EXHIBIT 4(b)(1)
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INTERCREDITOR AGREEMENT
Dated as of July 8, 2003
among
U.S. BANK TRUST NATIONAL ASSOCIATION,
as Trustee of the
American Airlines Pass Through Trust 2003-1G,
American Airlines Pass Through Trust 2003-1C,
and
American Airlines Pass Through Trust 2003-1D
CITIBANK, N.A.,
as Class G Liquidity Provider,
U.S. BANK TRUST NATIONAL ASSOCIATION,
as Subordination Agent
and
AMBAC ASSURANCE CORPORATION,
as Policy Provider
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TABLE OF CONTENTS
Page
ARTICLE I
DEFINITIONS
Section 1.01 Definitions................................................................................ 2
ARTICLE II
TRUST ACCOUNTS; CONTROLLING PARTY
Section 2.01 Agreement to Terms of Subordination; Payments from Monies Received Only.................... 23
Section 2.02 Trust Accounts............................................................................. 24
Section 2.03 Deposits to the Collection Account and Special Payments Account; Certain Distributions..... 25
Section 2.04 Distributions of Special Payments.......................................................... 26
Section 2.05 Designated Representatives................................................................. 29
Section 2.06 Controlling Party.......................................................................... 30
ARTICLE III
RECEIPT, DISTRIBUTION AND APPLICATION OF AMOUNTS RECEIVED
Section 3.01 Written Notice of Distribution............................................................. 32
Section 3.02 Distribution of Amounts on Deposit in the Collection Account............................... 35
Section 3.03 Distribution of Amounts on Deposit Following a Triggering Event............................ 37
Section 3.04 Other Payments............................................................................. 40
Section 3.05 Payments to the Trustees, the Liquidity Providers and the Policy Provider.................. 40
Section 3.06 Liquidity Facilities....................................................................... 41
Section 3.07 The Policy................................................................................. 47
Section 3.08 Subrogation................................................................................ 51
ARTICLE IV
EXERCISE OF REMEDIES
Section 4.01 Directions from the Controlling Party...................................................... 51
Section 4.02 Remedies Cumulative........................................................................ 52
Section 4.03 Discontinuance of Proceedings.............................................................. 53
Section 4.04 Right of Certificateholders, the Liquidity Providers and the Policy
Provider to Receive Payments Not to Be Impaired............................................ 53
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ARTICLE V
DUTIES OF THE SUBORDINATION AGENT;
AGREEMENTS OF TRUSTEES, ETC.
Section 5.01 Notices of Indenture Event of Default or Triggering Event, Etc............................. 53
Section 5.02 Indemnification............................................................................ 54
Section 5.03 No Duties Except as Specified in Intercreditor Agreement................................... 54
Section 5.04 Notice from the Liquidity Providers, the Policy Provider and the Trustees.................. 54
ARTICLE VI
THE SUBORDINATION AGENT
Section 6.01 Authorization; Acceptance of Trusts and Duties............................................. 54
Section 6.02 Absence of Duties.......................................................................... 55
Section 6.03 No Representations or Warranties as to Documents........................................... 55
Section 6.04 No Segregation of Monies; No Interest...................................................... 55
Section 6.05 Reliance; Agents; Advice of Counsel........................................................ 55
Section 6.06 Capacity in Which Acting................................................................... 56
Section 6.07 Compensation............................................................................... 56
Section 6.08 May Become Certificateholder............................................................... 56
Section 6.09 Subordination Agent Required; Eligibility.................................................. 56
Section 6.10 Money to Be Held in Trust.................................................................. 57
ARTICLE VII
SUCCESSOR SUBORDINATION AGENT
Section 7.01 Replacement of Subordination Agent; Appointment of Successor............................... 57
ARTICLE VIII
SUPPLEMENTS AND AMENDMENTS
Section 8.01 Amendments, Waivers, Etc................................................................... 58
Section 8.02 Subordination Agent Protected.............................................................. 61
Section 8.03 Effect of Supplemental Agreements.......................................................... 61
Section 8.04 Notice to Rating Agencies, the Liquidity Providers and the Policy Provider................. 61
ARTICLE IX
MISCELLANEOUS
Section 9.01 Termination of Intercreditor Agreement..................................................... 62
Section 9.02 Intercreditor Agreement for Benefit of Trustees, Liquidity Providers, Policy
Provider and Subordination Agent........................................................... 62
Section 9.03 Notices.................................................................................... 62
Section 9.04 Severability............................................................................... 63
Section 9.05 No Oral Modifications or Continuing Waivers................................................ 63
Section 9.06 Successors and Assigns..................................................................... 64
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Section 9.07 Headings................................................................................... 64
Section 9.08 Counterparts............................................................................... 64
Section 9.09 Subordination.............................................................................. 64
Section 9.10 Governing Law.............................................................................. 65
Section 9.11 Submission to Jurisdiction; Waiver of Jury Trial; Waiver of Immunity....................... 65
Exhibit A Refunding Terms
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INTERCREDITOR AGREEMENT
This INTERCREDITOR AGREEMENT, dated as of July 8, 2003, is
made by and among U.S. BANK TRUST NATIONAL ASSOCIATION, a national banking
association (in its individual capacity, together with its successors and
permitted assigns, "U.S. Bank"), not in its individual capacity but solely as
trustee of each Trust (such term and other capitalized terms used herein without
definition being defined as provided in Article I); CITIBANK, N.A., a national
banking association, as Class G Liquidity Provider; U.S. BANK TRUST NATIONAL
ASSOCIATION, 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 VII, the
"Subordination Agent"); and AMBAC ASSURANCE CORPORATION, a Wisconsin domiciled
stock insurance Company ("AMBAC"), as the Policy Provider.
WHEREAS, pursuant to each Indenture with respect to an
Aircraft, American will issue on a recourse basis several series of Equipment
Notes secured by such Aircraft;
WHEREAS, pursuant to the Participation Agreements, each Trust
will acquire those Equipment Notes having an interest rate identical 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, the Underwriters propose to purchase the Certificates
issued by the Class G Trust pursuant to the Underwriting Agreement and certain
investors propose to purchase the Certificates issued by the Class C Trust and
the Class D Trust;
WHEREAS, on the date hereof the Class G Liquidity Provider
proposes to enter into a revolving credit agreement with the Subordination
Agent, as agent and trustee for the Trustee of the Class G Trust, for the
benefit of the Certificateholders of the Class G Trust and in connection with
the issuance of New Class C Certificates, the Subordination Agent, as agent and
trustee of the trustee of the New Class C Certificates, may enter into a Class C
Liquidity Facility for the benefit of the holders of the New Class C
Certificates;
WHEREAS, the Policy Provider proposes to enter into the Policy
Provider Agreement providing for the issuance by the Policy Provider of a Policy
for the benefit of the Certificateholders of the Class G Trust; and
WHEREAS, it is a condition precedent to the obligations of the
Underwriters under the Underwriting Agreement that the Subordination Agent, the
Trustees, the Class G Liquidity Provider and the Policy Provider agree to the
terms of subordination set forth in this Agreement in respect of each Class of
Certificates, and the Subordination Agent, the Trustees, the Class G Liquidity
Provider and the Policy Provider, by entering into this Agreement, hereby
acknowledge and agree to such terms of subordination and the other provisions of
this Agreement;
NOW, THEREFORE, in consideration of the mutual agreements
herein contained, and of other good and valuable consideration the receipt and
adequacy of which are hereby acknowledged, the parties hereto agree as follows:
ARTICLE I
DEFINITIONS
Section 1.01 Definitions. (a) The definitions stated herein
apply equally to the singular and the plural forms of the terms defined.
(b) All references in this Agreement to designated
"Articles", "Sections" and other subdivisions are to the designated Articles,
Sections and other subdivisions of this Agreement.
(c) 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.
(d) Unless the context otherwise requires, whenever the
words "including", "include" or "includes" are used herein, it shall be deemed
to be followed by the phrase "without limitation".
(e) For purposes of this Agreement, unless the context
otherwise requires, the following capitalized terms shall have the following
meanings:
"Acceleration" means, with respect to the amounts payable in
respect of the Equipment Notes issued under any Indenture, such amounts
becoming immediately due and payable by declaration or otherwise.
"Accelerate", "Accelerated" and "Accelerating" have meanings
correlative to the foregoing.
"Accrued Class G Interest" means, with respect to any
Distribution Date, all amounts due and owing in respect of accrued and
unpaid interest on the Class G Certificates at the Stated Interest Rate
for the Class G Certificates on such Distribution Date.
"Adjusted Expected Distributions" means, with respect to the
Certificates of any Trust on any Current Distribution Date, the sum of
(x) accrued and unpaid interest in respect of such Certificates and (y)
the greater of:
(A) the difference between (x) the Pool Balance
of such Certificates as of the immediately preceding
Distribution Date (or, if the Current Distribution Date is the
first Distribution Date, the original aggregate face amount of
the Certificates of such Trust) 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
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principal of the Performing Equipment Notes held in such Trust
has been paid when due (whether at the stated maturity or upon
redemption (including, but not limited to, redemption pursuant
to Section 2.10 or 2.11 of the applicable Indenture)
prepayment, purchase or otherwise, but without giving effect
to any Acceleration of Performing Equipment Notes) and such
payments have been distributed to the holders of such
Certificates and (iii) the principal of any Equipment Notes
formerly held in such Trust that have been sold pursuant to
the terms hereof has been paid in full and such payments have
been distributed to the holders of such Certificates, and
(B) the amount of the excess, if any, of (i) the
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) over
(ii) the Aggregate LTV Collateral Amount for such Class of
Certificates for the Current Distribution Date;
provided that, until the date of the initial LTV Appraisals for all of
the Aircraft, clause (B) shall not apply.
For purposes of calculating Adjusted Expected Distributions
with respect to the Certificates of any Trust, any Make-Whole Amount
paid on the Equipment Notes held in such Trust that has not been
distributed to the Certificateholders of such Trust (other than such
Make-Whole Amount or a portion thereof applied to the distribution of
interest on the Certificates of such Trust or the reduction of the Pool
Balance of such Trust) shall be added to the amount of Adjusted
Expected Distributions.
"Advance" with respect to any Liquidity Facility, has the
meaning specified in such Liquidity Facility.
"Affiliate" means, with respect to any Person, any other
Person directly or indirectly controlling, controlled by or under
direct or indirect common control with such Person. For the purposes of
this definition, "control", when used with respect to any specified
Person, means the power, directly or indirectly, to direct the
management and policies of such Person, whether through the ownership
of voting securities or by contract or otherwise; and the terms
"controlling" and "controlled" have meanings correlative to the
foregoing.
"Aggregate LTV Collateral Amount" for any Class of
Certificates for any Distribution Date means an amount, not less than
zero, equal to (i) the sum of the applicable LTV Collateral Amounts for
such Class of Certificates for all Aircraft, minus (ii) the Pool
Balance for each Class of Certificates, if any, senior to such Class,
after giving effect to any distribution of principal on such
Distribution Date with respect to such senior Class or Classes.
"Aircraft" means, with respect to each Indenture, the
"Aircraft" referred to therein.
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"American" means American Airlines, Inc., a Delaware
corporation, and its successors and assigns.
"American Bankruptcy Event" means the occurrence and
continuation of any of the following:
(a) American consents to the appointment of or
the taking of possession by a receiver, trustee or liquidator
of itself or of a substantial part of its property, admits in
writing its inability to pay its debts generally as they come
due or makes a general assignment for the benefit of
creditors;
(b) American files a voluntary petition in
bankruptcy or a voluntary petition or an answer seeking
reorganization, liquidation or other relief in a case under
any bankruptcy laws or insolvency laws (as in effect at such
time) or an answer admitting the material allegations of a
petition filed against American in any such case, or American
seeks relief by voluntary petition, answer or consent, under
the provisions of any other bankruptcy or other similar law
providing for the reorganization or winding-up of corporations
(as in effect at such time), or American seeks an agreement,
composition, extension or adjustment with its creditors under
such laws; or
(c) an order, judgment or decree is entered by
any court of competent jurisdiction appointing, without the
consent of American, a receiver, trustee or liquidator of
American or of any substantial part of its property, or any
substantial part of its property is sequestered, or granting
any other relief as a debtor in respect of American as a
debtor under any bankruptcy laws or insolvency laws (as in
effect at such time), and any such order, judgment or decree
of appointment or sequestration remains in force undismissed,
unstayed and unvacated for a period of 90 days after the date
of entry thereof, or
(d) a petition against American in a case under
the federal bankruptcy laws or other insolvency laws (as in
effect at such time) is filed and not withdrawn or dismissed
within 90 days thereafter, or if, under the provisions of any
law providing for reorganization or winding-up of corporations
that may apply to American, any court of competent
jurisdiction assumes jurisdiction, custody or control of
American or of any substantial part of its property and such
jurisdiction, custody or control remains in force
unrelinquished, unstayed and unterminated for a period of 90
days.
"American Entity" has the meaning specified in the Policy
Provider Agreement.
"American Provisions" has the meaning specified in Section
8.01(a).
"Appraisal" means a current fair market value appraisal (which
may be a "desktop" appraisal) performed by any Appraiser or any other
nationally recognized appraiser on the basis of an arm's-length
transaction between an informed and willing purchaser under no
compulsion to buy and an informed and willing seller under no
compulsion to sell and both having knowledge of all relevant facts.
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"Appraised Current Market Value" of any Aircraft means the
lower of the average and the median of the three most recent LTV
Appraisals of such Aircraft.
"Appraisers" means Aircraft Information Systems, Inc., BK
Associates, Inc. and Xxxxxx Xxxxx & Xxxxx, Inc.
"Available Amount" means, with respect to any Liquidity
Facility on any drawing date, subject to the two provisos contained in
the first sentence of Section 3.06(g), an amount equal to (a) the
Stated Amount of such Liquidity Facility at such time, less (b) the
aggregate amount of each Interest Drawing honored by such Liquidity
Provider under such Liquidity Facility on or prior to such date that
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.
"Bankruptcy Code" means the United States Bankruptcy Code, 11
United States Code Sections 101 et seq., as amended, or any successor
statutes thereto.
"Basic Agreement" means that certain Pass Through Trust
Agreement, dated as of March 21, 2002, between American and U.S. Bank,
as successor trustee, as the same may be amended, supplemented or
otherwise modified from time to time in accordance with its terms, but
does not include any Trust Supplement.
"Business Day" means, with respect to the Certificates of any
Class, any day other than a Saturday, a Sunday or a day on which (i)
for purposes of the Policy and the Policy Provider, the fiscal agent
under the Policy, at its office specified in the Policy, the Policy
Provider at its office specified in the Policy and insurance companies
in New York, New York are required or authorized by law or executive
order to close and (ii) for all such and all other purposes hereunder,
commercial banks are required or authorized to close in New York, New
York, Dallas, Texas, or, so long as any Certificate of such Class is
outstanding, the city and state in which the Trustee, the Subordination
Agent or any related Loan Trustee maintains its Corporate Trust Office
or receives and disburses funds, and that, solely with respect to draws
under any Liquidity Facility, also is a "Business Day" as defined in
such Liquidity Facility.
"Cash Collateral Account" means the Class G Cash Collateral
Account or the Class C Cash Collateral Account, as applicable.
"Certificate" means a Class G Certificate, a Class C
Certificate or a Class D Certificate, as applicable.
"Certificateholder" means, with respect to any Class of
Certificates, the Person in whose name a Certificate is registered in
the Register for the Certificates of such Class.
"Citizen of the United States" has the meaning specified in
Section 40102(a)(15) of Title 49 of the United States Code or any
similar legislation of the United States enacted in substitution or
replacement therefor.
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"Class" has the meaning specified in the recitals to this
Agreement.
"Class C 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 amounts shall be deposited as referred to
in Section 3.06(f).
"Class C Certificateholder" means, at any time, any
Certificateholder of one or more Class C Certificates.
"Class C Certificates" means the certificates issued by the
Class C Trust, substantially in the form of Exhibit A to the Class C
Trust Agreement, and authenticated by the Class C Trustee, representing
Fractional Undivided Interests in the Class C Trust, and any
certificates issued in exchange therefor or replacement thereof
pursuant to the terms of the Class C Trust Agreement.
"Class C Liquidity Facility" means a revolving credit
agreement (or agreements) in substantially the form of the Class G
Liquidity Facility, including reinstatement provisions, or in such
other form (which may include a letter of credit, surety bond,
financial insurance policy or guaranty) between the Subordination
Agent, as agent and trustee for the trustee of the New Class C
Certificates, and the Class C Liquidity Provider complying with the
provisions of Exhibit A, 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 the Person issuing the
initial Class C Liquidity Facility or, upon the issuance of a
Replacement Liquidity Facility to replace the Class C Liquidity
Facility pursuant to Section 3.06(c) or 3.06(e), the Replacement
Liquidity Provider issuing such Replacement Liquidity Facility.
"Class C Trust" means the American Airlines Pass Through Trust
2003-1C created and administered pursuant to the Class C Trust
Agreement.
"Class C Trust Agreement" means the Basic Agreement, as
supplemented by Trust Supplement No. 2003-1C thereto, dated as of the
date hereof, governing the creation and administration of the American
Airlines Pass Through Trust 2003-1C and the issuance of the Class C
Certificates, as the same may be amended, supplemented or otherwise
modified from time to time in accordance with its terms.
"Class C Trustee" means U.S. Bank, 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
Certificateholder of one or more Class D Certificates.
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"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 replacement thereof
pursuant to the terms of the Class D Trust Agreement.
"Class D Trust" means the American Airlines Pass Through Trust
2003-1D created and administered pursuant to the Class D Trust
Agreement.
"Class D Trust Agreement" means the Basic Agreement, as
supplemented by Trust Supplement No. 2003-1D thereto, dated as of the
date hereof, governing the creation and administration of the American
Airlines Pass Through Trust 2003-1D and the issuance of the Class D
Certificates, as the same may be amended, supplemented or otherwise
modified from time to time in accordance with its terms.
"Class D Trustee" means U.S. Bank, 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.
"Class E Certificateholder" means, at any time, any
Certificateholder of one or more Class E Certificates, if and when
issued.
"Class E Certificates" means any Certificates issued by the
Class E Trust, if and when created, representing Fractional Undivided
Interests in the Class E Trust.
"Class E Trust" means the American Airlines Pass Through Trust
2003-1E, if and when created, administered pursuant to the Basic
Agreement and a Trust Supplement.
"Class E Trustee" means the trustee of the Class E Trust, if
and when created.
"Class G 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 amounts shall be deposited as provided in
Section 3.06(f).
"Class G Certificateholder" means, at any time any
Certificateholder of one or more Class G Certificates.
"Class G Certificates" means the certificates issued by the
Class G Trust, substantially in the form of Exhibit A to the Class G
Trust Agreement, and authenticated by the Class G Trustee, representing
Fractional Undivided Interests in the Class G Trust, and any
certificates issued in exchange therefor or replacement thereof
pursuant to the terms of the Class G Trust Agreement.
"Class G Liquidity Facility" means, initially, the Revolving
Credit Agreement, dated as of the date hereof, between the
Subordination Agent, as agent and trustee of the Class G Trustee, and
the initial Class G Liquidity Provider, and, from and after the
replacement of such agreement pursuant hereto, the Replacement
Liquidity Facility
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therefor, if any, in each case as amended, supplemented or otherwise
modified from time to time in accordance with its terms.
"Class G Liquidity Provider" means, initially, Citibank, N.A.,
or, upon the issuance of Replacement Liquidity Facility to replace the
Class G Liquidity Facility pursuant to Section 3.06(c) or 3.06(e), the
Replacement Liquidity Provider issuing such Replacement Liquidity
Facility.
"Class G Trust" means the American Airlines Pass Through Trust
2003-1G created and administered pursuant to the Class G Trust
Agreement.
"Class G Trust Agreement" means the Basic Agreement, as
supplemented by Trust Supplement No. 2003-1G thereto, dated as of the
date hereof, governing the creation and administration of the American
Airlines Pass Through Trust 2003-1G and the issuance of the Class G
Certificates, as the same may be amended, supplemented or otherwise
modified from time to time in accordance with its terms.
"Class G Trustee" means U.S. Bank, not in its individual
capacity except as expressly set forth in the Class G Trust Agreement,
but solely as trustee under the Class G Trust Agreement, together with
any successor trustee appointed pursuant thereto.
"Closing Date" means July 8, 2003.
"Code" means the Internal Revenue Code of 1986, as amended
from time to time, and Treasury Regulations promulgated thereunder.
"Collateral" means, with respect to any Indenture, the
"Collateral" referred to therein.
"Collection Account" means the Eligible Deposit Account
established by the Subordination Agent pursuant to Section 2.02(a)(i)
in and from which the Subordination Agent shall make deposits and
withdrawals in accordance with this Agreement.
"Consent Notice" has the meaning specified in Section 3.06(d).
"Consent Period" has the meaning specified in Section 3.06(d).
"Controlling Party" means the Person entitled to act as such
pursuant to the terms of Section 2.06.
"Corporate Trust Office" means, with respect to any Trustee,
the Subordination Agent or any Loan Trustee, the office of such Person
in the city at which, at any particular time, its corporate trust
business shall be principally administered.
"Current Distribution Date" means a Distribution Date
specified as a reference date for calculating the Expected
Distributions or the Adjusted Expected Distributions with respect to
the Certificates of any Trust as of such Distribution Date.
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"Defaulted Series G Equipment Note" has the meaning specified
in Section 3.07(c).
