Exhibit 10.52
EXECUTION VERSION
$89,855,433
AMENDED AND RESTATED TERM LOAN AGREEMENT
DATED AS OF JANUARY 18, 2002
AMONG
AMERICA WEST AIRLINES, INC.
AS THE COMPANY,
THE LENDERS LISTED HEREIN,
AS THE LENDERS,
THE INDUSTRIAL BANK OF JAPAN, LIMITED,
AS ARRANGER, CO-LEAD BOOK MANAGER,
AGENT AND LENDER,
CITICORP USA, INC., AS ARRANGER AND SYNDICATION AGENT,
▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ INC., AS CO-LEAD BOOK MANAGER
AND
BANKERS TRUST COMPANY, AS DOCUMENTATION AGENT
TABLE OF CONTENTS
PAGE
SECTION 1. DEFINITIONS................................................................................... 2
1.1 CERTAIN DEFINED TERMS......................................................................... 2
1.2 ACCOUNTING TERMS; UTILIZATION OF GAAP FOR PURPOSES OF CALCULATIONS UNDER AGREEMENT............ 23
1.3 OTHER DEFINITIONAL PROVISIONS................................................................. 23
SECTION 2. AMOUNTS AND TERMS OF THE TERM LOAN............................................................ 24
2.1 THE TERM LOAN; NOTES; REGISTER................................................................ 24
2.2 INTEREST ON THE LOANS......................................................................... 25
2.3 FEES.......................................................................................... 28
2.4 PREPAYMENTS; GENERAL PROVISIONS REGARDING PAYMENTS............................................ 28
2.5 USE OF PROCEEDS............................................................................... 33
2.6 SPECIAL PROVISIONS GOVERNING EURODOLLAR RATE LOANS............................................ 33
2.7 INCREASED COSTS; TAXES; CAPITAL ADEQUACY...................................................... 35
2.8 OBLIGATION OF LENDERS TO MITIGATE............................................................. 39
2.9 [INTENTIONALLY OMITTED]....................................................................... 40
2.10 BORROWING BASE................................................................................ 40
SECTION 3. CONDITIONS TO LOANS........................................................................... 43
3.1 CONDITIONS TO CLOSING DATE.................................................................... 43
SECTION 4. COMPANY'S REPRESENTATIONS AND WARRANTIES...................................................... 48
4.1 ORGANIZATION, POWERS, QUALIFICATION, GOOD STANDING, BUSINESS AND SUBSIDIARIES................. 48
4.2 AUTHORIZATION OF BORROWING, ETC............................................................... 49
4.3 FINANCIAL CONDITION........................................................................... 50
4.4 NO MATERIAL ADVERSE CHANGE.................................................................... 50
4.5 TITLE TO PROPERTIES; LIENS.................................................................... 50
4.6 LITIGATION; ADVERSE FACTS..................................................................... 51
4.7 PAYMENT OF TAXES.............................................................................. 51
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TABLE OF CONTENTS
(continued)
PAGE
4.8 PERFORMANCE OF AGREEMENTS; MATERIALLY ADVERSE AGREEMENTS...................................... 51
4.9 GOVERNMENTAL REGULATION....................................................................... 52
4.10 SECURITIES ACTIVITIES......................................................................... 52
4.11 EMPLOYEE BENEFIT PLANS........................................................................ 52
4.12 ENVIRONMENTAL PROTECTION...................................................................... 53
4.13 SOLVENCY...................................................................................... 54
4.14 DISCLOSURE.................................................................................... 54
4.15 YEAR 2000 MATTERS............................................................................. 54
SECTION 5. COMPANY'S AFFIRMATIVE COVENANTS............................................................... 55
5.1 FINANCIAL STATEMENTS AND OTHER REPORTS........................................................ 55
5.2 CORPORATE EXISTENCE........................................................................... 59
5.3 PAYMENT OF TAXES AND CLAIMS; TAX CONSOLIDATION................................................ 59
5.4 MAINTENANCE OF PROPERTIES; INSURANCE.......................................................... 60
5.5 INSPECTION.................................................................................... 60
5.6 COMPLIANCE WITH LAWS, ETC..................................................................... 61
5.7 COMPANY'S REMEDIAL ACTION REGARDING HAZARDOUS MATERIALS....................................... 61
5.8 FURTHER ASSURANCES............................................................................ 62
5.9 EMPLOYEE BENEFIT PLANS........................................................................ 62
5.10 FAA MATTERS; CITIZENSHIP...................................................................... 62
5.11 CHANGES IN GAAP............................................................................... 62
SECTION 6. COMPANY'S NEGATIVE COVENANTS.................................................................. 63
6.1 RESERVED...................................................................................... 63
6.2 LIENS AND RELATED MATTERS..................................................................... 63
6.3 INVESTMENTS................................................................................... 64
6.4 RESTRICTED PAYMENTS........................................................................... 64
6.5 FINANCIAL COVENANTS........................................................................... 65
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TABLE OF CONTENTS
(continued)
PAGE
6.6 RESTRICTION ON FUNDAMENTAL CHANGES; ASSET SALES AND ACQUISITIONS; NEW SUBSIDIARIES............ 65
6.7 SALES AND LEASE-BACKS......................................................................... 66
6.8 TRANSACTIONS WITH AFFILIATES.................................................................. 66
6.9 CONDUCT OF BUSINESS........................................................................... 67
6.10 MERGER OR CONSOLIDATION....................................................................... 67
6.11 LIMITATION ON ASSET SALES..................................................................... 67
6.12 LIMITATION ON ISSUANCES AND DISPOSITIONS OF CAPITAL STOCK OF SUBSIDIARIES..................... 68
6.13 LIMITATION ON CREATION OF NEW SUBSIDIARIES.................................................... 68
6.14 LIMITATION ON AMENDMENTS TO INDEBTEDNESS; PERFORMANCE OF AGREEMENTS........................... 69
SECTION 7. EVENTS OF DEFAULT............................................................................. 69
7.1 FAILURE TO MAKE PAYMENTS WHEN DUE............................................................. 69
7.2 DEFAULT IN OTHER AGREEMENTS................................................................... 70
7.3 BREACH OF CERTAIN COVENANTS................................................................... 70
7.4 BREACH OF WARRANTY............................................................................ 70
7.5 OTHER DEFAULTS UNDER LOAN DOCUMENTS........................................................... 71
7.6 INVOLUNTARY BANKRUPTCY; APPOINTMENT OF RECEIVER, ETC.......................................... 71
7.7 VOLUNTARY BANKRUPTCY; APPOINTMENT OF RECEIVER, ETC............................................ 71
7.8 JUDGMENTS AND ATTACHMENTS..................................................................... 72
7.9 DISSOLUTION................................................................................... 72
7.10 RESERVED...................................................................................... 72
7.11 FAILURE OF SECURITY........................................................................... 72
SECTION 8. AGENT......................................................................................... 73
8.1 APPOINTMENT................................................................................... 73
8.2 POWERS AND DUTIES; GENERAL IMMUNITY........................................................... 73
8.3 REPRESENTATIONS AND WARRANTIES; NO RELIANCE................................................... 74
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TABLE OF CONTENTS
(continued)
PAGE
8.4 RIGHT TO INDEMNITY............................................................................ 75
8.5 SECURITY AGREEMENTS........................................................................... 75
8.6 SUCCESSOR AGENT............................................................................... 75
SECTION 9. MISCELLANEOUS................................................................................. 76
9.1 ASSIGNMENTS AND PARTICIPATIONS IN LOANS....................................................... 76
9.2 EXPENSES...................................................................................... 78
9.3 INDEMNITY..................................................................................... 79
9.4 SET-OFF....................................................................................... 79
9.5 RATABLE SHARING............................................................................... 80
9.6 AMENDMENTS AND WAIVERS........................................................................ 80
9.7 INDEPENDENCE OF COVENANTS..................................................................... 81
9.8 NOTICES....................................................................................... 82
9.9 SURVIVAL OF REPRESENTATIONS, WARRANTIES AND AGREEMENTS........................................ 82
9.10 FAILURE OR INDULGENCE NOT WAIVER; REMEDIES CUMULATIVE......................................... 82
9.11 MARSHALING; PAYMENTS SET ASIDE................................................................ 82
9.12 SEVERABILITY.................................................................................. 83
9.13 OBLIGATIONS SEVERAL; INDEPENDENT NATURE OF LENDERS' RIGHTS.................................... 83
9.14 HEADINGS...................................................................................... 83
9.15 APPLICABLE LAW................................................................................ 83
9.16 SUCCESSORS AND ASSIGNS........................................................................ 83
9.17 CONSENT TO JURISDICTION AND SERVICE OF PROCESS................................................ 83
9.18 WAIVER OF JURY TRIAL.......................................................................... 84
9.19 CONFIDENTIALITY............................................................................... 85
9.20 COUNTERPARTS; EFFECTIVENESS................................................................... 85
9.21 INTEGRATION................................................................................... 85
9.22 DISCLAIMER OF DAMAGES......................................................................... 85
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Schedule 2.4 - Amortization Schedule; Lenders Pro Rata Share
Schedule 2.10 - Eligible Assets
Schedule 2.10A - Borrowing Base Collateral on the Closing Date
Schedule 4.1 - Subsidiaries
Schedule 6.2 - Payment Restrictions
Exhibits
--------
Exhibit A - Form of Aircraft Security Agreement
Exhibit B - Form of Receivables Security Agreement
Exhibit I - Reserved
Exhibit II - Form of Notice of Conversion/Continuation
Exhibit III - Form of Term Note
Exhibit III-A - Form of PIK Note
Exhibit IV - Form of Compliance Certificate
Exhibit V-A - Form of Company's outside counsel legal opinion (Section 1110)
Exhibit V-B - Form of Company's in-house counsel legal opinion
Exhibit VI - Form of Assignment Agreement
Exhibit VII - Reserved
Exhibit VIII - Form of Financial Condition Certificate
Exhibit IX - Form of Borrowing Base Certificate
Exhibit X - Description of Joint Venture Terms
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AMERICA WEST AIRLINES, INC.
AMENDED AND RESTATED TERM LOAN AGREEMENT
This AMENDED AND RESTATED TERM LOAN AGREEMENT is dated as of January
18, 2002 and entered into by and among AMERICA WEST AIRLINES, INC., a Delaware
corporation (the "COMPANY"), THE FINANCIAL INSTITUTIONS LISTED ON THE SIGNATURE
PAGES HEREOF (each individually referred to herein as a "LENDER" and
collectively, together with the other institutions that become lenders pursuant
to subsection 9.1, as the "LENDERS") and THE INDUSTRIAL BANK OF JAPAN, LIMITED
as Arranger and Agent for the Lenders (in such last capacity, the "AGENT").
RECITALS
WHEREAS, the Company, the financial institutions from time to time
party thereto and the Agent are parties to a Revolving Credit Agreement dated as
of December 12, 1997 (the "1997 Credit Agreement"), pursuant to which such
financial institutions and the Agent provided a revolving and term loan facility
to the Company;
WHEREAS, the lenders party thereto, the Agent and the Company amended
the 1997 Credit Agreement pursuant to that certain Amended and Restated
Revolving Credit Agreement, dated as of December 10, 1999 (the "Amended and
Restated Credit Agreement");
WHEREAS, the lenders party thereto, the Agent and Company have amended
the Amended and Restated Credit Agreement pursuant to Amendment No. 1, dated as
of April 16, 2001, Amendment No. 2 dated as of July 31, 2001 and Amendment No. 3
dated as of July 31, 2001 (as so amended, the "Existing Credit Agreement");
WHEREAS, certain Potential Events of Default and Events of Default have
occurred and are continuing under the Existing Credit Agreement;
WHEREAS, the Company has requested and, subject to satisfaction of the
conditions precedent set forth in Section 3.1 of this Agreement on or before
January 31, 2002, the Agent and Lenders have agreed to restate and amend the
Existing Credit Agreement as provided herein to provide the Company with a term
loan facility;
WHEREAS, unless and until the conditions precedent set forth in Section
3.1 of this Agreement are satisfied on or before January 31, 2002, the Existing
Credit Agreement shall remain in full force and effect and the Agent and Lenders
are not waiving and, by this Agreement or otherwise, shall not be deemed to
waive any Potential Events of Default or Events of Default thereunder;
NOW THEREFORE, in consideration of the premises and agreements,
provisions and covenants herein contained, the Company, the Lenders, and the
Agent hereby agree as follows:
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SECTION 1.
DEFINITIONS
1.1 CERTAIN DEFINED TERMS.
The following terms used in this Agreement shall have the following
meanings:
"ACT" means Subtitle VII of Title 49 of the United States Code, and the
rules and regulations promulgated thereunder, as in effect on the date hereof,
and as modified or amended hereafter, or any subsequent legislation that
supplements or supersedes such Subtitle.
"ADJUSTED EURODOLLAR RATE" means, for any Interest Rate Determination
Date, the rate per annum obtained by dividing (i) the arithmetic average of the
quotes (expressed as a rate per annum and rounded upward to the nearest l/16 of
one percent) appearing on the Reuters LIBO Screen (or such other screen as may,
in the opinion of the Agent, replace such screen on that system for the purpose
of displaying such rate) at or about 11:00 a.m. (London time) on such Interest
Rate Determination Date for U.S. dollar deposits of amounts in same day funds
comparable to the principal amount of the Eurodollar Rate Loans for which the
Adjusted Eurodollar Rate is then being determined with maturities comparable to
the Interest Period for which such Adjusted Eurodollar Rate will apply by (ii) a
percentage equal to 100% minus the stated maximum rate of all reserve
requirements (including, without limitation, any marginal, emergency,
supplemental, special or other reserves) applicable on such Interest Rate
Determination Date to any member bank of the Federal Reserve System in respect
of "Eurodollar liabilities" as defined in Regulation D (or any successor
category of liabilities under Regulation D) for such Interest Period, and if
such rate quotation cannot be obtained by the Agent, the rate per annum obtained
by dividing (i) the arithmetic average (rounded upward to the nearest l/16 of
one percent) of the offered quotation, if any, to first class banks in the
London interbank Eurodollar market by each of the Reference Lenders for U.S.
dollar deposits of amounts in same day funds comparable to the principal amount
of the Eurodollar Rate Loans for which the Adjusted Eurodollar Rate is then
being determined with maturities comparable to such Interest Period as of
approximately 10:00 A.M. (New York time) on such Interest Rate Determination
Date by (ii) a percentage equal to 100% minus the stated maximum rate of all
reserve requirements (including, without limitation, any marginal, emergency,
supplemental, special or other reserves) applicable on such Interest Rate
Determination Date to any member bank of the Federal Reserve System in respect
of "Eurocurrency liabilities" as defined in Regulation D (or any successor
category of liabilities under Regulation D) for such Interest Period; provided
that if any Reference Lender fails to provide the Agent with its aforementioned
quotation then the Adjusted Eurodollar Rate shall be determined based on the
quotation provided by the Agent, and that, if any, provided to the Agent by the
other Reference Lender.
"ADJUSTMENT EVENT" means any event of loss or damage to Rotables which
causes a reduction in the book value of Rotables, as reasonably determined by
the Company, in excess of $1,000,000.
"AFFECTED LENDER" has the meaning assigned to that term in subsection
2.6C.
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"AFFECTED LOANS" has the meaning assigned to that term in subsection
2.6C.
"AFFILIATE" means, as applied to any Person, any other Person directly
or indirectly controlling, controlled by, or under common control with, that
Person. For the purposes of this definition, "control" (including, with
correlative meanings, the terms "controlling", "controlled by" and "under common
control with"), as applied to any Person, means the possession, directly or
indirectly, of the power to direct or cause the direction of the management and
policies of that Person, whether through the ownership of voting securities or
by contract or otherwise.
"AGENT" has the meaning assigned to that term in the introduction to
this Agreement and also means and includes any successor Agent appointed
pursuant to subsection 8.6.
"AGREEMENT" means this Amended and Restated Term Loan Agreement, as it
may be amended, supplemented or otherwise modified from time to time.
"AIR CARRIER GUARANTEE LOAN DOCUMENTS" means, collectively, (1) the
Government Guaranteed Loan Agreement, (2) the Promissory Note issued by the
Company to the initial lender in connection therewith, (3) the Warrants, dated
as of January 18, 2002, issued to Holdings, The Air Transportation Stabilization
Board, the initial lender, and the counter-guarantors, (4) the Registration
Rights Agreement, dated as of January 18, 2002, among the Company, Holdings, The
Air Transportation Stabilization Board, the initial lender and the
counter-guarantors named therein, and (5) the Guaranty of The Air Transportation
Stabilization Board dated as of January 18, 2002; in each case, as any of the
foregoing may be amended, supplemented or otherwise modified from time to time
(subject to Section 6.14 hereof).
"AIRCRAFT" means an Airframe together with the Engines identified
therewith in Schedule I of, or a supplement to, an Aircraft Security Agreement,
whether or not any of such Engines may at any time of determination be installed
on such Airframe or installed on any other airframe.
"AIRCRAFT SECURITY AGREEMENT" means an Aircraft Security Agreement
substantially in the form of Exhibit A hereto, as such Aircraft Security
Agreement may be amended, restated, supplemented or otherwise modified from time
to time in accordance with the terms hereof and thereof.
"AIRFRAME" means each Airframe as defined in and from time to time
subject to the Aircraft Security Agreement.
"ALLIANCE AGREEMENTS" means those certain business alliance agreements
among the Company, Chautauqua Airlines, Inc., Continental Airlines, Inc. and
Mesa Airlines, Inc. and such other parties from time to time that include, but
are not limited to, code-sharing, frequent flyer, ground handling and marketing
agreements.
"APPLICABLE MARGIN" for each Base Rate Loan and Eurodollar Rate Loan
shall be the percentage set forth below for that type of Loan for the periods
set forth below:
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Period LIBOR Margin/Base Rate Margin
------ -----------------------------
Closing Date through December 31, 2004 2.25% /2.75%
January 1, 2005 and after 4.75% / 2.75%
"APPROVED APPRAISAL" has the meaning given such term in subsection
2.10(C)(1).
"APPROVED APPRAISER" has the meaning given such term in subsection
2.10(C)(2).
"ARRANGERS" means Citicorp USA, Inc. and The Industrial Bank of Japan,
Limited.
"ASSET SALE" means any sale, transfer or other disposition (including
by way of merger, consolidation, exchange of assets or sale-leaseback
transactions), in one transaction or a series of related transactions, by the
Company or any of its Subsidiaries to any Person other than the Company or any
of its Subsidiaries of (i) all or any of the Capital Stock of any Subsidiary of
the Company, (ii) all or substantially all of the property and assets of an
operating unit or business of the Company or any of its Subsidiaries or (iii)
any other property and assets of the Company or any of its Subsidiaries outside
the ordinary course of business of the Company or such Subsidiary and, in each
case, that is not governed by the provisions of subsection 6.8; provided that
none of (A) sales or other dispositions of inventory (other than Spare Parts),
receivables (after the conditions to the Liens on the identified receivables
pursuant to the Receivables Security Agreement have occurred, as set forth in
the Receivables Security Agreement, other than the receivables pledged to the
Agent under the Receivables Security Agreement) and other current assets (other
than Collateral), (B) sale or other dispositions of surplus equipment, spare
parts (pursuant to and subject to subsection 2.10 of this Agreement and the
Spare Parts Security Agreement), expendable inventories, furniture or fixtures
in an aggregate amount not to exceed $10,000,000 in any Fiscal Year of the
Company, (C) sale leasebacks of aircraft (including aircraft engines installed
thereon) in the Company's fleet (other than the Aircraft), spare aircraft
engines (other than the Spare Engines), aircraft parts (other than Spare Parts),
simulators (other than the Simulators) and passenger loading bridges or other
flight or ground equipment or the Company's office building located at ▇▇▇ ▇▇▇▇
▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇, ▇▇▇▇▇▇▇ or (D) $20,000,000 of other sales in any Fiscal Year
of the Company shall be included within the meaning of "Asset Sale."
"ASSIGNMENT AGREEMENT" means an Assignment Agreement in substantially
the form of Exhibit VI annexed hereto.
"BANKRUPTCY CODE" means Title 11 of the United States Code as now and
hereafter in effect, or any successor statute.
"BASE RATE" means, at any time, the higher of (x) the Prime Rate or (y)
the rate which is 1/2 of 1% in excess of the Federal Funds Effective Rate.
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"BASE RATE LOANS" means Loans bearing interest at rates determined by
reference to the Base Rate as provided in subsection 2.2A.
"BORROWING BASE" means an aggregate amount equal to:
(A) 100% of the Dollar amount of Cash and Permitted Cash Equivalents held by the
Agent at such time in the Cash Collateral Account, plus
(B) with respect to Aircraft, the Fair Market Value of all Stage III Aircraft as
stated in the then most recently delivered Approved Appraisal thereof, plus
(C) with respect to Rotables, the lower of (x) the then Adjusted Fair Market
Value of the Rotables (as hereinafter defined) and (y) the book value of the
Rotables as certified by the Company in the then most recently delivered
Borrowing Base Certificate; the "Adjusted Fair Market Value of the Rotables" (1)
on any date from and after the date of the then most recently delivered Approved
Appraisal (an "Appraisal Date") and prior to the next succeeding date on which
the Company shall deliver a Borrowing Base Certificate, shall equal the Fair
Market Value of the Rotables as set forth in such Approved Appraisal and (2) on
any date thereafter and prior to the date of the next succeeding Approved
Appraisal, shall equal the product of (x) the book value of the Rotables, as set
forth in the then most recently delivered Borrowing Base Certificate, multiplied
by (y) a fraction, of which the numerator shall be the Fair Market Value of the
Rotables, as of the Appraisal Date referred to in clause (1) above, and the
denominator shall be the book value of the Rotables, as set forth in the
Borrowing Base Certificate delivered on or next preceding such Appraisal Date,
plus
(D) the Fair Market Value of the Maintenance Facility as stated in the most
recently delivered Approved Appraisal thereof, plus
(E) the Fair Market Value of the Simulators as stated in the then most recently
delivered Approved Appraisal thereof, plus
(F) the Fair Market Value of the Spare Engines as stated in the then most
recently delivered Approved Appraisal thereof.
"BORROWING BASE CERTIFICATE" means a certificate substantially in the
form of Exhibit IX annexed hereto delivered by the Company pursuant to Section
2.10 with respect to the calculation of the Borrowing Base.
"BORROWING BASE COLLATERAL" means, at any time, Eligible Assets that
are subject to the Lien of a Security Agreement at such time; for the avoidance
of doubt, Collateral pledged pursuant to the Receivables Security Agreement
shall not constitute Borrowing Base Collateral.
"BORROWING BASE DEFICIENCY" means any time and for so long as the ratio
of (1) the aggregate outstanding principal amount of the Loans to (2) the
Borrowing Base, is more than .58 to 1.
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"BORROWING BASE VALUE" means, with respect to any Borrowing Base
Collateral, the value attributed to such Borrowing Base Collateral from time to
time pursuant to the definition of Borrowing Base.
"BUSINESS DAY" means any day excluding Saturday, Sunday and any day
which is a legal holiday under the laws of the States of New York, California or
Arizona or is a day on which banking institutions located in any such state are
authorized or required by law or other governmental action to close and, if the
applicable Business Day relates to any Eurodollar Rate Loan, on which dealings
are carried on in the London interbank market.
"CAPITAL LEASE", as applied to any Person, means any lease of any
property (whether real, personal or mixed) by that Person as lessee that, in
conformity with GAAP, is required to be accounted for as a capital lease on the
balance sheet of that Person, and the amount of Indebtedness represented by such
lease shall be the capitalized amount of the obligations evidenced thereby
determined in accordance with GAAP.
"CAPITAL STOCK" means, with respect to any Person, any and all shares,
interests, participations or other equivalents (however designated, whether
voting or non-voting) of such Person's capital stock, whether now outstanding or
issued after the date of this Agreement, including, without limitation, all
Common Stock.
"CASH" means money, currency or a credit balance.
"CASH AND CASH EQUIVALENT SECURITY AGREEMENT" means the Cash and Cash
Equivalent Security Agreement dated as of December 12, 1997 between the Company
and the Agent, as amended by Amendment No. 1 dated as of December 10, 1999 and
as such Cash and Cash Equivalent Security Agreement may be amended, restated,
supplemented or otherwise modified from time to time in accordance with the
terms hereof and thereof.
"CASH COLLATERAL ACCOUNT" has the meaning given such term in the Cash
and Cash Equivalent Security Agreement.
"CASH EQUIVALENTS" means, as at any date of determination, (i)
marketable securities (a) issued or directly and unconditionally guaranteed as
to interest and principal by the United States Government or (b) issued by any
agency or instrumentality of the United States the obligations of which are
backed by the full faith and credit of the United States, in each case maturing
within one year after such date; (ii) marketable direct obligations issued by
any state of the United States of America or any political subdivision of any
such state or any instrumentality thereof, in each case maturing within one year
after such date and having, at the time of the acquisition thereof, the highest
rating obtainable from either S&P or Moody's; (iii) commercial paper maturing no
more than one year after such date and having, at the time of the acquisition
thereof, a rating of at least A-2 from S&P or at least P-2 from Moody's; (iv)
certificates of deposit or bankers' acceptances maturing within one year after
such date and issued or accepted by any Lender or by any commercial bank
organized under the laws of the United States of America or any state thereof or
the District of Columbia that (a) is at least "adequately capitalized" (as
defined in the regulations of its primary Federal banking regulator) and (b) has
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Tier 1 capital (as defined in such regulations) of not less than $100,000,000;
and (v) shares of any money market mutual fund that (a) has at least 95% of its
assets invested continuously in the types of investments referred to in clauses
(i) and (ii) above, (b) has net assets of not less than $500,000,000, and (c)
has the highest rating obtainable from either S&P or Moody's.
"CASH PROCEEDS" means, with respect to any Asset Sale, the proceeds of
such Asset Sale in the form of Cash and Cash Equivalents, including payments in
respect of deferred payment obligations (to the extent corresponding to the
principal, but not the interest component thereof) when received in the form of
Cash or Cash Equivalents (except to the extent such obligations are financed or
sold with recourse to the Company or any Subsidiary of the Company) and proceeds
from the conversion of other property received when converted to Cash or Cash
Equivalents.
"CHANGE OF CONTROL" means (i) the acquisition at any time by any Person
(other than TPG, L.P. or any of its Affiliates or Holdings) or two or more
Persons acting in concert of "beneficial ownership" (within the meaning of
Section 13(d) under the Exchange Act and the rules and regulations promulgated
thereunder) in excess of 40% of the total voting power of the Voting Stock of
the Company or Holdings; (ii) the sale, lease, transfer or other disposition, of
all or substantially all of the assets of the Company or Holdings to any Person
(other than TPG, L.P. or any of its Affiliates or Holdings) or two or more
Persons acting in concert as an entirety or substantially as an entirety in one
transaction or a series of related transactions; (iii) the merger or
consolidation of the Company or Holdings, with or into another corporation, or
the merger of another corporation into the Company or Holdings, or any other
transaction, with the effect that a Person (other than TPG, L.P. or any of its
Affiliates or Holdings) or two or more Persons acting in concert has "beneficial
ownership" (within the meaning of Section 13(d) of the Exchange Act and the
rules and regulations promulgated thereunder) in excess of 40% of the Voting
Stock of the Company or Holdings, or (if the Company or Holdings is not the
surviving corporation in such transaction) such other corporation, as the case
may be (including indirect ownership through another Person other than TPG, L.P.
or any of its Affiliates or Holdings or through two or more Persons acting in
concert); or (iv) the liquidation or dissolution of the Company or Holdings. For
purposes of this definition, the term Person includes a "person" within the
meaning of Section 13(d) of the Exchange Act and the rules and regulations
promulgated thereunder.
