Exhibit 4(f)
[EXECUTION COPY]
INTERCREDITOR AGREEMENT
Dated as of
December 9, 1999
BY AND AMONG
STATE STREET BANK AND TRUST COMPANY OF CONNECTICUT,
NATIONAL ASSOCIATION,
not in its individual capacity
but solely as Trustee under the
Northwest Airlines Pass Through Trust 0000-0X,
Xxxxxxxxx Xxxxxxxx Xxxx Through Trust 1999-3B
and
Northwest Airlines Pass Through Trust 1999-3C
XXXXXX XXXXXXX CAPITAL SERVICES, INC.
as Class G Liquidity Provider
Class B Liquidity Provider
and
Class C Liquidity Provider,
STATE STREET BANK AND TRUST COMPANY
not in its individual capacity except
as expressly set forth herein but
solely as Subordination Agent and trustee hereunder
AND
MBIA INSURANCE CORPORATION
as Policy Provider
TABLE OF CONTENTS
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ARTICLE I
DEFINITIONS
SECTION 1.1 Definitions...................................................2
ARTICLE II
TRUST ACCOUNTS; CONTROLLING PARTY
SECTION 2.1 Agreement to Terms of Subordination; Payments from Monies
Received Only.............................................25
SECTION 2.2 Trust Accounts...............................................25
SECTION 2.3 Deposits to the Collection Account and Special Payments
Account...................................................26
SECTION 2.4 Distributions of Special Payments............................27
SECTION 2.5 Designated Representatives...................................30
SECTION 2.6 Controlling Party............................................30
ARTICLE III
RECEIPT, DISTRIBUTION AND APPLICATION OF AMOUNTS RECEIVED
SECTION 3.1 Written Notice of Distribution...............................32
SECTION 3.2 Distribution of Amounts on Deposit in the Collection
Account...................................................35
SECTION 3.3 Distribution of Amounts on Deposit Following a Triggering
Event.....................................................37
SECTION 3.4 Other Payments...............................................39
SECTION 3.5 Payments to the Trustees, the Liquidity Providers and the
Policy Provider...........................................40
SECTION 3.6 Liquidity Facilities.........................................40
SECTION 3.7 The Policy...................................................46
ARTICLE IV
EXERCISE OF REMEDIES
SECTION 4.1 Directions from the Controlling Party........................50
SECTION 4.2 Remedies Cumulative..........................................51
SECTION 4.3 Discontinuance of Proceedings................................51
SECTION 4.4 Right of Certificateholders to Receive Payments Not to Be
Impaired..................................................51
SECTION 4.5 Undertaking for Costs........................................51
ARTICLE V
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DUTIES OF THE SUBORDINATION AGENT;
AGREEMENTS OF TRUSTEES, ETC.
SECTION 5.1 Notice of Indenture Default or Triggering Event..............52
SECTION 5.2 Indemnification..............................................52
SECTION 5.3 No Duties Except as Specified in Intercreditor Agreement.....53
SECTION 5.4 Notice from the Liquidity Providers and Trustees.............53
ARTICLE VI
THE SUBORDINATION AGENT
SECTION 6.1 Authorization; Acceptance of Trusts and Duties...............53
SECTION 6.2 Absence of Duties............................................54
SECTION 6.3 No Representations or Warranties as to Documents.............54
SECTION 6.4 No Segregation of Monies; No Interest........................54
SECTION 6.5 Reliance; Agents; Advice of Counsel..........................54
SECTION 6.6 Capacity in Which Acting.....................................55
SECTION 6.7 Compensation.................................................55
SECTION 6.8 May Become Certificateholder.................................55
SECTION 6.9 Subordination Agent Required; Eligibility....................55
SECTION 6.10 Money to Be Held in Trust....................................56
ARTICLE VII
INDEMNIFICATION OF SUBORDINATION AGENT
SECTION 7.1 Scope of Indemnification.....................................56
ARTICLE VIII
SUCCESSOR SUBORDINATION AGENT
SECTION 8.1 Replacement of Subordination Agent; Appointment of
Successor.................................................56
ARTICLE IX
SUPPLEMENTS AND AMENDMENTS
SECTION 9.1 Amendments, Waivers, Etc.....................................57
SECTION 9.2 Subordination Agent Protected................................59
SECTION 9.3 Effect of Supplemental Agreements............................59
SECTION 9.4 Notice to Rating Agencies....................................59
SECTION 9.5 Addition of Class D Trustee..................................59
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ARTICLE X
MISCELLANEOUS
SECTION 10.1 Termination of Intercreditor Agreement.......................60
SECTION 10.2 Intercreditor Agreement for Benefit of Trustees, Liquidity
Providers, the Policy Provider and Subordination Agent....60
SECTION 10.3 Notices......................................................60
SECTION 10.4 Severability.................................................61
SECTION 10.5 No Oral Modifications or Continuing Waivers..................62
SECTION 10.6 Successors and Assigns.......................................62
SECTION 10.7 Headings.....................................................62
SECTION 10.8 Counterpart Form.............................................62
SECTION 10.9 Subordination................................................62
SECTION 10.10 Governing Law................................................63
SECTION 10.11 Submission to Jurisdiction; Waiver of Jury Trial; Waiver of
Immunity..................................................64
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INTERCREDITOR AGREEMENT
INTERCREDITOR AGREEMENT dated as of December 9, 1999, by and among
STATE STREET BANK AND TRUST COMPANY OF CONNECTICUT, NATIONAL ASSOCIATION, a
national banking association ("State Street of Connecticut"), not in its
individual capacity but solely as Trustee of each Trust (each as defined below),
XXXXXX XXXXXXX CAPITAL SERVICES, INC., a Delaware corporation, ("MSCS"), as
Class G Liquidity Provider, MSCS, as Class B Liquidity Provider, MSCS, as Class
C Liquidity Provider, STATE STREET BANK AND TRUST COMPANY, a Massachusetts trust
company, not in its individual capacity except as expressly set forth herein,
but solely as Subordination Agent and trustee hereunder (in such capacity,
together with any successor appointed pursuant to Article VIII hereof, the
"Subordination Agent"), and MBIA INSURANCE CORPORATION, a New York stock
insurance company, ("MBIA"), as the Policy Provider.
WHEREAS, all capitalized terms used herein shall have the respective
meanings referred to in Article I hereof;
WHEREAS, pursuant to each Indenture (i) in the case of each Aircraft
that is owned by Northwest at the time such Indenture is entered into (the
"Owned Aircraft"), Northwest will issue on a recourse basis three series of
Equipment Notes to finance the purchase of such Aircraft, and (ii) in the case
of each Aircraft that is leased to Northwest pursuant to a related Lease at the
time such Indenture is entered into (the "Leased Aircraft"), the related Owner
Trustee will issue on a nonrecourse basis three series of Equipment Notes to
finance the purchase of such Aircraft;
WHEREAS, pursuant to the Financing Agreements, each Trust will
acquire Equipment Notes having an interest rate equal to the interest rate
applicable to the Certificates to be issued by such Trust;
WHEREAS, pursuant to each Trust Agreement, the Trust created thereby
proposes to issue a single class of Certificates (a "Class") bearing the
interest rate and having the final distribution date described in such Trust
Agreement on the terms and subject to the conditions set forth therein;
WHEREAS, pursuant to the Underwriting Agreement (as defined below),
the Underwriters propose to purchase the Certificates issued by each Trust in
the aggregate face amount set forth opposite the name of such Trust on Schedule
I thereto on the terms and subject to the conditions set forth therein;
WHEREAS, each Liquidity Provider proposes to enter into a revolving
credit agreement (each, a "Liquidity Facility") with the Subordination Agent, as
agent for the Trustee of each Trust, for the benefit of the Certificateholders
of such Trust;
WHEREAS, Xxxxxx Xxxxxxx Xxxx Xxxxxx & Co. will guarantee in full,
pursuant to separate guarantee agreements dated as of the date hereof (each, a
"Liquidity Guarantee Agreement"), the obligations of MSCS under the Liquidity
Facilities;
WHEREAS, the Policy Provider proposes to enter into the Policy
Provider Agreement providing for the issuance by the Policy Provider of the
Policy for the benefit of the Class G Trustee and Class G Certificateholders;
and
WHEREAS, it is a condition precedent to the obligations of the
Underwriters under the Underwriting Agreement that the Subordination Agent, the
Trustees, the Liquidity Providers 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 Liquidity Providers
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 1.1 Definitions. For all purposes of this Agreement, except
as otherwise expressly provided or unless the context otherwise requires:
(1) the terms used herein that are defined in this Article have the
meanings assigned to them in this Article, and include the plural as well
as the singular;
(2) all references in this Agreement to designated "Articles",
"Sections" and other subdivisions are to the designated Articles, Sections
and other subdivisions of this Agreement;
(3) the words "herein", "hereof" and "hereunder" and other words of
similar import refer to this Agreement as a whole and not to any
particular Article, Section or other subdivision; and
(4) the term "including" shall mean "including without limitation".
"Acceleration" means, with respect to the amounts payable in respect
of the Equipment Notes issued under any Indenture, the declaration or
deemed declaration of
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such amounts to be immediately due and payable. "Accelerate" and
"Accelerated" have meanings correlative to the foregoing.
"Accrued Class G Interest" has the meaning assigned to such term in
Section 3.7(a).
"Adjusted Expected Distributions" means with respect to the
Certificates of any Class on any Current Distribution Date the sum of (x)
the amount of accrued and unpaid interest on such Certificates (excluding
interest, if any, payable with respect to the Deposits related to such
Trust) plus (y) the greater of:
(A) the difference between (x) the Pool Balance of such
Certificates as of the immediately preceding Distribution Date (or
if the Current Distribution Date is the first Distribution Date, the
original aggregate face amount of the Certificates of such Trust)
and (y) the Pool Balance of such Certificates as of the Current
Distribution Date calculated on the basis that (i) the principal of
the NonPerforming Equipment Notes held in such Trust has been paid
in full and such payments have been distributed to the holders of
such Certificates, (ii) the principal of the Performing Equipment
Notes has been paid when due (but without giving effect to any
Acceleration of Performing Equipment Notes) and has been distributed
to the holders of such Certificates and (iii) the principal of any
Equipment Notes formerly held in such Trust which have been sold
pursuant to the terms hereof have been paid in full and such
payments have been distributed to the holders of such Certificates
but without giving effect to any reduction in the Pool Balance as a
result of any distribution attributable to Deposits occurring after
the immediately preceding Distribution Date (or, if the Current
Distribution Date is the first Distribution Date, occurring after
the initial issuance of the Certificates of such Trust) and
(B) the amount of the excess, if any, by which (i) the Pool
Balance of such Class of Certificates as of the immediately
preceding Distribution Date (or, if the Current Distribution Date is
the first Distribution Date, the original aggregate face amount of
the Certificates of such Trust) less the amount of the Deposits for
such Class of Certificates as of such preceding Distribution Date
(or, if the Current Distribution Date is the first Distribution
Date, the original aggregate amount of the Deposits for such Class
of Certificates) other than any portion of such Deposits thereafter
used to acquire Equipment Notes pursuant to the Note Purchase
Agreement, over (ii) the Aggregate LTV Collateral Amount for such
Class of Certificates for the Current Distribution Date;
provided that, until the date of the initial LTV Appraisals, clause (B)
above shall not be applicable.
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"Affiliate" means, with respect to any Person, any other Person
directly or indirectly controlling, controlled by or under common control
with such Person. For the purposes of this definition, "control" means the
power, directly or indirectly, to direct or cause the direction of the
management and policies of such Person whether through the ownership of
voting securities or by contract or otherwise; and the terms "controlling"
and "controlled" have meanings correlative to the foregoing.
"Aggregate LTV Collateral Amount" means for any Class of
Certificates for any Distribution Date (i) the sum of the applicable LTV
Collateral Amounts for each Leased Aircraft and Owned Aircraft, minus the
Pool Balance for each Class of Certificates, if any, senior to such Class
after giving effect to any distribution of principal on such Distribution
Date with respect to such senior Class or Classes.
"Aircraft" means, with respect to any Indenture, the "Aircraft"
referred to therein.
"Appraised Current Market Value" of any Leased Aircraft or Owned
Aircraft means the lower of the average and the median of the most recent
three LTV Appraisals of such Aircraft.
"Appraisers" means Aircraft Information Systems, Inc., AvSOLUTIONS,
Inc. and Xxxxxx Xxxxx and Xxxxx, Inc.
"Available Amount" means, with respect to any Liquidity Facility on
any drawing date, an amount equal to (a) the Stated Amount of such
Liquidity Facility, less (b) the amount of each Interest Drawing honored
by the Liquidity Provider under such Liquidity Facility on or prior to
such date which has not been reimbursed or reinstated as provided in
Section 3.6(g) hereof as of such date; provided that, following a
Downgrade Drawing, a Non-Extension Drawing or a Final Drawing under such
Liquidity Facility, the Available Amount of such Liquidity Facility shall
be zero.
"Business Day" means any day other than a Saturday or Sunday or a
day on which, for purposes the Policy and the Policy Provider, insurance
companies in New York, New York and, for all such and all other purposes
hereunder, commercial banks are required or authorized to close in
Minneapolis, Minnesota, New York, New York, or the city and state in which
any Trustee, the Subordination Agent or any Loan Trustee maintains its
Corporate Trust Office or receives and disburses funds. Solely with
respect to draws under any Liquidity Facility, Business Day shall also
include a "Business Day" as defined in such Liquidity Facility.
"Cash Collateral Account" means the Class G Cash Collateral Account,
the Class B Cash Collateral Account or the Class C Cash Collateral
Account, as applicable.
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"Certificate" means a Class G Certificate, a Class B Certificate or
a Class C Certificate, as applicable.
"Certificateholder" means any holder of one or more Certificates.
"Class" has the meaning assigned to such term in the preliminary
statements to this Agreement.
"Class B Cash Collateral Account" means an Eligible Deposit Account
in the name of the Subordination Agent maintained at an Eligible
Institution, which shall be the Subordination Agent if it shall so
qualify, into which all amounts drawn under the Class B Liquidity Facility
pursuant to Section 3.6(c), 3.6(d) or 3.6(i) shall be deposited.
"Class B Certificateholder" means, at any time, any holder of one or
more Class B Certificates.
"Class B Certificates" means the certificates issued by the Class B
Trust, substantially in the form of Exhibit A to the Class B Trust
Agreement, and authenticated by the Class B Trustee, representing
fractional undivided interests in the Class B Trust, and any certificates
issued in exchange therefor or replacement thereof pursuant to the terms
of the Class B Trust Agreement.
"Class B Liquidity Facility" means, initially, the Revolving Credit
Agreement dated as of December 9, 1999, by and between the Subordination
Agent, as agent and trustee of the Class B Trustee, and the Class B
Liquidity Provider, and, from and after the replacement of such Agreement
pursuant hereto, the Replacement Liquidity Facility therefor, if any, in
each case as amended, supplemented or otherwise modified from time to time
in accordance with its terms.
"Class B Liquidity Provider" means MSCS, together with any
Replacement Liquidity Provider which has issued a Replacement Liquidity
Facility to replace the Class B Liquidity Facility pursuant to Section
3.6(e).
"Class B Trust" means Northwest Airlines 1999-3B Pass Through Trust
created and administered pursuant to the Class B Trust Agreement.
"Class B Trust Agreement" means the Pass Through Trust Agreement, as
supplemented by Trust Supplement No. 1999-3B thereto dated as of December
9, 1999, by and among Northwest, the Guarantor and the Trustee, governing
the creation and administration of the Class B Trust and the issuance of
the Class B Certificates, as the same may be amended, supplemented or
otherwise modified from time to time in accordance with its terms.
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"Class B Trustee" means State Street of Connecticut, not in its
individual capacity except as expressly set forth in the Class B Trust
Agreement, but solely as trustee under the Class B Trust Agreement,
together with any successor trustee appointed pursuant thereto.
"Class C Cash Collateral Account" means an Eligible Deposit Account
in the name of the Subordination Agent and maintained at an Eligible
Institution, which shall be the Subordination Agent if it shall so
qualify, into which all amounts drawn under the Class C Liquidity Facility
pursuant to Section 3.6(c), 3.6(d) or 3.6(i) shall be deposited.
"Class C Certificateholder" means, at any time, any holder of one or
more Class C Certificates.
"Class C Certificates" means the certificates issued by the Class C
Trust, substantially in the form of Exhibit A to the Class C Trust
Agreement, and authenticated by the Class C Trustee, representing
fractional undivided interests in the Class C Trust, and any certificates
issued in exchange therefor or in replacement thereof pursuant to the
terms of the Class C Trust Agreement.
"Class C Liquidity Facility" means, initially, the Revolving Credit
Agreement dated as of December 9, 1999, by and between the Subordination
Agent, as agent and trustee of the Class C Trustee, and the Class C
Liquidity Provider and, from and after the replacement of such Agreement
pursuant hereto, the Replacement Liquidity Facility therefor, if any, in
each case as amended, supplemented or otherwise modified from time to time
in accordance with its terms.
"Class C Liquidity Provider" means MSCS, together with any
Replacement Liquidity Provider which has issued a Replacement Liquidity
Facility to replace the Class C Liquidity Facility pursuant to Section
3.6(e).
"Class C Trust" means Northwest Airlines 1999-3C Pass Through Trust
created and administered pursuant to the Class C Trust Agreement.
"Class C Trust Agreement" means the Pass Through Trust Agreement, as
supplemented by Trust Supplement No. 1999-3C thereto dated as of December
9, 1999, by and among Northwest, the Guarantor and the Trustee, governing
the creation and administration of the Class C Trust 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 State Street of Connecticut, not in its
individual capacity except as expressly set forth in the Class C Trust
Agreement, but solely as trustee under
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the Class C Trust Agreement, together with any successor trustee appointed
pursuant thereto.
"Class D Certificates" means the pass through certificates, if any,
issued by Northwest Airlines, Inc. and designated Series 1999-3D, in
connection with a secured financing of an Owned Aircraft or a Leased
Aircraft.
"Class D Trustee" means the trustee of the trust relating to the
Class D Certificates.
"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 all amounts drawn under the Class G Liquidity Facility
pursuant to Section 3.6(c), 3.6(d) or 3.6(i) shall be deposited.
"Class G Certificateholder" means, at any time, any holder 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 Deposits" means the Deposits with respect to the Class G
Certificates.
"Class G Liquidity Facility" means, initially, the Revolving Credit
Agreement dated as of December 9, 1999, by and between the Subordination
Agent, as agent and trustee of the Class G Trustee, and the Class G
Liquidity Provider, and, from and after the replacement of such Agreement
pursuant hereto, the Replacement Liquidity Facility therefor, if any, in
each case as amended, supplemented or otherwise modified from time to time
in accordance with its terms.
"Class G Liquidity Provider" means MSCS, together with any
Replacement Liquidity Provider which has issued a Replacement Liquidity
Facility to replace the Class G Liquidity Facility pursuant to Section
3.6(e).
"Class G Paying Agent Account" means the Paying Agent Account as
defined in the Escrow and Paying Agent Agreement relating to the Class G
Certificates.
"Class G Trust" means Northwest Airlines 1999-3G Pass Through Trust
created and administered pursuant to the Class G Trust Agreement.
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"Class G Trust Agreement" means the Pass Through Trust Agreement, as
supplemented by Trust Supplement No. 1999-3G thereto dated as of December
9, 1999, by and among Northwest, the Guarantor and the Trustee, governing
the creation and administration of the Class G Trust 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 State Street of Connecticut, 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 December 9, 1999.