"Designated Representatives" means the Subordination Agent
Representatives, the Trustee Representatives, the LP Representatives
and the Policy Provider Representatives identified under Section 2.05.
"Disposition Payment" has the meaning specified in Section
3.07(b).
"Distribution Date" means a Regular Distribution Date or a
Special Distribution Date.
"Dollars" means the lawful currency of the United States.
"Downgrade Drawing" has the meaning specified in Section
3.06(c).
"Downgraded Facility" has the meaning specified in Section
3.06(c).
"Drawing" means an Interest Drawing, a Final Drawing, a
Non-Extension Drawing or a Downgrade Drawing, as the case may be.
"Election Distribution Date" has the meaning specified in
Section 3.07(c).
"Election Interest Payment" has the meaning specified in
Section 3.07(c).
"Eligible Deposit Account" means either (a) a segregated
account with an Eligible Institution or (b) a segregated trust account
with the corporate trust department of a depository institution
organized under the laws of the United States or any one of the states
thereof or the District of Columbia (or any United States branch of a
foreign bank), having corporate trust powers and acting as trustee for
funds deposited in such account, so long as any of the securities of
such depository institution has a long-term unsecured debt rating of at
least A3 or its equivalent by Moody's or at least A- or its equivalent
by S&P. An Eligible Deposit Account may be maintained with the
Subordination Agent or a Liquidity Provider so long as the
Subordination Agent or such Liquidity Provider is an Eligible
Institution; provided that the Subordination Agent, in its individual
capacity, or such Liquidity Provider shall have waived all rights of
set-off 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 state thereof or the District of Columbia (or
any U.S. branch of a foreign bank), which has a long-term unsecured
debt rating of at least A3 or its equivalent by Moody's or a long-term
issuer credit rating of at least A- or its equivalent by S&P.
"Eligible Investments" means investments in (a) obligations of
the United States government or agencies thereof, or obligations
guaranteed by the United States government, (b) open market commercial
paper of any corporation incorporated under
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the laws of the United States or any state thereof rated at least P-1
or its equivalent by Moody's or at least A-1 or its equivalent by S&P,
(c) certificates of deposit issued by commercial banks organized under
the laws of the United States or of any political subdivision thereof
(or any United States branch of a foreign bank) having a combined
capital and surplus in excess of $500,000,000 which banks or their
holding companies have a rating of A or its equivalent by Moody's or A
or its equivalent by S&P; provided, however, that the aggregate amount
at any one time invested in certificates of deposit issued by any one
bank shall not be in excess of 5% of such bank's capital and surplus,
(d) Dollar denominated offshore certificates of deposit issued by, or
offshore time deposits with, any commercial bank described in (c) or
any subsidiary thereof, and (e) repurchase agreements with any
financial institution having combined capital and surplus of at least
$500,000,000 with any of the obligations described in clauses (a)
through (d) as collateral so long as such investment is held by a third
party custodian also qualifying as an Eligible Institution.
Notwithstanding the foregoing, no investment of the type described in
clause (b) above which is issued or guaranteed by any American Entity
and no investment in the obligations of any one bank in excess of
$10,000,000 shall be an Eligible Investment unless written approval has
been obtained from the Policy Provider and a Ratings Confirmation shall
have been received with respect to the making of such investment. If
all of the above investments are unavailable, the entire amounts to be
invested may be used to purchase Federal funds from an entity described
in clause (c) above. All Eligible Investments must be held in an
Eligible Deposit Account. Any of the investments described herein may
be made through or with, as applicable, the bank acting as Trustee or
its Affiliates.
"Eligible Provider" has the meaning specified in Section
2.06(c).
"Equipment Notes" means, at any time, the Series G 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.
"Excess Interest Policy Drawing" has the meaning specified in
Section 3.07(c).
"Excess Reimbursement Obligations" means (a) in the event of
any Policy Provider Election with respect to a Series G Equipment Note,
interest on the Series G Equipment Notes in respect of which the Policy
Provider Election has been made in excess of 24 months of interest at
the interest rate applicable to such Series G Equipment Notes and (b)
any interest on the Liquidity Obligations in respect of the Class G
Liquidity Facility paid by the Policy Provider to the Class G Liquidity
Provider from and after the end of the 24-month period referred to in
Section 3.07(c) hereof.
"Expected Distributions" means, with respect to the
Certificates of any Trust on any Current Distribution Date, the sum of
(x) accrued and unpaid interest in respect of such Certificates and (y)
the difference between (A) the Pool Balance of such Certificates as of
the immediately preceding Distribution Date (or, if the Current
Distribution Date is the first Distribution Date, the original
aggregate face amount of the Certificates of such Trust) and (B) the
Pool Balance of such Certificates as of the Current Distribution Date
10
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 (including, but not limited to, any redemption
pursuant to Section 2.10 or 2.11 of any Indenture), prepayment,
purchase or Acceleration or otherwise) and such payments have been
distributed to the holders of such Certificates and (ii) the principal
of any Equipment Notes formerly held in such Trust that have been sold
pursuant to the terms hereof has been paid in full and such payments
have been distributed to the holders of such Certificates.
For purposes of calculating Expected Distributions with
respect to the Certificates of any Trust, any Make-Whole Amount paid on
the Equipment Notes held in such Trust which has not been distributed
to the Certificateholders of such Trust (other than such Make-Whole
Amount or a portion thereof applied to distributions of interest on the
Certificates of such Trust or the reduction of the Pool Balance of such
Trust) shall be added to the amount of such Expected Distributions.
"Expiry Date" with respect to any Liquidity Facility, shall
have the meaning specified in such Liquidity Facility.
"Fee Letter" means, with respect to each Liquidity Facility,
the Fee Letter among such Liquidity Provider, the Subordination Agent
and American with respect to the related Liquidity Facility and any fee
letter entered into among the Subordination Agent, American and any
Replacement Liquidity Provider.
"Final Distributions" means, with respect to the Certificates
of any Trust on any Distribution Date, the sum of (x) the aggregate
amount of all accrued and unpaid interest in respect of such
Certificates and (y) the Pool Balance of such Certificates as of the
immediately preceding Distribution Date. For purposes of calculating
Final Distributions with respect to the Certificates of any Trust, any
Make-Whole Amount paid on the Equipment Notes held in such Trust that
has not been distributed to the Certificateholders of such Trust (other
than such Make-Whole Amount or a portion thereof applied to
distributions of interest on the Certificates of such Trust or the
reduction of the Pool Balance of such Trust) shall be added to the
amount of such Final Distributions.
"Final Drawing" has the meaning specified in Section 3.06(i).
"Final Legal Distribution Date" means with respect to the
Class G Certificates, January 9, 2012, and with respect to the Class C
and Class D Certificates, July 9, 2010.
"Fractional Undivided Interest" means the fractional undivided
interest in a Trust that is represented by a Certificate relating to
such Trust.
"Indenture" means each of the Indenture and Security
Agreements entered into by the Loan Trustee and American pursuant to
the Participation Agreements, in each case as the same may be amended,
supplemented or otherwise modified from time to time in accordance with
its terms.
11
"Indenture Event of Default" means, with respect to any
Indenture, any Event of Default (as such term is defined in such
Indenture) thereunder.
"Interest Drawing" has the meaning specified in Section
3.06(a).
"Interest Payment Date" means, with respect to any Liquidity
Facility, each date on which interest is due and payable under Section
3.07(c) or (d) of such Liquidity Facility on a Drawing thereunder.
"Interest Period" has the meaning specified in the Indentures.
"Investment Earnings" means investment earnings on funds on
deposit in the Trust Accounts net of losses and the Subordination
Agent's reasonable expenses in making such investments.
"Late Payment Rate" has the meaning specified in the Policy
Provider Agreement.
"Lending Office", with respect to any Liquidity Facility, has
the meaning specified in such Liquidity Facility.
"Lien" means any mortgage, pledge, lien, charge, claim,
encumbrance, lease, sublease or security interest of any kind.
"Liquidity Event of Default" with respect to any Liquidity
Facility, has the meaning specified in such Liquidity Facility.
"Liquidity Expenses" means with respect to the Liquidity
Facilities, 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 G Liquidity
Facility or the Class C Liquidity Facility, as applicable.
"Liquidity Guarantee" means, with respect to any Liquidity
Facility, if applicable, a guarantee executed and delivered by a
Liquidity Guarantor fully and unconditionally guaranteeing the
obligations of the Liquidity Provider under such Liquidity Facility.
"Liquidity Guarantee Event" means, with respect to any
Liquidity Guarantee, (i) such Liquidity Guarantee ceasing to be in full
force and effect or becoming invalid or unenforceable or (ii) the
Liquidity Guarantor under such Liquidity Guarantee denying its
liability thereunder.
"Liquidity Guarantor" means, with respect to any Liquidity
Facility, if applicable, any Person that shall execute and deliver a
Liquidity Guarantee and at the time of such execution and delivery
shall meet the ratings requirements applicable to a Replacement
Liquidity Provider.
12
"Liquidity Obligations" means all principal, interest, fees
and other amounts owing to the Liquidity Providers under the Liquidity
Facilities, the indemnity provisions of the Participation Agreements or
the Fee Letters.
"Liquidity Provider" means the Class G Liquidity Provider or
the Class C Liquidity Provider, as applicable.
"Loan Trustee" means, with respect to any Indenture, the bank,
trust company or other financial institution designated as loan trustee
thereunder, and any successor to such loan trustee.
"LP Incumbency Certificate" has the meaning specified in
Section 2.05(c).
"LP Representatives" has the meaning specified in Section
2.05(c).
"LTV Appraisals" has the meaning specified in Section
4.01(a)(iv).
"LTV Collateral Amount" of any Aircraft for any Class of
Certificates means, as of any Distribution Date, the lesser of (i) (x)
with respect to any Aircraft other than an Aircraft referred to in the
following clause (y), the LTV Ratio for such Class of Certificates
multiplied by the Appraised Current Market Value of such Aircraft or
(y) with respect to any such Aircraft that has suffered an Event of
Loss under and as defined in the relevant Indenture, the amount of the
insurance proceeds paid to the related Loan Trustee in respect thereof
to the extent then held by such Loan Trustee (and/or on deposit in the
Special Payments Account) or payable to such Loan Trustee in respect
thereof and (ii) the outstanding principal amount of the Equipment
Notes secured by such Aircraft after giving effect to any principal
payments of such Equipment Notes on or before such Distribution Date.
"LTV Ratio" means (i) for the Class G Certificates, 47.4%,
(ii) for the Class C Certificates, 65.1% and (iii) for the Class D
Certificates, 71.1%.
"Majority in Interest of Noteholders" has the meaning
specified in each Indenture.
"Make-Whole Amount" has the meaning specified in the
Indentures.
"Minimum Sale Price" means, with respect to any Aircraft or
the Equipment Notes issued in respect of such Aircraft, at any time,
the lesser of (a) 75% of the Appraised Current Market Value of such
Aircraft and (b) the aggregate outstanding principal amount of such
Equipment Notes, plus accrued and unpaid interest thereon.
"Moody's" means Xxxxx'x Investors Service, Inc.
"New Class C Certificates" has the meaning specified in
Exhibit A.
"New Class D Certificates" has the meaning specified in
Exhibit A.
"New Series" has the meaning specified in Exhibit A.
13
"Non-Controlling Party" means, at any time, any Trustee or
Liquidity Provider or the Policy Provider that is not the Controlling
Party at such time.
"Non-Extended Facility" has the meaning specified in Section
3.06(d).
"Non-Extension Drawing" has the meaning specified in Section
3.06(d).
"Non-Performing Equipment Note" means an Equipment Note issued
pursuant to an Indenture that is not a Performing Equipment Note;
provided, that, any Equipment Note discharged (in whole or in part)
without full performance in a bankruptcy proceeding shall be deemed to
be a Non-Performing Equipment Note (but, in the case of any such
partial discharge, only to the extent of such discharge).
"Notice of Avoided Payment" has the meaning specified in the
Policy.
"Notice of Nonpayment" has the meaning specified in the
Policy.
"Officer's Certificate" of any Person means a certification
signed by a Responsible Officer of such Person.
"Operative Agreements" means this Agreement, the Liquidity
Facilities, the Policy, the Policy Provider Agreement, the Liquidity
Guarantees, if any, the Policy Fee Letter, the Fee Letters, the
Indentures, the Trust Agreements, the Participation Agreements, the
Equipment Notes and the Certificates, together with all exhibits and
schedules included with any of the foregoing.
"Order" has the meaning specified in the Policy.
"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) all of the Certificates of such Class if
money in the full amount required to make the final
distribution with respect to such Class pursuant to Section
11.01 of such Trust Agreement has been theretofore deposited
with the related Trustee in trust for the Certificateholders
of the Certificates of such Class as provided in Section 4.01
of such Trust Agreement, pending distribution of such money to
such Certificateholders pursuant to payment of such final
distribution payment; and
(iii) Certificates of such Class in exchange for
or in lieu of which other Certificates of such Class have been
authenticated and delivered pursuant to such Trust Agreement;
14
provided, however, that in determining whether the holders of the
requisite Fractional Undivided Interest of such Certificates have given
any request, demand, authorization, direction, notice, consent or
waiver hereunder, any Certificates owned by any American Entity shall
be disregarded and deemed not to be Outstanding. 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. Notwithstanding the foregoing, (x) if American Entities
own 100% of the Certificates of each Class, such Certificates shall not
be so disregarded and (y) if any amount of such Certificates owned by
American Entities have been pledged in good faith, such Certificates
shall not be disregarded 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 an American Entity.
"Overdue Scheduled Payment" means any Scheduled Payment which
is not in fact received by the Subordination Agent within five days
after the Scheduled Payment Date relating thereto.
"Participation Agreement" means, with respect to each
Aircraft, the related Participation Agreement dated as of July 8, 2003
among American, each Trustee, the Subordination Agent and the Loan
Trustee, as the same may be amended, supplemented or otherwise modified
from time to time in accordance with its terms.
"Payee" has the meaning specified in Section 2.03(c).
"Performing Equipment Note" means an Equipment Note issued
pursuant to an Indenture with respect to which no payment default has
occurred and is continuing (without giving effect to any Acceleration);
provided that in the event of a bankruptcy proceeding in which American
is a debtor under the Bankruptcy Code, (i) any payment default
occurring before the date of the order of relief in such proceeding
will not be taken into account during the 60-day period under Section
1110(a)(2)(A) of the Bankruptcy Code (or such longer period (not to
exceed an additional 75 days) as may apply under Section 1110(b) of the
Bankruptcy Code) (the "Section 1110 Period"), (ii) any payment default
occurring after the date of the order of relief in such proceeding
shall not be taken into consideration if (x) on or before the expiry of
the Section 1110 Period American shall have entered into an agreement
of the kind described in Section 1110(a)(2)(A) of the Bankruptcy Code
with respect such Equipment Note and (y) such payment default is cured
under Section 1110(a)(2)(B) of the Bankruptcy Code before the later of
30 days after the date of such default or the expiration of the Section
1110 Period and (iii) any payment default occurring after the Section
1110 Period will not be taken into consideration if (x) on or before
the expiry of the Section 1110 Period American shall have entered into
an agreement of the kind described in Section 1110(a)(2)(A) of the
Bankruptcy Code with respect such Equipment Note and (y) such payment
default is cured before the end of the grace period, if any, set forth
in the related Indenture.
"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.
15
"Person" means any individual, corporation, limited liability
company, partnership, joint venture, association, joint-stock company,
trust, trustee, unincorporated organization or government or any agency
or political subdivision thereof.
"Policy" means the Ambac Certificate Guaranty Insurance Policy
No. AB0686BE, together with the Certificate Guaranty Insurance Policy
Endorsement attached thereto, issued as of the Closing Date, by the
Policy Provider in favor of the Subordination Agent, for the benefit of
the Class G Certificateholders, as amended, supplemented or otherwise
modified from time to time in accordance with its terms.
"Policy Account" means the Eligible Deposit Account
established by the Subordination Agent pursuant to Section 2.02(a)(iii)
into which amounts shall be deposited as referred to in Section 3.07.
"Policy Drawing" means any payment of a claim under the Policy
(but shall not include, for the avoidance of doubt, amounts payable
directly by the Policy Provider to any Liquidity Provider as
contemplated by Section 2.06(c) and the last paragraph of Section
3.07(c)).
"Policy Expenses" means all amounts (including amounts in
respect of expenses) owing to the Policy Provider under the Policy
Provider Agreement, the Policy Provider Indemnity and Inspection
Agreement or the Participation Agreements but excluding (i) any amounts
due under the Policy Fee Letter (including, without limitation, the
Policy Premium), (ii) the amount of any Policy Drawing or other
payments made directly by the Policy Provider to the Liquidity
Providers as contemplated in Section 2.06(c) and the last paragraph of
Section 3.07(c) and any interest accrued thereon, (iii) reimbursement
of and interest on the Liquidity Obligations paid to the Liquidity
Providers by the Policy Provider, (iv) any indemnity payments owed to
the Policy Provider, (v) any amounts that the Policy Provider is
entitled to receive by virtue of the subrogation rights of the Policy
Provider hereunder, including, without limitation, fees and expenses
incurred in connection with the enforcement of such rights and (vi) any
Excess Reimbursement Obligations.
"Policy Fee Letter" means the fee letter from the Policy
Provider to American and the Subordination Agent setting forth the
Policy Premium and certain other amounts payable in respect of the
Policy.
"Policy Premium" has the meaning specified in the Policy Fee
Letter.
"Policy Provider" means Ambac Assurance Corporation, a
Wisconsin domiciled stock insurance company, or any successor thereto,
as issuer of the Policy.
"Policy Provider Agreement" means the Insurance and Indemnity
Agreement, dated as of the date hereof, among the Subordination Agent,
the Class G Trustee, American and the Policy Provider, as amended,
supplemented or otherwise modified from time to time in accordance with
its terms.
16
"Policy Provider Default" means the occurrence of any of the
following events: (a) the Policy Provider fails to make a payment
required under the Policy in accordance with its terms and such failure
remains unremedied for two Business Days following the delivery of
Written Notice of such failure to the Policy Provider, (b) the Policy
Provider (i) files any petition or commences any case or proceeding
under any provisions of any federal or state law relating to
insolvency, bankruptcy, rehabilitation, liquidation or reorganization,
(ii) makes a general assignment for the benefit of its creditors or
(iii) has an order for relief entered against it under any federal or
state law relating to insolvency, bankruptcy, rehabilitation,
liquidation or reorganization that is final and nonappealable or (c) a
court of competent jurisdiction, the Wisconsin Department of Insurance
or another competent regulatory authority enters a final and
nonappealable order, judgment or decree (i) appointing a custodian,
trustee, agent or receiver for the Policy Provider or for all or any
material portion of its property or (ii) authorizing the taking of
possession by a custodian, trustee, agent or receiver of the Policy
Provider (or taking of possession of all or any material portion of the
Policy Provider's property).
"Policy Provider Election" has the meaning specified in
Section 3.07(c).
"Policy Provider Incumbency Certificate" has the meaning
assigned to such term in Section 2.05(d).
"Policy Provider Indemnity and Inspection Agreement" means,
collectively, the Policy Provider Indemnity and Inspection Agreements
between American and the Policy Provider, each dated the date hereof,
relating to the Aircraft, as amended, supplemented or otherwise
modified from time to time in accordance with their terms.
"Policy Provider Interest Amounts" means interest on (i)
unreimbursed Policy Drawings and (ii) amounts paid by the Policy
Provider to any Liquidity Provider pursuant to Section 2.06(c) or
3.07(c) (other than Policy Provider Interest Drawing Amounts), in each
case, accruing at the Late Payment Rate. For the avoidance of doubt,
interest on unreimbursed Policy Drawings shall be deemed to commence
accruing on the date on which such Policy Drawing is made.
"Policy Provider Interest Drawing Amount" means, in the event
the Class G Liquidity Provider has failed to honor its obligation to
make a payment on any Interest Drawing in respect of the Class G
Certificates, the aggregate amount of interest accrued on the portion
of any Policy Drawing made to cover the shortfall attributable to such
failure by the Class G Liquidity Provider, the amount of such interest
to be equal to the amount of interest that would have accrued on such
Interest Drawing if such Interest Drawing had been made at the interest
rate applicable to such Interest Drawing under the Class G Liquidity
Facility until such Policy Drawing has been repaid in full, up to a
maximum of three such Policy Drawings under the Policy.
"Policy Provider Obligations" means (i) all reimbursement and
other amounts, including fees and indemnities, due to the Policy
Provider under the Policy Provider Agreement and the Policy Fee Letter
(including, without limitation, Policy Drawings) to the extent not
included in the definition of Policy Expenses and (ii) interest on all
17
amounts due and unpaid to the Policy Provider under the Policy Provider
Agreement and Policy Fee Letter (including, without limitation,
interest on all due and unpaid premium, fees, expenses, and
indemnities), in each case accruing at the Late Payment Rate, but shall
not include (x) any Excess Reimbursement Obligations, (y) any Policy
Provider Interest Amounts or (z) any Policy Provider Interest Drawing
Amounts.
"Policy Provider Representatives" has the meaning specified in
Section 2.05(d).
