INTERCREDITOR AGREEMENT
Dated as of
August 13, 1998
among
THE FIRST NATIONAL BANK OF MARYLAND
not in its individual capacity
but solely as Trustee under the
Midway Airlines Pass Through Trust 1998 - 1A,
Midway Airlines Pass Through Trust 1998 - 1B,
Midway Airlines Pass Through Trust 1998 - 1C and
Midway Airlines Pass Through Trust 1998 - 1D
ABN AMRO BANK, N.V., CHICAGO BRANCH
as Class A Liquidity Provider,
Class B Liquidity Provider and
Class C Liquidity Provider
and
THE FIRST NATIONAL BANK OF MARYLAND
not in its individual capacity except
as expressly set forth herein but
solely as Subordination Agent and trustee hereunder
TABLE OF CONTENTS
Page
ARTICLE I
DEFINITIONS
SECTION 1.1 Definitions................................................ 2
ARTICLE II
TRUST ACCOUNTS; CONTROLLING PARTY
SECTION 2.1 Agreement to Terms of Subordination;
Payments from Monies Received Only......................... 22
SECTION 2.2 Trust Accounts............................................. 22
SECTION 2.3 Deposits to the Collection Account and
Special Payments Account................................... 24
SECTION 2.4 Distributions of Special Payments.......................... 24
SECTION 2.5 Designated Representatives................................. 26
SECTION 2.6 Controlling Party.......................................... 27
ARTICLE III
RECEIPT, DISTRIBUTION AND APPLICATION OF
AMOUNTS RECEIVED
SECTION 3.1 Written Notice of Distribution............................. 29
SECTION 3.2 Distribution of Amounts on Deposit in the
Collection Account......................................... 31
SECTION 3.3 Distribution of Amounts on Deposit
Following a Triggering Event............................... 33
SECTION 3.4 Other Payments............................................. 35
SECTION 3.5 Payments to the Trustees and the
Liquidity Providers........................................ 36
SECTION 3.6 Liquidity Facilities....................................... 36
ARTICLE IV
EXERCISE OF REMEDIES
SECTION 4.1 Directions from the Controlling Party...................... 42
SECTION 4.2 Remedies Cumulative........................................ 44
SECTION 4.3 Discontinuance of Proceedings.............................. 44
SECTION 4.4 Right of Certificateholders to Receive
Payments Not to Be Impaired................................ 44
SECTION 4.5 Undertaking for Costs...................................... 44
Page
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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............ 45
SECTION 5.2 Indemnification............................................ 45
SECTION 5.3 No Duties Except as Specified in
Intercreditor Agreement.................................... 46
SECTION 5.4 Notice from the Liquidity Providers and Trustees........... 46
ARTICLE VI
THE SUBORDINATION AGENT
SECTION 6.1 Authorization; Acceptance of Trusts and Duties............. 46
SECTION 6.2 Absence of Duties.......................................... 47
SECTION 6.3 No Representations or Warranties as to Documents. ......... 47
SECTION 6.4 No Segregation of Monies; No Interest...................... 47
SECTION 6.5 Reliance; Agents; Advice of Counsel........................ 47
SECTION 6.7 Compensation............................................... 48
SECTION 6.8 May Become Certificateholder............................... 48
SECTION 6.9 Subordination Agent Required; Eligibility.................. 48
SECTION 6.10 Money to Be Held in Trust.................................. 49
ARTICLE VII
INDEMNIFICATION OF SUBORDINATION AGENT
SECTION 7.1 Scope of Indemnification................................... 49
ARTICLE VIII
SUCCESSOR SUBORDINATION AGENT
SECTION 8.1 Replacement of Subordination Agent; Appointment of
Successor.................................................. 49
ARTICLE IX
SUPPLEMENTS AND AMENDMENTS
SECTION 9.1 Amendments, Waivers, Etc................................... 51
SECTION 9.2 Subordination Agent Protected.............................. 52
SECTION 9.3 Effect of Supplemental Agreements.......................... 52
SECTION 9.4 Notice to Rating Agencies.................................. 52
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ARTICLE X
MISCELLANEOUS
SECTION 10.1 Termination of Intercreditor Agreement..................... 52
SECTION 10.2 Intercreditor Agreement for Benefit of
Trustees, Liquidity Providers and
Subordination Agent........................................ 53
SECTION 10.3 Notices.................................................... 53
SECTION 10.4 Severability............................................... 54
SECTION 10.5 No Oral Modifications or Continuing Waivers................ 54
SECTION 10.6 Successors and Assigns..................................... 54
SECTION 10.7 Headings................................................... 55
SECTION 10.8 Counterpart Form........................................... 55
SECTION 10.9 Subordination.............................................. 55
SECTION 10.10 GOVERNING LAW.............................................. 56
SECTION 10.11 Submission to Jurisdiction; Waiver of Jury
Trial; Waiver of Immunity.................................. 56
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INTERCREDITOR AGREEMENT
INTERCREDITOR AGREEMENT dated as of August 13, 1998, among THE FIRST
NATIONAL BANK OF MARYLAND, a national banking association ("FNBM"), not in its
individual capacity but solely as Trustee of each Trust (each as defined below),
ABN AMRO BANK N.V., acting through its Chicago Branch, as Class A Liquidity
Provider, ABN AMRO BANK N.V., acting through its Chicago Branch, as Class B
Liquidity Provider, ABN AMRO BANK N.V., acting through its Chicago Branch, as
Class C Liquidity Provider and THE FIRST NATIONAL BANK OF MARYLAND, not in its
individual capacity except as expressly set forth herein, but solely as
Subordination Agent and trustee hereunder (in such capacity, together with any
successor appointed pursuant to Article VIII hereof, the "Subordination Agent").
WHEREAS, all capitalized terms used herein shall have the respective
meanings referred to in Article I hereof;
WHEREAS, pursuant to each Indenture (i) in the case of each Aircraft
that is owned by Midway at the time such Indenture is entered into (the "Owned
Aircraft"), Midway will issue on a recourse basis four series of Equipment 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 will issue on
a nonrecourse basis four series of Equipment Notes to finance the purchase of
such Aircraft;
WHEREAS, pursuant to the Note Purchase Agreement and the
Participation Agreements, each Trust will acquire those Equipment Notes having
an interest rate equal to the interest rate applicable to the Certificates to be
issued by such Trust;
WHEREAS, pursuant to each Trust Agreement, the Trust created thereby
proposes to issue a single class of Certificates (a "Class") bearing the
interest rate and having the final distribution date described in such Trust
Agreement on the terms and subject to the conditions set forth therein;
WHEREAS, pursuant to the Purchase Agreement, the Initial Purchasers
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
agent
for the respective Trustee of the Class A Trust, the Class B Trust and the Class
C Trust, for the benefit of the Certificateholders of such Trust; and
WHEREAS, it is a condition precedent to the obligations of the
Initial Purchasers under the Purchase Agreement that the Subordination Agent,
the Trustees and the Liquidity Providers agree to the terms of subordination set
forth in this Agreement in respect of each Class of Certificates, and the
Subordination Agent, the Trustees and the Liquidity Providers, by entering into
this Agreement, hereby acknowledge and agree to such terms of subordination and
the other provisions of this Agreement.
NOW, THEREFORE, in consideration of the mutual agreements herein
contained, and of other good and valuable consideration, the receipt and
adequacy of which are hereby acknowledged, the parties hereto agree as follows:
ARTICLE I
DEFINITIONS
SECTION 1.1 Definitions. For all purposes of this Agreement, except
as otherwise expressly provided or unless the context otherwise requires:
(1) the terms used herein that are defined in this Article have the
meanings assigned to them in this Article, and include the plural as well
as the singular;
(2) all references in this Agreement to designated "Articles",
"Sections" and other subdivisions are to the designated Articles, Sections
and other subdivisions of this Agreement;
(3) the words "herein", "hereof" and "hereunder" and other words of
similar import refer to this Agreement as a whole and not to any
particular Article, Section or other subdivision; and
(4) the term "including" shall mean "including without limitation".
"ABN AMRO" means ABN AMRO Bank N.V., acting through its Chicago
branch.
"ABN AMRO Fee Letter" means the Fee Letter dated August 13, 1998
between ABN AMRO, Midway and the Subordination Agent with respect to the
Liquidity Facilities.
"Acceleration" means, with respect to the amounts payable in respect
of the Equipment Notes issued under any Indenture, the declaration of such
amounts to
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be immediately due and payable. "Accelerate" and "Accelerated" have meanings
correlative to the foregoing.
"Adjusted Expected Distributions" means with respect to the
Certificates of 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) and has been distributed to
the holders of such Certificates and (iii) the principal of any Equipment
Note formerly held in such Trust that has been sold pursuant hereto has
been paid in full and such payment has 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, 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,
exceeds (ii) the Aggregate LTV Collateral Amount for such Class of
Certificates for the Current Distribution Date;
provided that, until the date of the initial LTV Appraisals, clause (B) 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 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.
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"Affiliate" means, with respect to any Person, any other Person
directly or indirectly controlling, controlled by or under common control with
such Person. For the purposes of this definition, "control" means the power,
directly or indirectly, to direct or cause the direction of the management and
policies of such Person whether through the ownership of voting securities or by
contract or otherwise; and the terms "controlling" and "controlled" have
meanings correlative to the foregoing.
"Aggregate LTV Collateral Amount" means for any Class of
Certificates for 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 each Indenture, the "Aircraft"
referred to therein.
"Applicable Margin" has the meaning assigned thereto in each of the
Liquidity Facilities.
"Appraised Current Market Value" of any Aircraft means the lower of
the average or the median of the most recent three LTV Appraisals of such
Aircraft.
"Appraisers" means Aircraft Information Services, Inc., Xxxxxx Xxxxx
and Xxxxx, Inc., and Simat, Helliesen & Xxxxxxx, Inc..
"Assignment and Assumption Agreements" means each of the Assignment
and Assumption Agreements to be executed to be executed among a Trustee and
trustee of the relevant Successor Trust in accordance with the relevant Trust
Agreement, as the same may be amended, modified or supplemented from time to
time.
"Available Amount" means, with respect to any Liquidity Facility on
any drawing date, subject to the proviso contained in the first sentence of
Section 3.6(g) hereof, an amount equal to (a) the Stated Amount of such
Liquidity Facility, less (b) the amount of each Interest Drawing honored by the
Liquidity Provider under such Liquidity Facility on or prior to such date which
has not been reimbursed or reinstated as of such date; provided that, following
a Downgrade Drawing, a Non-Extension Drawing or a Final Drawing under such
Liquidity Facility, the Available Amount of such Liquidity Facility shall be
zero.