"Code" means the Internal Revenue Code of 1986, as amended from time
to time, and Treasury Regulations promulgated thereunder.
"Collateral" has the meaning assigned to such term in the Owned
Aircraft Indentures.
"Collection Account" means the Eligible Deposit Account established
by the Subordination Agent pursuant to Section 2.2 which the Subordination
Agent shall make deposits in and withdrawals from in accordance with this
Agreement.
"Controlling Party" means the Person entitled to act as such
pursuant to the terms of Section 2.6.
"Corporate Trust Office" means, with respect to any Trustee, the
Subordination Agent or any Loan Trustee, the office of such Person in the
city at which, at any particular time, its corporate trust business shall
be principally administered.
"Current Distribution Date" means a Distribution Date specified as a
reference date for calculating the Adjusted Expected Distributions or
Expected Distributions with respect to the Certificates of any Trust as of
such Distribution Date.
"Defaulted Series G Equipment Note" has the meaning assigned to such
term in Section 3.7(c).
"Delivery Period Expiry Date" means July 31, 2000.
"Deposit Agreement" shall mean, with respect to any Class, the
Deposit Agreement pertaining to such Class dated the date hereof between
the Escrow Agent, and
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the Depositary, as the same may be amended, modified or supplemented from
time to time in accordance with the terms thereof.
"Depositary" means ABN AMRO Bank N.V. as depositary under the
Deposit Agreement relating to Class G, Class B and Class C Certificates.
"Deposits" with respect to any Class, shall have the meaning set
forth in the Deposit Agreement pertaining to such Class.
"Designated Representatives" means the Subordination Agent
Representatives, Trustee Representatives and the Provider Representatives
identified under Section 2.5.
"Disposition Payment" has the meaning assigned to such term in
Section 3.7(b).
"Distribution Date" means a Regular Distribution Date or a Special
Distribution Date.
"Dollars" or "$" means United States dollars.
"Downgrade Drawing" has the meaning assigned to such term in Section
3.6(c).
"Downgraded Facility" has the meaning assigned to such term in
Section 3.6(c).
"Drawing" means an Interest Drawing, a Non-Extension Drawing, a
Final Drawing or a Downgrade Drawing, as the case may be.
"Election Distribution Date" has the meaning assigned to such term
in Section 3.7(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 of America or any one of the states thereof or
the District of Columbia (or any U.S. branch of a foreign bank), having
corporate trust powers and acting as trustee for funds deposited in such
account, so long as any of the securities of such depository institution
has a long-term unsecured debt rating from each Rating Agency of at least
A-3 or its equivalent. An Eligible Deposit Account may be maintained with
a Liquidity Provider so long as such Liquidity Provider is an Eligible
Institution (as defined below); provided that such Liquidity Provider
shall have waived all rights of set-off and counterclaim with respect to
such account.
"Eligible Institution" means, subject to the last sentence of
subsection 2.2(c), (a) the corporate trust department of the Subordination
Agent or any Trustee, as applicable,
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or (b) a depository institution organized under the laws of the United
States of America or any one of the states thereof or the District of
Columbia (or any U.S. branch of a foreign bank), which has a long-term
unsecured debt rating from each Rating Agency of at least A-3 or its
equivalent.
"Eligible Investments" means (a) investments in obligations of, or
guaranteed by, the United States Government having maturities no later
than 90 days following the date of such investment, (b) investments in
open market commercial paper of any corporation incorporated under the
laws of the United States of America or any state thereof with a
short-term unsecured debt rating issued by Moody's and Standard & Poor's
of at least A-1 and P-1, respectively, and, if rated by Fitch, F-1, having
maturities no later than 90 days following the date of such investment or
(c) investments in negotiable certificates of deposit, time deposits,
banker's acceptances, commercial paper or other direct obligations of, or
obligations guaranteed by, commercial banks organized under the laws of
the United States or of any political subdivision thereof (or any U.S.
branch of a foreign bank) with issuer ratings of at least B/C by Thomson
Bankwatch, having maturities no later than 90 days following the date of
such investment; provided, however, that (x) all Eligible Investments that
are bank obligations shall be denominated in U.S. dollars; and (y) the
aggregate amount of Eligible Investments at any one time that are bank
obligations issued by any one bank shall not be in excess of 5% of such
bank's capital surplus; provided further that (1) any investment of the
types described in clauses (a), (b) and (c) above may be made through a
repurchase agreement in commercially reasonable form with a bank or other
financial institution qualifying as an Eligible Institution so long as
such investment is held by a third party custodian also qualifying as an
Eligible Institution, and (2) all such investments set forth in (a), (b)
and (c) above mature no later than the Business Day immediately preceding
the next Regular Distribution Date; provided further, however, that in the
case of any Eligible Investment issued by a domestic branch of a foreign
bank, the income from such investment shall be from sources within the
United States for purposes of the Code. Notwithstanding the foregoing, no
investment of the types described in clause (b) or (c) above which is
issued or guaranteed by a Liquidity Provider or Northwest or any of their
respective Affiliates shall be an Eligible Investment.
"Eligible Provider" has the meaning assigned to such term in Section
2.6(c).
"Equipment Notes" means, at any time, the Series G Equipment Notes,
the Series B Equipment Notes and the Series C Equipment Notes,
collectively, and in each case, any Equipment Notes issued in exchange
therefor or replacement thereof pursuant to the terms of the Indentures.
"Escrow Agent" means First Security Bank, National Association, as
escrow agent under each Escrow and Paying Agent Agreement, together with
its successors in such capacity.
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"Escrow and Paying Agent Agreement" shall mean, with respect to any
Class, the Escrow and Paying Agent Agreement pertaining to such Class,
dated the date hereof, among the Escrow Agent, the Underwriters, the
Trustee for such Class and the Paying Agent, as the same may be amended,
modified or supplemented from time to time in accordance with the terms
thereof.
"Excess Reimbursement Obligations" means, (a) in the event of any
Policy Provider Election, the portion of the Policy Provider Obligations
that represents interest on the Series G Equipment Note in respect of
which the Policy Provider Election has been made in excess of 18 months of
interest at the interest rate applicable to such Series G Equipment Note
and (b) any interest on the Liquidity Obligations in respect of the
Liquidity Facilities paid by the Policy Provider to the Liquidity
Providers from and after the end of the 18-month period referred to in
Section 3.7(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 on such Certificates (excluding interest, if any, payable
with respect to the Deposits related to such Trust) and (y) the difference
between (A) the Pool Balance of such Certificates as of the immediately
preceding Distribution Date (or if the Current Distribution Date is the
first Distribution Date, the original aggregate face amount of the
Certificates of such Trust) and (B) the Pool Balance of such Certificates
as of the Current Distribution Date, calculated on the basis that (1) the
principal of the Equipment Notes held in such Trust has been paid when due
(whether at stated maturity or upon redemption, prepayment, purchase or
acceleration or otherwise) and such payments have been distributed to the
holders of such Certificates and (2) the principal of any Equipment Notes
formerly held in such Trust that have been sold pursuant to this Agreement
has been paid in full and such payments distributed to the
Certificateholders, but without giving effect to any reduction in the Pool
Balance as a result of any distribution attributable to Deposits occurring
after the immediately preceding Distribution Date (or, if the Current
Distribution Date is the first Distribution Date, occurring after the
initial issuance of the Certificates of such Trust). For purposes of
calculating Expected Distributions, any premium paid on the Equipment
Notes held in any Trust which has not been distributed to the
Certificateholders of such Trust (other than such premium or a portion
thereof applied to the payment of interest on the Certificates of such
Trust or the reduction of the Pool Balance of such Trust) shall be added
to the amount of such Expected Distributions.
"Expiry Date" with respect to any Liquidity Facility, shall have the
meaning set forth in such Liquidity Facility.
"Fee Letter" with respect to any Liquidity Facility, shall have the
meaning set forth in such Liquidity Facility.
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"Final Distributions" means, with respect to the Certificates of any
Trust on any Distribution Date, the sum of (a) the aggregate amount of all
accrued and unpaid interest on such Certificates (excluding interest, if
any, payable with respect to the Deposits relating to such Trust) and (b)
the Pool Balance of such Certificates as of the immediately preceding
Distribution Date (less the amount of the Deposits for such Class of
Certificates as of such preceding Distribution Date other than any portion
of such Deposits thereafter used to acquire Equipment Notes pursuant to
the Note Purchase Agreement). For purposes of calculating Final
Distributions with respect to the Certificates of any Trust, any premium
paid on the Equipment Notes held in such Trust which has not been
distributed to the Certificateholders of such Trust (other than such
premium or a portion thereof applied to the payment of interest on the
Certificates of such Trust or the reduction of the Pool Balance of such
Trust) shall be added to the amount of such Final Distributions.
"Final Drawing" means, in respect of a Liquidity Facility, a
borrowing or drawing, other than an Interest Drawing, a Downgrade Drawing
or a Non-Extension Drawing, of all available and undrawn amounts under
such Liquidity Facility in accordance with the provisions thereof.
"Final Legal Distribution Date" means, for the Class G Certificates,
October 1, 2020, for the Class B Certificates, October 1, 2016, and, for
the Class C Certificates, October 1, 2011.
"Final Order" has the meaning assigned to such term in the Policy.
"Financing Agreement" means each of the Participation Agreements and
the Note Purchase Agreement.
"Fitch" means Fitch Investors Service, L.P.
"Guarantor" means Northwest Airlines Corporation, a Delaware
corporation and its successors and assigns.
"Indemnification Agreement" means the Indemnification Agreement
dated as of December 2, 1999 among Northwest, the Underwriters and the
Policy Provider, as the same may be amended, supplemented or otherwise
modified from time to time in accordance with its terms
"Indenture" means each of the Trust Indentures entered into by the
Loan Trustee, and the Owner Trustee or Northwest, pursuant to the Note
Purchase Agreement, in each case as the same may be amended, supplemented
or otherwise modified from time to time in accordance with its terms.
12
"Indenture Default" means, with respect to any Indenture, any Event
of Default (as such term is defined in such Indenture) thereunder.
"Interest Drawing" has the meaning assigned to such term in Section
3.6(a).
"Investment Earnings" means investment earnings on funds on deposit
in the Trust Accounts net of losses and investment expenses of the
Subordination Agent in making such investments.
"Lease" means, with respect to any Indenture relating to a Leased
Aircraft, the "Lease" referred to therein.
"Leased Aircraft" has the meaning assigned to such term in the
preliminary statements of this Agreement.
"Lien" means any mortgage, pledge, lien, charge, claim, disposition
of title, encumbrance, lease, sublease, sub-sublease or security interest
of any kind, including, without limitation, any thereof arising under any
conditional sales or other title retention agreement.
"Liquidity Event of Default" with respect to any Liquidity Facility,
has the meaning assigned to such term in such Liquidity Facility.
"Liquidity Expenses" means all Liquidity Obligations other than (i)
the principal amount of any Drawings under the Liquidity Facilities and
(ii) any interest accrued on any Liquidity Obligations.
"Liquidity Facility" means, at any time, the Class G Liquidity
Facility, the Class B Liquidity Facility or the Class C Liquidity
Facility, as applicable.
"Liquidity Guarantee Agreement" has the meaning assigned to such
term in the preliminary statements to this Agreement.
"Liquidity Guarantee Event" has the meaning assigned to such term in
Section 3.6(c).
"Liquidity Guarantor" means the guarantor, if any, of a Liquidity
Provider's obligations under its Liquidity Facility if the short-term
unsecured debt rating of such Liquidity Provider is based upon the rating
of such guarantor. Initially, Xxxxxx Xxxxxxx Xxxx Xxxxxx & Co. will be a
Liquidity Guarantor in respect of the obligations of MSCS under the
Liquidity Facilities.
13
"Liquidity Obligations" means all principal, interest, fees and
other amounts owing to the Liquidity Providers under the Liquidity
Facilities, the Fee Letter and Section 7 of the Participation Agreements.
"Liquidity Provider" means, at any time, the Class G Liquidity
Provider, the Class B Liquidity Provider or the Class C Liquidity
Provider, as applicable.
"Loan Trustee" means, with respect to any Indenture, the indenture
trustee thereunder.
"LTV Appraisal" means a current fair market appraisal (which may be
a "desktop" appraisal) performed by any Appraiser or any other nationally
recognized appraiser on the basis of an arm's-length transaction between
an informed and willing purchaser under no compulsion to buy and an
informed and willing seller under no compulsion to sell and both having
knowledge of all relevant facts.
"LTV Collateral Amount" of any Leased Aircraft or Owned Aircraft for
any Class of Certificates on any Distribution Date means the lesser of (i)
the LTV Ratio for such Class of Certificates multiplied by the Appraised
Current Market Value of such Aircraft (or with respect to any such
Aircraft which has suffered an Event of Loss under and as defined in the
relevant Lease (in the case of a Leased Aircraft) or Indenture (in the
case of an Owned Aircraft), the amount of the insurance proceeds paid to
the related Loan Trustee in respect thereof to the extent then held by
such Loan Trustee (and/or on deposit in the Special Payments Account) or
payable to such Loan Trustee in respect thereof) and (ii) the outstanding
principal amount of the Equipment Notes held by the Subordination Agent
secured by such Aircraft after giving effect to any principal payments of
such Equipment Notes on or before such Distribution Date.
"LTV Ratio" means, for the Class G Certificates, 44.3%, for the
Class B Certificates, 64.1%, and, for the Class C Certificates, 72.2%.
"Minimum Sale Price" means, with respect to any Aircraft or the
Equipment Notes issued in respect of such Aircraft, at any time, the
lesser of (a) 75% of the Appraised Current Market Value of such Aircraft
and (b) the aggregate outstanding principal amount of such Equipment
Notes, plus accrued and unpaid interest thereon.
"Moody's" means Xxxxx'x Investors Service, Inc.
"MSCS" means Xxxxxx Xxxxxxx Capital Services, Inc.
"New Aircraft" has the meaning assigned to such term in the Note
Purchase Agreement.
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"Non-Controlling Parties" means, collectively, at any time, the
Policy Provider, the Trustees and the Liquidity Providers which are not
the Controlling Party at such time.
"Non-Extended Facility" has the meaning assigned to such term in
Section 3.6(d).
"Non-Extension Drawing" has the meaning assigned to such term in
Section 3.6(d).
"Non-Performing Equipment Note" means an Equipment Note issued
pursuant to an Indenture that is not a Performing Equipment Note.
"Northwest" means Northwest Airlines, Inc., a Minnesota corporation,
and its successors and assigns.
"Northwest Bankruptcy Event" means the occurrence and continuation
of any of the following:
(a) the commencement of an involuntary case or other
proceeding in respect of Northwest in an involuntary case under the
federal bankruptcy laws, as now or hereafter constituted, or any
other applicable federal or state bankruptcy, insolvency or other
similar law in the United States or seeking the appointment of a
receiver, liquidator, assignee, custodian, trustee, sequestrator (or
similar official) of Northwest or for all or substantially all of
its property, or seeking the winding-up or liquidation of its
affairs and the continuation of any such case or other proceeding
undismissed and unstayed for a period of ninety (90) consecutive
days or an order, judgment or decree shall be entered in any
proceeding by any court of competent jurisdiction appointing,
without the consent of Northwest, a receiver, trustee or liquidator
of Northwest, or of any substantial part of its property, or
sequestering any substantial part of the property of Northwest and
any such order, judgment or decree or appointment or sequestration
shall be final or shall remain in force undismissed, unstayed or
unvacated for a period of ninety (90) days after the date of entry
thereof; or
(b) the commencement by Northwest of a voluntary case under
the federal bankruptcy laws, as now constituted or hereafter
amended, or any other applicable federal or state bankruptcy,
insolvency or other similar law in the United States, or the consent
by Northwest to the appointment of or taking possession by a
receiver, liquidator, assignee, trustee, custodian, sequestrator (or
other similar official) of Northwest or for all or substantially all
of its property, or the making by Northwest of any assignment for
the benefit of creditors or the taking by Northwest of any corporate
action to authorize any of the foregoing.
"Northwest Provisions" has the meaning provided in Section 9.1(a).
15
"Note Purchase Agreement" means the Note Purchase Agreement dated as
of December 9, 1999 among Northwest, each Trustee, the Escrow Agent, the
Subordination Agent and the Paying Agent.
"Notice of Avoided Payment" has the meaning assigned to such term in
the Policy.
"Notice of Nonpayment" has the meaning assigned to such term in the
Policy.
"NWA Corp." means Northwest Airlines Corporation (formerly known as
Newbridge Parent Corporation), a Delaware corporation, and its successors
and assigns.
"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 Policy Fee
Letter, the Fee Letter, the Indentures, the Trust Agreements, the
Underwriting Agreement, the Financing Agreements, the Leases, the
Equipment Notes and the Certificates, together with all exhibits and
schedules included with any of the foregoing and each of the other
documents and instruments referred to in the definitions of "Operative
Documents" contained in the Leases or any Owned Aircraft Indenture.
"Outstanding" means, when used with respect to each Class of
Certificates, as of the date of determination, all Certificates of such
Class theretofore authenticated and delivered under the related Trust
Agreement, except:
(i) Certificates of such Class theretofore cancelled by
the Registrar (as defined in such Trust Agreement) or delivered to
the Trustee thereunder or such Registrar for cancellation;
(ii) Certificates of such Class for which money in the
full amount required to make the final distribution with respect to
such Certificates pursuant to Section 11.01 of such Trust Agreement
has been theretofore deposited with the related Trustee in trust for
the holders of such Certificates as provided in Section 4.01 of such
Trust Agreement pending distribution of such money to such
Certificateholders pursuant to such final distribution payment; and
(iii) Certificates of such Class in exchange for or in
lieu of which other Certificates have been authenticated and
delivered pursuant to such Trust Agreement;
16
provided, however, that in determining whether the holders of the
requisite Outstanding amount of such Certificates have given any request,
demand, authorization, direction, notice, consent or waiver hereunder, any
Certificates owned by Northwest or any of its Affiliates shall be
disregarded and deemed not to be Outstanding, except that, in determining
whether such Trustee shall be protected in relying upon any such request,
demand, authorization, direction, notice, consent or waiver, only
Certificates that such Trustee knows to be so owned shall be so
disregarded. Certificates so owned that have been pledged in good faith
may be regarded as Outstanding if the pledgee establishes to the
satisfaction of the applicable Trustee the pledgee's right so to act with
respect to such Certificates and that the pledgee is not Northwest or any
of its Affiliates.
"Overdue Scheduled Payment" means any Scheduled Payment which is not
in fact received by the Subordination Agent within five days of the
Scheduled Payment Date relating thereto.
"Owned Aircraft" has the meaning assigned to such term in the
preliminary statements of this Agreement.
"Owned Aircraft Indenture" means, with respect to each Owned
Aircraft, the Indenture pertaining to such Aircraft.
"Owner Participant" means, with respect to any Indenture pertaining
to a Leased Aircraft, the Owner Participant (as defined therein) and any
permitted successor or assign of such Owner Participant.
"Owner Trustee" means, with respect to any Indenture pertaining to a
Leased Aircraft, the Owner Trustee (as defined therein) not in its
individual capacity but solely as trustee under the related owner trust
agreement, together with any successor trustee appointed pursuant to such
owner trust agreement.
"Participation Agreements" means, with respect to each Indenture,
the Participation Agreement referred to therein, as the same may be
amended, supplemented or otherwise modified from time to time in
accordance with its terms.