"Pool Balance" means, with respect to the Certificates of any
Class, as of any date, (i) the original aggregate face amount of the
Certificates of such Class less (ii) the aggregate amount of all
distributions made as of such date in respect of such Certificates
other than distributions made in respect of interest or any Make-Whole
Amount payable in respect of the Equipment Notes or reimbursement of
any costs or expenses incurred in connection therewith. The Pool
Balance as of any Distribution Date with respect to each Class shall be
computed after giving effect to the payment of principal, if any, on
the Equipment Notes or other Trust Property held in the related Trust
and the distribution thereof to be made on such date and, with respect
to the Class G Certificates, any payments under the Policy made for the
benefit of the Class G Certificateholders (other than payments in
respect of the Class G Liquidity Facility or interest on the Class G
Certificates).
"Preference Amount" has the meaning specified in the Policy.
"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 distribute within 10 Business Days after the
applicable Distribution Date: (i) the outstanding Pool Balance of the
applicable Class of Certificates on the Final Legal Distribution Date
for such Class (unless, in the case of the Class G Certificates, the
Subordination Agent shall have made a drawing under the Policy, in an
aggregate amount sufficient to pay such outstanding Pool Balance, and
shall have distributed such amount to the Class G Trustee) or (ii)
interest scheduled for distribution on such Certificates on any
Distribution Date (unless, in the case of the Class G Certificates or
Class C Certificates, the Subordination Agent shall have made an
Interest Drawing, a withdrawal from the related Cash Collateral Account
or, in the case of the Class G Certificates, a drawing under the Policy
with respect thereto in an aggregate amount sufficient to pay such
interest and shall have distributed such amount to the Trustee entitled
thereto).
"Rating Agencies" means, collectively, at any time, Moody's
and S&P or if either S&P or Xxxxx'x is unable to rate the Certificates,
such other nationally recognized rating agency that has been requested
to rate the Certificates and that is then rating the Certificates. The
initial Rating Agencies will be Moody's and S&P.
"Ratings Confirmation" means, with respect to any action
proposed to be taken, a written confirmation from each of the Rating
Agencies (without regard to the Policy in the case of the Class G
Certificates) that such action would not result in (i) a reduction of
18
the rating for any Class of Certificates below the then current rating
for such Class of Certificates (without regard to the Policy in the
case of the Class G Certificates) or (ii) a withdrawal or suspension of
the rating of any Class of Certificates.
"Refunding" means a refunding of the Series C Equipment Notes,
Series D Equipment Notes and/or New Series (as defined in Exhibit A) of
Series D Equipment Notes in accordance with Exhibit A hereto.
"Register", with respect to any Trust, has the meaning
ascribed to such term in the Trust Agreement for such Trust.
"Regular Distribution Dates" means each January 9 and July 9,
commencing on January 9, 2004; provided, however, that, if any such day
shall not be a Business Day, the related distribution shall be made on
the next succeeding Business Day without additional interest.
"Replacement Liquidity Facility" means, for any Liquidity
Facility, an irrevocable revolving credit agreement (or agreements) in
substantially the form of the replaced Liquidity Facility, including
reinstatement provisions, or in such other form (which may include a
letter of credit, surety bond, financial insurance policy or guaranty)
as shall permit the Rating Agencies to issue a Ratings Confirmation
(before downgrading of the applicable ratings on the Certificates, if
any, as a result of the downgrading, if any, of the applicable
Liquidity Provider, or, if applicable, the downgrading of the Liquidity
Guarantor or the occurrence of a Liquidity Guarantee Event) in a face
amount (or in an aggregate face amount) equal to the applicable
Required Amount and issued by a Person (or Persons) (or whose
obligations are guaranteed by a Liquidity Guarantor) (i) having a
short-term issuer credit rating (with respect to S&P) and a short-term
unsecured debt rating (with respect to Moody's) that are equal to or
higher than the Threshold Rating specified in clause (a) of the
definition of Threshold Rating or (ii) if such Person (or Persons) or
such Liquidity Guarantor does not have such a rating from a given
Rating Agency, a long-term issuer credit rating (with respect to S&P)
or a long-term unsecured debt rating (with respect to Moody's) issued
by such Rating Agency that is equal to or higher than the Threshold
Rating specified in clause (b) of the definition of Threshold Rating.
Without limitation of the form that a Replacement Liquidity Facility
otherwise may have pursuant to the preceding sentence, a Replacement
Liquidity Facility for the Class G Certificates or Class C Certificates
may have a stated expiration date earlier than 15 days after the Final
Legal Distribution Date of such Class of Certificates so long as such
Replacement Liquidity Facility provides for a Non-Extension Drawing as
contemplated by Section 3.06(d) hereof.
"Replacement Liquidity Provider" means a Person who issues a
Replacement Liquidity Facility.
"Required Amount" means, with respect to the Liquidity
Facility or the Cash Collateral Account for any Class, for any day, the
sum of the aggregate amount of interest, calculated at the rate per
annum equal to the applicable Stated Interest Rate applicable to the
related Class of Certificates on the basis of a 360-day year comprised
of
19
twelve 30-day months, that would be distributable 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 distributions of principal on such Class of
Certificates. The Pool Balance for purposes of the definition of
Required Amount with respect to the Class G Liquidity Facility shall,
in the event of any Policy Provider Election, be deemed to be reduced
by an amount (if positive) by which (i) the outstanding principal
balance of the Series G Equipment Notes in respect of which such Policy
Provider Election has been made shall exceed (ii) the amount of any
Policy Drawings previously paid by the Policy Provider in respect of
principal on such Series G Equipment Notes.
"Responsible Officer" means (i) with respect to the
Subordination Agent and each of the Trustees, any officer in the
Corporate Trust Department or similar department of the Subordination
Agent or such Trustee, as the case may be, or any other officer
customarily performing functions similar to those performed by the
persons who at the time shall be such officers or to whom any corporate
trust matter is referred because of his knowledge of and familiarity
with a particular subject, (ii) with respect to a Liquidity Provider,
any authorized officer of such Liquidity Provider and (iii) with
respect to the Policy Provider, any authorized officer of the Policy
Provider.
"Scheduled Payment" means, with respect to any Equipment Note,
(i) any payment of principal or interest on such Equipment Note (other
than an Overdue Scheduled Payment) or (ii) any distribution in respect
of interest on such Equipment Note to the Certificateholders of
Certificates of the corresponding Class with funds drawn under the
Liquidity Facility for such Class or withdrawn from the Cash Collateral
Account for such Class or, in the case of the Class G Certificates,
drawn under the Policy, which payment in the case of clause (i) or
clause (ii) represents an installment of principal on such Equipment
Note at the stated maturity of such installment, or the payment of
regularly scheduled interest accrued on the unpaid principal amount of
such Equipment Note, or both; provided, however, that any payment of
principal, Make-Whole Amount, 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.
"Section 2.04(b) Fraction" has the meaning specified in
Section 2.04(b).
"Series C Equipment Notes" means the Series C Equipment Notes
issued pursuant to each Indenture by American 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 Series D Equipment Notes
issued pursuant to each Indenture by American and authenticated by the
Loan Trustee
20
thereunder, and any such Equipment Notes issued in exchange therefor or
replacement thereof pursuant to the terms of such Indenture.
"Series E Equipment Notes" means the equipment notes, if any,
issued pursuant to any Indenture by American and authenticated by the
Loan Trustee thereunder, and designated "Series E Equipment Notes"
thereunder, and any such equipment notes issued in exchange therefor or
replacement thereof pursuant to the terms of such Indenture.
"Series G Equipment Notes" means the Series G Equipment Notes
issued pursuant to each Indenture by American 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 (i) with respect to any
Special Payment, the Business Day chosen by the Subordination Agent
pursuant to Section 2.04(a) or Section 3.07(b) for the distribution of
such Special Payment in accordance with this Agreement, (ii) an
Election Distribution Date or (iii) each date designated as a Special
Distribution Date pursuant to Section 3.07(c) or Section 3.07(e).
"Special Payment" means any payment (other than a Scheduled
Payment or a distribution referred to in Section 2.03(c)) in respect
of, or any proceeds of, any Equipment Note or Collateral (as defined in
each Indenture).
"Special Payments Account" means the Eligible Deposit Account
created pursuant to Section 2.02(a)(ii) as a sub-account to the
Collection Account.
"S&P" means Standard & Poor's Ratings Services, a division of
The XxXxxx-Xxxx Companies, Inc.
"Stated Amount", with respect to any Liquidity Facility, means
the Maximum Commitment (as defined in such Liquidity Facility).
"Stated Expiration Date" has the meaning specified in Section
3.06(d).
"Stated Interest Rate" means (i) with respect to the Class G
Certificates, 3.857% per annum, (ii) with respect to the Class C
Certificates, 8.0% per annum and (iii) with respect to the Class D
Certificates, 12.0% per annum.
"Subordination Agent" has the meaning specified in the
introductory paragraph to this Agreement.
"Subordination Agent Incumbency Certificate" has the meaning
specified in Section 2.05(a).
"Subordination Agent Representatives" has the meaning
specified in Section 2.05(a).
21
"Tax" and "Taxes" means all governmental fees (including,
without limitation, license, filing and registration fees) and all
taxes (including, without limitation, franchise, excise, stamp, value
added, income, gross receipts, sales, use and property taxes),
withholdings, assessments, levies, imposts, duties or charges, of any
nature whatsoever, together with any related penalties, fines,
additions to tax or interest thereon imposed, withheld, levied or
assessed by any country, taxing authority or governmental subdivision
thereof or therein or by any international authority, including any
taxes imposed on any Person as a result of such Person being required
to collect and pay over withholding taxes.
"Termination Notice", with respect to any Liquidity Facility,
has the meaning specified in such Liquidity Facility.
"Threshold Rating" means (a) a short-term unsecured debt
rating of P-1 in the case of Moody's and a short-term issuer credit
rating of A-1 in the case of S&P, and (b) in the case of any Person who
does not have a short-term unsecured debt rating from Moody's or a
short-term issuer credit rating from S&P, then in lieu of such rating
from such Rating Agency or Rating Agencies, a long-term unsecured debt
rating of A1 in the case of Moody's and a long-term issuer credit
rating of A+ in the case of S&P.
"Treasury Regulations" means regulations, including proposed
or temporary regulations, promulgated under the Code. References herein
to specific provisions of proposed or temporary regulations shall
include analogous provisions of final Treasury Regulations or other
successor Treasury Regulations.
"Triggering Event" means (x) the occurrence of an Indenture
Event of Default under all of the Indentures resulting in a PTC Event
of Default with respect to the most senior Class of Certificates then
Outstanding, (y) the Acceleration of all of the outstanding Equipment
Notes or (z) the occurrence of an American Bankruptcy Event.
"Trust" means any of the Class G Trust, the Class C Trust or
the Class D Trust.
"Trust Accounts" has the meaning specified in Section 2.02(a).
"Trust Agreement" means any of the Class G Trust Agreement,
the Class C Trust Agreement or the Class D Trust Agreement.
"Trust Property", with respect to any Trust, has the meaning
specified in the Trust Agreement for such Trust.
"Trust Supplement" means an agreement supplemental to the
Basic Agreement pursuant to which (i) a separate trust is created for
the benefit of the holders of Certificates of a series, (ii) the
issuance of the Certificates of a series representing fractional
undivided interests in such trust is authorized and (iii) the terms of
the Certificates of such series are established, as such agreement may
from time to time be supplemented, amended or otherwise modified.
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"Trustee" means any of the Class G Trustee, the Class C
Trustee or the Class D Trustee.
"Trustee Incumbency Certificate" has the meaning specified in
Section 2.05(b).
"Trustee Representatives" has the meaning specified in Section
2.05(b).
"Underwriters" means the several Underwriters listed as such
in the Underwriting Agreement.
"Underwriting Agreement" means the Underwriting Agreement
dated June 30, 2003, among the Underwriters and American, relating to
the purchase of the Class G Certificates by the Underwriters, as the
same may be amended, supplemented or otherwise modified from time to
time in accordance with its terms.
"United States" means the United States of America.
"U.S. Bank" has the meaning specified in the introductory
paragraph to this Agreement.
"Withdrawal Notice" has the meaning specified in Section
3.06(d).
"Written Notice" means, from the Subordination Agent, any
Trustee, any Liquidity Provider or the Policy Provider, a written
instrument executed by the Designated Representative of such Person. An
invoice delivered by any Liquidity Provider pursuant to Section 3.01 in
accordance with its normal invoicing procedures shall constitute
Written Notice under such Section.
ARTICLE II
TRUST ACCOUNTS; CONTROLLING PARTY
Section 2.01 Agreement to Terms of Subordination; Payments
from Monies Received Only. (a) Each Trustee (i) hereby acknowledges and agrees
to the terms of subordination and distribution set forth in this Agreement in
respect of each Class of Certificates, (ii) agrees to enforce such provisions
and cause all payments in respect of the Equipment Notes, the Liquidity
Facilities and the Policy to be applied in accordance with the terms of this
Agreement and (iii) with respect to payments in respect of the Equipment Notes
received by it, agrees to allocate such payments first, to interest
distributable in respect of the Certificates of the related Class, second, to
Make-Whole Amount, if any, distributable in respect of the Certificates of the
related Class, and third, to principal distributable in respect of the
Certificates of the related Class. In addition, each Trustee hereby agrees to
cause the Equipment Notes purchased by the related Trust to be registered in the
name of the Subordination Agent or its nominee, as agent and trustee for such
Trustee, to be held in trust by the Subordination Agent solely for the purpose
of facilitating the enforcement of the subordination and other provisions of
this Agreement.
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(b) Except as otherwise expressly provided in the next
succeeding sentence of this Section 2.01(b), all payments to be made by the
Subordination Agent hereunder shall be made only from amounts received by it
that constitute Scheduled Payments, Special Payments or other payments under the
Policy Provider Indemnity and Inspection Agreement, the Operative Agreements,
including payments under Section 4.02 of the Participation Agreements and
Section 2.14 of the Indentures, 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 each Certificateholder, by its
acceptance of a Certificate, the Policy Provider, by entering into the Policy
Provider Agreement, and each Liquidity Provider, by entering into its respective
Liquidity Facility, has agreed to look solely to such amounts to the extent
available for distribution to it as provided in this Agreement or the applicable
Trust Agreement, as the case may be, and that none of the Trustees, Loan
Trustees or 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, the Policy Provider Agreement, the Policy 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 herein
and in each Trust Agreement or (in the case of the Loan Trustees) as expressly
provided in any Operative Agreement.
Notwithstanding anything to the contrary in this Agreement and
in the other Operative Agreements, the Certificates do not represent
indebtedness of the related Trust, and references in this Agreement and the
Operative Agreements to accrued interest or principal amounts payable on the
Certificates of any Class are included only for computational purposes. For
purposes of such computations, the Certificates of any Class shall be deemed to
be comprised of interest and principal components, with the principal component
deemed to be the Pool Balance, and the interest component deemed to equal
interest accruing at the Stated Interest Rate for such Class of Certificates
from (i) the later of (1) the date of the issuance thereof and (2) the most
recent but preceding Distribution Date to which such interest was distributed
to, but excluding, (ii) the applicable date of determination, such interest to
be considered payable in arrears and to be calculated on the basis of a 360-day
year comprised of twelve 30-day months.
Section 2.02 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, the Liquidity Providers and the
Policy Provider, (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, the Liquidity Providers and the Policy
Provider and (iii) a Policy 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 Class G Trustee and the Class G Certificateholders.
The Subordination Agent shall establish and maintain the Cash Collateral
Accounts pursuant to and under the circumstances set forth in Section 3.06(f).
Upon such establishment and maintenance under Section 3.06(f), the Cash
Collateral Accounts shall, together with the Collection Account and the Policy
Account, constitute the "Trust Accounts" hereunder. Without limiting the
foregoing, all monies credited to the Trust Accounts shall be, and shall remain,
the property of the relevant Trust(s).
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(b) Funds on deposit in the Trust Accounts shall be
invested and reinvested by the Subordination Agent in Eligible Investments
selected by American or its designated representative if such investments are
reasonably available and have maturities no later than the earlier of (i) 90
days following the date of such investment and (ii) the Business Day immediately
preceding the Regular Distribution Date or the date of the related distribution
pursuant to Section 2.04, as the case may be, next following the date of such
investment; provided, however, that, following the making of a Downgrade Drawing
or a Non-Extension Drawing under any Liquidity Facility, the Subordination Agent
shall invest and reinvest the amounts in the applicable Cash Collateral Account
in Eligible Investments pursuant to the written instructions of American, and
provided further, however, that upon the occurrence and during the continuation
of a Triggering Event, the Subordination Agent shall invest and reinvest such
amounts in Eligible Investments 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 amounts
on deposit in the Cash Collateral Accounts as provided in Section 3.06(f)), any
Investment Earnings shall be deposited in the Collection Account when received
by the Subordination Agent and shall be applied by the Subordination Agent in
the same manner as the other amounts on deposit in the Collection Account are to
be applied. The Subordination Agent's reasonable fees and expenses in making
such investments and any losses incurred in such investments shall be charged
against the principal amount invested. 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 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, the Liquidity Providers and the Policy Provider, 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 the Policy Provider and
each Rating Agency may consent) establish a new Collection Account, Special
Payments Account, Cash Collateral Account or Policy 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, Cash
Collateral Account or Policy Account, as the case may be. So long as the
Subordination Agent is an Eligible Institution, the Trust Accounts shall be
maintained with it as Eligible Deposit Accounts.
Section 2.03 Deposits to the Collection Account and Special
Payments Account; Certain Distributions. (a) The Subordination Agent shall, on
each day when one or more Scheduled Payments (other than any Scheduled Payment
which by the express terms hereof is to be deposited to the Policy Account or a
Cash Collateral Account) are made to the Subordination
25
Agent as holder of the Equipment Notes, deposit in the Collection Account the
aggregate amount of such Scheduled Payments.
(b) The Subordination Agent shall, on each day 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.
(c) In the event that a Loan Trustee distributes to the
Subordination Agent pursuant to Section 3.05 of any Indenture or clause "first"
of Section 3.04 of any Indenture any amounts payable under Section 2.14 of any
Indenture, the Subordination Agent shall promptly deposit such amounts in the
Collection Account. The Subordination Agent will distribute promptly upon
receipt thereof (or in the case of any such payment, compensation or
reimbursement in respect of the Subordination Agent, will retain) (i) any
indemnity payment received by it from American in respect of any Trustee or the
Subordination Agent (collectively, the "Payees") and (ii) any compensation or
reimbursement received by it from American or the Loan Trustee under any
Operative Agreement in respect of any Payee, in any such case directly to the
Payee entitled thereto, provided that if such Payee has previously received from
the Collection Account such payment, compensation or reimbursement, then the
Subordination Agent shall deposit such amount in the Collection Account.
Section 2.04 Distributions of Special Payments. (a) Notice of
Special Payment. 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, the Liquidity Providers and the Policy Provider. The Subordination
Agent shall promptly calculate the amount of the prepayment (including upon
Acceleration), redemption or purchase of Equipment Notes or the amount of any
Overdue Scheduled Payment, or the proceeds of Equipment Notes or Collateral, as
the case may be, comprising such Special Payment under the applicable Indenture
or Indentures and shall promptly send to each Trustee, the Policy Provider and
the Liquidity Providers 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, which shall be the first Business Day that follows the later to
occur of (x) the 15th day after the date of such Written Notice or (y) the date
the Subordination Agent has received or expects to receive such Special Payment.
Amounts on deposit in the Special Payments Account shall be distributed in
accordance with Sections 2.04(b) and 2.04(c) hereof, as applicable.