"Business Day" means any day other than a Saturday or Sunday or a
day on which commercial banks are required or authorized to close in Charlotte,
North Carolina, New York, New York, Baltimore, Maryland, 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, and solely with respect
to draws under any Liquidity Facility, which is also a "Business Day" as defined
in such Liquidity Facility.
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"Cash Collateral Account" means the Class A Cash Collateral Account,
the Class B Cash Collateral Account or the Class C Cash Collateral Account, as
applicable.
"Certificate" means a Class A Certificate, a Class B Certificate, a
Class C Certificate or a Class D Certificate, as applicable.
"Certificateholder" means any holder of one or more Certificates.
"Class" has the meaning assigned to such term in the preliminary
statements to this Agreement.
"Class A Cash Collateral Account" means an Eligible Deposit Account
in the name of the Subordination Agent maintained at an Eligible Institution,
which shall be the Subordination Agent if it shall so qualify, into which all
amounts drawn under the Class A Liquidity Facility pursuant to Section 3.6(c),
3.6(d) or 3.6(i) shall be deposited.
"Class A Certificateholder" means, at any time, any holder of one or
more Class A Certificates.
"Class A Certificates" means the certificates issued by the Class A
Trust, substantially in the form of Exhibit A to the Class A Trust Agreement,
and authenticated by the Class A Trustee, representing fractional undivided
interests in the Class A Trust, and any certificates issued in exchange therefor
or replacement thereof pursuant to the terms of the Class A Trust Agreement.
"Class A Liquidity Facility" means, initially, the Irrevocable
Revolving Credit Agreement dated as of August 13, 1998, between the
Subordination Agent, as agent and trustee for the Class A Trust, and the Class A
Liquidity Provider, and, from and after the replacement of such Agreement
pursuant hereto, the Replacement Liquidity Facility therefor, if any, in each
case as amended, supplemented or otherwise modified from time to time in
accordance with its terms.
"Class A Liquidity Provider" means ABN AMRO Bank N.V., acting
through its Chicago Branch, together with any Replacement Liquidity Provider
which has issued a Replacement Liquidity Facility to replace the Class A
Liquidity Facility pursuant to Section 3.6(e).
"Class A Trust" means (i) prior to the Transfer, the Midway Airlines
1998-lA-O Pass Through Trust created and administered pursuant to the Class A
Trust Agreement and (ii) after the Transfer, the Midway Airlines 1998-1A-S Pass
Through Trust created and administered pursuant to the Class A Trust Agreement.
"Class A Trust Agreement" means (i) prior to the Transfer, the Pass
Through Trust Agreement 1998-1A-O dated as of August 13, 1998, between Midway
and the Class A Trustee and (ii) after the Transfer, the Pass Through Trust
Agreement
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1998-1A-S dated as of August 13, 1998 between Midway and the Class A Trustee, in
each case as the same may be amended, supplemented or otherwise modified from
time to time in accordance with its terms.
"Class A Trustee" means The First National Bank of Maryland, not in
its individual capacity except as expressly set forth in the Class A Trust
Agreement, but solely as trustee under the Class A Trust Agreement, together
with any successor trustee appointed pursuant thereto.
"Class B Cash Collateral Account" means an Eligible Deposit Account
in the name of the Subordination Agent maintained at an Eligible Institution,
which shall be the Subordination Agent if it shall so qualify, into which all
amounts drawn under the Class B Liquidity Facility pursuant to Section 3.6(c),
3.6(d) or 3.6(i) shall be deposited.
"Class B Certificateholder" means, at any time, any holder of one or
more Class B Certificates.
"Class B Certificates" means the certificates issued by the Class B
Trust, substantially in the form of Exhibit A to the Class B Trust Agreement,
and authenticated by the Class B Trustee, representing fractional undivided
interests in the Class B Trust, and any certificates issued in exchange therefor
or replacement thereof pursuant to the terms of the Class B Trust Agreement.
"Class B Liquidity Facility" means, initially, the Irrevocable
Revolving Credit Agreement dated as of August 13, 1998, between the
Subordination Agent, as agent and trustee for the Class B Trust, and the Class B
Liquidity Provider, and, from and after the replacement of such Agreement
pursuant hereto, the Replacement Liquidity Facility therefor, if any, in each
case as amended, supplemented or otherwise modified from time to time in
accordance with its terms.
"Class B Liquidity Provider" means ABN AMRO Bank N.V., acting
through its Chicago Branch, together with any Replacement Liquidity Provider
which has issued a Replacement Liquidity Facility to replace the Class B
Liquidity Facility pursuant to Section 3.6(e).
"Class B Trust" means (i) prior to the Transfer, the Midway Airlines
1998-lB-O Pass Through Trust created and administered pursuant to the Class B
Trust Agreement and (ii) after the Transfer, the Midway Airlines 1998-1B-S Pass
Through Trust created and administered pursuant to the Class A Trust Agreement.
"Class B Trust Agreement" means (i) prior to the Transfer, the Pass
Through Trust Agreement 1998-1B-O dated as of August 13, 1998, between Midway
and the Class B Trustee and (ii) after the Transfer, the Pass Through Trust
Agreement 1998-1B-S dated as of August 13, 1998, between Midway and the Class B
Trustee, in
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each case as the same may be amended, supplemented or otherwise modified from
time to time in accordance with its terms.
"Class B Trustee" means The First National Bank of Maryland, not in
its individual capacity except as expressly set forth in the Class B Trust
Agreement, but solely as trustee under the Class B Trust Agreement, together
with any successor trustee appointed pursuant thereto.
"Class C Cash Collateral Account" means an Eligible Deposit Account
in the name to the Subordination Agent and maintained at an Eligible
Institution, which shall be the Subordination Agent if it shall so qualify, into
which all amounts drawn under the Class C Liquidity Facility pursuant to Section
3.6(c), 3.6(d) or 3.6(i) shall be deposited.
"Class C Certificateholder" means, at any time, any holder of one or
more Class C Certificates.
"Class C Certificates" means the certificates issued by the Class C
Trust, substantially in the form of Exhibit A to the Class C Trust Agreement,
and authenticated by the Class C Trustee, representing fractional undivided
interests in the Class C Trust, and any certificates issued in exchange therefor
or in replacement thereof pursuant to the terms of the Class C Trust Agreement.
"Class C Liquidity Facility" means, initially, the Irrevocable
Revolving Credit Agreement dated as of August 13, 1998, between the
Subordination Agent, as agent and trustee for the Class C Trust, and the Class C
Liquidity Provider and, from and after the replacement of such Agreement
pursuant hereto, the Replacement Liquidity Facility therefor, if any, in each
case as amended, supplemented or otherwise modified from time to time in
accordance with its terms.
"Class C Liquidity Provider" means ABN AMRO Bank N.V., acting
through its Chicago Branch, together with any Replacement Liquidity Provider
which has issued a Replacement Liquidity Facility to replace the Class C
Liquidity Facility pursuant to Section 3.6(e).
"Class C Trust" means (i) prior to the Transfer, the Midway Airlines
1998-lC-O Pass Through Trust created and administered pursuant to the Class C
Trust Agreement and (ii) after the Transfer, the Midway Airlines 1998-1C-S Pass
Through Trust created and administered pursuant to the Class A Trust Agreement.
"Class C Trust Agreement" means (i) prior to the Transfer, the Pass
Through Trust Agreement 1998-1C-O dated as of August 13, 1998, between Midway
and the Class C Trustee and (ii) after the Transfer, the Pass Through Trust
Agreement 1998-1C-S dated as of August 13, 1998, between Midway and the Class C
Trustee, in each case as the same may be amended, supplemented or otherwise
modified from time to time in accordance with its terms.
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"Class C Trustee" means The First National Bank of Maryland, not in
its individual capacity except as expressly set forth in the Class C Trust
Agreement, but solely as trustee under the Class C Trust Agreement, together
with any successor trustee appointed pursuant thereto.
"Class D Certificateholder" means, at any time, any holder of one or
more Class D Certificates.
"Class D Certificates" means the certificates issued by the Class D
Trust, substantially in the form of Exhibit A to the Class D Trust Agreement,
and authenticated by the Class D Trustee, representing fractional undivided
interests in the Class D Trust, and any certificates issued in exchange therefor
or in replacement thereof pursuant to the terms of the Class D Trust Agreement.
"Class D Trust" means (i) prior to the Transfer, the Midway Airlines
1998-lD-O Pass Through Trust created and administered pursuant to the Class D
Trust Agreement and (ii) after the Transfer, the Midway Airlines 1998-1D-S Pass
Through Trust Agreement created and administered pursuant to the Class D Trust
Agreement.
"Class D Trust Agreement" means (i) prior to the Transfer, the Pass
Through Trust Agreement 1998-1D-O dated as of August 13, 1998, between Midway
and the Class D Trustee and (ii) after the Transfer, the Pass Through Trust
Agreement 1998-1D-S dated as of August 13, 1998, between Midway and the Class D
Trustee, in each case, as the same may be amended, supplemented or otherwise
modified from time to time in accordance with its terms.
"Class D Trustee" means The First National Bank of Maryland, not in
its individual capacity except as expressly set forth in the Class D Trust
Agreement, but solely as trustee under the Class D Trust Agreement, together
with any successor trustee appointed pursuant thereto.
"Closing Date" means August 13, 1998.
"Code" means the Internal Revenue Code of 1986, as amended from time
to time, and Treasury Regulations promulgated thereunder.
"Collection Account" means the Eligible Deposit Account established
by the Subordination Agent pursuant to Section 2.2 which the Subordination Agent
shall make deposits in and withdrawals from in accordance with this Agreement.
"Controlling Party" means the Person entitled to act as such
pursuant to the terms of Section 2.6.
"Corporate Trust Office" means, with respect to any Trustee, the
Subordination Agent or any Loan Trustee, the office of such Person in the city
at
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which, at any particular time, its corporate trust business shall be principally
administered.
"Current Distribution Date" means a Distribution Date specified as a
reference date for calculating the Adjusted Expected Distributions or Expected
Distributions with respect to the Certificates of any Trust as of such
Distribution Date.
"Delivery Period Expiry Date" means the earlier of (a) September 30,
1999 (provided that, if a labor strike occurs at the Manufacturer prior to such
date, such date shall be extended by adding thereto the number of days that such
strike has continued in effect) and (b) the date on which Equipment Notes with
respect to all New Aircraft have been purchased by the Trusts in accordance with
the Note Purchase Agreement.
"Deposit Agreement" shall mean, with respect to any Class, the
Deposit Agreement pertaining to such Class dated the date hereof between the
Escrow Agent, and the Depositary, as the same may be amended, modified or
supplemented from time to time in accordance with the terms thereof.