"Pass Through Trust Agreement" means the Pass Through Trust
Agreement, dated as of June 3, 1999 by and among the Guarantor, Northwest
and the State Street Bank and Trust Company of Connecticut, National
Association, not in its individual capacity except as expressly provided
therein, but solely as trustee (in such capacity, together with its
successors in such capacity, the "Pass Through Trustee").
"Payee" has the meaning assigned to such term in Section 2.4(e).
17
"Paying Agent" means State Street Bank and Trust Company, as paying
agent under each Escrow and Paying Agent Agreement, together with its
successors in such capacity.
"Performing Equipment Note" means an Equipment Note issued pursuant
to an Indenture with respect to which no payment default has occurred and
is continuing (without giving effect to any Acceleration thereof);
provided that in the event of a bankruptcy proceeding involving Northwest
under Title 11 of the United States Code (the "Bankruptcy Code"), (i) any
payment default existing during the 60-day period under Section
1110(a)(1)(A) of the Bankruptcy Code (or such longer period as may apply
under Section 1110(b) of the Bankruptcy Code) (the "Section 1110 Period")
shall not be taken into consideration, unless during such period the
trustee in such proceeding or Northwest refuses to assume or agree to
perform its obligations under the Lease related to such Equipment Notes
(in the case of a Leased Aircraft) or under the Indenture related to such
Equipment Note (in the case of an Owned Aircraft) and (ii) any payment
default occurring after the date of the order of relief in such proceeding
shall not be taken into consideration if such payment default is cured
under Section 1110(a)(1)(B) of the Bankruptcy Code before the later of 30
days after the date of such default or the expiration of the Section 1110
Period.
"Performing Note Deficiency" means any time that less than 65% of
the then aggregate outstanding principal amount of all Equipment Notes are
Performing Equipment Notes.
"Person" means any individual, corporation, 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 MBIA Financial Guaranty Insurance Policy No.
30951 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 2.2(a)(iii).
"Policy Drawing" means any payment of a claim under the Policy.
"Policy Expenses" means all amounts (including amounts in respect of
expenses) owing to the Policy Provider under the Policy Provider
Agreement, the Participation Agreements or the Note Purchase Agreement
other than (i) the amount of any Policy Drawing and any interest accrued
thereon, (ii) reimbursement of and interest on the Liquidity Obligations
paid to the Liquidity Provider by the Policy Provider, (iii) any
18
indemnity payments owed to the Policy Provider and (iv) any Excess
Reimbursement Obligations.
"Policy Fee Letter" means the fee letter, dated as of December 9,
1999 from the Policy Provider to Northwest setting forth the Premium and
certain other amounts payable in respect of the Policy.
"Policy Provider" means MBIA Insurance Corporation, or any successor
thereto, as issuer of the Policy.
"Policy Provider Agreement" means the Insurance and Indemnity
Agreement, dated as of the date of issuance of the Certificates, between
the Subordination Agent, as agent and trustee for the Class G Trustee,
Northwest and the Policy Provider pursuant to which, among other things,
the Subordination Agent agrees to reimburse the Policy Provider for
amounts paid pursuant to claims made under the Policy.
"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 or (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
New York Insurance Department 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 assigned to such term in
Section 3.7(c).
"Policy Provider Obligations" means all reimbursement and other
amounts, including fees and indemnities, due to the Policy Provider under
the Policy Provider Agreement, but shall not include any interest on
Policy Drawings except, if 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, interest on the portion of any Policy Drawing
made to cover the shortfall attributable to such failure by the Liquidity
Provider in an amount 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 until such Policy
Drawing has been repaid in full, up to a maximum of
19
three such Policy Drawings. For the avoidance of doubt, and subject to the
effect of payment priorities with respect to Excess Reimbursement
Obligations, Policy Provider Obligations include reimbursement of and
interest on the Liquidity Obligations in respect of the Liquidity
Facilities paid by the Policy Provider to the Liquidity Provider.
"Policy Provider Rating" shall mean the respective ratings by each
of the Ratings Agencies of the Policy Provider's financial strength and/or
claims paying ability in respect of the Policy.
"Policy Provider Threshold Rating" shall mean a Policy Provider
Rating of Aaa by Moody's and AAA by Standard & Poor's.
"Pool Balance" means, with respect to each Trust or the Certificates
issued by any Trust, as of any date, (i) the original aggregate face
amount of the Certificates of such Trust less (ii) the aggregate amount of
all payments made in respect of the Certificates of such Trust or in
respect of Deposits relating to such Trust other than payments made in
respect of interest or premium thereon or reimbursement of any costs and
expenses in connection therewith. The Pool Balance for each Trust or the
Certificates issued by any Trust as of any Distribution Date shall be
computed after giving effect to any special distribution with respect to
unused Deposits, any payment of principal, if any, on the Equipment Notes
or other Trust Property held in such Trust and the distribution thereof to
be made on such date and, with respect to the Class G Trust, payments
under the Policy for the benefit of the Class G Certificateholders (other
than in respect of the Liquidity Facilities and interest on the Class G
Certificates).
"Post-Disposition Balance" has the meaning assigned to such term in
Section 3.7(b).
"Preference Amount" has the meaning assigned to such term in the
Policy.
"Premium" means the sum of (a) the premium payable in respect of the
Policy on the Closing Date and on each Distribution Date thereafter in an
amount equal to 1/2 of the product of (i) the Premium Percentage and (ii)
with respect to the payment to be made on the Closing Date, the Pool
Balance of the Class G Certificates on the Closing Date, or with respect
to the payments to be made on each Distribution Date, the Pool Balance of
the Class G Certificates on such Distribution Date after giving effect to
any distributions to be made on such Distribution Date and (b) any
additional amounts in connection with the prepayment of the Class G
Certificates as due and when due in accordance with the Policy Fee Letter;
provided, however, the Premium payable on the Closing Date shall be pro
rated from the Closing Date to the first Distribution Date (based upon a
360 day year of twelve 30 day months).
"Premium Percentage" shall have the meaning set forth in the Policy
Fee Letter.
20
"Proceeding" means any suit in equity, action at law or other
judicial or administrative proceeding.
"Provider Incumbency Certificate" has the meaning assigned to such
term in Section 2.5(c).
"Provider Representatives" has the meaning assigned to such term in
Section 2.5(c).
"PTC Event of Default" means, with respect to each Trust Agreement,
the failure to pay within 10 Business Days of the due date thereof: (i)
the outstanding Pool Balance of the applicable Class of Certificates on
the Final Legal Distribution Date for such Class (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 due on such Certificates on any
Distribution Date (unless, in the case of the Class G, Class B or Class C
Certificates, the Subordination Agent shall have made an Interest Drawing
or a withdrawal from the Cash Collateral Account or a drawing under the
Policy with respect thereto in an amount sufficient to pay such interest
and shall have distributed such amount to the Trustee entitled thereto).
"Rating Agencies" means, collectively, at any time, each nationally
recognized rating agency which shall have been requested to rate the
Certificates and which shall then be rating the Certificates. Initially,
the Rating Agencies shall consist of Moody's and Standard & Poor's.
"Ratings Confirmation" means, with respect to any action proposed to
be taken, a written confirmation from each of the Rating Agencies that
such action would not result in (i) a reduction of the rating for any
Class of Certificates below the then current rating for such Class of
Certificates or (ii) a withdrawal or suspension of the rating of any Class
of Certificates.
"Regular Distribution Dates" means each April 1 and October 1,
commencing on April 1, 2000; provided, however, that, if any such day
shall not be a Business Day, the related distribution shall be made on the
next succeeding Business Day without additional interest.
"Replacement Liquidity Facility" means, for any Liquidity Facility,
an irrevocable revolving credit agreement in substantially the form of the
initial Liquidity Facility for such Trust, including reinstatement
provisions or in such other form (which may include a letter of credit) as
shall permit the Rating Agencies to confirm in writing their respective
ratings then in effect for the related Certificates (before downgrading of
such ratings, if any, as a result of the circumstances identified in
clauses (i) and (ii) of Section
21
3.6(c), in each case, without regard to the Policy), and, in the case of
the Class G Liquidity Facility only, be consented to by the Policy
Provider, which consent shall not be unreasonably withheld or delayed, in
a face amount (or an aggregate face amount) equal to the Required Amount
for such Liquidity Facility and issued by a Replacement Liquidity
Provider, provided that, if a form of Liquidity Facility that is not
substantially in the form of the replaced Liquidity Facility is to be
used, Northwest shall have received a satisfactory opinion of tax counsel
satisfactory to Northwest with respect to such form of Replacement
Liquidity Facility (and a copy of such opinion shall be furnished to the
Subordination Agent).
"Replacement Liquidity Provider" means a Person having unsecured
debt ratings which are equal to or higher than the Threshold Rating.
"Required Amount" means, with respect to each Liquidity Facility and
each Cash Collateral Account related thereto, for any day, the sum of the
aggregate amount of interest, calculated at the rate per annum equal to
the Stated Interest Rate for the related Class of Certificates, that would
be payable on such Class of Certificates on each of the three successive
Regular Distribution Dates immediately following such day or, if such day
is a Regular Distribution Date, on such day and the succeeding two Regular
Distribution Dates, in each case calculated on the basis of the Pool
Balance of such Class of Certificates on such date and without regard to
expected future payments of principal on such Class of Certificates. 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 (a) the outstanding principal balance of the Series G
Equipment Note in respect of which such Policy Provider Election has been
made shall exceed (b) the amount of any Policy Drawings previously paid by
the Policy Provider in respect of principal on such Series G Equipment
Note.
"Responsible Officer" means (i) with respect to the Subordination
Agent and each of the Trustees, any officer in the corporate trust
administration department of the Subordination Agent or such Trustee or
any other officer customarily performing functions similar to those
performed by the Persons who at the time shall be such officers,
respectively, or to whom any corporate trust matter is referred because of
his knowledge of and familiarity with a particular subject and (ii) with
respect to each Liquidity Provider, any authorized officer or agent of
such Liquidity Provider.
"Scheduled Payment" means, with respect to any Equipment Note, (i)
any payment of principal and interest on such Equipment Note (other than
an Overdue Scheduled Payment) due from the obligor thereon or (ii) any
payment of interest on the corresponding Class of Certificates with funds
drawn under any Liquidity Facility (or under the Policy in the case of any
Series G Equipment Note), which payment represents the installment of
principal at the stated maturity of such installment of principal on such
22
Equipment Note, the payment of regularly scheduled interest accrued on the
unpaid principal amount of such Equipment Note, or both; provided that any
payment of principal of, premium, if any, or interest resulting from the
redemption or purchase of any Equipment Note shall not constitute a
Scheduled Payment.
"Scheduled Payment Date" means, with respect to any Scheduled
Payment, the date on which such Scheduled Payment is scheduled to be made.
"Section 2.4(b) Fraction" has the meaning assigned to such term in
Section 2.4(b)(i).
"Series B Equipment Notes" means the 9.485% Series B Equipment Notes
issued pursuant to each Indenture by the related Owner Trustee or
Northwest, as the case may be, and authenticated by the Loan Trustee
thereunder, and any such Equipment Notes issued in exchange therefor or
replacement thereof pursuant to the terms of such Indenture.
"Series C Equipment Notes" means the 9.152% Series C Equipment Notes
issued pursuant to each Indenture by the related Owner Trustee or
Northwest, as the case may be, and authenticated by the Loan Trustee
thereunder, and any such Equipment Notes issued in exchange therefor or
replacement thereof pursuant to the terms of such Indenture.
"Series D Equipment Notes" means the equipment notes, if any, issued
pursuant to any Indenture by the related Owner Trustee or Northwest, as
the case may be, and authenticated by the Loan Trustee thereunder, and
designated as "Series D" 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 7.935% Series G Equipment Notes
issued pursuant to each Indenture by the related Owner Trustee or
Northwest, as the case may be, and authenticated by the Loan Trustee
thereunder, and any such Equipment Notes issued in exchange therefor or
replacement thereof pursuant to the terms of such Indenture.
"Special Distribution Date" means, with respect to any Special
Payment, the date chosen by the Subordination Agent pursuant to Section
2.4(a) or Section 3.7 for the distribution of such Special Payment in
accordance with this Agreement or the Election Distribution Date;
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.
23
"Special Payment" means any payment (other than a Scheduled Payment)
in respect of, or any proceeds of, any Equipment Note, Trust Indenture
Estate or Collateral, including Overdue Scheduled Payments, payments in
respect of the redemption or repurchase of any Equipment Note and payments
in respect of the sale of any Equipment Note to the related Owner Trustee,
Owner Participant or any other Person.
"Special Payments Account" means the Eligible Deposit Account
created pursuant to Section 2.2 as a sub-account to the Collection
Account.
"Specified Investments" has the meaning assigned to such term in the
Pass Through Trust Agreement.
"Standard & Poor's" means Standard & Poor's Ratings Services, a
division of XxXxxx-Xxxx Inc.
"State Street of Connecticut" has the meaning assigned to it in the
preamble to this Agreement.
"Stated Amount" with respect to any Liquidity Facility, means the
Maximum Commitment (as defined in such Liquidity Facility) of the
applicable Liquidity Provider thereunder.
"Stated Expiration Date" has the meaning specified in Section
3.6(d).
"Stated Interest Rate" means (i) with respect to the Class G
Certificates, 7.935% per annum; (ii) with respect to the Class B
Certificates, 9.485% per annum, and (iii) with respect to the Class C
Certificates, 9.152% per annum.
"Subordination Agent" has the meaning assigned to it in the preamble
to this Agreement.
"Subordination Agent Incumbency Certificate" has the meaning
assigned to such term in Section 2.5(a).
"Subordination Agent Representatives" has the meaning assigned to
such term in Section 2.5(a).
"Tax" and "Taxes" mean any and all taxes, fees, levies, duties,
tariffs, imposts, and other charges of any kind (together with any and all
interest, penalties, loss, damage, liability, expense, additions to tax
and additional amounts or costs incurred or imposed with respect thereto)
imposed or otherwise assessed by the United States or by any state, local
or foreign government (or any subdivision or agency thereof) or other
taxing authority, including, without limitation: taxes or other charges on
or with respect to
24
income, franchises, windfall or other profits, gross receipts, property,
sales, use, capital stock, payroll, employment, social security, workers'
compensation, unemployment compensation, or net worth and similar charges;
taxes or other charges in the nature of excise, withholding, ad valorem,
stamp, transfer, value added, taxes on goods and services, gains taxes,
license, registration and documentation fees, customs duties, tariffs, and
similar charges.
"Threshold Rating" means the short-term unsecured debt rating of P-1
by Moody's and A-1 by Standard & Poor's, in the case of the Liquidity
Provider or Liquidity Guarantor as applicable for each Trust.
"Treasury Regulations" means regulations, including proposed or
temporary regulations, promulgated under the Code. References herein to
specific provisions of proposed or temporary regulations shall include
analogous provisions of final Treasury Regulations or other successor
Treasury Regulations.
"Triggering Event" means (x) the occurrence of an Indenture Default
under all of the Indentures resulting in a PTC Event of Default with
respect to the most senior Class of Certificates then Outstanding, (y) the
Acceleration of all of the outstanding Equipment Notes (provided that,
with respect to the period prior to the Delivery Period Expiry Date, such
Equipment Notes have an aggregate principal balance in excess of $110
million) or (z) the occurrence of a Northwest Bankruptcy Event.
"Trust" means any of the Class G Trust, the Class B Trust or the
Class C Trust.
"Trust Accounts" has the meaning assigned to such term in Section
2.2(a).
"Trust Agreement" means any of the Class G Trust Agreement, Class B
Trust Agreement or Class C Trust Agreement.
"Trust Indenture Estate" has the meaning assigned to such term in
each Indenture.
"Trustee" means any of the Class G Trustee, the Class B Trustee or
the Class C Trustee.
"Trustee Incumbency Certificate" has the meaning assigned to such
term in Section 2.5(b).
"Trustee Representatives" has the meaning assigned to such term in
Section 2.5(b).
"Underwriters" means Xxxxxx Xxxxxxx & Co. Incorporated, Chase
Securities, Inc., Xxxxxxx Xxxxx Xxxxxx Inc. and U.S. Bancorp Xxxxx Xxxxxxx
Inc.
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"Underwriting Agreement" means the Underwriting Agreement dated as
of December 2, 1999, by and among the Underwriters, Northwest and the
Guarantor, relating to the purchase of the Certificates by the
Underwriters, as the same may be amended, supplemented or otherwise
modified from time to time in accordance with its terms.
"Written Notice" means, from (i) any Trustee, Liquidity Provider or
the Policy Provider, a written instrument executed by the Designated
Representative of such Person, and (ii) the Subordination Agent, a written
instrument executed by a Person designated in the Officer's Certificate of
the Subordination Agent delivered on the Closing Date. An invoice
delivered by a Liquidity Provider pursuant to Section 3.1 in accordance
with its normal invoicing procedures shall constitute Written Notice under
such Section.
ARTICLE II
TRUST ACCOUNTS; CONTROLLING PARTY
SECTION 2.1 Agreement to Terms of Subordination; Payments from
Monies Received Only. (a) Each Trustee hereby acknowledges and agrees to the
terms of subordination and distribution set forth in this Agreement in respect
of each Class of Certificates and agrees to enforce such provisions and cause
all payments in respect of the Equipment Notes, the Liquidity Facilities and the
Policy to be applied in accordance with the terms of this Agreement. In
addition, each Trustee hereby agrees to cause the Equipment Notes purchased by
the related Trust to be registered in the name of the Subordination Agent or its
nominee, as agent and trustee for such Trustee, to be held in trust by the
Subordination Agent solely for the purpose of facilitating the enforcement of
the subordination and other provisions of this Agreement.
(b) Each of the Trustees and the Subordination Agent hereby agrees
and, as provided in each Trust Agreement, each Certificateholder, by its
acceptance of a Certificate, each Liquidity Provider, by entering into the
Liquidity Facility to which it is a party, and the Policy Provider, by entering
into the Policy Provider Agreement has agreed that none of the Trustees, Owner
Trustees, Loan Trustees, Owner Participants nor the Subordination Agent is
personally liable to any of them for any amounts payable or any liability under
this Agreement, any Trust Agreement, any Liquidity Facility , the Policy
Provider Agreement or such Certificate, except (in the case of the Subordination
Agent) as expressly provided herein or (in the case of the Trustees) as
expressly provided in each Trust Agreement or (in the case of the Owner Trustees
and the Loan Trustees) as expressly provided in any Operative Agreement.
SECTION 2.2 Trust Accounts. (a) Upon the execution of this
Agreement, the Subordination Agent shall establish and maintain in its name (i)
the Collection Account as an Eligible Deposit Account, bearing a designation
clearly indicating that the funds deposited therein are held in trust for the
benefit of the Trustees, the Certificateholders, the Liquidity
26
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) the 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 3.6(f) hereof. Upon such establishment and maintenance
under Section 3.6(f) hereof, the Cash Collateral Accounts shall, together with
the Collection Account, constitute the "Trust Accounts" hereunder.