(b) Redemptions, Purchases and Prepayments of Equipment
Notes. (i) So long as no Triggering Event shall have occurred (whether or not
continuing), subject to Section 2.04(b)(iii), the Subordination Agent shall make
distributions pursuant to this Section 2.04(b) of amounts on deposit in the
Special Payments Account on account of the redemption, purchase or prepayment of
all of the Equipment Notes issued pursuant to an Indenture on the Special
Distribution Date for such Special Payment in the following order of priority:
first, such amount as shall be required to pay (A) all accrued
and unpaid Liquidity Expenses and Policy Expenses then in arrears plus
(B) the product of (x) the aggregate amount of all accrued and unpaid
Liquidity Expenses and Policy Expenses not in arrears to such Special
Distribution Date multiplied by (y) a fraction, the numerator of which
is
26
the aggregate outstanding principal amount of Equipment Notes being
redeemed, purchased or prepaid on such Special Distribution Date and
the denominator of which is the aggregate outstanding principal amount
of all Equipment Notes (the "Section 2.04(b) Fraction"), shall be
distributed to the applicable Liquidity Provider and the Policy
Provider, first, in satisfaction of any past due amounts, and then, in
satisfaction of the accrued amounts, in each case, pro rata on the
basis of the amount of Liquidity Expenses owed to each Liquidity
Provider and Policy Expenses owed to the Policy Provider;
second, such amount as shall be required to pay (i) (A) all
accrued and unpaid interest (including interest accrued and unpaid on
any Interest Drawing or any Applied Provider Advance (as defined in the
respective Liquidity Facility)) then in arrears on all Liquidity
Obligations (at the rate provided in the applicable Liquidity Facility)
plus (B) 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, determined
after giving effect to payments made by the Policy Provider to each
Liquidity Provider, if any, in respect of interest on Drawings under
the Liquidity Facilities), (ii) all accrued and unpaid Policy Provider
Interest Drawing Amounts then in arrears plus (B) the aggregate amount
of all accrued and unpaid Policy Provider Interest Drawing Amounts not
in arrears to such Special Distribution Date and (iii) if the Policy
Provider has paid to each Liquidity Provider all outstanding Drawings
and interest owing to such Liquidity Provider under its Liquidity
Facility pursuant to Section 2.06(c), the amount of such payment made
to the Liquidity Providers attributable to such interest accrued on
such Drawings, shall be distributed in the case of clause (i) above to
the respective Liquidity Provider and in the case of clauses (ii) and
(iii) above, to the Policy Provider pro rata (without duplication) on
the basis of the amounts owing to each under this clause "second";
third, such amount as shall be required (A) if any Cash
Collateral Account has been previously funded as provided in Section
3.06(f), to fund such Cash Collateral Account up to the applicable
Required Amount shall be deposited in such Cash Collateral Account, (B)
if any 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, to deposit into the related Cash Collateral Account
an amount equal to the applicable Required Amount shall be deposited in
such Cash Collateral Account, (C) if 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 any unreimbursed Interest Drawings under
such Liquidity Facility shall be distributed to such Liquidity
Provider, in each case pro rata with any amount distributable pursuant
to subclause (D) of this clause "third" on the basis of the amount of
unreimbursed Interest Drawings and the amount of unreimbursed Policy
Provider Obligations payable to the Policy Provider under subclause (D)
of this clause "third" and (D) if the Policy Provider has paid to each
Liquidity Provider all outstanding Drawings and interest thereon owing
to such Liquidity Provider under its Liquidity Facility pursuant to
Section 2.06(c), to reimburse the Policy Provider for the principal
amount of such payment made to the Liquidity Providers, but only after
giving effect to the application of amounts, if any, under subclause
(A) or (B) of this clause "third" and if any amount shall be
distributable
27
under subclause (C) of this clause "third", pro rata (without
duplication) with any amount distributable pursuant to such subclause
(C), on the basis of the amount of unreimbursed Interest Drawings and
the amount of such unreimbursed Policy Provider Obligations payable to
the Policy Provider under this clause "third";
fourth, if, with respect to any Liquidity Facility, any
amounts are to be distributed pursuant to either subclause (A) or (B)
of clause "third" above, then the related Liquidity Provider shall be
paid the excess of (x) the aggregate outstanding amount of unreimbursed
Advances under such Liquidity Facility (whether or not then due, and
after giving effect to any payments to be made under Section
3.06(f)(ii)), over (y) the Required Amount for the relevant Class, pro
rata, on the basis of such amounts in respect of each Liquidity
Facility;
fifth, if any Class G Certificates are Outstanding on such
Special Distribution Date, such amount as shall be required to pay in
full Expected Distributions to the holders of Class G Certificates on
such Special Distribution Date shall be distributed to the Class G
Trustee;
sixth, such amount as shall be required to pay all Policy
Provider Obligations then due (with any amount due under the Policy Fee
Letter calculated to equal the product of the Section 2.04(b) Fraction
and the amount due under the Policy Fee Letter) shall be distributed to
the Policy Provider;
seventh, such amount as shall be required to pay Excess
Reimbursement Obligations and Policy Provider Interest Amounts, shall
be distributed to the Policy Provider;
eighth, if any Class C Certificates are Outstanding on such
Special Distribution Date, 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, provided, however, that if all of the Class C Certificates
have been sold by the initial holder thereof to one or more Persons
that are not an American Entity and the sale or sales of such Class C
Certificates to such Person or Persons occurred prior to the occurrence
of an Indenture Event of Default under any Indenture, the Expected
Distributions on the Class C Certificates shall be distributed
immediately prior to the payment in clause "seventh" above;
ninth, if any Class D Certificates are Outstanding on such
Special Distribution Date, such amount as shall be required to pay in
full Expected Distributions to the holders of Class D Certificates on
such Special Distribution Date shall be distributed to the Class D
Trustee;
tenth, if the Class E Certificates have been issued and any
Class E Certificates are Outstanding on such Special Distribution Date,
such amount as shall be required to pay in full Expected Distributions
to holders of Class E Certificates on such Special Distribution Date
shall be distributed to the Class E Trustee; and
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eleventh, the balance, if any, of such Special Payment shall
be deposited in the Collection Account for distribution in accordance
with Section 3.02 hereof.
For the purposes of this Section 2.04(b)(i), clause (x) of the
definition of "Expected Distributions" shall be deemed to read as
follows: "(x) accrued, due and unpaid interest in respect of such
Certificates, together with (without duplication) accrued and unpaid
interest in respect of a portion of such Certificates equal to the
outstanding principal amount of Equipment Notes being redeemed,
purchased or prepaid (immediately prior to such redemption, purchase or
prepayment)".
(ii) Upon the occurrence of a Triggering Event (whether or
not continuing), the Subordination Agent shall make distributions pursuant to
this Section 2.04(b) of amounts on deposit in the Special Payments Account on
account of the redemption, purchase or prepayment of the Equipment Notes issued
pursuant to an Indenture on the Special Distribution Date for such Special
Payment in accordance with Section 3.03.
(iii) Notwithstanding the provisions of Section 2.04(b)(i),
whether or not a Triggering Event shall have occurred, the Subordination Agent
shall make distributions of amounts deposited in the Special Payments Account
constituting proceeds from the exercise of remedies under an Indenture after the
occurrence of an Indenture Event of Default thereunder (including, without
limitation, the sale of any Equipment Notes) in the order of priority provided
in Section 3.03 on the Special Distribution Date for such Special Payment.
(c) Other Special Payments. Any amounts on deposit in the
Special Payments Account other than in respect of amounts to be distributed
pursuant to Section 2.04(b) shall be distributed on the Special Distribution
Date therefor in accordance with Article III.
(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 2.04(b) or Section 2.04(c) shall be invested in
accordance with Section 2.02(b). Investment Earnings on such investments shall
be distributed in accordance with Section 2.04(b) or Section 2.04(c), as the
case may be.
Section 2.05 Designated Representatives. (a) With the delivery
of this Agreement, the Subordination Agent shall furnish to the Liquidity
Providers, the Policy Provider and each Trustee, and from time to time
thereafter may furnish to the Liquidity Providers, the Policy Provider and each
Trustee, at the Subordination Agent's discretion, or upon a Liquidity
Provider's, the Policy Provider's or any 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
the Liquidity Providers, the Policy Provider and each 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.
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(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 (with respect to each such Trustee,
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 (with respect to
each 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 from a Trustee, it shall be
entitled to rely on the last Trustee Incumbency Certificate with respect to such
Trustee 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 a Responsible Officer of such Liquidity Provider
certifying as to the incumbency and specimen signatures of the officers of such
Liquidity Provider and the attorney-in-fact and agents of such Liquidity
Provider (the "LP Representatives") authorized to give Written Notices on behalf
of such Liquidity Provider hereunder. Until the Subordination Agent receives a
subsequent LP Incumbency Certificate from a Liquidity Provider, it shall be
entitled to rely on the last LP Incumbency Certificate with respect to such
Liquidity Provider delivered to it hereunder.
(d) With the delivery of this Agreement, the Policy
Provider shall furnish to the Subordination Agent, and from time to time
thereafter may furnish to the Subordination Agent, at the Policy 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 (a "Policy
Provider Incumbency Certificate") of a Responsible Officer of the Policy
Provider certifying as to the incumbency and specimen signatures of any officer,
attorney-in-fact, agent or other designated representative of the Policy
Provider (in each case, the "Policy Provider Representatives" and, together with
the Subordination Agent Representatives, the Trustee Representatives and the LP
Representatives, the "Designated Representatives") authorized to give Written
Notices on behalf of the Policy Provider hereunder. Until the Subordination
Agent receives a subsequent Policy Provider Incumbency Certificate, it shall be
entitled to rely on the last Policy Provider Incumbency Certificate delivered to
it hereunder.
Section 2.06 Controlling Party. (a) The Trustees, the
Liquidity Providers and the Policy Provider hereby agree that, subject to
Section 8.01(b), with respect to any Indenture at any given time, the Loan
Trustee thereunder will be directed in taking, or refraining from taking, any
action under such Indenture or with respect to the Equipment Notes issued
thereunder, including exercising remedies thereunder (including Accelerating the
Equipment Notes issued thereunder or foreclosing the Lien created thereunder on
the Aircraft securing such Equipment Notes), by the Subordination Agent as
directed by the Controlling Party.
(b) Subject to paragraph (c) below, at any time prior to
the time that Final Distributions have been fully paid to the holders of the
Class G Certificates and/or at any time
30
when any obligations payable to the Policy Provider hereunder remain
outstanding, so long as no Policy Provider Default has occurred and is
continuing, the Policy Provider shall be the Controlling Party. At any other
time the Controlling Party shall be: (i) if Final Distributions have not been
fully paid to the holders of the Class G Certificates, the Class G Trustee; (ii)
if Final Distributions have been fully paid to the holders of Class G
Certificates, but not to the holders of the Class C Certificates, the Class C
Trustee; and (iii) if Final Distributions have been fully paid to the holders of
the Class G Certificates and 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, at any time after 18
months from the earliest to occur of (i) the date on which the entire Available
Amount under any Liquidity Facility shall have been drawn (for any reason other
than a Downgrade Drawing or a Non-Extension Drawing) and remain unreimbursed,
(ii) the date on which the entire amount of any Downgrade Drawing or
Non-Extension Drawing under any Liquidity Facility shall have become and remain
"Applied Downgrade Advances" or "Applied Non-Extension Advances" or has been
converted into a Final Drawing, as the case may be, under and as defined in such
Liquidity Facility and (iii) the date on which all Equipment Notes under all of
the Indentures shall have been Accelerated (provided that in the event of a
bankruptcy proceeding under the Bankruptcy Code in which American is a debtor,
any amounts payable in respect of Equipment Notes which have become immediately
due and payable by declaration or otherwise shall not be considered Accelerated
for purposes of this subclause (iii) until the expiration of the 60-day period
under Section 1110(a)(2)(A) of the Bankruptcy Code or such longer period as may
apply under Section 1110(a)(2)(B) or Section 1110(b) of the Bankruptcy Code),
the Liquidity Provider with the greater amount of unreimbursed Liquidity
Obligations owing to it (unless it has defaulted in its obligation to make any
advance under its Liquidity Facility) (the "Eligible Provider") shall have the
right to elect, by Written Notice to the Subordination Agent, the Policy
Provider and each of the Trustees given at any time on or after the fifteenth
Business Day prior to the end of such 18-month period, to become the Controlling
Party hereunder with respect to any Indenture at any time from and including the
later of (x) the last day of such 18-month period and (y) the 15th Business Day
after the date of receipt by the Policy Provider of such Written Notice,
provided, however, that if, within 15 Business Days after its receipt of any
such Written Notice from such Liquidity Provider, the Policy Provider pays to
each Liquidity Provider an amount equal to all outstanding Drawings owing to
such Liquidity Provider in respect of its Liquidity Facility, and interest
accrued thereon to such date, the Policy Provider shall remain the Controlling
Party so long as (x) no Policy Provider Default has occurred and is continuing
and (y) the Policy Provider
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thereafter pays to each Liquidity Provider an amount equal to all subsequent
Drawings, together with accrued interest thereon, under its Liquidity Facility
as and when such Drawings and such interest would otherwise be required to be
paid under such Liquidity Facility (which payments shall be applied by such
Liquidity Provider as repayments of such Drawings and accrued interest thereon),
provided further, however, that upon any Policy Provider Default or the failure
to comply with clause (y) of this Section 2.06(c) the Eligible Provider, if it
so elects and if Liquidity Obligations owing to it remain outstanding or, if it
does not so elect or if no Liquidity Obligations owing to it remain outstanding,
the Person determined to be the Controlling Party in accordance with Section
2.06(b), shall become the Controlling Party.
(d) The exercise of remedies by the Controlling Party
under this Agreement shall be expressly limited by Section 4.01(a)(ii) and
Section 8.01(b).
(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.
(f) Notwithstanding anything contained herein, neither
the Controlling Party nor the Subordination Agent shall be authorized or
empowered to do anything that would cause any Trust to fail to qualify as a
"grantor trust" for federal income tax purposes.
ARTICLE III
RECEIPT, DISTRIBUTION AND APPLICATION OF AMOUNTS RECEIVED
Section 3.01 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
2.04(b), 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 G Certificates, if any are
then Outstanding, the Class G Trustee shall separately set forth the
amounts to be paid in accordance with clause "fifth" of Section 3.02 or
2.04(b), as the case may be;
(ii) With respect to the Class C Certificates, if any are
then Outstanding, the Class C Trustee shall separately set forth the
amounts to be paid in accordance with clause "eighth" of Section 3.02
or 2.04(b), as the case may be;
(iii) With respect to the Class D Certificates, if any are
then Outstanding, the Class D Trustee shall separately set forth the
amounts to be paid in accordance with clause "ninth" of Section 3.02 or
2.04(b), as the case may be;
(iv) With respect to each Liquidity Facility, the
Liquidity Provider thereunder shall separately set forth the amounts to
be paid to it in accordance with clauses "first", "second", "third" and
"fourth" of Section 3.02 or 2.04(b), as the case may be;
32
(v) The Policy Provider shall set forth the amounts to be
paid to it in accordance with clauses "first", "second", "third",
"sixth" and "seventh" of Section 2.04(b) or Section 3.02, as the case
may be; and
(vi) Each Trustee shall set forth the amounts to be paid
in accordance with clause "eleventh" of Section 3.02.
The notices required under this Section 3.01(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 redemption, purchase or prepayment of the
Equipment Notes, such schedule or similar document is to remain in effect until
any substitute notice or amendment shall be given to the Subordination Agent by
the party providing such notice.
(b) Following the occurrence of a Triggering Event, the
Subordination Agent shall request the following information from the following
Persons, and may from time to time thereafter again request such information
from such Persons, and each of the following Persons shall, within five Business
Days of such 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 G Certificates, if any are
then Outstanding, the Class G Trustee shall separately set forth the
amounts to be paid in accordance with clauses "first" (to reimburse
payments made by the Class G Certificateholders pursuant to subclause
(iv) of clause "first" of Section 3.03), "sixth" (to reimburse payments
made by the Class G Certificateholders pursuant to subclause (iii) of
clause "sixth" of Section 3.03) and "seventh" of Section 3.03;
(ii) With respect to the Class C Certificates, if any are
then Outstanding, 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
(iv) of clause "first" of Section 3.03), "sixth" (to reimburse payments
made by the Class C Certificateholders pursuant to subclause (iii) of
clause "sixth" of Section 3.03) and "tenth" of Section 3.03;
(iii) With respect to the Class D Certificates, if any are
then Outstanding, 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
(iv) of clause "first" of Section 3.03), "sixth" (to reimburse payments
made by the Class D Certificateholders pursuant to subclause (iii) of
clause "sixth" of Section 3.03) and "eleventh" of Section 3.03;
(iv) With respect to each Liquidity Facility, the
Liquidity Provider thereunder shall separately set forth the amounts to
be paid to it in accordance with subclause (iv) of clause "first" of
Section 3.03 and clauses "second", "third", "fourth" and "fifth" of
Section 3.03;
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(v) Each Trustee shall set forth the amounts to be paid
in accordance with subclause (ii) of clause "first" of Section 3.03 and
subclause (ii) of clause "sixth" of Section 3.03; and
(vi) The Policy Provider shall separately set forth
amounts to be paid to it in accordance with clauses "first", "second",
"third", "fourth", "eighth" and "ninth" of Section 3.03.
(c) At such time as a Trustee, a Liquidity Provider or
the Policy 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 2.04, 3.02, 3.03 or 3.07, as applicable, and, in the case of a Liquidity
Provider or the Policy Provider, its commitment under its Liquidity Facility or
the Policy, as the case may be, shall have terminated or expired, such Person
shall, by a Written Notice, so inform the Subordination Agent and each other
party to this Agreement.
(d) As provided in Section 6.05, the Subordination Agent
shall be fully protected in relying on any of the information set forth in a
Written Notice provided by any Trustee, any Liquidity Provider or the Policy
Provider pursuant to Sections 3.01(a), 3.01 (b) and 3.01(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 Sections.
(e) Any Written Notice delivered by a Trustee, a
Liquidity Provider or the Policy Provider, as applicable, pursuant to Section
3.01(a), 3.01(b) or 3.01(c), if made prior to 10:00 A.M. (New York City time) on
a given date that is a Business Day shall be effective on the date delivered (or
if delivered later on such date or on a day that is not a Business Day 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, except as set forth in the Policy, 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 Section 3.01(a) or Section
3.01(b) that is required to enable the Subordination Agent to make a
distribution to such Person pursuant to Section 2.04(b), Section 3.02 or Section
3.03, 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 "eleventh" of Section 2.04(b), clauses "first"
through "twelfth" of Section 3.02 and clauses "first" through "fourteenth" of
Section 3.03 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, on the terms hereof (including Section 2.02(b)) until
the Subordination Agent shall receive all necessary information to enable it to
distribute any funds so withheld, and upon receipt of the information necessary
to distribute any funds so withheld, the Subordination Agent shall distribute
such funds.
(g) On such dates (but not more frequently than monthly)
as any Liquidity Provider, the Policy 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
34
statement (x) setting forth the Pool Balance of the Class G Certificates and (y)
reflecting all amounts on deposit with the Subordination Agent pursuant to
Section 3.01(f).
Section 3.02 Distribution of Amounts on Deposit in the
Collection Account. Except as otherwise provided in Sections 2.04, 3.01(f),
3.03, 3.04, 3.06(b), 3.06(k) and 3.07, amounts on deposit in the Collection
Account (or, in the case of any amount described in Section 2.04(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 2.04(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 3.01(a):
first, such amount as shall be required to pay in full (i) all
accrued and unpaid Liquidity Expenses owed to each Liquidity Provider
and (ii) all accrued and unpaid Policy Expenses owed to the Policy
Provider shall be distributed to the applicable Liquidity Provider and
the Policy Provider pro rata on the basis of the amount of Liquidity
Expenses owed to each Liquidity Provider and Policy Expenses owed to
the Policy Provider;
second, such amount as shall be required to pay in full (i)
accrued and unpaid interest on the Liquidity Obligations (at the rate
provided in the applicable Liquidity Facility), (ii) the aggregate
amount of all accrued and unpaid Policy Provider Interest Drawing
Amounts and (iii) if the Policy Provider has paid to each Liquidity
Provider all outstanding Drawings and interest owing to such Liquidity
Provider under its Liquidity Facility pursuant to Section 2.06(c), the
amount of such payment made to the Liquidity Providers attributable to
such interest accrued on such Drawings, shall be distributed, in the
case of clause (i) above to the respective Liquidity Provider and in
the case of clauses (ii) and (iii) above to the Policy Provider pro
rata (without duplication) on the basis of the amounts owing to each
under this clause "second";
third, such amount as shall be required (A) if any Cash
Collateral Account has been previously funded as provided in Section
3.06(f), to fund such Cash Collateral Account up to the applicable
Required Amount shall be deposited in such Cash Collateral Account, (B)
if any 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, to deposit into the related Cash Collateral Account
an amount equal to the applicable Required Amount shall be deposited in
the Cash Collateral Account, (C) if 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, shall be distributed to such Liquidity Provider, in
each case, pro rata with any amount distributable pursuant to subclause
(D) of this clause "third" on the basis of the amount of unreimbursed
Interest Drawings and the amount of the unreimbursed Policy Provider
Obligations payable to the Policy Provider under subclause (D) of this
clause "third" and (D) if the Policy Provider has paid to each
Liquidity Provider all outstanding Drawings and interest thereon owing
to such Liquidity Provider under its Liquidity Facility pursuant to
Section 2.06(c), to reimburse the Policy Provider for the principal
amount of such payment made to the
35
Liquidity Providers, shall be distributed to the Policy Provider but
only after giving effect to the application of amounts, if any, under
subclause (A) or (B) of this clause "third" and if any amount shall be
distributable under subclause (C) of this clause "third" pro rata
(without duplication) with any amount distributable pursuant to such
subclause (C), on the basis of the amount of unreimbursed Interest
Drawings and the amount of such unreimbursed Policy Provider
Obligations payable to the Policy Provider under this clause "third";
fourth, if, with respect to any Liquidity Facility, any
amounts are to be distributed pursuant to either subclause (A) or (B)
of clause "third" above, then the related Liquidity Provider shall be
paid the excess of (x) the aggregate outstanding amount of unreimbursed
Advances under such Liquidity Facility (whether or not then due, and
after giving effect to any payments to be made under Section
3.06(f)(ii)), over (y) the Required Amount for the relevant Class, pro
rata, on the basis of such amounts in respect of each Liquidity
Facility;
fifth, if any Class G Certificates are Outstanding on such
Distribution Date, such amount as shall be required to pay in full
Expected Distributions to the holders of the Class G Certificates on
such Distribution Date shall be distributed to the Class G Trustee;
sixth, such amount as shall be required to pay the Policy
Provider all Policy Provider Obligations then due shall be distributed
to the Policy Provider;
seventh, such amount as shall be required to pay in full all
Excess Reimbursement Obligations and any Policy Provider Interest
Amounts shall be distributed to the Policy Provider;
eighth, if any Class C Certificates are Outstanding on such
Distribution Date, 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,
provided, however, that if all of the Class C Certificates have been
sold by the initial holder thereof to one or more Persons that are not
an American Entity and the sale or sales of such Class C Certificates
to such Person or Persons occurred prior to the occurrence of an
Indenture Event of Default under any Indenture, the Expected
Distributions on the Class C Certificates shall be distributed
immediately prior to the payment in clause "seventh" above;
ninth, if any Class D Certificates are Outstanding on such
Distribution Date, 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;
tenth, if the Class E Certificates have been issued and any
Class E Certificates are outstanding on such Distribution Date, such
amount as shall be required to pay in full Expected Distributions to
holders of Class E Certificates on such Distribution Date shall be
distributed to the Class E Trustee;
eleventh, such amount as shall be required to pay in full
(without duplication of any amounts otherwise payable hereunder or
under any Operative Agreement) the
36
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
twelfth, the balance, if any, of any such amount remaining
thereafter shall be held in the Collection Account for later
distribution in accordance with this Article III.