"CLOSING DATE" means the date, if any, on or before January 31, 2002,
when the conditions of Section 3.1 hereof have been satisfied and the Existing
Credit Agreement has been restated and amended as provided in this Agreement.
"CO-LEAD BOOK MANAGERS" means ▇▇▇▇▇▇▇ ▇▇▇▇▇ Barney Inc. and The
Industrial Bank of Japan, Limited.
"COLLATERAL" means all of the properties and assets that are from time
to time subject to the Liens purported to be granted by the Security Agreements
(provided, for the avoidance of doubt, that "Collateral" shall not include any
properties or assets subject to Liens granted pursuant to the Receivables
Security Agreement unless and until the conditions to such Liens becoming
effective, as set forth in the Receivables Security Agreement, have occurred).
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"COMMODITY AGREEMENT" means any agreement or arrangement designed to
protect the Company or any of its Subsidiaries against fluctuations in the
prices of commodities used by the Company or any of its Subsidiaries in the
ordinary course of its business.
"COMMON STOCK" means, with respect to any Person, any and all shares,
interests, participations or other equivalents (however designated, whether
voting or non-voting) of such Person's common stock, whether now outstanding or
issued after the date of this Agreement, including, without limitation, all
series and classes of such common stock.
"COMPANY" has the meaning assigned to that term in the introduction to
this Agreement and its permitted successors and assigns.
"COMPANY COMMON STOCK" means the Common Stock of the Company, par value
$0.01 per share.
"COMPLIANCE CERTIFICATE" means a certificate substantially in the form
of Exhibit IV annexed hereto delivered to the Agent and the Lenders by the
Company pursuant to subsection 5.1(iii).
"CONCESSIONS" means the lessor, creditor and vendor concessions granted
to the Company in connection with the Company's Restructuring Plan.
"CONFIDENTIAL INFORMATION" means information that the Company furnishes
to the Agent or any Lender in a writing designated as confidential, but does not
include any such information that is or becomes generally available to the
public or that is or becomes available to the Agent or such Lender from a source
other than the Company.
"CONTRACTUAL OBLIGATION", as applied to any Person, means any provision
of any equity security issued by that Person or of any material indenture,
mortgage, deed of trust, contract, undertaking, agreement or other material
instrument to which that Person is a party or by which it or any of its
properties is bound or to which it or any of its properties is subject.
"CURRENCY AGREEMENT" means any foreign exchange contract, currency swap
agreement, futures contract, option contract, synthetic cap or other similar
agreement or arrangement designed to protect the Company or any of its
Subsidiaries against fluctuations in currency values.
"DESIGNATED LOCATIONS" has the meaning given such term in the Spare
Parts Security Agreement.
"DOCUMENTATION AGENT" means Bankers Trust Company.
"DOLLARS" and the sign "$" mean the lawful money of the United States
of America.
"ELIGIBLE ASSETS" has the meaning given such term in Subsection 2.10.
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"ELIGIBLE ASSIGNEE" means (A) (i) a commercial bank organized under the
laws of the United States or any state thereof and having total assets on a
consolidated basis in excess of $1,000,000,000; (ii) a savings and loan
association or savings bank organized under the laws of the United States or any
state thereof and having total assets on a consolidated basis in excess of
$1,000,000,000; (iii) a commercial bank organized under the laws of any other
country or a political subdivision thereof; provided that (x) such bank is
acting through a branch or agency located in the United States or (y) such bank
is organized under the laws of a country that is a member of the Organization
for Economic Cooperation and Development or a political subdivision of such
country; and (iv) any other institutional investor organized under the laws of
the United States or any state thereof which extends credit or buys loans or
notes as one of its businesses including, but not limited to, investment banks,
insurance companies, mutual funds, money management companies, pension
management companies and lease financing companies, in each case (under clauses
(i) through (iv) above) that is reasonably acceptable to the Agent; and (B) any
Lender and any Affiliate of any Lender; provided that neither the Company nor
any Affiliate of the Company shall be an Eligible Assignee.
"ELIGIBLE SIMULATOR" means a flight simulator of the type described in
Schedule 2.10.
"ELIGIBLE SPARE ENGINE" means an aircraft engine of the type described
in Schedule 2.10.
"ELIGIBLE STAGE III AIRCRAFT" means an aircraft, including engines,
that meets the "Stage III" noise standards of the Federal Aviation Regulations,
is of the type described in Schedule 2.10 and has met such standards either (x)
in the case of an aircraft other than a 737-200A series aircraft, since it was
originally manufactured and delivered or (y) in the case of a 737-200A series
aircraft, either at the time such aircraft becomes subject to the Lien of an
Aircraft Security Agreement or at the time such aircraft was originally
manufactured and delivered.
"ENGINE" means each aircraft engine from time to time subject to the
Lien of the Aircraft Security Agreement.
"ENVIRONMENTAL CLAIM" means any material investigation, notice, claim,
suit, proceeding, demand or order, by any governmental authority or any Person
arising in connection with any alleged or actual material violation of
Environmental Laws or with any Hazardous Material, or any actual or alleged
damage, or harm to health, safety or the environment.
"ENVIRONMENTAL INDEMNITY AGREEMENT" means the Amended and Restated
Environmental Indemnity Agreement dated as of December 10, 1999 and as such
Environmental Indemnity Agreement may be amended, restated, supplemented or
otherwise modified from time to time in accordance with the terms hereof or
thereof.
"ENVIRONMENTAL LAWS" means any and all current or future statutes,
ordinances, orders, rules, regulations, guidance documents, judgments,
governmental authorizations, or any other requirement of governmental
authorities relating to (a) the prevention or control of
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pollution or protection of the environment, (b) solid, gaseous or liquid waste
generation, handling, treatment, storage, disposal, discharge, release, emission
or transportation, or (c) exposure to Hazardous Materials. "Environmental Laws"
shall include, but not be limited to, the Comprehensive Environmental Response,
Compensation and Liability Act (42 U.S.C. 9601 et seq.), the Resource
Conservation and Recovery Act (42 U.S.C. 6901 et seq.), the National
Environmental Policy Act (42 U.S.C. 4321 et seq.), the Hazardous Materials
Transportation Act (49 U.S.C. 1801 et seq.), the Toxic Substances Control Act
(49 U.S.C. 2601 et seq.), the Clean Air Act (42 U.S.C. 7401 et seq.), the
Federal Water Pollution Control Act (33 U.S.C. 1251 et seq.), the Safe Drinking
Water Act (42 U.S.C. 3007 et seq.), the Emergency Planning and Community
Right-to-Know Act (42 U.S.C. 11001 et seq.), the Occupational Safety and Health
Act (29 U.S.C. 641 et seq.), and the State of Arizona Environmental Quality Act
(A.R.S. 49-101 et seq.).
"EQUITY PROCEEDS" means the cash proceeds (net of underwriting
discounts and commissions and other reasonable costs associated therewith) from
the issuance of any equity securities of the Company including, without
limitation, additional issuances of Company Common Stock.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended from time to time, and any successor statute.
"ERISA AFFILIATE" means, as applied to the Company, (i) any corporation
which is, or was at any time, a member of a controlled group of corporations
within the meaning of Section 414(b) of the Internal Revenue Code of which the
Company is a member; (ii) any trade or business (whether or not incorporated)
which is a member of a group of trades or businesses under common control within
the meaning of Section 414(c) of the Internal Revenue Code of which the Company
is a member; and (iii) any member of an affiliated service group within the
meaning of Section 414(m) or (o) of the Internal Revenue Code of which the
Company, any corporation described in clause (i) above or any trade or business
described in clause (ii) above is a member.
"EURODOLLAR RATE LOANS" means Loans bearing interest at rates
determined by reference to the Adjusted Eurodollar Rate as provided in
subsection 2.2A.
"EVENT OF DAMAGE" with respect to any Borrowing Base Collateral (other
than Rotables) means any damage to such Borrowing Base Collateral the repair of
which is reasonably estimated by the Company to cost more than 50% of the Fair
Market Value of such Borrowing Base Collateral.
"EVENT OF DEFAULT" means each of the events set forth in Section 7.
"EVENT OF LOSS" with respect to any Borrowing Base Collateral (other
than Cash and Cash Equivalents) has the meaning given in the Security Agreement
to which such Borrowing Base Collateral is subject.
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"EXCHANGE ACT" means the Securities Exchange Act of 1934, as amended
from time to time, and any successor statute.
"FACILITIES" means any and all real property now, hereafter or
heretofore owned, leased, operated or used by the Company or any of its
Subsidiaries and any of their respective predecessors.
"FAIR MARKET VALUE" for any Borrowing Base Collateral means the value
of such Borrowing Base Collateral, as determined by an Approved Appraiser in the
most recently delivered Approved Appraisal thereof, obtainable by a seller at
the time of determination in an arm's-length transaction between an informed and
willing seller under no compulsion to sell and an informed and willing
buyer-user (other than a lessee or other Person currently in possession and a
used equipment dealer or broker) under no compulsion to buy and based on the
then condition of such Borrowing Base Collateral.
"FEDERAL AVIATION ADMINISTRATION" or "FAA" means the United States
Federal Aviation Administration or any successor thereto administering the
functions of the Federal Aviation Administration under the Act.
"FEDERAL AVIATION REGULATIONS" means regulations issued by the FAA.
"FEDERAL FUNDS EFFECTIVE RATE" means, for any period, a fluctuating
interest rate equal for each day during such period to the weighted average of
the rates on overnight Federal funds transactions with members of the Federal
Reserve System arranged by Federal funds brokers, as published for such day (or,
if such day is not a Business Day, for the next preceding Business Day) by the
Federal Reserve Bank of New York, or, if such rate is not so published for any
day on which is a Business Day, the average of the quotations for such day on
such transactions received by the Agent from three Federal funds brokers of
recognized standing selected by the Agent.
"FISCAL YEAR" means with respect to the financial statements to be
delivered by the Company pursuant to subsection 5.1, the Company's fiscal year
referenced in such financial statements; provided, that the Company will not
change its Fiscal Year if such change will cause an unreasonable delay in the
production of the financial statements required by subsection 5.1(ii).
"FUNDING AND PAYMENT OFFICE" means the office of the Agent located at
▇▇▇▇ ▇▇▇▇▇▇ ▇▇ ▇▇▇ ▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇.
"GAAP" means, subject to the limitations on the application thereof set
forth in subsection 1.2, generally accepted accounting principles set forth in
opinions and pronouncements of the Accounting Principles Board of the American
Institute of Certified Public Accountants and statements and pronouncements of
the Financial Accounting Standards Board or in such other statements by such
other entity as may be approved by a significant segment of the accounting
profession. Financial statements and other information required to be delivered
by the Company to the Lenders pursuant to clauses (ii), (iii) and (xiii) of
subsection 5.1 shall be
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prepared in accordance with GAAP as in effect at the time of such preparation
(and delivered together with the reconciliation statements provided for in
subsection 5.1(v)).
"GUARANTEE" means any obligation, contingent or otherwise, of any
Person directly or indirectly guaranteeing any Indebtedness or other obligation
of any other Person and, without limiting the generality of the foregoing, any
obligation, direct or indirect, contingent or otherwise, of such first Person
(i) to purchase or pay (or advance or supply funds for the purchase or payment
of) such Indebtedness or other obligation of such other Person (whether arising
by virtue of partnership arrangements, or by agreement to keep-well, to purchase
assets, goods, securities or services, to take-or-pay, or to maintain financial
statement conditions or otherwise) or (ii) entered into for purposes of assuring
in any other manner the obligee of such Indebtedness or other obligation of the
payment thereof or to protect such obligee against loss in respect thereof (in
whole or in part). The term "Guarantee" used as a verb has a corresponding
meaning.
"GOVERNMENTAL AUTHORIZATION" means any permit, license, authorization,
plan, directive, consent order or consent decree of or from any federal, state
or local governmental authority, agency or court.
"GOVERNMENT GUARANTEED LOAN" means the loan made to the Company
pursuant to the Air Carrier Guarantee Loan Documents, a portion of which is
guaranteed by the full faith and credit of the United States Government or an
agency thereof and the balance of which may be guaranteed by one or more other
third parties pursuant to the Air Carrier Guarantee Loan Documents.
"GOVERNMENT GUARANTEED LOAN AGREEMENT" means the Loan Agreement, dated
as of January 18, 2002, among the Company, the lenders, the loan administrator
and agent party thereto and The Air Transportation Stabilization Board.
"GOVERNMENT GUARANTEED LOAN TERM SHEET" means the term sheet provided
by the Company to the Agent and the Lenders, setting forth the material economic
and business terms and conditions of the Government Guaranteed Loan.
"HAZARDOUS MATERIALS" means any chemical or other material or
substance, exposure to which or Release of is now or hereafter prohibited,
limited or regulated under any law.
"HAZARDOUS MATERIALS ACTIVITY" means any past, current, proposed, or
threatened use, storage, release, generation, treatment, remediation or
transportation of any Hazardous Material (i) from, under, in, into or on the
Facilities or surrounding property; and (ii) caused by, or undertaken by or on
behalf of, the Company, any of its Subsidiaries or any of their respective
predecessors.
"HOLDINGS" means America West Holdings Corporation.
"INDEBTEDNESS" means, with respect to any Person at any date of
determination (without duplication), (i) all indebtedness of such Person for
borrowed money; (ii) all obligations of such Person evidenced by bonds,
debentures, notes or other similar instruments; (iii) all
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obligations of such Person in respect of letters of credit or other similar
instruments (including reimbursement obligations with respect thereto); (iv) all
obligations of such Person to pay the deferred and unpaid purchase price of
property or services, which purchase price is due more than six months after the
date of placing such property in service or taking delivery and title thereto or
the completion of such services, except Trade Payables; (v) all Capitalized
Lease obligations of such Person (the amount of the Indebtedness with respect to
Capitalized Lease obligations to be determined as provided in the definition of
Capitalized Lease in this subsection 1.1); (vi) all Indebtedness of other
Persons secured by a Lien on any asset of such Person, whether or not such
Indebtedness is assumed by such Person; provided that the amount of such
Indebtedness shall be the lesser of (A) the fair market value of such asset at
such date of determination and (B) the stated principal amount of such
Indebtedness; (vii) all Indebtedness of other Persons Guaranteed by such Person
to the extent such Indebtedness is Guaranteed by such Person; and (viii) to the
extent not otherwise included in this definition and to the extent treated as a
liability under GAAP, obligations under Currency Agreements, Interest Rate
Agreements and Commodity Agreements. The amount of Indebtedness of any Person at
any date shall be the outstanding balance at such date of all unconditional
obligations as described above and the maximum liability, upon the occurrence of
the contingency giving rise to the obligation, of any contingent obligations at
such date; provided that the amount outstanding at any time of any Indebtedness
issued with original issue discount is the face amount of such Indebtedness less
the remaining unamortized portion of the original issue discount of such
Indebtedness at such time as determined in conformity with GAAP.
"INDEMNITEE" has the meaning assigned to that term in subsection 9.3.
"INSURANCE PROCEEDS" has the meaning assigned to that term in
subsection 2.9B(iii)(c).
"INTEREST PAYMENT DATE" means (i) with respect to any Base Rate Loan,
the last day of each month of each year, commencing on the first such date to
occur after the Closing Date, and (ii) with respect to any Eurodollar Rate Loan,
the last day of each Interest Period applicable to such Loan.
"INTEREST PERIOD" has the meaning assigned to that term in subsection
2.2B.
"INTEREST RATE AGREEMENT" means any interest rate future agreement,
interest rate option agreement, interest rate swap agreement, interest rate cap
agreement, interest rate collar agreement, interest rate hedge agreement or
other similar agreement or arrangement designed to protect the Company or any of
its Subsidiaries against fluctuations in interest rates or under which the
Company or any of its Subsidiaries is a party or a beneficiary on the date of
this Agreement or becomes a party or a beneficiary thereafter.
"INTEREST RATE DETERMINATION DATE" means, with respect to any Interest
Period, the second Business Day prior to the first day of such Interest Period.
"INTERNAL REVENUE CODE" means the Internal Revenue Code of 1986, as
amended to the date hereof and from time to time hereafter.
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"INVESTMENT" means with respect to any Person, any direct or indirect
advance, loan (other than advances to customers in the ordinary course of
business consistent with past practices that are recorded as accounts receivable
on the balance sheet of such Person or its Subsidiaries) or other extension of
credit or capital contribution by such Person to any other Person (by means of
any transfer of cash or other property to others or any payment for property or
services for the account or use of others; provided, that any transfer of
aircraft to a limited partnership or other entity in connection with the
transaction in which the aircraft are leased to the Company shall not be an
Investment), or any purchase or acquisition by such person of Capital Stock,
bonds, notes, debentures or other similar instruments issued by any other
Person; provided, that advances or loans by the Company to Holdings shall not
constitute an Investment.
"JOINT VENTURE" means a joint venture, partnership or other similar
arrangement, whether in corporate, partnership or other legal form; provided
that in no event shall any corporate Subsidiary of any Person be considered to
be a Joint Venture to which such Person is a party.
"LEASE INDENTURE" means the Indenture, dated as of January 18, 2002,
between Wilmington Trust Company, as Indenture Trustee, and Holdings.
"LEASE INDENTURE TERM SHEET" means the term sheet provided by the
Company to the Agent and the Lenders, setting forth the material economic and
business terms and conditions of the Lease Indenture.
"LENDER" and "LENDERS" means the persons identified as "Lenders" and
listed on the signature pages of this Agreement, together with their successors
and permitted assigns pursuant to subsection 9.1.
"LIEN" means any lien, mortgage, pledge, assignment, security interest,
charge, hypothecation, preference, priority, privilege, lease or encumbrance of
any kind (including any conditional sale or other title retention agreement, any
lease in the nature thereof, and any agreement to give any security interest);
provided, that neither negative pledges nor covenants to abstain from granting
liens on or security interests in assets of the Company or any of its
Subsidiaries shall constitute Liens.
"LOAN" or "LOANS" means the term loans made by each Lender to the
Company and evidenced by the Term Notes.
"LOAN DOCUMENTS" means this Agreement, the Notes, the Environmental
Indemnity Agreement, the Security Agreements and any letter agreement between
the Company and the Agent establishing fees payable by the Company to the Agent
in connection with this Agreement.
"MAINTENANCE FACILITY" means an aircraft maintenance facility, all
right, title and interest of the Company in and to the real property on which
the maintenance facility is located and the other improvements on such real
property, in each case that have been made subject to the Lien of the
Maintenance Facility Security Agreement.
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"MAINTENANCE FACILITY SECURITY AGREEMENT" means the Leasehold Deed of
Trust, Security Agreement, Assignment of Rents, Financing Statement and Fixture
Filing, dated as of December 12, 1997, by the Company to First American Title
Insurance Company, as Trustee for the Agent, as such Maintenance Facility
Security Agreement may be amended, restated, supplemented or otherwise modified
from time to time in accordance with the terms hereof and thereof.
"MARGIN STOCK" has the meaning assigned to that term in Regulation T, U
or X of the Board of Governors of the Federal Reserve System as in effect from
time to time.
"MOODY'S" means ▇▇▇▇▇'▇ Investors Service, Inc.
"NET CASH PROCEEDS" means, with respect to any Asset Sale, the Cash
Proceeds of such Asset Sale, net of (i) brokerage commissions and other fees and
expenses (including fees and expenses of counsel and investment bankers) related
to such Asset Sale, (ii) provisions for all taxes payable as a result of such
Asset Sale without regard to the consolidated results of operations of the
Company and its Subsidiaries, take as a whole, (iii) payments made to repay
Indebtedness or any other obligation outstanding at the time of such Asset Sale
that either (A) is secured by a Lien on the property or assets sold or (B) is
required by its own terms to be paid as a result of such Asset Sale, and (iv)
appropriate amounts to be provided by the Company or any Subsidiary of the
Company as a reserve against any liabilities associated with such Asset Sale,
including, without limitation, pension and other post-employment benefit
liabilities, liabilities related to environmental matters and liabilities under
any indemnification obligations associated with such Asset Sale, all as
determined in conformity with GAAP.
"NON-US LENDER" has the meaning assigned to that term in subsection
2.7B(iii)(a).
"NOTES" means (i) the Term Notes of the Company issued pursuant to
subsection 2.1D, (ii) any Term Notes issued by the Company pursuant to the last
sentence of subsection 9.1B(i) in connection with assignments of the Loans of
any Lenders, in each case substantially in the form of Exhibit III annexed
hereto, as they may be amended, supplemented or otherwise modified from time to
time and (iii) the PIK Notes.
"NOTICE OF CONVERSION/CONTINUATION" means a notice substantially in the
form of Exhibit II annexed hereto delivered by the Company to the Agent pursuant
to subsection 2.2D with respect to a proposed conversion or continuation of the
applicable basis for determining the interest rate with respect to the Loans
specified therein.
"OBLIGATIONS" means all payment and performance obligations of every
nature of the Company from time to time owed to the Agent, the Lenders or any of
them under the Loan Documents, whether for principal, interest, fees, expenses,
indemnification or otherwise.
"OFFICER'S CERTIFICATE" means, as applied to any corporation, a
certificate executed on behalf of such corporation by its chairman of the board
(if an officer), president, one of its vice presidents, chief financial officer,
controller, treasurer or assistant treasurer or an assistant secretary; provided
that every Officer's Certificate shall include (i) a statement that the
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officer acting in such capacity making or giving such Officer's Certificate has
read such condition and any definitions or other provisions contained in this
Agreement relating thereto, (ii) a statement that, in the opinion of the signer,
s/he has made or has caused to be made such examination or investigation as is
necessary to enable her/him to express an informed opinion as to whether or not
such condition has been complied with, and (iii) a statement as to whether, in
the opinion of the signer, such condition has been complied with.
"OPERATING LEASE" means, as applied to any Person, any lease
(including, without limitation, leases that may be terminated by the lessee at
any time) of any property (whether real, personal or mixed) under which such
Person is Lessee, that is not a Capital Lease.
"PARTS COLLATERAL" has the meaning given such term in the Spare Parts
Security Agreement.
"PAYMENT RESTRICTION" means, with respect to a Subsidiary of any
Person, any encumbrance, restriction or limitation, whether by operation of the
terms of its charter or by reason of any agreement, instrument, judgment,
decree, order, statute, rule or governmental regulation, on the ability of (i)
such Subsidiary to (a) pay dividends or make other distributions on its Capital
Stock or make payments on any obligation, liability or Indebtedness owed to such
Person or any other Subsidiary of such Person, (b) make loans or advances to
such Person or any other Subsidiary of such Person, or (c) transfer any of its
property or assets to such Person or any other Subsidiary of such Person, or
(ii) such Person or any other Subsidiary of such Person to receive or retain any
such (a) dividend, distributions or payments, (b) loans or advances, or (c)
property or assets.
"PERMITTED CASH EQUIVALENTS" means, at any date of determination, (i)
certificates of deposit or bankers' acceptances maturing within one year after
such date and issued or accepted by the Agent and (ii) subject to agreement of
the Agent and the Company to mutually satisfactory custodial arrangements, other
Cash Equivalents (except that commercial paper described in clause (b)(iii) of
the definition of Cash Equivalents shall have a rating of at least A-1 from S&P
or P-1 from ▇▇▇▇▇'▇).
"PERMITTED ENCUMBRANCES" means the following types of Liens (other than
any such Lien imposed pursuant to Section 401(a)(29) or 412(n) of the Internal
Revenue Code or by ERISA) as applied to property not constituting Collateral:
(i) Liens for taxes, assessments or governmental charges or
claims the payment of which is either (a) not delinquent for a period
of more than 30 days or (b) subject to a good faith contest as set
forth in subsection 5.3(A);
(ii) statutory Liens of landlords and Liens of carriers,
vendors, warehousemen, repairmen, mechanics and materialmen and other
Liens imposed by law incurred in the ordinary course of business for
sums either (a) not delinquent for a period of more than 30 days or (b)
being contested in faith by appropriate proceedings that do not involve
imminent danger of the sale, forfeiture or loss of any Collateral, if
such reserve or other appropriate provision, if any, as shall required
by GAAP shall have been made therefor;
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(iii) Liens incurred or deposits made in the ordinary course
of business in connection with workers' compensation, unemployment
insurance and other types of social security, or to secure the
performance of tenders, statutory obligations, surety and appeal bonds,
bids, leases, government contracts, trade contracts, performance and
return-of-money bonds, reimbursement obligations and chargeback rights
of Persons performing services for the Company or any of its
Subsidiaries and other similar obligations (exclusive of obligations
for the payment of borrowed money);
(iv) easements, rights-of-way, restrictions, minor defects,
encroachments or irregularities in title and other similar charges or
encumbrances not interfering in any material respect with the ordinary
conduct of the business of the Company or any of its Subsidiaries;
(v) Liens arising from filing effective Uniform Commercial
Code financing statements relating solely to leases not prohibited by
this Agreement;
(vi) Liens in favor of customs and revenue authorities arising
as a matter of law to secure payment of customs duties in connection
with the importation of goods;
(vii) Liens described in Schedule 6.2 annexed hereto;
(viii) Liens granted pursuant to the Security Agreements;
(ix) judgment and attachment Liens not giving rise to an Event
of Default;
(x) Liens on the assets of any entity or asset existing at the
time such entity is acquired by the Company or any Subsidiary, whether
by merger, consolidation, purchase of assets or otherwise; provided
that such Liens (i) are not created, incurred or assumed by such entity
in contemplation of such entity's being acquired by the Company or any
Subsidiary; (ii) do not extend to any other assets of the Company or
any Subsidiary; and (iii) the Indebtedness secured by such Lien is
permitted pursuant to this Agreement;
(xi) leases or subleases granted to others not interfering in
any material respect with the business of the Company or any
Subsidiary;
(xii) any interest or title of a lessor in property subject to
any Capital Lease obligation or Operating Lease which, in each case, is
not prohibited under this Agreement (disregarding for this purpose
subsection 6.2);
(xiii) Liens in favor of collecting or payor banks having a
right of setoff, revocation, refund or chargeback with respect to money
or instruments of the Company or any Subsidiary on deposit with or in
possession of such bank;
(xiv) any renewal of or substitution for any Lien permitted by
any of the preceding clauses; provided that the debt secured is not
increased nor the Lien extended to any additional assets; and
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(xv) Liens of creditors of any Person to whom any of the
Company's assets are consigned for sale.
"PERMITTED LIEN" with respect to any Collateral, has the meaning given
such term in the Security Agreement to which such Collateral is subject.
"PERSON" means and includes natural persons, corporations, limited
partnerships, general partnerships, joint stock companies, limited liability
companies, Joint Ventures, associations, companies, trusts, banks, trust
companies, land trusts, business trusts or other organizations, whether or not
legal entities, and governments and agencies and political subdivisions thereof.
"PIK NOTES" means the promissory notes of the Company in favor of each
Lender, in each case in substantially the form of Exhibit III-A hereto, with
appropriate insertions and deletions, as they may be amended, supplemented or
otherwise modified from time to time .
"PLAN" means any "employee benefit plan" as defined in Section 3(3) of
ERISA which is, or was at any time, maintained or contributed to by the Company
or any of its ERISA Affiliates, other than a multiemployer plan, within the
meaning of Section 4001(a)(3) of ERISA.
