or prior to such date which has not
been reimbursed or reinstated as provided in Section 3.6(g) hereof as of such
date; provided that, following a Downgrade Drawing, a Non-Extension Drawing or a
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Final Drawing under such Liquidity Facility, the Available Amount of such
Liquidity Facility shall be zero.
"Business Day" means any day other than a Saturday or Sunday or a day on
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which commercial banks are required or authorized to close in Baltimore,
Maryland, New York, New York, or 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. Solely with respect to draws under any Liquidity
Facility, Business Day shall also include a "Business Day" as defined in such
Liquidity Facility.
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"Cash Collateral Account" means the Class A Cash Collateral Account, the
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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
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Class C Certificate, as applicable.
"Certificateholder" means any holder of one or more Certificates.
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"Class" has the meaning assigned to such term in the preliminary statements
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to this Agreement.
"Class A Cash Collateral Account" means an Eligible Deposit Account in the
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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
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Class A Certificates.
"Class A Certificates" means the certificates issued by the Class A Trust,
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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 Deposits" means the Deposits with respect to the Class A
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Certificates.
"Class A Liquidity Facility" means, initially, the Revolving Credit
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Agreement dated as of the Closing Date, by and between the Subordination Agent,
as agent and trustee of the Class A Trustee, and MSCS, and, from and after the
replacement of such Agreement pursuant hereto, the Replacement Liquidity
Facility therefor, if any, in each case as amended, supplemented or otherwise
modified from time to time in accordance with its terms.
"Class A Liquidity Provider" means MSCS, together with any Replacement
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Liquidity Provider which has issued a Replacement Liquidity Facility to replace
the Class A Liquidity Facility pursuant to Section 3.6(e).
"Class A Trust" means Midway Airlines 2000-1A Pass Through Trust created
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and administered pursuant to the Class A Trust Agreement.
"Class A Trust Agreement" means the Pass Through Trust Agreement 2000-1A
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dated as of the Closing Date, between Midway and the Class A Trustee, as the
same may be amended, supplemented or otherwise modified from time to time in
accordance with its terms.
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"Class A Trustee" means Allfirst Bank, not in its individual capacity
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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
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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
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Class B Certificates.
"Class B Certificates" means the certificates issued by the Class B Trust,
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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
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Agreement dated as of the Closing Date by and between the Subordination Agent,
as agent and trustee of the Class B Trustee, and MSCS, and, from and after the
replacement of such Agreement pursuant hereto, the Replacement Liquidity
Facility therefor, if any, in each case as amended, supplemented or otherwise
modified from time to time in accordance with its terms.
"Class B Liquidity Provider" means MSCS, together with any Replacement
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Liquidity Provider which has issued a Replacement Liquidity Facility to replace
the Class B Liquidity Facility pursuant to Section 3.6(e).
"Class B Trust" means Midway Airlines 2000-1B Pass Through Trust created
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and administered pursuant to the Class B Trust Agreement.
"Class B Trust Agreement" means the Pass Through Trust Agreement 2000-1B
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dated as of the Closing Date, between Midway and the Class B Trustee, as the
same may be amended, supplemented or otherwise modified from time to time in
accordance with its terms.
"Class B Trustee" means Allfirst Bank, not in its individual capacity
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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
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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.
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"Class C Certificateholder" means, at any time, any holder of one or more
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Class C Certificates.
"Class C Certificates" means the certificates issued by the Class C Trust,
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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 in replacement thereof pursuant to the terms of the Class C Trust Agreement.
"Class C Liquidity Facility" means, initially, the Revolving Credit
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Agreement dated as of Closing Date, by and between the Subordination Agent, as
agent and trustee of the Class C Trustee, and MSCS and, from and after the
replacement of such Agreement pursuant hereto, the Replacement Liquidity
Facility therefor, if any, in each case as amended, supplemented or otherwise
modified from time to time in accordance with its terms.
"Class C Liquidity Provider" means MSCS, together with any Replacement
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Liquidity Provider which has issued a Replacement Liquidity Facility to replace
the Class C Liquidity Facility pursuant to Section 3.6(e).
"Class C Trust" means Midway Airlines 2000-1C Pass Through Trust created
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and administered pursuant to the Class C Trust Agreement.
"Class C Trust Agreement" means the Pass Through Trust Agreement 2000-1C
-----------------------
dated as of the Closing Date, between Midway and the Class C Trustee, as the
same may be amended, supplemented or otherwise modified from time to time in
accordance with its terms.
"Class C Trustee" means Allfirst Bank, not in its individual capacity
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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 September 27, 2000.
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"Code" means the Internal Revenue Code of 1986, as amended from time to
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time, and Treasury Regulations promulgated thereunder.
"Collateral" has the meaning assigned to such term in the Owned Aircraft
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Indentures.
"Collection Account" means the Eligible Deposit Account established by the
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Subordination Agent pursuant to Section 2.2 which the Subordination Agent shall
make deposits in and withdrawals from in accordance with this Agreement.
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"Controlling Party" means the Person entitled to act as such pursuant to
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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
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reference date for calculating the Adjusted Expected Distributions or Expected
Distributions with respect to the Certificates of any Trust as of such
Distribution Date.
"Deposit Agreement" shall mean, with respect to any Class, the Deposit
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Agreement pertaining to such Class dated the date hereof between the Escrow
Agent, and the Depositary, as the same may be amended, modified or supplemented
from time to time in accordance with the terms thereof.
"Depositary" means Allfirst Bank, as depositary under the Deposit Agreement
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relating to Class A, Class B and Class C Certificates.
"Deposits" with respect to any Class, shall have the meaning set forth in
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the Deposit Agreement pertaining to such Class.
"Designated Representatives" means the Subordination Agent Representatives,
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Trustee Representatives and the Provider Representatives identified under
Section 2.5.
"Distribution Date" means a Regular Distribution Date or a Special
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Distribution Date.
"Dollars" or "$" means United States dollars.
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"Downgrade Drawing" has the meaning assigned to such term in Section
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3.6(c).
"Downgraded Facility" has the meaning assigned to such term in Section
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3.6(c).
"Drawing" means an Interest Drawing, a Non-Extension Drawing, a Final
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Drawing or a Downgrade Drawing, as the case may be.
"Eligible Deposit Account" means either (a) a segregated account with an
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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
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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 (as defined below); provided that such Liquidity Provider shall
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have waived all rights of set-off and counterclaim with respect to such account.
"Eligible Institution" means, subject to the last sentence of subsection
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2.2(c), (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.
"Eligible Investments" means (a) investments in obligations of, or
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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,
or, if such ratings are unavailable, rated by any nationally recognized rating
organization in the United States equal to the highest rating assigned by such
rating organization, having maturities no later than 90 days following the date
of such investment, (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, (d) any
mutual fund the portfolio of which is limited to investments of the types
specified in the preceding clauses (a) through (c), including any proprietary
mutual fund of Allfirst Bank for which such bank or an affiliate is investment
advisor or to which such bank provides other services and receives reasonable
compensation for such services or (e) overnight federal funds transactions with
members of the Federal Reserve Systems arranged by federal funds brokers;
provided, however, that (x) all Eligible Investments that are bank obligations
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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
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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 (a), (b) and (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
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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 Midway or any of their respective Affiliates shall be an Eligible Investment.