Section 3.03 Distribution of Amounts on Deposit Following a
Triggering Event. Except as otherwise provided in Sections 3.01(f), 3.06(b),
3.06(k) and 3.07, 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 reasonable 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 Collateral, 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, (iii) the
Policy Provider for any amounts of the nature described in clause (i)
above actually incurred by it (to the extent not previously
reimbursed), shall be distributed to the Policy Provider, and (iv) each
Liquidity Provider, the Policy Provider or each 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, Policy Provider or to the
applicable Trustee for the account of such Certificateholder, in each
such case, pro rata on the basis of all amounts described in clauses
(i) through (iv) above;
second, such amount as shall be required to pay (i) all
accrued and unpaid Liquidity Expenses and (ii) all accrued and unpaid
Policy Expenses shall be distributed to the applicable Liquidity
Provider and the Policy Provider pro rata on the basis of the amount of
Liquidity Expenses owed to each Liquidity Provider and Policy Expenses
owed to the Policy Provider;
third, such amount as shall be required to pay in full (i)
accrued and unpaid interest on the Liquidity Obligations (at the rate
provided in the applicable Liquidity Facility), (ii) the aggregate
amount of all accrued and unpaid Policy Provider Interest Drawing
Amount and (iii) if the Policy Provider has paid to each Liquidity
Provider all outstanding Drawings and interest owing to such Liquidity
Provider under its Liquidity Facility pursuant to Section 2.06.(c), the
amount of such payment made to the Liquidity Providers attributable to
such interest accrued on such Drawings, shall be distributed, in the
case of (i) above, to the respective Liquidity Provider and, in the
case of (ii) and (iii) above, to the Policy Provider pro rata (without
duplication) on the basis of the amounts owing to each;
37
fourth, such amount as shall be required (A) if any Cash
Collateral Account has been previously funded as provided in Section
3.06(f), unless (i) a Performing Note Deficiency exists and a Liquidity
Event of Default shall have occurred and be continuing with respect to
the related Liquidity Facility or (ii) a Final Drawing shall have
occurred with respect to such Liquidity Facility, to fund such Cash
Collateral Account up to its Required Amount shall be deposited in such
Cash Collateral Account, (B) if any 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, unless (i) a
Performing Note Deficiency exists and a Liquidity Event of Default
shall have occurred and be continuing with respect to the related
Liquidity Facility or (ii) a Final Drawing shall have occurred with
respect to such Liquidity Facility, to deposit into the related Cash
Collateral Account an amount equal to the Required Amount applicable to
such Cash Collateral Account shall be deposited in such Cash Collateral
Account, (C) if, with respect to any Liquidity Facility, neither
subclause (A) nor subclause (B) of this clause "fourth" 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 shall be distributed to such
Liquidity Provider, in each case pro rata with any amount distributable
pursuant to subclause (D) of this clause "fourth" on the basis of the
amount of unreimbursed Interest Drawings and unreimbursed Policy
Provider Obligations payable to the Policy Provider under subclause (D)
of this clause "fourth" and (D) if the Policy Provider has paid to each
Liquidity Provider all outstanding Drawings and interest thereon owing
to such Liquidity Provider pursuant to Section 2.06(c), to reimburse
the Policy Provider for the principal amount of such payment made to
the Liquidity Providers, shall be distributed to the Policy Provider
but only after giving effect to the application of amounts, if any,
under subclause (A) or (B) of this clause "fourth" and if any amount
shall be distributable under subclause (C) of this clause "fourth", pro
rata (without duplication) with any amount distributable pursuant to
such subclause (C), on the basis of the amount of unreimbursed Interest
Drawings and the amount of such unreimbursed Policy Provider
Obligations payable to the Policy Provider under this clause "fourth";
fifth, if, with respect to any Liquidity Facility, any amounts
are to be distributed pursuant to either subclause (A) or (B) of clause
"fourth" above, then the Liquidity Provider relating to such Liquidity
Facility shall be paid the excess of (x) the aggregate outstanding
amount of unreimbursed Advances under such Liquidity Facility (whether
or not then due, and after giving effect to any payments to be made
under Section 3.06(f)(ii)), over (y) the Required Amount applicable to
such Liquidity Facility (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);
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
38
paid under the applicable Trust Agreement), expense, fee, charge or
other loss incurred by, 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
5.02 in respect of amounts described in clause (i) above (without
duplication of any amounts distributed pursuant to subclause (iv) of
clause "first" of this Section 3.03), shall be distributed to the
applicable Trustee for the account of such Certificateholder, in each
such case pro rata on the basis of all amounts described in clauses
(i), (ii) and (iii) above;
seventh, if any Class G Certificates are Outstanding on such
Distribution Date, such amount remaining as shall be required to pay in
full Adjusted Expected Distributions on the Class G Certificates shall
be distributed to the Class G Trustee, provided that so long as all of
the Class C Certificates are owned by an American Entity, such amount
remaining as shall be required to pay Final Distributions on the Class
G Certificates shall be distributed to the Class G Trustee;
eighth, such amount as shall be required to pay all Policy
Provider Obligations then due shall be distributed to the Policy
Provider;
ninth, such amount as shall be required to pay in full all
Excess Reimbursement Obligations and Policy Provider Interest Amounts
shall be distributed to the Policy Provider;
tenth, if any Class C Certificates are Outstanding on such
Distribution Date, 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, provided, however, that if all
of the Class C Certificates have been sold by the initial holder
thereof to one or more Persons that are not an American Entity and the
sale or sales of such Class C Certificates to such Person or Persons
occurred prior to the occurrence of an Indenture Event of Default under
any Indenture, the Adjusted Expected Distributions on the Class C
Certificates shall be distributed immediately prior to the payment in
clause "ninth" above;
eleventh, if any Class D Certificates are Outstanding on such
Distribution Date, 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; provided that so long as all of
the Class D Certificates are owned by an American Entity, such amount
remaining as shall be required to pay Final Distributions on the Class
G Certificates shall be distributed to the Class G Trustee prior to any
distribution to the Class D Trustee pursuant to this clause "eleventh";
twelfth, if the Class E Certificates have been issued and any
Class E Certificates are Outstanding on such Distribution Date, such
amount remaining as shall be required to pay in full Adjusted Expected
Distributions on the Class E Certificates shall be distributed to the
Class E Trustee;
39
thirteenth, (i) if any Class G Certificates are Outstanding on
such Distribution Date, such amount remaining as shall be required to
pay Final Distributions on the Class G Certificates shall be
distributed to the Class G Trustee; (ii) after giving effect to clause
(i), if any Class C Certificates are Outstanding on such Distribution
Date, such amount remaining as shall be required to pay Final
Distributions on the Class C Certificates shall be distributed to the
Class C Trustee; (iii) after giving effect to clauses (i) and (ii), if
any Class D Certificates are Outstanding on such Distribution Date,
such amount remaining as shall be required to pay Final Distributions
on the Class D Certificates shall be distributed to the Class D
Trustee; (iv) after giving effect to clauses (i), (ii) and (iii), if
the Class E Certificates have been issued and any Class E Certificates
are Outstanding on such Distribution Date, such amount remaining as
shall be required to pay Final Distributions on the Class E
Certificates shall be distributed to the Class E Trustee; and
fourteenth, any amount remaining shall be distributed to the
Class G, Class C, Class D and Class E Trustees (for distribution to the
Certificateholders of the applicable Trusts) pro rata based upon the
original aggregate principal amounts of the Equipment Notes held by the
respective Trusts.
Section 3.04 Other Payments. (a) Any payments received by the
Subordination Agent for which no provision as to the application thereof is made
in this Agreement or any payments received or realized at any time after the
Final Distributions for all Classes of Certificates have been made shall, in
either case, be distributed by the Subordination Agent in the order of priority
specified in Section 3.03.
(b) On any Interest Payment Date under each Liquidity
Facility that is not a Distribution Date, the Subordination Agent shall pay to
the Liquidity Provider under such Liquidity Facility from, and to the extent of,
amounts on deposit in the Collection Account, an amount equal to the amount of
interest then due and payable to such Liquidity Provider under such Liquidity
Facility.
(c) Except as otherwise provided in Section 3.03 or
Sections 3.06(a) and 3.06(b), 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 3.02; provided that, for the purposes of this
Section 3.04(c) only, each reference in clause "eleventh" of Section 3.02 to
"Distribution Date" shall be deemed to mean the actual date of payment of such
Scheduled Payment and each reference in clause "fifth", "eighth", "ninth" or
"tenth" of Section 3.02 to "Distribution Date" shall be deemed to refer to such
Scheduled Payment Date.
Section 3.05 Payments to the Trustees, the Liquidity Providers
and the Policy Provider. Any amounts distributed hereunder to any Liquidity
Provider or the Policy Provider shall be paid to such Liquidity Provider or the
Policy Provider, as applicable, by wire transfer of funds to the address such
Liquidity Provider or the Policy Provider shall provide to the Subordination
Agent. The Subordination Agent shall provide a Written Notice of any such
transfer to the applicable Liquidity Provider or the Policy Provider, as the
case may be, at the
40
time of such transfer. Any amounts distributed hereunder by the Subordination
Agent to any Trustee that is not the same institution as the Subordination Agent
shall be paid to such Trustee by wire transfer of funds at the address such
Trustee shall provide to the Subordination Agent.
Section 3.06 Liquidity Facilities. (a) Interest Drawings. If
on any Distribution Date, after giving effect to the provisions of this
Agreement (including the subordination provisions hereof) and any Election
Interest Payment made by the Policy Provider pursuant to Section 3.07(c), the
Subordination Agent shall not have sufficient funds for the payment of any
amounts due and owing in respect of accrued interest on any Class of
Certificates (at the related Stated Interest Rate) then, prior to 1:00 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, if any, for such Class (and concurrently with the making of such
request, the Subordination Agent shall give notice to the Policy Provider of
such insufficiency of funds) 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 the related Class of Certificates) and (ii) the Available Amount under
the applicable Liquidity Facility, and shall upon receipt of such amount pay
such amount to the applicable Trustee in payment of such accrued interest as
provided in Section 3.06(b).
(b) Application of Interest Drawings. Notwithstanding
anything to the contrary contained in this Agreement, all payments received by
the Subordination Agent in respect of an Interest Drawing under a Liquidity
Facility and all amounts withdrawn by the Subordination Agent from any Cash
Collateral Account, and payable in each case to the related Class of
Certificateholders, shall be promptly distributed to the Trustee for such Class
and, upon receipt thereof by such Trustee, applied to the payment of interest in
respect of which it was drawn, except that if (i) the Subordination Agent shall
receive any amount in respect of an Interest Drawing under the Class G Liquidity
Facility or a withdrawal from the Class G Cash Collateral Account to pay Accrued
Class G Interest after such Accrued Class G Interest has been fully paid by a
Policy Drawing under the Policy pursuant to Section 3.07(a), or (ii) the
Subordination Agent shall receive any amount in respect of a Policy Drawing
under the Policy pursuant to Section 3.07(a), to pay Accrued Class G Interest
after such Accrued Class G Interest has been paid (in full or in part) to the
Class G Trustee by an Interest Drawing under the Class G Liquidity Facility or a
withdrawal from the Class G Cash Collateral Account, the Subordination Agent, in
the case of either clause (i) or clause (ii), shall pay an amount equal to the
amount of such Interest Drawing or withdrawal directly to the Policy Provider as
reimbursement of such Policy Drawing rather than to the Class G
Certificateholders or the Class G Trustee (provided that any such amount paid
under both the Class G Liquidity Facility (or from the Class G Cash Collateral
Account) and the Policy and constituting an Election Interest Payment with
respect to one or more Series G Equipment Notes shall be repaid directly to the
Class G Liquidity Provider as reimbursement for such Interest Drawing or to the
Class G Cash Collateral Account as replenishment for such withdrawal, as
applicable).
(c) Downgrade Drawings. Each Liquidity Provider shall
promptly, but in any event within ten days of its receipt of notice thereof,
deliver notice to the Subordination Agent of any downgrading below the
applicable Threshold Rating of the short-term unsecured debt rating or
short-term issuer credit rating of such Liquidity Provider or of any Liquidity
Guarantor issued by any Rating Agency (or, if such Liquidity Provider or
Liquidity Guarantor does not have a
41
short-term unsecured debt rating or short-term issuer credit rating from either
Rating Agency, the long-term unsecured debt rating or long-term issuer credit
rating of such Liquidity Provider or Liquidity Guarantor from such Rating
Agency). If at any time (i) if there is no Liquidity Guarantor, the short-term
issuer credit rating (with respect to S&P) or short-term unsecured debt rating
(with respect to Xxxxx'x) of any Liquidity Provider (or, if such Liquidity
Provider does not have such a rating issued by a given Rating Agency, the
long-term issuer credit rating (with respect to S&P) or long-term unsecured debt
rating (with respect to Xxxxx'x) of such Liquidity Provider issued by such
Rating Agency) is lower than the applicable Threshold Rating or (ii) if there is
a Liquidity Guarantor, the short-term issuer credit rating (with respect to S&P)
or short-term unsecured debt rating (with respect to Xxxxx'x) of the Liquidity
Guarantor issued by either Rating Agency is lower than the applicable Threshold
Rating or a Liquidity Guarantee Event has occurred with respect to such
Liquidity Facility and is continuing, within 10 days after the date of such
downgrading or Liquidity Guarantee Event (but not later than the expiration date
of the Liquidity Facility issued by the downgraded Liquidity Provider (or
guaranteed by the downgraded Liquidity Guarantor or affected by a Liquidity
Guarantee Event) (the "Downgraded Facility")), such Liquidity Provider or
American (in both cases at American's expense) may arrange for a Replacement
Liquidity Provider to issue and deliver a Replacement Liquidity Facility to the
Subordination Agent, subject to the Ratings Confirmation. If a Downgraded
Facility has not been replaced in accordance with the terms of this paragraph,
the Subordination Agent shall, on such 10th day (or if such 10th day is not a
Business Day, on the next succeeding Business Day) (or, if earlier, on 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 3.06(f). Subject to Section 3.06(e)(iii), the applicable
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 such Liquidity Provider.
(d) Non-Extension Drawings. If any Liquidity Facility
with respect to a 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 applicable Stated
Expiration Date, the Subordination Agent shall request in writing that the
related Liquidity Provider extend the Stated Expiration Date to the earlier of
(i) the date that is 15 days after the Final Legal Distribution Date for such
Class of Certificates and (ii) the date that is the day immediately preceding
the 364th day after the last day of the Consent Period (unless the obligations
of such Liquidity Provider thereunder are earlier terminated in accordance with
such Liquidity Facility); provided that a Liquidity Provider may elect to extend
the Stated Expiration Date for its Liquidity Facility to a date that is later
than such 364th day and on or before the date that is 15 days after the Final
Legal Distribution Date for the related Class of Certificates in accordance with
the procedures specified in its Liquidity Facility. Whether or not the
applicable Liquidity Provider has received such a request from the Subordination
Agent, such Liquidity Provider shall by notice (the "Consent Notice") to the
Subordination Agent during the period commencing on the date that is 60 days
prior to the then effective Stated Expiration Date and ending on the date that
is 25 days prior to such Stated Expiration Date (the "Consent Period") advise
the Subordination Agent whether, in its sole discretion, it agrees to so extend
the Stated
42
Expiration Date; provided, however, that such extension shall not be effective
with respect to such Liquidity Provider if, by notice (the "Withdrawal Notice")
to the Subordination Agent prior to the end of the Consent Period, such
Liquidity Provider revokes its Consent Notice. If a Liquidity Provider advises
the Subordination Agent in the Consent Notice that such Stated Expiration Date
shall not be so extended or gives a Withdrawal Notice to the Subordination Agent
prior to the end of the Consent Period, or fails to irrevocably and
unconditionally advise the Subordination Agent on or before the end of the
Consent Period that such Stated Expiration Date shall be so extended (and, in
each case, if such Liquidity Provider shall not have been replaced in accordance
with Section 3.06(e)), the Subordination Agent shall, on the date on which the
Consent Period ends (or as soon as possible thereafter but prior to the Stated
Expiration Date), in accordance with and to the extent permitted by the terms of
the expiring Liquidity Facility (a "Non-Extended Facility"), request a drawing
under such expiring Liquidity Facility (such drawing, a "Non-Extension Drawing")
of all available and undrawn amounts thereunder. Amounts drawn pursuant to a
Non-Extension Drawing shall be maintained and invested in accordance with
Section 3.06(f). If any amounts shall be drawn pursuant to a Non-Extension
Drawing and, within 30 days thereafter, the related Liquidity Provider shall not
have been replaced, then at any time following the 30th day after such
Non-Extension Drawing, such Liquidity Provider may, by written notice to the
Subordination Agent, agree to reinstate its Liquidity Facility on the terms of
its existing Liquidity Facility for a period ending on the 364th day after the
end of the Consent Period; provided, however, that in such event such Liquidity
Provider shall reimburse the Subordination Agent for any costs actually incurred
by or on behalf of the Subordination Agent in drawing pursuant to the
Non-Extension Drawing and funding the related Cash Collateral Account or
otherwise in connection with the Non-Extension Drawing.
(e) Issuance of Replacement Liquidity Facility. (i)
Subject to Section 3.06(e)(iii) and the agreements, if any, in the applicable
Fee Letter, at any time, American may, at its option and at its own expense,
with notice to the Policy Provider, with cause or without cause, arrange for a
Replacement Liquidity Facility to replace any Liquidity Facility (including any
Replacement Liquidity Facility provided pursuant to Section 3.06(e)(ii)). If a
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 related
Cash Collateral Account resulting from such Downgrade Drawing or Non-Extension
Drawing will be returned to the Liquidity Provider being replaced.
(ii) If any Liquidity Provider shall determine not to
extend its Liquidity Facility in accordance with Section 3.06(d), then such
Liquidity Provider may, at its option, with notice to the Subordination Agent,
arrange for a Replacement Liquidity Facility to replace such Liquidity Facility
during the period no earlier than 40 days and no later than 25 days prior to the
then effective Stated Expiration Date of such Liquidity Facility. Subject to
Section 3.06(e)(iii), any Liquidity Provider also may arrange for a Replacement
Liquidity Provider to issue and deliver a Replacement Liquidity Facility at any
time after a Non-Extension Drawing so long as such Non-Extension Drawing has not
been reimbursed in full to such Liquidity Provider.
(iii) No Replacement Liquidity Facility arranged by
American or a Liquidity Provider in accordance with Section 3.06(c) or clause
(i) or (ii) of this Section 3.06(e) shall become effective and no such
Replacement Liquidity Facility shall be deemed the "Liquidity Facility" under
the Operative Agreements, unless and until (A) each of the conditions referred
to
43
in Section 3.06(e)(iv) below shall have been satisfied and (B) in the case of a
Replacement Liquidity Facility arranged by a Liquidity Provider under Section
3.06(c) or Section 3.06(e)(ii), such Replacement Liquidity Provider and such
Replacement Liquidity Facility (including the fees and compensation and interest
payable thereunder to the Replacement Liquidity Provider) are acceptable to
American.
(iv) In connection with the issuance of each Replacement
Liquidity Facility, the Subordination Agent shall (x) prior to the issuance of
such Replacement Liquidity Facility, obtain written confirmation from each
Rating Agency that such Replacement Liquidity Facility will not cause a
reduction of any rating then in effect for any Class of Certificates by such
Rating Agency (without regard to any downgrading of any rating of any Liquidity
Provider being replaced pursuant to Section 3.06(c) and without regard to the
Policy), (y) pay all Liquidity Obligations then owing to the replaced Liquidity
Provider (which payment shall be made first from available funds in the
applicable Cash Collateral Account as described in Section 3.06(f)(vii), and
thereafter from any other available source, including, without limitation, a
drawing under the Replacement Liquidity Facility) and (z) cause the issuer of
the Replacement Liquidity Facility to deliver the Replacement Liquidity Facility
to the Subordination Agent, together with a legal opinion addressed to the
Subordination Agent, the Trustees, the Policy Provider and American opining that
such Replacement Liquidity Facility is an enforceable obligation of such
Replacement Liquidity Provider.
(v) Upon satisfaction of the conditions set forth in
Sections 3.06(e)(iii) and 3.06(e)(iv), (w) the replaced Liquidity Facility shall
terminate, (x) the Subordination Agent shall, if and to the extent so requested
by American or the Liquidity Provider being replaced, execute and deliver any
certificate or other instrument required in order to terminate the replaced
Liquidity Facility, shall surrender the replaced Liquidity Facility to the
Liquidity Provider being replaced and shall execute and deliver the Replacement
Liquidity Facility and any associated Fee Letter, (y) each of the parties hereto
shall enter into any amendments to this Agreement necessary to give effect to
(1) the replacement of the applicable Liquidity Provider with the applicable
Replacement Liquidity Provider and (2) the replacement of the applicable
Liquidity Facility with the applicable Replacement Liquidity Facility and (z)
the Replacement Liquidity Provider shall be deemed to be a Liquidity Provider
with respect to the relevant Class with the rights and obligations of a
Liquidity Provider for such Class hereunder and under the other Operative
Agreements and such Replacement Liquidity Facility shall be deemed to be the
Liquidity Facility for the relevant Class hereunder and under the other
Operative Agreements.