"POTENTIAL EVENT OF DEFAULT" means a condition or event that, after
notice or the passage of time or both, would constitute an Event of Default.
"PRIME RATE" means the rate that The Industrial Bank of Japan, Limited,
announces from time to time as its prime lending rate at its New York City
office, as in effect from time to time. The Prime Rate is a reference rate and
does not necessarily represent the lowest or best rate actually charged to any
customer. The Industrial Bank of Japan, Limited or any Lender may make
commercial loans or other loans at rates of interest at, above or below the
Prime Rate.
"PRINCIPAL PAYMENT DATE" means each of December 31, 2005, December 31,
2006 and the Termination Date.
"PRO FORMA BASIS" means, with respect to compliance with any covenant
hereunder, compliance with such covenant after giving effect to any proposed
incurrence of Indebtedness by the Company or any of its Subsidiaries and the
application of the proceeds thereof, the acquisition (whether by purchase,
merger or otherwise) or disposition (whether by sale, merger or otherwise) of
any company, entity or business or any asset by the Company or any of its
Subsidiaries or any other related action which requires compliance on a Pro
Forma Basis. In making any determination of compliance on a Pro Forma Basis,
such determination shall be performed after good faith consultation with the
Agent using the consolidated financial statements of the Company and its
Subsidiaries which shall be reformulated as if any such incurrence of
Indebtedness and the application of proceeds, acquisition, disposition or other
related action had been consummated at the beginning of the period specified in
the covenant with respect to which Pro Forma Basis compliance is required.
"PRO RATA SHARE" means, with respect to each Lender, the percentage
obtained by dividing the outstanding principal amount of the Loan of that Lender
by the aggregate
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outstanding principal amount of the Loans of all Lenders, as such percentage may
be adjusted by assignments permitted pursuant to subsection 9.1. The initial Pro
Rata Share of each Lender is set forth opposite the name of that Lender in
Schedule 2.4 annexed hereto.
"PROCEEDINGS" has the meaning assigned to that term in subsection
5.1(x).
"RECEIVABLES SECURITY AGREEMENT" means a Receivables Security Agreement
substantially in the form of Exhibit B hereto, as such Receivables Security
Agreement may be amended, restated, supplemented or otherwise modified from time
to time in accordance with the terms hereof and thereof.
"REDEEMABLE STOCK" means any class or series of Capital Stock of any
Person that by its terms or otherwise (i) is required to be redeemed prior to
the Termination Date, (ii) may be required to be redeemed at the option of the
holder of such class or series of Capital Stock at any time prior to the
Termination Date, or (iii) is convertible into or exchangeable for Capital Stock
referred to in clause (i) or (ii) above or Indebtedness having a scheduled
maturity prior to the Termination Date; provided that any Capital Stock that
would not constitute Redeemable Stock but for provisions thereof offering
holders thereof the right to require the Company to repurchase or redeem such
Capital Stock upon the occurrence of an "asset sale" occurring prior to the
Termination Date shall not constitute Redeemable Stock if the asset sale
provisions contained in such Capital Stock specifically provide that in respect
of any particular asset sale proceeds, the Company will not repurchase or redeem
any such Capital Stock pursuant to such provisions prior to the Company's
permanent repayment of the Loans and other Obligations of the Lenders by an
amount at least equal to such asset sale proceeds (net of associated taxes and
transaction costs).
"REFERENCE LENDERS" means the Agent, Citicorp USA, Inc. and Bankers
Trust Company.
"REFINANCING INDEBTEDNESS" means any Indebtedness of the Company or any
of its Subsidiaries issued in exchange for, or the net proceeds of which are
applied entirely to substantially concurrently repay, refinance, refund or
replace, outstanding Indebtedness of the Company or any of its Subsidiaries (the
"Refinanced Indebtedness"), to the extent such Refinancing Indebtedness:
(a) is issued in a principal amount (or if such Indebtedness
is issued at an original issue discount, is issued at an original issue
price) not exceeding the outstanding principal amount (or, if such
Refinanced Indebtedness was issued at an original issue discount, not
exceeding the outstanding accreted principal amount) of such Refinanced
Indebtedness; and
(b) if the Refinanced Indebtedness is Indebtedness of the
Company and ranks by contract, by its terms or otherwise junior in
right of payment to the Obligations, (i) does not have a final
scheduled maturity and is not subject to any principal payments,
including but not limited to payments upon mandatory or optional
redemption, prior to the dates of analogous payments under the
Refinanced Indebtedness, and (ii) has subordination provisions
effective to subordinate such Indebtedness to the Obligations at
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least to the extent that such Refinanced Indebtedness is subordinated
to the Obligations; and
(c) if the Refinanced Indebtedness is Indebtedness of the
Company which is pari passu in right of payment with the Obligations,
(i) is pari passu or subordinated in right of payment to the
Obligations, (ii) does not have a final scheduled maturity and is not
subject to any principal payments, including but not limited to,
payments upon mandatory or optional redemption, prior to the final
scheduled maturity date of the Refinanced Indebtedness, and (iii) is
not secured by any Lien on any property of the Company or any
Subsidiary in addition to Liens securing the Refinanced Indebtedness;
and
(d) with respect to Refinancing Indebtedness that refinances
the Government Guaranteed Loan or the debt issued pursuant to the Lease
Indenture, such Refinancing Indebtedness shall not (i) shorten the
final maturity date of such Refinanced Indebtedness, (ii) require the
acceleration of the final scheduled maturity date or any principal
payments, including but not limited to scheduled payments and mandatory
prepayments, or increase the principal amount payable on any date
(including, without limitation, pursuant to mandatory prepayments)
prior to the dates of analogous payments under such Refinanced
Indebtedness, (iii) provide for an interest rate applicable to such
Refinancing Indebtedness, plus the interest rate equivalent of all fees
and costs associated with closing and servicing such Refinancing
Indebtedness higher than the greater of (x) (I) if such Refinancing
Indebtedness bears interest at a floating rate of interest, 105% of the
average remaining interest rate applicable to the Refinanced
Indebtedness plus the average remaining fees and costs associated with
servicing the Refinanced Indebtedness, or (II) if such Refinancing
Indebtedness bears interest at a fixed rate of interest, the amount
calculated as the sum of clause (I) above plus the appropriate
fixed-for-floating swap rate for the Refinancing Indebtedness, and (y)
105% of the average remaining "all in" interest expense for the
Refinanced Indebtedness as contemplated in the Restructuring Plan.
"REGISTER" has the meaning assigned to that term in subsection 2.1.E.
"REGULATION D" means Regulation D of the Board of Governors of the
Federal Reserve System, as in effect from time to time.
"RELEASE" means any release, spill, emission, leaking, pumping,
pouring, injection, escaping, deposit, disposal, discharge, dispersal, dumping,
leaching or migration of Hazardous Materials into the indoor or outdoor
environment (including, without limitation, the abandonment or disposal of any
barrels, containers or other closed receptacles containing any Hazardous
Materials), or into or out of any Facilities, including the movement of any
Hazardous Material through the air, soil, surface water, groundwater or
property.
"REPAIRABLE DAMAGE" with respect to any Borrowing Base Collateral
(other than Rotables) means any damage to such Borrowing Base Collateral the
repair of which is reasonably estimated by the Company to cost 50% or less of
the Fair Market Value of such Borrowing Base Collateral.
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"REQUISITE LENDERS" means at any time Lenders owed or holding a
majority in interest of the aggregate principal amount of the Loans of all
Lenders.
"RESPONSIBLE OFFICER" means, with respect to the Company, its
controller, treasurer, president or any vice president.
"RESTRICTED PAYMENT" means (i) any declaration or payment of dividends
on or making of any distributions in respect of the Capital Stock of the Company
(other than dividends or distributions payable solely in shares of Capital Stock
(other than Redeemable Stock) or in options, warrants, or other rights to
purchase Capital Stock (other than Redeemable Stock)) to holders of Capital
Stock of the Company, (ii) any purchase, redemption or other acquisition or
retirement for value (other than through the issuance solely of Capital Stock
(other than Redeemable Stock) or options, warrants or other rights to purchase
Capital Stock (other than Redeemable Stock)) of any Capital Stock or warrants,
rights (other than exchangeable or convertible Indebtedness of the Company not
prohibited under clause (iii) below) or options to acquire Capital Stock of the
Company; (iii) any redemption, repurchase, defeasance (including, but not
limited to, in substance or legal defeasance), or other acquisition or
retirement for value (other than through the issuance solely of Capital Stock
(other than Redeemable Stock) or warrants, rights or options to acquire Capital
Stock (other than Redeemable Stock)) (collectively, a "prepayment"), directly or
indirectly (including by way of amendment of the terms of any Indebtedness in
connection with any retirement or acquisition of such Indebtedness), other than
at any scheduled maturity thereof or by any scheduled repayment or scheduled
sinking fund payment or any mandatory prepayment, of any Indebtedness of the
Company (other than a repayment of Indebtedness relating to aircraft (including
aircraft engines installed thereon), spare aircraft engines, aircraft parts,
simulators, passenger loading bridges or other flight or ground support
equipment that is being repaid pursuant to a sale-leaseback transaction
permitted by Section 6.7 of this Agreement) which is subordinated in right of
payment to the Obligations or which matures after the Termination Date (except
out of the proceeds of Refinancing Indebtedness) and (iv) any advances or loans
by the Company to Holdings.
"RESTRUCTURING PLAN" means the seven year plan of the Company, as
provided by the Company to the Agent and the Lenders.
"ROTABLES" means Parts Collateral at Designated Locations.
"S&P" means Standard & Poor's Ratings Group, a division of McGraw Hill,
Inc.
"SECURITIES ACT" means the Securities Act of 1933, as amended from time
to time, and any successor statute.
"SECURITY AGREEMENTS" means, collectively, the Aircraft Security
Agreements, Spare Engine Security Agreement, Cash and Cash Equivalent Security
Agreement, Maintenance Facility Security Agreement, Spare Parts Security
Agreement and the Receivables Security Agreement.
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"SENIOR NOTES" means the Company's 10--3/4% Senior Unsecured Notes Due
September 1, 2005 issued pursuant to an Indenture, dated as of August 1995,
between the Company and American National Bank National Association, as trustee.
"SIMULATORS" means each Eligible Simulator from time to time subject to
the Lien of the Spare Engine Security Agreement.
"SOLVENT" means, with respect to any Person, that as of the date of
determination both (A) (i) the then fair saleable value of the property of such
Person is (y) greater than the total amount of liabilities (including contingent
liabilities) of such Person and (z) not less than the amount that will be
required to pay the probable liabilities on such Person's then existing debts as
they become absolute and matured considering all financing alternatives and
potential asset sales reasonably available to such Person; (ii) such Person's
capital is not unreasonably small in relation to its business or any
contemplated or undertaken transaction; and (iii) such Person does not intend to
incur, or believes that it will not incur, debts beyond its ability to pay such
debts as they become due; and (B) such Person is "solvent" within the meaning
given that term and similar terms under applicable laws relating to fraudulent
transfers and conveyances. For purposes of this definition, the amount of any
contingent liability at any time shall be computed as the amount that, in light
of all of the facts and circumstances existing at such time, represents the
amount that can reasonably be expected to become an actual or matured liability.
"SPARE ENGINE" means each Eligible Spare Engine from time to time
subject to the Lien of the Spare Engine Security Agreement.
"SPARE ENGINE SECURITY AGREEMENT" means the Spare Engine and Simulator
Security Agreement dated as of December 12, 1997, between the Company and the
Agent, as amended and supplemented as of the date hereof and as such Spare
Engine Security Agreement may be amended, restated, supplemented or otherwise
modified from time to time in accordance with the terms hereof and thereof.
"SPARE PARTS SECURITY AGREEMENT" means the Spare Parts Security
Agreement dated as of December 12, 1997, between the Company and the Agent, as
amended and supplemented as of the date hereof and as such Spare Parts Security
Agreement may be amended, restated, supplemented or otherwise modified from time
to time in accordance with the terms hereof and thereof.
"STAGE III AIRCRAFT" means each Eligible Stage III Aircraft that is an
Aircraft.
"SUBSIDIARY" means, with respect to any Person, any corporation,
partnership, association, limited liability company, trust or estate, joint
venture or other business entity of which more than 50% of the issued and
outstanding shares of Voting Stock at the time of determination are owned or
controlled, directly or indirectly, by that Person or one or more of the other
Subsidiaries of that Person or a combination thereof.
"SYNDICATION AGENT" means Citicorp USA, Inc.
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"TAX" or "TAXES" means any present or future tax, levy, impost, duty,
charge, fee, deduction or withholding of any nature and whatever called, by
whomsoever, on whomsoever and wherever imposed, levied, collected, withheld or
assessed; provided that "TAX ON THE OVERALL NET INCOME" of a Person shall be
construed as a reference to a tax imposed by the jurisdiction in which that
Person's principal office (and/or, in the case of a Lender, its lending office)
is located.
"TERM NOTES" means the promissory notes of the Company in favor of each
Lender, in each case in substantially the form of Exhibit III hereto, with
appropriate insertions and deletions, as they may be amended, supplemented or
otherwise modified from time to time
"TERMINATION DATE" means the earlier of December 31, 2007 and the date
of the acceleration of the Obligations pursuant to Section 7 hereof.
"TRADE PAYABLES" means, with respect to any Person, any accounts
payable or any other indebtedness or monetary obligation to trade creditors
created, assumed or Guaranteed by such Person or any of its Subsidiaries and
arising in the ordinary course or business in connection with the acquisition of
goods or services.
"UNITED STATES CITIZEN" has the meaning assigned to that term in
subsection 4.1B.
"VOTING STOCK" means any class or classes of Capital Stock pursuant to
which the holders thereof have the general voting power under ordinary
circumstances to vote for the election of directors, managers or trustees of any
Person (or Persons performing similar functions) irrespective of whether or not
at the time stock of any class or classes will have or might have such voting
power by the reason of the happening of any contingency.
"WHOLLY OWNED" denotes a Subsidiary all of the Voting Stock of which
(other than any director's qualifying shares or Investments by foreign nationals
mandated by applicable law) is owned directly or indirectly by the Company.
1.2 ACCOUNTING TERMS; UTILIZATION OF GAAP FOR PURPOSES OF CALCULATIONS
UNDER AGREEMENT.
Except as otherwise expressly provided in this Agreement, all
accounting terms not otherwise defined herein shall have the meanings assigned
to them in conformity with GAAP. Each reference to a consolidated balance sheet
or other financial statement of the Company shall, at any time or for any period
during which the Company has no Subsidiaries, be deemed to mean and refer to a
balance sheet or other financial statement of the Company alone.
1.3 OTHER DEFINITIONAL PROVISIONS.
References to "Sections" and "subsections" shall be to Sections and
subsections, respectively, of this Agreement unless otherwise specifically
provided. Any of the terms defined in subsection 1.1 may, unless the context
otherwise requires, be used in the singular or the plural, depending on the
reference. All references to the "Term Loan Agreement", "Amended and
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Restated Credit Agreement" or any similar term of like meaning in any Loan
Document shall mean and refer to this Agreement, as amended, modified, waived or
restated from time to time.
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SECTION 2.
AMOUNTS AND TERMS OF THE TERM LOAN
2.1 THE TERM LOAN; NOTES; REGISTER.
A. THE TERM LOAN. Subject to the terms and conditions of this Agreement
and in reliance upon the representations and warranties of the Company herein
set forth, each Lender hereby agrees to maintain the Loans all as described in
this subsection 2.1A. Each Lender's Loan shall be deemed to have been advanced
under the Existing Credit Agreement, and the principal amount owed to each
Lender on the Closing Date under the Existing Credit Agreement shall be the
principal amount of the Loan owed to such Lender, which such amount is set forth
on Schedule 2.4 hereto. Amounts repaid or prepaid under this Agreement may not
be reborrowed.
B. NOTES. On the Closing Date, the Company shall execute and deliver to
each Lender (or to the Agent on behalf of each Lender) Notes substantially in
the form of Exhibit III and Exhibit III-A annexed hereto to evidence that
Lender's Loans in the principal amount of the Loans attributable to such Lender
outstanding under the Existing Credit Agreement and with other appropriate
insertions and the Company's Obligations under the PIK Notes.
C. THE REGISTER.
(i) The Agent shall maintain, at its address referred to in
subsection 9.8, a register for the registration of the names and
addresses of the Lenders and Loans and PIK Notes of each Lender from
time to time (the "REGISTER"). The Register shall be available for
inspection by the Company or any Lender at any reasonable time and from
time to time upon reasonable prior notice.
(ii) The Agent shall record in the Register the Loans from
time to time of each Lender and each repayment or prepayment in respect
of the principal amount of the Loans and the PIK Notes. Any such
recordation shall be conclusive and binding on the Company and each
Lender, absent manifest error; provided that failure to make any such
recordation, or any error in such recordation, shall not affect the
Company's Obligations in respect of the applicable Loans and PIK Notes.
(iii) Each Lender shall record on its internal records
(including, without limitation the applicable Notes held by such
Lender) the amount of the Loans made by it, PIK Notes held by it and
each payment or other reduction in respect thereof. Any such
recordation shall be conclusive and binding on the Company, absent
manifest error; provided that failure to make any such recordation, or
any error in such recordation, shall not affect the Company's
Obligations in respect of the applicable Loans and PIK Notes; and
provided, further, that in the event of any inconsistency between the
Register and any Lender's records, the recordations in the Register
shall govern.
(iv) The Company, the Agent and the Lenders shall deem and
treat the Persons listed as Lenders and holders of the PIK Notes in the
Register as the holders and owners of the corresponding Loans and PIK
Notes listed therein for all purposes hereof, and no
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assignment or transfer of any such Loans or PIK Notes shall be
effective, in each case unless and until an Assignment Agreement
effecting the assignment or transfer thereof shall have been accepted
by the Agent and recorded in the Register as provided in subsection
9.1B(ii). Prior to such recordation, all amounts owed with respect to
the applicable Loans and PIK Notes shall be owed to the Lender and
holders of PIK Notes listed in the Register as the owner thereof, and
any request, authority or consent of any Person who, at the time of
making such request or giving such authority or consent, is listed in
the Register as a Lender or holder of a PIK Note shall be conclusive
and binding on any subsequent holder, assignee or transferee of the
corresponding Loans and PIK Notes.
2.2 INTEREST ON THE LOANS.
A. RATE OF INTEREST. Subject to the provisions of subsections 2.6 and
2.7, the Loans shall bear interest on the unpaid principal amount thereof from
the date made through maturity (whether by acceleration or otherwise) at a rate
determined by reference to the Base Rate or the Adjusted Eurodollar Rate, as the
case may be. The applicable basis for determining the rate of interest with
respect to the Loans shall be selected by the Company; provided, however, that
initially as of the Closing Date all of the Loans shall be Eurodollar Rate
Loans. The basis for determining the interest rate with respect to the Loans may
be changed from time to time pursuant to subsection 2.2D. If on any day a Loan
is outstanding with respect to which notice has not been delivered to the Agent
in accordance with the terms of this Agreement specifying the applicable basis
for determining the rate of interest, then for that day that Loan shall bear
interest determined by reference to the Base Rate.
Subject to the provisions of subsection 2.2E and 2.7, the Loans shall
bear interest through maturity as follows:
(i) if a Base Rate Loan, then at a rate per annum equal to the
sum of the Base Rate plus the Applicable Margin; or
(ii) if a Eurodollar Rate Loan, then at a rate per annum equal
to the sum of the Adjusted Eurodollar Rate plus the Applicable Margin.
B. INTEREST PERIODS. In connection with each Eurodollar Rate Loan, the
interest period (the "INTEREST PERIOD") to be applicable to such Loan, shall be
a one-month period; provided that:
(i) each Interest Period shall commence on the day on which
the next preceding Interest Period expires, or on the date specified in
the applicable Notice of Conversion/Continuation, in the case of a Loan
converted to a Eurodollar Rate Loan, provided that the initial Interest
Period shall commence on the Closing Date, and the Company shall pay
any breakage amounts pursuant to Section 2.6D in connection with the
termination of any Interest Period under the Existing Credit Agreement;
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(ii) if an Interest Period would otherwise expire on a day
that is not a Business Day, such Interest Period shall expire on the
next succeeding Business Day; provided that, if any Interest Period
would otherwise expire on a day that is not a Business Day but is a day
of the month after which no further Business Day occurs in such month,
such Interest Period shall expire on the next preceding Business Day;
(iii) any Interest Period that begins on the last Business Day
of a calendar month (or on a day for which there is no numerically
corresponding day in the calendar month at the end of such Interest
Period) shall, subject to clause (iv) of this subsection 2.2B, end on
the last Business Day of a calendar month; and
(iv) no Interest Period shall extend beyond the scheduled
Termination Date.
C. INTEREST PAYMENTS. Subject to the provisions of subsection 2.2E,
interest on each Loan shall be payable in arrears on and to, but not including,
each Interest Payment Date applicable to that Loan, upon any prepayment of that
Loan (to the extent accrued on the amount being prepaid) and at maturity
(including final maturity).
D. CONVERSION OR CONTINUATION. Subject to the provisions of subsection
2.6, the Company shall have the option (i) to convert at any time all (but not
less than all) of the outstanding Loans from Loans bearing interest at a rate
determined by reference to one basis to Loans bearing interest at a rate
determined by reference to an alternative basis or (ii) upon the expiration of
any Interest Period applicable to a Eurodollar Rate Loan, to continue all (but
not less than all) of the Loans as a Eurodollar Rate Loan. A Eurodollar Rate
Loan converted into a Base Rate Loan on any day other than the last day of an
Interest Period applicable thereto shall be subject to breakage fees in
accordance with Section 2.6D.
The Company shall deliver a Notice of Conversion/Continuation to the
Agent no later than 12:00 noon (New York time) on the proposed conversion date
(in the case of a conversion to a Base Rate Loan) and at least three Business
Days in advance of the proposed conversion/continuation date (in the case of a
conversion to, or a continuation of, a Eurodollar Rate Loan). A Notice of
Conversion/Continuation shall specify (i) the proposed conversion/continuation
date (which shall be a Business Day), (ii) the amount and type of the Loan to be
converted/continued, (iii) the nature of the proposed conversion/continuation,
and (iv) in the case of a conversion to, or a continuation of, a Eurodollar Rate
Loan, that no Potential Event of Default or Event of Default has occurred and is
continuing.
Neither the Agent nor any Lender shall incur any liability to the
Company in acting upon any notice referred to above that the Agent believes in
good faith to have been given by a duly authorized officer or other person
authorized to act on behalf of the Company or for otherwise acting in good faith
under this subsection 2.2D, and upon conversion or continuation of the
applicable basis for determining the interest rate with respect to any Loans in
accordance with this Agreement pursuant to any such notice the Company shall
have effected a conversion or continuation, as the case may be, hereunder.
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Except as otherwise provided in subsections 2.6B, 2.6C and 2.6G, a
Notice of Conversion/Continuation for conversion to, or continuation of, a
Eurodollar Rate Loan shall be irrevocable on and after the related Interest Rate
Determination Date, and the Company shall be bound to effect a conversion or
continuation in accordance therewith.
E. DEFAULT RATE. Any amounts not paid when due hereunder or under any
other Loan Document, including, but not limited to, outstanding principal of a
Loan or under a PIK Note and, to the extent permitted by applicable law, any
interest payments thereon and any fees and other amounts, shall thereafter bear
interest payable upon demand from the date when due until the date of payment at
a rate which is 2% per annum in excess of the interest rate otherwise payable
under this Agreement with respect to the applicable Loans or PIK Notes (or, in
the case of any such fees and other amounts, at a rate which is 2% per annum in
excess of the interest rate otherwise payable under this Agreement for Base Rate
Loans); provided that, in the case of Eurodollar Rate Loans, upon the expiration
of the Interest Period in effect at the time any such increase in interest rate
is effective such Eurodollar Rate Loans shall thereupon become Base Rate Loans
and shall thereafter bear interest payable upon demand at a rate which is 2% per
annum in excess of the interest rate otherwise payable under this Agreement for
Base Rate Loans. Payment or acceptance of the increased rates of interest
provided for in this subsection 2.2E is not a permitted alternative to timely
payment and shall not constitute a waiver of any Event of Default or otherwise
prejudice or limit any rights or remedies of the Agent or any Lender.
F. COMPUTATION OF INTEREST. Interest on each Loan shall be computed on
the basis of a 360-day year, in each case for the actual number of days elapsed
in the period during which it accrues, unless such Loan is a Base Rate Loan with
a Base Rate based upon the Prime Rate, in which event interest shall be computed
on the basis of a year of 365 or 366 days, as the case may be, for the actual
number of days elapsed in the period during which it accrues. In computing
interest on any Loan, the date of the making of such Loan or the first day of an
Interest Period applicable to such Loan or, with respect to a Base Rate Loan
being converted from a Eurodollar Rate Loan, the date of conversion of such
Eurodollar Rate Loan to such Base Rate Loan, as the case may be, shall be
included, and the date of payment of such Loan or the expiration date of an
Interest Period applicable to such Loan or, with respect to a Base Rate Loan
being converted to a Eurodollar Rate Loan, the date of conversion of such Base
Rate Loan to such Eurodollar Rate Loan, as the case may be, shall be excluded
provided that if a Loan is repaid on the same day on which it is made, one day's
interest shall be paid on that Loan.
G. PAYMENT IN KIND NOTES
In addition to any other interest payable in respect of the Loans, the
Company shall pay interest in kind on the aggregate outstanding principal amount
of the Loans at a rate of two percent per annum (2%) from the Closing Date
through December 31, 2004. The payment of interest in kind shall be made by the
Company by executing and delivering PIK Notes to each Lender (or to the Agent on
behalf of the Lenders) on the Closing Date. The principal amount of each PIK
Note shall be set forth on the schedule thereto, which schedule shall be
conclusive absent manifest error. The Company shall pay interest in kind on the
PIK Notes on each Interest Payment Date at a rate equal to two percent per annum
(2%), which interest shall be compounded
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monthly and incorporated into the schedule to each PIK Note and shall be
conclusive absent manifest error.
On December 31, 2004, the Company shall pay the outstanding principal
amount of the PIK Notes in the amount set forth on the schedule to each PIK
Note; provided, that, so long as no Potential Event of Default or Event of
Default shall then have occurred and be continuing, the Company may elect to add
up to the entire principal amount of each Lender's PIK Note as of December 31,
2004 (as shown on the schedule to such PIK Note) to the principal amount of such
Lender's Loan and the Company shall issue a new Term Note to such Lender
reflecting such additional principal.
2.3 FEES.
The Company and the Agent shall enter into one or more letter
agreements establishing administrative fees payable by the Company to the Agent
for its administrative services hereunder which fees shall be for the account of
the Agent and not the Lenders.
2.4 PREPAYMENTS; GENERAL PROVISIONS REGARDING PAYMENTS
A. REPAYMENT OF PRINCIPAL AMOUNT OF LOANS. On each Principal Payment
Date, the Company shall pay to the Agent for the account of the Lenders the
principal amount of thirty million Dollars ($30,000,000), or, in the case of the
Termination Date, the aggregate outstanding principal amount of all Loans,
together on each such date with all accrued and unpaid interest thereon and all
fees and other amounts payable by the Company under this Agreement; provided,
that the payment on the Termination Date shall be in amount sufficient to repay
in full the PIK Notes and all other Obligations of the Company (other than those
Obligations which are contingent Obligations not then due and payable, such as
contingent indemnities).