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"Eligible Provider" has the meaning assigned to such term in Section
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2.6(c).
"Equipment Notes" means, at any time, the Series A Equipment Notes, the
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Series B Equipment Notes and the Series C Equipment Notes, collectively, and in
each case, any Equipment Notes issued in exchange therefor or replacement
thereof pursuant to the terms of the Indentures.
"Escrow Agent" means First Union Trust Company, National Association, as
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escrow agent under each Escrow and Paying Agent Agreement, together with its
successors in such capacity.
"Escrow and Paying Agent Agreement" shall mean, with respect to any Class,
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the Escrow and Paying Agent Agreement pertaining to such Class, dated the date
hereof, among the Escrow Agent, the Placement Agents, the Trustee for such Class
and the Paying Agent, as the same may be amended, modified or supplemented from
time to time in accordance with the terms thereof.
"Expected Distributions" means, with respect to the Certificates of any
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Trust on any Current Distribution Date, the sum of (x) accrued and unpaid
interest on such Certificates (excluding interest, if any, payable with respect
to the Deposits related to such Trust) and (y) the difference between (A) the
Pool Balance of such Certificates as of the immediately preceding Distribution
Date (or if the Current Distribution Date is the first Distribution Date, the
original aggregate face amount of the Certificates of such Trust) and (B) the
Pool Balance of such Certificates as of the Current Distribution Date,
calculated on the basis that (1) 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 (2) the principal
of any Equipment Notes formerly held in such Trust that have been sold pursuant
to this Agreement has been paid in full and such payments distributed to the
Certificateholders, but without giving effect to any reduction in the Pool
Balance as a result of any distribution attributable to Deposits occurring after
the immediately preceding Distribution Date (or, if the Current Distribution
Date is the first Distribution Date, occurring after the initial issuance of the
Certificates of such Trust). For purposes of calculating Expected
Distributions, any premium paid on the Equipment Notes held in any 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.
"Fee Letter" with respect to any Liquidity Facility, shall have the meaning
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set forth in such Liquidity Facility.
"Final Distributions" means, with respect to the Certificates of any Trust
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on any Distribution Date, the sum of (a) the aggregate amount of all accrued and
unpaid interest on such
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Certificates (excluding interest, if any, payable with respect to the Deposits
relating to such Trust) and (b) the Pool Balance of such Certificates as of the
immediately preceding Distribution Date (less the amount of the Deposits for
such Class of Certificates as of such preceding Distribution Date other than any
portion of such Deposits thereafter used to acquire Equipment Notes pursuant to
the Note Purchase Agreement). For purposes of calculating Final Distributions
with respect to the Certificates of any Trust, any premium paid on the Equipment
Notes held in such Trust which has not been distributed to the
Certificateholders of such Trust (other than such premium or a portion thereof
applied to the payment of interest on the Certificates of such Trust or the
reduction of the Pool Balance of such Trust) shall be added to the amount of
such Final Distributions.
"Final Drawing" means, in respect of a Liquidity Facility, a borrowing or
-------------
drawing, other than an Interest Drawing, a Downgrade Drawing or a Non-Extension
Drawing, of all available and undrawn amounts under such Liquidity Facility in
accordance with the provisions thereof.
"Final Legal Distribution Date" means, for each of the Class A, Class B and
-----------------------------
Class C Certificates, October 1, 2020, October 1, 2015 and October 1, 2007
respectively.
"Financing Agreement" means each of the Participation Agreements and the
-------------------
Note Purchase Agreement.
"Guarantee Agreement" has the meaning assigned to such term in the
-------------------
preliminary statements to this Agreement.
"Guarantee Event" has the meaning assigned to such term in Section 3.6(c).
---------------
"Guarantor" has the meaning assigned to such term in the preliminary
---------
statements to this Agreement.
"Indenture" means each of the Trust Indentures entered into by the Loan
---------
Trustee, and the Owner Trustee or Midway, pursuant to the Note Purchase
Agreement, in each case as the same may be amended, supplemented or otherwise
modified from time to time in accordance with its terms.
"Indenture Default" means, with respect to any Indenture, any Event of
-----------------
Default (as such term is defined in such Indenture) thereunder.
"Indenture Estate" has the meaning assigned to such term in each Indenture.
----------------
"Interest Drawing" has the meaning assigned to such term in Section 3.6(a).
----------------
-11-
"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 any Indenture relating to a Leased Aircraft,
-----
the "Lease" referred to therein.
"Leased Aircraft" has the meaning assigned to such term in the preliminary
---------------
statements of this Agreement.
"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, as applicable.
"Liquidity Obligations" means all principal, interest, fees and other
---------------------
amounts owing to the Liquidity Providers under the Liquidity Facilities, the Fee
Letter and Sections 6.01 and 7.01 of the Participation Agreements.
"Liquidity Provider" means, at any time, the Class A Liquidity Provider,
------------------
the Class B Liquidity Provider or the Class C Liquidity Provider, as applicable.
"Loan Trustee" means, with respect to any Indenture, the indenture trustee
------------
thereunder.
"LTV Appraisal" means a current fair market 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.
"LTV Collateral Amount" of any Leased Aircraft or Owned Aircraft for any
---------------------
Class of Certificates on any Distribution Date means 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
-12-
to any such Aircraft which has suffered an Event of Loss under and as defined in
the relevant Lease (in the case of a Leased Aircraft) or Indenture (in the case
of an Owned Aircraft), the amount of the insurance proceeds paid to the related
Loan Trustee in respect thereof to the extent then held by such Loan Trustee
(and/or on deposit in the Special Payments Account) or payable to such Loan
Trustee in respect thereof) and (ii) the outstanding principal amount of the
Equipment Notes held by the Subordination Agent 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, 42%, for the Class B
---------
Certificates, 56%, and, for the Class C Certificates, 63%.
"Midway" means Midway Airlines Corporation, a Delaware corporation, and its
------
successors and permitted assigns.
"Midway Bankruptcy Event" means the occurrence and continuation of any of
-----------------------
the following:
(a) Midway shall consent to the appointment of or taking possession by
a receiver, assignee, custodian, sequestrator, trustee or liquidator (or
other similar official) of itself or of a substantial part of its property,
or Midway shall admit in writing its inability to pay its debts generally
as they come due (as provided in 11 U.S.C. (S)303(h)(1)), or shall make a
general assignment for the benefit of its creditors, or Midway shall file a
voluntary petition in bankruptcy or a voluntary petition or answer seeking
liquidation, reorganization or other relief with respect to itself or its
debts under the Federal bankruptcy laws, as now or hereafter constituted or
any other applicable Federal or State bankruptcy, insolvency or other
similar law or shall consent to the entry of an order for relief in an
involuntary case under any such law or Midway shall file an answer
admitting the material allegations of a petition filed against Midway in
any such proceeding, or otherwise seek relief under the provisions of any
now existing or future Federal or State bankruptcy, insolvency or other
similar law providing for the reorganization or winding-up of corporations,
or providing for an agreement, composition, extension or adjustment with
its creditors; or
(b) an order, judgment or decree shall be entered in any proceeding by
any court of competent jurisdiction appointing, without the consent of
Midway, a receiver, trustee or liquidator of Midway or of any substantial
part of its property, or any substantial part of the property of Midway
shall be sequestered, and any such order, judgment of decree of appointment
or sequestration shall remain in force undismissed, unstayed or unvacated
for a period of 90 days after the date of entry thereof; or
(c) a petition against Midway in a proceeding under any applicable
bankruptcy laws or other insolvency or similar laws as now or hereafter in
effect shall be
-13-
filed and shall not be withdrawn or dismissed within 90 days thereafter,
or, in the case the approval of such petition by a court of competent
jurisdiction is required, the petition as filed or amended shall be
approved by such a court as properly filed and such approval shall not be
withdrawn or the proceeding dismissed within 90 days thereafter, or a
decree or order for relief in respect of Midway shall be entered by a court
of competent jurisdiction in an involuntary case under such bankruptcy,
insolvency or similar laws, as now or hereafter constituted and such decree
or order shall remain unstayed in effect for a period of 90 days, or if,
under the provisions of any law providing for reorganization or winding-up
of corporations which may apply to Midway, any court of competent
jurisdiction shall assume jurisdiction, custody or control of Midway or of
any substantial part of its property and such jurisdiction, custody or
control shall remain in force unrelinquished, unstayed or unterminated for
a period of 90 days.