(b) Funds on deposit in the Trust Accounts shall be invested and
reinvested by the Subordination Agent in Eligible Investments selected by the
Subordination Agent if such investments are reasonably available and have
maturities no later than the earlier of (i) 90 days following the date of such
investment and (ii) the Business Day immediately preceding the Regular
Distribution Date or the date of the related distribution pursuant to Section
2.4 hereof, as the case may be, next following the date of such investment;
provided, however, that following the making of a Downgrade Drawing or a
Non-Extension Drawing under any Liquidity Facility, the Subordination Agent
shall invest and reinvest such amounts in Eligible Investments at the direction
of the Liquidity Provider funding such Drawing and the Subordination Agent shall
use reasonable efforts to cause such amounts to be invested in Specified
Investments which yield at least an amount equal to the interest (excluding the
Applicable Margin (as defined in the applicable Liquidity Facility)) that is
payable to such Liquidity Provider in respect of such amounts pursuant to
Section 3.7 of the relevant Liquidity Facility (it being understood that it may
not be feasible to obtain such a yield). Unless otherwise expressly provided in
this Agreement, any Investment Earnings shall be deposited in the Collection
Account when received by the Subordination Agent and shall be applied by the
Subordination Agent in the same manner as the principal amount of such
investment is to be applied and any losses shall be charged against the
principal amount invested, in each case net of the Subordination Agent's
reasonable fees and expenses in making such investments. The Subordination Agent
shall not be liable for any loss resulting from any investment, reinvestment or
liquidation required to be made under this Agreement other than by reason of its
willful misconduct or gross negligence or, with respect to the handling or
transfer of funds, ordinary negligence. Eligible Investments and any other
investment required to be made hereunder shall be held to their maturities
except that any such investment may be sold (without regard to its maturity) by
the Subordination Agent without instructions whenever such sale is necessary to
make a distribution required under this Agreement. Uninvested funds held
hereunder shall not earn or accrue interest.
(c) The Subordination Agent shall possess all right, title and
interest in all funds on deposit from time to time in the Trust Accounts and in
all proceeds thereof (including all income thereon, except as otherwise provided
herein with respect to Investment Earnings). The Trust Accounts shall be held in
trust by the Subordination Agent under the sole dominion and control of the
Subordination Agent for the benefit of the Trustees, the Certificateholders, the
27
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, Policy
Account or Cash Collateral Account, as the case may be, as an Eligible Deposit
Account and shall transfer any cash and/or any investments to such new
Collection Account, Special Payments Account, Policy Account or Cash Collateral
Account, as the case may be. So long as the Subordination Agent is an Eligible
Institution, the Trust Accounts shall be maintained with it as Eligible Deposit
Accounts.
SECTION 2.3 Deposits to the Collection Account and Special Payments
Account. (a) The Subordination Agent shall, upon receipt thereof, deposit in the
Collection Account all Scheduled Payments received by it (other than any
Scheduled Payment which by the express terms hereof is to be deposited to the
Policy Account or a Cash Collateral Account).
(b) The Subordination Agent shall, on each date when one or more
Special Payments are made to the Subordination Agent as holder of the Equipment
Notes, deposit in the Special Payments Account the aggregate amount of such
Special Payments.
SECTION 2.4 Distributions of Special Payments. (a) Notice of Special
Payment. Except as provided in Section 2.4(e), upon receipt by the Subordination
Agent, as registered holder of the Equipment Notes, of any notice of a Special
Payment (or, in the absence of any such notice, upon receipt by the
Subordination Agent of a Special Payment), the Subordination Agent shall
promptly give notice thereof to each Trustee, the Liquidity Providers and the
Policy Provider. The Subordination Agent shall promptly calculate the amount of
the redemption or purchase of Equipment Notes or the amount of any Overdue
Scheduled Payment, as the case may be, comprising such Special Payment under the
applicable Indenture or Indentures and shall promptly send to each Trustee and
the Liquidity Provider a Written Notice of such amount and the amount allocable
to each Trust. Such Written Notice shall also set the distribution date for such
Special Payment (a "Special Distribution Date"), which, subject to Section 3.7,
shall be a Business Day which follows the later to occur of (x) the 15th day
after the date of such Written Notice or (y) the date the Subordination Agent
has received or expects to receive such Special Payment. Amounts on deposit in
the Special Payments Account shall be distributed in accordance with Sections
2.4(b) and 2.4(c) hereof, as applicable.
(b) (i) Redemptions and Purchases of Equipment Notes. So long as no
Triggering Event shall have occurred (whether or not continuing), the
Subordination Agent shall make distributions pursuant to this Section 2.4(b) of
amounts on deposit in the Special Payments Account on account of the redemption
or purchase (including, without limitation, a purchase resulting from the sale
of the Equipment Notes permitted by Article IV hereof) of all of the Equipment
Notes issued pursuant to an Indenture on the Special Distribution Date for such
Special Payment in the following order of priority:
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first, such amount as shall be required to pay (A) the aggregate
amount of all accrued and unpaid Liquidity Expenses and Policy Expenses
then in arrears ("past due amounts") 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 the aggregate outstanding
principal amount of Equipment Notes being redeemed, purchased or prepaid
on such Special Distribution Date and the denominator of which is the
aggregate outstanding principal amount of all Equipment Notes (the
"Section 2.4(b) Fraction") ("accrued amounts"), shall be distributed to
the relevant Liquidity Providers and the Policy Provider first in
satisfaction of any past due amounts then in satisfaction of the accrued
amounts, in each case, pari passu on the basis of the amount of Liquidity
Expenses and Policy Expenses, owed to each Liquidity Provider and the
Policy Provider;
second, such amount as shall be required to pay (i) (A) all accrued
and unpaid interest then in arrears on all Liquidity Obligations (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) plus (B) the product of (x) the aggregate amount of all
accrued and unpaid interest on all Liquidity Obligations not in arrears to
such Special Distribution Date (at the rate provided in the applicable
Liquidity Facility and 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) multiplied by (y) the
Section 2.4(b) Fraction, to the Liquidity Providers pari passu on the
basis of the amount of such accrued and unpaid interest owed to each
Liquidity Provider, (ii) if the Class G Liquidity Provider has defaulted
in its obligation to make any Interest Drawing in respect of the Class G
Certificates, (A) the aggregate amount of interest accrued on the portion
of any Policy Drawing made to cover the shortfall attributable to such
default by the Liquidity Provider at the rate provided in the "except"
clause of the definition of "Policy Provider Obligations" which are then
in arrears plus (B) the product of (x) the aggregate amount of all accrued
and unpaid interest on such Policy Drawings not in arrears to such Special
Distribution Date multiplied by (y) the Section 2.4(b) Fraction, to the
Policy Provider and (iii) if the Policy Provider has elected to pay to
each Liquidity Provider all outstanding drawings and interest owing to
such Liquidity Provider under its Liquidity Facility pursuant to
subsection 2.6(c) hereof, the amount of such payment made to the Liquidity
Providers attributable to such interest accrued on such drawings, shall be
distributed to the Liquidity Providers and the Policy Provider pari passu;
third, such amount as shall be required (A) if any Cash Collateral
Account had been previously funded as provided in Section 3.6(f), to fund
such Cash Collateral Account up to its Required Amount shall be deposited
in such Account, (B) if any Liquidity Facility shall become a Downgraded
Facility or a Non-Extended Facility at a time when unreimbursed Interest
Drawings under such Liquidity Facility have reduced the Available Amount
thereunder to zero, to deposit into the related Cash Collateral
29
Account an amount equal to such Account's Required Amount shall be
deposited in such Account, and (C) after application of amounts required
pursuant to subclause (A) or subclause (B) of this clause "third", (x) 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 (other than amounts payable pursuant to clauses first
or second of this Section 2.4(b) and as determined after giving effect to
payments made by the Policy Provider to the Liquidity Provider in respect
of principal of drawings under the Liquidity Facilities) and (y) if the
Policy Provider has elected to pay to each Liquidity Provider all
outstanding drawings and interest owing to such Liquidity Provider under
its Liquidity Facility pursuant to subsection 2.6(c) hereof, to reimburse
the Policy Provider for the principal amount of such payment made to the
Liquidity Providers, shall be distributed to such Liquidity Providers and
the Policy Provider pari passu on the basis of the amounts of all such
unreimbursed Liquidity Obligations and such payments under the Policy;
fourth, if, with respect to any particular Liquidity Facility, any
amounts are to be distributed pursuant to either subclause (A) or (B) of
clause "third" above, then the Liquidity Provider with respect to such
Liquidity Facility shall be paid the excess of (x) the aggregate
outstanding amount of unreimbursed advances (whether or not then due)
under such Liquidity Facility over (y) the Required Amount for the
relevant Class, pari passu on the basis of such amounts in respect of each
Liquidity Provider;
fifth, such amount as shall be required to pay in full Expected
Distributions to the holders of Class G Certificates on such Special
Distribution Date shall be distributed to the Class G Trustee;
sixth, such amount as shall be required to pay Policy Provider
Obligations then due (other than amounts payable pursuant to the preceding
clauses of this Section 2.4(b) and other than any Excess Reimbursement
Obligations) to the Policy Provider;
seventh, such amount as shall be required to pay in full Expected
Distributions to the holders of Class B Certificates on such Special
Distribution Date shall be distributed to the Class B Trustee;
eighth, such amount as shall be required to pay in full Expected
Distributions to the holders of Class C Certificates on such Special
Distribution Date shall be distributed to the Class C Trustee; and
ninth, such amount as shall be required to pay Excess Reimbursement
Obligations to the Policy Provider;
tenth, the balance, if any, of such Special Payment shall be
transferred to the Collection Account for distribution in accordance with
Section 3.2 hereof.
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For the purposes of this Section 2.4(b)(i), clause (x) of the definition
of "Expected Distributions" shall be deemed to read as follows: "(x)
accrued, due and unpaid interest on such Certificates excluding interest,
if any, payable with respect to the Deposits related to such Trust".
(ii) Upon the occurrence of a Triggering Event (whether or not
continuing), the Subordination Agent shall make distributions pursuant to
this Section 2.4(b) of amounts on deposit in the Special Payments Account
on account of the redemption or purchase of all of the Equipment Notes
issued pursuant to an Indenture on the Special Distribution Date for such
Special Payment in accordance with Section 3.3 hereof.
(c) Other Special Payments. Except as provided in clause (e) below,
any amounts on deposit in the Special Payments Account, other than in respect of
amounts to be distributed pursuant to Section 2.4(b), shall be distributed on
the Special Distribution Date therefor in accordance with Article III hereof.
(d) Investment of Amounts in Special Payments Account. Any amounts
on deposit in the Special Payments Account prior to the distribution thereof
pursuant to Section 2.4(b) or (c) shall be invested in accordance with Section
2.2(b). Investment Earnings on such investments shall be distributed in
accordance with Section 2.4(b) or (c), as the case may be.
(e) Certain Payments. The Subordination Agent will distribute
promptly upon receipt thereof (i) any indemnity payment received by it from the
Owner Participant, the Owner Trustee or Northwest in respect of any Trustee, any
Liquidity Provider, the Policy Provider, the Paying Agent, the Depositary or any
Escrow Agent (collectively, the "Payees") and (ii) any compensation (including,
without limitation, any fees payable to any Liquidity Provider under Section
2.03 of any Liquidity Facility or to the Policy Provider under the Policy Fee
Letter) received by it from the Owner Participant, the Owner Trustee or
Northwest under any Operative Agreement in respect of any Payee, directly to the
Payee entitled thereto.
SECTION 2.5 Designated Representatives. (a) With the delivery of
this Agreement, the Subordination Agent shall furnish to each Liquidity
Provider, the Policy Provider and each Trustee, and from time to time thereafter
may furnish to each Liquidity Provider, the Policy Provider and each Trustee, at
the Subordination Agent's discretion, or upon any Liquidity Provider's, the
Policy Provider's or Trustee's request (which request shall not be made more
than one time in any 12-month period), a certificate (a "Subordination Agent
Incumbency Certificate") of a Responsible Officer of the Subordination Agent
certifying as to the incumbency and specimen signatures of the officers of the
Subordination Agent and the attorney-in-fact and agents of the Subordination
Agent (the "Subordination Agent Representatives") authorized to give Written
Notices on behalf of the Subordination Agent hereunder. Until each Liquidity
Provider, 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 (a "Trustee Incumbency Certificate") of a
Responsible Officer of such Trustee certifying as to the incumbency and specimen
signatures of the officers of such Trustee and the attorney-in-fact and agents
of such Trustee (the "Trustee Representatives") authorized to give Written
Notices on behalf of such Trustee hereunder. Until the Subordination Agent
receives a subsequent Trustee Incumbency Certificate, it shall be entitled to
rely on the last Trustee Incumbency Certificate delivered to it hereunder.
(c) With the delivery of this Agreement, each Liquidity Provider and
the Policy Provider shall furnish to the Subordination Agent, and from time to
time thereafter may furnish to the Subordination Agent, at such Liquidity
Provider's or 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 (each a "Provider Incumbency Certificate") of any
authorized signatory of such Liquidity Provider or Policy Provider certifying as
to the incumbency and specimen signatures of any officer, attorney-in-fact,
agent or other designated representative of such Liquidity Provider or Policy
Provider (in each case, the "Provider Representatives" and, together with the
Subordination Agent Representatives and Trustee Representatives, the "Designated
Representatives") authorized to give Written Notices on behalf of such Liquidity
Provider or Policy Provider hereunder. Until the Subordination Agent receives a
subsequent Provider Incumbency Certificate, it shall be entitled to rely on the
last Provider Incumbency Certificate delivered to it hereunder.
SECTION 2.6 Controlling Party. (a) The Trustees, the Liquidity
Providers and the Policy Provider hereby agree that, with respect to any
Indenture at any given time, the Loan Trustee thereunder will be directed (i) in
taking, or refraining from taking, any action with respect to such Indenture or
the Equipment Notes issued thereunder, so long as no Indenture Default has
occurred and is continuing thereunder, by the holders of at least a majority of
the outstanding principal amount of such Equipment Notes (provided that, for so
long as the Subordination Agent is the registered holder of the Equipment Notes,
the Subordination Agent shall act with respect to this clause (i) in accordance
with the directions of the Trustees representing holders of Certificates
representing an undivided interest in such principal amount of Equipment Notes,
and (ii) after the occurrence and during the continuance of an Indenture Default
thereunder (which, in the case of an Indenture pertaining to a Leased Aircraft,
has not been cured by the applicable Owner Trustee or the applicable Owner
Participant, if applicable, pursuant to Section 4.03 of such Indenture), in
taking, or refraining from taking, any action with respect to such Indenture or
such Equipment Notes, including exercising remedies thereunder (including
accelerating the Equipment Notes issued thereunder or foreclosing the Lien on
the Aircraft securing such Equipment Notes), by the Controlling Party.
32
(b) Subject to subparagraph (c) below, the Person who shall be the
"Controlling Party" with respect to any Indenture shall be: (x) the Policy
Provider until payment of Final Distributions to the holders of Class G
Certificates and no obligations owing to the Policy Provider remain outstanding
or, if a Policy Provider Default has occurred and is continuing, the Class G
Trustee until payment of Final Distributions to the holders of Class G
Certificates; and thereafter, (y) upon payment of Final Distributions to the
holders of Class G Certificates and if either no Policy Provider Obligations
owing to the Policy Provider remain outstanding or a Policy Provider Default has
occurred and is continuing, the Class B Trustee until payment of Final
Distributions to the holders of Class B Certificates; and thereafter (z) upon
payment of Final Distributions to the holders of Class B Certificates, the Class
C Trustee. For purposes of giving effect to the foregoing, the Trustees (other
than the Controlling Party) irrevocably agree (and the Certificateholders (other
than the Certificateholders represented by the Controlling Party) shall be
deemed to agree by virtue of their purchase of Certificates) that the
Subordination Agent, as record holder of the Equipment Notes, shall exercise its
voting rights in respect of the Equipment Notes as directed by the Controlling
Party and any vote so exercised shall be binding upon the Trustees and all
Certificateholders.
The Subordination Agent shall give written notice to all of the
other parties to this Agreement promptly upon a change in the identity of the
Controlling Party. Each of the parties hereto agrees that it shall not exercise
any of the rights of the Controlling Party at such time as it is not the
Controlling Party hereunder; provided, however, that nothing herein contained
shall prevent or prohibit any Non-Controlling Party from exercising such rights
as shall be specifically granted to such Non-Controlling Party hereunder and
under the other Operative Agreements.
(c) Notwithstanding the foregoing, at any time after 18 months from
the earliest to occur of (i) the date on which the entire Available Amount under
any Liquidity Facility shall have been drawn (for any reason other than a
Downgrade Drawing or a Non-Extension Drawing) and any amount remains
unreimbursed, (ii) the date on which the entire amount of any Downgrade Drawing
or Non-Extension Drawing has been withdrawn from a Cash Collateral Account to
pay interest on the related Class of Certificates and any amount remains
unreimbursed and (iii) the date on which all Equipment Notes shall have been
Accelerated (provided that with respect to the period prior to the Delivery
Period Expiry Date, such Equipment Notes have an aggregate outstanding principal
balance in excess of $110 million), the Liquidity Provider with the highest
outstanding amount of unreimbursed Liquidity Obligations (so long as such
Liquidity Provider has not defaulted in its obligation to make any advance under
any Liquidity Facility; the "Eligible Provider") shall have the right to elect,
by Written Notice to the Subordination Agent, the Policy Provider and each of
the Trustees, to become the Controlling Party hereunder with respect to any
Indenture at any time from and including the last day of such 18-month period,
provided that if (A) within 15 Business Days after its receipt of any such
written notice from such Liquidity Provider (i) the Policy Provider then meets
the Policy Provider Threshold Rating, (ii) no Policy Provider Default shall have
occurred and be continuing and (iii) the Policy Provider delivers to the
Subordination Agent (with a copy to each of the Trustees and each Liquidity
Provider) (a) an amended policy (x) covering payment of all
33
drawings and interest thereon owing to the Liquidity Providers (determined
without regard to the availability of funds for the payment thereof by the
Subordination Agent), (y) permitting each Liquidity Provider to demand a payment
directly from the Policy Provider under such amended Policy of such Liquidity
Obligations when and as due under the applicable Liquidity Facility and (z)
prohibiting any amendment or modification of such amended Policy without the
prior written consent of the Liquidity Providers and otherwise in form and
substance reasonable satisfactory to the Liquidity Providers, (b) a legal
opinion to the effect that the Policy as amended constitutes an enforceable
obligation of the Policy Provider and (c) Ratings Confirmations issued by each
Rating Agency with respect thereto or (B) the Policy Provider pays to each
Liquidity Provider 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 no Policy
Provider Default has occurred and is continuing (in which case 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 remain
outstanding, the Class G Trustee, shall become the Controlling Party). In
connection with the delivery of any such amended Policy, the parties hereto
agree to enter into an amendment to this Agreement and the Subordination Agent
agrees to enter into an amendment to the Policy Provider Agreement, in each
instance, to make such changes thereto as may be necessary to give effect to the
foregoing (any such amendment to this Agreement to be subject to delivery to
each of the Trustees and the Subordination Agent of a Ratings Confirmation
issued by each Rating Agency with respect thereto and each such amendment to be
in form and substance reasonably satisfactory to each party thereto). In
addition, each Liquidity Provider agrees to request the Policy Drawings
permitted by such amended Policy and that the proceeds thereof be applied to the
Liquidity Obligations owing to it.
(d) The exercise of remedies by the Controlling Party under this
Agreement shall be expressly limited by Section 4.1(a)(ii) hereof.
(e) The Controlling Party shall not be entitled to require or
obligate any Non-Controlling Party to provide funds necessary to exercise any
right or remedy hereunder.
