Escrow & Paying Agent Agreement Class A

EXECUTION COPY


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ESCROW AND PAYING AGENT AGREEMENT
(Class A)


Dated as of February 9, 1998


among


FIRST SECURITY BANK, NATIONAL ASSOCIATION


as Escrow Agent


MORGAN STANLEY & CO. INCORPORATED
BT ALEX. BROWN INCORPORATED
DONALDSON, LUFKIN & JENRETTE SECURITIES CORPORATION
GOLDMAN, SACHS & CO.


as Placement Agents


WILMINGTON TRUST COMPANY
not in its individual capacity,
but solely as Pass Through Trustee
for and on behalf of
Atlas Air, Inc. Pass Through Trust 1998-1A-O


as Pass Through Trustee


and


WILMINGTON TRUST COMPANY


as Paying Agent


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TABLE OF CONTENTS


Page
---- SECTION 1. Escrow Agent . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2


Section 1.01. Appointment of Escrow Agent . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2


Section 1.02. Instruction; Etc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3


Section 1.03. Initial Escrow Amount; Issuance of Escrow Receipts . . . . . . . . . . . . . . . . . . . . . . . . . 3


Section 1.04. Payments to Receiptholders . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4


Section 1.05. Mutilated, Destroyed, Lost or Stolen Escrow Receipt . . . . . . . . . . . . . . . . . . . . . . . . 4


Section 1.06. Additional Escrow Amounts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5


Section 1.07. Resignation or Removal of Escrow Agent . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5


Section 1.08. Persons Deemed Owners . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5


Section 1.09. Further Assurances . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6


SECTION 2. Paying Agent . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6


Section 2.01. Appointment of Paying Agent . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6


Section 2.02. Establishment of Paying Agent Account . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6


Section 2.03. Payments from Paying Agent Account . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6


Section 2.04. Withholding Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7


Section 2.05. Resignation or Removal of Paying Agent . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8


Section 2.06. Notice of Final Withdrawal . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8


SECTION 3. Payments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9


SECTION 4. Other Actions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9


SECTION 5. Representations and Warranties of the Escrow Agent . . . . . . . . . . . . . . . . . . . . . . . . . 9


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Page
---- SECTION 6. Representations and Warranties of the Paying Agent . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
SECTION 7. Indemnification . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
SECTION 8. Amendment, Etc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
SECTION 9. Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
SECTION 10. Transfer . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13


SECTION 11. Entire Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13


SECTION 12. Governing Law . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13


SECTION 13. Waiver of Jury Trial Right . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13


SECTION 14. Counterparts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13


Exhibit A Escrow Receipt


Exhibit B Withdrawal Certificate


Exhibit C Prepayment Withdrawal Certificate


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ESCROW AND PAYING AGENT AGREEMENT (Class A) dated as of February 9, 1998 (as amended, modified or supplemented from time to time, this "Agreement") among FIRST SECURITY BANK, NATIONAL ASSOCIATION, a national banking association, as Escrow Agent (in such capacity, together with its successors in such capacity, the "Escrow Agent"); MORGAN STANLEY & CO. INCORPORATED, BT ALEX. BROWN INCORPORATED, DONALDSON, LUFKIN & JENRETTE SECURITIES CORPORATION AND GOLDMAN, SACHS & CO., as Placement Agents of the Certificates referred to below (the "Placement Agents" and together with their respective transferees and assigns as registered owners of the Certificates, the "Investors") under the Placement Agreement referred to below; WILMINGTON TRUST COMPANY, a Delaware banking corporation, not in its individual capacity except as otherwise expressly provided herein, but solely as trustee (in such capacity, together with its successors in such capacity, the "Pass Through Trustee") under the Pass Through Trust Agreement referred to below; and WILMINGTON TRUST COMPANY, a Delaware banking corporation, as paying agent hereunder (in such capacity, together with its successors in such capacity, the "Paying Agent").


W I T N E S S E T H


WHEREAS, Atlas Air, Inc. ("Atlas") and the Pass Through Trustee have entered into the Pass Through Trust Agreement, dated as of February 9, 1998 (together, as amended, modified or supplemented from time to time in accordance with the terms thereof, the "Pass Through Trust Agreement") relating to Atlas Air, Inc. Pass Through Trust 1998-1A-O (the "Pass Through Trust") pursuant to which the Atlas Air Pass Through Trust, Series 1998-1A-O Certificates referred to therein (the "Certificates") are being issued;


WHEREAS, Atlas and the Placement Agents have entered into a Placement Agreement dated as of January 27, 1998 (as amended, modified or supplemented from time to time in accordance with the terms thereof, the "Placement Agreement") pursuant to which the Pass Through Trustee will issue and sell the Certificates to the Placement Agents;


WHEREAS, Atlas, the Pass Through Trustee, certain other pass through trustees and certain other persons concurrently herewith are entering into the Note Purchase Agreement, dated as of the date hereof (the "Note Purchase Agreement"), pursuant to which the Pass Through Trustee has agreed to acquire from time to time on or prior to the Cut- Off Date (as defined in the Note Purchase Agreement) equipment notes (the "Equipment Notes") issued to finance the acquisition of aircraft by Atlas, as lessee or as owner, utilizing a portion of the proceeds from the sale of the Certificates (the "Net Proceeds");