"Depositary" means First Union National Bank, as depositary under
each Deposit Agreement.
"Deposits" with respect to any Class, shall have the meaning set
forth in the Deposit Agreement pertaining to such Class.
"Designated Representatives" means the Subordination Agent
Representatives, Trustee Representatives and the LP Representatives identified
under Section 2.5.
"Distribution Date" means a Regular Distribution Date or a Special
Distribution Date.
"Dollars" means United States dollars.
"Downgrade Drawing" has the meaning assigned to such term in Section
3.6(c).
"Downgraded Facility" has the meaning assigned to such term in
Section 3.6(c).
"Drawing" means an Interest Drawing, a Final Drawing, a
Non-Extension Drawing or a Downgrade Drawing, as the case may be.
"Eligible Deposit Account" means either (a) a segregated account
with an Eligible Institution or (b) a segregated trust account with the
corporate trust department of a depository institution with corporate trust
powers organized under the laws of the United States of America or any one of
the states thereof or the District of
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Columbia (or any U.S. branch of a foreign bank), so long as any of the
securities of such depository institution has a long-term unsecured debt rating
from each Rating Agency of at least A-3 or its equivalent. An Eligible Deposit
Account may be maintained with a Liquidity Provider so long as such Liquidity
Provider is an Eligible Institution; provided that such Liquidity Provider shall
have waived all rights of setoff and counterclaim with respect to such account.
"Eligible Institution" means (a) the corporate trust department of
the Subordination Agent or any Trustee, as applicable, or (b) a depository
institution organized under the laws of the United States of America or any 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
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, Inc.,
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 The First National Bank of Maryland 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 shall be denominated in U.S. dollars; and (y) the
aggregate amount of Eligible Investments at any one time that are bank
obligations issued by any one bank shall not be in excess of 5% of such bank's
capital surplus; provided further that (1) any investment of the types described
in clauses (a), (b) and (c) above may be made through a repurchase agreement in
commercially reasonable form with a bank or other financial institution
qualifying as an Eligible Institution so long as such investment is held by a
third party custodian also qualifying as an Eligible Institution, and (2) all
such investments set forth in clauses (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 Eligible Investment issued by
a domestic branch of a foreign bank, the income from such investment shall be
from sources within the United States
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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 any of its Affiliates shall be an Eligible Investment.
"Equipment Notes" means, at any time, the Series A Equipment Notes,
the Series B Equipment Notes, the Series C Equipment Notes and the Series D
Equipment Notes, collectively, and in each case, any Equipment Notes issued in
exchange therefor or replacement thereof pursuant to the terms of the
Indentures.
"Escrow Agent" means First Union Trust Company, National
Association, as escrow agent under each Escrow and Paying Agent Agreement,
together with its successors in such capacity.
"Escrow and Paying Agent Agreement" shall mean, with respect to any
Class, the Escrow and Paying Agent Agreement pertaining to such Class dated the
date hereof between the Escrow Agent, the Initial Purchasers, the Trustee for
such Class and the Paying Agent, as the same may be amended, modified or
supplemented from time to time in accordance with the terms thereof.
"Expected Distributions" means, with respect to the Certificates of
any Trust on any Current Distribution Date, the sum of (x) accrued and unpaid
interest on such Certificates (excluding interest, if any, payable with respect
to Deposits related to such Trust) and (y) the difference between (A) the Pool
Balance of such Certificates as of the immediately preceding Distribution Date
(or, if the Current Distribution Date is the first Distribution Date, the
original aggregate face amount of the Certificates of such Trust) and (B) the
Pool Balance of such Certificates as of the Current Distribution Date,
calculated on the basis that (i) the principal of the Equipment Notes held in
such Trust has been paid when due (whether at stated maturity or upon
redemption, prepayment, purchase or acceleration or otherwise) and such payments
have been distributed to the holders of such Certificates and (ii) the principal
of any Equipment Note formerly held in such Trust that has been sold pursuant
hereto has been paid in full and such payments have been distributed to the
holders of such Certificates, but without giving effect to any reduction in the
Pool Balance as a result of any distribution attributable to Deposits occurring
after the immediately preceding Distribution Date (or, if the Current
Distribution Date is the first Distribution Date, occurring after the initial
issuance of the Certificates of such Trust). For purposes of calculating
Expected Distributions, 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.
"Final Distribution" means, with respect to the Certificates of any
Trust on any Distribution Date, the sum of (x) the aggregate amount of all
accrued and unpaid interest on such Certificates (excluding interest, if any,
payable with respect to the Deposits relating to such Trust) and (y) the Pool
Balance of such Certificates as of
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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 of all available and undrawn amounts under such Liquidity
Facility in accordance with the provisions thereof other than a Downgrade
Drawing or a Non-Extension Drawing.
"Final Legal Distribution Date" means, for the Class A Certificates,
July 2, 2016, for the Class B Certificates, July 2, 2014, for the Class C
Certificates, July 2, 2009, and for the Class D Certificates, January 2, 2003.
"Indenture" means each of the Trust Indenture and Security
Agreements 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.
"Initial Purchasers" means Xxxxxx Xxxxxxx & Co. Incorporated and
Credit Suisse First Boston Corporation.
"Interest Drawing" has the meaning assigned to such term in Section
3.6(a).
"Investment Earnings" means investment earnings on funds on deposit
in the Trust Accounts net of losses and investment expenses of the Subordination
Agent in making such investments.
"Lease" means, with respect to each Indenture pertaining to a Leased
Aircraft, the "Lease" referred to therein.
"Leased Aircraft" has the meaning given to such term in the
Introduction hereto.
"Lien" means any mortgage, pledge, lien, charge, claim, disposition
of title, encumbrance, lease, sublease, sub-sublease or security interest of any
kind, including,
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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
and Sections 6.01 and 7.01 of the Participation Agreements and the ABN AMRO Fee
Letter.
"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.
"LP Incumbency Certificate" has the meaning assigned to such term in
Section 2.5(b).
"LP Representatives" has the meaning assigned to such term in
Section 2.5(b).
"LTV Appraisal" means a current fair market appraisal (which may be
a "desktop" appraisal) performed by an 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, as
the case may be, 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 to any such
Aircraft which has suffered an Event of Loss under and as defined in the
relevant Lease (in the case of a Leased Aircraft) or Indenture (in the case of
an Owned Aircraft), the amount of the insurance proceeds paid to the related
Loan Trustee in respect thereof to the extent then held by such Loan Trustee
(and/or on deposit in the Special Payments Account) or payable to such Loan
Trustee in respect thereof), and (ii) the outstanding principal amount of the
Equipment Notes secured by such Aircraft, after giving effect to any principal
payments of such Equipment Notes on or before such Distribution Date.
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"LTV Ratio" means for the Class A Certificates 36.7%, for the Class
B Certificates 52.6%, for the Class C Certificates 65.5% and for the Class D
Certificates 69.0%.
"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) the commencement of an involuntary case or other proceeding in
respect of Midway in an involuntary case under the federal bankruptcy
laws, as now or hereafter constituted, or any other applicable federal or
state bankruptcy, insolvency or other similar law in the United States or
seeking the appointment of a receiver, liquidator, assignee, custodian,
trustee, sequestrator (or similar official) of Midway or for all or
substantially all of its property, or seeking the winding-up or
liquidation of its affairs and the continuation of any such case or other
proceeding undismissed and unstayed for a period of sixty (60) consecutive
days or 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 sequestering any substantial part of the property
of Midway and any such order, judgment or decree or appointment or
sequestration shall be final or shall remain in force undismissed,
unstayed or unvacated for a period of sixty (60) days after the date of
entry thereof; or
(b) the commencement by Midway of a voluntary case under the federal
bankruptcy laws, as now constituted or hereafter amended, or any other
applicable federal or state bankruptcy, insolvency or other similar law in
the United States, or the consent by Midway to the appointment of or
taking possession by a receiver, liquidator, assignee, trustee, custodian,
sequestrator (or other similar official) of Midway or for all or
substantially all of its property, or the making by Midway of any
assignment for the benefit of creditors or the taking by Midway of any
corporate action to authorize any of the foregoing.
"Midway Provisions" has the meaning given to such term in Section
9.1.
"Minimum Sale Price" means, (x) with respect to any Leased Aircraft
or the Equipment Notes issued in respect of such Leased Aircraft, at any time,
the lesser of (1) 75% of the Appraised Current Market Value of such Leased
Aircraft and (2) the aggregate outstanding principal amount of such Equipment
Notes, plus accrued and unpaid interest thereon, (y) with respect to any Owned
Aircraft, at any time, the lesser of (1) 75% of the Appraised Current Market
Value of such Owned Aircraft and (2) the aggregate outstanding principal amount
of the Equipment Notes issued under related Owned Aircraft Indenture plus
accrued and unpaid interest on such Equipment Notes and (z) with respect to the
Equipment Notes issued under any Owned Aircraft
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Indenture, at any time, the lesser of (1) 75% of the aggregate Appraised Current
Market Value of the Aircraft subject to the lien of such Owned Aircraft
Indenture immediately prior to the time of determination and (2) the aggregate
outstanding principal amount of such Equipment Notes, plus accrued and unpaid
interest thereon.
"Moody's" means Xxxxx'x Investors Service, Inc.
"Non-Controlling Party" means, at any time, any Trustee or Liquidity
Provider which is not the Controlling Party at such time.
"Non-Extended Facility" has the meaning provided in Section 3.6(d).
"Non-Extension Drawing" has the meaning provided in Section 3.6(d).
"Non-Performing Equipment Note" means any Equipment Note other than
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.
"Officer's Certificate" of any Person means a certification signed
by a Responsible Officer of such Person.
"Operative Agreements" means this Agreement, the Note Purchase
Agreement, the Liquidity Facilities, the Indentures, the Trust Agreements, the
Purchase Agreement, the Leases, the Participation Agreements, 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
in any or 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
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(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 their
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.
"Owned Aircraft" has the meaning assigned to such term in the
preliminary statements of this Agreement.
"Owned Aircraft Indenture" means any Indenture relating to an Owned
Aircraft.
"Owner Participant" has the meaning provided in each of the Leases.
"Owner Trustee" means, with respect to any Indenture pertaining to
any 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.
"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"), (i) any payment default existing
during a 60-day period under Section 1110(a)(1)(A) of the Bankruptcy Code (or
such longer period as may apply under Section 1110(b) of the Bankruptcy Code)
(the "Section 1110 Period") shall not be taken into consideration, unless during
such period the trustee in such proceeding or Midway refuses to assume or agree
to perform its obligations under the Lease related to such Equipment Notes (in
the case of a Leased Aircraft) or under the Indenture
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pertaining to the Owned Aircraft (in the case of the Owned Aircraft) and (ii)
any payment default occurring after the date of the order of relief in such
proceeding shall not be taken into consideration if such payment default is
cured under Section 1110(a)(1)(B) of the Bankruptcy Code before the later of (A)
30 days after the date of such default or (B) the expiration of the Section 1110
Period.