ARTICLE III
RECEIPT, DISTRIBUTION AND APPLICATION OF
AMOUNTS RECEIVED
SECTION 3.1 Written Notice of Distribution. (a) No later than 3:00
P.M. (New York City time) on the Business Day immediately preceding each
Distribution Date (or Special Distribution Date for purposes of Section 2.4(b)
hereof, as the case may be), each of the 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:
34
(i) With respect to the Class G Certificates, the Class G
Trustee shall separately set forth the amounts to be paid in accordance
with clause "fifth" of Section 3.2 or with clause "fifth" of Section
2.4(b), as the case may be, hereof;
(ii) With respect to the Class B Certificates, the Class B
Trustee shall separately set forth the amounts to be paid in accordance
with clause "seventh" of Section 3.2 or with clause "seventh" of Section
2.4(b), as the case may be, hereof;
(iii) With respect to the Class C Certificates, the Class C
Trustee shall separately set forth the amounts to be paid in accordance
with clause "eighth" of Section 3.2 or with clause "eighth" of Section
2.4(b), as the case may be, hereof;
(iv) With respect to each Liquidity Facility, the Liquidity
Provider thereunder shall separately set forth the amounts to be paid in
accordance with clauses "first", "second", "third" and "fourth" of Section
3.2 or Section 2.4(b), as the case may be, hereof;
(v) The Policy Provider shall set forth the amounts to be paid
to it in accordance with clauses "first", "second", "third", "sixth" and
"ninth" of Section 3.2 or 2.4(b), as the case may be, hereof; and
(vi) Each Trustee shall set forth the amounts to be paid in
accordance with clause "tenth" of Section 3.2 hereof.
The notices required under this Section 3.1(a) shall be provided to the
Subordination Agent by the parties referenced therein or by any one of them
pursuant to an agreement between the parties referred to therein, and may state
that, unless there has been a prepayment of the Certificates, such notice is to
remain in effect until any substitute notice or amendment shall be given to the
Subordination Agent by the party providing such notice.
(b) Following the occurrence of a Triggering Event, the
Subordination Agent shall request the following information from the following
Persons, and each of the following Persons shall, upon the request of the
Subordination Agent, deliver a Written Notice to the Subordination Agent setting
forth for such Person the following information:
(i) With respect to the Class G Certificates, the Class G
Trustee shall separately set forth the amounts to be paid in accordance
with clauses "first" (relating to reimbursement payments made by the Class
G Certificateholders) and "seventh" of Section 3.3 hereof;
(ii) With respect to the Class B Certificates, the Class B
Trustee shall separately set forth the amounts to be paid in accordance
with clauses "first" (relating to
35
reimbursement payments made by the Class B Certificateholders) and "ninth"
of Section 3.3 hereof;
(iii) With respect to the Class C Certificates, the Class C
Trustee shall separately set forth the amounts to be paid in accordance
with clauses "first" (relating to reimbursement payments made by the Class
C Certificateholders) and "tenth" of Section 3.3 hereof;
(iv) With respect to each Liquidity Facility, the Liquidity
Provider thereunder shall separately set forth the amounts to be paid in
accordance with clauses "first", "second", "third", "fourth" and "fifth"
of Section 3.3 hereof;
(v) The Policy Provider shall separately set forth amounts to
be paid to it in accordance with clauses "first", "second", "third",
"fourth", "eighth" and "eleventh" of Section 3.3 hereof; and
(vi) Each Trustee shall set forth the amounts to be paid in
accordance with clause "sixth" of Section 3.3 hereof.
(c) At such time as a Trustee, 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 2.4,
3.2, 3.3 or 3.7 hereof, as applicable, and, in the case of a Liquidity Provider
or the Policy Provider, its commitment under the related Liquidity Facility or
the Policy shall have terminated or expired, such Person shall, by a Written
Notice, so inform the Subordination Agent and each other party to this
Agreement.
(d) As provided in Section 6.5 hereof, the Subordination Agent shall
be fully protected in relying on any of the information set forth in a Written
Notice provided by any Trustee, any Liquidity Provider or the Policy Provider
pursuant to paragraphs (a) through (c) above and shall have no independent
obligation to verify, calculate or recalculate any amount set forth in any
Written Notice delivered in accordance with such paragraphs.
(e) Any Written Notice delivered by a Trustee, a Liquidity Provider
or the Policy Provider, as applicable, pursuant to Section 3.1(a), 3.1(b) or
3.1(c) hereof, if made prior to 10:00 A.M. (New York City time) shall be
effective on the date delivered (or if delivered later shall be effective as of
the next Business Day). Subject to the terms of this Agreement, the
Subordination Agent shall as promptly as practicable comply with any such
instructions; provided, however, that any transfer of funds pursuant to any
instruction received after 10:00 A.M. (New York City time) on any Business Day
may be made on the next succeeding Business Day.
(f) In the event the Subordination Agent shall not receive from any
Person any information set forth in paragraphs (a) or (b) above which is
required to enable the Subordination Agent to make a distribution to such Person
pursuant to Section 3.2 or 3.3 hereof, the
36
Subordination Agent shall request such information in writing and, failing to
receive any such information, the Subordination Agent shall, after written
notice to such person, not make such distribution(s) to such Person. In such
event, the Subordination Agent shall make distributions pursuant to clauses
"first" through "ninth" of Section 3.2 and clauses "first" through "twelfth" of
Section 3.3 to the extent it shall have sufficient information to enable it to
make such distributions, and shall continue to hold any funds remaining, after
making such distributions, until the Subordination Agent shall receive all
necessary information to enable it to distribute any funds so withheld.
(g) On such dates (but not more frequently than monthly) as any
Liquidity Provider , the Policy Provider or any Trustee shall request, the
Subordination Agent shall send to such party a written statement reflecting all
amounts on deposit with the Subordination Agent pursuant to Section 3.1(f)
hereof.
SECTION 3.2 Distribution of Amounts on Deposit in the Collection
Account. Except as otherwise provided in Sections 2.4, 3.1(f), 3.3, 3.4 and
3.6(b), amounts on deposit in the Collection Account (or, in the case of any
amount described in Section 2.4(c), on deposit in the Special Payments Account)
shall be promptly distributed on each Distribution Date (or, in the case of any
amount described in Section 2.4(c), on the Special Distribution Date therefor)
in the following order of priority and in accordance with the information
provided to the Subordination Agent pursuant to Section 3.1(a) hereof:
first, such amount as shall be required to pay (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 Liquidity Providers and the Policy Provider pari passu
on the basis of the amount of Liquidity Expenses and Policy Expenses owed
to each Liquidity Provider and the Policy Provider;
second, such amount as shall be required to pay in full (i) the
aggregate amount of interest accrued on all Liquidity Obligations (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)
and unpaid shall be distributed to the Liquidity Providers pari passu on
the basis of the amount of Liquidity Obligations owed to each Liquidity
Provider, (ii) if the Class G Liquidity Provider has defaulted in its
obligation to make 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
default by the Liquidity Provider at the rate provided in the "except"
clause of the definition of "Policy Provider Obligations" and (iii) if the
Policy Provider has elected to pay to each Liquidity Provider all
outstanding drawings and interest owing to such Liquidity Provider under
its Liquidity Facility pursuant to subsection 2.6(c) hereof, the amount of
such payment made to the Liquidity Providers attributable to such interest
accrued on such
37
drawings, shall be distributed to the Liquidity Providers and the Policy
Provider pari passu on the basis of the amounts owing to each;
third, such amount as shall be required (A) if any Cash Collateral
Account had been previously funded as provided in Section 3.6(f), to fund
such Account up to its Required Amount shall be deposited in such Account,
(B) if any Liquidity Facility shall become a Downgraded Facility or a
Non-Extended Facility at a time when unreimbursed Interest Drawings under
such Liquidity Facility have reduced the Available Amount thereunder to
zero, to deposit into the related Cash Collateral Account an amount equal
to such Account's Required Amount shall be deposited in such Cash
Collateral Account, and (C) after applications of the amounts required
pursuant to subclause (A) or subclause (B) of this clause "third", (x) to
pay or reimburse the Liquidity Provider in respect of such Liquidity
Facility in an amount equal to the amount of all Liquidity Obligations
then due under such Liquidity Facility (other than amounts payable
pursuant to clause "first" or "second" of this Section 3.2 and as
determined after giving effect to payments made by the Policy Provider to
the Liquidity Providers in respect of principal of drawings under the
Liquidity Facilities) and (y) if the Policy Provider has elected to pay to
each Liquidity Provider all outstanding drawings and interest owing to
such Liquidity Provider under its Liquidity Facility pursuant to
subsection 2.6(c) hereof, the principal amount of such payment made to the
Liquidity Providers, shall be distributed to such Liquidity Providers and
the Policy Provider pari passu on the basis of the amounts of all such
unreimbursed Liquidity Obligations and such payments under the Policy;
fourth, if, with respect to any particular Liquidity Facility, any
amounts are to be distributed pursuant to either subclause (A) or (B) of
clause "third" above, then the Liquidity Provider with respect to such
Liquidity Facility shall be paid the excess of (x) the aggregate
outstanding amount of unreimbursed advances (whether or not then due)
under such Liquidity Facility over (y) the Required Amount for the
relevant Class, pari passu on the basis of such amounts in respect of each
Liquidity Provider;
fifth, such amount as shall be required to pay in full Expected
Distributions to the holders of the Class 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 (other than amounts payable
pursuant to the preceding clauses of this Section 3.2 and other than
Excess Reimbursement Obligations) to the Policy Provider;
seventh, such amount as shall be required to pay in full Expected
Distributions to the holders of the Class B Certificates on such
Distribution Date shall be distributed to the Class B Trustee;
38
eighth, 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;
ninth, such amount as shall be required to pay in full any Excess
Reimbursement Obligations shall be distributed to the Policy Provider;
tenth, such amount as shall be required to pay in full the aggregate
unpaid amount of fees and expenses payable as of such Distribution Date to
the Subordination Agent and each Trustee pursuant to the terms of this
Agreement and the Trust Agreements, as the case may be, shall be
distributed to the Subordination Agent and such Trustee; and
eleventh, the balance, if any, of any such payment remaining
thereafter shall be held in the Collection Account for later distribution
in accordance with this Article III (including the priorities set forth
therein).
SECTION 3.3 Distribution of Amounts on Deposit Following a
Triggering Event. (a) Except as otherwise provided in Sections 3.1(f) and 3.6(b)
hereof, upon the occurrence of a Triggering Event and at all times thereafter,
all funds in the Collection Account or the Special Payments Account shall be
promptly distributed by the Subordination Agent in the following order of
priority:
first, such amount as shall be required to reimburse (i) the
Subordination Agent for any out-of-pocket costs and expenses actually
incurred by it (to the extent not previously reimbursed) in the protection
of, or the realization of the value of, the Equipment Notes or any Trust
Indenture Estate, shall be applied by the Subordination Agent in
reimbursement of such costs and expenses, (ii) each Trustee for any
amounts of the nature described in clause (i) above actually incurred by
it under the applicable Trust Agreement (to the extent not previously
reimbursed), shall be distributed to such Trustee and (iii) 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) any Liquidity Provider,
Policy Provider or Certificateholder for payments, if any, made by it to
the Subordination Agent or any Trustee in respect of amounts described in
clause (i) above, shall be distributed to such Liquidity Provider, Policy
Provider or to the applicable Trustee for the account of such
Certificateholder, in each such case, pari passu on the basis of all
amounts described in clauses (i) through (iv) above;
second, such amount remaining as shall be required to pay (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 each Liquidity Provider and the Policy Provider
pari passu on the basis of the amount of Liquidity Expenses and Policy
Expenses owed to each Liquidity Provider, and the Policy Provider;
39
third, such amount remaining as shall be required to pay (i) the
aggregate amount of interest accrued on all Liquidity Obligations (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)
and unpaid shall be distributed to the Liquidity Providers pari passu on
the basis of the amount of Liquidity Obligations owed to each Liquidity
Provider, (ii) if the Class G Liquidity Provider has defaulted in its
obligation to make 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
default by the Liquidity Provider at the rate provided in the "except"
clause of the definition of "Policy Provider Obligations" and (iii) if the
Policy Provider has elected to pay to each Liquidity Provider all
outstanding drawings and interest owing to such Liquidity Provider under
its Liquidity Facility pursuant to subsection 2.6(c) hereof, the amount of
such payment made to the Liquidity Providers attributable to such interest
accrued on such drawings, shall be distributed to the Liquidity Providers
and the Policy Provider pari passu on the basis of the amounts owing to
each;
fourth, such amount remaining as shall be required (A) if any Cash
Collateral Account had been previously funded as provided in Section
3.6(f), unless (i) a Performing Note Deficiency exists and a Liquidity
Event of Default shall have occurred and be continuing with respect to the
relevant Liquidity Facility or (ii) a Final Drawing shall have occurred
with respect to such Liquidity Facility, to fund such Cash Collateral
Account up to its Required Amount (less the amount of any repayments of
Interest Drawings under such Liquidity Facility while subclause (A)(i)
above is applicable) shall be deposited in such Account, (B) if any
Liquidity Facility shall become a Downgraded Facility or a Non-Extended
Facility at a time when unreimbursed Interest Drawings under such
Liquidity Facility have reduced the Available Amount thereunder to zero,
unless (i) a Performing Note Deficiency exists and a Liquidity Event of
Default shall have occurred and be continuing with respect to the relevant
Liquidity Facility or (ii) a Final Drawing shall have occurred with
respect to such Liquidity Facility, to deposit into the related Cash
Collateral Account an amount equal to such Account's Required Amount (less
the amount of any repayments of Interest Drawings under such Liquidity
Facility while subclause (B)(i) above is applicable) shall be deposited in
such Cash Collateral Account, and (C) after application of the amounts
required pursuant to subclause (A) or subclause (B) of this clause
"fourth", (x) to pay in full the outstanding amount of all Liquidity
Obligations then due under such Liquidity Facility (other than amounts
payable pursuant to clause "second" or "third" of this Section 3.3 and as
determined after giving effect to payments made by the Policy Provider to
the Liquidity Providers in respect of principal of drawings under the
Liquidity Facilities) and (y) if the Policy Provider has elected to pay to
each Liquidity Provider all outstanding drawings and interest owing to
such Liquidity Provider under its Liquidity Facility pursuant to
subsection 2.6(c) hereof, the principal amount of such payment made to the
Liquidity Providers, shall be distributed to such
40
Liquidity Providers and the Policy Provider pari passu on the basis of the
amounts of all such unreimbursed Liquidity Obligations and such payments
under the Policy;
fifth, if, with respect to any particular Liquidity Facility, any
amounts are to be distributed pursuant to either subclause (A) or (B) of
clause "fourth" above, then the Liquidity Provider with respect to such
Liquidity Facility shall be paid the excess of (x) the aggregate
outstanding amount of unreimbursed advances (whether or not then due)
under such Liquidity Facility over (y) the Required Amount for the
relevant Class (less the amount of any repayments of Interest Drawings
under such Liquidity Facility while subclause (A)(i) or (B)(i), as the
case may be, of clause "fourth" above is applicable), pari passu on the
basis of such amounts in respect of each Liquidity Provider;
sixth, such amount as shall be required to reimburse or pay (i) the
Subordination Agent for any Tax (other than Taxes imposed on compensation
paid hereunder), expense, fee, charge or other loss incurred by or any
other amount payable to the Subordination Agent in connection with the
transactions contemplated hereby (to the extent not previously
reimbursed), shall be applied by the Subordination Agent in reimbursement
of such amount, (ii) each Trustee for any Tax (other than Taxes imposed on
compensation paid under the applicable Trust Agreement), expense, fee,
charge, loss or any other amount payable to such Trustee under the
applicable Trust Agreements (to the extent not previously reimbursed),
shall be distributed to such Trustee and (iii) each Certificateholder for
payments, if any, made by it pursuant to Section 5.2 hereof in respect of
amounts described in clause (i) above, shall be distributed to the
applicable Trustee for the account of such Certificateholder, in each such
case, pari passu on the basis of all amounts described in clauses (i)
through (iii) above;
seventh, such amount remaining as shall be required to pay in full
Adjusted Expected Distributions on the Class G Certificates shall be
distributed to the Class G Trustee;
eighth, such amount remaining as shall be required to pay the Policy
Provider Obligations then due to the Policy Provider under the Policy
Provider Agreement (other than amounts payable pursuant to clauses "first"
through "fourth" above and other than any Excess Reimbursement
Obligations) shall be paid to the Policy Provider;
ninth, such amount remaining as shall be required to pay in full
Adjusted Expected Distributions on the Class B Certificates shall be
distributed to the Class B Trustee;
tenth, 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;
41
eleventh, such amount remaining as shall be required to pay any
Excess Reimbursement Obligations to the Policy Provider;
twelfth, such amount remaining shall be retained in the Collection
Account until the immediately succeeding Distribution Date or, if all
Classes of Certificates shall have been paid in full, shall be distributed
to the Owner Trustee to the extent that the amount received from the Loan
Trustees and deposited in the Collection Account exceed the amounts
described in clauses "first" through "eleventh" above; and
thirteenth, amount remaining shall be distributed to the
Certificateholders of the related Trust.
SECTION 3.4 Other Payments. Any payments received by the
Subordination Agent for which no provision as to the application thereof is made
in this Agreement shall be distributed by the Subordination Agent in the order
of priority specified in Section 3.3 hereof.
SECTION 3.5 Payments to the Trustees, the Liquidity Providers and
the Policy Provider. Any amounts distributed hereunder to any Liquidity Provider
shall be paid to such Liquidity Provider by wire transfer of funds to the
address such Liquidity Provider shall provide to the Subordination Agent. The
Subordination Agent shall provide a Written Notice of any such transfer to the
applicable Liquidity Provider, as the case may be, at the time of such transfer.
Any amounts distributed hereunder by the Subordination Agent to any Trustee
which shall not be the same institution as the Subordination Agent shall be paid
to such Trustee by wire transfer of funds to the address such Trustee shall
provide to the Subordination Agent.
SECTION 3.6 Liquidity Facilities. (a) Interest Drawings. If on any
Distribution Date, after giving effect to the subordination provisions of this
Agreement, the Subordination Agent shall not have sufficient funds for the
payment of any amounts due and owing in respect of accrued interest on the Class
G Certificates, the Class B Certificates or the Class C Certificates (at the
Stated Interest Rate for such Class of Certificates), then, prior to 10:00 a.m.
(New York City time) on such Distribution Date, the Subordination Agent shall
request a drawing (each such drawing, an "Interest Drawing") under the Liquidity
Facility with respect to such Class of Certificates (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 such Class of Certificates) or (ii) the Available Amount under
such Liquidity Facility, and shall pay such amount to the Trustee with respect
to such Class of Certificates in payment of such accrued interest.
(b) Application of Interest Drawings. Notwithstanding anything to
the contrary contained in this Agreement, (i) all payments received by the
Subordination Agent in respect of an Interest Drawing under the Class G
Liquidity Facility and all amounts withdrawn by the Subordination Agent from the
Class G Cash Collateral Account, and payable in each case to the
42
Class G Certificateholders, shall be promptly distributed to the Class G Trustee
and (ii) all payments received by the Subordination Agent in respect of an
Interest Drawing under the Class B Liquidity Facility and all amounts withdrawn
by the Subordination Agent from the Class B Cash Collateral Account, and payable
in each case to the Class B Certificateholders, shall be promptly distributed to
the Class B Trustee and (iii) all payments received by the Subordination Agent
in respect of an Interest Drawing under the Class C Liquidity Facility and all
amounts withdrawn by the Subordination Agent from the Class C Cash Collateral
Account, and payable in each case to the Class C Certificateholders, shall be
promptly distributed to the Class C Trustee.