"Midway Provisions" has the meaning provided in Section 9.1(a).
-----------------
"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.
-------
"MSCS" has the meaning assigned to such term in the recital of the parties
----
to this Agreement.
"New Aircraft" has the meaning assigned to such term in the Note Purchase
------------
Agreement.
"Non-Controlling Parties" means, collectively, at any time, the Trustees
-----------------------
and the Liquidity Providers which are 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.
"Note Purchase Agreement" means the Note Purchase Agreement dated as of the
-----------------------
date hereof, among Midway, each Trustee, the Escrow Agent, the Subordination
Agent and the Paying Agent.
-14-
"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
--------------------
Fee Letter, the Indentures, the Trust Agreements, the Placement Agreement, the
Financing Agreements, the Leases, the Equipment Notes and the Certificates,
together with all exhibits and schedules included with any of the foregoing and
each of the other documents and instruments referred to in the definitions of
"Operative Agreements" contained in the Leases or any Owned Aircraft Indenture.
"Outstanding" means, when used with respect to each Class of Certificates,
-----------
as of the date of determination, all Certificates of such Class theretofore
authenticated and delivered under the related Trust Agreement, except:
(i) Certificates of such Class theretofore cancelled by the
Registrar (as defined in such Trust Agreement) or delivered to the Trustee
thereunder or such Registrar for cancellation;
(ii) 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 Midway 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 Midway 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 of the Scheduled
Payment Date relating thereto.
-15-
"Owned Aircraft" has the meaning assigned to such term in the preliminary
--------------
statements of this Agreement.
"Owned Aircraft Indenture" means, with respect to each Owned Aircraft, the
------------------------
Indenture pertaining to such Aircraft.
"Owner Participant" means, with respect to any Indenture pertaining to a
-----------------
Leased Aircraft, the Owner Participant (as defined therein) and any permitted
successor or assign of such Owner Participant.
"Owner Trustee" means, with respect to any Indenture pertaining to a Leased
-------------
Aircraft, the Owner Trustee (as defined therein) not in its individual capacity
but solely as trustee under the related owner trust agreement, together with any
successor trustee appointed pursuant to such owner trust agreement.
"Participation Agreements" means, with respect to each Indenture, the
------------------------
Participation Agreement referred to therein, as the same may be amended,
supplemented or otherwise modified from time to time in accordance with its
terms.
"Payee" has the meaning assigned to such term in Section 2.4(e).
-----
"Paying Agent" means Allfirst Bank, as paying agent under each Escrow and
------------
Paying Agent Agreement, together with its successors in such capacity.
"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 thereof); provided that in
--------
the event of a bankruptcy proceeding involving Midway under Title 11 of the
United States Code (the "Bankruptcy Code"), any payment default existing during
---------------
the 60-day period under Section 1110(a)(2)(A) of the Bankruptcy Code (or such
longer period as may apply under Section 1110(b) of the Bankruptcy Code) (the
"Section 1110 Period") shall not be taken into consideration, unless during such
-------------------
period the trustee in such proceeding or Midway (a) fails to agree pursuant to
the Bankruptcy Code to perform its obligations under the Lease related to such
Equipment Note (in the case of a Leased Aircraft) or under the Indenture related
to such Equipment Note (in the case of an Owned Aircraft) or (b) does not cure
any such payment default under Section 1110(a)(2)(B) of the Bankruptcy Code
before the expiration of the period applicable thereto as specified in such
Section 1110(a)(2)(B).
"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.
-16-
"Person" means any individual, corporation, limited liability company,
------
partnership, joint venture, association, joint-stock company, trust, trustee,
unincorporated organization or government or any agency or political subdivision
thereof.
"Placement Agents" means Xxxxxx Xxxxxxx & Co. Incorporated and Seabury
----------------
Securities LLC.
"Placement Agreement" means the Placement Agreement dated September 22,
-------------------
2000, between the Placement Agents and Midway, relating to the purchase of the
Certificates by the Placement Agents, as the same may be amended, supplemented
or otherwise modified from time to time in accordance with its terms.
"Pool Balance" means, with respect to each Trust or the Certificates issued
------------
by any Trust, as of any date, (i) the original aggregate face amount of the
Certificates of such Trust less (ii) the aggregate amount of all payments made
----
in respect of the Certificates of such Trust or in respect of Deposits relating
to such Trust other than payments made in respect of interest or premium thereon
or reimbursement of any costs and expenses in connection therewith. The Pool
Balance for each Trust or the Certificates issued by any Trust as of any
Distribution Date shall be computed after giving effect to any special
distribution with respect to unused Deposits, any payment of principal, if any,
on the Equipment Notes or other Trust Property held in such Trust and the
distribution thereof to be made on such date.
"Proceeding" means any suit in equity, action at law or other judicial or
----------
administrative proceeding.
"Provider Incumbency Certificate" has the meaning assigned to such term in
-------------------------------
Section 2.5(c).
"Provider Representatives" has the meaning assigned to such term in Section
------------------------
2.5(c).
"PTC Event of Default" means, with respect to each Trust Agreement, the
--------------------
failure to pay within 10 Business Days after 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, in the case of the Class A, Class B or Class C
Certificates, the Subordination Agent shall have made an Interest Drawing or a
withdrawal from the Cash Collateral Account with respect thereto in an 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. Initially, the
Rating Agencies shall consist of Moody's and Standard & Poor's.
-17-
"Ratings Confirmation" means, with respect to any action proposed to be
--------------------
taken, a written confirmation from each of the Rating Agencies that such action
would not result in (i) a reduction of the rating for any Class of Certificates
below the then current rating for such Class of Certificates or (ii) a
withdrawal or suspension of the rating of any Class of Certificates.
"Registration Rights Agreement" means the Registration Rights Agreement,
-----------------------------
dated as of September 27, 2000, among the Placement Agents, Midway and the
Trustees.
"Regular Distribution Dates" means each April 1 and October 1, commencing
--------------------------
on April 1, 2001; 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, a
------------------------------
revolving credit agreement in substantially the form of the initial Liquidity
Facility for such 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
circumstances identified in clauses (i) and (ii) of the Section 3.6(c)), in a
face amount (or an aggregate face amount) equal to the Required Amount for such
Liquidity Facility and issued by a Replacement Liquidity Provider.