WHEREAS, the Placement Agents and the Pass Through Trustee intend that the Net Proceeds be held in escrow by the Escrow Agent on behalf of the Investors, subject to withdrawal upon request by the Pass Through Trustee and satisfaction of the conditions set forth in the Note Purchase Agreement for the purpose of purchasing Equipment Notes, and that pending such withdrawal the Net Proceeds be deposited on behalf of the Escrow Agent 5 with ABN AMRO Bank N.V., a banking institution organized under the laws of the Netherlands, acting through its Chicago Branch, as Depositary (the "Depositary") under the Deposit Agreement, dated as of the date hereof between the Depositary and the Escrow Agent relating to the Pass Through Trust (as amended, modified or supplemented from time to time in accordance with the terms thereof, the "Deposit Agreement") pursuant to which, among other things, the Depositary will pay interest for distribution to the Investors and establish accounts from which the Escrow Agent shall make withdrawals upon request of and proper certification by the Pass Through Trustee;


WHEREAS, the Escrow Agent wishes to appoint the Paying Agent to pay amounts required to be distributed to the Investors in accordance with this Agreement; and


WHEREAS, capitalized terms used but not defined herein shall have the meanings ascribed to such terms in the Pass Through Trust Agreement.


NOW, THEREFORE, in consideration of the obligations contained herein, and for other good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, the parties hereto hereby agree as follows:


SECTION 1. Escrow Agent.


Section 1.01. Appointment of Escrow Agent. Each of the Placement Agents, for and on behalf of each of the Investors, hereby irrevocably appoints, authorizes and directs the Escrow Agent to act as escrow agent and fiduciary hereunder and under the Deposit Agreement for such specific purposes and with such powers as are specifically delegated to the Escrow Agent by the terms of this Agreement, together with such other powers as are reasonably incidental thereto. Any and all money received and held by the Escrow Agent under this Agreement or the Deposit Agreement shall be held in escrow by the Escrow Agent in accordance with the terms of this Agreement. This Agreement is irrevocable and the Investors' rights with respect to any monies received and held in escrow by the Escrow Agent under this Agreement or the Deposit Agreement shall only be as provided under the terms and conditions of this Agreement and the Deposit Agreement. The Escrow Agent (which term as used in this sentence shall include reference to its affiliates and its own and its affiliates' officers, directors, employees and agents): (a) shall have no duties or responsibilities except those expressly set forth in this Agreement; (b) shall not be responsible to the Pass Through Trustee or the Investors for any recitals, statements, representations or warranties of any person other then itself contained in this Agreement or the Deposit Agreement or for the failure by the Pass Through Trustee, the Investors or any other person or entity (other than the Escrow Agent) to perform any of its obligations hereunder (whether or not the Escrow Agent shall have any knowledge thereof); and (c) shall not be responsible for any action taken or omitted to be taken by it hereunder or provided for herein or in connection herewith, except for its own willful misconduct or gross negligence (or simple negligence in connection with the handling of funds).


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Section 1.02. Instruction; Etc. The Placement Agents, for and on behalf of each of the Investors, hereby irrevocably instruct the Escrow Agent, and the Escrow Agent agrees, (a) to enter into the Deposit Agreement, (b) to appoint the Paying Agent as provided in this Agreement, (c) upon receipt at any time and from time to time prior to the Delivery Period Termination Date (as defined in the Note Purchase Agreement) of a certificate substantially in the form of Exhibit B hereto (a "Withdrawal Certificate") executed by the Pass Through Trustee, together with an attached Notice of Purchase Withdrawal in substantially the form of Exhibit A to the Deposit Agreement duly completed by the Pass Through Trustee (the "Applicable Notice of Purchase Withdrawal" and the withdrawal to which it relates, a "Purchase Withdrawal"), immediately to execute the Applicable Notice of Purchase Withdrawal as Escrow Agent and transmit it to the Depositary by facsimile transmission in accordance with the Deposit Agreement; provided that, upon the request of the Pass Through Trustee after such transmission, the Escrow Agent shall cancel such Applicable Notice of Purchase Withdrawal, (d) upon receipt at any time and from time to time prior to the Delivery Period Termination Date (as defined in the Note Purchase Agreement) of a certificate substantially in the form of Exhibit C hereto (a "Prepayment Withdrawal Certificate") executed by the Pass Through Trustee, together with an attached Notice of Prepayment Withdrawal in substantially the form of Exhibit B to the Deposit Agreement duly completed by the Pass Through Trustee (the "Applicable Notice of Prepayment Withdrawal" and the withdrawal to which it relates, a "Prepayment Withdrawal"), immediately to execute the Applicable Notice of Prepayment Withdrawal as Escrow Agent and transmit it to the Depositary by facsimile transmission in accordance with the Deposit Agreement; provided that, upon the request of the Pass Through Trustee after such transmission, the Escrow Agent shall cancel such Applicable Notice of Prepayment Withdrawal, and (e) if there are any undrawn Deposits (as defined in the Deposit Agreement) on the earlier of (i) the Delivery Period Termination Date and (ii) the day on which the Escrow Agent receives notice from the Pass Through Trustee that the Pass Through Trustee's obligation to purchase Equipment Notes under the Note Purchase Agreement has terminated, to give notice to the Depositary (with a copy to the Paying Agent) substantially in the form of Exhibit C to the Deposit Agreement requesting a withdrawal of all of the remaining Deposits, together with accrued and unpaid interest on such Deposits to the date of withdrawal, on the 35th day after the date that such notice of withdrawal is given to the Depositary (or, if not a Business Day, on the next succeeding Business Day) (a "Final Withdrawal"), provided that if the day scheduled for the Final Withdrawal in accordance with the foregoing is within 10 days before or after a Regular Distribution Date, then the Escrow Agent shall request that such requested Final Withdrawal be made on such Regular Distribution Date (the date of such requested withdrawal, the "Final Withdrawal Date"). If for any reason the Escrow Agent shall have failed to give the Final Withdrawal Notice to the Depositary on or before June 29, 1999 (provided, that if a labor strike or work stoppage occurs at The Boeing Company prior to such date, such date shall be extended by adding thereto the number of days that each such labor strike or work stoppage continues in effect), and there are unwithdrawn Deposits on such date, the Final Withdrawal Date shall be deemed to be the Delivery Period Termination Date.