B. PREPAYMENTS.
(i) Voluntary Prepayments. The Company may, with respect to Eurodollar
Rate Loans, upon not less than three Business Days' prior written notice given
to the Agent by 12:00 noon (New York time) on the date so required and, with
respect to Base Rate Loans and the PIK Notes, upon prior written notice given to
the Agent by 12:00 noon (New York time) on the date of prepayment, at any time
and from time to time prepay, without premium or penalty (other than pursuant to
subsection 2.6D, if applicable), any Loans and PIK Notes on any Business Day in
whole or in part in an aggregate minimum amount of $3,000,000 and integral
multiples of $100,000 in excess of that amount; provided, however, that a
Eurodollar Rate Loan may only be prepaid prior to the expiration date of the
Interest Period applicable thereto upon compliance with subsection 2.6D. Notice
of prepayment having been given as aforesaid, the principal amount of the Loans
and/or PIK Notes specified in such notice shall become due and payable on the
prepayment date specified therein. Any such voluntary prepayment shall be
applied as specified in subsection 2.4B(iii).
(ii) Mandatory Prepayments and Mandatory Reductions of Loans.
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(1) Prepayments Due to Reductions in Borrowing Base.
(a) If at any time there exists a Borrowing Base Deficiency, the Company shall
prepay, without premium or penalty (other than pursuant to subsection 2.6D),
amounts outstanding under the Loans in a principal amount sufficient to
eliminate the Borrowing Base Deficiency, together with accrued and unpaid
interest thereon, provided, that, if no Potential Event of Default (other than a
Potential Event of Default due to such Borrowing Base Deficiency) or Event of
Default shall have then occurred and be continuing, pursuant to subsection
2.10B(ii)(2) the Company may pledge Eligible Assets having an aggregate
appraised Fair Market Value sufficient to eliminate the Borrowing Base
Deficiency. Such prepayment (and collateral arrangements, if any) shall be made
not later than three (3) Business Days following the delivery of (x) a regularly
scheduled Borrowing Base Certificate delivered pursuant to subsection 2.10D
showing a Borrowing Base Deficiency or (y) an updated Borrowing Base Certificate
delivered pursuant to subsection 2.4B(ii)(1)(b), 2.4B(ii)(1)(c) or 7.11 showing
a Borrowing Base Deficiency.
(b) In addition to any notice required by subsection 5.1(xii), if an event
occurs that could reasonably be expected to cause loss of or substantial damage
to Borrowing Base Collateral (excluding Rotables), the Company shall deliver to
the Agent a written notice within three (3) Business Days after a Responsible
Officer of the Company obtains actual knowledge of such event. Such notice shall
identify the specific item(s) of such Borrowing Base Collateral subject to such
event of loss or damage, describe the nature of the event of loss or damage and
include an estimate of whether such loss or damage can reasonably be expected to
exceed $1,000,000. As soon as it can reasonably determine whether such event is
an Event of Loss, Event of Damage or Repairable Damage with respect to the
affected Borrowing Base Collateral but in any event not later than 30 days after
the Company's notice with respect to such event, the Company shall deliver to
the Agent an updated Borrowing Base Certificate in which the Company shall
certify that such event is either an Event of Loss, Event of Damage or
Repairable Damage, with respect to the item(s) of affected Borrowing Base
Collateral. If the Company fails to deliver such updated Borrowing Base
Certificate by such date, it shall be deemed to have delivered an updated
Borrowing Base Certificate as provided in this subsection 2.4B(ii)(1)(b)
certifying that such event is an Event of Loss of the affected Borrowing Base
Collateral. Such updated Borrowing Base Certificate shall exclude from the
Borrowing Base any such Borrowing Base Collateral subject to an Event of Loss,
Event of Damage or Repairable Damage, provided, however, that (1) any such
Borrowing Base Collateral other than the Maintenance Facility that has suffered
Repairable Damage shall not be excluded if (A) such Repairable Damage is covered
by insurance which will pay proceeds in at least the amount of the repair costs
(net of any permitted self-insurance and deductibles) and the Agent is the loss
payee of such insurance pursuant to the terms of the relevant Security
Agreement, each as certified by the Company in the updated Borrowing Base
Certificate and (B) the Company elects to repair such Borrowing Base Collateral
as certified in the updated Borrowing Base Certificate and (2) Borrowing Base
Collateral comprising the Maintenance Facility that has suffered Repairable
Damage shall not be excluded and the Borrower shall repair the Maintenance
Facility unless (A) the cost of such repair is likely to exceed $1,000,000 as
reasonably estimated by the Company, as certified by the Company in such updated
Borrowing Base Certificate, or by the Agent (following consultation, in the case
of the Agent, with an Approved Appraiser) by notice delivered by the Agent to
the Company and (B) the Repairable Damage is not covered by insurance which will
pay proceeds to
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the Agent, as loss payee, in at least the amount of the repair costs (net of any
permitted self-insurance and deductibles), as certified by the Company in such
updated Borrowing Base Certificate. If such updated Borrowing Base Certificate
shows a Borrowing Base Deficiency, the Company shall make a prepayment (and/or
provide collateral) as provided in subsection 2.4B(ii)(1)(a).
(c) If an event occurs that could reasonably be expected to cause an Adjustment
Event (as reasonably determined by the Company), the Company shall deliver to
the Agent a written notice within three (3) Business Days after a Responsible
Officer of the Company obtains actual knowledge of such event. Such notice shall
identify the location and type (to the extent reasonably possible) of the
affected Rotables, describe the event of loss or damage and include an estimate
of whether such loss or damage can reasonably be expected to exceed $1,000,000.
As soon as it can reasonably determine whether such event is an Adjustment Event
but in any event not later than 30 days after the Company's notice of such
event, the Company shall deliver to the Agent an updated Borrowing Base
Certificate in which the Company shall certify whether or not such event is an
Adjustment Event. If the Company fails to deliver such updated Borrowing Base
Certificate by such date, it shall be deemed to have delivered an updated
Borrowing Base Certificate certifying that such event is an Adjustment Event of
the affected Rotables. If such updated Borrowing Base Certificate certifies that
an Adjustment Event has occurred, it shall exclude from the Borrowing Base the
book value of the Rotables subject to the Adjustment Event and shall specify the
amount of such book value excluded for purposes of calculating the Borrowing
Base Value of the Rotables. If such updated Borrowing Base Certificate certifies
that an Adjustment Event has not occurred, it shall make an appropriate
adjustment in the book value of the affected Rotables, as certified in such
Borrowing Base Certificate, to take into account the loss or damage to the
affected Rotables and shall specify the amount of such adjustment for purposes
of calculating the Borrowing Base Value of the Rotables. (For the avoidance of
doubt, the Company shall make or not make adjustments to the book value of
Rotables subject to events of loss or damage not covered by this subsection
2.4B(ii)(1)(c) in accordance with its normal accounting procedures as applied
without regard to the procedures established in this subsection). If such
updated Borrowing Base Certificate shows a Borrowing Base Deficiency, the
Company shall make a prepayment (and/or provide collateral) as provided in
subsection 2.4B(ii)(1)(a).
(d) If the Company elects to repair any Borrowing Base Collateral (other than
the Maintenance Facility) subject to Repairable Damage and so certifies in any
Borrowing Base Certificate or, in the case of the Maintenance Facility only, is
required to repair Repairable Damage to the Maintenance Facility, the Company
shall complete such repair as soon as reasonably practicable.
(e) In any Borrowing Base Certificate delivered as provided in Subsection
2.4B(ii)(1)(b) which requires the exclusion of any Borrowing Base Collateral
pursuant to the terms of such Subsection, the Company may also request the
release of the Lien of the Security Agreement to which such Borrowing Base
Collateral is subject and, provided that no Potential Event of Default or Event
of Default then exists, as certified by the Company in such Borrowing Base
Certificate, and any Borrowing Base Deficiency certified in such Borrowing Base
Certificate is timely paid and additional Collateral (if any) is provided as
required by subsection 2.4B(ii)(1)(a), the Agent shall release such Lien on such
Borrowing Base Collateral simultaneously with the satisfaction of
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the conditions contained in this subsection 2.4B(ii)(1)(e) and the second
sentence of subsection 2.10B(ii)(1) by executing and delivering such releases as
may be reasonably requested by the Company.
(2) Prepayments Due to Change of Control. Within five Business Days after the
occurrence of a Change of Control, the Company will notify the Agent of such
Change of Control (the giving of such notice not being a prerequisite to the
Agent's giving its notice as provided in this subsection 2.4B(ii)(2)). The Agent
shall, upon receipt of the notice from the Company required by the preceding
sentence, give the Company and the Lenders notice delivered not more than 30
(thirty) days following the occurrence of a Change of Control or, if later, not
more than 30 (thirty) days following delivery of the notice set forth in the
immediately preceding sentence, except as provided in the last sentence of this
subsection 2.4B(ii)(2), that the Company will be required to prepay all
Obligations on a date specified by the Agent in such notice (which shall be not
less than ten (10) days after the date of delivery of such notice). On the date
specified in such notice, except as provided in the last sentence of this
subsection 2.4B(ii)(2), the Company shall pay all outstanding principal and
interest on all Loans and the PIK Notes and all other fees and amounts payable
under any Loan Document. Notwithstanding the foregoing terms of this subsection
2.4B(ii)(2), by notice to the Company and the Agent within five Business Days
after receipt by a Lender of a notice by the Agent as provided in this clause,
such Lender may elect not to have its portion of the Obligations prepaid as
provided in this clause, in which case such portion shall not be prepaid and its
Pro Rata Share shall be adjusted in relationship to the other remaining
outstanding Obligations.
(3) Prepayments Due to Issuances of Indebtedness and Equity. All cash proceeds
received by Holdings or the Company or any of their respective Subsidiaries
(other than The Leisure Company) from any secured or unsecured Indebtedness for
borrowed money (other than purchase money Indebtedness permitted under Section
6.2A(ii)) incurred by Holdings or the Company or any of their respective
Subsidiaries (other than The Leisure Company) or from any Capital Stock (other
than in connection with the exercise of any options, warrants or other rights)
issued by Holdings or the Company or any of their respective Subsidiaries (other
than The Leisure Company), in either case received after the Closing Date (net
of usual and customary underwriting discounts, commissions and other transaction
costs and expenses) shall be paid directly to the Agent for the benefit of the
Lenders, to be applied pursuant to subsection 2.4B(iii), provided, however, that
the Company shall not be obligated to pay such proceeds to the Agent if and to
the extent that (i) the Company is then required pursuant to the Air Carrier
Guarantee Loan Documents to pay such amounts to repay the Government Guaranteed
Loan, or (ii) the Company is prohibited from so repaying the Obligations under
the terms of the Senior Notes and the Company applies such proceeds to repay the
Senior Notes, or (iii) such proceeds of Indebtedness are applied to refinance
assets described in subsection 6.2A(ii) that were acquired by the Company for
cash and not Indebtedness (for the avoidance of doubt, only to the extent of the
Company's cash investment in such assets), or (iv) such proceeds of Indebtedness
relate to the financing of the Company's training facility located in Phoenix,
Arizona existing on the date hereof.
(iii) Application of Prepayments.
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(a) Application of Voluntary Prepayments. Any voluntary prepayments pursuant to
subsection 2.4B(i) shall be applied ratably first among the Term Notes until
paid in full and second among the PIK Notes.
(b) Application of Mandatory Prepayments of Loans. Any mandatory prepayments of
the Loans pursuant to subsection 2.4B(ii) shall be applied ratably among the
Lenders according to their Pro Rata Share, in inverse order of maturity, first
to the Term Notes until paid in full and second among the PIK Notes.
C. GENERAL PROVISIONS REGARDING PAYMENTS.
(i) Manner and Time of Payment. All payments by the Company of
principal, interest, fees and other Obligations hereunder and under the Notes
shall be made in Dollars in same day funds, without defense, set-off or
counterclaim, free of any restriction or condition, and delivered to the Agent
not later than 2:00 p.m. (New York time) on the date due at the Funding and
Payment Office for the account of Lenders; funds received by the Agent after
that time on such due date shall be deemed to have been paid by the Company on
the next succeeding Business Day.
(ii) Application of Payments to Principal and Interest. All payments in
respect of the principal amount of any Loan or Note shall include payment of
accrued interest on the principal amount being repaid or prepaid, and all such
payments shall be applied to the payment of interest before application to
principal.
(iii) Apportionment of Payments. Except as otherwise provided in
subsection 2.4B(ii)(2), aggregate principal and interest payments in respect of
the Loans and Notes shall be apportioned in each case proportionately to each
Lender's respective Pro Rata Share. The Agent shall promptly distribute to each
Lender, at its primary address set forth below its name on the appropriate
signature page hereof or at such other address as such Lender may request, its
Pro Rata Share of all such payments received by the Agent. Notwithstanding the
foregoing provisions of this subsection 2.4C(iii), if, pursuant to the
provisions of subsection 2.6C, any Notice of Conversion/Continuation is
withdrawn as to any Affected Lender or if any Affected Lender makes Base Rate
Loans in lieu of its Pro Rata Share of any Eurodollar Rate Loans, the Agent
shall give effect thereto in apportioning payments received thereafter.
(iv) Payments on Business Days. Whenever any payment to be made
hereunder shall be stated to be due on a day that is not a Business Day, such
payment shall be made on the next succeeding Business Day and such extension of
time shall be included in the computation of the payment of interest hereunder.
(v) Notation of Payment. Each Lender agrees that before disposing of
any Note held by it, or any part thereof (other than by granting participations
therein), that Lender will make a notation thereon of the Loan evidenced by that
Note and all principal payments previously made thereon and of the date to which
interest thereon has been paid; provided that the failure to make (or any error
in the making of) a notation made under such Note shall not
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limit or otherwise affect the Obligations of the Company hereunder or under such
Note with respect to the Loan or any payments of principal or interest on such
Note.
2.5 USE OF PROCEEDS.
A. GENERAL CORPORATE PURPOSES. The proceeds of the Loan shall be used
by the Company for its general corporate purposes.
B. MARGIN REGULATIONS. No portion of the proceeds of any borrowing
under this Agreement shall be used by the Company or any of its Subsidiaries in
any manner that might cause the borrowing or the application of such proceeds to
violate Regulation U, Regulation T or Regulation X of the Board of Governors of
the Federal Reserve System or any other regulation of such Board or to violate
Section 7(c) of the Exchange Act, in each case as in effect on the date or dates
of such borrowing and such use of proceeds.
2.6 SPECIAL PROVISIONS GOVERNING EURODOLLAR RATE LOANS.
Notwithstanding any other provision of this Agreement to the contrary,
the following provisions shall govern with respect to Eurodollar Rate Loans as
to the matters covered:
A. DETERMINATION OF APPLICABLE INTEREST RATE. As soon as practicable
after 1:00 p.m. (New York time) on each Interest Rate Determination Date, the
Agent shall determine (which determination shall, absent manifest error, be
final, conclusive and binding upon all parties) the interest rate that shall
apply to the Eurodollar Rate Loans for which an interest rate is then being
determined for the applicable Interest Period and shall promptly give notice
thereof (in writing or by telephone confirmed in writing) to the Company and
each Lender.
B. INABILITY TO DETERMINE APPLICABLE INTEREST RATE. In the event that
the Agent shall have determined (which determination shall be final and
conclusive and binding upon all parties hereto), on any Interest Rate
Determination Date with respect to any Eurodollar Rate Loans, that by reason of
circumstances affecting the interbank Eurodollar market adequate and fair means
do not exist for ascertaining the interest rate applicable to such Loans on the
basis provided for in the definition of Adjusted Eurodollar Rate, the Agent
shall on such date give notice by telefacsimile to the Company and each Lender
of such determination, whereupon (i) no Loans may be converted to, Eurodollar
Rate Loans until such time as the Agent notifies the Company and Lenders that
the circumstances giving rise to such notice no longer exist and (ii) any Notice
of Conversion/Continuation given by the Company with respect to the Loans in
respect of which such determination was made shall be deemed to be rescinded by
the Company.
C. ILLEGALITY OR IMPRACTICABILITY OF EURODOLLAR RATE LOANS. In the
event that on any date any Lender shall have determined (which determination
shall be final and conclusive and binding upon all parties hereto but shall be
made only after consultation with the Company and the Agent) that the making,
maintaining or continuation of its Eurodollar Rate Loans (i) has become unlawful
as a result of compliance by such Lender in good faith with any law, treaty,
governmental rule, regulation, guideline or order (or would conflict with any
such treaty, governmental rule, regulation, guideline or order enacted, entered
into or
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promulgated after the date of this Agreement not having the force of law even
though the failure to comply therewith would not be unlawful) or (ii) has become
impracticable, or would cause such Lender material hardship, as a result of
contingencies occurring after the date of this Agreement which materially and
adversely affect the interbank Eurodollar market or the position of such Lender
in that market, then, and in any such event, such Lender shall be an "AFFECTED
LENDER" and it shall on that day give notice (by telefacsimile) to the Company
and the Agent of such determination (which notice the Agent shall promptly
transmit to each other Lender). Thereafter (a) the obligation of the Affected
Lender to convert Loans to Eurodollar Rate Loans shall be suspended until such
notice shall be withdrawn by the Affected Lender, (b) to the extent such
determination by the Affected Lender relates to a Eurodollar Rate Loan then
being requested by the Company pursuant to a Notice of Conversion/Continuation,
the Affected Lender shall convert such Loan to a Base Rate Loan, (c) the
Affected Lender's obligation to maintain its outstanding Eurodollar Rate Loans
(the "AFFECTED LOANS") shall be terminated at the earlier to occur of the
expiration of the Interest Period then in effect with respect to the Affected
Loans or when required by law, and (d) the Affected Loans shall automatically
convert into Base Rate Loans on the date of such termination. Notwithstanding
the foregoing, to the extent a determination by an Affected Lender as described
above relates to a Eurodollar Rate Loan then being requested by the Company
pursuant to a Notice of Conversion/Continuation, the Company shall have the
option, subject to the provisions of subsection 2.6D, to rescind such Notice of
Conversion/Continuation as to all Lenders by giving notice (by telefacsimile) to
the Agent of such rescission on the date on which the Affected Lender gives
notice of its determination as described above (which notice of rescission the
Agent shall promptly transmit to each other Lender). Except as provided in the
immediately preceding sentence, nothing in this subsection 2.6C shall affect the
obligation of any Lender other than an Affected Lender to maintain Loans as, or
to convert Loans to, Eurodollar Rate Loans in accordance with the terms of this
Agreement.
In the event any Affected Lender shall give a notice to the Company
pursuant to this subsection 2.6C, the Company may give notice to such Lender
(with copies to the Agent) that it wishes to seek one or more Eligible Assignees
to purchase its outstanding Loans, Obligations and Notes. Each Lender giving a
notice to the Company pursuant to this subsection 2.6C agrees to sell its Loans,
Obligations, Notes and interest in this Agreement and the other Loan Documents
pursuant to subsection 9.1B to any such Eligible Assignee for an amount equal to
the sum of the outstanding unpaid principal of and accrued interest on such
Loans, Obligations and Notes plus all other fees and amounts due such Lender
hereunder calculated, in each case, to the date such Loans, Obligations, Notes
and interest are purchased, whereupon such Lender shall have no further rights
or obligations hereunder.
D. COMPENSATION FOR BREAKAGE OR NON-COMMENCEMENT OF INTEREST PERIODS.
The Company shall compensate each Lender, upon written request by that Lender
(which request shall set forth the basis for requesting such amounts), for all
reasonable losses, expenses and liabilities (including, without limitation, any
interest paid by that Lender to lenders of funds borrowed by it to carry its
Eurodollar Rate Loans and any loss, expense or liability sustained by that
Lender in connection with the liquidation or re-employment of such funds) which
that Lender may sustain: (i) if for any reason (other than a default by that
Lender) a conversion to or continuation of any Eurodollar Rate Loan does not
occur on a date
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specified therefor in a Notice of Conversion/Continuation, (ii) if any
prepayment or other principal payment or any conversion of any of its Eurodollar
Rate Loans occurs on a date prior to the last day of an Interest Period
applicable to that Loan, (iii) if any prepayment of any of its Eurodollar Rate
Loans is not made on any date specified in a notice of prepayment given by the
Company, or (iv) as a consequence of any other default by the Company in the
repayment of its Eurodollar Rate Loans when required by the terms of this
Agreement.
E. BOOKING OF EURODOLLAR RATE LOANS. Any Lender may carry or transfer
Eurodollar Rate Loans at, to, or for the account of any of its branch offices or
the office of an Affiliate of that Lender; provided that such action does not
increase the Company's liability under subsection 2.7.
F. ASSUMPTIONS CONCERNING FUNDING OF EURODOLLAR RATE LOANS. Calculation
of all amounts payable to a Lender under this subsection 2.6 and under
subsection 2.7A shall be made as though that Lender had actually funded each of
its relevant Eurodollar Rate Loans through the purchase of a Eurodollar deposit
bearing interest at the rate obtained pursuant to clause (i) of the definition
of Adjusted Eurodollar Rate in an amount equal to the amount of such Eurodollar
Rate Loan and having a maturity comparable to the relevant Interest Period and
through the transfer of such Eurodollar deposit from an offshore office of that
Lender to a domestic office of that Lender in the United States of America;
provided, however, that each Lender may fund each of its Eurodollar Rate Loans
in any manner it sees fit and the foregoing assumptions shall be utilized only
for the purposes of calculating amounts payable under this subsection 2.6 and
under subsection 2.7A.
G. EURODOLLAR RATE LOANS AFTER DEFAULT. After the occurrence of and
during the continuation of a Potential Event of Default or an Event of Default,
(i) the Company may not elect to have the Loans be maintained as, or converted
to, a Eurodollar Rate Loan after the expiration of any Interest Period then in
effect for that Loan and (ii) subject to the provisions of subsection 2.6D, any
Notice of Conversion/Continuation given by the Company with respect to a
requested conversion/continuation that has not yet occurred shall be deemed to
be rescinded by the Company.
2.7 INCREASED COSTS; TAXES; CAPITAL ADEQUACY.
A. COMPENSATION FOR INCREASED COSTS AND TAXES. Subject to the
provisions of subsection 2.7B, in the event that any Lender shall determine
(which determination shall, absent manifest error, be final and conclusive and
binding upon all parties hereto) that any law, treaty or governmental rule,
regulation or order, or any change therein or in the interpretation,
administration or application thereof (including the introduction of any new
law, treaty or governmental rule, regulation or order), or any determination of
a court or governmental authority, in each case that becomes effective after the
date hereof, or compliance by such Lender with any guideline, request or
directive issued or made after the date hereof by any central bank or other
governmental or quasi-governmental authority (whether or not having the force of
law):
(i) subjects such Lender (or its applicable lending office) to any
additional Tax (other than any Tax on the overall net income of such Lender)
with respect to this
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Agreement or any of its obligations hereunder or any payments to such Lender (or
its applicable lending office) of principal, interest, fees or any other amount
payable hereunder;
(ii) imposes, modifies or holds applicable any reserve (including
without limitation any marginal, emergency, supplemental, special or other
reserve), special deposit, compulsory loan, FDIC insurance or similar
requirement against assets held by, or deposits or other liabilities in or for
the account of, or advances or loans by, or other credit extended by, or any
other acquisition of funds by, any office of such Lender (other than any such
reserve or other requirements with respect to Eurodollar Rate Loans that are
reflected in the definition of Adjusted Eurodollar Rate); or
(iii) imposes any other condition (other than with respect to a Tax
matter) on or affecting such Lender (or its applicable lending office) or its
obligations hereunder or the interbank Eurodollar market;
and the result of any of the foregoing is to increase the cost to such Lender of
maintaining Loans or Notes hereunder or to reduce any amount received or
receivable by such Lender (or its applicable lending office) with respect
thereto; then, in any such case, the Company shall promptly pay to such Lender,
upon receipt of the statement referred to in the next sentence, such additional
amount or amounts (in the form of an increased rate of, or a different method of
calculating, interest or otherwise as such Lender in its sole discretion shall
determine) as may be necessary to compensate such Lender for any such increased
cost or reduction in amounts received or receivable hereunder. Such Lender shall
deliver to the Company (with a copy to the Agent) a written statement, setting
forth in reasonable detail the basis for calculating the additional amounts owed
to such Lender under this subsection 2.7A, which statement shall be conclusive
and binding upon all parties hereto absent manifest error.
B. WITHHOLDING OF TAXES.
(i) Payments to Be Free and Clear. All sums payable by the Company
under this Agreement and the other Loan Documents shall be paid free and clear
of and (except to the extent required by law) without any deduction or
withholding on account of any Tax imposed, levied, collected, withheld or
assessed by any governmental authority, domestic or foreign.
(ii) Grossing-up of Payments. If the Company or any other Person is
required by law to make any deduction or withholding on account of any Tax from
any sum paid or payable by the Company to the Agent or any Lender under any of
the Loan Documents:
(a) the Company shall notify the Agent or such Lender of any
such requirement or any change in any such requirement as soon as the
Company becomes aware of it;
(b) the Company shall remit any such Tax before the date on
which penalties attach thereto, such remittance to be made (if the
liability is imposed on the Company) for its own account or (if that
liability is imposed on the Agent or such Lender, as the case may be)
on behalf of and in the name of the Agent or such Lender;
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(c) the sum payable by the Company in respect of which the
relevant deduction, withholding or payment is required shall be
increased to the extent necessary to ensure that, after the making of
that deduction, withholding or payment, the Agent or such Lender, as
the case may be, receives on the due date a net sum equal to what it
would have received had no such deduction, withholding or payment been
required or made; and
(d) within 30 days after paying any sum from which it is
required by law to make any deduction or withholding, and within 30
days after the due date of remittance of any Tax which it is required
by clause (b) above to remit, the Company shall deliver to the Agent
evidence satisfactory to the other affected parties of such deduction,
withholding or payment and of the remittance thereof to the relevant
taxing or other authority.
(iii) Evidence of Exemption from U.S. Withholding Tax.
(a) Each Lender that is organized under the laws of any jurisdiction
other than the United States or any state or other political subdivision thereof
(for purposes of this subsection 2.7B(iii), a "NON-US LENDER") shall deliver to
the Agent for transmission to the Company, on or prior to the Closing Date (in
the case of each Lender listed on the signature pages hereof) or on the date of
the Assignment Agreement pursuant to which it becomes a Lender (in the case of
each other Lender), and at such other times as may be necessary in the
determination of the Company or the Agent (each in the reasonable exercise of
its discretion), two original copies of Internal Revenue Service Form W-8BEN or
W-8ECI (or any successor forms), properly completed and duly executed by such
Lender, or any other form, certificate or statement of exemption required under
the Internal Revenue Code or the regulations issued thereunder to establish that
such Lender is not subject to deduction or withholding of United States federal
income tax with respect to any payments to such Lender of principal, interest,
fees or other amounts payable under any of the Loan Documents.
(b) Each Lender required to deliver any forms, certificates or other
evidence with respect to United States federal income tax withholding matters
pursuant to subsection 2.7B(iii)(a) hereby agrees that, from time to time after
the initial delivery by such Lender of such forms, certificates or other
evidence, whenever a lapse in time or change in circumstances renders such
forms, certificates or other evidence obsolete or inaccurate in any material
respect, such Lender shall (l) deliver to the Agent for transmission to the
Company two new original copies of Internal Revenue Service Form W-8BEN or
W-8ECI, properly completed and duly executed by such Lender, or any other form,
certificate or statement of exemption required in order to confirm or establish
that such Lender is not subject to deduction or withholding of United States
federal income tax with respect to payments to such Lender under the Loan
Documents or (2) immediately notify the Agent and the Company of its inability
to deliver any such forms, certificates or other evidence.