"Performing Note Deficiency" means any time that less than 65% of
the then aggregate outstanding principal amount of all Equipment Notes are
Performing Equipment Notes.
"Person" means any individual, limited liability company,
corporation, partnership, joint venture, association, joint-stock company,
trust, trustee, unincorporated organization or government or any agency or
political subdivision thereof.
"Pool Balance" means, with respect to 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, payment of principal, if
any, on the Equipment Notes or payment with respect to 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.
"PTC Event of Default" means, with respect to each Trust Agreement,
the failure to pay: (i) the outstanding Pool Balance of the applicable Class of
Certificates within 10 Business Days after the Final Legal Distribution Date for
such Class or (ii) interest due on such Certificates within 10 Business Days
after any Distribution Date (unless, except in the case of the Class D
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
holders of the Certificates entitled thereto).
"Purchase Agreement" means the Purchase Agreement dated August 6,
1998, between the Initial Purchasers and Midway, relating to the purchase of the
Certificates by the Initial Purchasers, as the same may be amended, supplemented
or otherwise modified from time to time in accordance with its terms.
"Rating Agencies" means, collectively, at any time, each nationally
recognized rating agency which shall have been requested to rate the
Certificates and
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which shall then be rating the Certificates. Initially, the Rating Agencies
shall consist of Moody's and Standard & Poor's.
"Ratings Confirmation" means, with respect to any action proposed to
be taken, a written confirmation from each of the Rating Agencies that such
action would not result in (i) a reduction of the rating for any Class of
Certificates below the then current rating for such Class of Certificates or
(ii) a withdrawal or suspension of the rating of any Class of Certificates.
"Registration Rights Agreement" means the Registration Rights
Agreement, dated as of August 13, 1998, among the Initial Purchasers, Midway and
the Trustees.
"Registration Rights Event" has the meaning given to such term in
the Registration Rights Agreement.
"Regular Distribution Dates" means each January 2 and July 2,
commencing on January 2, 1999; 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 Trust (other than
the Class D Trust), an irrevocable 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 Certificates (before downgrading of
such ratings, if any, as a result of the downgrading of the Liquidity Provider),
in a 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 department of
the
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Subordination Agent or such Trustee and (ii) with respect to each Liquidity
Provider, any authorized officer of such Liquidity Provider.
"Scheduled Payment" means, with respect to any Equipment Note, (i)
any payment of principal 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 7.14% 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 8.14% 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 8.92% 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.
"Series D Equipment Notes" means the 8.86% Series D 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.
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"Special Payment" means any payment (other than a Scheduled Payment)
in respect of, or any proceeds of, any Equipment Note or Trust Indenture Estate
(as defined in each Indenture), 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.
"Standard & Poor's" means Standard & Poor's Ratings Group, a
division of XxXxxx-Xxxx Inc.
"Stated Amount" means with respect to any Liquidity Facility, the
Commitment (as defined in such Liquidity Facility) of the applicable Liquidity
Provider thereunder.
"Stated Expiration Date" has the meaning assigned to it in Section
3.6(d).
"Stated Interest Rate" means the sum of (a) (i) with respect to the
Class A Certificates, 7.14% per annum, (ii) with respect to the Class B
Certificates, 8.14% per annum, (iii) with respect to the Class C Certificates,
8.92% per annum, and (iv) with respect to the Class D Certificates, 8.86% per
annum, plus (b) in the case of clause (i), (ii), (iii) or (iv), .50% per annum
for such periods as are required due to the failure of a Registration Event to
occur as provided in Section 2(d) of the Registration Rights Agreement.
"Subordination Agent" has the meaning assigned to it in the Preamble
to this Agreement.
"Successor Trusts" means, collectively, Midway Airlines Pass Through
Trust 1998-1A-S, Midway Airlines Pass Through Trust 1998-1B-S, Midway Airlines
Pass Through Trust 1998-1C-S and Midway Airlines Pass Through Trust 1998-1D-S.
"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.
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"Threshold Rating" means the short-term unsecured debt rating of P-1
by Moody's and A-1 by Standard & Poor's, provided that in the event a person's
short-term unsecured debt is not rated by either Moody's or Standard & Poor's,
the long-term unsecured debt rating by Moody's and Standard & Poor's at least
equal to the initial rating by each of Moody's and Standard & Poor's on the
Class A Certificates.
"Transfer" means the transfers contemplated by the Assignment and
Assumption Agreements.
"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,
or 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, the Class
C Trust or the Class D 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, Class C Trust Agreement or Class D Trust Agreement.
"Trustee" means any of the Class A Trustee, the Class B Trustee, the
Class C Trustee or the Class D Trustee.
"Trustee Incumbency Certificate" has the meaning assigned to such
term in Section 2.5(a).
"Trustee Representatives" has the meaning assigned to such term in
Section 2.5(a).
"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.
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ARTICLE II
TRUST ACCOUNTS; CONTROLLING PARTY
SECTION 2.1 Agreement to Terms of Subordination; Payments from
Monies Received Only. (a) Each Trustee hereby acknowledges and agrees to the
terms of subordination set forth in this Agreement in respect of each Class of
Certificates and agrees to enforce such provisions and cause all payments in
respect of the Equipment Notes and the Liquidity Facilities to be applied in
accordance with the terms of this Agreement. In addition, each Trustee hereby
agrees to cause the Equipment Notes purchased by the related Trust to be
registered in the name of the Subordination Agent, as agent and trustee for such
Trustee, to be held in trust by the Subordination Agent solely for the purpose
of facilitating the enforcement of the subordination and other provisions of
this Agreement.
(b) Except as otherwise expressly provided in the next succeeding
sentence of this Section 2.1, all payments to be made by the Subordination Agent
hereunder shall be made only from amounts received by it that constitute
Scheduled Payments, Special Payments, payments under Sections 8.01 and 9.01 of
the Participation Agreements or payments under Section 6 of the Note Purchase
Agreement and only to the extent that the Subordination Agent shall have
received sufficient income or proceeds therefrom to enable it to make such
payments in accordance with the terms hereof. Each of the Trustees and the
Subordination Agent hereby agrees and, as provided in each Trust Agreement, each
Certificateholder, by its acceptance of a Certificate, and each Liquidity
Provider, by entering into the Liquidity Facility to which it is a party, has
agreed to look solely to such amounts to the extent available for distribution
to it as provided in this Agreement and to the relevant Deposits and that none
of the Trustees, Owner Trustees, Loan Trustees, Owner Participants nor the
Subordination Agent is personally liable to any of them for any amounts payable
or any liability under this Agreement, any Trust Agreement, any Liquidity
Facility or such Certificate, except (in the case of the Subordination Agent) as
expressly provided herein or (in the case of the Trustees) as expressly provided
in each Trust Agreement or (in the case of the Owner Trustees and the Loan
Trustees) as expressly provided in any Operative Agreement.
SECTION 2.2 Trust Accounts. (a) Upon the execution of this
Agreement, the Subordination Agent shall establish and maintain in its name (i)
the Collection Account as an Eligible Deposit Account, bearing a designation
clearly indicating that the funds deposited therein are held in trust for the
benefit of the Trustees, the Certificateholders and the Liquidity Providers and
(ii) as a sub-account in the Collection Account, the Special Payments Account as
an Eligible Deposit Account, bearing a designation clearly indicating that the
funds deposited therein are held in trust for the benefit of the Trustees, the
Certificateholders and the Liquidity Providers. The Subordination Agent shall
establish and maintain the Cash Collateral Accounts pursuant to and under the
circumstances set forth in Section 3.6(f) hereof. Upon such establishment and
maintenance under Section 3.6(f) hereof, the Cash
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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 any then specified Special Distribution Date
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 Non-Extension Drawing, 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 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
willful misconduct or gross negligence. Eligible Investments and any other
investment required to be made hereunder shall be held to their maturities
except that any such investment may be sold (without regard to its maturity) by
the Subordination Agent without instructions whenever such sale is necessary to
make a distribution required under this Agreement. Uninvested funds held
hereunder shall not earn or accrue interest.
(c) The Subordination Agent shall possess all right, title and
interest in all funds on deposit from time to time in the Trust Accounts and in
all proceeds thereof (including all income thereon, except as otherwise
expressly provided herein with respect to Investment Earnings). The Trust
Accounts shall be held in trust by the Subordination Agent under the sole
dominion and control of the Subordination Agent for the benefit of the Trustees,
the Certificateholders and the Liquidity Providers, as the case may be. If, at
any time, any of the Trust Accounts ceases to be an Eligible Deposit Account,
the Subordination Agent shall within 10 Business Days (or such longer period,
not to exceed 30 calendar days, to which each Rating Agency may consent)
establish a new Collection Account, Special Payments Account or Cash Collateral
Account, as the case may be, as an Eligible Deposit Account and shall transfer
any cash and/or any investments to such new Collection Account, Special Payments
Account or Cash Collateral Account, as the case may be. So long as The First
National Bank of Maryland is an Eligible Institution, the Trust Accounts shall
be maintained with it as Eligible Deposit Accounts.
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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 of any such notice, upon receipt by the
Subordination Agent of a Special Payment), the Subordination Agent shall
promptly give notice thereof to each Trustee and the Liquidity Providers. The
Subordination Agent shall promptly calculate the amount of the redemption or
purchase of Equipment Notes or the amount of any Overdue Scheduled Payment, as
the case may be, comprising such Special Payment under the applicable Indenture
or Indentures and shall promptly send to each Trustee a Written Notice of such
amount and the amount allocable to each Trust. Such Written Notice shall also
set the distribution date for such Special Payment (a "Special Distribution
Date"), which shall be the first Business Day which follows the later to occur
of (x) the 20th day after the date of such written Notice or (y) the date the
Subordination Agent receives or expects to receive such Special Payment. Amounts
on deposit in the Special Payments Account shall be distributed in accordance
with Sections 2.4(b) and 2.4(c) hereof, as applicable.