(f) Cash Collateral Account; Withdrawals; Investments. If
the Subordination Agent shall draw all available amounts under any Liquidity
Facility pursuant to Section 3.06(c), Section 3.06(d) or Section 3.06(i), or in
the event amounts are to be deposited in any Cash Collateral Account pursuant to
subclause (A) or (B) of clause "third" of Section 2.04(b), subclause (A) or (B)
of clause "third" of Section 3.02 or subclause (A) or (B) of clause "fourth" of
Section 3.03, amounts so drawn or to be deposited, as the case may be, shall be
deposited by the Subordination Agent in the related Cash Collateral Account. All
amounts on deposit in each Cash Collateral Account shall be invested and
reinvested in Eligible Investments in accordance with Section 2.02(b). On each
Interest Payment Date (or, in the case of any Special Distribution Date
occurring prior to the occurrence of a Triggering Event, on such Special
Distribution Date), Investment Earnings on amounts on deposit in each Cash
Collateral Account (or in the case of
44
any Special Distribution Date occurring prior to the occurrence of a Triggering
Event, an amount of such Investment Earnings on amounts on deposit in each Cash
Collateral Account equal to the product of such Investment Earnings multiplied
by the Section 2.04(b) Fraction) shall be deposited in the Collection Account
(or, in the case of any Special Distribution Date occurring prior to the
occurrence of a Triggering Event, the Special Payments Account) and applied on
such Interest Payment Date (or Special Distribution Date, as the case may be) in
accordance with Section 2.04(b), 3.02, 3.03 or 3.04(b) (as applicable). The
Subordination Agent shall deliver a written statement to American, the Policy
Provider and each Liquidity Provider one day prior to each Interest Payment Date
and Special Distribution Date setting forth the 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 accounts as follows:
(i) on each Distribution Date, the Subordination Agent
shall, to the extent it shall not have received funds to pay accrued
and unpaid interest due and owing on any Class of Certificates covered
by a Liquidity Facility (at the Stated Interest Rate for such Class of
Certificates) after giving effect to the subordination provisions of
this Agreement and (in the case of the Class G Certificates) any
Election Interest Payment made by the Policy Provider, withdraw from
the applicable Cash Collateral Account, and pay to the Trustee of the
related Class, an amount equal to the lesser of (x) an amount necessary
to pay accrued and unpaid interest (at the Stated Interest Rate for
such Class of Certificates) on such Class of Certificates and (y) the
amount on deposit in the related Cash Collateral Account (so long as
the aggregate amount of unreplenished withdrawals, including such
withdrawal, does not exceed the Required Amount with respect to the
Liquidity Facility for such Class of Certificates for such Distribution
Date);
(ii) on each date on which the Pool Balance of any Class
of Certificates covered by a Liquidity Facility shall have been reduced
by payments made to the Certificateholders of such Class pursuant to
Section 2.04(b), Section 3.02 or Section 3.03, the Subordination Agent
shall withdraw from the related Cash Collateral Account such amount as
is necessary so that, after giving effect to the reduction of such Pool
Balance on such date (including any such reduction resulting from a
prior withdrawal of amounts on deposit in such Cash Collateral Account
on such date) and any transfer of Investment Earnings from such Cash
Collateral Account to the Collection Account or the Special Payments
Account on such date, an amount equal to the sum of the Required Amount
(with respect to the Liquidity Facility for such Class of Certificates)
plus the remaining Investment Earnings on deposit in such Cash
Collateral Account (if any) will be on deposit in such Cash Collateral
Account and shall, first, pay such withdrawn amount to the applicable
Liquidity Provider until the Liquidity Obligations owing to such
Liquidity Provider shall have been paid in full and, second, deposit
any remaining amount in the Collection Account;
(iii) 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 related Cash
Collateral Account, the Subordination Agent shall withdraw all amounts
remaining on deposit in such Cash Collateral Account and shall pay such
amounts to the replaced Liquidity Provider until all Liquidity
Obligations owed
45
to such Person shall have been paid in full, and deposit any remaining
amount in the Collection Account; and
(iv) following the payment of Final Distributions with
respect to a Class of Certificates covered by a Liquidity Facility, on
the date on which the Subordination Agent shall have been notified by
the Liquidity Provider with respect to such Class 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
related Cash Collateral Account and deposit such amount in the
Collection Account.
(g) Reinstatement. With respect to any Interest Drawing
under any Liquidity Facility, upon the reimbursement of the related Liquidity
Provider for all or any part of the amount of such Interest Drawing, together
with any accrued interest thereon, the Available Amount of such Liquidity
Facility shall be reinstated by an amount equal to the amount of such Interest
Drawing so reimbursed to such Liquidity Provider but not to exceed the Stated
Amount for such Liquidity Facility; provided, however, that the Available Amount
of such Liquidity Facility shall not be so reinstated in part or in full at any
time if (x) both a Performing Note Deficiency exists and a Liquidity Event of
Default shall have occurred and be continuing with respect to the relevant
Liquidity Facility or (y) a Final Drawing shall have occurred under such
Liquidity Facility; provided further that any payment by the Policy Provider to
any Liquidity Provider of any amounts pursuant to the first proviso to Section
2.06(c) shall not reinstate such Liquidity Facility, but such Liquidity Facility
(so long as such Liquidity Facility is in effect) shall be reinstated, pro
tanto, to the extent the Policy Provider receives any reimbursement in respect
of such payment under clause "third" of Section 2.04(b), clause "third" of
Section 3.02 or clause "fourth" of Section 3.03 unless (x) both a Performing
Note Deficiency exists and a Liquidity Event of Default shall have occurred and
be continuing or (y) a Final Drawing shall have occurred with respect to such
Liquidity Facility. In the event that, with respect to a Liquidity Facility, (i)
funds are withdrawn from the related Cash Collateral Account pursuant to clause
(i) of Section 3.06(f) or (ii) such Liquidity Facility shall become a Downgraded
Facility or a Non-Extended Facility at a time when unreimbursed Interest
Drawings under such Liquidity Facility have reduced the Available Amount
thereunder to zero, then funds received by the Subordination Agent at any time,
other than (x) any time when both a Performing Note Deficiency exists and a
Liquidity Event of Default shall have occurred and be continuing with respect to
such Liquidity Facility or (y) any time after a Final Drawing shall have
occurred with respect to such Liquidity Facility, shall be deposited in such
Cash Collateral Account as and to the extent provided in clause "third" of
Section 2.04(b), clause "third" of Section 3.02 or clause "fourth" of Section
3.03, as applicable, and applied in accordance with Section 3.06(f).
(h) Reimbursement. The amount of each drawing under each
Liquidity Facility shall be due and payable, together with interest thereon, on
the dates and at the rates, respectively, provided in such Liquidity Facility.
(i) Final Drawing. Upon receipt from a Liquidity Provider
of a Termination Notice, the Subordination Agent shall, not later than the date
specified in such Termination Notice, in accordance with and to the extent
permitted by the terms of such Liquidity Facility, request a drawing under such
Liquidity Facility of all available and undrawn amounts thereunder
46
(a "Final Drawing"). Amounts drawn pursuant to a Final Drawing shall be
maintained and invested in accordance with Section 3.06(f).
(j) Reduction of Stated Amount. Promptly following each
date on which the Required Amount of a Liquidity Facility is reduced as a result
of a reduction in the Pool Balance with respect to the related Class of
Certificates (including, in the case of Class G Liquidity Facility, by reason of
a Policy Provider Election with respect to one or more Series G Equipment
Notes), 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 related Liquidity Provider 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 relevant Liquidity Facility.
(k) Relation to Subordination Provisions. Interest
Drawings under each Liquidity Facility and withdrawals from each Cash Collateral
Account, in each case, in respect of interest on the related Class of
Certificates, will be distributed to the Trustee for such Class of Certificates,
notwithstanding Sections 2.04(b), 3.02, 3.03 and 3.06(f).
(l) Assignment of Liquidity Facility. The Subordination
Agent agrees not to consent to the assignment by any Liquidity Provider of any
of its rights or obligations under its Liquidity Facility or any interest
therein unless (i) American shall have consented to such assignment and (ii)
each Rating Agency shall have provided a Ratings Confirmation in respect of such
assignment.
Section 3.07 The Policy. (a) Interest Drawings. If on any
Regular Distribution Date (other than the Final Legal Distribution Date) after
giving effect to the subordination provisions of this Agreement and to the
application of available funds in accordance with the priorities specified in
Section 2.04 and Article III, and taking into account any Drawing paid under the
Class G Liquidity Facility in respect of Accrued Class G Interest due on such
Distribution Date and any withdrawal of funds from the Class G Cash Collateral
Account in respect of Accrued Class G Interest due on such Distribution Date,
the Subordination Agent does not then have sufficient funds available for the
payment of Accrued Class G Interest, then, prior to 1:00 p.m. (New York City
time) on such Regular Distribution Date, the Subordination Agent (i) shall
deliver a Notice of Nonpayment, as provided in the Policy, to the Policy
Provider or its fiscal agent, requesting a Policy Drawing under the Policy (for
payment into the Policy Account) in an amount sufficient to enable the
Subordination Agent to pay such Accrued Class G Interest and (ii) upon receipt
of funds, shall pay such amount from the Policy Account to the Class G Trustee
in payment of such Accrued Class G Interest on such Distribution Date.
(b) Proceeds Deficiency Drawing. If on any Special
Distribution Date (other than a Special Distribution Date established pursuant
to the second paragraph of Section 3.07(c)) established by the Subordination
Agent by reason of its receipt of a Special Payment (a "Disposition Payment")
constituting the proceeds of any Series G Equipment Note or related Collateral,
as the case may be, there exists a shortfall in the amounts available to the
Subordination Agent (after giving effect to the subordination provisions of this
Agreement and to the application of available funds, including, without
limitation, the amount of such Disposition
47
Payment in accordance with the priorities specified in Section 2.04 and Article
III, and (if the receipt of the Special Payment from the disposition of such
Series G Equipment Note or related Collateral occurs prior to a Policy Provider
Election with respect to such Series G Equipment Note) taking into account any
Drawing paid under the Class G Liquidity Facility in respect of Accrued Class G
Interest and any withdrawal of funds in the Class G Cash Collateral Account in
respect of such interest) required to reduce the outstanding Pool Balance of the
Class G Certificates by an amount equal to the outstanding principal amount of
the applicable Series G Equipment Note (determined immediately prior to the
receipt of such Disposition Payment and less the amount of any Policy Drawing
previously paid by the Policy Provider in respect of principal of such Series G
Equipment Note) plus accrued and unpaid interest on the amount of such reduction
accrued at the Stated Interest Rate for the Class G Certificates for the period
from the immediately preceding Regular Distribution Date to such Special
Distribution Date, then, prior to 1:00 p.m. (New York City time) on such Special
Distribution Date, the Subordination Agent (x) shall deliver a Notice of
Nonpayment, as provided in the Policy, to the Policy Provider or its fiscal
agent, requesting a Policy Drawing under the Policy (for payment into the Policy
Account) in an amount equal to the amount of such shortfall and (y) shall pay
the amount specified in clause (x), when received, from the Policy Account to
the Class G Trustee in payment of such reduction in the outstanding Pool Balance
of the Class G Certificates plus such accrued and unpaid interest on such
Special Distribution Date. The Subordination Agent shall promptly, but not less
than 20 days prior to the Special Distribution Date established pursuant to this
Section 3.07(b), send to American, the Trustees, the Class G Liquidity Provider
and the Policy Provider, a Written Notice of such Special Distribution Date.
(c) No Proceeds Drawing. On the first Business Day (which
shall be a Special Distribution Date) that is 24 months after the last date on
which full payment was made on any Series G Equipment Note (a "Defaulted Series
G Equipment Note") as to which there has subsequently been a failure to pay
principal or that has subsequently been Accelerated, if on or prior to such
Business Day the Subordination Agent has not theretofore made a drawing under
the Policy pursuant to Section 3.07(b), the Subordination Agent shall deliver a
Notice of Nonpayment, as provided in the Policy, to the Policy Provider or its
fiscal agent, requesting a Policy Drawing under the Policy (for payment into the
Policy Account) in an amount equal to the then outstanding principal amount of
such Defaulted Series G Equipment Note plus accrued and unpaid interest thereon
at the Stated Interest Rate for the Class G Certificates from the immediately
preceding Regular Distribution Date to such Special Distribution Date. The
Subordination Agent shall promptly, but not less than 25 days prior to such
Business Day, send to American, the Trustees, the Class G Liquidity Provider and
the Policy Provider a Written Notice establishing such Business Day as the date
for the distribution of the proceeds of such Policy Drawing, which date shall
constitute a Special Distribution Date. No later than 1:00 p.m. (New York City
time) on the specified Special Distribution Date the Subordination Agent shall
make the specified Policy Drawing and upon its receipt of the proceeds thereof
pay the amount thereof from the Policy Account to the Class G Trustee in
reduction of the outstanding Pool Balance of the Class G Certificates together
with such accrued and unpaid interest on the amount of such reduction at the
Stated Interest Rate for the Class G Certificates. For the avoidance of doubt,
after the payment by the Policy Provider in full of such amount under this
Section 3.07(c), the Subordination Agent shall have no right to make any further
Policy Drawings under Section 3.07(c) in respect of such Defaulted Series G
Equipment Note except for a drawing in respect of Preference Amounts as provided
in Section 3.07(e).
48
Notwithstanding the foregoing, the Policy Provider has the
right, so long as no Policy Provider Default shall have occurred and be
continuing, upon notice to the Subordination Agent given at least five days
prior to the Special Distribution Date established by the Subordination Agent
pursuant to the first paragraph of this Section 3.07(c), to elect instead (the
"Policy Provider Election") to pay (i) on such Special Distribution Date an
amount equal to the scheduled principal and interest at the Stated Interest Rate
for the Class G Certificates that came due on such Defaulted Series G Equipment
Note (without regard to the Acceleration thereof) but was not paid during such
24-month period (after giving effect to the application of funds received from
the Class G Liquidity Facility and withdrawals of funds from the Class G Cash
Collateral Account, in each case in respect of such interest) and (ii)
thereafter, on each Regular Distribution Date, an amount equal to the scheduled
principal and interest at the Stated Interest Rate for the Class G Certificates
that becomes due on such Defaulted Series G Equipment Note on the related
payment date (without regard to any Acceleration thereof or to any funds
available under the Class G Liquidity Facility or the Class G Cash Collateral
Account) until the establishment of an Election Distribution Date or a Special
Distribution Date established as provided in the immediately following sentence
(the interest portion of each such payment, an "Election Interest Payment").
Following a Policy Provider Election with respect to a Defaulted Series G
Equipment Note, on any Business Day (which shall be a Special Distribution Date)
elected by the Policy Provider upon 20 days' Written Notice to the Subordination
Agent and the Class G Trustee, the Policy Provider may, notwithstanding the
Policy Provider Election, request the Subordination Agent to, and the
Subordination Agent shall, make a Policy Drawing for an amount equal to the then
outstanding principal balance of such Defaulted Series G Equipment Note (less
any Policy Drawings previously paid by the Policy Provider in respect of
principal of such Defaulted Series G Equipment Note) and accrued and unpaid
interest thereon at the Stated Interest Rate for the Class G Certificates from
the immediately preceding Regular Distribution Date to such Special Distribution
Date.
Further, following a Policy Provider Election with respect to
a Defaulted Series G Equipment Note, upon the occurrence and continuance of a
Policy Provider Default, the Subordination Agent shall on any Business Day (an
"Election Distribution Date", which shall be a Special Distribution Date)
elected by the Subordination Agent upon 20 days' Written Notice to the Class G
Trustee and the Policy Provider, make a Policy Drawing for an amount equal to
the then outstanding principal balance of such Defaulted Series G Equipment Note
(less any Policy Drawings previously paid by the Policy Provider in respect of
principal of such Defaulted Series G Equipment Note) and accrued and unpaid
interest thereon at the Stated Interest Rate for the Class G Certificates from
the immediately preceding Regular Distribution Date to such Election
Distribution Date. The Subordination Agent shall make each such Policy Drawing
referred to in this subparagraph (c) under the Policy (for payment into the
Policy Account) no later than 1:00 p.m. (New York City time) on the relevant
Special Distribution Date and upon its receipt of the proceeds thereof pay the
amount thereof from the Policy Account to the Class G Trustee in reduction of
the outstanding Pool Balance of the Class G Certificates together with such
accrued and unpaid interest thereon.
In addition, regardless of whether or not the Policy Provider
makes a Policy Provider Election, the Policy Provider shall, from and after the
end of such 24-month period honor drawings by the Class G Liquidity Provider in
respect of amounts referred to in clause (g) of the definition of "Deficiency
Amount" contained in the Policy (each, an "Excess Interest
49
Policy Drawing"). The Class G Liquidity Provider agrees to make such Excess
Interest Policy Drawings and that the proceeds thereof shall reduce pro tanto
the Liquidity Obligations owing to it. Upon the issuance of any Replacement
Liquidity Facility for the Class G Certificates pursuant to Section 3.06(e), the
Policy Provider agrees to promptly deliver to the Replacement Liquidity Provider
providing such Replacement Liquidity Facility a certified copy of the Policy,
provided that the Class G Liquidity Provider being replaced returns its
certified copy of the Policy to the Policy Provider.
(d) Final Policy Drawing. If on the Final Legal
Distribution Date of the Class G Certificates after giving effect to the
subordination provisions of this Agreement and the application of available
funds in accordance with the priorities specified in Section 2.04 and Article
III, and taking into account any Drawing paid under the Class G Liquidity
Facility in respect of interest included in the Final Distribution and any
withdrawal of funds in the Class G Cash Collateral Account in respect of
interest included in the Final Distribution, the Subordination Agent does not
then have sufficient funds available on such date for the payment in full of the
Final Distribution (calculated as of such date but excluding any Make-Whole
Amount) on the Class G Certificates then, prior to 1:00 p.m. (New York City
time) on such date, the Subordination Agent shall: (i) deliver a Notice of
Nonpayment, as provided in the Policy, to the Policy Provider or its fiscal
agent, requesting a Policy Drawing under the Policy (for payment into the Policy
Account) in an amount equal to the minimum amount sufficient to enable the
Subordination Agent to pay the Final Distribution (calculated as of such date
but excluding any Make-Whole Amount) on the Class G Certificates, and (ii) upon
receipt of funds, pay such amount from the Policy Account to the Class G Trustee
in payment of such amount on such date.
(e) Avoidance Drawings. If at any time the Subordination
Agent shall have actual knowledge of the issuance of an Order, the Subordination
Agent shall promptly give notice thereof to American, each Trustee, the Class G
Liquidity Provider and the Policy Provider. The Subordination Agent shall
thereupon calculate the Preference Amount resulting therefrom and shall
promptly: (a) send to the Class G Trustee a Written Notice of such amount and
(b) prior to the expiration of the Policy deliver to the Policy Provider, or its
fiscal agent, a Notice of Avoided Payment, together with a copy of the
documentation required by the Policy with respect thereto, requesting a Policy
Drawing (for payment to the receiver, conservator, debtor-in-possession or
trustee in bankruptcy and/or the Subordination Agent for deposit into the Policy
Account) in an amount equal to the amount of relevant Preference Amount. To the
extent that any portion of such Preference Amount is to be paid by the
Subordination Agent, such Written Notice shall also set the date for the
distribution of such portion of the proceeds of such Policy Drawing, which date
shall constitute a Special Distribution Date and shall be the earlier of the
third Business Day that immediately precedes the expiration of the Policy and
the Business Day that immediately follows the 25th day after the date of such
Written Notice. No later than 1:00 p.m. (New York City time) on the specified
Special Distribution Date, the Subordination Agent shall make the specified
Policy Drawing and, upon its receipt of the proceeds thereof, pay the amount
thereof from the Policy Account to the Class G Trustee.
(f) Application of Policy Drawings. Notwithstanding
anything to the contrary contained in this Agreement (including, without
limitation, Sections 2.04, 3.02 and 3.03), except as provided in Section
3.06(b)(i) and (ii), all payments received by the Subordination Agent in respect
of a Policy Drawing (including, without limitation, that portion, if any, of the
proceeds of
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a Policy Drawing for any Preference Amount that is to be paid to the
Subordination Agent and not to any receiver, conservator, debtor-in-possession
or trustee-in-bankruptcy as provided in the Policy) shall be promptly paid from
the Policy Account to the Class G Trustee for distribution to the Class G
Certificateholders. Each Policy Drawing shall be applied to the purpose for
which it was made, including, without limitation, the application of that
portion of a Policy Drawing relating (i) to accrued interest with respect to a
Series G Equipment Note to the payment of interest on the Class G Certificates
and (ii) to principal of a Series G Equipment Note to the reduction of the Pool
Balance of the Class G Certificates.
(g) Reduction of Outstanding Pool Balance. Promptly
following each date on which the Pool Balance of the Class G Certificates is
reduced as a result of a payment under this Agreement, the Subordination Agent
shall inform the Policy Provider of such reduction. Anything contained herein to
the contrary notwithstanding, (i) no Policy Drawing for payment in respect of
the Class G Certificates under clause (a) of this Section 3.07 shall be in
excess of Accrued Class G Interest and (ii) no Policy Drawing under clauses (b),
(c) or (d) of this Section 3.07 shall be for an amount in excess of the then
outstanding Pool Balance of the Class G Certificates plus Accrued Class G
Interest. Nothing contained in this Intercreditor Agreement shall be deemed to
alter or amend the liabilities, obligations, requirements or procedures of the
Policy Provider under the Policy and the Policy Provider shall not be obligated
to make payment except at the times and in the amounts and under the
circumstances expressly set forth in the Policy.