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(c) The Company shall not be required to pay any additional
amount to any Non-US lender under clause (c) of subsection 2.7B(ii) if
such Lender shall have failed to satisfy the requirements of subsection
2.7B(iii)(a); provided that if such Lender shall have satisfied such
requirements on the Closing Date (in the case of each Lender listed on
the signature pages hereof) or on the date of the Assignment Agreement
pursuant to which it became a Lender (in the case of each other
Lender), nothing in this subsection 2.7B(iii)(c) shall relieve the
Company of its obligation to pay any additional amounts pursuant to
clause (c) of subsection 2.7B(ii) in the event that, as a result of any
change in any applicable law, treaty or governmental rule, regulation
or order, or any change in the interpretation, administration or
application thereof, such Lender is no longer properly entitled to
deliver forms, certificates or other evidence at a subsequent date
establishing the fact that such Lender is not subject to withholding as
described in subsection 2.7B(iii)(a).
C. CAPITAL ADEQUACY ADJUSTMENT. If any Lender shall have determined
that the adoption, effectiveness, phase-in or applicability after the date
hereof of any law, rule or regulation (or any provision thereof) regarding
capital adequacy, or any change therein or in the interpretation or
administration thereof by any governmental authority, central bank or comparable
agency charged with the interpretation or administration thereof, or compliance
by any Lender (or its applicable lending office) with any guideline, request or
directive regarding capital adequacy (whether or not having the force of law) of
any such governmental authority, central bank or comparable agency, has or would
have the effect of reducing the rate of return on the capital of such Lender or
any corporation controlling such Lender as a consequence of, or with reference
to, such Lender's Loans or Notes or other obligations hereunder to a level below
that which such Lender or such controlling corporation could have achieved but
for such adoption, effectiveness, phase-in, applicability, change or compliance
(taking into consideration the policies of such Lender or such controlling
corporation with regard to capital adequacy), then from time to time, within
five Business Days after receipt by the Company from such Lender of the
statement referred to in the next sentence, the Company shall pay to such Lender
such additional amount or amounts as will compensate such Lender or such
controlling corporation on an after-tax basis for such reduction. Such Lender
shall deliver to the Company (with a copy to the Agent) a written statement,
setting forth in reasonable detail the basis of the calculation of such
additional amounts, which statement shall be conclusive and binding upon all
parties hereto absent manifest error.
D. SUBSTITUTE LENDERS. In the event the Company is required under the
provisions of this subsection 2.7 to make payments in a material amount to any
Lender, the Company may, so long as no Event of Default or Potential Event of
Default shall have occurred and be continuing, elect to terminate such Lender as
a party to this Agreement; provided that, concurrently with such termination,
(i) the Company shall pay that Lender all principal, interest and fees and other
amounts (including without limitation, amounts, if any, owed under this
subsection 2.7) owed to such Lender through such date of termination, and (ii)
all documents and supporting materials necessary, in the judgment of the Agent
(or if the Agent is also the Lender to be terminated, the successor Agent) to
evidence the termination and/or substitution of such Lender (if applicable)
shall have been received and approved by the Agent as of such date.
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2.8 OBLIGATION OF LENDERS TO MITIGATE.
Each Lender agrees that, as promptly as practicable after the officer
of such Lender responsible for administering the Loans of such Lender becomes
aware of the occurrence of an event or the existence of a condition that would
cause such Lender to become an Affected Lender or that would entitle such Lender
to receive payments under subsection 2.7, it will, to the extent not
inconsistent with the internal policies of such Lender and any applicable legal
or regulatory restrictions, use reasonable efforts (i) to maintain the Loans of
such Lender or the affected Loans of such Lender through another lending office
of such Lender, or (ii) take such other measures as such Lender may deem
reasonable, if as a result thereof the circumstances which would cause such
Lender to be an Affected Lender would cease to exist or the additional amounts
which would otherwise be required to be paid to such Lender pursuant to
subsection 2.7 would be materially reduced and if, as determined by such Lender
in its sole discretion, the maintaining of such Loans through such other lending
office or in accordance with such other measures, as the case may be, would not
otherwise materially adversely affect such Loans or the interests of such
Lender; provided that such Lender will not be obligated to utilize such other
lending office pursuant to this subsection 2.8 unless the Company agrees to pay
all incremental expenses incurred by such Lender as a result of utilizing such
other lending office as described in clause (i) above. A certificate as to the
amount of any such expenses payable by the Company pursuant to this subsection
2.8 (setting forth in reasonable detail the basis for requesting such amount)
submitted by such Lender to the Company (with a copy to the Agent) shall be
conclusive absent manifest error.
2.9 [INTENTIONALLY OMITTED].
2.10 BORROWING BASE.
A. BORROWING BASE. The Borrowing Base shall be calculated based upon
the Eligible Assets that from time to time are subject to the Liens of the
Security Agreements and constitute Borrowing Base Collateral. The Borrowing Base
shall exclude any Borrowing Base Collateral that has suffered loss or damage and
is required to be excluded by subsection 2.4B(ii)(1). In addition, if the
portion of the Borrowing Base attributable to the Rotables exceeds thirty five
percent, rounded to the nearest whole percent (35%), of all Borrowing Base as
determined in any calculation of the Borrowing Base contained in a Borrowing
Base Certificate, such excess amount shall be excluded from the calculation of
the Borrowing Base for such period.
B. COLLATERAL.
(i) Eligible Assets. The Eligible Assets may from time to time include
the property of the types listed on Schedule 2.10 hereto, which schedule shall
include, without limitation, (a) Cash and Permitted Cash Equivalents from time
to time in the Cash Collateral Account, (b) Eligible Stage III Aircraft, (c) the
Maintenance Facility, (d) Eligible Simulators, (e) Eligible Spare Engines and
(f) Rotables (collectively, the Collateral identified in clauses (a) through (f)
and on Schedule 2.10, the "ELIGIBLE ASSETS"). Initially the Borrowing Base
Collateral shall include the Maintenance Facility, the Stage III Aircraft and
the Spare Engines
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specified in Schedule 2.10A hereto and the Rotables and the Company shall cause
all such Collateral to be subject to the Liens of Security Agreements on the
Closing Date. Thereafter, subject to subsection 2.10B(ii), the Borrowing Base
Collateral may include the Maintenance Facility, Simulators, Spare Engines,
Rotables and other Eligible Assets which the Company elects from time to time to
make subject to the Liens of Security Agreements, provided, however, that no
Eligible Assets shall be included in the calculation of the Borrowing Base
unless the Lien of a Security Agreement has been perfected in such Collateral
and such Collateral constitutes Borrowing Base Collateral.
(ii) Release and Addition of Eligible Assets.
(1) Release. Except under the circumstances set forth in the
next sentence of this subsection 2.10B(ii)(1), the Agent shall not release the
Liens of the Security Agreements on any Borrowing Base Collateral until payment
in full of all outstanding Loans and all other amounts owed to the Lenders and
the Agent under the Notes and other Loan Documents. Notwithstanding anything in
this subsection 2.10B(ii)(1) to the contrary, the Agent acknowledges that (I)
the Lien of the Spare Parts Security Agreement will be released from the Parts
Collateral in accordance with the terms thereof (including, but not limited to,
the sale in the ordinary course of the Company's business of not more than
$5,000,000 of Parts Collateral in any six month period), and (II) (x) the
Maintenance Facility may be released from the Lien of the Maintenance Facility
Security Agreement if an Event of Loss or an Event of Damage has occurred with
respect to the Maintenance Facility and (y) any Borrowing Base Collateral that
the Company requests to be released pursuant to and in compliance with
subsection 2.4B(ii)(1)(e) may be so released, in each case provided that the
Company complies with the following requirements: (i) the Company shall make any
prepayment and furnish additional collateral (if any) required by subsection
2.4B(ii)(1) if a Borrowing Base Deficiency would result from the reduction in
the Borrowing Base that such release of such Lien would cause as calculated by
the Borrowing Base Certificate delivered pursuant to clause (iv) below, (ii) no
Event of Default or Potential Event of Default has occurred and is continuing,
(iii) the Company has requested such release in writing and certified that it is
entitled to such release under the applicable Security Agreement and this
subsection 2.10 and (iv) the Company shall have delivered an updated Borrowing
Base Certificate giving pro forma effect to such release and certifying that no
Borrowing Base Deficiency will result therefrom (after taking into account any
additional Eligible Assets added to the Borrowing Base Collateral pursuant to,
and in compliance with, subsection 2.10B(ii)(2) concurrently with or prior to
release of such Lien). Following the release of the Lien of a Security Agreement
on any Borrowing Base Collateral pursuant to the terms of this subsection
2.10B(ii)(1), unless and until such Borrowing Base Collateral is again subjected
to the Lien of a Security Agreement, such Borrowing Base Collateral shall no
longer be included in the calculation of the Borrowing Base or in a future
Borrowing Base Certificate.
(2) Addition. The Company may from time to time subject
Eligible Assets (other than Rotables) to the Lien of the relevant Security
Agreements upon written notice thereof to the Agent and such additional
Collateral shall be included in the calculation of the Borrowing Base delivered
in an updated Borrowing Base Certificate after (A) except in the case of Cash
and Cash Equivalents in the Cash Collateral Account, an Approved Appraisal has
been delivered to the Agent for such Eligible Assets, (B) the Lien of the
relevant Security Agreement
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has been perfected in such Eligible Assets, (C) appropriate filings have been
made to protect the Lien and rights of the Agent in any such Eligible Assets as
are deemed necessary by the Agent, (D) the Agent shall have received such
opinions as it shall reasonably request with respect to any such Eligible
Assets, (E) the Agent shall have received insurance certificates and other
documents required by the relevant Security Agreement and all other documents
and actions required by the terms of such Security Agreement shall have been
delivered or shall have occurred to the satisfaction of the Agent, (F) the
Company shall have delivered all other documents and taken all other actions
reasonably requested by the Agent with respect to any such Eligible Assets, (G)
the Agent has satisfied itself that such Eligible Assets are "Aircraft", "Spare
Engines" or "Simulators", as the case may be, within the meaning of this
Agreement and as described in Schedule 2.10 hereof and (H) the Agent shall
notify the Company in writing that it is satisfied that the conditions of this
Section 2.10B(ii)(2) have been satisfied. Rotables shall become subject to the
Lien of the Spare Parts Security Agreement as provided therein, without also
being required to satisfy any of the requirements of this subsection applicable
to Eligible Assets of other types.
Expenses. The Company shall pay all expenses of the Agent in
connection with the release and addition of Eligible Assets to the Borrowing
Base and the release or granting and perfection of Liens of Security Agreements
in connection therewith, including, but not limited to, reasonable fees and
expenses of counsel for the Agent, reasonable fees and expenses of special FAA
counsel and filing fees.
C. APPROVED APPRAISAL AND APPRAISERS.
(1) Approved Appraisal. An Approved Appraisal for any
Borrowing Base Collateral shall mean (A) an appraisal and inspection
report satisfactory to the Agent delivered to the Agent by an Approved
Appraiser not later than the time that such Borrowing Base Collateral
becomes subject to the perfected Lien of a Security Agreement, (B) an
appraisal and inspection report satisfactory to the Agent delivered
semi-annually thereafter to the Agent by an Approved Appraiser not
later than six months after the delivery date of the last delivered
Approved Appraisal (commencing with the appraisals delivered in
November, 2001), and in any event by no later than May 20 and November
20 of each year so long as any Loan remains outstanding or any amount
is owed under the PIK Notes, (C) an appraisal and inspection report
satisfactory to the Agent delivered to the Agent at any time after the
Company has notified the Agent that such Borrowing Base Collateral has
been damaged, and (D) in the case of Rotables only, an appraisal and
inspection report satisfactory to the Agent delivered to the Agent by
an Approved Appraiser at the written request of the Company at any
time. In the case of Rotables only, an inspection of the Rotables
conducted as part of an Approved Appraisal shall mean an inspection of
a sample of the Rotables by the Approved Appraiser for the purpose of
determining the accuracy of the inventory reports maintained by the
Company for the Rotables. The Approved Appraiser delivering any
Approved Appraisal shall be selected by the Agent. The Company shall
pay the fees and expenses of the Approved Appraiser in connection with
delivery of an Approved Appraisal. Any inspection of Borrowing Base
Collateral by an Approved Appraiser shall be conducted in compliance
with the inspection provisions of the relevant Security Agreement.
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(2) Approved Appraisers. Approved Appraisers for Borrowing
Base Collateral shall mean AVITAS, Inc. and Simat Hellieson & ▇▇▇▇▇▇▇
Inc. or any other appraiser for such Eligible Assets approved in
writing by the Agent and consented to by the Company, such consent not
to be unreasonably withheld or delayed.
D. BORROWING BASE CERTIFICATE. On the Closing Date and no later than
the 25th day of each May and November thereafter until payment in full of all
Loans outstanding hereunder and all other amounts payable to the Lenders and the
Agent under the Notes and other Loan Documents, the Company shall deliver a
Borrowing Base Certificate to the Agent relating to the then most recently ended
six-month period; provided, however, that in addition to such regular
certificates, the Company shall also deliver Borrowing Base Certificates when
required, pursuant to subsection 2.4B(ii)(1) or 2.10B(ii)(1). Each Borrowing
Base Certificate shall replace and supersede for all purposes of this Agreement
the Borrowing Base Certificate then most recently delivered, and shall be based
on the then most current Approved Appraisals. Such Borrowing Base Certificate
shall (1) state each component of Borrowing Base Collateral then subject to
perfected Liens of the Security Agreements, (2) state the portion of the
Borrowing Base established by each component Borrowing Base Collateral, (3)
state the Borrowing Base by aggregating each of the values stated pursuant to
the preceding clause (2), and (4) state the then outstanding principal amount of
the Loans. The Borrowing Base Certificate shall (A) certify that none of the
Borrowing Base Collateral included in the calculation of the Borrowing Base is
subject to an Event of Loss, Event of Damage, Repairable Event or Adjustment
Event or, if any of such Borrowing Base Collateral is subject to an Event of
Loss, Event of Damage, Repairable Damage or Adjustment Event, such Borrowing
Base Certificate shall contain the relevant exclusions for any such Borrowing
Base Collateral subject to such Event of Loss, Event of Damage, Repairable
Damage or Adjustment Event as required by subsections 2.4B(ii)(1) and 2.10A
hereof, (B) certify that no Borrowing Base Deficiency then exists or, if a
Borrowing Base Deficiency then exists, the amount thereof, and (C) certify that
the portion of the Borrowing Base attributable to Rotables stated in the
Borrowing Base Certificate does not exceed thirty five percent, rounded to the
nearest whole percent (35%), of the aggregate Borrowing Base stated in such
certificate or that, if the portion of the Borrowing Base attributable to the
Rotables does exceed thirty five percent, rounded to the nearest whole percent
(35%), of the aggregate Borrowing Base, the portion of the Borrowing Base
attributable to the Rotables in such certificate for purposes of calculating the
Borrowing Base excludes such excess amount. In determining the book value of
Rotables in any Borrowing Base Certificate, the Company shall use its normal
accounting procedures except to the extent that the timing of such procedures
may be shortened pursuant to subsection 2.4B(ii)(1)(c). The Borrowing Base
Certificate shall be certified to be true and accurate by a Responsible Officer
of the Company. Notwithstanding any Borrowing Base Certificate delivered by the
Company, in the event of any dispute between the Company and the Agent regarding
the then outstanding principal amount of the Loans, the records of the Agent
shall determine such outstanding principal amounts, absent manifest error.
SECTION 3.
CONDITIONS TO LOANS
The obligations of the Agent and the Lenders to maintain the Loans
hereunder are subject to the satisfaction of the following conditions:
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3.1 CONDITIONS TO CLOSING DATE.
The Existing Credit Agreement shall not be amended and restated as
provided in this Agreement unless the following conditions have been satisfied
or waived on or prior to January 31, 2002:
A. COMPANY DOCUMENTS. The Company shall deliver or cause to be
delivered to the Lenders (or to the Agent for the Lenders with sufficient
originally executed copies, where appropriate, for each Lender) the following,
each, unless otherwise noted, dated or certified on, as the case may be, the
Closing Date:
(i) certified copies of its Certificate of Incorporation,
together with a good standing certificate from the Secretary of State of the
State of Delaware and each other state in which it is qualified as a foreign
corporation to do business and, to the extent generally available, a certificate
or other evidence of good standing as to payment of any applicable franchise or
similar taxes from the appropriate taxing authority of each of such states, each
dated a recent date prior to the Closing Date;
(ii) copies of its Bylaws, certified by its corporate
secretary or an assistant secretary;
(iii) resolutions of its Board of Directors approving and
authorizing the execution, delivery and performance of this Agreement and the
other Loan Documents, certified by its corporate secretary or an assistant
secretary as being in full force and effect without modification or amendment;
(iv) signature and incumbency certificates of its officers
executing this Agreement and the other Loan Documents;
(v) executed originals of this Agreement, the Notes (duly
executed in accordance with subsection 2.1D, drawn to the order of each Lender
and with appropriate insertions) and the other Loan Documents; and
(vi) such other documents as the Agent may reasonably request.
B. NECESSARY CONSENTS. The Company shall have obtained all consents
necessary or reasonably advisable in connection with the transactions
contemplated by the Loan Documents, and each of the foregoing shall be in full
force and effect and in form and substance satisfactory to the Agent.
C. FINANCIAL CONDITION CERTIFICATE. The Company shall have delivered to
the Agent a Financial Condition Certificate dated the Closing Date,
substantially in the form annexed hereto as Exhibit VIII, with appropriate
attachments demonstrating that, after giving effect to the consummation of the
financing transactions contemplated hereby, the Company and its Subsidiaries,
taken as a whole, are Solvent.
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D. OPINIONS OF COMPANY'S COUNSEL. The Agent and its counsel shall have
received (i) executed copies of a favorable written opinion of ▇▇▇▇▇▇▇ ▇▇▇▇
Slate ▇▇▇▇▇▇▇ & ▇▇▇▇ LLP regarding the enforceability of this Agreement and the
Notes and (ii) executed copies of a favorable written opinion of ▇▇▇▇▇▇ Godward
LLP regarding Section 1110 of the Bankruptcy Code, in each case dated the
Closing Date and setting forth substantially the matters in the opinions
designated in Exhibits V-A1 and V-A2, respectively, annexed hereto.
E. OPINIONS OF GENERAL COUNSEL. The Agent and its counsel shall have
received executed copies of one or more favorable written opinions of ▇▇▇▇▇ ▇.
▇▇▇▇▇▇▇▇, Esq., Vice President and General Counsel of the Company, in form and
substance reasonably satisfactory to the Agent and its counsel, dated the
Closing Date, and setting forth substantially the matters in the opinions
designated in Exhibit V-B annexed hereto.
F. RESERVED.
G. OPINIONS OF FAA COUNSEL. The Agent and its counsel shall have
received a form of a favorable written opinion of Daugherty, Fowler, Peregrin &
▇▇▇▇▇▇ regarding perfection of the security interests in certain of the
Collateral established by the Security Agreements filed with the FAA, dated as
of the Closing Date; provided, that executed copies of such opinion may be
delivered to the Agent and its counsel within five Business Days of the Closing
Date.
H. RESERVED.
I. EVIDENCE OF INSURANCE. The Company shall have delivered to the Agent
certificates of insurance with respect to Borrowing Base Collateral subject to
Security Agreements as of the Closing Date, naming the Agent (on behalf of the
Agent and the Lenders) as loss payee under the casualty insurance policies and
as additional insured under the liability policies of the Company and a broker's
report from the Company's insurance broker evidencing compliance with the
requirements of each Security Agreement, all as required pursuant to subsection
5.4 hereof or pursuant to the Security Agreements.
J. REPRESENTATIONS AND WARRANTIES; PERFORMANCE OF AGREEMENTS. The
representations and warranties of the Company contained herein and in the other
Loan Documents are true, correct and complete in all material respects on and as
of the Closing Date to the same extent as though made on and as of that date
(except to the extent the same expressly relate to an earlier date, in which
case such representations and warranties were true, correct and complete in all
material respects as of such date) and that the Company shall have performed in
all material respects all agreements and satisfied all conditions which this
Agreement provides shall be performed or satisfied by it on or before the
Closing Date.
K. COMPLIANCE CERTIFICATE. The Company shall have delivered to the
Agent a Compliance Certificate dated as of the Closing Date, substantially in
the form annexed hereto as Exhibit IV.
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L. COMPLETION OF PROCEEDINGS. All corporate and other proceedings taken
or to be taken in connection with the transactions contemplated hereby and all
documents incidental thereto shall be reasonably satisfactory in form and
substance to the Agent and its counsel, and the Agent and such counsel shall
have received all such counterpart originals or certified copies of such
documents as the Agent may reasonably request.
M. BORROWING BASE CERTIFICATE. The Company shall have delivered to the
Agent the Borrowing Base Certificate contemplated to be delivered on the Closing
Date by the terms of subsection 2.10.
N. ELIGIBLE ASSETS. The Collateral as of the Closing Date shall include
the Eligible Assets listed in Schedule 2.10A hereto which are included in the
Borrowing Base on the Closing Date as certified in the Borrowing Base
Certificate delivered on the Closing Date and, without limitation of the
foregoing, such Eligible Assets shall be subject to the perfected Liens of the
applicable Security Agreements.
O. SECURITY AGREEMENTS. The Company shall have executed and delivered
to the Agent the Receivables Security Agreement, in form and substance
satisfactory to the Agent. All documents required to be delivered, filings
required to be made and action required to be taken by the terms of any Security
Agreement referred to in subsection 3.1N shall have been accomplished in
accordance with such terms, including, without limitation, the delivery to the
Agent for recording of UCC financing statements and FAA filings. The Company
shall have executed and delivered to the Agent amendments, supplements and
restatements, as the case may be, in form and substance reasonably satisfactory
to the Agent, to the Security Agreements and the Environmental Indemnity
Agreement.
P. RESERVED.
Q. RECEIVABLES DOCUMENTATION. The Agent shall have received copies of
any and all documentation reasonably requested by the Agent relating to the
receivables to be pledged pursuant to the Receivables Security Agreement, which
such documentation shall be in form and substance reasonably satisfactory to the
Agent.
R. GOVERNMENT GUARANTEED LOAN DOCUMENTATION. The Company shall
concurrently enter into the Air Carrier Guarantee Loan Documents evidencing the
Government Guaranteed Loan, on terms and conditions consistent with the
Government Guaranteed Loan Term Sheets, and the Company shall have delivered to
the Agent a copy of the Air Carrier Guarantee Loan Documents and the Government
Guaranteed Loan Term Sheet, together with an Officer's Certificate certifying
that (1) attached thereto are a true, correct and complete copy of the Air
Carrier Guarantee Loan Documents and the Government Guaranteed Loan Term Sheet,
(2) the Air Carrier Guarantee Loan Documents are in full force and effect, (3)
the Government Guaranteed Loan Term Sheet has not been supplemented, amended or
revised in any way from that provided to the Agent and the Lenders on or about
January 6, 2002, (4) the Government Guaranteed Loan Term Sheet contains all of
the material business and economic terms and conditions of the Government
Guaranteed Loan, (5) the Air Carrier Guarantee Loan Documents conform in all
material respects to the Government Guaranteed Loan Term Sheet,
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and (6) no default or event of default (or other similar term of like meaning)
has occurred and is continuing under the Air Carrier Guarantee Loan Documents.
S. TERM SHEETS. The Company shall have delivered to the Agent and the
Lenders on or before the Closing Date evidence of the approval of the Government
Guaranteed Loan by the Air Transportation Stabilization Board, which shall be in
form and substance acceptable to the Agent and the Lenders, together with an
Officer's Certificate certifying that attached thereto is a true, correct and
complete copy of the approval of the Government Guaranteed Loan by the Air
Transportation Stabilization Board and that no supplement, amendment,
modification, withdrawal or other revision has been made to such approval.
▇. ▇▇▇▇▇▇ CONCESSIONS. Holdings and Wilmington Trust Company, acting on
behalf of the lessors leasing aircraft to the Company, shall have entered into
the Lease Indenture, on terms and conditions consistent with the Lease Indenture
Term Sheet, and the Company shall have delivered to the Agent a copy of the
Lease Indenture and the Lease Indenture Term Sheet, together with an Officer's
Certificate certifying that (1) attached thereto is a true, correct and complete
copy of the Lease Indenture and the Lease Indenture Term Sheet, (2) the Lease
Indenture is in full force and effect, (3) the Lease Indenture Term Sheet has
not been supplemented, amended or revised in any way from that provided to the
Agent and the Lenders on or about January 3, 2002, (4) the Lease Indenture Term
Sheet contains all of the material business and economic terms and conditions of
the Lease Indenture, (5) the Lease Indenture conforms in all material respects
to the Lease Indenture Term Sheet, and (6) no default or event of default (or
other similar term of like meaning) has occurred and is continuing under the
Lease Indenture.
U. RESERVED
V. RECEIPT OF PROCEEDS OF GOVERNMENT GUARANTEED LOAN. The Company shall
have received the proceeds of the Government Guaranteed Loan in a minimum
principal amount of $254,000,000.
W. CONCESSIONS RECEIVED. The Company shall have delivered an Officer's
Certificate to the Agent that the Company has received Concessions (taken as a
whole) consistent with the Restructuring Plan and containing such information
regarding the Concessions as is reasonably satisfactory to the Agent, and the
terms and conditions of such Concessions shall be satisfactory to the Agent and
shall be in full force and effect on the Closing Date.
X. RESTRUCTURING PLAN. The Company shall have furnished the Agent and
the Lenders with a copy of the Restructuring Plan, and such Restructuring Plan
shall be satisfactory to the Agent and the Lenders, together with an Officer's
Certificate certifying that (1) attached thereto is a true, correct and complete
copy of the Restructuring Plan, (2) the Restructuring Plan has not been
materially supplemented, amended or revised in any way from that Restructuring
Plan dated December 18, 2001 and furnished to the Air Transportation
Stabilization Board on December 19, 2001, provided to the Agent and the Lenders
on or about January 3, 2002.
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Y. DOCUMENTS SATISFACTORY. The Loan Documents shall be satisfactory to
the Agent and the Lenders.
Z. PAYMENT OF FEES AND EXPENSES. The Company shall have paid all fees
and expenses of the Agent and the Lenders, including, without limitation, fees
and expenses of legal counsel to the Agent and the Lenders, and all fees and
expenses of the financial and collateral consultants to the Agent and the
Lenders.
AA. RESERVED.
BB. REPRESENTATIONS AND WARRANTIES, ETC. As of the Closing Date, after
giving effect to the application of proceeds of the Government Guaranteed Loan:
(i) the representations and warranties of the Company
contained herein and in the other Loan Documents shall be
true, correct and complete in all material respects on and as
of the Closing Date to the same extent as though made on and
as of that date (except to the extent the same expressly
relate to an earlier date, in which case such representations
and warranties were true, correct and complete in all material
respects as of such date), and the Company shall be deliver a
certificate to the Agent to such effect and as to the matters
set forth in clauses (ii), (iii), and (iv) of this subsection
3.1(BB);
(ii) no event shall have occurred and be continuing
or would result from the consummation of the borrowing
contemplated by this Agreement that would constitute an Event
of Default or a Potential Event of Default;
(iii) to the best knowledge of the Company, no
injunction or other restraining order shall have been issued
and no hearing to cause an injunction or other restraining
order to be issued shall be pending or noticed with respect to
any action, suit or proceeding seeking to enjoin or otherwise
prevent the consummation of, or to recover any damages or
obtain relief as a result of, the maintaining of the Loans
hereunder, or with respect to the Government Guaranteed Loan,
the Lease Indenture or the Restructuring Plan or otherwise
relating to the Concessions; and
(iv) to the best knowledge of the Company, the
decision of the Air Transportation Stabilization Board to
approve the Government Guaranteed Loan shall be final and not
subject to appeal.