(b) Redemptions and Purchases of Equipment Notes. (i) So long as no
Triggering Event shall have occurred (whether or not continuing), the
Subordination Agent shall make distributions pursuant to this Section 2.4(b) of
amounts on deposit in the Special Payments Account on account of the redemption,
prepayment or purchase (including, without limitation, a purchase resulting from
a sale of the Equipment Notes permitted by Article IV hereof) of all the
Equipment Notes issued pursuant to an Indenture on the Special Distribution Date
for such Special Payment in the following order of priority:
first, such amount as shall be required to pay (A) all accrued and
unpaid Liquidity Expenses then in arrears plus (B) the product of (x) the
aggregate amount of all accrued and unpaid Liquidity Expenses not in
arrears to such Special 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, shall be distributed
to the Liquidity Providers pari passu on the basis of the amount of
Liquidity Expenses owed to each Liquidity Provider;
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second, such amount as shall be required to pay (A) all accrued and
unpaid interest then in arrears on all Liquidity Obligations 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) 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, 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 Cash Collateral Account up to its Required Amount shall be deposited
in such Cash Collateral Account, (B) if any Liquidity Facility shall
become a Downgraded Facility or a Non-Extended Facility at a time when
unreimbursed Interest Drawings under such Liquidity Facility have reduced
the Available Amount thereunder to zero, to deposit into the related Cash
Collateral Account an amount equal to such Cash Collateral Account's
Required Amount shall be deposited in such Cash Collateral Account, and
(C) if, with respect to any particular Liquidity Facility, neither
subclause (A) nor subclause (B) of this clause "third" are applicable, to
pay or reimburse the Liquidity Provider in respect of such Liquidity
Facility in an amount equal to the amount of any unreimbursed Interest
Drawings under such Liquidity Facility shall be distributed to such
Liquidity Provider, pari passu on the basis of the amounts of all such
deficiencies and/or unreimbursed Interest Drawings;
fourth, if, with respect to any particular Liquidity Facility, any
amounts are to be distributed pursuant to either subclause (A) or (B) of
clause "third" above, then the Liquidity Provider with respect to such
Liquidity Facility shall be paid the excess of (x) the aggregate
outstanding amount of unreimbursed Advances (whether or not then due)
under such Liquidity Facility over (y) the Required Amount for the
relevant Class, pari passu on the basis of such amounts in respect of each
Liquidity Provider;
fifth, such amount as shall be required to pay in full Expected
Distributions to the holders of Class A Certificates on such Special
Distribution Date shall be distributed to the Class A Trustee;
sixth, such amount as shall be required to pay in full Expected
Distributions to the holders of Class B Certificates on such Special
Distribution Date shall be distributed to the Class B Trustee;
seventh, such amount as shall be required to pay in full Expected
Distributions to the holders of Class C Certificates on such Special
Distribution Date shall be distributed to the Class C Trustee;
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eighth, such amount as shall be required to pay in full Expected
Distributions to the holders of the Class D Certificates on such Special
Distribution Date shall be distributed to the Class D Trustee; and
ninth, the balance, if any, of such Special Payment shall be
transferred to the Collection Account for distribution in accordance with
Section 3.2 hereof.
For the purposes of this Section 2.4(b), clause (x) of the
definition of "Expected Distributions" shall be deemed to read as follows: "(x)
accrued, due and unpaid interest on such Certificates together with (without
duplication) accrued and unpaid interest on a portion of such Certificates equal
to the outstanding principal amount of Equipment Notes being redeemed, purchased
or prepaid (immediately prior to such redemption, purchase or prepayment)
(excluding interest, if any, payable with respect to the Deposits related to
such Trust)".
(ii) At any time following the occurrence of a Triggering Event
(whether or not continuing), the Subordination Agent shall make distributions 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 Pass Through
Trustee, Paying Agent or any Liquidity Provider (collectively, the "Payees") and
(ii) any compensation (including, without limitation, any fees payable to any
Liquidity Provider under Section 2.03 of any Liquidity Facility) received by it
from the Owner Participant, the Owner Trustee or 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
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or Trustee's request (which request shall not be made more than one time in any
12- month period), a certificate (a "Subordination Agent Incumbency
Certificate") of a Responsible Officer of the Subordination Agent certifying as
to the incumbency and specimen signatures of the officers of the Subordination
Agent and the attorney-in-fact and agents of the Subordination Agent (the
"Subordination Agent Representatives") authorized to give Written Notices on
behalf of the Subordination Agent hereunder. Until each Liquidity Provider and
Trustee receives a subsequent Subordination Agent Incumbency Certificate, it
shall be entitled to rely on the last Subordination Agent Incumbency Certificate
delivered to it hereunder.
(b) With the delivery of this Agreement, each Trustee shall furnish
to the Subordination Agent, and from time to time thereafter may furnish to the
Subordination Agent, at such Trustee's discretion, or upon the Subordination
Agent's request (which request shall not be made more than one time in any
12-month period), a certificate (a "Trustee Incumbency Certificate") of a
Responsible Officer of such Trustee certifying as to the incumbency and specimen
signatures of the officers of such Trustee and the attorney-in-fact and agents
of such Trustee (the "Trustee Representatives") authorized to give Written
Notices on behalf of such Trustee hereunder. Until the Subordination Agent
receives a subsequent Trustee Incumbency Certificate, it shall be entitled to
rely on the last Trustee Incumbency Certificate delivered to it hereunder.
(c) With the delivery of this Agreement, each Liquidity Provider
shall furnish to the Subordination Agent, and from time to time thereafter may
furnish to the Subordination Agent, at such Liquidity Provider's discretion, or
upon the Subordination Agent's request (which request shall not be made more
than one time in any 12-month period), a certificate (an "LP Incumbency
Certificate") of any 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 (the "LP
Representatives" and, together with the Trustee Representatives, the "Designated
Representatives") authorized to give Written Notices on behalf of such Liquidity
Provider hereunder. Until the Subordination Agent receives a subsequent LP
Incumbency Certificate, it shall be entitled to rely on the last LP Incumbency
Certificate delivered to it hereunder.
SECTION 2.6 Controlling Party. (a) The Trustees and the Liquidity
Providers hereby agree that, with respect to any Indenture at any given time,
the Loan Trustee thereunder will be directed (i) in taking, or refraining from
taking, any action 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
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(which, in the case of an Indenture related to a Leased Aircraft, has not been
cured by the applicable Owner Trustee or the applicable Owner Participant
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) The Person who shall be the "Controlling Party" with respect to
any Indenture shall be: (w) the Class A Trustee; (x) upon payment of Final
Distributions to the holders of Class A Certificates, the Class B Trustee; (y)
upon payment of Final Distributions to the holders of Class B Certificates, the
Class C Trustee; and (z) upon payment of Final Distributions to the holders of
the Class C Certificates, the Class D Trustee. For purposes of giving effect to
the foregoing, the Trustees (other than the Controlling Party) irrevocably agree
(and the Certificateholders (other than the Certificateholders represented by
the Controlling Party) shall be deemed to agree by virtue of their purchase of
Certificates) that the Subordination Agent, as record holder of the Equipment
Notes, shall exercise its voting rights in respect of the Equipment Notes as
directed by the Controlling Party and any vote so exercised shall be binding
upon the Trustees and all Certificateholders.
The Subordination Agent shall give written notice to all of the
other parties to this Agreement promptly upon a change in the identity of the
Controlling Party. Each of the parties hereto agrees that it shall not exercise
any of the rights of the Controlling Party at such time as it is not the
Controlling Party hereunder; provided, however, that nothing herein contained
shall prevent or prohibit any Non-Controlling Party from exercising such rights
as shall be specifically granted to such Non-Controlling Party hereunder and
under the other Operative Agreements.
(c) Notwithstanding the foregoing, the Liquidity Providers holding a
majority in interest of unreimbursed Liquidity Obligations payable to it under
the Liquidity Facilities 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 date
which is 18 months after the earlier of (i) the Acceleration of the Equipment
Notes under such Indenture, (ii) the date on which the entire available and
undrawn amount under any Liquidity Facility shall have been drawn (for any
reason other than a Downgrade Drawing or a Non-Extension Drawing) and remains
unreimbursed and (iii) the date on which the entire amount of any Downgrade
Drawing or Non-Extension Drawing shall have become an Applied Downgrade Drawing
or Applied Non-Extension Drawing, as the case may be, if, in the case of clause
(i), (ii) and (iii) above, at the time of such election all Liquidity
Obligations owed to such Liquidity Provider under the Liquidity Facilities have
not been paid in full.
(d) The exercise of remedies by the Controlling Party under this
Agreement shall be expressly limited by Section 4.1(a)(ii) hereof.
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(e) The Controlling Party shall not be entitled to require or
obligate any Non-Controlling Party to provide funds necessary to exercise any
right or remedy hereunder.
ARTICLE III
RECEIPT, DISTRIBUTION AND APPLICATION OF
AMOUNTS RECEIVED
SECTION 3.1 Written Notice of Distribution. (a) No later than 3:00
P.M. (New York City time) on the Business Day immediately preceding each Regular
Distribution Date (or Special Distribution Date for purposes of Section 2.4(b)
hereof, as the case may be), each of the following Persons shall deliver to the
Subordination Agent a Written Notice setting forth the following information as
at the close of business on such Business Day:
(i) With respect to the Class A Certificates, the Class A Trustee
shall separately set forth the amounts to be paid in accordance with
clause "fifth" of Section 3.2 or Section 2.4(b), as the case may be,
hereof;
(ii) With respect to the Class B Certificates, the Class B Trustee
shall separately set forth the amounts to be paid in accordance with
clause "sixth" of Section 3.2 or Section 2.4(b), as the case may be,
hereof;
(iii) With respect to the Class C Certificates, the Class C Trustee
shall separately set forth the amounts to be paid in accordance with
clause "seventh" of Section 3.2 or Section 2.4(b), as the case may be,
hereof;
(iv) With respect to the Class D Certificates, the Class D Trustee
shall separately set forth the amounts to be paid in accordance with
clause "eighth" of Section 3.2 or Section 2.4(b), as the case may be,
hereof;
(v) 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), as the case may be, hereof; and
(vi) Each Trustee shall set forth the amounts to be paid in
accordance with clause "ninth" of Section 3.2 hereof.
The notices required under this Section 3.1(a) may be in the form of a schedule
or similar document provided to the Subordination Agent by the parties
referenced therein or by any one of them, which schedule or similar document may
state that, unless there has been a prepayment of the Certificates, such
schedule or similar document is to remain in effect until any substitute notice
or amendment shall be given to the Subordination Agent by the party providing
such notice.