(h) Resubmission of Notice for Payment. If the Policy
Provider at any time informs the Subordination Agent in accordance with the
Policy that a Notice of Nonpayment or Notice of Avoided Payment submitted by the
Subordination Agent does not satisfy the requirements of the Policy, the
Subordination Agent shall, as promptly as possible after being so informed,
submit to the Policy Provider an amended and revised Notice of Nonpayment or
Notice of Avoided Payment, as the case may be, and shall pay to the Class G
Trustee out of the Policy Account the amount received pursuant to such amended
or revised Notice of Nonpayment or Notice of Avoided Payment, as the case may
be, when received.
Section 3.08 Subrogation. The Policy Provider will be
subrogated to all of the rights of the holders of the Class G Certificates to
payment on the Class G Certificates to the extent of the payments made under the
Policy as set forth herein, the exercise of such subrogation rights to be
subject to the other provisions of this Agreement.
ARTICLE IV
EXERCISE OF REMEDIES
Section 4.01 Directions from the Controlling Party. (a) (i)
The Controlling Party shall direct the Subordination Agent, which in turn shall
direct the Loan Trustee under each Indenture, in the exercise of remedies
available to the holders of the Equipment Notes issued pursuant to such
Indenture, including, without limitation, the ability to vote all such Equipment
Notes in favor of Accelerating such Equipment Notes in accordance with the
provisions of such Indenture. If the Equipment Notes issued pursuant to any
Indenture have been Accelerated
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following an Indenture Event of Default with respect thereto, the Controlling
Party may direct the Subordination Agent to sell, assign, contract to sell or
otherwise dispose of and deliver all (but not less than all) of such Equipment
Notes to any Person at public or private sale, at any location at the option of
the Controlling Party, all upon such terms and conditions as it may reasonably
deem advisable and in accordance with applicable law.
(ii) 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 an American Bankruptcy
Event, without the consent of each Trustee (other than the Trustee of a Trust
all of the Certificates of which are held or beneficially owned by American
Entities), 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.
(iii) At the request of the Controlling Party, the
Subordination Agent may from time to time during the continuance of an Indenture
Event of Default (and before the occurrence of a Triggering Event) commission an
appraisal with respect to the Aircraft subject to such Indenture.
(iv) After a Triggering Event occurs and any Equipment
Note becomes a Non-Performing Equipment Note, the Subordination Agent shall
obtain Appraisals with respect to all of the Aircraft (the "LTV Appraisals") as
soon as practicable and additional LTV Appraisals on or prior to each
anniversary of the date of such initial LTV Appraisals; provided that, if the
Controlling Party reasonably objects to the appraised value of the Aircraft
shown in such LTV Appraisals, the Controlling Party shall have the right to
obtain or cause to be obtained substitute LTV Appraisals (including any LTV
Appraisals based upon physical inspection of the Aircraft).
(b) To the extent permitted by applicable law, the
Subordination Agent, at the direction of 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, if the Subordination
Agent is so directed by the Controlling Party, the Subordination Agent may
maintain possession of such Equipment Notes and continue to apply monies
received in respect of such Equipment Notes in accordance with Section 2.04(b)
and Article III. 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 direct the Subordination Agent to, subject to the terms
and conditions of the related Indenture, instruct the Loan Trustee under such
Indenture to foreclose on the Lien on the related Aircraft or take any other
remedial action permitted by such Indenture or applicable law.
Section 4.02 Remedies Cumulative. Each and every right, power
and remedy given to the Trustees, the Liquidity Providers, the Policy Provider,
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
52
hereof, be exercised from time to time and as often and in such order as may be
deemed expedient by any Trustee, any Liquidity Provider, the Policy Provider,
the Controlling Party or the Subordination Agent, as appropriate, and the
exercise or the beginning of the exercise of any right, power or remedy shall
not be construed to be a waiver of the right to exercise at the same time or
thereafter any other right, power or remedy. No delay or omission by any
Trustee, any Liquidity Provider, the Policy Provider, the Controlling Party or
the Subordination Agent in the exercise of any right, remedy or power or in the
pursuit of any remedy shall impair any such right, power or remedy or be
construed to be a waiver of any default or to be an acquiescence therein.
Section 4.03 Discontinuance of Proceedings. In case any party
to this Agreement (including the Controlling Party in such capacity) shall have
instituted any Proceeding to enforce any right, power or remedy under this
Agreement by foreclosure, entry or otherwise, and such Proceeding shall have
been discontinued or abandoned for any reason or shall have been determined
adversely to the Person instituting such Proceeding, then and in every such case
each such party shall, subject to any determination in such Proceeding, be
restored to its former position and rights hereunder, and all rights, remedies
and powers of such party shall continue as if no such Proceeding had been
instituted.
Section 4.04 Right of Certificateholders, the Liquidity
Providers and the Policy Provider to Receive Payments Not to Be Impaired.
Subject to the provisions of this Agreement and each Trust Agreement, the right
of any Certificateholder, any Liquidity Provider or the Policy Provider,
respectively, to receive payments hereunder (including, without limitation,
pursuant to Section 2.04, 3.02 or 3.03) 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,
such Liquidity Provider or the Policy Provider, respectively.
ARTICLE V
DUTIES OF THE SUBORDINATION AGENT;
AGREEMENTS OF TRUSTEES, ETC.
Section 5.01 Notices of Indenture Event of Default or
Triggering Event, Etc. (a) If the Subordination Agent shall have knowledge of an
Indenture Event of Default or a Triggering Event, as promptly as possible and in
any event within ten days after obtaining actual knowledge thereof, the
Subordination Agent shall give notice thereof to the Rating Agencies, American,
the Liquidity Providers, the Policy Provider and the Trustees by facsimile or
telephone (to be promptly confirmed in writing), unless such Indenture Event of
Default or Triggering Event shall have been cured or waived. For all purposes of
this Agreement, in the absence of actual knowledge, the Subordination Agent
shall not be deemed to have knowledge of any Indenture Event of Default or
Triggering Event unless notified in writing by American, one or more Trustees,
any Liquidity Provider, the Policy Provider or one or more Certificateholders;
and "actual knowledge" (as used in the foregoing clause) of the Subordination
Agent shall mean actual knowledge of an officer in the Corporate Trust Office of
the Subordination Agent.
53
(b) The Subordination Agent will furnish to each
Liquidity Provider, the Policy Provider and each 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, the Policy Provider
or Trustee, as applicable, pursuant to any other Operative Agreement. The
Subordination Agent will furnish to the Policy Provider and American, promptly
upon receipt thereof, duplicates or copies of all notices received by the
Subordination Agent from any Liquidity Provider.
Section 5.02 Indemnification. The Subordination Agent shall
not be required to take any action or refrain from taking any action under
Article IV unless the Subordination Agent shall have received indemnification
against any risks incurred in connection therewith in form and substance
reasonably satisfactory to it, including, without limitation, adequate advances
against costs that may be incurred by it in connection therewith. The
Subordination Agent shall not be required to take any action under Article IV,
nor shall any other provision of this Agreement or any other Operative Agreement
be deemed to impose a duty on the Subordination Agent to take any action, if the
Subordination Agent shall have been advised by outside counsel that such action
is contrary to the terms hereof or is otherwise contrary to law.
Section 5.03 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) promptly take such action as
may be necessary duly to discharge all Liens on any of the Trust Accounts or any
monies deposited therein that are attributable to the Subordination Agent in its
individual capacity and that are unrelated to the transaction contemplated
hereby and by the other Operative Agreements.
Section 5.04 Notice from the Liquidity Providers, the Policy
Provider and the Trustees. If any Liquidity Provider, the Policy Provider or any
Trustee has notice of an Indenture Event of Default or a Triggering Event, such
Person shall promptly give notice thereof to all other Liquidity Providers, the
Policy Provider 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 6.01 Authorization; Acceptance of Trusts and Duties.
The Class G Trustee hereby designates and appoints the Subordination Agent as
the agent and trustee of such Trustee under the Class G Liquidity Facility and
Policy Provider Agreement and authorizes the Subordination Agent to enter into
the Class G Liquidity Facility and Policy Provider Agreement
54
as agent and trustee for such Trustee. Each of the Liquidity Providers, the
Policy Provider and the Trustees hereby designates and appoints the
Subordination Agent as the Subordination Agent under this Agreement. U.S. Bank
accepts the trusts and duties hereby created and applicable to it and agrees to
perform such duties, but only upon the terms of this Agreement and agrees to
receive, handle and disburse all monies received by it in accordance with the
terms hereof. The Subordination Agent shall have no liability hereunder except
(a) for its own willful misconduct or negligence, (b) as provided in Section
2.02 and the last sentence of Section 5.03, (c) for liabilities that may result
from the inaccuracy of any representation or warranty of the Subordination Agent
made in its individual capacity in any Operative Agreement and (d) as otherwise
expressly provided herein or in the other Operative Agreements.
Section 6.02 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 6.03 No Representations or Warranties as to Documents.
The Subordination Agent shall not 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
herein or therein (other than the representations and warranties of the
Subordination Agent made in its individual capacity under any Operative
Agreement), except that the Subordination Agent hereby represents and warrants
that each of said specified documents to which it is a party has been or will be
duly executed and delivered by one of its officers who is and will be duly
authorized to execute and deliver such document on its behalf. The
Certificateholders, the Trustees, the Policy Providers and the Liquidity
Providers make no representation or warranty hereunder whatsoever.
Section 6.04 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, the Policy Provider or
any Liquidity Provider as provided in Articles II and III or deposited into one
or more Trust Accounts need not be segregated in any manner except to the extent
required by such Articles II and III and by law, and the Subordination Agent
shall not (except as otherwise provided in Section 2.02) 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 6.05 Reliance; Agents; Advice of Counsel. The
Subordination Agent shall not incur any liability to anyone in acting upon any
signature, instrument, notice, resolution, request, consent, order, certificate,
report, opinion, bond or other document or paper believed by it to be genuine
and believed by it to be signed by the proper party or parties. 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, the Trustees or the Policy Provider, 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, Trustee, or
55
the Policy Provider, 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. In
the administration of the trusts hereunder, the Subordination Agent may (a)
execute any of the trusts or powers hereof and perform its powers and duties
hereunder directly or through agents or attorneys and (b) consult with counsel,
accountants and other skilled Persons to be selected and retained by it. The
Subordination Agent shall not be liable for anything done, suffered or omitted
in good faith by it in accordance with the advice or opinion of any such
counsel, accountants or other skilled Persons acting within such counsel's,
accountants' or Person's area of competence (so long as the Subordination Agent
shall have exercised reasonable care and judgment in selecting such Persons).
Section 6.06 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 6.07 Compensation. The Subordination Agent shall be
entitled to such compensation, including reasonable expenses and disbursements,
for all services rendered hereunder as American and the Subordination Agent may
agree from time to time in writing and shall have a priority claim to the extent
set forth in Article III 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 or the Policy Provider for any fee as compensation
for its services as agent under this Agreement. The provisions of this Section
6.07 shall survive the termination of this Agreement.
Section 6.08 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 6.09 Subordination Agent Required; Eligibility. There
shall at all times be a Subordination Agent hereunder that is a Citizen of the
United States, a bank, trust company or other financial institution organized
and doing business under the laws of the United States or any state thereof and
eligible to act as a trustee under Section 310(a) of the Trust Indenture Act of
1939, as amended, and that has a combined capital and surplus of at least
$75,000,000 (or a combined capital and surplus in excess of $5,000,000 and the
obligations of which, whether now in existence or hereafter incurred, are fully
and unconditionally guaranteed by a corporation organized under the laws of the
United States or any State or territory thereof or the District of Columbia and
having a combined capital and surplus of at least $75,000,000). If such bank,
trust company or other financial institution or such corporation publishes
reports of conditions at least annually, pursuant to law or to the requirements
of federal, state, territorial or District of Columbia supervising or examining
authority, then for the purposes of this Section 6.09 the combined capital and
surplus of such bank, trust company or other financial institution or such
corporation shall be deemed to be its combined capital and surplus as set forth
in its most recent report of conditions so published.
56
In case at any time the Subordination Agent shall cease to be
eligible in accordance with the provisions of this Section 6.09, the
Subordination Agent shall resign immediately in the manner and with the effect
specified in Section 7.01.
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 and the
Subordination Agent, in its individual capacity, hereby waives all rights of
set-off and counterclaim with respect to all such property.
ARTICLE VII
SUCCESSOR SUBORDINATION AGENT
Section 7.01 Replacement of Subordination Agent; Appointment
of Successor. (a) The Subordination Agent or any successor thereto must resign
if at any time it fails to comply with Section 6.09 and may resign at any time
without cause by giving 60 days' prior written notice to American, the Trustees,
the Policy Provider and the Liquidity Providers. The Controlling Party may
remove the Subordination Agent for cause by so notifying the Subordination Agent
and shall remove the Subordination Agent if:
(1) the Subordination Agent fails to comply with Section
6.09;
(2) the Subordination Agent is adjudged bankrupt or
insolvent or files a bankruptcy petition as a debtor;
(3) a receiver of the Subordination Agent shall be
appointed or any public officer shall take charge or control of the
Subordination Agent or its property or affairs; or
(4) the Subordination Agent otherwise becomes incapable
of acting.
If the Subordination Agent resigns or is removed or if a
vacancy exists in the office of Subordination Agent for any reason (the
Subordination Agent in such event being referred to herein as the retiring
Subordination Agent), the Controlling Party shall in consultation with American
promptly appoint a successor Subordination Agent. If a successor Subordination
Agent shall not have been appointed within 60 days after such notice of
resignation or removal, the retiring Subordination Agent, one or more of the
Trustees, one or more of the Liquidity Providers or the Policy Provider may
petition any court of competent jurisdiction for the appointment of a successor
Subordination Agent to act until such time, if any, as a successor shall have
been appointed as provided above.
A successor Subordination Agent shall deliver (x) a written
acceptance of its appointment as Subordination Agent hereunder to the retiring
Subordination Agent and (y) a written assumption of its obligations hereunder
and under each Liquidity Facility to each party hereto, upon which the
resignation or removal of the retiring Subordination Agent shall become
effective, and the successor Subordination Agent shall have all the rights,
powers and duties of
57
the Subordination Agent under this Agreement. The successor Subordination Agent
shall mail a notice of its succession to the Policy Provider, the Liquidity
Providers and the Trustees. The retiring Subordination Agent shall promptly
transfer its rights under each of the Policy, the Liquidity Facilities and all
of the property and all books and records, or true, complete and correct copies
thereof, held by it as Subordination Agent to the successor Subordination Agent.
If the Subordination Agent fails to comply with Section 6.09
(to the extent applicable), one or more of the Trustees, one or more of the
Liquidity Providers or the Policy Provider may petition a 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
and, so long as no Policy Provider Default has occurred and is continuing, the
Policy Provider shall have consented to such successor Subordination Agent.
(b) Any corporation, bank, trust company or other
financial institution into which the Subordination Agent may be merged or
converted or with which it may be consolidated, or any corporation, bank, trust
company or other financial institution resulting from any merger, conversion or
consolidation to which the Subordination Agent shall be a party, or any
corporation, bank, trust company or other financial institution succeeding to
all or substantially all of the corporate trust business of the Subordination
Agent, shall be the successor of the Subordination Agent hereunder, provided
that such corporation, bank, trust company or other financial institution shall
be otherwise qualified and eligible under Section 6.09, without the execution or
filing of any paper or any further act on the part of any of the parties hereto,
except that such corporation, bank, trust company or other financial institution
shall give prompt subsequent notice of such transaction to the Liquidity
Providers, American and the Policy Provider.
ARTICLE VIII
SUPPLEMENTS AND AMENDMENTS
Section 8.01 Amendments, Waivers, Etc. (a) This Agreement may
not be supplemented, amended or modified without the consent of each Trustee
(acting, except in the case of any amendment pursuant to Section 3.06(e)(v)(y)
with respect to any Replacement Liquidity Facility or any amendment contemplated
by the penultimate sentence of this Section 8.01(a), with the consent of holders
of Certificates of the related Class evidencing Fractional Undivided Interests
in the related Trust aggregating not less than a majority in interest in such
Trust or as otherwise authorized pursuant to the relevant Trust Agreement
(including, without limitation, without the consent of the Certificateholders to
the extent permitted thereby, Section 9.01 of the Basic Agreement)), the
Subordination Agent, the Policy Provider and each Liquidity Provider; provided,
however, that this Agreement may be supplemented, amended or modified (i)
without the consent of any Trustee in order (x) to cure any ambiguity or
omission or to correct any mistake, (y) to correct or supplement any provision,
or (z) to make any other provision in
58
regard to matters or questions arising hereunder that will not materially
adversely affect the interests of any Trustee or the holders of the related
Class of Certificates, (ii) without the consent of any Trustee, the Policy
Provider or any Liquidity Provider if such supplement, amendment or modification
is in accordance with Section 8.01(c) or Section 8.01(d) and Exhibit A hereto
and (iii) without the consent of the Policy Provider if such supplement,
amendment or modification is to give effect to a Replacement Liquidity Facility
issued pursuant to the provisions of Section 3.06(e) so long as such supplement,
amendment or modification shall not be adverse to the interests of the Policy
Provider and the Policy Provider shall have received five Business Days' prior
notice (together with a copy) thereof. If any supplement, amendment or
modification to this Agreement (i) would directly or indirectly amend, modify or
supersede, or otherwise conflict with, Section 2.02(b), Section 3.06(c), Section
3.06(e), Section 3.06(f) (other than the last sentence thereof), Section
3.06(1), this sentence, the last sentence of Section 8.01(a), Section 8.01(c),
Section 8.01(d) or Section 9.06 (collectively, the "American Provisions"), (ii)
would otherwise affect the interests of a potential Replacement Liquidity
Provider or of American with respect to its ability to replace any Liquidity
Facility or with respect to its payment obligations under any Operative
Agreement or the Policy Provider Indemnity and Inspection Agreement or (iii) is
made pursuant to the penultimate sentence of this Section 8.01(a) or pursuant to
Section 8.01(c) or Section 8.01(d), then such supplement, amendment or
modification shall not be effective without the additional written consent of
American. Notwithstanding the foregoing, without the consent of each
Certificateholder affected thereby, the Policy Provider 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) except as provided in
the penultimate sentence of this Section 8.01(a) or Section 8.01(c) or Section
8.01(d), modify Section 2.04, Section 3.02 or Section 3.03 hereof relating to
the distribution of monies received by the Subordination Agent hereunder from
the Equipment Notes or pursuant to any Liquidity Facility or the Policy. Nothing
contained in this Section 8.01(a) shall require the consent of a Trustee at any
time following the payment of Final Distributions with respect to the related
Class of Certificates. Each of the Liquidity Providers and the Policy Provider
hereby agrees and confirms that (i) it shall be deemed to consent to the
issuance of the New Class C Certificates, New Class D Certificates, Class E
Certificates, New Series of Series C Equipment Notes, New Series of Series D
Equipment Notes, Series E Equipment Notes and the amendments to this Agreement
made in connection therewith in accordance with Section 8.01(c) or Section
8.01(d), as the case may be, and (ii) any such issuance shall not affect any of
its respective obligations under its Liquidity Facility or the Policy, as
applicable. The parties hereto agree that no amendments shall be made to this
Agreement pursuant to Section 8.01(c), Section 8.01(d) or Exhibit A hereto
unless each Rating Agency shall have provided written confirmation that the
issuance of the New Class C Certificates, the New Class D Certificates or the
Class E Certificates, as the case may be, will not cause the rating then in
effect by such Rating Agency for any Class of Certificates (without regard, in
the case of the Class G Certificates, to the Policy), to be withdrawn, suspended
or downgraded. If the Replacement Liquidity Facility is to be comprised of more
than one instrument as contemplated by the definition of the term "Replacement
Liquidity Facility", then each party hereto agrees to amend this Agreement and
the other Operative Agreements to incorporate appropriate mechanics for multiple
Liquidity Facilities for a single Trust.
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(b) If the Subordination Agent, as the registered holder
of any Equipment Notes, receives a request for its consent to any amendment,
modification, consent or waiver under such Equipment Notes, the Indenture
pursuant to which such Equipment Notes were issued or the related Participation
Agreement or other related document, the Subordination Agent will exercise its
voting rights as directed by the Controlling Party, subject to Sections 4.01 and
4.04; provided that no such amendment, modification, consent or waiver shall (i)
reduce the amount of principal or interest payable by American under any
Equipment Note or delay the timing of any such payment, (ii) create any Lien
with respect to any Collateral prior to, pari passu with or subordinate to the
Lien of the related Indenture or deprive any holder of an Equipment Note issued
under such Indenture of the benefit of the Lien of such Indenture upon the
related Collateral or (iii) reduce the percentage in principal amount of the
outstanding Equipment Notes issued under any Indenture required to take or
approve any action under such Indenture without, in the case of the preceding
clauses (i), (ii) and (iii), the consent of each Liquidity Provider, the Policy
Provider and the Trustee of each Trust (other than any Trust all the
Certificates of which are held or beneficially owned by American Entities) whose
Certificateholders would be affected thereby, the consent of each such Trustee
to be given only at the direction of the holders of all of the Certificates
Outstanding under such Trust.