(c) Downgrade Drawings. If at any time (i) the short-term unsecured
debt rating of any Liquidity Provider (or any Liquidity Guarantor with respect
to any Liquidity Facility), issued by either Rating Agency is lower than the
applicable Threshold Rating or (ii) , if applicable, any guarantee issued by a
Liquidity Guarantor related to any Liquidity Facility ceases to be in full force
and effect or becomes invalid or unenforceable, or the Liquidity Guarantor
denies its liability thereunder (any such occurrence, a "Liquidity Guarantee
Event"), within 30 days after receiving notice of an event identified in clauses
(i) and (ii) (but no later than the expiration date of the Liquidity Facility
issued by the downgraded Liquidity Provider (the "Downgraded Facility")), such
Liquidity Provider may arrange, or the Subordination Agent (in consultation with
Northwest), may arrange for a Replacement Liquidity Provider to issue and
deliver a Replacement Liquidity Facility to the Subordination Agent. If a
Downgraded Facility has not been replaced in accordance with the terms of this
paragraph, the Subordination Agent shall, on such 30th day (or if such 30th day
is not a Business Day, on the next succeeding Business Day) (or, if earlier, the
expiration date of such Downgraded Facility), request a drawing in accordance
with and to the extent permitted by such Downgraded Facility (such drawing, a
"Downgrade Drawing") of all available and undrawn amounts thereunder. Amounts
drawn pursuant to a Downgrade Drawing shall be maintained and invested as
provided in Section 3.6(f) hereof. The Liquidity Provider may also arrange for a
Replacement Liquidity Provider to issue and deliver a Replacement Liquidity
Facility at any time after such Downgrade Drawing so long as such Downgrade
Drawing has not been reimbursed in full to the Liquidity Provider.
(d) Non-Extension Drawings. If any Liquidity Facility with respect
to any Class of Certificates is scheduled to expire on a date (the "Stated
Expiration Date") prior to the date that is 15 days after the Final Legal
Distribution Date for such Class of Certificates, then, no earlier than the 60th
day and no later than the 40th day prior to the then Stated Expiration Date, the
Subordination Agent shall request that such Liquidity Provider extend the Stated
Expiration Date for a period of 364 days after the Stated Expiration Date
(unless the obligations of such Liquidity Provider thereunder are earlier
terminated in accordance with such Liquidity Facility). The Liquidity Provider
shall advise the Subordination Agent, no earlier than 40 days and no later than
25 days prior to such Stated Expiration Date, whether, in its sole discretion,
it agrees to so extend the Stated Expiration Date. If, on or before the 25th day
prior to the Stated Expiration Date, such Liquidity Facility shall not have been
so extended or replaced in accordance with Section 3.6(e), or if the Liquidity
Provider fails irrevocably and unconditionally to advise the
43
Subordination Agent on or before the 25th day prior to the Stated Expiration
Date then in effect that such Stated Expiration Date shall be so extended, the
Subordination Agent shall, on such 25th day (or as soon as possible thereafter),
in accordance with and to the extent permitted by the terms of the expiring
Liquidity Facility (a "Non-Extended Facility"), request a drawing under such
expiring Liquidity Facility (such drawing, a "Non-Extension Drawing") of all
available and undrawn amounts thereunder. Amounts drawn pursuant to any
Non-Extension Drawing shall be maintained and invested in accordance with
Section 3.6(f) hereof. Notwithstanding the foregoing provisions of this Section
3.6(d), so long as MSCS is the Liquidity Provider for any Liquidity Facility,
the Stated Expiration Date therefor shall be automatically extended, effective
on the 25th day, prior to such Stated Expiration Date (unless such Stated
Expiration Date is on or after the date that is 15 days after the Final Legal
Distribution Date for the relevant Class of Certificates), for a period of 364
days after such Stated Expiration Date (unless the obligations of such Liquidity
Provider are earlier terminated in accordance with such Liquidity Facility)
without the necessity of any act by the Subordination Agent or such Liquidity
Provider, unless such Liquidity Provider shall advise the Subordination Agent,
prior to such 25th day, that it does not agree to such extension of the Stated
Expiration Date, in which event, the Subordination Agent shall, on such 25th day
(or as soon as possible thereafter), in accordance with and to the extent
permitted by the terms of the Non-Extended Facility, request a Non-Extension
Drawing under the Non-Extended Facility of all available and undrawn amounts
thereunder.
(e) Issuance of Replacement Liquidity Facility. At any time, the
Subordination Agent may, at its option, in consultation with Northwest, arrange
for a Replacement Liquidity Facility to replace the Liquidity Facility for any
Class of Certificates; provided that, the initial Liquidity Provider may not be
replaced unless there shall have become due to the initial Liquidity Provider
amounts pursuant to Section 3.1, 3.2 or 3.3 of the Liquidity Facilities and the
replacement of the initial Liquidity Provider would reduce or eliminate the
obligation to pay such amounts; provided further that, the Liquidity Provider
may arrange, or the Subordination Agent (in consultation with Northwest) may
arrange, for a Replacement Liquidity Provider pursuant to paragraphs (c) and (d)
of this Section 3.6. In any such consultation, the Subordination Agent shall
accept the recommendations of Northwest in the absence of a good faith reason
not to do so. No such Replacement Liquidity Facility executed in connection
therewith shall become effective and no such Replacement Liquidity Facility
shall be deemed a "Liquidity Facility" under the Operative Agreements, unless
and until (i) the conditions referred to in the immediately following paragraph
shall have been satisfied and (ii) if such Replacement Liquidity Facility shall
materially adversely affect the rights, remedies, interests or obligations of
the Class G Certificateholders, the Class B Certificateholders or the Class C
Certificateholders under any of the Operative Agreements, the applicable Trustee
shall have consented, in writing, to the execution and issuance of such
Replacement Liquidity Facility.
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
the rating then in effect for any Class of Certificates by such Rating
44
Agency (without regard to any downgrading of the ratings of any Liquidity
Provider or the Liquidity Guarantor being replaced pursuant to Section 3.6(c)
hereof and without regard to the Policy) and, in the case of the Class G
Liquidity Facility only, the written consent of the Policy Provider (which
consent shall not be unreasonably withheld or delayed), (y) pay all Liquidity
Obligations then owing to the replaced Liquidity Provider (which payment shall
be made first from available funds in the Cash Collateral Account as described
in clause (vii) of Section 3.6(f) hereof and thereafter from any other available
source, including, without limitation, a drawing under the Replacement Liquidity
Facility, it being understood that no Replacement Liquidity Facility shall
become effective (other than insofar as necessary to permit the repayment of
amounts owed to the replaced Liquidity Provider) until all amounts owed to the
replaced Liquidity Provider have been paid) and (z) cause the issuer of the
Replacement Liquidity Facility to deliver the Replacement Liquidity Facility to
the Subordination Agent, together with a legal opinion opining that such
Replacement Liquidity Facility is an enforceable obligation of such Replacement
Liquidity Provider. Upon satisfaction of the conditions set forth in this
Section 3.6(e), (i) the replaced Liquidity Facility shall terminate and (ii)
such Replacement Liquidity Provider shall be deemed to be a Liquidity Provider
with the rights and obligations of a Liquidity Provider hereunder and under the
other Operative Agreements and such Replacement Liquidity Facility shall be
deemed to be a Liquidity Facility hereunder and under the other Operative
Agreements.
(f) Cash Collateral Accounts; Withdrawals; Investments. In the event
the Subordination Agent shall draw all available amounts under the Class G
Liquidity Facility, the Class B Liquidity Facility or the Class C Liquidity
Facility pursuant to Section 3.6(c), 3.6(d) or 3.6(i), amounts so drawn shall be
deposited by the Subordination Agent in the Class G Cash Collateral Account, the
Class B Cash Collateral Account or the Class C Cash Collateral Account,
respectively. Amounts so deposited shall be invested in Eligible Investments in
accordance with Section 2.2(b) hereof. Investment Earnings on amounts on deposit
in the Cash Collateral Accounts shall be deposited in the Collection Account.
The Subordination Agent shall deliver a written statement to the respective
Liquidity Provider one day prior to each Distribution Date setting forth the
aggregate amount of Investment Earnings held in the applicable Cash Collateral
Accounts as of such date. In addition, from and after the date funds are so
deposited, the Subordination Agent shall make withdrawals from such account as
follows:
(i) on each Distribution Date, the Subordination Agent shall,
to the extent it shall not have received funds to pay accrued and unpaid
interest on the Class G Certificates (at the Stated Interest Rate for the
Class G Certificates) from any other source, withdraw from the Class G
Cash Collateral Account, and pay to the Class G Trustee an amount equal to
the lesser of (x) an amount necessary to pay accrued and unpaid interest
(at the Stated Interest Rate for the Class G Certificates) on such Class G
Certificates and (y) the amount on deposit in the Class G Cash Collateral
Account;
(ii) on each Distribution Date, the Subordination Agent shall,
to the extent it shall not have received funds to pay accrued and unpaid
interest on the Class B
45
Certificates (at the Stated Interest Rate for the Class B Certificates)
from any other source, withdraw from the Class B Cash Collateral Account,
and pay to the Class B Trustee an amount equal to the lesser of (x) an
amount necessary to pay accrued and unpaid interest (at the Stated
Interest Rate for the Class B Certificates) on such Class B Certificates
and (y) the amount on deposit in the Class B Cash Collateral Account;
(iii) on each Distribution Date, the Subordination Agent
shall, to the extent it shall not have received funds to pay accrued and
unpaid interest on the Class C Certificates (at the Stated Interest Rate
for the Class C Certificates) from any other source, withdraw from the
Class C Cash Collateral Account, and pay to the Class C Trustee an amount
equal to the lesser of (x) an amount necessary to pay accrued and unpaid
interest (at the Stated Interest Rate for the Class C Certificates) on
such Class C Certificates and (y) the amount on deposit in the Class C
Cash Collateral Account;
(iv) on each date on which the Pool Balance of the Class G
Trust shall have been reduced by payments made to the Class G
Certificateholders pursuant to Section 2.4, 3.2 or 3.3 hereof or pursuant
to Section 2.03 of the Escrow and Paying Agent Agreement for such Class,
the Subordination Agent shall withdraw from the Class G Cash Collateral
Account such amount as is necessary so that, after giving effect to the
reduction of the Pool Balance on such date (including any such reduction
resulting from a prior withdrawal of amounts on deposit in the Class G
Cash Collateral Account on such date), the Required Amount (with respect
to the Class G Liquidity Facility) will be on deposit in the Class G Cash
Collateral Account and shall first, pay such amount to the Class G
Liquidity Provider until the Liquidity Obligations (with respect to the
Class G Certificates) shall have been paid in full, and second, deposit
any remaining amount in the Collection Account;
(v) on each date on which the Pool Balance of the Class B
Trust shall have been reduced by payments made to the Class B
Certificateholders pursuant to Section 2.4, 3.2 or 3.3 hereof or pursuant
to Section 2.03 of the Escrow and Paying Agent Agreement for such Class,
the Subordination Agent shall withdraw from the Class B Cash Collateral
Account such amount as is necessary so that, after giving effect to the
reduction of the Pool Balance on such date (including any such reduction
resulting from a prior withdrawal of amounts on deposit in the Class B
Cash Collateral Account on such date), the Required Amount (with respect
to the Class B Liquidity Facility) will be on deposit in the Class B Cash
Collateral Account and shall first, pay such amount to the Class B
Liquidity Provider until the Liquidity Obligations (with respect to the
Class B Certificates) shall have been paid in full, and second, deposit
any remaining amount in the Collection Account;
(vi) on each date on which the Pool Balance of the Class C
Trust shall have been reduced by payments made of the Class C
Certificateholders pursuant to Section 2.4, 3.2 or 3.3 hereof or pursuant
to Section 2.03 of the Escrow and Paying Agent Agreement
46
for such Class, the Subordination Agent shall withdraw from the Class C
Cash Collateral Account such amount as is necessary so that, after giving
effect to the reduction of the Pool Balance on such date (including any
such reduction resulting from a prior withdrawal of amounts on deposit in
the Class C Cash Collateral Account on such date), the Required Amount
(with respect to the Class C Liquidity Facility) will be on deposit in the
Class C Cash Collateral Account and shall first, pay such amount to the
Class C Liquidity Provider until the Liquidity Obligations (with respect
to the Class C Certificates) shall have been paid in full, and second,
deposit any remaining amount in the Collection Account;
(vii) if a Replacement Liquidity Facility for any Class of
Certificates shall be delivered to the Subordination Agent following the
date on which funds have been deposited into the Cash Collateral Account
for such Class of Certificates, the Subordination Agent shall withdraw all
amounts on deposit in such Cash Collateral Account and shall pay such
amounts to each replaced Liquidity Provider pari passu until all Liquidity
Obligations owed to such Person shall have been paid in full, and shall
deposit any remaining amount in the Collection Account; and
(viii) following the payment of Final Distributions with
respect to any Class of Certificates, on the date on which the
Subordination Agent shall have been notified by the Liquidity Provider for
such Class of Certificates that the Liquidity Obligations owed to such
Liquidity Provider have been paid in full, the Subordination Agent shall
withdraw all amounts on deposit in the Cash Collateral Account in respect
of such Class of Certificates and shall deposit such amount in the
Collection Account.
(g) Reinstatement. With respect to any Interest Drawing under the
Liquidity Facility for any Trust, upon the reimbursement of the applicable
Liquidity Provider for all or any part of the amount of such Interest Drawing,
together with any accrued interest thereon, the Available Amount of such
Liquidity Facility shall be reinstated by an amount equal to the amount so
reimbursed to the applicable Liquidity Provider, but not to exceed the Required
Amount for such Liquidity Facility; provided, however, that such Liquidity
Facility shall not be so reinstated in part or in full at any time if (x) both
(i) a Triggering Event shall have occurred and (ii) a Performing Note Deficiency
exists or (y) a Final Drawing shall have occurred and be continuing under such
Liquidity Facility. In the event that at any time prior to both the occurrence
of a Triggering Event and the existence of a Performing Note Deficiency funds
are withdrawn from any Cash Collateral Account pursuant to clauses (i), (ii) or
(iii) of Section 3.6(f) hereof, then funds received by the Subordination Agent
prior to both the occurrence of a Triggering Event and the existence of a
Performing Note Deficiency shall be deposited in such Cash Collateral Account as
provided in clause "third" of Section 2.4(b), clause "third" of Section 3.2 or
clause "fourth" of Section 3.3, as applicable, and applied in accordance with
Section 3.6(f) hereof.
47
(h) Reimbursement. The amount of each drawing under the Liquidity
Facilities shall be due and payable, together with interest thereon, on the
dates and at the rates, respectively, provided in the Liquidity Facilities.
(i) Final Drawing. If any action is required under a Liquidity
Facility to be taken by the Subordination Agent in order to make a Final Drawing
thereunder, the Subordination Agent shall not fail to take such action. Upon
receipt of the proceeds of a Final Drawing under the related Liquidity Facility,
the Subordination Agent shall maintain and invest such proceeds in accordance
with Section 3.6(f) hereof.
(j) Reduction of Stated Amount. Promptly following each date on
which the Required Amount of the Liquidity Facility for a Class of Certificates
is reduced as a result of a distribution to the Certificateholders of such Class
of Certificates, the Subordination Agent shall, if such Liquidity Facility
provides for reductions of the Stated Amount of such Liquidity Facility and if
such reductions are not automatic, request the Liquidity Provider for such Class
of Certificates to reduce such Stated Amount to an amount equal to the Required
Amount with respect to such Liquidity Facility (as calculated by the
Subordination Agent after giving effect to such payment). Each such request
shall be made in accordance with the provisions of the applicable Liquidity
Facility.
(k) Relation to Subordination Provisions. Interest Drawings under
the Liquidity Facilities and withdrawals from the Cash Collateral Accounts, in
each case, in respect of interest on the Certificates of any Class, will be
distributed to the Trustee for such Class of Certificates, notwithstanding
Sections 3.2, 3.3 and 3.6(h) hereof.
SECTION 3.7 The Policy. (a) Interest Drawings. If on any Regular
Distribution Date (other than the Final Legal Distribution Date) after giving
effect to the application of available funds in accordance with the priorities
specified in Section 2.4 and Article III, and taking into account the
application of any amounts received by the Escrow Agent in the Class G Paying
Agent Account in respect of accrued interest on the Class G Deposits, any
Drawing paid under the Class G Liquidity Facility in respect of such interest
and any withdrawal of funds from the Class G Cash Collateral Account in respect
of such interest, the Subordination Agent does not then have sufficient funds
available for the payment of all amounts due and owing in respect of accrued
interest on the Class G Certificates at the Stated Interest Rate for Class G
Certificates ("Accrued Class G Interest"), then, prior to 1:00 p.m. (New York
City time) on such 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) 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 an Election Distribution Date or a Special Distribution Date
established pursuant to clause
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(ii) of the third paragraph of Section 3.7(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 Trust
Indenture Estate or Collateral, as the case may be, the Subordination Agent does
not have sufficient funds (after giving effect to the application of available
funds in accordance with the priorities specified in Section 2.4 and Article
III, and taking into account the application of any amounts received by the
Escrow Agent in the Class G Paying Agent Account in respect of accrued interest
on the Class G Deposits, any Drawing paid under the Class G Liquidity Facility
in respect of such interest, any withdrawal of funds in the Class G Cash
Collateral Account in respect of such interest and the amount of such Special
Payment) (i) available for a reduction in the outstanding Pool Balance of the
Class G Certificates to an amount equal to the Post-Disposition Balance (as
defined below) and (ii) to pay interest on the amount of such reduction accrued
at the Stated Interest Rate, 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 (for payment into the Policy
Account) in an amount sufficient to enable the Subordination Agent to pay the
amount of such reduction plus such accrued interest and (y) shall pay such
amount 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 interest on such Special Distribution Date. The "Post-Disposition
Balance" of the Pool Balance of the Class G Certificates on any Special
Distribution Date shall be equal to the difference between the Pool Balance of
the Class G Certificates immediately prior to the receipt of the related
Disposition Payment and the outstanding principal amount of the Series G
Equipment Note related to such Disposition Payment.
(c) No Proceeds Drawing. On the first Business Day that is 18 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
the Subordination Agent has not theretofore made a drawing under the Policy
pursuant to Section 3.7(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 the payment into the
Policy Account) in an amount equal to the then outstanding principal amount of
such Defaulted Series G Equipment Note plus accrued interest thereon. The
Subordination Agent shall promptly, but not less than 25 days prior to the such
Business Day, send to the Class G Trustee, the Class B Trustee and the Class C
Trustee, the Liquidity Provider for the Class G Liquidity Facility 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 thereon. For the avoidance of doubt, after
the payment in full of such amount under this Section 3.7(c), the Subordination
Agent shall have no right to make any further Policy Drawings
49
under Section 3.7(c) in respect of such Defaulted Series G Equipment Note except
for a drawing under Section 3.7(e).
Notwithstanding the foregoing, the Policy Provider has the right at
the end of any such 18-month period, so long as no Policy Provider Default shall
have occurred and be continuing, to elect (the "Policy Provider Election")
instead to pay (a) on such Special Distribution Date an amount equal to the
scheduled principal and interest that came due on such Defaulted Series G
Equipment Note (without regard to the acceleration thereof) but was not paid
during such 18-month period (after giving effect to the application of funds
received from the Class G Liquidity Facility and the Class G Cash Collateral
Account, in each case attributable to such interest) and (b) thereafter, on each
Regular Distribution Date, an amount equal to the scheduled principal and
interest that were to become due on such Defaulted Series G Equipment Note on
the related payment date (without regard to any acceleration thereof) until the
establishment of an Election Distribution Date. 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; each, an "Election 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 interest on
such amounts at the Stated Interest Rate for the Class G Certificates from the
previous Regular Distribution Date to such Election Distribution Date.