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(b) Following the occurrence of a Triggering Event, the
Subordination Agent shall request the following information from the following
Persons, and each of the following Persons shall, upon the request of the
Subordination Agent, deliver a Written Notice to the Subordination Agent setting
forth for such Person the following information:
(i) With respect to the Class A Certificates, the Class A Trustee
shall separately set forth the amounts to be paid in accordance with
clauses "first" (to reimburse payments made by the Class A
Certificateholders pursuant to subclause (iii) of clause "first" of
Section 3.3 hereof) and "seventh" of Section 3.3 hereof;
(ii) With respect to the Class B Certificates, the Class B Trustee
shall separately set forth the amounts to be paid in accordance with
clauses "first" (to reimburse payments made by the Class B
Certificateholders pursuant to subclause (iii) of clause "first" of
Section 3.3 hereof) and "eighth" of Section 3.3 hereof;
(iii) With respect to the Class C Certificates, the Class C Trustee
shall separately set forth the amounts to be paid in accordance with
clauses "first" (to reimburse payments made by the Class C
Certificateholders pursuant to subclause (iii) of clause "first" of
Section 3.3 hereof) and "ninth" of Section 3.3 hereof;
(iv) With respect to the Class D Certificates, the Class D Trustee
shall separately set forth the amounts to be paid in accordance with
clauses "first" (to reimburse payments made by the Class D
Certificateholders pursuant to subclause (iii) of clause "first" of
Section 3.3 hereof) and "tenth" of Section 3.3 hereof;
(v) With respect to each Liquidity Facility, the Liquidity Provider
thereunder shall separately set forth the amounts to be paid in accordance
with subclause (iii) of clause "first" of Section 3.3 hereof and clauses
"second", "third" and "fourth" of Section 3.3 hereof; and
(vi) 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.
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(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 on any given date shall be effective as of the
next Business Day). Subject to the terms of this Agreement, the Subordination
Agent shall as promptly as practicable comply with any such instructions;
provided, however, that any transfer of funds pursuant to any instruction
received after 10:00 A.M. (New York City time) on any Business Day may be made
on the next succeeding Business Day.
(f) In the event the Subordination Agent shall not receive from any
Person any information set forth in paragraph (a) or (b) above which is required
to enable the Subordination Agent to make a distribution to such Person pursuant
to Section 2.4(b), 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 Section 2.4(b) or clauses "first" through "ninth" of Section 3.2 and
clauses "first" through "tenth" of Section 3.3, as the case may be, to the
extent it shall have sufficient information to enable it to make such
distributions, and shall continue to hold any funds remaining, after making such
distributions, until the Subordination Agent shall receive all necessary
information to enable it to distribute any funds so withheld.
(g) On such dates (but not more frequently than monthly) as any
Liquidity Provider or any Trustee shall request, but in any event automatically
at the end of each calendar quarter, the Subordination Agent shall send to such
party a written statement reflecting all amounts on deposit with the
Subordination Agent pursuant to Section 3.1(f) hereof.
SECTION 3.2 Distribution of Amounts on Deposit in the Collection
Account. Except as otherwise provided in Sections 2.4, 3.1(f), 3.3, 3.4 and
3.6(b), amounts on deposit in the Collection Account (or, in the case of any
amount described in Section 2.4(c), on deposit in the Special Payments Account)
shall be promptly distributed on each Regular Distribution Date (or in the case
of any amount described in Section 2.4(c), on the Special Distribution Date
thereof) in the following order of priority and in accordance with the
information provided to the Subordination Agent pursuant to Section 3.1(a)
hereof:
first, such amount as shall be required to pay all accrued and
unpaid Liquidity Expenses owed to each Liquidity Provider shall be
distributed to the
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Liquidity Providers pari passu on the basis of the amount of Liquidity
Expenses owed to each Liquidity Provider;
second, such amount as shall be required to pay in full the
aggregate amount of interest accrued on all Liquidity Obligations (at the
rate, or in the amount, provided in the applicable Liquidity Facility)
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 Cash Collateral Account up to its Required Amount shall be deposited
in such Cash Collateral Account, (B) if any Liquidity Facility shall
become a Downgraded Facility or a Non-Extended Facility at a time when
unreimbursed Interest Drawings under such Liquidity Facility have reduced
the Available Amount thereunder to zero, to deposit into the related Cash
Collateral Account an amount equal to the Required Amount shall be
deposited in such Cash Collateral Account, and (C) if, with respect to any
particular Liquidity Facility, neither subclause (A) nor subclause (B) of
this clause "third" is applicable, to pay or reimburse the Liquidity
Provider in respect of such Liquidity Facility in an amount equal to the
amount of all Liquidity Obligations then due under such Liquidity Facility
(other than amounts payable pursuant to clause "first" or "second" of this
Section 3.2) shall be distributed to such Liquidity Provider, pari passu
on the basis of the amounts of all such deficiencies and/or unreimbursed
Liquidity Obligations;
fourth, if, with respect to any particular Liquidity Facility, any
amounts are to be distributed pursuant to either subclause (A) or (B) of
clause "third" above, then the Liquidity Provider with respect to such
Liquidity Facility shall be paid the excess of (x) the aggregate
outstanding amount of unreimbursed Advances (whether or not then due)
under such Liquidity Facility over (y) the Required Amount for the
relevant Class, pari passu on the basis of such amounts in respect of each
Liquidity Provider;
fifth, such amount as shall be required to pay in full Expected
Distributions to the holders of the Class A Certificates on such
Distribution Date shall be distributed to the Class A Trustee;
sixth, such amount as shall be required to pay in full Expected
Distributions to the holders of the Class B Certificates on such
Distribution Date shall be distributed to the Class B Trustee;
seventh, such amount as shall be required to pay in full Expected
Distributions to the holders of the Class C Certificates on such
Distribution Date shall be distributed to the Class C Trustee;
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eighth, such amount as shall be required to pay in full Expected
Distributions to the holders of the Class D Certificates on such
Distribution Date shall be distributed to the Class D Trustee;
ninth, 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
tenth, 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.
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 Trust
Indenture Estate, shall be applied by the Subordination Agent in
reimbursement of such costs and expenses, (ii) each Trustee for any
amounts of the nature described in clause (i) above actually incurred by
it under the applicable Trust Agreement (to the extent not previously
reimbursed), shall be distributed to such Trustee and (iii) any Liquidity
Provider or Certificateholder for payments, if any, made by it to the
Subordination Agent or any Trustee in respect of amounts described in
clause (i) above, shall be distributed to such Liquidity Provider or to
the applicable Trustee for the account of such Certificateholder, in each
such case, pari passu on the basis of all amounts described in clauses (i)
through (iii) above;
second, such amount remaining as shall be required to pay all
accrued and unpaid Liquidity Expenses shall be distributed to each
Liquidity Provider pari passu on the basis of the amount of Liquidity
Expenses owed to each Liquidity Provider;
third, such amount remaining as shall be required to pay accrued and
unpaid interest on the Liquidity Obligations as provided in the Liquidity
Facilities shall be distributed to each Liquidity Provider pari passu on
the basis of the amount of such accrued and unpaid interest owed to each
Liquidity Provider;
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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 a Performing Note Deficiency exists to fund such Cash
Collateral Account up to its Required Amount (less the amount of any
repayments of Interest Drawings under such Liquidity Facility while
subclause (A)(i) above is applicable) shall be deposited in such Cash
Collateral Account, (B) if any Liquidity Facility shall become a
Downgraded Facility or a Non-Extended Facility at a time when unreimbursed
Interest Drawings under such Liquidity Facility have reduced the Available
Amount thereunder to zero, unless a Performing Note Deficiency exists to
deposit into the related Cash Collateral Account an amount equal to such
Cash Collateral Account's Required Amount (less the amount of any
repayments of Interest Drawings under such Liquidity Facility while
subclause (B)(i) above is applicable) shall be deposited in such Cash
Collateral Account, and (C) if, with respect to any particular Liquidity
Facility, neither subclause (A) nor subclause (B) of this clause "fourth"
are applicable, to pay in full the outstanding amount of all Liquidity
Obligations then due under such Liquidity Facility (other than amounts
payable pursuant to clause "second" or "third" of this Section 3.3) shall
be distributed to such Liquidity Provider, pari passu on the basis of the
amounts of all such deficiencies and/or unreimbursed Liquidity
Obligations;
fifth, if, with respect to any particular Liquidity Facility, any
amounts are to be distributed pursuant to other subclause (A) or (B) of
clause "fourth" above, then the Liquidity Provider with respect to such
Liquidity Facility shall be paid the excess of (x) the aggregate
outstanding amount of unreimbursed Advances (whether or not then due)
under such Liquidity Facility over (y) the Required Amount for the
relevant Class (less the amount of any repayments of Interest Drawings
under such Liquidity Facility while subclause (A)(i) or (B)(i), as the
case may be, of clause "fourth" above is applicable), pari passu on the
basis of such amounts in respect of each Liquidity Provider;
sixth, such amount as shall be required to reimburse or pay (i) the
Subordination Agent for any Tax (other than Taxes imposed on compensation
paid hereunder), expense, fee, charge or other loss incurred by or any
other amount payable to the Subordination Agent in connection with the
transactions contemplated hereby (to the extent not previously
reimbursed), shall be applied by the Subordination Agent in reimbursement
of such amount, (ii) each Trustee for any Tax (other than Taxes imposed on
compensation paid under the applicable Trust Agreement), expense, fee,
charge, loss or any other amount payable to such Trustee under the
applicable Trust Agreements (to the extent not previously reimbursed),
shall be distributed to such Trustee and (iii) each Certificateholder for
payments, if any, made by it pursuant to Section 5.2 hereof in respect of
amounts described in clause (i) above, shall be distributed to the
applicable Trustee for the account of such Certificateholder, in each such
case, pari passu on the basis of all amounts described in clauses (i)
through (iii) above;
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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 as shall be required to pay in full
Adjusted Expected Distributions on the Class D Certificates shall be
distributed to the Class D Trustee;
eleventh, such amount remaining shall be retained in the Collection
Account until the immediately succeeding Distribution Date; and
twelfth, if all Classes of Certificates shall have been paid in
full, such amount remaining shall be distributed to the Certificateholders
of the related Trust.
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 "eighth" of Section 3.2 to "Distribution Date" shall be deemed to mean
the actual date of payment of such Scheduled Payment and each reference in
clause "fifth", "sixth" or "seventh" of Section 3.2 to "Distribution Date" shall
be deemed to refer to such Scheduled Payment Date.
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SECTION 3.5 Payments to the Trustees and the Liquidity Providers.
Any amounts distributed hereunder to any Liquidity Provider shall be paid to
such Liquidity Provider by wire transfer of funds to the address such Liquidity
Provider shall provide to the Subordination Agent. The Subordination Agent shall
provide a Written Notice of any such transfer to the applicable Liquidity
Provider, as the case may be, at the time of such transfer. Any amounts
distributed hereunder by the Subordination Agent to any Trustee which shall not
be the same institution as the Subordination Agent shall be paid to such Trustee
by wire transfer funds at the address such Trustee shall provide to the
Subordination Agent.