SECTION 4.
COMPANY'S REPRESENTATIONS AND WARRANTIES
In order to induce the Lenders to enter into this Agreement and to
maintain the Loans, the Company represents and warrants to the Agent and each
Lender, as of the date of this Agreement and the Closing Date, that the
following statements are true, correct and complete:
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4.1 ORGANIZATION, POWERS, QUALIFICATION, GOOD STANDING, BUSINESS AND
SUBSIDIARIES.
A. ORGANIZATION AND POWERS. The Company is a corporation duly
organized, validly existing and in good standing under the laws of the State of
Delaware. The Company has all requisite corporate power and authority to own and
operate its properties, to carry on its business as now conducted and as
proposed to be conducted, to enter into the Loan Documents and to carry out the
transactions contemplated hereby and thereby.
B. QUALIFICATION AND GOOD STANDING; AIR CARRIER CERTIFICATION. The
Company is qualified to do business and in good standing in every jurisdiction
where its assets are located and wherever necessary to carry out its business
and operations, except in jurisdictions where the failure to be so qualified or
in good standing would not in the reasonable determination of the Company be
expected to impair the ability of the Company to perform its payment or other
material obligations under the Loan Documents. The Company is an "air carrier"
within the meaning of the Act and holds a certificate under Sections 41102(a)(1)
and 41103 of the Act. The Company is a "citizen of the United States" as defined
in Section 40102(a)(15) of the Act (a "UNITED STATES CITIZEN") and holds an air
carrier operating certificate issued pursuant to Chapter 447 under the Act for
aircraft capable of carrying 10 or more individuals or 6,000 pounds or more of
cargo. The Company possesses all necessary certificates, franchises, licenses,
permits, rights and concessions and consents which are material to the operation
of the routes flown by it and the conduct of its business and operations as
currently conducted.
C. SUBSIDIARIES. All of the Subsidiaries of the Company as of the
Closing Date are identified in Schedule 4.1 annexed hereto, as said Schedule 4.1
may be supplemented from time to time pursuant to the provisions of subsection
5.1(xi). Each of the Subsidiaries of the Company identified in Schedule 4.1
annexed hereto (as so supplemented) is a corporation duly organized, validly
existing and in good standing under the laws of its respective jurisdiction of
incorporation set forth therein, has all requisite corporate power and authority
to own and operate its properties and to carry on its business as now conducted
and as proposed to be conducted, and is qualified to do business and in good
standing in every jurisdiction where its assets are located and wherever
necessary to carry out its business and operations, in each case except where
failure to be so qualified or in good standing or a lack of such corporate power
and authority would not in the reasonable determination of the Company be
expected to impair the ability of the Company to perform its payment or other
material obligations under the Loan Documents. Schedule 4.1 annexed hereto (as
so supplemented) correctly sets forth the ownership interest of the Company and
each of its Subsidiaries in each of the Subsidiaries of the Company identified
therein.
4.2 AUTHORIZATION OF BORROWING, ETC.
A. AUTHORIZATION OF BORROWING. The execution, delivery and performance
of the Loan Documents have been duly authorized by all necessary corporate
action on the part of the Company.
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B. NO CONFLICT. The execution, delivery and performance by the Company
of the Loan Documents and the consummation of the transactions contemplated by
the Loan Documents do not and will not (i) violate any provision of any law or
any governmental rule or regulation applicable to the Company or any of its
Subsidiaries, the Certificate or Articles of Incorporation or Bylaws of the
Company or any of its Subsidiaries or any order, judgment or decree of any court
or other agency of government binding on the Company or any of its Subsidiaries,
(ii) conflict with, result in a breach of or constitute (with due notice or
lapse of time or both) a default under any Contractual Obligation of the Company
or any of its Subsidiaries, (iii) result in or require the creation or
imposition of any Lien upon any of the properties or assets of the Company or
any of its Subsidiaries (other than any Liens created under any of the Loan
Documents in favor of the Agent on behalf of Lenders), or (iv) require any
approval of stockholders or any approval or consent of any Person under any
Contractual Obligation of the Company or any of its Subsidiaries, except for
such approvals or consents which will be obtained on or before the Closing Date
and disclosed in writing to Lenders.
C. GOVERNMENTAL CONSENTS. The execution, delivery and performance by
the Company of the Loan Documents and the consummation of the transactions
contemplated by the Loan Documents do not and will not require any registration
with, consent or approval of, or notice to, or other action to, with or by, any
federal, state or other governmental authority or regulatory body which has not
been obtained or made on or prior to the date required to be obtained or made
except for such matters relating to performance as would ordinarily be done in
the ordinary course of business after the Closing Date or if not made or
obtained would materially affect such performance.
D. BINDING OBLIGATION. Each of the Loan Documents has been duly
executed and delivered by the Company and is the legally valid and binding
obligation of the Company, enforceable against the Company in accordance with
its respective terms, except as may be limited by bankruptcy, insolvency,
reorganization, moratorium, fraudulent transfer or other similar laws relating
to or affecting the enforcement of creditors' rights generally, including
materiality, reasonableness, good faith and fair dealing, and by general
principles of equity (regardless of whether considered in a proceeding in equity
or at law).
4.3 FINANCIAL CONDITION.
The Company has heretofore delivered to the Lenders, at the Lenders'
request, the following financial statements and information: (i) the audited
balance sheets of the Company as at December 31, 2000, and the related
statements of income, stockholders' equity and cash flows of the Company for the
Fiscal Year then ended and (ii) the unaudited balance sheet of the Company as at
September 30, 2001 and the related unaudited statements of income, stockholders'
equity and cash flows of the Company for the nine months then ended. All such
statements were prepared in conformity with GAAP and fairly present the
financial position of the Company as at the respective dates thereof and the
results of operations and cash flows of the Company for each of the periods then
ended subject, in the case of the unaudited statements, to year-end audit and
adjustments. Except as disclosed in writing to the Agent after the Closing Date,
the Company does not have any material contingent liability or liability for
taxes, long-term lease or unusual forward or long-term commitment that is not
reflected in the foregoing financial
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statements (or in the most recently delivered financial statements delivered
pursuant to subsection 5.1((i) or (ii)) or the notes thereto and which in any
such case is material in relation to the business, operations, properties,
assets, condition (financial or otherwise) or, with respect to the Loans, the
prospects of the Company.
4.4 NO MATERIAL ADVERSE CHANGE.
Since December 31, 1998, after giving effect to the Government
Guaranteed Loan, the Lease Indenture and the Concessions, no material adverse
change has occurred in the financial condition or operations of the Company. For
purposes of the previous sentence, the term "material adverse change" shall mean
the material impairment of the Company's ability to perform its payment and
other material obligations under the Loan Documents; this sentence is intended
to pertain to substantial economic events such as (1) any actual or imminent
regulatory or judicial order revoking or materially restricting the Company's
ability to operate as an airline or to operate any of the aircraft types in its
fleet that is not subject to judicial stay or (2) any labor strike action that
causes operations to be substantially suspended for a period exceeding three
weeks.
4.5 TITLE TO PROPERTIES; LIENS.
Except for any property covered by any Security Agreement (the terms of
which shall govern such property to the extent provided therein), the Company
and its Subsidiaries have (i) good, sufficient and legal title to (in the case
of fee interests in real property), (ii) valid leasehold interests in (in the
case of leasehold interests in real or personal property), or (iii) good title
to (in the case of all other personal property), all of the properties and
assets reflected in the financial statements referred to in subsection 4.3 or in
the most recent financial statements delivered pursuant to subsection 5.1, in
each case except for assets disposed of since the date of such financial
statements in the ordinary course of business or as otherwise permitted under
subsection 6.6. Except as otherwise permitted by this Agreement, to the actual
knowledge of the Company, all such properties and assets are free and clear of
Liens.
4.6 LITIGATION; ADVERSE FACTS.
There are no actions, suits, appeals, proceedings, arbitrations or
governmental investigations (whether or not purportedly on behalf of the Company
or any of its Subsidiaries) at law or in equity or before or by any federal,
state, municipal or other governmental department, court, commission, board,
bureau, agency or instrumentality, domestic or foreign, pending or, to the
knowledge of the Company, threatened against or affecting the Company or any of
its Subsidiaries or any property of the Company or any of its Subsidiaries that,
individually or in the aggregate, are reasonably likely to materially impair the
ability of the Company to perform its payment or other material obligations
under the Loan Documents, the Lease Indenture or the Air Carrier Guarantee Loan
Documents, or (taken as a whole) the Concessions. Neither the Company nor any of
its Subsidiaries is (i) in violation of any applicable laws that, individually
or in the aggregate, could in the reasonable determination of the Company be
expected to impair the ability of the Company to perform its payment or other
material obligations under the Loan Documents or (ii) subject to or in default
with respect to any final judgments, writs, injunctions,
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decrees, rules or regulations of any court or any federal, state, municipal or
other governmental department, commission, board, bureau, agency or
instrumentality, domestic or foreign, that, individually or in the aggregate,
could in the reasonable determination of the Company be expected to impair the
ability of the Company to perform its payment or other material obligations
under the Loan Documents.
4.7 PAYMENT OF TAXES.
Except to the extent permitted by subsection 5.3, all federal income
tax returns and other material tax returns and reports of the Company and its
Subsidiaries required to be filed by any of them have been timely filed (or
extensions have been obtained with respect thereto), and all federal income
taxes and material Taxes upon the Company and its Subsidiaries and upon their
respective properties, assets, income, businesses and franchises which are due
and payable have been paid when before any penalty, fine or interest accrues
thereon. Except as disclosed in writing to the Agent after the Closing Date,
there are no agreements with respect to Taxes between the Company and any taxing
agency or authority.
4.8 PERFORMANCE OF AGREEMENTS; MATERIALLY ADVERSE AGREEMENTS.
A. Neither the Company nor any of its Subsidiaries is in default in the
performance, observance or fulfillment of any of the material obligations,
covenants or conditions contained in any of its Contractual Obligations (after
giving effect to the application of the proceeds of the Government Guaranteed
Loan), and no condition exists that, with the giving of notice or the lapse of
time or both, would constitute such a default.
B. Neither the Company nor any of its Subsidiaries is a party to or is
otherwise subject to any agreements or instruments or any charter or other
internal restrictions which, individually or in the aggregate, could in the
reasonable determination of the Company be expected to impair the ability of the
Company to perform its payment or other material obligations under the Loan
Documents or in connection with the Government Guaranteed Loan or the Lease
Indenture, or (taken as a whole) the Concessions.
4.9 GOVERNMENTAL REGULATION.
Neither the Company nor any of its Subsidiaries is subject to
regulation under the Public Utility Holding Company Act of 1935, the Federal
Power Act, the Interstate Commerce Act or the Investment Company Act of 1940 or
under any other federal or state statute or regulation which may limit its
ability to incur Indebtedness or which may otherwise render all or any portion
of the Obligations unenforceable.
4.10 SECURITIES ACTIVITIES.
Neither the Company nor any of its Subsidiaries owns or is engaged
principally, or as one of its important activities, in the business of extending
credit for the purpose of purchasing or carrying any Margin Stock, nor shall any
proceeds of the Loans be used to purchase or carry Margin Stock or to extend
credit to any Person for the purpose of purchasing or carrying any
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Margin Stock in a manner that violates or causes a violation of Regulations T, U
or X of the Board of Governors of the Federal Reserve System or any other
regulation of such Board.
4.11 EMPLOYEE BENEFIT PLANS.
Each Plan maintained by the Company or an ERISA Affiliate is in
compliance in all material respects with all applicable laws. Except in such
instances where an omission or failure would in the reasonable determination of
the Company impair the ability of the Company to perform its payment or other
material obligations under the Loan Documents (a) all returns, reports and
notices required to be filed with any regulatory agency with respect to any Plan
have been filed timely and (b) neither the Company nor any ERISA Affiliate has
failed to make any contribution or pay any amount due or owing as required by
the terms of any Plan. There are no pending or, to the best of the Company's
knowledge, threatened claims, lawsuits, investigations or actions (other than
routine claims for benefits in the ordinary course) asserted or instituted
against the assets of any Plan or its related trust or against any fiduciary of
a Plan with respect to the operation of such Plan that are likely to result in
liability of the Company that in the reasonable determination of the Company
would impair the ability of the Company to perform its payment or other material
obligations under the Loan Documents. Except in such instances where an omission
or failure would not in the reasonable determination of the Company impair the
ability of the Company to perform its payment or other material obligations
under the Loan Documents, each Plan maintained by the Company or an ERISA
Affiliate that is intended to be "qualified" within the meaning of section
401(a) of the Code is, and has been during the period from its adoption to date,
so qualified, both as to form and operation and all necessary governmental
approvals, including a favorable determination as to the qualification under the
Code of such Plan and each amendment thereto, have been or will be timely
obtained. Neither the Company nor any ERISA Affiliate has engaged in any
prohibited transaction, within the meaning of section 406 of ERISA or section
4975 of the Code, in connection with any Plan which could result in liability of
the Company that would in the reasonable determination of the Company impair the
ability of the Company to perform its payment or other material obligations
under the Loan Documents. Neither the Company nor any ERISA Affiliate has any
contingent liability with respect to any post-retirement benefits under a
welfare benefit plan as defined in ERISA other than a liability for continuation
coverage described in Part 6 of Title 1 of ERISA, except where such liability
could not in the reasonable determination of the Company be expected to impair
the ability of the Company to perform its payment or other material obligations
under the Loan Documents. Neither the Company nor any ERISA Affiliate maintains,
has established or has ever participated in a multiple employer welfare benefit
arrangement within the meaning of ERISA except to the extent that such
participation would not in the reasonable determination of the Company be
expected to impair the ability of the Company to perform its payment or other
material obligations under the Loan Documents. The Company has not incurred any
potential liability with respect to a multiemployer plan, as defined in section
3(37) of ERISA or a plan described in section 4063(a) of ERISA except to the
extent that such liability would not in the reasonable determination of the
Company be expected to impair the ability of the Company to perform its payment
or other material obligations under the Loan Documents. Neither the Company nor
any ERISA Affiliate has incurred any liability under Title IV of ERISA that has
not been satisfied, and no condition exists that could reasonably be expected to
result in the Company or an ERISA Affiliate incurring any liability under Title
IV of
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ERISA that would in the reasonable determination of the Company impair the
ability of the Company to perform its payment or other material obligations
under the Loan Documents.
4.12 ENVIRONMENTAL PROTECTION.
A. All Facilities and operations of the Company and its Subsidiaries
are, and have been to the Company's knowledge, in compliance with all
Environmental Laws except for any noncompliance which, individually or in the
aggregate, could not in the reasonable determination of the Company be expected
to impair the ability of the Company to perform its payment or other material
obligations under the Loan Documents.
B. There are no, and have been no, conditions, occurrences, or
Hazardous Materials Activity (a) arising at any Facilities or, to the knowledge
of the Company, at any other location or (b) arising in connection with the
operations of the Company or its Subsidiaries (including the transportation of
Hazardous Materials in accordance with applicable regulations), which
conditions, occurrences or Hazardous Materials Activity could reasonably be
expected to form the basis of an Environmental Claim against the Company or any
of its Subsidiaries and which, individually or in the aggregate, could in the
reasonable determination of the Company be expected to impair the ability of the
Company to perform its payment or other material obligations under the Loan
Documents.
C. To the Company's knowledge, there are no pending or threatened
Environmental Claims against the Company or its Subsidiaries, and the Company
and its Subsidiaries have received no notices, inquiries, or requests for
information with respect to any Environmental Claims which in either case are
reasonably likely to be adversely determined and could individually or in the
aggregate in the reasonable determination of the Company be expected to impair
the ability of the Company to perform its payment or other material obligations
under the Loan Documents.
D. Except as disclosed to the Agent in writing, the Company is not
currently operating or required to be operating under any compliance order,
schedule, decree or agreement, any consent decree, order or agreement, and/or
any corrective action decree, order or agreement issued or entered into under
any Environmental Law the failure to comply with which could individually or in
the aggregate in the reasonable determination of the Company be expected to
impair the ability of the Company to perform its payment or other material
obligations under the Loan Documents.
E. The Company has provided the Agent copies of all environmental
audits, assessments or other evaluations in its possession or subject to its
control prepared with respect to the Maintenance Facility, except for audits,
assessments or other evaluations that are confidential and privileged as
attorney-client communication.
4.13 SOLVENCY.
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As of the Closing Date, after giving effect to the application of
proceeds of the Government Guaranteed Loan, the Company is and, upon the
incurrence of any Obligations by the Company on any date on which this
representation is made, will be, Solvent.
4.14 DISCLOSURE.
No representation or warranty of the Company contained in any Loan
Document or in any other document, certificate or written statement furnished to
the Agent or Lenders by or on behalf of the Company or any of its Subsidiaries
for use in connection with the transactions contemplated by this Agreement
contains any untrue statement as and when made, as any of such representations
and warranties may made from time to time in accordance with this Agreement and
the other Loan Documents. Any projections and pro forma financial information
contained in such materials are based upon good faith estimates and assumptions
believed by the Company to be reasonable at the time made, it being recognized
by Lenders that such projections as to future events are not to be viewed as
facts and that actual results during the period or periods covered by any such
projections may differ from the projected results. There are no facts known to
any Responsible Officer of the Company (other than matters of a general economic
nature) that, individually or in the aggregate, could in the reasonable
determination of the Company be expected to impair the ability of the Company to
perform its payment or other material obligations under the Loan Documents.
4.15 YEAR 2000 MATTERS.
Any reprogramming required to permit the proper functioning (but only
to the extent that such proper functioning would otherwise be impaired by the
occurrence of the year 2000) in and following the year 2000 of computer systems
and other equipment containing embedded microchips, whether owned or operated by
the Company or any of its Subsidiaries or used or relied upon in the conduct of
their business (including any such systems and other equipment supplied by
others or with which the computer systems of the Company or any of its
Subsidiaries interface), and the testing of all such systems and other equipment
as so reprogrammed, has been completed on or prior to the Closing Date, except
for such reprogramming the failure to perform any of which could not
individually or in the aggregate in the reasonable determination of the Company
be expected to impair the ability of the Company to perform its payment or other
material obligations under the Loan Documents.
4.16 RECEIVABLES DOCUMENTATION.
The documentation provided to the Agent relating to the receivables
pledged to the Agent for the benefit of the Lenders pursuant to the Receivables
Security Agreement is materially correct and complete, and sets forth all of the
material terms and conditions relating to such receivables.
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SECTION 5.
COMPANY'S AFFIRMATIVE COVENANTS
The Company covenants and agrees that, until payment in full of all of
the Loans and other Obligations, the Company shall perform, and shall cause each
of its Subsidiaries to perform, all covenants in this Section 5.
5.1 FINANCIAL STATEMENTS AND OTHER REPORTS.
The Company will maintain, and cause each of its Subsidiaries to
maintain, a system of accounting established and administered in accordance with
sound business practices to permit preparation of financial statements in
conformity with GAAP. The Company will deliver to the Agent and Lenders:
(i) (a) Quarterly Financials: as soon as available and in any event
within 60 days after the end of each fiscal quarter of each Fiscal Year (other
than the last quarter of each Fiscal Year), (a) the consolidated balance sheets
of each of the Company and Holdings as at the end of such fiscal quarter and the
related consolidated statements of income and stockholders' equity of each such
company for such fiscal quarter and consolidated cash flows of each such company
for the period from the beginning of then current Fiscal Year to the end of such
fiscal quarter, all in reasonable detail and certified by the chief financial
officer, controller or treasurer of such company that they fairly present the
consolidated financial condition of such company as at the dates indicated and
the results of its operations and their cash flows for the periods indicated and
(b) a narrative report describing the operations of such company in the form
prepared for presentation to senior management for such fiscal quarter and for
the period from the beginning of then current Fiscal Year to the end of such
fiscal quarter; provided that delivery of such company's Form 10-Q for such
fiscal quarter shall be deemed to satisfy all of the requirements of this
subsection 5.1(i):
(b) Monthly Reporting. as soon as available and in any event within 25
days after the end of each calendar month, the consolidated balance sheets of
the Company as at the end of such month and the related consolidated statements
of income and consolidated cash flows of the Company for such calendar month and
for the period from the beginning of the then current Fiscal Year to the end of
such month; all such financial statements to be in the form prepared for the
management of the Company and certified by the chief financial officer,
controller or treasurer of the Company being fairly stated in all material
respects (subject to normal year-end audit adjustments).
(ii) Year-End Financials: as soon as available and in any event within
105 days after the end of each Fiscal Year, (a) the consolidated balance sheets
of each of the Company and Holdings at the end of such Fiscal Year and the
related consolidated statements of income, stockholders' equity and cash flows
of such company for such Fiscal Year, setting forth in each case in comparative
form the corresponding figures for the previous Fiscal Year and, in the case of
the Company, the corresponding figures from the annual financial plan delivered
pursuant to
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subsection 5.1(viii) for the Fiscal Year covered by such financial statements of
the Company, all in reasonable detail, (b) a narrative report describing the
operations of such company in the form prepared for presentation to senior
management for such Fiscal Year, and (c) an accountant's report thereon of
Pricewaterhouse Coopers L.L.P. or other independent certified public accountants
of recognized national standing selected by such company, which report shall be
unqualified, shall express no doubts about the ability of such company to
continue as a going concern, and shall state that such consolidated financial
statements fairly present the consolidated financial position of such company as
at the dates indicated and the results of their operations and their cash flows
for the periods indicated in conformity with GAAP applied on a basis consistent
with prior years and that the examination by such accountants in connection with
such consolidated financial statements has been made in accordance with
generally accepted auditing standards; provided that (i) references in such
opinion to changes in GAAP, changes in accounting standards, highlighting
contents of footnotes, limitations in the scope of the audit or exclusions from
the audit information not required by GAAP that are, in each case, customary in
industry practice and not prejudicial to the opinion stated therein shall not be
deemed to be "qualifications" for the purpose of this subsection and (ii)
delivery of such company's Form 10-K for such Fiscal Year shall be deemed to
satisfy all of the requirements of this subsection 5.1(ii);
(iii) Officer's and Compliance Certificates: together with each
delivery of financial statements of the Company pursuant to subdivisions (i) and
(ii) above after the Closing Date, (a) an Officer's Certificate of the Company
stating that the signer has reviewed the terms of this Agreement and has made,
or caused to be made under his or her supervision, a review in reasonable detail
of the transactions and condition of the Company during the accounting period
covered by such financial statements and that such review has not disclosed the
existence during or at the end of such accounting period, and that the signer
does not have knowledge of the existence as at the date of such Officer's
Certificate, of any condition or event that constitutes an Event of Default or
Potential Event of Default, or, if any such condition or event existed or
exists, specifying the nature and period of existence thereof and what action
the Company has taken, is taking and proposes to take with respect thereto; and
(b) a Compliance Certificate demonstrating in reasonable detail compliance (or
non-compliance) during and at the end of the applicable accounting periods with
the restrictions contained in subsections 6.4 and 6.5;
(iv) SEC Filings and Press Releases: promptly upon their becoming
available, copies of (a) all financial statements, reports, notices and proxy
statements sent or made available generally by the Company to its security
holders, (b) all regular and periodic reports and all registration statements
and prospectuses, if any, filed by the Company or any of its Subsidiaries with
any securities exchange or with the Securities and Exchange Commission or any
governmental or private regulatory authority, and (c) all material press
releases and other statements made available generally by the Company or any of
its Subsidiaries to the public concerning material developments in the business
of the Company or any of its Subsidiaries;
(v) Events of Default, etc.: promptly upon any Responsible Officer of
the Company obtaining knowledge (a) of any condition or event that constitutes
an Event of Default or Potential Event of Default, (b) that any creditor has
given any notice to the Company or any of its Subsidiaries or taken any other
action with respect to a claimed default or event or condition of the type
referred to in subsection 7.2, (c) of any condition or event that would be
required to be
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disclosed in a current report filed by the Company with the Securities and
Exchange Commission on Form 8-K if the Company were required to file such
reports under the Exchange Act, or (d) of the occurrence of any event or change
that has caused or evidences, either in any case or in the aggregate, in the
reasonable determination of the Company, impairment of the ability of the
Company to perform its payment or other material obligations under the Loan
Documents, an Officer's Certificate specifying the nature and period of
existence of such condition, event or change, or specifying the notice given or
action taken by any such Person and the nature of such claimed Event of Default,
Potential Event of Default, default, event or condition, and what action the
Company has taken, is taking and proposes to take with respect thereto;
(vi) Litigation or Other Proceedings: To the extent not disclosed
pursuant to this subsection, (a) promptly upon any Responsible Officer of the
Company obtaining knowledge of (X) the institution of, or threat of, any action,
suit, proceeding (whether administrative, judicial or otherwise), governmental
investigation or arbitration against or affecting the Company or any of its
Subsidiaries or any property of the Company or any of its Subsidiaries
(collectively, "PROCEEDINGS") or (Y) any material development in any Proceeding
that, in any case:
(1) is reasonably likely to be adversely determined and assuming that all
damages demanded in such litigation are awarded, is in the reasonable
determination of the Company likely to impair the ability of the Company to
perform its payment or other material obligations under the Loan Documents; or
(2) seeks to enjoin or otherwise prevent the consummation of, or to recover any
damages or obtain relief as a result of, the transactions contemplated hereby;
written notice thereof together with such other information as may be reasonably
available to the Company to enable the Agent and its counsel to evaluate such
matters; and (b) within twenty days after the end of each Fiscal Year, a
schedule of all Proceedings involving an alleged liability of, or claims against
or affecting, the Company or any of its Subsidiaries equal to or greater than
$20,000,000 and promptly after request by the Agent such other information as
may be reasonably requested by the Agent to enable the Agent and its counsel to
evaluate any of such Proceedings;
(vii) ERISA Reports: promptly after the receipt by the Company of a
request therefor by the Agent or a Lender copies of any annual and other reports
(including Schedule B thereto) with respect to a Plan filed by the Company or
any ERISA Affiliate with the United States Department of Labor, the Internal
Revenue Service or the Pension Benefit Guaranty Corporation;
(viii) Annual Financial Plan: annually, as soon as practicable after
preparation thereof by the Company in the ordinary course of business but in no
event later than January 31 of each year, the Company shall provide the Agent
and each Lender copies of its annual financial plan;
(ix) Environmental Audits and Reports: as soon as practicable following
receipt thereof, copies of all environmental audits and reports, whether
prepared by personnel of the Company or any of its Subsidiaries or by
independent consultants, with respect to significant environmental matters at
any Facility or which relate to an Environmental Claim which could in
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the reasonable determination of the Company be expected to impair the ability of
the Company to perform its payment or other material obligations under the Loan
Documents;
(x) Pricing Certificates: (a) within one Business Day after any public
release by S&P or ▇▇▇▇▇'▇ raising or lowering its credit rating on the Company's
senior unsecured debt obligations and (b) at such additional times as the
Company may elect, a certificate setting forth the credit rating on the
Company's senior unsecured debt obligations (each, a "PRICING CERTIFICATE");
(xi) Additional Subsidiaries: to the extent permitted hereunder
pursuant to subsection 6.13, with reasonable promptness, upon the formation
thereof, the name, corporate structure and allocation of Voting Securities of
each Subsidiary of the Company, including, without limitation, providing a
supplement Schedule 4.1 hereto with all relevant information included with
respect to such new Subsidiary;
(xii) Insurance Proceeds: promptly notify the Agent upon a Responsible
Officer of the Company obtaining actual knowledge of the occurrence of an event
of loss or damage to any Collateral that is reasonably expected to result in
receipt of insurance proceeds reasonably estimated by the Company to exceed
$5,000,000.