"Replacement Liquidity Provider" means a Person having unsecured debt
------------------------------
ratings which are equal to or higher than the Threshold Rating who issues a
Replacement Liquidity Facility.
"Required Amount" means, with respect to each Liquidity Facility and each
---------------
Cash Collateral Account related thereto, 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
or agent of such Liquidity Provider.
-18-
"Scheduled Payment" means, with respect to any Equipment Note, (i) any
-----------------
payment of principal and 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 8.82% Series A Equipment Notes issued
------------------------
pursuant to each Indenture by the related Owner Trustee or Midway, as the case
may be, and authenticated by the Loan Trustee thereunder, and any such Equipment
Notes issued in exchange therefor or replacement thereof pursuant to the terms
of such Indenture.
"Series B Equipment Notes" means the 10.07% Series B Equipment Notes issued
------------------------
pursuant to each Indenture by the related Owner Trustee or Midway, as the case
may be, and authenticated by the Loan Trustee thereunder, and any such Equipment
Notes issued in exchange therefor or replacement thereof pursuant to the terms
of such Indenture.
"Series C Equipment Notes" means the 11.19% Series C Equipment Notes issued
------------------------
pursuant to each Indenture by the related Owner Trustee or Midway, as the case
may be, and authenticated by the Loan Trustee thereunder, and any such Equipment
Notes issued in exchange therefor or replacement thereof pursuant to the terms
of such Indenture.
"Special Distribution Date" means, with respect to any Special Payment, the
-------------------------
date chosen by the Subordination Agent pursuant to Section 2.4(a) for the
distribution of such Special Payment in accordance with this Agreement;
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.
"Special Payment" means any payment (other than a Scheduled Payment) in
---------------
respect of, or any proceeds of, any Equipment Note, Indenture Estate or
Collateral, including Overdue Scheduled Payments, payments in respect of the
redemption or repurchase of any Equipment Note and payments in respect of the
sale of any Equipment Note to the related Owner Trustee, Owner Participant or
any other Person.
"Special Payments Account" means the Eligible Deposit Account created
------------------------
pursuant to Section 2.2 as a sub-account to the Collection Account.
-19-
"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 the sum of (a) (i) with respect to the Class A
--------------------
Certificates, 8.82% per annum, or (ii) with respect to the Class B Certificates,
10.07% per annum, or (iii) with respect to the Class C Certificates, 11.19% per
annum, plus (b) in the case of clause (i), (ii), or (iii), 0.50% per annum for
----
such periods as are required pursuant to Section 2(d) or Section 3 of the
Registration Rights Agreement; provided that for purposes of calculating the
--------
"Required Amount" for each Class of Certificates, the Stated Interest Rate for
the Class A Certificates, the Class B Certificates and the Class C Certificates
shall equal, respectively, 8.82%, 10.07% and 11.19% per annum, plus, until such
----
date as there shall exist no possibility of an increase in the interest rate
applicable to the Certificates pursuant to the Registration Rights Agreement and
each Liquidity Provider and the Subordination Agent shall have received a
certificate of an authorized officer of Midway to such effect, 0.50% per annum.
"Subordination Agent" has the meaning assigned to it in the preamble 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 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.
-20-
"Threshold Rating" means the short-term unsecured debt rating of P-1 by
----------------
Moody's and A-1 by Standard & Poor's.
"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, a
failure to pay at final maturity, all of the outstanding Equipment Notes or (z)
the occurrence of a Midway 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, Class B Trust
---------------
Agreement or Class C Trust Agreement.
"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(b).
"Trustee Representatives" has the meaning assigned to such term in Section
-----------------------
2.5(b).
"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.
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 and distribution 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,
-21-
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 under the Operative
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 to the relevant Deposits and that none
of the Trustees, Owner Trustees, Loan Trustees, Owner Participants nor the
Subordination Agent is personally liable to any of them for any amounts payable
or any liability under this Agreement, any Trust Agreement, any Liquidity
Facility or such Certificate, except (in the case of the Subordination Agent) as
expressly provided herein or (in the case of the Trustees) as expressly provided
in each Trust Agreement or (in the case of the Owner Trustees and the Loan
Trustees) as expressly provided in any Operative Agreement.
SECTION 2.2 Trust Accounts. (a) Upon the execution of this
--------------
Agreement, the Subordination Agent shall establish and maintain in its name (i)
the Collection Account as an Eligible Deposit Account, bearing a designation
clearly indicating that the funds deposited therein are held in trust for the
benefit of the Trustees, the Certificateholders and the Liquidity Providers and
(ii) as a sub-account in the Collection Account, the Special Payments Account as
an Eligible Deposit Account, bearing a designation clearly indicating that the
funds deposited therein are held in trust for the benefit of the Trustees, the
Certificateholders and the Liquidity Providers. The Subordination Agent shall
establish and maintain the Cash Collateral Accounts pursuant to and under the
circumstances set forth in Section 3.6(f) hereof. Upon such establishment and
maintenance under Section 3.6(f) hereof, the Cash Collateral Accounts shall,
together with the Collection Account, constitute the "Trust Accounts" hereunder.
--------------
(b) Funds on deposit in the Trust Accounts shall be invested and
reinvested by the Subordination Agent in Eligible Investments selected by the
Subordination Agent if such investments are reasonably available and have
maturities no later than the earlier of (i) 90 days following the date of such
investment and (ii) the Business Day immediately preceding the Regular
Distribution Date or the date of the related distribution pursuant to Section
2.4 hereof, as the case may be, next following the date of such investment;
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 at the direction of Midway; provided further,
-------- -------
however, that upon the occurrence and during the continuation of the
-------
-22-
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,
the provisions of 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 principal
amount of such investment is 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 own willful misconduct or gross negligence, or from
the handling or transfer of funds other than by reason of its own ordinary
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 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 the Subordination Agent 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), upon receipt by the
---------------
Subordination Agent, as registered holder of the Equipment Notes, of any notice
of a Special Payment (or, in the absence
-23-
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 and the Liquidity Provider a Written Notice of such amount
and the amount allocable to each Trust. Such Written Notice shall also set the
distribution date for such Special Payment (a "Special Distribution Date"),
-------------------------
which shall be a Business Day which 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) (i) Redemptions and Purchases of Equipment Notes. 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
or purchase (including, without limitation, a purchase resulting from the sale
of the Equipment Notes permitted by Article IV hereof) 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) the aggregate
-----
amount of all accrued and unpaid Liquidity Expenses then in arrears ("past
due amounts") plus (B) the product of (x) the aggregate amount of all
----
accrued and unpaid Liquidity Expenses not in arrears to such Special
Distribution Date multiplied by (y) a fraction, the numerator of which is
---------- --
the aggregate outstanding principal amount of Equipment Notes being
redeemed, purchased or prepaid on such Special Distribution Date and the
denominator of which is the aggregate outstanding principal amount of all
Equipment Notes (the "Section 2.4(b) Fraction") ("accrued amounts"), shall
-----------------------
be distributed to the relevant Liquidity Providers first in satisfaction of
any past due amounts then in satisfaction of the accrued amounts, in each
case, 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 (at the rate
provided in the applicable 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 Distribution Date (at the rate
provided in the applicable Liquidity Facility) multiplied by (y) the
---------- --
Section 2.4(b) Fraction, to the Liquidity Providers pari passu on the basis
---- -----
of the amount of such accrued and unpaid interest owed to each Liquidity
Provider;
-24-
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 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 Account's Required Amount shall be deposited in such
Account, and (C) after application of amounts required pursuant to
subclause (A) or subclause (B) of this clause "third", 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 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 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 together with (without
duplication) accrued and unpaid interest on a portion of such Certificates
equal to the outstanding principal amount of Equipment Notes being
redeemed, purchased or prepaid (immediately prior to such redemption,
purchase or prepayment) (excluding interest, if any, payable with respect
to the Deposits related to such Trust)".