SECTION 3.6 Liquidity Facilities. (a) Interest Drawings. If on any
Distribution Date, after giving effect to the subordination provisions of this
Agreement, the Subordination Agent shall not have sufficient funds for the
payment of any amounts due and owing in respect of accrued interest on the Class
A Certificates, the Class B Certificates or the Class C Certificates (at the
Stated Interest Rate for such Class of Certificates), then, prior to 1 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) and (ii) the
Available Amount under such Liquidity Facility, and shall pay such amount to the
Trustee with respect to such Class of Certificates in payment of such accrued
interest.
(b) Application of Interest Drawings. Notwithstanding anything to
the contrary contained in this Agreement, (i) all payments received by the
Subordination Agent in respect of an Interest Drawing under the Class A
Liquidity Facility and all amounts withdrawn by the Subordination Agent from the
Class A Cash Collateral Account, and payable in each case to the Class A
Certificateholders, shall be promptly distributed to the Class A Trustee 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 the debt rating of any
Liquidity Provider issued by either Rating Agency is lower than the applicable
Threshold Rating, within 30 days after receiving notice of such downgrading (but
no later than the expiration date of the Liquidity Facility issued by the
downgraded 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 within such 30 day period. If a
Downgraded Facility has not been replaced in accordance with the terms of this
paragraph, the Subordination
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Agent shall, on such 30th day (or if such 30th 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 the Liquidity Facility for any Class
of Certificates is scheduled to expire on a date (the "Stated Expiration Date")
prior to the date that is 15 days after the Final Legal Distribution Date for
such Class of Certificates then, no earlier than the 60th day and no later than
the 40th day prior to the then Stated Expiration Date, the Subordination Agent
shall request that such Liquidity Provider extend the Stated Expiration Date for
a period of 364 days after the Stated Expiration Date (unless the obligations of
such Liquidity Provider thereunder are earlier terminated in accordance with
such Liquidity Facility). The Liquidity Provider shall advise the 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 such 25th day, such Liquidity Facility
shall not have been so extended or replaced in accordance with Section 3.6(e),
or if the Liquidity Provider fails irrevocably and unconditionally to advise the
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, the "Non-Extension Drawing") of all
available and undrawn amounts thereunder. Amounts drawn pursuant to a
Non-Extension Drawing shall be maintained and invested as provided in Section
3.6(f) hereof.
(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 fifth 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 or the
letter dated as of August 13, 1998 from Midway to the Liquidity Provider
regarding certain tax matters 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
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Liquidity Provider waives, in writing, any right it may have to claim such
amounts), (B) it shall become unlawful or impossible for the initial Liquidity
Provider (or its Lending Office) 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) the short-term unsecured debt rating of the initial Liquidity
Provider is downgraded by Standard & Poor's from A-1+ to A-1 and there is a
resulting downgrade in the rating by any Rating Agency of any Class of
Certificates, (D) 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, the Class C Certificateholders or the Class D
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 this Liquidity Agreement or any other Operative Agreements.
In connection with the issuance of each Replacement Liquidity Facility, Midway
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), and the
Subordination Agent shall (x) pay all Liquidity Obligations then owing to the
replaced Liquidity Provider (which payment shall be made first from available
funds in the Cash Collateral Account as described in clause (vii) of Section
3.6(f) hereof and thereafter from any other available source, including, without
limitation, a drawing under the Replacement Liquidity Facility, 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
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Liquidity Provider) until all amounts owed to the replaced Liquidity Provider
have been paid) and (y) 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
or to be deposited, as the case may be, shall be deposited by the Subordination
Agent in the Class A Cash Collateral Account, the Class B Cash Collateral
Account or the Class C Cash Collateral Account, respectively. All amounts on
deposit in each Cash Collateral Account shall be invested and reinvested in
Eligible Investments in accordance with Section 2.2(b) hereof. Investment
Earnings on amounts on deposit in the Cash Collateral Account with respect to
each Liquidity Facility shall be deposited in the Collection Account on each
Interest Payment Date under such Liquidity Facility and applied on such Interest
Payment Date in accordance with Section 3.2, 3.3 or 3.4 (as applicable). The
Subordination Agent shall deliver a written statement to Midway and the
Liquidity Provider one day prior to each Interest Payment Date setting forth the
aggregate amount of Investment Earnings held in the Cash Collateral Accounts as
of such date. In addition, from and after the date funds are so deposited, the
Subordination Agent shall make withdrawals from such account as follows:
(i) on each Distribution Date, the Subordination Agent shall, to the
extent it shall not have received funds to pay accrued and unpaid interest
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 Trustee an amount equal to
the lesser of (x) an amount
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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, 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) plus Investment Earnings on deposit in such Cash Collateral
Account will be on deposit in the Class A Cash Collateral Account and
shall first, pay such amount to the 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, 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) plus Investment Earnings on deposit in such Cash Collateral
Account will be on deposit in the Class B Cash Collateral Account and
shall first, pay such amount to the Class B Liquidity Provider until the
Liquidity Obligations (with respect to the Class B Certificates) 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
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Paying Agent Agreement, the Subordination Agent shall withdraw from the
Class C Cash Collateral Account such amount as is necessary so that, after
giving effect to the reduction of the Pool Balance on such date (including
any such reduction resulting from a prior withdrawal of amounts on deposit
in the Class C Cash Collateral Account on such date), the Required Amount
(with respect to the Class C Liquidity Facility) plus Investment Earnings
on deposit in such Cash Collateral Account will be on deposit in the Class
C Cash Collateral Account and shall first, pay such amount to the Class C
Liquidity Provider until the Liquidity Obligations (with respect to the
Class C Certificates) shall have been paid in full, and second, deposit
any remaining amount in the Collection Account;
(vii) if a Replacement Liquidity Facility for any Class of
Certificates shall be delivered to the Subordination Agent following the
date on which funds have been deposited into the Cash Collateral Account
for such Class of Certificates, the Subordination Agent shall withdraw all
amounts on deposit in such Cash Collateral Account and shall pay such
amounts to the replaced Liquidity Provider until all Liquidity Obligations
owed to such Person shall have been paid in full, and shall deposit any
remaining amount in the Collection Account; and
(viii) following the payment of Final Distributions with respect to
any Class of Certificates, on the date on which the Subordination Agent
shall have been notified by the Liquidity Provider for such Class of
Certificates that the Liquidity Obligations owed to such Liquidity
Provider have been paid in full, the Subordination Agent shall withdraw
all amounts on deposit in the Cash Collateral Account in respect of such
Class of Certificates and shall deposit such amount in the Collection
Account.
(g) Reinstatement. With respect to any Interest Drawing under the
Liquidity Facility for any Trust, upon the reimbursement of the applicable
Liquidity Provider for all or any part of the amount of such Interest Drawing,
together with any accrued interest thereon, the Available Amount of such
Liquidity Facility shall be reinstated by an amount equal to the amount so
reimbursed to the applicable Liquidity Provider but not exceed the Required
Amount; provided, however, that such Liquidity Facility shall not be so
reinstated at any time after (i) the acceleration of all of the outstanding
Equipment Notes or (ii) both (A) a Triggering Event shall have occurred and (B)
a Performing Note Deficiency exists. In the event that at any time prior to both
the occurrence of a Triggering Event and the existence of a Performing Note
Deficiency, funds are withdrawn from any Cash Collateral Account pursuant to
clause (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 prior to both the occurrence of a Triggering Event and the
existence of a Performing Note Deficiency shall be deposited in such Cash
Collateral Account as provided in clause "third" of Section
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2.4(b)(i), 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 set forth in the Indentures with
respect to the Leased Aircraft to 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
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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 the Leased Aircraft, the amount and
payment dates of rentals payable by Midway under the Lease for such Leased
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 then outstanding 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 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 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.
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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, 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, 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 Proceedings, 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 any
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 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.
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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. (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 Section
3.6(e) and Section 5.1 (other than the first sentence thereof) or Article IV
hereof unless the Subordination Agent shall have been indemnified (to the extent
and in the manner reasonably satisfactory to the Subordination Agent) against
any liability, cost or expense (including counsel fees and expenses) which may
be incurred in connection therewith. The Subordination Agent shall not be under
any obligation to take any action, or refrain from taking any action, under this
Agreement and nothing contained in this Agreement shall require the
Subordination Agent to expend or risk its own funds or otherwise incur any
financial liability in the performance of any of its duties hereunder or in the
exercise of any of its rights or powers if it shall have reasonable grounds for
believing that repayment of such funds or adequate indemnity against such risk
or liability is not reasonably assured to it. The Subordination Agent shall not
be required to take any action under Section 3.6(e) and Section 5.1 (other than
the first
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sentence thereof) or Article IV hereof, nor shall any other provision of this
Agreement be deemed to impose a duty on the Subordination Agent to take any
action, if the Subordination Agent shall have been advised by counsel that such
action is contrary to the terms hereof or is otherwise contrary to law.
SECTION 5.3 No Duties Except as Specified in Intercreditor
Agreement. The Subordination Agent shall not have any duty or obligation to take
or refrain from taking any action under, or in connection with, this Agreement,
except as expressly provided by the terms of this Agreement; and no implied
duties or obligations shall be read into this Agreement against the
Subordination Agent. The Subordination Agent agrees that it will, in its
individual capacity and at its own cost and expense (but without any right of
indemnity in respect of any such cost or expense under Section 7.1 hereof)
promptly take such action as may be necessary to duly discharge all Liens on any
of the Trust Accounts or any monies deposited therein which result from claims
against it in its individual capacity not related to its activities hereunder or
any other Operative Agreement.
SECTION 5.4 Notice from the Liquidity Providers and Trustees. If a
Responsible Officer of any Liquidity Provider or Trustee has notice of an
Indenture Default or a Triggering Event, such Liquidity Provider or Trustee, as
the case may be, shall promptly give notice thereof to all other Liquidity
Providers and Trustees and to the Subordination Agent; provided, however, that
no such Person shall have any liability hereunder as a result of its failure to
deliver any such notice.
ARTICLE VI
THE SUBORDINATION AGENT
SECTION 6.1 Authorization; Acceptance of Trusts and Duties. Each of
the Class A Trustee, Class B Trustee, Class C Trustee and Class D 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.
The First National Bank of Maryland 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
(other than for the handling of funds, for which the standard of accounting
shall be 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
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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 grossly negligent
(other than for the handling of funds, for which the standard of accounting
shall be negligence) 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
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
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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 compensation, including expenses and disbursements, for all services rendered
hereunder (such compensation shall be set forth in a separate fee agreement
between Midway and The First National Bank of Maryland) 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 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
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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
7.01 of the Participation Agreements and Section 7 of the Note Purchase
Agreement. The indemnities contained in such Sections shall survive the
termination of this Agreement.