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Section 1.03. Initial Escrow Amount; Issuance of Escrow Receipts. The Escrow Agent hereby directs the Placement Agents to, and the Placement Agents hereby acknowledge that on the date hereof they shall, irrevocably deliver to the Depositary on behalf of the Escrow Agent, an amount in U.S. dollars ("Dollars") and immediately available funds equal to $300,254,000 for deposit on behalf of the Escrow Agent with the Depositary in accordance with Section 2.1 of the Deposit Agreement. The Placement Agents hereby instruct the Escrow Agent, upon receipt of such sum from the Placement Agents, to confirm such receipt by executing and delivering to the Pass Through Trustee an Escrow Receipt in the form of Exhibit A hereto (an "Escrow Receipt"), (a) to be affixed by the Pass Through Trustee to each Certificate and (b) to evidence the same percentage interest (the "Escrow Interest") in the Account Amounts (as defined below) as the Fractional Undivided Interest in the Pass Through Trust evidenced by the Certificate to which it is to be affixed. The Escrow Agent shall provide to the Pass Through Trustee for attachment to each Certificate newly issued under and in accordance with the Pass Through Trust Agreement an executed Escrow Receipt as the Pass Through Trustee may from time to time request of the Escrow Agent. Each Escrow Receipt shall be registered by the Escrow Agent in a register (the "Register") maintained by the Escrow Agent in the same name and same manner as the Certificate to which it is attached and may not thereafter be detached from such Certificate to which it is to be affixed prior to the distribution of the Final Withdrawal (the "Final Distribution"). After the Final Distribution, no additional Escrow Receipts shall be issued and the Pass Through Trustee shall request the return to the Escrow Agent for cancellation of all outstanding Escrow Receipts.


Section 1.04. Payments to Receiptholders. All payments and distributions made to holders of an Escrow Receipt (collectively "Receiptholders") in respect of the Escrow Receipt shall be made only from amounts deposited in the Paying Agent Account (as defined below) ("Account Amounts"). Each Receiptholder, by its acceptance of an Escrow Receipt, agrees that (a) it will look solely to the Account Amounts for any payment or distribution due to such Receiptholder pursuant to the terms of the Escrow Receipt and this Agreement and (b) it will have no recourse to Atlas, the Pass Through Trustee, the Paying Agent or the Escrow Agent, except as expressly provided herein or in the Pass Through Trust Agreement. No Receiptholder shall have any right to vote or in any manner otherwise control the operation and management of the Paying Agent Account or the obligations of the parties hereto, nor shall anything set forth herein, or contained in the terms of the Escrow Receipt, be construed so as to constitute the Receiptholders from time to time as partners or members of an association.


Section 1.05. Mutilated, Destroyed, Lost or Stolen Escrow Receipt. If (a) any mutilated Escrow Receipt is surrendered to the Escrow Agent or the Escrow Agent receives evidence to its satisfaction of the destruction, loss or theft of any Escrow Receipt and (b) there is delivered to the Escrow Agent and the Pass Through Trustee such security, indemnity or bond, as may be required by them to hold each of them harmless, then, absent notice to the Escrow Agent or the Pass Through Trustee that such destroyed, lost or stolen Escrow Receipt has been acquired by a bona fide purchaser, and provided that the


4 8 requirements of Section 8-405 of the Uniform Commercial Code in effect in any applicable jurisdiction are met, the Escrow Agent shall execute, authenticate and deliver, in exchange for or in lieu of any such mutilated, destroyed, lost or stolen Escrow Receipt, a new Escrow Receipt or Escrow Recei ...