-25-
(ii) Upon and at any time following 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, prepayment 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 Midway in respect of any Trustee, any
Liquidity Provider, the Paying Agent, the Depositary or any Escrow Agent
(collectively, the "Payees") and (ii) any compensation (including, without
------
limitation, any fees payable to any Liquidity Provider under Section 2.03 of any
Liquidity Facility) received by it from the Owner Participant, the Owner Trustee
or Midway 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
------------------
-26-
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 (each a "Provider
--------
Incumbency Certificate") of any authorized signatory 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 (in each case, the "Provider Representatives" and, together with the
------------------------
Subordination Agent Representatives and Trustee Representatives, the "Designated
----------
Representatives") authorized to give Written Notices on behalf of such Liquidity
---------------
Provider hereunder. Until the Subordination Agent receives a subsequent
Provider Incumbency Certificate, it shall be entitled to rely on the last
Provider 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 with respect to such Indenture or 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 representing holders of Certificates representing an undivided
interest in such principal amount of Equipment Notes), and (ii) after the
occurrence and during the continuance of an Indenture Default thereunder (which,
in the case of an Indenture pertaining to a Leased Aircraft, has not been cured
by the applicable Owner Trustee or the applicable Owner Participant, if
applicable, pursuant to Section 8.03 of such Indenture), in taking, or
refraining from taking, any action with respect to such Indenture or 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) Subject to subparagraph (c) below, the Person who shall be the
"Controlling Party" with respect to any Indenture shall be: (x) the Class A
-----------------
Trustee until payment of Final Distributions to the holders of Class A
Certificates; and thereafter, (y) the Class B Trustee until payment of Final
Distributions to the holders of Class B Certificates; and thereafter (z) the
Class C Trustee. For purposes of giving effect to the foregoing, the Trustees
(other than the
-27-
Controlling Party) irrevocably agree (and the Certificateholders (other than the
Certificateholders represented by the Controlling Party) shall be deemed to
agree by virtue of their purchase of Certificates) that the Subordination Agent,
as record holder of the Equipment Notes, shall exercise its voting rights in
respect of the Equipment Notes as directed by the Controlling Party and any vote
so exercised shall be binding upon the Trustees and all Certificateholders.
The Subordination Agent shall give written notice to all of the other
parties to this Agreement promptly upon a change in the identity of the
Controlling Party. Each of the parties hereto agrees that it shall not exercise
any of the rights of the Controlling Party at such time as it is not the
Controlling Party hereunder; provided, however, that nothing herein contained
-------- -------
shall prevent or prohibit any Non-Controlling Party from exercising such rights
as shall be specifically granted to such Non-Controlling Party hereunder and
under the other Operative Agreements.
(c) Notwithstanding the foregoing, at any time after 18 months from
the earliest to occur of (i) the date on which the entire Available Amount under
any Liquidity Facility shall have been drawn (for any reason other than a
Downgrade Drawing or a Non-Extension Drawing) and any amount remains
unreimbursed, (ii) the date on which the entire amount of any Downgrade Drawing
or Non-Extension Drawing has been withdrawn from a Cash Collateral Account to
pay interest on the related Class of Certificates and any amount remains
unreimbursed and (iii) the date on which all Equipment Notes shall have been
Accelerated, the Liquidity Provider with the highest outstanding amount of
unreimbursed Liquidity Obligations (so long as such Liquidity Provider has not
defaulted in its obligation to make any advance under any Liquidity Facility;
the "Eligible Provider") 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
Distribution Date (or Special Distribution Date for purposes of Section 2.4(b)
hereof, as the case may be), each of the
-28-
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 Section 2.4(b)(i), 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 Section 2.4(b)(i), 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 Section 2.4(b)(i), 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 Section 2.4(b)(i), 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) shall be provided to the
Subordination Agent by the parties referenced therein or by any one of them
pursuant to an agreement between the parties referred to therein, and may state
that, unless there has been a prepayment of the Certificates, such notice 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" (relating to reimbursement of 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" (relating to
-----
-29-
reimbursement of 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" (relating to reimbursement of 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 in
accordance with clauses "first", "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 paragraphs (a) or (b) above which is
required to enable the Subordination Agent to make a distribution to such Person
pursuant to Section 2.4(b)(i), 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 "eighth" of
----- ------
-30-
Section 2.4(b)(i), clauses "first" through "ninth" of Section 3.2 and clauses
----- -----
"first" through "eleventh" 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 Distribution Date 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
provided in the applicable Liquidity Facility) and unpaid shall be
distributed to the Liquidity Providers pari passu on the basis of the
---- -----
amount of 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 Account up to its Required Amount shall be deposited in such 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
Account's Required Amount shall be deposited in such Cash Collateral
Account, and (C) after applications of the amounts required pursuant to
subclause (A) or subclause (B) of this clause "third", 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 the Liquidity
------
Providers pari passu on the basis of the amounts of all such unreimbursed
---- -----
Liquidity Obligations;
-31-
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 payment remaining thereafter
-----
shall be held in the Collection Account for later distribution in
accordance with this Article III (including the priorities set forth
therein).
SECTION 3.3 Distribution of Amounts on Deposit Following a Triggering
---------------------------------------------------------
Event. 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
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
-32-
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 owed to each Liquidity Provider 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 the aggregate
-----
amount of interest accrued on all Liquidity Obligations (at the rate
provided in the applicable Liquidity Facility) and unpaid shall be
distributed to the Liquidity Providers pari passu on the basis of the
---- -----
amount of Liquidity Obligations 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 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 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) after application of the amounts required
pursuant to subclause (A) or subclause (B) of this clause "fourth", (x) 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 Providers pari passu on the basis of the amounts of all such
---- -----
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)
-33-
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;
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;
tenth, such amount remaining shall be retained in the Collection
-----
Account until the immediately succeeding Distribution Date or, if all
Classes of Certificates shall have been paid in full, shall be distributed
to the Owner Trustee to the extent that the amount received from the Loan
Trustees and deposited in the Collection Account exceed the amounts
described in clauses "first" through "ninth" above; and
----- -----
eleventh, amount remaining shall be distributed to the
--------
Certificateholders of the related Trust.
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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 in the order
of priority specified in 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 only 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 "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 of funds to the address such Trustee shall provide to the
Subordination Agent.
SECTION 3.6 Liquidity Facilities. (a) Interest Drawings. If on any
-------------------- -----------------
Distribution Date, after giving effect to the subordination provisions of this
Agreement, the Subordination Agent shall not have sufficient funds for the
payment of any amounts due and owing in respect of accrued interest on the Class
A Certificates, the Class B Certificates or the Class C Certificates (at the
Stated Interest Rate for such Class of Certificates), then, prior to 1 p.m. (New
York City time) on 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) or (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.