(xiii) Plan Audits and Liabilities: promptly after the Company or any
ERISA Affiliate (a) contacts the Internal Revenue Service for the purpose of
participation in a closing agreement or any voluntary resolution program with
respect to a Plan which could in the reasonable determination of the Company
impair the ability of the Company to perform its payment or other material
obligations under the Loan Documents or (b) knows or has reason to know that any
event with respect to any Plan occurred that could in the reasonable
determination of the Company impair the ability of the Company to perform its
payment or other material obligations under the Loan Documents a notification
thereof;
(xiv) Funding Changes and New Plan Benefits: promptly after the change,
a notification of any material increases in the benefits, or material change in
funding method, with respect to which the Company may have any liability, or the
establishment of any material new Plan with respect to which the Company may
have any liability or the commencement of contributions to any Plan to which the
Company or any ERISA Affiliate was not previously contributing, except to the
extent that such an event would not in the reasonable determination of the
Company be expected to impair the ability of the Company to perform its payment
or other material obligations under the Loan Documents;
(xv) Claims and Proceedings: promptly after receipt of written notice
of commencement thereof, notification of all (i) claims made by participants or
beneficiaries with respect to any Plan and (ii) actions, suits and proceedings
before any court or governmental department, commission, board, bureau, agency
or instrumentality, domestic or foreign, affecting the Company or any ERISA
Affiliate with respect to any Plan, except those which, in the aggregate, if
adversely determined could not in the reasonable determination of the Company
impair the ability of the Company to perform its payment or other material
obligations under the Loan Documents;
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(xvi) ERISA Reportable Events: promptly after the occurrence of any
reportable event (as defined in ERISA) relating to a Plan with respect to which
the Company or an ERISA Affiliate may have any liability (other than any such
event with respect to which the Pension Benefit Guaranty Corporation has waived
the ERISA reportable event notification requirement by regulation or notice);
and
(xvii) Other Information: with reasonable promptness, such other
information and data with respect to the Company or any of its Subsidiaries as
from time to time may be reasonably requested by the Agent or any Lender.
5.2 CORPORATE EXISTENCE.
Except as permitted under subsection 6.6(v), the Company will do or
cause to be done all things necessary to preserve and keep in full force and
effect its corporate existence and the corporate, partnership or other existence
of each Subsidiary of the Company and the rights (charter and statutory) and
franchises of the Company and any Subsidiary of the Company; provided, that the
Company shall not be required to preserve any such corporate, partnership or
other existence of any Subsidiary or any such right or franchise, if the Board
of Directors of the Company shall determine in the exercise of its business
judgment that the preservation thereof is no longer desirable in the conduct of
the business of the Company or any Subsidiary and that abandonment of any such
right or franchise shall not in the reasonable determination of the Company
impair the ability of the Company to perform its payment or other material
obligations under the Loan Documents.
5.3 PAYMENT OF TAXES AND CLAIMS; TAX CONSOLIDATION.
A. The Company will, and will cause its Subsidiaries to, pay or
discharge or cause to be paid or discharged, before the same shall become
delinquent, (i) all taxes, assessments and governmental charges levied or
imposed upon the Company or any Subsidiary or upon the income, profits or
property of the Company or any Subsidiary, and (ii) all lawful claims for labor,
materials and supplies that, if unpaid, might by law become a lien on the
property of the Company or any Subsidiary; provided, however, that the Company
shall not be required to pay or discharge or cause to be paid or discharged any
such tax, assessment, charge or claim the amount, applicability or validity of
which is being contested in good faith by appropriate proceedings and with
respect to which an adequate reserve has been established by the Company to the
extent required by GAAP.
B. The Company will not, and will not permit any of its Subsidiaries
to, file or consent to the filing of any consolidated income tax return with any
Person (other than any Subsidiary of the Company or the Company or Holdings).
5.4 MAINTENANCE OF PROPERTIES; INSURANCE.
The Company will, and will cause each of its Subsidiaries to, maintain
all properties used or useful in the conduct of its business in good condition,
repair and working order and supply such properties with all necessary equipment
and make all necessary repairs, renewals,
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replacements, betterments and improvements thereto, all as in the judgment of
the Company may be necessary so that the business carried on in connection
therewith may be properly and advantageously conducted at all times; provided,
however, that nothing in this subsection shall prevent the Company or any
Subsidiary from discontinuing the operation and maintenance of any such
properties if such discontinuance is, in the good faith judgment of the Company
or such Subsidiary, as the case may be, desirable in the conduct of its
respective business and shall not impair the ability of the Company to perform
its payment or other material obligations under the Loan Documents. In addition
to the insurance required pursuant to each of the Security Agreements, the
Company will insure and keep insured, and will cause each of its Subsidiaries to
insure and keep insured, with reputable insurance companies, such of their
respective properties, to such an extent and against such risks, and will
maintain liability insurance, to the extent that property of a similar character
is usually so insured by companies engaged in a similar business and owning
similar properties in accordance with good business practice.
5.5 INSPECTION.
The Company will, and will cause its Subsidiaries to, permit any
authorized representatives designated by the Agent or any Lender to visit and
inspect any of the properties (other than with respect to Collateral, inspection
of which is governed by the applicable Security Agreements) of the Company or
any of its Subsidiaries, including its and their financial and accounting
records, and to make copies and take extracts therefrom, and to discuss its and
their affairs, finances and accounts with its and their officers and independent
public accountants, all upon reasonable notice and at such reasonable times
during normal business hours and as often as may be reasonably requested;
provided that so long as no Potential Event of Default or Event of Default shall
have occurred and be continuing, such inspection shall not be disruptive to the
Company's business, as reasonably determined by the Company.
5.6 COMPLIANCE WITH LAWS, ETC.
The Company will, and will cause each of its Subsidiaries to, comply
with all applicable statutes, rules, regulations, orders and restrictions of the
United States of America, all states and municipalities thereof, and of any
governmental department, commission, board, regulatory authority, bureau, agency
and instrumentality of the foregoing, in respect of the conduct of their
respective businesses and the ownership of their respective properties, except
such as are being contested in good faith by appropriate proceedings and except
for such noncompliance as would not in any case or in the aggregate in the
reasonable determination of the Company impair the ability of the Company to
perform its payment or other material obligations under the Loan Documents. The
Company shall not conduct, any Hazardous Materials Activity at any Facility or
at any other location in a manner that does not comply with Environmental Laws.
5.7 COMPANY'S REMEDIAL ACTION REGARDING HAZARDOUS MATERIALS.
A. MAINTENANCE FACILITY. To the extent required by Environmental Laws,
the Company will promptly take, and will cause each of its Subsidiaries promptly
to take, any and all necessary remedial action (except to the extent that such
remedial action is taken by other Persons responsible for such remedial action
through contractual arrangements with the
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Company) in connection with the presence, storage, use, disposal, transportation
or Release of any Hazardous Materials on, under or about the Maintenance
Facility in order to comply with all applicable Environmental Laws and
Governmental Authorizations. In the event the Company or any of its Subsidiaries
undertakes any remedial action with respect to any Hazardous Materials on, under
or about the Maintenance Facility, the Company or such Subsidiary will conduct
and complete such remedial action (or will cause such action to be taken
pursuant to contractual rights of the Company against third parties) in
compliance with all applicable Environmental Laws, and in accordance with the
policies, orders and directives of all federal, state and local governmental
authorities except when, and only to the extent that, the Company's or such
Subsidiary's liability for such presence, storage, use, disposal, transportation
or discharge of any Hazardous Materials is being contested in good faith and by
appropriate proceedings diligently conducted by the Company or such Subsidiary.
B. COMPANY FACILITIES. To the extent required by Environmental Laws,
the Company will take, and will cause each of its Subsidiaries to take, any and
all necessary remedial action (except to the extent that such remedial action is
taken by other Persons responsible for such remedial action through contractual
arrangements with the Company) in connection with the presence, storage, use,
disposal, transportation or Release of any Hazardous Materials on, under or
about any Facility (other than the Maintenance Facility) in order to comply
timely with all applicable Environmental Laws and Governmental Authorizations
except for such non-compliance as would not in any case or in the aggregate in
the reasonable determination of the Company impair the ability of the Company to
perform its payment and other material obligations under the Loan Documents. In
the event the Company or any of its Subsidiaries undertakes any remedial action
with respect to any Hazardous Materials on, under or about any Facility (other
than the Maintenance Facility), the Company or such Subsidiary will conduct and
complete such remedial action (or will cause such action to be taken pursuant to
contractual rights of the Company against third parties) in compliance with all
applicable Environmental Laws, and in accordance with the policies, orders and
directives of all federal, state and local governmental authorities except when,
and only to the extent that, the Company's or such Subsidiary's liability for
such presence, storage, use, disposal, transportation or discharge of any
Hazardous Materials is being contested in good faith and by appropriate
proceedings diligently conducted by the Company or such Subsidiary or except for
such non-compliance as would not in any case or in the aggregate in the
reasonable determination of the Company impair the ability of the Company to
perform its payment and other material obligations under the Loan Documents.
5.8 FURTHER ASSURANCES.
At any time or from time to time upon the request of the Agent, the
Company will, at its expense, promptly execute, acknowledge and deliver such
further documents and do such other acts and things as the Agent may reasonably
request in order to effect fully the purposes of the Loan Documents and to
provide for payment of the Obligations in accordance with the terms of this
Agreement, the Notes and the other Loan Documents.
5.9 EMPLOYEE BENEFIT PLANS.
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The Company shall take such actions as are reasonably practicable to
ensure that the Plans with respect to which it may have any liability are
operated in material compliance with all applicable laws, except to the extent
that the failure to do so could not in the reasonable determination of the
Company be expected to impair the ability of the Company to perform its payment
or other material obligations under the Loan Documents. Neither the Company nor
a Subsidiary shall amend, adopt or terminate any Plan unless such action could
not in the reasonable determination of the Company be expected to impair the
ability of the Company to perform its payment or other material obligations
under the Loan Documents.
5.10 FAA MATTERS; CITIZENSHIP.
The Company will at all times hereunder be an "air carrier" within the
meaning of the Act and hold a certificate under Section 41102(a)(1) of the Act.
The Company will at all times hereunder be a United States Citizen holding an
air carrier operating certificate issued pursuant to Chapter 447 of the Act for
aircraft capable of carrying 10 or more individuals or 6,000 pounds or more of
cargo. The Company will possess and maintain all necessary consents, franchises,
licenses, permits, rights and concessions and consents which are material to the
operation of the routes flown by it and the conduct of its business and
operations as currently conducted.
5.11 CHANGES IN GAAP.
Should there be a change in GAAP from that in effect on the Closing
Date, such that the defined terms set forth in subsection 1.1 or the covenants
set forth in Section 6 would then be calculated in a different manner or with
different components or would render the same not meaningful criteria for
evaluating the matters contemplated to be evidenced by such covenants, the
Company will, upon the request of the Agent and the Lenders, and the Agent and
Lenders will, upon the request of the Company, within 30 days of such request,
amend this Agreement as necessary to preserve the intent of the financial
covenants contained herein on the Closing Date. In the event that the parties
hereto are unable to agree upon such an amendment within such 30 day period,
such defined terms and covenants shall be calculated in accordance with GAAP as
in effect immediately prior to such change.
5.12 REFINANCING OF INDEBTEDNESS
Any refinancing of Indebtedness for borrowed money shall be made only
pursuant to Refinancing Indebtedness. The Company shall give the Agent prior
written notice of any refinancing of the Air Carrier Guarantee Loan Documents
and the Lease Indenture.
5.13 GUARANTY BY HOLDINGS
Promptly after repaying in full all amounts owed by the Company under
the Government Guaranteed Loan, the Company shall cause Holdings to enter into a
guaranty, in form and substance reasonably satisfactory to the Agent, pursuant
to which Holdings shall guaranty the Obligations under this Agreement and the
other Loan Documents.
SECTION 6.
COMPANY'S NEGATIVE COVENANTS
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The Company covenants and agrees that, until payment in full of all of
the Loans and other Obligations, the Company shall perform, and shall cause each
of its Subsidiaries to perform, all covenants in this Section 6.
6.1 RESERVED.
6.2 LIENS AND RELATED MATTERS.
A. PROHIBITION ON LIENS. The Company shall not, and shall not permit
any of its Subsidiaries to, directly or indirectly create, incur, assume or
permit to exist any Lien on or with respect to any property or asset of any kind
(other than Collateral) (including any document or instrument in respect of
goods or accounts receivable) of the Company or any of its Subsidiaries, whether
now owned or hereafter acquired, or any income or profits therefrom, or file or
permit the filing of, or permit to remain in effect, any financing statement or
other similar notice of any Lien with respect to any such property, asset,
income or profits under the Uniform Commercial Code of any state or under any
similar recording or notice statute, except:
(i) Permitted Encumbrances; and
(ii) purchase money Liens securing Indebtedness used to acquire
aircraft (including aircraft engines installed thereon), spare aircraft engines,
aircraft parts, simulators, passenger loading bridges or other flight or ground
support equipment (collectively, "Aircraft Related Equipment") or refinancing of
any Aircraft Related Equipment acquired by the Company with cash and not
Indebtedness (for the avoidance of doubt, only to the extent of the Company's
cash investment in such Aircraft Related Equipment);
(iii) Liens on the Company's existing training facility located in
Phoenix, Arizona; and
(iv) other Liens securing or relating to Indebtedness and other
liabilities and obligations in an aggregate amount not to exceed $50,000,000 at
any time outstanding.
B. NO RESTRICTIONS ON SUBSIDIARY DISTRIBUTIONS TO COMPANY OR OTHER
SUBSIDIARIES. Except (i) as provided herein and (ii) as described on Schedule
6.2 annexed hereto, the Company will not, and will not permit any of its
Subsidiaries to, create or otherwise cause or suffer to exist or become
effective any Payment Restriction.
6.3 INVESTMENTS.
The Company shall not, and shall not permit any Subsidiary to make any
Investment other than (i) Investments made from proceeds from Asset Sales as
permitted by subsection 6.11 or from other sales or other disposition of assets
permitted under Section 6.6(ii); (ii) Investments consisting of Cash
Equivalents; (iii) accounts receivable if credited or acquired in the ordinary
course of business and payable or dischargeable in accordance with customary
trade terms; (iv) payroll advances and advances for business and travel expenses
in the ordinary course of business; (v) Investments by the Company in its
Subsidiaries in the ordinary course of business or otherwise in accordance with
Section 6.8; (vi) Investments by any Subsidiary of the Company in the Company or
in any other Subsidiary; (vii) Investments made by way of any endorsement of
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negotiable instruments received by the Company or any Subsidiary in the ordinary
course of its business and presented by it to any bank for collection or
deposit; (viii) stock, obligations or securities received in settlement of debts
created in the ordinary course of business owing to the Company or any
Subsidiary; (ix) Investments by the Company in any Subsidiary for the purpose of
receivables financing; (x) in addition to any other permitted investments, any
other Investments by the Company in an aggregate amount not exceeding $1,000,000
at any time; and (xi) Investments made in connection with marketing and
promotion agreements, alliance agreements, distribution agreements and other
similar agreements under which a portion of the consideration to the Company
includes an opportunity for Investment in the Capital Stock of other Persons,
which Investments shall not exceed $20,000,000 in any Fiscal Year.
6.4 RESTRICTED PAYMENTS.
The Company shall not, and shall not permit any of its Subsidiaries to,
directly or indirectly, declare, order, pay, make or set apart any sum for any
Restricted Payment; provided, however, that the Company may, so long as no
Potential Event of Default or Event of Default shall have occurred and be
continuing, make a Restricted Payment to Holdings (i) to pay or reimburse the
Company's share of Holding's business expenses and overhead in a maximum amount
of $2,500,000 per Fiscal Year, (ii) to pay or reimburse Holdings for Capital
Stock (including options on any such Capital Stock or related stock appreciation
rights or similar securities) purchases or redemptions from officers, directors
or employees of the Company or Holdings (or their estates or beneficiaries under
their estates) upon death, disability, retirement, termination of employment or
pursuant to the terms of any plan or any other agreement under which such
Capital Stock or related rights were issued, in an amount not to exceed
$3,000,000 per Fiscal Year, (iii) to pay or reimburse Holdings for withholding
taxes arising from cashless exercises of options or warrants for Holdings
Capital Stock year and (iv) to pay or reimburse Holdings for interest payments
under the Lease Indenture, in an amount not to exceed $11,000,000 in Fiscal Year
2002, $12,000,000 in Fiscal Year 2003, $13,000,000 in Fiscal Year 2004, and
$14,000,000 in Fiscal Year 2005 and each fiscal year thereafter until the
Termination Date.
6.5 FINANCIAL COVENANT.
The Company shall not permit the reserve of Cash and Cash Equivalents
(that in either case are free from all Liens other than Permitted Encumbrances
of the type described in clause (xiii) of the definition of Permitted
Encumbrances) of the Company and its Wholly Owned Subsidiaries (without regard
to Cash and Cash Equivalents in the Cash Collateral Account) to be less than One
Hundred Million Dollars ($100,000,000).
6.6 RESTRICTION ON FUNDAMENTAL CHANGES; ASSET SALES AND ACQUISITIONS; NEW
SUBSIDIARIES.
The Company shall not, and shall not permit any of its Subsidiaries to,
enter into any transaction of merger or consolidation, or liquidate, wind-up or
dissolve itself (or suffer any liquidation or dissolution), or convey, sell,
lease, sub-lease, transfer or otherwise dispose of, in one transaction or a
series of transactions, all or any part of its business, property or fixed
assets,
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whether now owned or hereafter acquired, or acquire by purchase or otherwise all
or any portion of the business, property or fixed assets (excluding therefrom
purchases and acquisitions in the ordinary course of business by the Company and
its Subsidiaries of property from any Person not constituting all or
substantially all of the property of such Person), or stock or other evidence of
beneficial ownership of, any Person or any division or line of business of any
Person, except:
(i) any Subsidiary of the Company may be merged with or into the
Company or any Wholly Owned Subsidiary of the Company or be liquidated, wound up
or dissolved, or all or any part of its business, property or assets may be
conveyed, sold, leased, transferred or otherwise disposed of, in one transaction
or a series of transactions, to the Company or any such Wholly Owned Subsidiary
of the Company; provided that, in the case of such a merger, the Company or such
Wholly Owned Subsidiary shall be the continuing or surviving corporation; and
(ii) the Company and its Subsidiaries may sell or otherwise dispose of
assets in transactions that do not constitute Asset Sales; provided that the
consideration received for such assets shall be in an amount at least equal to
the fair market value thereof; and
(iii) the Company and its Subsidiaries may make Asset Sales to the
extent permitted by subsection 6.11 hereto; and
(iv) the Company may make acquisitions of Capital Stock, the assets
and/or the business of another Person (including any division or line of
business of such Person) provided that, (a) the acquisition primarily involves
the acquisition of assets to be used in the business of the Company, (b) with
respect to such acquisition any newly acquired Subsidiary of the Company shall
be a Wholly Owned Subsidiary, (c) immediately before and after giving effect
thereto, no Potential Event of Default or Event of Default shall have occurred
and be continuing, (d) immediately after giving effect to the acquisition, the
Company shall be in compliance on a Pro Forma Basis with financial covenants in
subsection 6.5 and such compliance shall be evidenced by an Officer's
Certificate demonstrating such compliance and (e) the aggregate purchase price
in connection with all such acquisitions (excluding therefrom any Indebtedness
assumed in connection with such acquisitions and any portion of the purchase
price thereof paid with the Company's Common Stock) does not exceed
$200,000,000; and
(v) the Company may enter into a consolidation or merger that complies
with subsections 6.10 and 6.12 hereof.
6.7 SALES AND LEASE-BACKS.
The Company shall not, and shall not permit any of its Subsidiaries to,
directly or indirectly, become or remain liable as lessee or as a guarantor or
other surety with respect to any lease, whether an Operating Lease or a Capital
Lease, of any property (whether real, personal or mixed), whether now owned or
hereafter acquired, other than aircraft (including aircraft engines installed
thereon), spare aircraft engines, aircraft parts, simulators, passenger loading
bridges or other flight or ground support equipment, in each case which (i) the
Company or any of its Subsidiaries has sold or transferred or is to sell or
transfer to any other Person (other than the Company or any of its Subsidiaries)
or (ii) the Company or any of its Subsidiaries intends to use
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for substantially the same purpose as any other property which has been or is to
be sold or transferred by the Company or any of its Subsidiaries to any Person
(other than the Company or any of its Subsidiaries) in connection with such
lease; provided that the Company and its Subsidiaries may become and remain
liable as lessee, guarantor or other surety with respect to any such lease if
and to the extent that the annual aggregate rentals under all such leases shall
not exceed $20,000,000.
6.8 TRANSACTIONS WITH AFFILIATES.
A. Neither the Company nor any Subsidiary of the Company shall,
directly or indirectly (i) sell, lease, transfer or otherwise dispose of any of
its properties or assets, or issue securities to, (ii) purchase any property,
assets or securities from, (iii) make any Investment in, or (iv) enter into or
suffer to exist any contract or agreement with or for the benefit of, an
Affiliate or holder of 5% or more of any class of Capital Stock (and any
Affiliate of such holder) of the Company (an "AFFILIATE TRANSACTION"), other
than (x) Affiliate Transactions permitted under subsection 6.8B hereof and (y)
Affiliate Transactions (including lease transactions) which are on fair and
reasonable terms no less favorable to the Company or such Subsidiary, as the
case may be, than those as might reasonably have been obtainable at such time
from an unaffiliated party; provided that if an Affiliate Transaction or series
of related Affiliate Transactions involves or has a value in excess of
$15,000,000, the Company or such Subsidiary, as the case may be, shall not enter
into such Affiliate Transaction or series of related Affiliate Transactions
unless a majority of the disinterested members of the Board of Directors of the
Company or such Subsidiary shall reasonably and in good faith determine that
such Affiliate Transaction is fair to the Company or such Subsidiary, as the
case may be, or is on terms no less favorable to the Company or such Subsidiary,
as the case may be, than those as might reasonably have been obtained at such
time from an unaffiliated party.
B. The provisions of subsection 6.8A shall not apply to (i) any
agreement as in effect as of the date hereof, or any amendment thereto in effect
as of the date hereof or any transaction contemplated thereby (including
pursuant to any amendment thereto) so long as any such agreement or amendment or
transaction is not disadvantageous to the Lenders in any material respect; (ii)
any transaction between the Company and any Wholly Owned Subsidiary or between
Wholly Owned Subsidiaries, provided such transactions are not otherwise
prohibited by this Agreement; (iii) reasonable and customary fees and
compensation paid to, and indemnity provided on behalf of, officers, directors,
employees or consultants of the Company or any Subsidiary, as determined by the
Board of Directors of the Company or any Subsidiary or the senior management
thereof in good faith; (iv) any Restricted Payments not prohibited by subsection
6.4; (v) any payments or other transactions pursuant to any tax sharing
agreement between the Company and any other Person with which the Company is
required or permitted to file a consolidated tax return or with which the
Company is or could be part of a consolidated group for tax purposes; (vi)
transactions with Chautauqua Airlines, Inc., Continental Airlines, Inc., Mesa
Airlines, Inc. and their respective Affiliates as contemplated by the Alliance
Agreements; and (vii) the Air Carrier Guarantee Loan Documents and the
transactions contemplated thereby.
6.9 CONDUCT OF BUSINESS.
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From and after the date hereof, the Company shall not, and shall not
permit any of its Subsidiaries to, engage in any business other than (i) the
businesses engaged in by the Company and its Subsidiaries on the date hereof and
similar or related businesses and (ii) such other lines of business as may be
consented to by Requisite Lenders.
6.10 MERGER OR CONSOLIDATION.
The Company shall not consolidate with or merge into any other
corporation or convey, lease or transfer its properties and assets substantially
as an entirety to any Person, unless: (i) in the case of a consolidation or
merger, the Company is the surviving entity, or (ii) if the Company is not the
surviving entity, such surviving entity or the Person that acquires by
conveyance, lease or transfer the properties and assets of the Company
substantially as an entirety, shall be a corporation organized and existing
under the laws of the United States of America or any State or the District of
Columbia, and shall expressly assume, by an agreement executed and delivered to
the Agent, in form satisfactory to the Agent, the Company's Obligations to repay
the Loans and all other Obligations of the Company; (iii) immediately before and
after giving effect to such transaction, no Event of Default or Potential Event
of Default shall have occurred and be continuing; and (iv) the Company has
delivered to the Agent an Officer's Certificate and, in the case of any
transaction described in clause (ii) above, an opinion of counsel from counsel
satisfactory to the Agent, in form and substance satisfactory to the Agent,
stating that such consolidation, merger, conveyance, lease or transfer and such
agreement comply with this subsection and that all conditions precedent herein
provided for relating to such transaction have been complied with and addressing
such other matters as may be reasonably requested by the Agent.
6.11 LIMITATION ON ASSET SALES.
In the event and to the extent that on any date after the Closing Date
the Company and its Subsidiaries shall receive Net Cash Proceeds from one or
more Asset Sales (other than Asset Sales by the Company or any Subsidiary to the
Company or another Subsidiary), then the Company shall, or shall cause such
Subsidiary to, within 6 months after such date apply an amount equal to the
amount by which the aggregate amount of Net Cash Proceeds for such 6 month
period exceeds $10,000,000 (A) to repay Indebtedness of the Company or
Indebtedness of any of its Subsidiaries, in each case owing to a Person other
than the Company or any of its Subsidiaries, and/or (B) subject to subsection
6.6(iv), as an Investment (or enter into a definitive agreement committing to so
invest within 6 months after the date of such agreement), in property or assets
of a nature or type or that are used in a business (or in a Person having
property and assets of a nature or type, or engaged in a business) similar or
related to the nature or type of the property and assets of, or the business of,
the Company and its Subsidiaries existing on the date thereof (as determined in
good faith by the board of directors of the Company or such Subsidiary, as the
case may be, whose determination shall be conclusive and evidenced by a
resolution of the board of directors of the Company or such Subsidiary). The
amount of such Net Cash Proceeds required to be applied (or to be committed to
be applied) during such 6-month period as set forth in clause (A) or (B) of the
preceding sentence shall constitute "EXCESS PROCEEDS."
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6.12 LIMITATION ON ISSUANCES AND DISPOSITIONS OF CAPITAL STOCK OF SUBSIDIARIES.
Other than Subsidiaries which comply with Section 6.13, each Subsidiary
of the Company shall at all times be a Wholly Owned Subsidiary of the Company.