Further, following a Policy Provider Election with respect to a
Defaulted Series G Equipment Note, upon either (i) the occurrence and
continuance of a Policy Provider Default or (ii) the receipt by the
Subordination Agent of a Special Payment constituting the Disposition Payment in
respect of such Defaulted Series G Equipment Note or related Trust Indenture
Estate or Collateral, as the case may be, then the Subordination Agent shall on
any Business Day (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 Equipment Note) and accrued interest on such amounts 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 make each such 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.
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In addition, regardless of whether or not the Policy Provider makes
a Policy Provider Election, the Policy Provider shall, at the end of the first
occurring 18-month period described in Section 3.7(c), amend the Policy (if not
already amended to so provide) to provide for the payment to the Class G
Liquidity Provider, the Class B Liquidity Provider and the Class C Liquidity
Provider of interest accruing on the outstanding drawings in respect of the
Class G Liquidity Facility, Class B Liquidity Facility and Class C Liquidity
Facility from and after the end of such 18-month period as and when such
interest becomes due in accordance with such Liquidity Facilities.
(d) Final Policy Drawing. If on the Final Legal Distribution Date of
the Class G Certificates after giving effect to the application of available
funds in accordance with the priorities specified in Section 2.4 and Article
III, and taking into account the application of any amounts received by the
Escrow Agent in the Class G Paying Agent Account in respect of accrued interest
on the Class G Deposits, 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 at such date but excluding any accrued and unpaid premium) 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 at such date but excluding any accrued and
unpaid premium) on the Class G Certificates, and (ii) shall 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 any Final Order, the Subordination
Agent shall promptly give notice thereof to each Trustee, the Liquidity
Providers and the Policy Provider. The Subordination Agent shall thereupon
calculate the relevant Preference Amounts resulting therefrom and shall
promptly: (a) send to the Class G Trustee a Written Notice of such amount and
(b) 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 to the
Subordination Agent for deposit into the Policy Account) in an amount equal to
the amount of relevant Preference Amount. Such Written Notice shall also set the
date for the distribution 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 Payment Account to the Class G Trustee in reinstatement of the
Preference Amount.
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(f) Application of Policy Drawings. Notwithstanding anything to the
contrary contained in this Agreement (including, without limitation, Sections
2.4, 3.2 and 3.3 hereof), all payments received by the Subordination Agent in
respect of a Policy Drawing shall be promptly paid from the Payment Account to
the Class G Trustee for distribution to the Class G Certificateholders.
(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, no Policy Drawing under clauses (a)(d) of this Section 3.7
shall be for an amount in excess of the outstanding Pool Balance of the Class G
Certificates plus accrued and unpaid interest thereon at the Stated Interest
Rate for the Class G Certificates.
(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.
(i) 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.
ARTICLE IV
EXERCISE OF REMEDIES
SECTION 4.1 Directions from the Controlling Party. (a) (i) Following
the occurrence and during the continuation of an Indenture Default under any
Indenture, the Controlling Party shall direct the Loan Trustee under such
Indenture in the exercise of remedies available to the holders of the Equipment
Notes issued pursuant to such Indenture, including, without limitation, the
ability to vote all such Equipment Notes in favor of declaring all of the unpaid
principal amount of such Equipment Notes and accrued interest thereon to be due
and payable under, and in accordance with, the provisions of such Indenture.
Subject to the Owner Trustees' and the Owner Participants' rights, if any, set
forth in the Indentures with respect to Leased Aircraft to purchase the
Equipment Notes, if the Equipment Notes issued pursuant to any Indenture have
been Accelerated following an Indenture Default with respect thereto, the
Controlling Party may sell, assign, contract to sell or otherwise dispose of and
deliver all (but not
52
less than all) of such Equipment Notes to any Person at public or private sale,
at any location at the option of the Controlling Party, all upon such terms and
conditions as it may reasonably deem advisable in accordance with applicable
law.
(ii) Subject to the Owner Trustees' and the Owner
Participants' rights set forth in the Indentures, with respect to Leased
Aircraft, to purchase the Equipment Notes, and notwithstanding the foregoing, so
long as any Certificates remain Outstanding, during the period ending on the
date which is nine months after the earlier of (x) the Acceleration of the
Equipment Notes issued pursuant to any Indenture or (y) the occurrence of a
Northwest Bankruptcy Event, without the consent of each Trustee, (A) no Aircraft
subject to the Lien of such Indenture or such Equipment Notes may be sold if the
net proceeds from such sale would be less than the Minimum Sale Price for such
Aircraft or such Equipment Notes, and (B) with respect to any Leased Aircraft,
the amount and payment dates of rentals payable by Northwest under the Lease for
such Aircraft may not be adjusted, if, as a result of such adjustment, the
discounted present value of all such rentals would be less than 75% of the
discounted present value of the rentals payable by Northwest under such Lease
before giving effect to such adjustment, in each case, using the weighted
average interest rate of the Equipment Notes issued pursuant to such Indenture
as the discount rate.
(iii) At the request of the Controlling Party, the
Subordination Agent may from time to time during the continuance of an Indenture
Default (and before the occurrence of a Triggering Event) commission LTV
Appraisals with respect to the related Aircraft.
(iv) After a Triggering Event occurs and any Equipment Note
becomes a NonPerforming Equipment Note, the Subordination Agent shall obtain LTV
Appraisals for the Aircraft as soon as practicable and additional LTV Appraisals
on or prior to each anniversary of the date of such initial LTV Appraisals;
provided that, if the Controlling Party reasonably objects to the appraised
value of the Aircraft shown in any such LTV Appraisals, the Controlling Party
shall have the right to obtain or cause to be obtained at its expense substitute
LTV Appraisals (including any LTV Appraisals based upon physical inspection of
the Aircraft).
(b) The Controlling Party shall take such actions as it may
reasonably deem most effectual to complete the sale or other disposition of such
Aircraft or Equipment Notes. In addition, in lieu of any sale, assignment,
contract to sell or other disposition, the Subordination Agent, on behalf of the
Controlling Party, may maintain possession of such Equipment Notes and continue
to apply monies received in respect of such Equipment Notes in accordance with
Article III hereof. In addition, in lieu of such sale, assignment, contract to
sell or other disposition, or in lieu of such maintenance of possession, the
Controlling Party may instruct the Loan Trustee under such Indenture to
foreclose on the Lien on the related Aircraft or to take any other remedial
action permitted under such Indenture or applicable law.
SECTION 4.2 Remedies Cumulative. Each and every right, power and
remedy given to the Trustees, the Liquidity Providers, the Policy Provider, the
Controlling Party or the
53
Subordination Agent specifically or otherwise in this Agreement shall be
cumulative and shall be in addition to every other right, power and remedy
herein specifically given or now or hereafter existing at law, in equity or by
statute, and each and every right, power and remedy whether specifically herein
given or otherwise existing may, subject always to the terms and conditions
hereof, be exercised from time to time and as often and in such order as may be
deemed expedient by any Trustee, any Liquidity Provider, the Policy Provider,
the Controlling Party or the Subordination Agent, as appropriate, and the
exercise or the beginning of the exercise of any power or remedy shall not be
construed to be a waiver of the right to exercise at the same time or thereafter
any other right, power or remedy. No delay or omission by any Trustee, any
Liquidity Provider, the 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 4.3 Discontinuance of Proceedings. In case any party to this
Agreement (including the Controlling Party in such capacity) shall have
instituted any Proceeding to enforce any right, power or remedy under this
Agreement by foreclosure, entry or otherwise, and such Proceedings shall have
been discontinued or abandoned for any reason or shall have been determined
adversely to the Person instituting such Proceeding, then and in every such case
each such party shall, subject to any determination in such proceedings, be
restored to its former position and rights hereunder, and all rights, remedies
and powers of such party shall continue as if no such Proceedings had been
instituted.
SECTION 4.4 Right of Certificateholders to Receive Payments Not to
Be Impaired. Anything in this Agreement to the contrary notwithstanding but
subject to each Trust Agreement, the right of any Certificateholder, Liquidity
Provider or the Policy Provider, respectively, to receive payments pursuant to
Section 2.4, 3.2 or 3.3 hereof when due, or to institute suit for the
enforcement of any such payment on or after the applicable Distribution Date,
shall not be impaired or affected without the consent of such Certificateholder,
such Liquidity Provider or the Policy Provider, respectively.
SECTION 4.5 Undertaking for Costs. In any suit for the enforcement
of any right or remedy under this Agreement or in any suit against any
Controlling Party or the Subordination Agent for any action taken or omitted by
it as Controlling Party or Subordination Agent, as the case may be, a court in
its discretion may require the filing by any party litigant in the suit of an
undertaking to pay the costs of the suit, and the court in its discretion may
assess reasonable costs, including reasonable attorneys' fees and expenses,
against any party litigant in the suit, having due regard to the merits and good
faith of the claims or defenses made by the party litigant. The provisions of
this Section do not apply to a suit instituted by the Subordination Agent, a
Liquidity Provider, the Policy Provider or a Trustee or a suit by
Certificateholders holding more than 10% of the original principal amount of any
Class of Certificates.
54
ARTICLE V
DUTIES OF THE SUBORDINATION AGENT;
AGREEMENTS OF TRUSTEES, ETC.
SECTION 5.1 Notice of Indenture Default or Triggering Event. (a) In
the event the Subordination Agent shall have actual knowledge of the occurrence
of an Indenture Default or a Triggering Event, as promptly as practicable, and
in any event within 10 days after obtaining knowledge thereof, the Subordination
Agent shall transmit by mail to the Rating Agencies, the Liquidity Providers,
the Policy Provider and the Trustees notice of such Indenture Default or
Triggering Event, unless such Indenture Default or Triggering Event shall have
been cured or waived. For all purposes of this Agreement, in the absence of
actual knowledge on the part of a Responsible Officer, the Subordination Agent
shall not be deemed to have knowledge of any Indenture Default or Triggering
Event unless notified in writing by one or more Trustees, one or more Liquidity
Providers, the Policy Provider or one or more Certificateholders.
(b) Other Notices. The Subordination Agent will furnish to each
Liquidity Provider, the Policy Provider and Trustee, promptly upon receipt
thereof, duplicates or copies of all reports, notices, requests, demands,
certificates, financial statements and other instruments furnished to the
Subordination Agent as registered holder of the Equipment Notes or otherwise in
its capacity as Subordination Agent to the extent the same shall not have been
otherwise directly distributed to such Liquidity Provider, the Policy Provider
or Trustee, as applicable, pursuant to the express provision of any other
Operative Agreement.
SECTION 5.2 Indemnification. The Subordination Agent shall not be
required to take any action or refrain from taking any action under Section 5.1
(other than the first sentence thereof) or Article IV hereof unless the
Subordination Agent shall have been indemnified (to the extent and in the manner
reasonably satisfactory to the Subordination Agent) against any liability, cost
or expense (including counsel fees and expenses) which may be incurred in
connection therewith. The Subordination Agent shall not be under any obligation
to take any action under this Agreement and nothing contained in this Agreement
shall require the Subordination Agent to expend or risk its own funds or
otherwise incur any financial liability in the performance of any of its duties
hereunder or in the exercise of any of its rights or powers if it shall have
reasonable grounds for believing that repayment of such funds or adequate
indemnity against such risk or liability is not reasonably assured to it. The
Subordination Agent shall not be required to take any action under Section 5.1
(other than the first sentence thereof) or Article IV hereof, nor shall any
other provision of this Agreement be deemed to impose a duty on the
Subordination Agent to take any action, if the Subordination Agent shall have
been advised by counsel that such action is contrary to the terms hereof or is
otherwise contrary to law.
SECTION 5.3 No Duties Except as Specified in Intercreditor
Agreement. The Subordination Agent shall not have any duty or obligation to take
or refrain from taking any action under, or in connection with, this Agreement,
except as expressly provided by the terms of
55
this Agreement; and no implied duties or obligations shall be read into this
Agreement against the Subordination Agent. The Subordination Agent agrees that
it will, in its individual capacity and at its own cost and expense (but without
any right of indemnity in respect of any such cost or expense under Section 7.1
hereof) promptly take such action as may be necessary to duly discharge all
Liens on any of the Trust Accounts or any monies deposited therein which result
from claims against it in its individual capacity not related to its activities
hereunder or from a breach of its obligations that constitute willful misconduct
or gross negligence hereunder or any other Operative Agreement.
SECTION 5.4 Notice from the Liquidity Providers and Trustees. If a
Responsible Officer of any Liquidity Provider, the Policy Provider or Trustee
has actual notice of an Indenture Default or a Triggering Event, such Person
shall promptly use its best efforts 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 6.1 Authorization; Acceptance of Trusts and Duties. Each of
the Class G Trustee, Class B Trustee and Class C Trustee hereby designates and
appoints the Subordination Agent as the agent and trustee of such Trustee under
the applicable Liquidity Facility and authorizes the Subordination Agent to
enter into the applicable Liquidity Facility as agent and trustee for such
Trustee. Each of the Liquidity Providers, the Policy Provider and the Trustees
hereby designates and appoints the Subordination Agent as the Subordination
Agent under this Agreement.
The Subordination Agent hereby accepts the duties hereby created and
applicable to it as the Subordination Agent and agrees to perform the same but
only upon the terms of this Agreement and agrees to receive and disburse all
monies received by it in accordance with the terms hereof. The Subordination
Agent shall not be answerable or accountable under any circumstances, except (a)
for its own willful misconduct or gross negligence or, with respect to the
handling or transfer of funds, ordinary negligence, (b) as provided in Section
2.2 hereof and (c) for liabilities that may result from the material inaccuracy
of any representation or warranty of the Subordination Agent made in its
individual capacity in any Operative Agreement. The Subordination Agent shall
not be liable for any error of judgment made in good faith by a Responsible
Officer of the Subordination Agent, unless it is proved that the Subordination
Agent was negligent in ascertaining the pertinent facts.
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SECTION 6.2 Absence of Duties. The Subordination Agent shall have no
duty to see to any recording or filing of this Agreement or any other document,
or to see to the maintenance of any such recording or filing.
SECTION 6.3 No Representations or Warranties as to Documents. The
Subordination Agent in its individual capacity does not make nor shall be deemed
to have made any representation or warranty as to the validity, legality or
enforceability of this Agreement or any other Operative Agreement or as to the
correctness of any statement contained in any thereof, except for the
representations and warranties of the Subordination Agent, made in its
individual capacity, under any Operative Agreement to which it is a party. The
Certificateholders, the Trustees and the Liquidity Providers make no
representation or warranty hereunder whatsoever.
SECTION 6.4 No Segregation of Monies; No Interest. Any monies paid
to or retained by the Subordination Agent pursuant to any provision hereof and
not then required to be distributed to any Trustee or any Liquidity Provider as
provided in Articles II and III hereof need not be segregated in any manner
except to the extent required by such Articles II and III and by law, and the
Subordination Agent shall not (except as otherwise provided in Section 2.2
hereof) be liable for any interest thereon; provided, however, that any payments
received or applied hereunder by the Subordination Agent shall be accounted for
by the Subordination Agent so that any portion thereof paid or applied pursuant
hereto shall be identifiable as to the source thereof.
SECTION 6.5 Reliance; Agents; Advice of Counsel. The Subordination
Agent shall not incur liability to anyone in acting upon any signature,
instrument, notice, resolution, request, consent, order, certificate, report,
opinion, bond or other document or paper believed by it to be genuine and
believed by it to be signed by the proper party or parties. As to the Pool
Balance of any Trust as of any date, the Subordination Agent may for all
purposes hereof rely on a certificate signed by any Responsible Officer of the
applicable Trustee, and such certificate shall constitute full protection to the
Subordination Agent for any action taken or omitted to be taken by it in good
faith in reliance thereon. As to any fact or matter relating to the Liquidity
Providers, the Policy Provider or the Trustees the manner of ascertainment of
which is not specifically described herein, the Subordination Agent may for all
purposes hereof rely on a certificate, signed by any Responsible Officer of the
applicable Liquidity Provider, the Policy Provider or Trustee, as the case may
be, as to such fact or matter, and such certificate shall constitute full
protection to the Subordination Agent for any action taken or omitted to be
taken by it in good faith in reliance thereon. The Subordination Agent shall
assume, and shall be fully protected in assuming, that each of the Liquidity
Providers, the Policy Provider and each of the Trustees are authorized to enter
into this Agreement and to take all action to be taken by them pursuant to the
provisions hereof, and shall not inquire into the authorization of each of the
Liquidity Providers and each of the Trustees with respect thereto. In the
administration of the trusts hereunder, the Subordination Agent may execute any
of the trusts or powers hereof and perform its powers and duties hereunder
directly or through agents or attorneys and may consult with counsel,
accountants and other skilled persons to be selected and retained by it, and the
Subordination Agent shall not be liable for the acts or omissions of any agent
appointed with due
57
care or for anything done, suffered or omitted in good faith by it in accordance
with the advice or written opinion of any such counsel, accountants or other
skilled persons.
SECTION 6.6 Capacity in Which Acting. The Subordination Agent acts
hereunder solely as agent and trustee herein and not in its individual capacity,
except as otherwise expressly provided in the Operative Agreements.
SECTION 6.7 Compensation. The Subordination Agent shall be entitled
to reasonable compensation, including expenses and disbursements, for all
services rendered hereunder and shall have a priority claim to the extent set
forth in Article III hereof on all monies collected hereunder for the payment of
such compensation, to the extent that such compensation shall not be paid by
others. The Subordination Agent agrees that it shall have no right against any
Trustee, Liquidity Provider, or the Policy Provider for any fee as compensation
for its services as agent under this Agreement. The provisions of this Section
6.7 shall survive the termination of this Agreement.
SECTION 6.8 May Become Certificateholder. The institution acting as
Subordination Agent hereunder may become a Certificateholder and have all rights
and benefits of a Certificateholder to the same extent as if it were not the
institution acting as the Subordination Agent.
SECTION 6.9 Subordination Agent Required; Eligibility. There shall
at all times be a Subordination Agent hereunder which shall be a corporation
organized and doing business under the laws of the United States of America or
of any State or the District of Columbia having a combined capital and surplus
of at least $100,000,000 (or the obligations of which, whether now in existence
or hereafter incurred, are fully and unconditionally guaranteed by a corporation
organized and doing business under the laws of the United States, any State
thereof or of the District of Columbia and having a combined capital and surplus
of at least $100,000,000), if there is such an institution willing and able to
perform the duties of the Subordination Agent hereunder upon reasonable or
customary terms. Such corporation shall be a citizen of the United States and
shall be authorized under the laws of the United States or any State thereof or
of the District of Columbia to exercise corporate trust powers and shall be
subject to supervision or examination by federal, state or District of Columbia
authorities. If such corporation publishes reports of condition at least
annually, pursuant to law or to the requirements of any of the aforesaid
supervising or examining authorities, then, for the purposes of this Section
6.9, the combined capital and surplus of such corporation shall be deemed to be
its combined capital and surplus as set forth in its most recent report of
condition so published.
In case at any time the Subordination Agent shall cease to be
eligible in accordance with the provisions of this Section, the Subordination
Agent shall resign immediately in the manner and with the effect specified in
Section 8.1.
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SECTION 6.10 Money to Be Held in Trust. All Equipment Notes, monies
and other property deposited with or held by the Subordination Agent pursuant to
this Agreement shall be held in trust for the benefit of the parties entitled to
such Equipment Notes, monies and other property. All such Equipment Notes,
monies or other property shall be held in the Trust Department of the
institution acting as Subordination Agent hereunder.