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(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 and
(ii) all payments received by the Subordination Agent in respect of an Interest
Drawing under the Class B Liquidity Facility and all amounts withdrawn by the
Subordination Agent from the Class B Cash Collateral Account, and payable in
each case to the Class B Certificateholders, shall be promptly distributed to
the Class B Trustee and (iii) all payments received by the Subordination Agent
in respect of an Interest Drawing under the Class C Liquidity Facility and all
amounts withdrawn by the Subordination Agent from the Class C Cash Collateral
Account, and payable in each case to the Class C Certificateholders, shall be
promptly distributed to the Class C Trustee.
(c) Downgrade Drawings. If at any time (i) in the case of any
------------------
Liquidity Facility (other than as provided in clause (ii) below) the short-term
unsecured debt rating of the Liquidity Provider thereof issued by either Rating
Agency is lower than the applicable Threshold Rating or (ii) in the case of any
Liquidity Facility for which MSCS is the Liquidity Provider, the short-term
unsecured debt rating of the Guarantor issued by either Rating Agency is lower
than the applicable Threshold Rating or the related Guarantee Agreement ceases
to be in full force and effect, becomes invalid or unenforceable or the
Guarantor denies its liability thereunder (any such occurrence, a "Guarantee
Event"), within 10 days after receiving notice of such downgrading or Guarantee
Event, as the case may be (but not later than the expiration date of the
Liquidity Facility issued by the relevant Liquidity Provider (the "Downgraded
----------
Facility")), Midway 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 10/th/ day (or if such 10/th/
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,
provided that any such replacement shall be made subject to the terms of the
proviso to the final paragraph of Section 3(e).
(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,
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the Subordination Agent shall request that such Liquidity Provider extend the
Stated Expiration Date to the earlier of (i) the date which is 15 days after the
Final Legal Distribution Date for such Class of Certificates and (ii) the date
that is the day immediately preceding the 364/th/ day occurring 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 Subordination Agent, 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 the 25th day prior to the Stated Expiration Date, 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
Subordination Agent 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 any Non-
Extension Drawing shall be maintained and invested in accordance with Section
3.6(f) hereof. Notwithstanding the immediately preceding provisions of this
Section 3.6(d), so long as MSCS is the Liquidity Provider for any Liquidity
Facility, the Stated Expiration Date therefor shall be automatically extended,
effective on the 25/th/ day prior to such Stated Expiration Date (unless such
Stated Expiration Date is on or after the date that is 15 days after the Final
Legal Distribution Date for the relevant Class of Certificates), for a period of
364 days after such Stated Expiration Date (unless the obligations of such
Liquidity Provider are earlier terminated in accordance with such Liquidity
Facility) without the necessity of any act by the Subordination Agent or such
Liquidity Provider, unless such Liquidity Provider shall advise the
Subordination Agent, prior to such 25/th/ day, that it does not agree to such
extension of the Stated Expiration Date, in which event, the Subordination Agent
shall, on such 25/th/ day (or as soon as possible thereafter), in accordance
with and to the extent permitted by the terms of the Non-Extended Facility,
request a Non-Extension Drawing under the Non-Extended Facility of all available
and undrawn amounts thereunder.
(e) Issuance of Replacement Liquidity Facility. At any time, the
------------------------------------------
Subordination Agent may, but only upon the direction of Midway, with or without
cause, arrange for a Replacement Liquidity Facility to replace the Liquidity
Facility for any Class of Certificates, provided that, any such replacement of
-------- ----
the initial Liquidity Provider may not be effective until the second anniversary
of the Closing Date unless (A) there shall have become due to the initial
Liquidity Provider, or the initial Liquidity Provider shall have demanded,
amounts pursuant to Section 3.1, 3.2 or 3.3 of any Liquidity Facility and the
replacement of the initial Liquidity Provider would reduce or eliminate the
obligation to pay such amounts or Midway determines in good faith that there is
a material likelihood that the initial Liquidity Provider will have the right to
claim any such amounts (unless the initial Liquidity Provider waives, in
writing, any right it may have to claim such amounts), which determination shall
be set forth in a certificate delivered
-37-
by Midway to such Liquidity Provider setting forth the basis for such
determination and accompanied by an opinion of outside counsel selected by
Midway and reasonably acceptable to such Liquidity Provider verifying the legal
conclusions, if any, of such certificate relating to such basis, provided that,
--------
in the case of any likely claim for such amounts based upon any proposed, or
proposed change in, law, rule, regulation, interpretation, directive,
requirement, request or administrative practice, such opinion may assume the
adoption or promulgation of such proposed matter, (B) it shall become unlawful
or impossible for the initial Liquidity Provider to maintain or fund its LIBOR
Advances as described in Section 3.10 of any Liquidity Facility, to the extent
that such Replacement Liquidity Facility would be able to maintain or fund such
LIBOR Advances, (C) a Guarantee Event occurs and there is a resulting downgrade
in the rating by any Rating Agency of any Class of Certificates, (D) a Downgrade
Drawing or a Non-Extension Drawing shall have occurred under any Liquidity
Facility or (E) the initial Liquidity Provider shall have breached any of its
payment (including, without limitation, funding) obligations under any Liquidity
Facility. If such Replacement Liquidity Facility is provided at any time after a
Downgrade Drawing or a 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. No such Replacement Liquidity Facility executed in
connection therewith shall become effective and no such Replacement Liquidity
Facility shall be deemed a "Liquidity Facility" under the Operative Agreements,
unless and until (i) the conditions referred to in the immediately following
paragraph shall have been satisfied and (ii) 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.