(c) If Class E Certificates are issued, this Agreement
shall be amended by written agreement of the Subordination Agent and the
Trustees to provide for the subordination of such Class E Certificates to the
Class G Certificates, the Class C Certificates and the Class D Certificates
substantially in the same manner as the Class D Certificates are subordinated
hereunder to the Class G Certificates and the Class C Certificates. No such
amendment shall adversely affect any Trustee or, without the consent thereof,
any Liquidity Provider or the Policy Provider. The amendment to this Agreement
to give effect to the issuance of any Class E Certificates shall, without
limitation:
(i) add the Class E Trustee as a party to this Agreement;
(ii) revise the definitions of "Certificate", "Class",
"Controlling Party", "Equipment Notes", "Final Legal Distribution
Date", "LTV Ratio", "Stated Interest Rate", "Trust", "Trust Agreement"
and "Trustee", as appropriate, to reflect the issuance of the Class E
Certificates (and the subordination thereof); and
(iii) revise the provisions of this Agreement governing
distributions with respect to Certificates and related notices,
including, without limitation, Sections 2.04, 3.01, 3.02, 3.03 and
3.06, if necessary, to provide for distributions on the Class E
Certificates after payment of all relevant distributions on the Class D
Certificates.
If, with respect to any Aircraft, Series E Equipment Notes are issued to any
Person other than the Class E Trust, this Agreement shall be amended by written
agreement of the indenture trustees of the Series E Equipment Notes, the
Trustees and the Subordination Agent (i) to provide for each holder of a Series
E Equipment Note to be bound by the provisions of Section 2.06(a) so that the
Controlling Party, among other things, shall be entitled to direct the Loan
Trustee under the applicable Indenture as provided in such Section 2.06(a) (and
such Series E Equipment Notes shall make effective provision therefor so as to
bind each holder thereof to such provisions of Section 2.06(a)) and (ii) to
revise the definitions of "Controlling Party" and "Equipment Notes",
60
as appropriate, to reflect the issuance of the Series E Equipment Notes (and the
prior rights, as against the holders of such Series E Equipment Notes, of the
Policy Provider, the Class G Trustee, the Class C Trustee and the Class D
Trustee to be such "Controlling Party"). No such amendment shall materially
adversely affect any Trustee.
(d) If there is a Refunding, this Agreement shall be
amended by written agreement of the Subordination Agent, the Trustees of the
continuing Trusts, if applicable, the Class C Liquidity Provider, and the
Trustees of the newly created Trusts. Such amendment shall comply with the
provisions of Exhibit A hereto, shall substitute the new class C trustee and/or
the new class D trustee for the Class C Trustee or Class D Trustee of the Trusts
being prepaid and shall make other Permitted Refunding Changes (as defined in
such Exhibit A), including, without limitation:
(i) revise the definitions as appropriate of "Class C
Cash Collateral Account", "Class C Liquidity Facility", "Class C
Liquidity Provider", "Class C Trust Agreement", "Class D Trust
Agreement", "Fee Letter", "Series C Equipment Notes", and "Series D
Equipment Notes", including without limitation, to reflect the new date
and other identifying characteristics of any substituted agreement; and
(ii) revise the definitions of Stated Interest Rate and
Final Legal Distribution Date to reflect the terms of the new
Certificates.
No Refunding shall adversely affect any right or obligation of the Policy
Provider or any Liquidity Provider, it being agreed by the Policy Provider and
each Liquidity Provider that any Refunding in accordance with Exhibit A will be
deemed to not adversely affect any of its respective rights or obligations.
Section 8.02 Subordination Agent Protected. If, in the
reasonable opinion of the institution acting as the Subordination Agent
hereunder, any document required to be executed by it pursuant to the terms of
Section 8.01 adversely affects any right, duty, immunity or indemnity with
respect to such institution under this Agreement, any Liquidity Facility or the
Policy, the Subordination Agent may in its discretion decline to execute such
document.
Section 8.03 Effect of Supplemental Agreements. Upon the
execution of any amendment, consent or supplement hereto pursuant to the
provisions hereof, this Agreement shall be and shall be deemed to be modified
and amended in accordance therewith and the respective rights, limitations of
rights, obligations, duties and immunities under this Agreement of the parties
hereto and beneficiaries hereof shall thereafter be determined, exercised and
enforced hereunder subject in all respects to such modifications and amendments,
and all the terms and conditions of any such supplemental agreement shall be and
be deemed to be part of the terms and conditions of this Agreement for any and
all purposes. In executing or accepting any supplemental agreement permitted by
this Article VIII, 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 8.04 Notice to Rating Agencies, the Liquidity
Providers and the Policy Provider. (a) Promptly following its receipt of each
amendment, consent, modification,
61
supplement or waiver contemplated by this Article VIII, the Subordination Agent
shall send a copy thereof to each Rating Agency, each Liquidity Provider and the
Policy Provider.
(b) Until such time as an Indenture Event of Default has
occurred under an Indenture, the Policy Provider shall provide at least seven
days prior notice to S&P and Xxxxx'x of each action it intends to take with
respect to such Indenture in its capacity as Controlling Party.
ARTICLE IX
MISCELLANEOUS
Section 9.01 Termination of Intercreditor Agreement. Upon (or
at any time after) 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 all Policy Provider Obligations to the Policy Provider
and provided that there shall then be no other amounts due to the
Certificateholders, the Trustees, the Liquidity Providers, the Policy Provider
and the Subordination Agent hereunder or under the Trust Agreements, and that
the commitment of the Liquidity Providers under the Liquidity Facilities and of
the Policy Provider under the Policy shall have expired or been terminated, this
Agreement shall terminate and shall be of no further force or effect. Except as
aforesaid or otherwise provided, this Agreement and the trusts created hereby
shall continue in full force and effect in accordance with the terms hereof.
Section 9.02 Intercreditor Agreement for Benefit of Trustees,
Liquidity Providers, Policy Provider and Subordination Agent. Subject to the
second sentence of Section 9.06 and the provisions of Section 4.04 and 8.01,
nothing in this Agreement, whether express or implied, shall be construed to
give to any Person other than the Trustees, the Liquidity Providers, the Policy
Provider and the Subordination Agent any legal or equitable right, remedy or
claim under or in respect of this Agreement.
Section 9.03 Notices. Unless otherwise expressly specified or
permitted by the terms hereof, all notices required or permitted under the terms
and provisions of this Agreement shall be in English and in writing, and any
such notice may be given by United States mail, courier service or facsimile or
any other customary means of communication, and any such notice shall be
effective when delivered (or if mailed, three Business Days after deposit,
postage prepaid in the first class United States mail and, if delivered by
facsimile, upon completion of transmission and confirmation by the sender (by a
telephone call to a representative of the recipient or by machine confirmation)
that such transmission was received),
if to the Subordination Agent, to:
U.S. Bank Trust National Association
000 Xxxxxx Xxxxxx
Xxxxxxx Square
Hartford, Connecticut 06103
Attention: Corporate Trust Division
62
Telephone: (000) 000-0000
Telecopy: (000) 000-0000
if to any Trustee, to:
U.S. Bank Trust National Association
000 Xxxxxx Xxxxxx
Xxxxxxx Square
Hartford, Connecticut 06103
Attention: Corporate Trust Division
Telephone: (000) 000-0000
Telecopy: (000) 000-0000
if to the Policy Provider, to:
Ambac Assurance Corporation
Xxx Xxxxx Xxxxxx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Surveillance Department
Telephone: (000) 000-0000
Telecopy: (000) 000-0000
with a copy to:
Attention: General Counsel - Urgent
Telecopy: (000) 000-0000
if to any Liquidity Provider, at the address set forth in the respective
Liquidity Facility.
Any party hereto, by notice to the other parties hereto, may
designate additional or different addresses for subsequent notices or
communications. Whenever the words "notice" or "notify" or similar words are
used herein, they mean the provisions of formal notice as set forth in this
Section 9.03.
Section 9.04 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 9.05 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.
63
Section 9.06 Successors and Assigns. All covenants and
agreements contained herein shall bind and inure to the benefit of, and be
enforceable by, each of the parties hereto and the successors and permitted
assigns of each, all as herein provided. In addition, the American Provisions
shall inure to the benefit of American and its successors and permitted assigns,
and (without limitation of the foregoing) American is hereby constituted, and
agreed to be, an express third party beneficiary of the American Provisions.
Section 9.07 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 9.08 Counterparts. This Agreement may be executed in
any number of counterparts (and each party shall not be required to execute the
same counterpart). Each counterpart of this Agreement including a signature page
or pages executed by each of the parties hereto shall be an original counterpart
of this Agreement, but all of such counterparts together shall constitute one
instrument.
Section 9.09 Subordination. (a) As among the Trustees, and as
between the Liquidity Providers and the Policy Provider, 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. In addition, as among the
Trustees and the Certificateholders of each Class, this Agreement shall be a
subordination agreement for purposes of such Section 510.
(b) Notwithstanding the provisions of this Agreement, if
prior to the payment in full to (i) the Liquidity Providers of all Liquidity
Obligations then due and payable and (ii) the Policy Provider of all Policy
Provider Obligations, or prior to the distribution in full of any other amount
distributable hereunder, any party hereto shall have received any payment or
distribution in respect of Equipment Notes or any other amount under the Policy
Provider Indemnification and Inspection Agreement, the Indentures or other
Operative Agreements which, had the subordination provisions of this Agreement
been properly applied to such payment, distribution or other amount, would not
have been distributed to such Person, then such payment, distribution or other
amount shall be received and held in trust by such Person and paid over or
delivered to the Subordination Agent for application as provided herein.
(c) If any Trustee, any Liquidity Provider, the Policy
Provider or the Subordination Agent receives any payment in respect of any
obligations owing or amounts distributable hereunder (or, in the case of the
Liquidity Providers or the Policy Provider, in respect of the Liquidity
Obligations or the Policy Provider Obligations, as the case may be), 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 amounts (or, in the case of the Liquidity Providers
or the Policy Provider, such Liquidity Obligations or the Policy Provider
Obligations, as the case may be) 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, the Policy Provider and the
Subordination Agent expressly confirm and
64
agree that the payment priorities and subordination specified in Articles II and
III shall apply in all circumstances, notwithstanding the occurrence of an
American Bankruptcy Event or any similar event or occurrence relating to any
other Person (it being expressly agreed that the payment priorities and
subordination specified in Articles II and III shall apply whether or not a
claim for post-petition or post-filing interest is allowed in the proceedings
resulting from such American Bankruptcy Event or other event or occurrence).
(e) Each of the Trustees (on behalf of themselves and the
holders of Certificates), the Liquidity Providers, the Policy Provider 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 any Liquidity Provider
and the Policy Provider, the Liquidity Obligations or the Policy
Provider Obligations, as the case may be;
(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 any Liquidity Provider and the Policy
Provider, any of the Liquidity Obligations or the Policy Provider
Obligations, as the case may be;
(iii) renew, extend, increase, alter or exchange any
amounts owing to it hereunder, including, in the case of any Liquidity
Provider and the Policy Provider, any of the Liquidity Obligations or
the Policy Provider Obligations, as the case may be, or release or
compromise any obligation of any obligor with respect thereto;
(iv) refrain from exercising any right or remedy, or delay
in exercising any right or remedy, which it may have; or
(v) take any other action which might discharge a
subordinated party or a surety under applicable law;
provided, however, that the taking of any such actions by any of the Trustees,
the Liquidity Providers, the Policy Provider or the Subordination Agent shall
not prejudice the rights or adversely affect the obligations of any other party
under this Agreement.
Section 9.10 Governing Law. THIS AGREEMENT HAS BEEN DELIVERED
IN THE STATE OF NEW YORK AND SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE
WITH THE LAWS OF THE STATE OF NEW YORK, INCLUDING ALL MATTERS OF CONSTRUCTION,
VALIDITY AND PERFORMANCE, AND THE OBLIGATIONS, RIGHTS AND REMEDIES OF THE
PARTIES HEREUNDER SHALL BE DETERMINED IN ACCORDANCE WITH SUCH LAWS.
Section 9.11 Submission to Jurisdiction; Waiver of Jury Trial;
Waiver of Immunity. (a) Each of the parties hereto, to the extent it may do so
under applicable law, for purposes hereof and of all other Operative Agreements
hereby (i) irrevocably submits itself to the non-exclusive jurisdiction of the
courts of the State of New York sitting in the City of New York and to the
non-exclusive jurisdiction of the United States District Court for the Southern
District of New York, for the purposes of any suit, action or other proceeding
arising out of this
65
Agreement, the subject matter hereof or any of the transactions contemplated
hereby brought by any party or parties hereto or thereto, or their successors or
permitted assigns and (ii) waives, and agrees not to assert, by way of motion,
as a defense, or otherwise, in any such suit, action or proceeding, that the
suit, action or proceeding is brought in an inconvenient forum, that the venue
of the suit, action or proceeding is improper or that this Agreement or the
subject matter hereof or any of the transactions contemplated hereby may not be
enforced in or by such courts.
(b) EACH OF THE PARTIES HERETO HEREBY AGREES TO WAIVE ITS
RESPECTIVE RIGHTS TO A JURY TRIAL OF ANY CLAIM OR CAUSE OF ACTION BASED UPON OR
ARISING OUT OF THIS AGREEMENT OR ANY DEALINGS BETWEEN THEM RELATING TO THE
SUBJECT MATTER OF THIS AGREEMENT AND THE RELATIONSHIP THAT IS BEING ESTABLISHED,
including, without limitation, contract claims, tort claims, breach of duty
claims and all other common law and statutory claims. Each of the parties
warrants and represents that it has reviewed this waiver with its legal counsel,
and that it knowingly and voluntarily waives its jury trial rights following
consultation with such legal counsel. THIS WAIVER IS IRREVOCABLE AND CANNOT BE
MODIFIED EITHER ORALLY OR IN WRITING, AND THIS WAIVER SHALL APPLY TO ANY
SUBSEQUENT AMENDMENTS, RENEWALS, SUPPLEMENTS OR MODIFICATIONS TO THIS AGREEMENT.
(c) Each Liquidity Provider hereby waives any immunity it
may have from the jurisdiction of the courts of the United States or of any
state thereof 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.
66
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be duly executed by their respective officers thereunto duly
authorized, as of the date first above written.
U.S. BANK TRUST NATIONAL ASSOCIATION,
as Trustee for each of the Trusts
By: /s/ Alison X.X. Xxxxxx
----------------------------------------
Name: Alison X.X. Xxxxxx
Title: Vice President
CITIBANK, N.A., Class G Liquidity Provider
By: /s/ Xxxxxxx X. Xxxxxx
----------------------------------------
Name: Xxxxxxx X. Xxxxxx
Title: Vice President
U.S. BANK TRUST NATIONAL ASSOCIATION,
Subordination Agent
By: /s/ Alison X.X. Xxxxxx
----------------------------------------
Name: Alison X.X. Xxxxxx
Title: Vice President
AMBAC ASSURANCE CORPORATION,
Policy Provider
By: /s/ Xxxxx Xxxxxxxxx
----------------------------------------
Name: Xxxxx Xxxxxxxxx
Title: Vice President
67
Exhibit A to
Intercreditor Agreement
REFUNDING TERMS
American shall have the option to prepay (each such prepayment and the related
transactions contemplated by this Exhibit A, a "Refunding") at any time without
premium all outstanding Series C Equipment Notes and all outstanding Series D
Equipment Notes, provided that all the following conditions are complied with:
1. Ratings Confirmation with respect to the Refunding shall have been
received with respect to any then-rated Class of Certificates not
undergoing such Refunding.
2. American shall have issued, pursuant to each Indenture, new Series C
Equipment Notes and Series D Equipment Notes (each, a "New Series").
The economic terms of either New Series (the "Specified Economic
Terms") may not differ in any material respect from the economic terms
of the corresponding series of Equipment Notes being prepaid (a
"Prepaid Series"), except that:
(a) the interest rates of either New Series or both may be changed
(provided that the interest rate of all Equipment Notes of a
series shall be the same), and either New Series or both may
provide for specified increases and decreases in the stated
interest rate under stated circumstances (provided that the
interest rate on the New Series of Series C Equipment Notes
may not exceed 20% per annum) or, solely in the case of a New
Series of Series D Equipment Notes, floating rate interest;
(b) the principal amount of either New Series or both issued under
any Indenture may be increased or decreased; provided that the
principal amount of a New Series issued under any Indenture
may not change by more than 20% of the principal amount
outstanding as of the date of redemption of the corresponding
Prepaid Series issued under such Indenture;
(c) the maturity date of either New Series or both may be made
earlier or later by not more than one year before or after the
original maturity date of the corresponding Prepaid Series;
and
(d) the amount of premium on prepayment on either New Series or
both may be changed.
3. Each New Series shall be substantially in the form of the respective
series of Equipment Notes being prepaid, with only Permitted Refunding
Changes thereto. "Permitted Refunding Changes", with respect to any
instrument, agreement or other document, means only such changes,
amendments and modifications to such instrument, agreement or other
document as may be necessary or advisable to implement (x) the
Specified Economic Terms and (y) conforming and clarifying changes to
reflect the transactions contemplated by this Exhibit A.
A-1
4. Following a Refunding, if a New Series has been purchased by a New
Trust (as defined below) with proceeds of New Class C Certificates (as
defined below) or New Class D Certificates (as defined below) that were
sold to Persons unaffiliated with American, such new Series may be
prepaid only if all series of Equipment Notes issued under the
underlying related Indenture that are senior to such New Series also
are prepaid.
5. American and a Trustee (a "New Trustee") shall have entered into a
Trust Supplement for a new Class C Trust and a new Class D Trust (each,
a "New Trust") (providing for the issuance of new Class C Certificates
and new Class D Certificates respectively) substantially in the form of
the Trust Supplements of the Trusts holding the corresponding Prepaid
Series (the "Terminating Trusts"), in each case, with Permitted
Refunding Changes.
6. [RESERVED].
7. [RESERVED].
8. Pursuant to amendments to reflect Permitted Refunding Changes, each New
Trustee, in substitution of the corresponding Trustee of the relevant
Terminating Trust, shall become a party to this Intercreditor Agreement
and to the Participation Agreements, in each case, as they may be
amended as provided in the last paragraph of this Exhibit A.
9. New Class C Certificates ("New Class C Certificates") shall have been
sold to one or more Persons unaffiliated with American, other than the
original registered holder (or the named beneficiary of such original
registered holder or any person who holds Class C Certificates for the
benefit of such named beneficiary) of definitive trust certificates of
the Terminating Trusts, and from the proceeds thereof there shall have
been purchased the relevant New Series by the relevant New Trustee. A
Class C Liquidity Facility with terms substantially similar to those
contained in the Class G Liquidity Facility covering 18 months of
interest on the New Class C Certificates may be provided for the New
Class C Certificates.
Concurrently with the sale of New Class C Certificates, new Class D
Certificates ("New Class D Certificates") may be sold to one or more
Persons affiliated with American or unaffiliated with American (other
than, in each case, the original registered holder (or the named
beneficiary of such original holder or any person who holds Class D
Certificates for the benefit of such named beneficiary) of definitive
trust certificates of the Terminating Trusts), and from the proceeds
thereof there shall have been purchased the relevant New Series by the
relevant New Trustee. If the Series D Equipment Notes are the subject
of such a Refunding, and if the New Series of Series D Equipment Notes
issued in such Refunding is purchased by a New Trust with proceeds of
New Class D Certificates that are sold to one or more Persons
affiliated with American, such New Series of Series D Equipment Notes
may, at American's option, be prepaid as part of a second Refunding in
which additional new Class D Certificates are sold to one or more
Persons unaffiliated with American as provided in this Exhibit A.
A-2
10. Each New Series of Equipment Notes shall be issued to the Subordination
Agent as agent of the New Trustee of the applicable New Trust.
11. American shall have paid or made provision for the payment of all costs
of implementing the foregoing.
12. American shall provide the Policy Provider with prior notice of its
intention to effect a Refunding as promptly as practicable, but in no
event less than 5 business days in advance of such Refunding.
In lieu of prepaying both the Series C Equipment Notes and Series D Equipment
Notes, American shall have the right to prepay only the Series C Equipment
Notes, in which case the conditions relating to Series D Equipment Notes and
Class D Certificates (the "Class D Conditions") shall not be applicable.
American may thereafter prepay the Series D Equipment Notes in which case the
Class D Conditions above will be applicable and the Ratings Confirmation in
respect of the related Refunding shall also be in respect of the Class C
Certificates.
Each party to this Intercreditor Agreement agrees for the benefit of American to
cooperate with American at American's reasonable request to carry out the
purpose of the foregoing provisions on the terms and conditions set forth above.
Notwithstanding anything to the contrary set forth in this Intercreditor
Agreement, any Operative Agreement, or any Operative Document or Pass Through
Document (as such terms are defined in each Indenture), any Permitted Refunding
Changes to this Intercreditor Agreement or any such other agreement or
instrument may be made without the consent of any Certificateholder; provided
that each of the following instruments, agreements or specified provisions of
instruments or agreements may be amended, modified or supplemented in connection
with a Refunding only to make conforming or clarifying changes resulting from
the consummation of the transactions described in this Exhibit A (or otherwise
in accordance with the terms of such instrument or agreement):
Series G Equipment Notes
Class G Trust Agreement
Class G Certificate
Policy
Class G Liquidity Facility
The granting clause and Sections 3.02, 3.03 and 3.04 of the Indentures, and
Sections 3.02, 3.03 and 3.06 of the Intercreditor Agreement.
A-3