ARTICLE VIII
SUCCESSOR SUBORDINATION AGENT
SECTION 8.1 Replacement of Subordination Agent; Appointment of
Successor. The Subordination Agent may resign at any time by so notifying the
Trustees and the Liquidity Providers. The Controlling Party may remove the
Subordination Agent for cause by so notifying the Subordination Agent and may
appoint a successor Subordination Agent. The Controlling Party (or, prior to the
occurrence of a Triggering Event, the Person who would be the Controlling Party
if a Triggering Event had occurred) shall remove the Subordination Agent if:
(1) the Subordination Agent fails to comply with Section 6.9 hereof;
(2) the Subordination Agent is adjudged bankrupt or insolvent;
(3) a receiver or other public officer takes charge of the
Subordination Agent or its property; or
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(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 Documents 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 mail a notice of
its succession to the Liquidity Providers and the Trustees. The retiring
Subordination Agent shall promptly transfer its rights under each of the
Liquidity Facilities and all of the property held by it as Subordination Agent
to the successor Subordination Agent.
If a successor Subordination Agent does not take office within 60
days after the retiring Subordination Agent resigns or is removed, the retiring
Subordination Agent or one or more of the Trustees may petition any court of
competent jurisdiction for the appointment of a successor Subordination Agent.
If the Subordination Agent fails to comply with Section 6.9 hereof
(to the extent applicable), one or more of the Trustees or one or more of the
Liquidity Providers may petition any court of competent jurisdiction for the
removal of the Subordination Agent and the appointment of a successor
Subordination Agent.
Notwithstanding the foregoing, no resignation or removal of the
Subordination Agent shall be effective unless and until a successor has been
appointed. No appointment of a successor Subordination Agent shall be effective
unless and until the Rating Agencies shall have delivered a Ratings
Confirmation.
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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), 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 or amendment 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, 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 the Note Purchase Agreement or any Indenture or
Participation Agreement, 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 or waiver under such Equipment Notes, the Indenture
pursuant to which such Equipment Notes were issued, or the Lease, Participation
Agreement or other related document, (i) if no Indenture Default shall have
occurred and be continuing, the Subordination Agent shall request instructions
with respect to each Series of 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 an Indenture pertaining to a Leased Aircraft, has not been cured by
the applicable Owner Trustee or the applicable Owner Participant 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; 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
the lessee under
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the Lease; and provided further that no amendment of or supplement to any
Indenture, Lease, Purchase Agreement Assignment, PAA Consent or Participation
Agreement (the terms "Purchase Agreement Assignment" and "PAA Consent" having
the meanings specified in the Participation Agreements) or waiver or
modification of the terms of, or consent under, any thereof, shall, without the
consent of each Liquidity Provider, have any of the effects listed in the
proviso to Section 9.01(b) of such Indenture.
SECTION 9.2 Subordination Agent Protected. If, in the opinion of
counsel or the reasonable opinion of the institution acting as the Subordination
Agent hereunder, any document required to be executed pursuant to the terms of
Section 9.1 affects any right, duty, immunity or indemnity with respect to it
under this Agreement or any Liquidity Facility, the Subordination Agent may in
its discretion decline to execute such document.
SECTION 9.3 Effect of Supplemental Agreements. Upon the execution of
any amendment or supplement hereto pursuant to the provisions hereof, this
Agreement shall be and be deemed to be and shall be modified and amended in
accordance therewith and the respective rights, limitations of rights,
obligations, duties and immunities under this Agreement of the parties hereto
and beneficiaries hereof shall thereafter be determined, exercised and enforced
hereunder subject in all respects to such modifications and amendments, and all
the terms and conditions of any such supplemental agreement shall be and be
deemed to be and shall be part of the terms and conditions of this Agreement for
any and all purposes. In executing or accepting any supplemental agreement
permitted by this Article IX, the Subordination Agent shall be entitled to
receive, and shall be fully protected in relying upon, an opinion of counsel
stating that the execution of such supplemental agreement is authorized or
permitted by this Agreement.
SECTION 9.4 Notice to Rating Agencies. Promptly following its
receipt of each amendment, consent, modification, supplement or waiver
contemplated by this Article IX, the Subordination Agent shall send a copy
thereof to each Rating Agency.
ARTICLE X
MISCELLANEOUS
SECTION 10.1 Termination of Intercreditor Agreement. Following
payment of Final Distributions with respect to each Class of Certificates and
the payment in full of all Liquidity Obligations to the Liquidity Providers and
provided that there shall then be no other amounts due to the
Certificateholders, the Trustees, the Liquidity Providers and the Subordination
Agent hereunder or under the Trust Agreements, and that the commitment of the
Liquidity Providers under the Liquidity Facilities shall have expired or been
terminated, this Agreement and the trusts created hereby shall terminate and
this Agreement shall be of no further force or effect. Except
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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 at its office at:
The First National Bank of Maryland
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:
The First National Bank of Maryland
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:
ABN AMRO BANK N.V.
Aerospace Department
000 Xxxxx XxXxxxx Xxxxxx, #000
Xxxxxxx, XX 00000-0000
Attention: Xxxxxxx Xxxxxxxx
Telephone: (000) 000-0000
Telecopy: (000) 000-0000
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with copy to:
AMB AMRO BANK N.V.
000 Xxxxx XxXxxxx Xxxxxx, #000
Xxxxxxx, XX 00000-0000
Attention: Loan Operations
Telephone: (000) 000-0000
Telecopy: (000) 000-0000
Whenever any notice in writing is required to be given by any Trustee or
Liquidity Provider or the Subordination Agent to any of the other of them, such
notice shall be deemed given and such requirement satisfied when such notice is
received, if such notice is received, if such notice is mailed by certified
mail, postage prepaid or by courier service or 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. Upon the occurrence of the Transfers contemplated by the
Assignment and Assumption Agreements, the Trustee of each Class shall (without
any further act) be deemed to have transferred all of its rights, title and
interest in and to this Agreement to the trustee of the Successor Trust of the
same Class and, thereafter, the trustee of the Successor Trust of the same Class
and, thereafter, the trustee of each Successor Trust shall be deemed to be the
"Trustee" of such Successor Trust with the rights and obligations of a "Trustee"
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hereunder and under the other Operative Agreements and each reference to a Trust
of any Class herein shall be deemed a reference to the Successor Trust of such
Class.
SECTION 10.7 Headings. The headings of the various Articles and
Sections herein and in the table of contents hereto are for convenience of
reference only and shall not define or limit any of the terms or provisions
hereof.
SECTION 10.8 Counterpart Form. This Agreement may be executed by the
parties hereto in separate counterparts, each of which when so executed and
delivered shall be an original, but all such counterparts shall together
constitute but one and the same agreement.
SECTION 10.9 Subordination. (a) As between the Liquidity Providers,
on the one hand, and the Trustees and the Certificateholders, on the other hand,
this Agreement shall be a subordination agreement for purposes of Xxxxxxx 000 xx
xxx Xxxxxx Xxxxxx Bankruptcy Code, as amended from time to time.
(b) Notwithstanding the provisions of this Agreement, if prior to
the payment in full to the Liquidity Providers of all Liquidity Obligations then
due and payable, any party hereto shall have received any payment or
distribution in respect of Equipment Notes or any other amount under the
Indentures or other Operative Documents 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 (including to the payment of any sum which would have accrued but
for the commencement of any insolvency proceeding), notwithstanding the fact
that the obligations owed to the Trustees and the holders of Certificates are
secured by certain assets and the Liquidity Obligations are not 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.
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(e) Each of the Trustees (on behalf of themselves and the holders of
Certificates), the Liquidity Providers and the Subordination Agent may take any
of the following actions without impairing its rights under this Agreement:
(i) obtain a lien on any property to secure any amounts owing to it
hereunder, including, in the case of the Liquidity Providers, the
Liquidity Obligations,
(ii) obtain the primary or secondary obligation of any other obligor
with respect to any amounts owing to it hereunder, including, in the case
of the Liquidity Providers, any of the Liquidity Obligations,
(iii) renew, extend, increase, alter or exchange any amounts owing
to it hereunder, including, in the case of the Liquidity Providers, any of
the Liquidity Obligations, or release or compromise any obligation of any
obligor with respect thereto,
(iv) refrain from exercising any right or remedy, or delay in
exercising such right or remedy, which it may have, or
(v) take any other action which might discharge a subordinated party
or a surety under applicable law.
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 irrevocably and
unconditionally:
(i) submits for itself and its property in any legal action or
proceeding relating to this Agreement or any other Operative Agreement, or
for recognition and enforcement of any judgment in respect hereof or
thereof, to the nonexclusive general jurisdiction of the courts of the
State of New York, the courts of the United States of America for the
Southern District of New York, and the appellate courts from any thereof;
(ii) consents that any such action or proceeding may be brought in
such courts, and waives any objection that it may now or hereafter have to
the venue of any such action or proceeding in any such court or that such
action or proceeding was brought in an inconvenient court and agrees not
to plead or claim the same;
(iii) agrees that service of process in any such action or
proceeding may be effected by mailing a copy thereof by registered or
certified mail (or any
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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 AGREES TO WAIVE ITS RESPECTIVE RIGHTS
TO A JURY TRIAL OF ANY CLAIM OR CAUSE OF ACTION BASED UPON OR ARISING OUT OF
THIS AGREEMENT OR ANY DEALINGS BETWEEN THEM RELATING TO THE SUBJECT MATTER OF
THIS AGREEMENT AND THE RELATIONSHIP THAT IS BEING ESTABLISHED, including,
without limitation, contract claims, tort claims, breach of duty claims and all
other common law and statutory claims. Each of the parties warrants and
represents that it has reviewed this waiver with its legal counsel, and that it
knowingly and voluntarily waives its jury trial rights following consultation
with such legal counsel. THIS WAIVER IS IRREVOCABLE AND CANNOT BE MODIFIED
ORALLY.
(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.
THE FIRST NATIONAL BANK OF
MARYLAND, not in its individual capacity but
solely as Trustee for each of the Trusts
By: /s/ Xxxxxx X. Xxxxx
----------------------------------------
Name: Xxxxxx X. Xxxxx
Title: Assistant Vice President
ABN AMRO BANK N.V., acting through its
Chicago Branch, as Class A Liquidity
Provider, Class B Liquidity Provider and
Class C Liquidity Provider
By: /s/ Xxxxxxx X. Xxxxxxxx
----------------------------------------
Name: Xxxxxxx X. Xxxxxxxx
Title: Vice President
By: /s/ Xxxxx X. Xxxxxxxx
----------------------------------------
Name: Xxxxx X. Xxxxxxxx
Title: Assistant Vice President
THE FIRST NATIONAL BANK OF
MARYLAND, 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: Assistant Vice President
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