If any Liquidity Provider shall determine not to extend 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 effected Stated Expiration Date of such Liquidity
Facility; provided that (i) such right shall not interfere with the right of the
-------- ----
Subordination Agent, at the direction of Midway, to select a Replacement
Liquidity Facility pursuant to the immediately preceding paragraph and (ii) no
Replacement Liquidity Provider selected pursuant to this sentence shall result
in any increase in the obligations (or contingent obligations) of Midway
pursuant to any Operative Agreement. In connection with the issuance of each
Replacement Liquidity Facility, the Subordination Agent shall, 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 the rating then in effect for any Class of Certificates by such
Rating Agency (without regard to the ratings 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
-38-
Replacement Liquidity Facility, it being understood that no Replacement
Liquidity Facility shall become effective (other than insofar as necessary to
permit the repayment of amounts owed to the replaced Liquidity Provider) until
all amounts owed to the replaced Liquidity Provider have been paid) 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. Upon satisfaction of the
conditions set forth in this Section 3.6(e), (i) the replaced Liquidity Facility
shall terminate and (ii) such 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
------
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, and amounts so deposited shall be invested in Eligible
Investments in accordance with Section 2.2(b) hereof. Investment Earnings on
amounts on deposit in the Cash Collateral Accounts 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 Midway and the respective Liquidity Provider one day prior to each
Distribution Date setting forth the aggregate amount of Investment Earnings held
in the applicable Cash Collateral Accounts as of such date. In addition, from
and after the date funds are so deposited, the Subordination Agent shall make
withdrawals from such account as follows:
(i) on each Distribution Date, the Subordination Agent shall,
to the extent it shall not have received funds to pay accrued and unpaid
interest 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 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
-39-
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 on the Class C Certificates (at the Stated Interest Rate for the
Class C Certificates) from any other source, withdraw from the Class C Cash
Collateral Account, and pay to the Class C Trustee an amount equal to the
lesser of (x) an amount necessary to pay accrued and unpaid interest (at
the Stated Interest Rate for the Class C Certificates) on such Class C
Certificates and (y) the amount on deposit in the Class C Cash Collateral
Account;
(iv) on each date on which the Pool Balance of the Class A
Trust shall have been reduced by payments made to the Class A
Certificateholders pursuant to Section 2.4, 3.2 or 3.3 hereof or pursuant
to Section 2.03 of the Escrow and Paying Agent Agreement for such Class,
the Subordination Agent shall withdraw from the Class A Cash Collateral
Account such amount as is necessary so that, after giving effect to the
reduction of the Pool Balance on such date (including any such reduction
resulting from a prior withdrawal of amounts on deposit in the Class A Cash
Collateral Account on such date), the Required Amount (with respect to the
Class A Liquidity Facility) will be on deposit in the Class A Cash
Collateral Account and shall first, pay such amount to the Class A
-----
Liquidity Provider until the Liquidity Obligations (with respect to the
Class A Certificates) shall have been paid in full, and second, deposit any
------
remaining amount in the Collection Account;
(v) on each date on which the Pool Balance of the Class B Trust
shall have been reduced by payments made to the Class B Certificateholders
pursuant to Section 2.4, 3.2 or 3.3 hereof or pursuant to Section 2.03 of
the Escrow and Paying Agent Agreement for such Class, the Subordination
Agent shall withdraw from the Class B Cash Collateral Account such amount
as is necessary so that, after giving effect to the reduction of the Pool
Balance on such date (including any such reduction resulting from a prior
withdrawal of amounts on deposit in the Class B Cash Collateral Account on
such date), the Required Amount (with respect to the Class B Liquidity
Facility) will be on deposit in the Class B Cash Collateral Account and
shall first, pay such amount to the Class B Liquidity Provider until the
-----
Liquidity Obligations (with respect to the Class B Certificates) 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 of the Class C
Certificateholders pursuant to Section 2.4, 3.2 or 3.3 hereof or pursuant
to Section 2.03 of the Escrow and Paying Agent Agreement for such Class,
the Subordination Agent shall withdraw from the Class C
-40-
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), the Required Amount
(with respect to the Class C Liquidity Facility) will be on deposit in the
Class C Cash Collateral Account and shall first, pay such amount to the
-----
Class C Liquidity Provider until the Liquidity Obligations (with respect to
the Class C Certificates) 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 each replaced Liquidity Provider pari passu 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 so
reimbursed to the applicable Liquidity Provider, but not to exceed the Required
Amount for such Liquidity Facility; provided, however, that such Liquidity
-------- -------
Facility shall not be so reinstated, in part or in full, at any time after (i) a
Final Drawing shall have occurred with respect to such Liquidity Facility or
(ii) both (A) a Liquidity Event of Default shall have occurred and be continuing
and (B) a Performing Note Deficiency exists. In the event that at any time
prior to both the occurrence of a Liquidity Event of Default and the existence
of a Performing Note Deficiency, funds are withdrawn from any Cash Collateral
Account pursuant to clauses (i), (ii) or (iii) of Section 3.6(f) hereof, or such
Liquidity Facility shall have 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
both a Liquidity Event of Default shall have occurred and be continuing with
respect to such Liquidity Facility and a Performing Note Deficiency exists, and
(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
-41-
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. If any action is required under a Liquidity
-------------
Facility to be taken by the Subordination Agent in order to make a Final Drawing
thereunder, the Subordination Agent shall not fail to take such action. Upon
receipt of the proceeds of a Final Drawing under the related Liquidity Facility,
the Subordination Agent shall maintain and invest such proceeds 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 distribution to the Certificateholders of such Class
of Certificates, the Subordination Agent shall, if such Liquidity Facility
provides for reductions of the Stated Amount of such Liquidity Facility and if
such reductions are not automatic, request the Liquidity Provider for such Class
of Certificates to reduce such Stated Amount to an amount equal to the Required
Amount with respect to such Liquidity Facility (as calculated by the
Subordination Agent after giving effect to such payment). Each such request
shall be made in accordance with the provisions of the applicable Liquidity
Facility.
(k) Relation to Subordination Provisions. Interest Drawings under
------------------------------------
the Liquidity Facilities and withdrawals from the Cash Collateral Accounts, in
each case, in respect of interest on the Certificates of any Class, will be
distributed to the Trustee for such Class of Certificates, notwithstanding
Sections 3.2, 3.3 and 3.6(h) hereof.
ARTICLE IV
EXERCISE OF REMEDIES
SECTION 4.1 Directions from the Controlling Party. (a) (i)
-------------------------------------
Following the occurrence and during the continuation of an Indenture Default
under any Indenture, the Controlling Party shall direct the Subordination Agent,
which shall in turn 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 declaring all of the unpaid principal amount of such
Equipment Notes and accrued interest thereon to be due and payable under, and in
accordance with, the provisions of such Indenture. Subject to the Owner
Trustees' and the Owner Participants' rights, if any, set forth in the
Indentures with respect to the Leased Aircraft to
-42-
purchase the Equipment Notes, if the Equipment Notes issued pursuant to any
Indenture have been Accelerated following an Indenture Default with respect
thereto, the Controlling Party may direct the Subordination Agent to sell,
assign, contract to sell or otherwise dispose of and deliver all (but not less
than all) of such Equipment Notes to any Person at public or private sale, at
any location at the option of the Controlling Party, all upon such terms and
conditions as it may reasonably deem advisable in accordance with applicable
law.
(ii) Subject to the Owner Trustees' and the Owner Participants'
rights set forth in the Indentures, with respect to the Leased Aircraft, to
purchase the Equipment Notes, and notwithstanding the foregoing, so long as any
Certificates remain Outstanding, during the period ending on the date which is
nine months after the earlier of (x) the Acceleration of the Equipment Notes
issued pursuant to any Indenture or (y) the occurrence of a Midway Bankruptcy
Event, without the consent of each Trustee, (A) no Aircraft subject to the Lien
of such Indenture or such Equipment Notes may be sold if the net proceeds from
such sale would be less than the Minimum Sale Price for such Aircraft or such
Equipment Notes, and (B) with respect to any Leased Aircraft, the amount and
payment dates of rentals payable by Midway 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 Midway 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 (but at no expense to
the Subordination Agent), 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 related
Aircraft.
(iv) After a Triggering Event occurs and any Equipment Note becomes
a Non-Performing Equipment Note, the Subordination Agent shall obtain (but at no
expense to the Subordination Agent) LTV Appraisals for the Aircraft as soon as
practicable and additional LTV Appraisals on or prior to each anniversary of the
date of such initial LTV Appraisals; provided that, if the Controlling Party
reasonably objects to the appraised value of the Aircraft shown in any such LTV
Appraisals, the Controlling Party shall have the right to obtain or cause to be
obtained at its expense 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 Subordination Agent, on behalf of 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
-43-
disposition, or in lieu of such maintenance of possession, the Controlling Party
may instruct the Loan Trustee under such Indenture to foreclose on the Lien on
the related Aircraft or to take any other remedial action permitted under such
Indenture or applicable law.