ARTICLE VII
INDEMNIFICATION OF SUBORDINATION AGENT
SECTION 7.1 Scope of Indemnification. The Subordination Agent shall
be indemnified hereunder to the extent and in the manner described in Section
6(c) of the Participation Agreements and Section 7 of the Note Purchase
Agreement. The indemnities contained in such Section 7(c) shall survive the
termination of this Agreement.
ARTICLE VIII
SUCCESSOR SUBORDINATION AGENT
SECTION 8.1 Replacement of Subordination Agent; Appointment of
Successor. The Subordination Agent may resign at any time by so notifying the
Trustees and the Liquidity Providers. The Liquidity Provider or the Controlling
Party may remove the Subordination Agent for cause by so notifying the
Subordination Agent and may appoint a successor Subordination Agent. The
Controlling Party shall remove the Subordination Agent if:
(1) the Subordination Agent fails to comply with Section 6.9 hereof;
(2) the Subordination Agent is adjudged bankrupt or insolvent;
(3) a receiver or other public officer takes charge of the
Subordination Agent or its property; or
(4) the Subordination Agent otherwise becomes incapable of acting.
If the Subordination Agent resigns or is removed or if a vacancy
exists in the office of Subordination Agent for any reason (the Subordination
Agent in such event being referred to herein as the retiring Subordination
Agent), the Controlling Party in consultation with Northwest shall promptly
appoint a successor Subordination Agent.
Any corporation into which the Subordination Agent may be merged or
converted or with which it may be consolidated, or any corporation resulting
from any merger, conversion
59
or consolidation to which the Subordination Agent shall be a party, or any
corporation to which substantially all the corporate trust business of the
Subordination Agent may be transferred, shall, subject to the terms of Section
6.9 hereof, be the Subordination Agent hereunder and under the other Operative
Agreements to which the Subordination Agent is a party without further act,
except that such Person shall give prompt subsequent notice of such transaction
to the Liquidity Provider and each Trustee,
A successor Subordination Agent shall deliver a written acceptance
of its appointment as Subordination Agent hereunder to the retiring
Subordination Agent, upon which the resignation or removal of the retiring
Subordination Agent shall become effective, and the successor Subordination
Agent shall have all the rights, powers and duties of the Subordination Agent
under this Agreement. The successor Subordination Agent shall send a written
notice of its succession to the Liquidity Providers, the Policy Provider and the
Trustees. The retiring Subordination Agent shall promptly transfer its rights
under each of the Liquidity Facilities, the Policy and all of the property held
by it as Subordination Agent to the successor Subordination Agent.
If a successor Subordination Agent does not take office within 60
days after the retiring Subordination Agent resigns or is removed, the retiring
Subordination Agent or one or more of the Trustees may petition any court of
competent jurisdiction for the appointment of a successor Subordination Agent.
If the Subordination Agent fails to comply with Section 6.9 hereof
(to the extent applicable), one or more of the Trustees or one or more of the
Liquidity Providers, the Policy Provider or Northwest may petition any court of
competent jurisdiction for the removal of the Subordination Agent and the
appointment of a successor Subordination Agent.
Notwithstanding the foregoing, no resignation or removal of the
Subordination Agent shall be effective unless and until a successor has been
appointed. No appointment of a successor Subordination Agent shall be effective
unless and until the Rating Agencies shall have delivered a Ratings
Confirmation.
ARTICLE IX
SUPPLEMENTS AND AMENDMENTS
SECTION 9.1 Amendments, Waivers, Etc. (a) This Agreement may not be
supplemented, amended or modified without the consent of each Trustee (acting
with the consent of holders of Certificates of the related Class evidencing
interests in the related Trust aggregating not less than a majority in interest
in such Trust or as otherwise authorized pursuant to the relevant Trust
Agreement), the Subordination Agent, the Policy Provider and each Liquidity
Provider; provided, however, that this Agreement may be supplemented, amended or
modified
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without the consent of any Trustee if such supplement, amendment or modification
cures an ambiguity or inconsistency or does not materially adversely affect such
Trustee or the holders of the related Class of Certificates; provided further,
however, that, if such supplement, amendment or modification would (x) directly
or indirectly modify or supersede, or otherwise conflict with, Section 2.2(b),
Section 3.6(e), Section 3.6(f) (other than the last sentence thereof),
(collectively, together with this proviso and Section 9.1, the "Northwest
Provisions") or (y) otherwise adversely affect the interests of a potential
Replacement Liquidity Provider or of Northwest with respect to its ability to
replace any Liquidity Facility or with respect to its payment obligations under
any Financing Agreement, Leased or Owned Aircraft Indenture, then such
supplement, amendment or modification shall not be effective without the
additional written consent of Northwest. Notwithstanding the foregoing, without
the consent of each Certificateholder, 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) modify Section 2.4, 3.2
or 3.3 hereof, relating to the distribution of monies received by the
Subordination Agent hereunder from the Equipment Notes or pursuant to the
Liquidity Facilities or the Policy. Nothing contained in this Section shall
require the consent of a Trustee at any time following the payment of Final
Distributions with respect to the related Class of Certificates.
(b) In the event that the Subordination Agent, as the registered
holder of any Equipment Notes, receives a request for its consent to any
amendment, modification, consent or waiver under such Equipment Notes, the
Indenture pursuant to which such Equipment Notes were issued, or the related
Lease, Participation Agreement or other related document, (i) if no Indenture
Default shall have occurred and be continuing with respect to such Indenture,
the Subordination Agent shall request directions with respect to each Series of
such Equipment Notes from the Trustee of the Trust which holds such Equipment
Notes, except that so long as the Final Distribution on the Class G Certificates
has not been made or any Policy Provider Obligations remain outstanding and no
Policy Provider Default shall have occurred and be continuing, the Subordination
Agent shall request directions from the Policy Provider rather than the Class G
Trustee with respect to the Class G Equipment Notes held in the Class G Trust,
and shall vote or consent in accordance with the directions of such Trustee or
the Policy Provider and (ii) if any Indenture Default (which, in the case of any
Indenture pertaining to a Leased Aircraft, has not been cured by the applicable
Owner Trustee or the applicable Owner Participant, if applicable, pursuant to
Section 4.03 of such Indenture) shall have occurred and be continuing with
respect to such Indenture, the Subordination Agent will exercise its voting
rights as directed by the Controlling Party, subject to Sections 4.1 and 4.4
hereof; provided that no such amendment, modification or waiver shall, without
the consent of each Liquidity Provider and the Policy Provider, reduce the
amount of rent, supplemental rent or stipulated loss values payable by Northwest
under any Lease or reduce the amount of principal or interest payable by
Northwest under any Equipment Note issued under any Indenture in respect of an
Owned Aircraft
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SECTION 9.2 Subordination Agent Protected. If, in the reasonable
opinion of the institution acting as the Subordination Agent hereunder, any
document required to be executed pursuant to the terms of Section 9.1 affects
any right, duty, immunity or indemnity with respect to it under this Agreement,
any Liquidity Facility or the Policy, the Subordination Agent may in its
discretion decline to execute such document.
SECTION 9.3 Effect of Supplemental Agreements. Upon the execution of
any amendment or supplement hereto pursuant to the provisions hereof, this
Agreement shall be and be deemed to be modified and amended in accordance
therewith and the respective rights, limitations of rights, obligations, duties
and immunities under this Agreement of the parties hereto and beneficiaries
hereof shall thereafter be determined, exercised and enforced hereunder subject
in all respects to such modifications and amendments, and all the terms and
conditions of any such supplemental agreement shall be and be deemed to be part
of the terms and conditions of this Agreement for any and all purposes. In
executing or accepting any supplemental agreement permitted by this Article IX,
the Subordination Agent shall be entitled to receive, and shall be fully
protected in relying upon, an opinion of counsel stating that the execution of
such supplemental agreement is authorized or permitted by this Agreement.
SECTION 9.4 Notice to Rating Agencies and the Policy Provider.
Promptly following its receipt of each amendment, consent, modification,
supplement or waiver contemplated by this Article IX, the Subordination Agent
shall send a copy thereof to each Rating Agency and the Policy Provider.
SECTION 9.5 Addition of Class D Trustee. If with respect to any
Aircraft, Class D Certificates are issued, this Agreement shall be amended by
written agreement of Northwest and the Subordination Agent to provide for the
subordination of such Class D Certificates to the Class G Certificates, the
Class B Certificates and the Class C Certificates substantially in the same
manner as the Class C Certificates are subordinated hereunder to the Class B
Certificates and the Class G Certificates. No such amendment shall materially
adversely affect any Trustee, any Liquidity Provider or the Policy Provider. The
amendment to this Agreement to give effect to the issuance of any Class D
Certificates shall include, without limitation:
(i) the Class D Trust Trustee shall be added as a party to this
Agreement; and
(ii) the definitions of "Cash Collateral Account," "Certificate,"
"Class," "Equipment Notes," "Final Legal Distribution Date," "Liquidity
Facilities," "Liquidity Provider," "LTV Ratio," "Stated Interest Rate,"
"Trust," "Trust Agreement" and "Controlling Party" shall be revised, as
appropriate, to reflect the issuance of the Class D Certificates (and the
subordination thereof); and
(iii) the provisions of this Agreement governing payments with
respect to Certificates and related notices, including, without
limitation, Sections 2.4, 3.1, 3.2, 3.3
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and 3.6(e), shall be revised to provide for distributions on the Class D
Certificates after payment of all relevant distributions on the Class C
Certificates.
If with respect to any Aircraft, Series D Equipment Notes are issued to any
Person other than the Class D Trust, this Agreement shall be amended by written
agreement of Northwest and the Subordination Agent to (i) provide for each
holder of a Series D Equipment Note to be bound by the provisions of Section
2.6(a) hereof so that the Controlling Party shall be entitled to direct the Loan
Trustee as provided therein (and such Series D Equipment Notes shall make
effective provision therefor so as to bind each holder thereof to such
provisions of Section 2.6(a) hereof) and (ii) to revise the definitions of
"Controlling Party" and "Equipment Notes", as appropriate, to reflect the
issuance of the Series D Equipment Notes (and the prior rights, as against the
holders of such Series D Equipment Notes, of the Policy Provider, of the Class G
Trustee, the Class B Trustee and the Class C Trustee to be such "Controlling
Party"). No such amendment shall materially adversely affect any Trustee, any
Liquidity Provider or the Policy Provider.
ARTICLE X
MISCELLANEOUS
SECTION 10.1 Termination of Intercreditor Agreement. Following
payment of Final Distributions with respect to each Class of Certificates and
the payment in full of all Liquidity Obligations to the Liquidity Providers and
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 Subordination Agent and the Policy Provider hereunder
or under the Trust Agreements, and that the commitment of (i) the Liquidity
Providers under the Liquidity Facilities and (ii) the Policy Provider under the
Policy shall have expired or been terminated, this Agreement and the trusts
created hereby shall terminate and this Agreement shall be of no further force
or effect. Except as aforesaid or otherwise provided, this Agreement and the
trusts created hereby shall continue in full force and effect in accordance with
the terms hereof.
SECTION 10.2 Intercreditor Agreement for Benefit of Trustees,
Liquidity Providers, the Policy Provider and Subordination Agent. Nothing in
this Agreement, whether express or implied, shall be construed to give to any
Person other than the Trustees, the Liquidity Providers, the Subordination Agent
and the Policy Provider any legal or equitable right, remedy or claim under or
in respect of this Agreement.
SECTION 10.3 Notices. Unless otherwise expressly specified or
permitted by the terms hereof, all notices, requests, demands, authorizations,
directions, consents, waivers or documents provided or permitted by this
Agreement to be made, given, furnished or filed shall be in writing, mailed by
certified mail, postage prepaid, or by confirmed telecopy and
63
(i) if to the Subordination Agent, addressed to it at its office
at:
State Street Bank and Trust Company
Xxx Xxxxxxxxxxxxx Xxxxx
Xxxxxx, Xxxxxxxxxxxxx 00000
Attention: Corporate Trust Department
Fax: (000) 000-0000
(ii) if to the Trustee, addressed to it at its office at:
State Street Bank and Trust Company of Connecticut, National
Association
000 Xxxxxx Xxxxxx, Xxxxxxx Square
Hartford, Connecticut 06103
Attention: Corporate/Muni Department
Fax: (000) 000-0000
(iii) if to any Liquidity Provider, addressed to it at its office
at:
Xxxxxx Xxxxxxx Capital Services, Inc.
0000 Xxxxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxx Xxxxxxxx
Fax: (000) 000-0000
(iv) if to the Policy Provider, addressed to it at its office at:
MBIA Insurance Corporation
000 Xxxx Xxxxxx
Xxxxxx, Xxx Xxxx 00000
Attention: Insured Portfolio Management, Structured Finance
Fax: (000) 000-0000
Whenever any notice in writing is required to be given by any Trustee or
Liquidity Provider, the Subordination Agent or the Policy Provider to any of the
other of them, such notice shall be deemed given and such requirement satisfied
when such notice is received, if such notice is mailed by certified mail,
postage prepaid or by courier service or if such notice is sent by confirmed
telecopy addressed as provided above. Any party hereto may change the address to
which notices to such party will be sent by giving notice of such change to the
other parties to this Agreement.
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SECTION 10.4 Severability. Any provision of this Agreement which is
prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction,
be ineffective to the extent of such prohibition or unenforceability without
invalidating the remaining provisions hereof, and any such prohibition or
unenforceability in any jurisdiction shall not invalidate or render
unenforceable such provision in any other jurisdiction.
SECTION 10.5 No Oral Modifications or Continuing Waivers. No terms
or provisions of this Agreement may be changed, waived, discharged or terminated
orally, but only by an instrument in writing signed by the party or other Person
against whom enforcement of the change, waiver, discharge or termination is
sought and any other party or other Person whose consent is required pursuant to
this Agreement and any waiver of the terms hereof shall be effective only in the
specific instance and for the specific purpose given.
SECTION 10.6 Successors and Assigns. All covenants and agreements
contained herein shall be binding upon, and inure to the benefit of, each of the
parties hereto and the successors and assigns of each, all as herein provided.
SECTION 10.7 Headings. The headings of the various Articles and
Sections herein and in the table of contents hereto are for convenience of
reference only and shall not define or limit any of the terms or provisions
hereof.
SECTION 10.8 Counterpart Form. This Agreement may be executed by the
parties hereto in separate counterparts, each of which when so executed and
delivered shall be an original, but all such counterparts shall together
constitute but one and the same agreement.
SECTION 10.9 Subordination. (a) As between the Liquidity Providers
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.
(b) Notwithstanding the provisions of this Agreement, if prior to
the payment in full to the (i) Liquidity Providers of all Liquidity Obligations
then due and payable and (ii) Policy Provider of all Policy Provider Obligations
then due and payable, any party hereto shall have received any payment or
distribution in respect of Equipment Notes or any other amount under the
Indentures or other Operative Agreements which, had the subordination provisions
of this Agreement been properly applied to such payment, distribution or other
amount, would not have been distributed to such Person, then such payment,
distribution or other amount shall be received and held in trust by such Person
and paid over or delivered to the Subordination Agent for application as
provided herein.
(c) If any Trustee, any Liquidity Provider, the Subordination Agent
or the Policy Provider receives any payment in respect of any obligations owing
hereunder (or, in the case of the Liquidity Providers or the Policy Provider, in
respect of the Liquidity Obligations or the
65
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, 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 Subordination Agent and the Policy
Provider confirm that the payment priorities specified in Sections 2.4, 3.2 and
3.3 shall apply in all circumstances, notwithstanding the fact that the
obligations owed to the Trustees and the holders of Certificates are secured by
certain assets and the Liquidity Obligations and Policy Provider Obligations may
not be so secured. The Trustees expressly agree (on behalf of themselves and the
holders of Certificates) not to assert priority over the holders of Liquidity
Obligations or Policy Provider Obligations due to their status as secured
creditors in any bankruptcy, insolvency or other legal proceeding.
(e) Each of the Trustees (on behalf of themselves and the holders of
Certificates), the Liquidity Providers, the Subordination Agent and the Policy
Provider may take any of the following actions without impairing its rights
under this Agreement:
(i) obtain a lien on any property to secure any amounts owing
to it hereunder, including, in the case of the Liquidity Providers 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 the Liquidity Providers 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 the Liquidity Providers
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 such right or remedy, which it may have, or
(v) take any other action which might discharge a subordinated
party or a surety under applicable law;
provided, however, that the taking of any such actions by any of the Trustees,
the Liquidity Providers, the Policy Provider or the Subordination Agent shall
not prejudice the rights or adversely affect the obligations of any other party
under this Agreement.
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SECTION 10.10 Governing Law. THIS AGREEMENT SHALL IN ALL RESPECTS BE
GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAW OF THE STATE OF NEW YORK,
INCLUDING ALL MATTERS OF CONSTRUCTION, VALIDITY AND PERFORMANCE.
SECTION 10.11 Submission to Jurisdiction; Waiver of Jury Trial;
Waiver of Immunity. (a) Each of the parties hereto hereby irrevocably and
unconditionally:
(i) submits for itself and its property in any legal action or
proceeding relating to this Agreement or any other Operative Agreement, or
for recognition and enforcement of any judgment in respect hereof or
thereof, to the nonexclusive general jurisdiction of the courts of the
State of New York, the courts of the United States of America for the
Southern District of New York, and the appellate courts from any thereof;
(ii) consents that any such action or proceedings may be brought in
such courts, and waives any objection that it may now or hereafter have
that the venue of any such action or proceeding was brought in an
inconvenient court and agrees not to plead or claim the same;
(iii) agrees that service of process in any such action or
proceeding may be effected by mailing a copy thereof by registered or
certified mail (or any substantially similar form and mail), postage
prepaid, to each party hereto at its address set forth in Section 10.3
hereof, or at such other address of which the other parties shall have
been notified pursuant thereto; and
(iv) agrees that nothing herein shall affect the right to effect
service of process in any other manner permitted by law or shall limit the
right to xxx in any other jurisdiction.
(b) EACH OF THE PARTIES HERETO HEREBY AGREES TO WAIVE ITS RESPECTIVE
RIGHTS TO A JURY TRIAL OF ANY CLAIM OR CAUSE OF ACTION BASED UPON OR ARISING OUT
OF THIS AGREEMENT OR ANY DEALINGS BETWEEN THEM RELATING TO THE SUBJECT MATTER OF
THIS AGREEMENT AND THE RELATIONSHIP THAT IS BEING ESTABLISHED, including,
without limitation, contract claims, tort claims, breach of duty claims and all
other common law and statutory 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.
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be duly executed by their respective officers thereunto duly authorized, as of
the day and year first above written, and acknowledge that this Agreement has
been made and delivered in the City of New York, and this Agreement has become
effective only upon such execution and delivery.
(Signature Pages to Follow)
00
XXXXX XXXXXX BANK AND TRUST
COMPANY OF CONNECTICUT,
NATIONAL ASSOCIATION, not in its
individual capacity but solely as Trustee for
each of the Trusts
By:______________________________________
Name:
Title:
MORGANSTANLEY CAPITAL SERVICES,
INC., as Class G Liquidity Provider, Class B
Liquidity Provider and Class C Liquidity
Provider
By:______________________________________
Name:
Title:
STATE STREET BANK AND TRUST
COMPANY, not in its individual capacity
except as expressly set forth herein but
solely as Subordination Agent and trustee
By:______________________________________
Name:
Title:
69
MBIA INSURANCE CORPORATION
as Policy Provider
By:______________________________________
Name:
Title:
70