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 Proceedings 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 Proceedings 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 Liquidity
Provider, respectively, to receive payments hereunder (including 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 suit for the enforcement
---------------------
of any right or remedy under this Agreement or in any suit 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
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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 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.
(c) Determinations and Notifications. The Subordination Agent agrees
--------------------------------
to provide to Midway, upon its request and at its expense, information
concerning amounts contained in, and returns earned on, any Cash Collateral
Account and any other information needed for Midway to determine amounts owing
to any Liquidity Provider.
SECTION 5.2 Indemnification. The Subordination Agent shall not be
---------------
required to take any action or refrain from taking any action under 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, or refrain from taking any action, under this
Agreement and nothing contained in this Agreement shall require the
Subordination Agent to
-45-
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 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 from a breach of its
obligations that constitute willful misconduct or gross negligence hereunder or
under any other Operative Agreement.
SECTION 5.4 Notice from the Liquidity Providers and Trustees. If a
------------------------------------------------
Responsible Officer of any Liquidity Provider or Trustee has actual notice of an
Indenture Default or a Triggering Event, such Person shall promptly use its best
efforts to 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, Class B Trustee and 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.
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Allfirst Bank 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, with respect to the handling
or transfer of funds, for its own negligence, (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 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
-47-
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, 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
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hereunder upon reasonable or customary terms. Such corporation 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
5.2 hereof, Sections 7.01 and 8.01 of the Participation Agreements and Section 6
of the Note Purchase Agreement. The indemnities contained in such Sections shall
survive the termination of this Agreement.
ARTICLE VII
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;
-49-
(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 in consultation with Midway shall promptly appoint
a successor Subordination Agent.
Any corporation into which the Subordination Agent may be merged or
converted or with which it may be consolidated, or any corporation resulting
from any merger, conversion or consolidation to which the Subordination Agent
shall be a party, or any corporation to which substantially all the corporate
trust business of the Subordination Agent may be transferred, shall, subject to
the terms of Section 6.9 hereof, be the Subordination Agent hereunder and under
the other Operative Agreements to which the Subordination Agent is a party
without further act, except that such Person shall give prompt subsequent notice
of such transaction to the Liquidity Providers and each Trustee,
A successor Subordination Agent shall deliver a written acceptance of
its appointment as Subordination Agent hereunder to the retiring Subordination
Agent, 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 send a written 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 or Midway 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
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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
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; and 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) or the second sentence of Section 10.6
(collectively, together with this proviso and Section 9.1, the "Midway
------
Provisions") or (y) otherwise adversely affect the interests of a potential
----------
Replacement Liquidity Provider or of Midway with respect to its ability to
replace any Liquidity Facility or with respect to its payment obligations under
any Financing Agreement or any Indenture, then such supplement, amendment or
modification shall not be effective without the additional written consent of
Midway. 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.
(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 instructions of such
Trustee and (ii) if any Indenture Default (which, in the case of any Indenture
pertaining to a Leased Aircraft, has not been cured by the applicable
-51-
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 termination values payable by Midway under any Lease or reduce the
amount of principal or interest payable by Midway under any Equipment Note
issued under any Indenture in respect of an Owned Aircraft.
SECTION 9.2 Subordination Agent Protected. If, in the reasonable
-----------------------------
opinion of the institution acting as the Subordination Agent hereunder or any
counsel consulted by it, 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 or supplement hereto pursuant to the provisions hereof, this
Agreement shall be and be deemed to be modified and amended in accordance
therewith and the respective rights, limitations of rights, obligations, duties
and immunities under this Agreement of the parties hereto and beneficiaries
hereof shall thereafter be determined, exercised and enforced hereunder subject
in all respects to such modifications and amendments, and all the terms and
conditions of any such supplemental agreement shall be and be deemed to be part
of the terms and conditions of this Agreement for any and all purposes. In
executing or accepting any supplemental agreement permitted by this Article 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. 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
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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. 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 it at its
office at:
Allfirst Bank
00 Xxxxx Xxxxxxx Xxxxxx
Xxxxxxxxx, Xxxxxxxx 00000
Facsimile: (000) 000-0000
Attention: Corporate Trust Department
(ii) if to any Trustee, addressed to it at its office at:
Allfirst Bank
00 Xxxxx Xxxxxxx Xxxxxx
Xxxxxxxxx, Xxxxxxxx 00000
Facsimile: (000) 000-0000
Attention: Corporate Trust Department
(iii) if to any Liquidity Provider, addressed to it at its
office at:
XXXXXX XXXXXXX CAPITAL SERVICES INC.
0000 Xxxxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Facsimile: (000) 000-0000
Attention: Xxxxx Xxxxxxxx
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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, if such notice is mailed by certified mail, postage prepaid or by
courier service or if such notice is sent by confirmed telecopy addressed as
provided above. Any party hereto may change the address to which notices to
such party will be sent by giving notice of such change to the other parties to
this Agreement.
SECTION 10.4 Severability. Any provision of this Agreement which is
------------
prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction,
be ineffective to the extent of such prohibition or unenforceability without
invalidating the remaining provisions hereof, and any such prohibition or
unenforceability in any jurisdiction shall not invalidate or render
unenforceable such provision in any other jurisdiction.
SECTION 10.5 No Oral Modifications or Continuing Waivers. No terms
-------------------------------------------
or provisions of this Agreement may be changed, waived, discharged or terminated
orally, but only by an instrument in writing signed by the party or other Person
against whom enforcement of the change, waiver, discharge or termination is
sought and any other party or other Person whose consent is required pursuant to
this Agreement and any waiver of the terms hereof shall be effective only in the
specific instance and for the specific purpose given.
SECTION 10.6 Successors and Assigns. All covenants and agreements
----------------------
contained herein shall be binding upon, and inure to the benefit of, each of the
parties hereto and the successors and assigns of each, all as herein provided.
In addition, the Midway Provisions shall inure to the benefit of Midway and its
successors and assigns, and (without limitation of the foregoing) Midway is
hereby constituted, and agreed to be, an express third party beneficiary of the
Midway 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,
and as among the Certificateholders, 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
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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
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(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 or
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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
that the venue of any 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
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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 or of any State and
waives any immunity any of its properties located in the United States may have
from attachment or execution upon a judgment entered by any such court under the
United States Foreign Sovereign Immunities Act of 1976 or any similar successor
legislation.
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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.
ALLFIRST BANK, not in its individual capacity
but solely as Trustee for each of the Trusts
By: /s/ Xxxxxx X. Xxxxx
--------------------------
Name: Xxxxxx X. Xxxxx
Title: Vice President
XXXXXX XXXXXXX CAPITAL SERVICES INC.,
as Class A Liquidity Provider, Class B Liquidity
Provider and Class C Liquidity Provider
By: /s/ Xxxxxx X. Xxxxxx
--------------------------
Name: Xxxxxx X. Xxxxxx
Title: Vice President
ALLFIRST BANK, not in its individual capacity
except as expressly set forth herein but
solely as Subordination Agent and trustee
By: /s/ Xxxxxx X. Xxxxx
--------------------------
Name: Xxxxxx X. Xxxxx
Title: Vice President
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