The Company (i) shall not, and shall not permit any Subsidiary to, transfer,
convey, sell, encumber or otherwise dispose of any Capital Stock of a
Subsidiary, or securities convertible or exchangeable into, or options,
warrants, rights or any other interest with respect to, Capital Stock of a
Subsidiary to any Person (other than the Company or a Wholly Owned Subsidiary)
and (ii) shall not permit any Subsidiary to issue shares of its Capital Stock
(other than directors' qualifying shares), or securities convertible or
exchangeable into, or options, warrants, rights or any other interest with
respect to, its Capital Stock to any Person other than to the Company or a
Wholly Owned Subsidiary; provided, that the limitations of this subsection shall
not apply to any transaction between or among the Company and one or more direct
or indirect Wholly Owned Subsidiaries of the Company whereby the Company merges,
consolidates or otherwise combines with such Wholly Owned Subsidiary and
pursuant to which all existing holders of Capital Stock of the Company receive,
upon conversion or otherwise in exchange for securities owned by such holders,
Capital Stock of a corporation which immediately prior to such exchange is a
Wholly Owned Subsidiary, and which securities have rights and preferences
identical to those of the securities replaced, so long as (a) immediately before
and after giving effect to such transaction no Potential Default or Event of
Default shall have occurred and be continuing, and (ii) such transaction is
otherwise in conformity with and not prohibited by this Agreement.
6.13 LIMITATION ON CREATION OF NEW SUBSIDIARIES.
The Company may create new Subsidiaries provided that (i) the total
assets of all Subsidiaries in the aggregate (other than (a) single purpose
Subsidiaries created solely for the purpose of financing aircraft and (b)
Subsidiaries created solely for the purpose of acquiring assets from Persons
other than the Company or any of its Subsidiaries) does not at any time exceed
ten percent (10%) of the consolidated total assets of the Company, in each case
determined in accordance with GAAP and (ii) the Company complies with the
provisions of subsection 5.1(xi) hereof.
6.14 LIMITATION ON AMENDMENTS TO INDEBTEDNESS; PERFORMANCE OF AGREEMENTS
The Company shall not amend, waive or modify, nor shall it consent to
or request any amendment, waiver or modification, of any of the material terms,
conditions, representations and covenants contained in the Air Carrier Guarantee
Loan Documents or the Lease Indenture that (i) shortens the final maturity date
of the Government Guaranteed Loan or the debt issued pursuant to the Lease
Indenture (collectively or individually, without giving effect to any amendment,
waiver or modification, the "Initial Indebtedness"; and after giving effect to
any such amendment, waiver or modification, the "Amended Indebtedness"), (ii)
requires the acceleration of the final scheduled maturity date and/or any
principal payments, including but not limited to scheduled payments and
mandatory prepayments, and/or increases the principal amount payable on any date
(including, without limitation, pursuant to mandatory prepayments) prior to the
dates
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of analogous payments of such Initial Indebtedness, (iii) provides for an
interest rate applicable to such Amended Indebtedness, plus the interest rate
equivalent of all remaining fees and costs associated with closing and servicing
such Amended Indebtedness higher than the greater of (x) (I) if such Amended
Indebtedness bears interest at a floating rate of interest, 105% of the average
remaining interest rate applicable to such Initial Indebtedness plus the average
remaining fees and costs associated with servicing such Initial Indebtedness, or
(II) if such Amended Indebtedness bears interest at a fixed rate of interest,
the amount calculated as the sum of clause (I) above plus the appropriate
fixed-for-floating swap rate for the Initial Indebtedness, and (y) 105% of the
average remaining "all in" interest expense for such Initial Indebtedness as
contemplated in the Restructuring Plan.. The Company shall not agree to amend,
waive or modify the Concessions if, after giving effect to the aggregate value
of all such amendments, waivers or modifications to the Concessions, the value
of the Concessions as a whole to the Company would be reduced as a result of
such amendments, waivers or modifications by more than $120.0 million (on a net
present value basis) in the aggregate, as determined in good faith by the
Company. The Company shall perform each of its material obligations under the
Air Carrier Guarantee Loan Documents, the Lease Indenture and the Concessions,
in each case strictly in accordance with the terms thereof.
SECTION 7.
EVENTS OF DEFAULT
If any of the following conditions or events ("EVENTS OF DEFAULT")
shall occur:
7.1 FAILURE TO MAKE PAYMENTS WHEN DUE.
(i) Failure by the Company to pay any installment of principal of any
Loan or Note when due, whether at stated maturity, by acceleration, by notice of
voluntary prepayment, by mandatory prepayment or otherwise; or (ii) failure by
the Company to pay any interest on any Loan or Note or any fee or any other
amount due under this Agreement or any other Loan Document within five Business
Days after the date due; or
7.2 DEFAULT IN OTHER AGREEMENTS.
(i) (a) The Company or any Subsidiary (1) fails to make (whether as
primary obligor or as guarantor or other surety) any principal payment of or
interest or premium, if any, on any Indebtedness (other than Indebtedness
referred to in subsection 7.1) or any Operating Lease beyond any period of grace
provided with respect thereto, provided that the aggregate amount of all
Indebtedness and aggregate amounts under Operating Leases as to which such a
payment default shall occur and be continuing is equal to or exceeds
$10,000,000, or (2) fails to duly observe, perform or comply with any agreement
with any Person or any term or condition of any instrument, if such failure,
either individually or in the aggregate, shall have caused or shall have the
ability to cause the acceleration of the payment of Indebtedness with an
aggregate face amount which is equal to or exceeds $10,000,000; or (b) any Event
of Default (as defined in the Government Guaranteed Loan Agreement or the Lease
Indenture, as the case may be) has occurred and is continuing under the
Government Guaranteed Loan Agreement or the Lease Indenture.
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7.3 BREACH OF CERTAIN COVENANTS.
Failure of the Company to perform or comply in any material respect
with any term or condition contained in subsections 2.5B, 5.2, 5.10, 6.2, 6.5,
6.7 and 6.9 of this Agreement and (excluding subsections 5.10, 6.2, 6.5 and 6.9)
such failure shall not have been remedied within five days after a Responsible
Officer of the Company knows (or, in the reasonable exercise of such Responsible
Officer's discretion, should have known) of such failure; or
7.4 BREACH OF WARRANTY.
Any representation, warranty, certification or other statement made by
the Company or any of its Subsidiaries in any Loan Document or in any statement
or certificate at any time given by the Company or any of its Subsidiaries in
writing pursuant hereto or thereto or in connection herewith or therewith shall
be false in any material respect on the date as of which made; or
7.5 OTHER DEFAULTS UNDER LOAN DOCUMENTS.
(i) The Company shall default in the performance of or compliance with
any term contained in this Agreement or any of the other Loan Documents, other
than any such term referred to in any other subsection of this Section 7, and
such default shall not have been remedied or waived (x) within 30 days after the
earlier of (a) a Responsible Officer of the Company becoming aware of such
default or (b) receipt by the Company of notice from the Agent or any Lender of
such default or (y) with respect to a default under subsection 6.5, the earlier
of (a) an officer of the Company becoming aware of the default after the
applicable measurement date and (b) the delivery of financial statements
pursuant to subsection 5.1 or (ii) a guaranty, if any, of the Obligations for
any reason ceases to be in full force and effect; or
7.6 INVOLUNTARY BANKRUPTCY; APPOINTMENT OF RECEIVER, ETC.
(i) A court shall enter a decree or order for relief in respect of the
Company or any of its Subsidiaries in an involuntary case under the Bankruptcy
Code or under any other applicable bankruptcy, insolvency or similar law now or
hereafter in effect; or any other similar relief shall be granted under any
applicable federal or state law; or (ii) an involuntary case shall be commenced
against the Company or any of its Subsidiaries under the Bankruptcy Code or
under any other applicable bankruptcy, insolvency or similar law now or
hereafter in effect; or a decree or order of a court for the appointment of a
receiver, liquidator, sequestrator, trustee, custodian or other officer having
similar powers over the Company or any of its Subsidiaries, or over all or a
substantial part of its property, shall have been entered; or there shall have
occurred the involuntary appointment of an interim receiver, trustee or other
custodian of the Company or any of its Subsidiaries for all or a substantial
part of its property; or a warrant of attachment, execution or similar process
shall have been issued against any substantial part of the property of the
Company or any of its Subsidiaries, and any such event described in this clause
(i) or clause (ii) shall continue for 60 days unless dismissed, bonded or
discharged; or
7.7 VOLUNTARY BANKRUPTCY; APPOINTMENT OF RECEIVER, ETC.
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(i) The Company or any of its Subsidiaries shall have an order for
relief entered with respect to it or commence a voluntary case under the
Bankruptcy Code or under any other applicable bankruptcy, insolvency or similar
law now or hereafter in effect, or shall consent to the entry of an order for
relief in an involuntary case, or to the conversion of an involuntary case to a
voluntary case, under any such law, or shall consent to the appointment of or
taking possession by a receiver, trustee or other custodian of all or a
substantial part of its property; or the Company or any of its Subsidiaries
shall make any assignment for the benefit of creditors; or (ii) the Company or
any of its Subsidiaries shall be unable, or shall fail generally, or shall admit
in writing its inability, to pay its debts as such debts become due; or the
Board of Directors of the Company or any of its Subsidiaries (or any committee
thereof) shall adopt any resolution or otherwise authorize any action to approve
any of the actions referred to in clause (i) above or this clause (ii); or
7.8 JUDGMENTS AND ATTACHMENTS.
Any final judgment or order (not covered by insurance) for the payment
of money in excess of $25,000,000 in the aggregate for all such final judgments
or orders against the Company or any of its Subsidiaries treating any
deductibles, self-insurance or retention as not so covered shall be rendered
against the Company or any Subsidiary and shall not be discharged, and there
shall be any period of 60 consecutive days following entry of the final judgment
or order that causes the aggregate amount for all such final judgements or
orders outstanding against the Company or its Subsidiaries to exceed $25,000,000
during which a stay of enforcement of such final judgment or order, by reason of
a pending appeal or otherwise, shall not be in effect; or
7.9 DISSOLUTION.
Any order, judgment or decree shall be entered against the Company or
any of its Subsidiaries decreeing the dissolution or split up of the Company or
that Subsidiary and such order shall remain undischarged or unstayed for a
period in excess of 30 days; or
7.10 RESERVED.
7.11 FAILURE OF SECURITY.
Upon execution and delivery thereof, any Loan Document shall, at any
time, cease to be in full force and effect in any material respect (other than
by reason of a release of Collateral thereunder in accordance with the terms
hereof or thereof, the satisfaction in full of the Obligations or any other
termination of any Security Agreement in accordance with the terms hereof or
thereof) or shall be declared null and void, or the validity or enforceability
thereof shall be contested in writing by the Company, or the Agent shall not
have or shall in any material respect cease to have a valid and perfected first
priority security interest in any Collateral (or in the case of the Spare Parts
Security Agreement, Rotables only) purported to be covered thereby, subject only
to Permitted Liens and, in each case, the Company shall fail to (i) deliver a
Borrowing Base Certificate excluding therefrom the Collateral subject to such
Security Agreement within ten (10) days after a Responsible Officer of the
Company knows of such
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failure and (ii) make a prepayment (and/or provide collateral) in accordance
with subsection 2.4B(ii)(1)(a);
THEN (i) upon the occurrence of any Event of Default described in subsection 7.6
or 7.7, each of (a) the unpaid principal amount of and accrued interest on the
Loans and Notes and (b) all other Obligations shall automatically become
immediately due and payable, without presentment, demand, protest or other
requirements of any kind, all of which are hereby expressly waived by the
Company, and (ii) upon the occurrence and during the continuation of any other
Event of Default, the Agent shall, upon the written request or with the written
consent of Requisite Lenders, by written notice to the Company, declare all or
any portion of the amounts described in clauses (a) and (b) above to be, and the
same shall forthwith become, immediately due and payable. Following the
occurrence and during the continuation of an Event of Default, the Agent may
exercise any remedy provided in the Security Agreements or any other Loan
Document or otherwise available to it.
SECTION 8.
AGENT
8.1 APPOINTMENT.
The Industrial Bank of Japan, Limited, is hereby appointed the Agent
hereunder and under the other Loan Documents and each Lender hereby authorizes
the Agent to act as its agent in accordance with the terms of this Agreement and
the other Loan Documents. The Agent agrees to act upon the express conditions
contained in this Agreement and the other Loan Documents, as applicable. The
provisions of this Section 8 (except subsections 8.5 and 8.6) are solely for the
benefit of the Agent, and the Lenders, and the Company shall have no rights as a
third party beneficiary of any of the provisions thereof. In performing its
functions and duties under this Agreement, the Agent shall act solely as an
agent of the Lenders and does not assume and shall not be deemed to have assumed
any obligation towards or relationship of agency or trust with or for the
Company or any of its Subsidiaries.
8.2 POWERS AND DUTIES; GENERAL IMMUNITY.
▇. ▇▇▇▇▇▇; DUTIES SPECIFIED. Each Lender irrevocably authorizes the
Agent to take such action on such Lender's behalf and to exercise such powers,
rights and remedies hereunder and under the other Loan Documents as are
specifically delegated or granted to the Agent by the terms hereof and thereof,
together with such powers, rights and remedies as are reasonably incidental
thereto. The Agent shall have only those duties and responsibilities that are
expressly specified in this Agreement and the other Loan Documents. The Agent
may exercise such powers, rights and remedies and perform such duties by or
through its agents or employees. The Agent shall not have, by reason of this
Agreement or any of the other Loan Documents, a fiduciary relationship in
respect of any Lender; and nothing in this Agreement or any of the other Loan
Documents, expressed or implied, is intended to or shall be so construed as to
impose upon the Agent any obligations in respect of this Agreement or any of the
other Loan Documents except as expressly set forth herein or therein.
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B. NO RESPONSIBILITY FOR CERTAIN MATTERS. The Agent shall not be
responsible to any Lender for the execution, effectiveness, genuineness,
validity, enforceability, collectibility or sufficiency of this Agreement or any
other Loan Document or for any representations, warranties, recitals or
statements made herein or therein or made in any written or oral statements or
in any financial or other statements, instruments, reports or certificates or
any other documents furnished or made by the Agent to the Lenders or by or on
behalf of the Company to the Agent or any Lender in connection with the Loan
Documents and the transactions contemplated thereby or for the financial
condition or business affairs of the Company or any other Person liable for the
payment of any Obligations, nor shall the Agent be required to ascertain or
inquire as to the performance or observance of any of the terms, conditions,
provisions, covenants or agreements contained in any of the Loan Documents or as
to the use of the proceeds of the Loans or as to the existence or possible
existence of any Event of Default or Potential Event of Default. Anything
contained in this Agreement to the contrary notwithstanding, the Agent shall not
have any liability arising from confirmations of the amount of outstanding Loans
or the component amounts thereof.
C. EXCULPATORY PROVISIONS. Neither the Agent nor any of its officers,
directors, employees or agents shall be liable to the Lenders for any action
taken or omitted by the Agent under or in connection with any of the Loan
Documents except to the extent caused by their respective gross negligence or
willful misconduct. If the Agent shall request instructions from the Lenders
with respect to any act or action (including the failure to take an action) in
connection with this Agreement or any of the other Loan Documents, the Agent
shall be entitled to refrain from such act or taking such action unless and
until the Agent shall have received instructions from the Requisite Lenders.
Without prejudice to the generality of the foregoing, (i) the Agent shall be
entitled to rely, and shall be fully protected in relying, upon any
communication, instrument or document believed by it to be genuine and correct
and to have been signed or sent by the proper person or persons, and shall be
entitled to rely and shall be protected in relying on opinions and judgments of
attorneys (who may be attorneys for the Company and its Subsidiaries),
accountants, experts and other professional advisors selected by it; and (ii) no
Lender shall have any right of action whatsoever against the Agent as a result
of the Agent acting or (where so instructed) refraining from acting under this
Agreement or any of the other Loan Documents in accordance with the instructions
of Requisite Lenders. The Agent shall be entitled to refrain from exercising any
power, discretion or authority vested in it under this Agreement or any of the
other Loan Documents unless and until it has obtained the instructions of the
Requisite Lenders.
D. AGENT ENTITLED TO ACT AS LENDER. The agency hereby created shall in
no way impair or affect any of the rights and powers of, or impose any duties or
obligations upon, the Agent in its individual capacity as a Lender hereunder.
With respect to its participations in the Loans, the Agent shall have the same
rights and powers hereunder as any other Lender and may exercise the same as
though it were not performing the duties and functions delegated to it
hereunder, and the term "Lender" or "Lenders" or any similar term shall, unless
the context clearly otherwise indicates, include the Agent in its individual
capacity. The Agent and its Affiliates may accept deposits from, lend money to
and generally engage in any kind of banking, trust, financial advisory or other
business with the Company or any of its Affiliates as if it were not performing
the duties specified herein, and may accept fees and other consideration from
the
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Company for services in connection with this Agreement and otherwise without
having to account for the same to the Lenders.
8.3 REPRESENTATIONS AND WARRANTIES; NO RELIANCE.
Each Lender represents and warrants that it has made its own
independent investigation of the financial condition and affairs of the Company
and its Subsidiaries in connection with the making and maintaining of the Loans
hereunder and that it has made and shall continue to make its own analysis of
the creditworthiness of the Company and its Subsidiaries. The Agent shall not
have any duty or responsibility, either initially or on a continuing basis, to
make any such investigation or any such appraisal on behalf of Lenders or to
provide any Lender with any credit or other information with respect thereto,
whether coming into its possession before the making of the Loans on the Closing
Date or at any time or times thereafter, and the Agent shall not have any
responsibility with respect to the accuracy of or the completeness of any
information provided to the Lenders.
8.4 RIGHT TO INDEMNITY.
Each Lender, in proportion to its Pro Rata Share, severally agrees to
indemnify the Agent (and their respective affiliates and partners), to the
extent that the Agent shall not have been reimbursed by the Company, for and
against any and all liabilities, obligations, losses, damages, penalties,
actions, judgments, suits, costs, expenses (including, without limitation,
counsel fees and disbursements) or disbursements of any kind or nature
whatsoever which may be imposed on, incurred by or asserted against the Agent in
exercising their respective powers, rights and remedies or performing their
respective duties hereunder or under the other Loan Documents or otherwise in
its capacity as Agent, in any way relating to or arising out of this Agreement
or the other Loan Documents; provided that no Lender shall be liable for any
portion of such liabilities, obligations, losses, damages, penalties, actions,
judgments, suits, costs, expenses or disbursements resulting from the Agent's
gross negligence or willful misconduct.
8.5 SECURITY AGREEMENTS.
Without limiting the generality of subsection 8.1, each Lender hereby
further authorizes the Agent to enter into the Security Agreements as secured
party on behalf of and for the benefit of such Lender and agrees to be bound by
the terms of each of the Security Agreements; provided that, except as otherwise
provided below, the Agent shall not enter into or consent to any amendment,
modification, termination or waiver of any provision contained in any Security
Agreement without prior written consent of the Requisite Lenders. Anything
contained in any of the Loan Documents to the contrary notwithstanding, each
Lender agrees that no Lender shall have any right individually to realize upon
any of the Collateral under any Security Agreement, it being understood and
agreed that all powers, rights and remedies under the Security Agreements may be
exercised solely by the Agent for the benefit of Lenders in accordance with the
terms thereof. Each Lender hereby authorizes the Agent (i) to release or
subordinate Collateral as permitted or required under this Agreement or the
Security Agreements, and agrees that a certificate executed by the Agent
evidencing such release of Collateral shall be conclusive evidence of such
release as to any third party and (ii) to enter into any amendments of the
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Security Agreements to cure any ambiguity, defect or inconsistency or to amend
provisions relating to ministerial or administrative matters which do not
materially adversely affect the rights of the Lenders thereunder.
8.6 SUCCESSOR AGENT.
The Agent may resign at any time by giving 30 days' prior written
notice thereof to the Lenders and the Company and may be removed at any time
with cause by the Required Lenders, such resignation or removal to be effective
only upon acceptance of its appointment of a successor Agent as provided herein.
Upon any such notice of resignation or removal, the Requisite Lenders shall have
the right to appoint a successor Agent and shall notify the Company in writing
of such appointment; provided, that, unless a Potential Event of Default or
Event of Default shall have occurred and then be continuing, the Required
Lenders shall obtain the Company's written consent to the appointment of such
successor Agent (such consent not to be unreasonably withheld or delayed). Upon
the acceptance of any appointment hereunder by a successor Agent, that successor
Agent shall thereupon succeed to and become vested with all the rights, powers,
privileges and duties of the retiring Agent and the retiring or removed Agent
shall be discharged from its duties and obligations under this Agreement. After
any retiring Agent's resignation or removal hereunder as Agent, the provisions
of this Section 8 shall inure to its benefit as to any actions taken or omitted
to be taken by it while it was the Agent under this Agreement.
SECTION 9.
MISCELLANEOUS
9.1 ASSIGNMENTS AND PARTICIPATIONS IN LOANS.
A. GENERAL. Each Lender shall have the right at any time to (i) subject
to compliance with subsection 9.1B(i), sell, assign or transfer to any Eligible
Assignee, or (ii) sell participations to any Person in, all or any part of its
Loans made by it or any other interest herein or in any other Obligations owed
to it; provided that no such sale, assignment, transfer or participation shall
require the Company to file a registration statement with the Securities and
Exchange Commission or apply to qualify such sale, assignment, transfer or
participation under the securities laws of any state; provided, further that no
such sale, assignment or transfer described in clause (i) above shall be
effective unless and until an Assignment Agreement effecting such sale,
assignment or transfer shall have been accepted by the Agent and recorded in the
Register as provided in subsection 9.1B(ii). Except as otherwise provided in
this subsection 9.1, no Lender shall, as between the Company and such Lender, be
relieved of any of its obligations hereunder as a result of any sale, assignment
or transfer of, or any granting of participations in, all or any part of its
Loans or the other Obligations owed to such Lender.
B. ASSIGNMENTS.
(i) Amounts and Terms of Assignments. Each Loan or other
Obligation may (a) be assigned in any amount to another Lender, or to
an Affiliate of the assigning Lender or another Lender, with the giving
of notice to the Company and the Agent or (b)
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be assigned in an aggregate amount of not less than $5,000,000 (or such
lesser amount as shall constitute the aggregate amount of the Loans,
and other Obligations of the assigning Lender) to any other Eligible
Assignee with the consent of the Agent (which consent shall not be
unreasonably withheld or delayed). To the extent of any such assignment
in accordance with either clause (a) or (b) above, the assigning Lender
shall be relieved of its obligations thereafter arising with respect to
its Loans, or other Obligations or the portion thereof so assigned. The
parties to each such assignment shall execute and deliver to the Agent,
for its acceptance and recording in the Register, an Assignment
Agreement, together with a processing and recordation fee of $3,500 and
such forms, certificates or other evidence, if any, with respect to
United States federal income tax withholding matters as the assignee
under such Assignment Agreement may be required to deliver to the Agent
pursuant to subsection 2.7B(iii)(a). Upon such execution, delivery and
acceptance, from and after the effective date specified in such
Assignment Agreement, (y) the assignee thereunder shall be a party
hereto and, to the extent that rights and obligations hereunder have
been assigned to it pursuant to such Assignment Agreement, shall have
the rights and obligations of a Lender hereunder and (z) the assigning
Lender thereunder shall, to the extent that rights and obligations
hereunder have been assigned by it pursuant to such Assignment
Agreement, relinquish its rights and be released from its obligations
thereafter arising under this Agreement (and, in the case of an
Assignment Agreement covering all or the remaining portion of an
assigning Lender's rights and obligations under this Agreement, such
Lender shall cease to be a party hereto). The assigning Lender shall,
upon the effectiveness of such assignment or as promptly thereafter as
practicable, surrender its applicable Notes to the Agent for
cancellation, and thereupon new Notes shall be issued to the assignee
substantially in the form of Exhibit III and Exhibit III-A annexed
hereto, as the case may be, with appropriate insertions, to reflect the
outstanding Loans, as the case may be, of the assignee and/or the
assigning Lender. If a Lender assigns all some or of its Term Note,
such Lender must also assign a like portion of such Lender's PIK Note
to the same Eligible Assignee. No Lender may assign any of its PIK Note
without an assignment of some or all of its Term Note as permitted
hereunder.
(ii) Acceptance by the Agent; Recordation in Register. Upon
its receipt of an Assignment Agreement executed by an assigning Lender
and an assignee representing that it is an Eligible Assignee, together
with the processing and recordation fee referred to in subsection
9.1B(i) and any forms, certificates or other evidence with respect to
United States federal income tax withholding matters that such assignee
may be required to deliver to the Agent pursuant to subsection
2.7B(iii)(a), the Agent shall, if such Assignment Agreement has been
completed and is in substantially the form of Exhibit VI hereto and if
the Agent has consented to the assignment evidenced thereby, (a) accept
such Assignment Agreement by executing a counterpart thereof as
provided therein (which acceptance shall evidence any required consent
of the Agent to such assignment), (b) record the information contained
therein in the Register and (c) give prompt notice thereof to the
Company. The Agent shall maintain a copy of each Assignment Agreement
delivered to and accepted by it as provided in this subsection
9.1B(ii).
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C. PARTICIPATIONS. No participation granted hereunder shall relieve the
granting Lender from its obligations hereunder and the Agent, the Company and
other Lenders shall continue to deal solely and directly with such Lender in
connection with such Lender's rights and obligations under this Agreement and
the other Loan Documents, provided, however, that (i) the selling Lender's
obligations under this Agreement shall remain unchanged, (ii) such Lender shall
remain solely responsible to the other parties hereto for the performance of
such obligations, (iii) the participating banks or other entities shall be
entitled to the provisions of subsections 2.6, 2.7, 9.3 and 9.5, provided,
however, that the costs to which a participant shall be entitled to obtain
pursuant thereto shall be determined by reference to such participant's selling
Lender and shall be recoverable solely from such selling Lender and (iv) the
Company, the Agent and the other Lenders shall continue to deal solely and
directly with the selling Lender in connection with such Lender's rights and
obligations under this Agreement and the other Loan Documents; provided,
however, as between the selling Lender and any such participant, the selling
Lender may grant such participant rights with respect to amendments,
modifications or waivers with respect to any fees payable hereunder to such
Lender (including the amount and the dates fixed for the payment of any such
fees) or the amount of principal or the rate of interest payable on, or the
release of any obligations of the Company hereunder and under the other Loan
Documents. No participant shall be a third party beneficiary of this Agreement
and shall not be entitled to enforce any rights provided to its selling Lender
against the Company under this Agreement.
D. ASSIGNMENTS TO FEDERAL RESERVE BANKS. In addition to the assignments
and participations permitted under the foregoing provisions of this subsection
9.1, any Lender may assign and pledge all or any portion of its Loans, the other
Obligations owed to such Lender, and its Notes to any Federal Reserve Bank as
collateral security pursuant to Regulation A of the Board of Governors of the
Federal Reserve System and any operating circular issued by such Federal Reserve
Bank; provided that (i) no Lender shall, as between the Company and such Lender,
be relieved of any of its obligations hereunder as result of any such assignment
and pledge and (ii) in no event shall such Federal Reserve Bank be considered to
be a "Lender" or be entitled to require the assigning Lender to take or omit to
take any action hereunder.
E. INFORMATION. Each Lender may furnish any information concerning the
Company and its Subsidiaries in the possession of that Lender from time to time
to assignees and participants (including prospective assignees and
participants), subject to subsection 9.19.
9.2 EXPENSES.
Whether or not the transactions contemplated hereby shall be
consummated, the Company agrees to pay promptly (i) all the reasonable costs and
expenses of preparation of the Loan Documents; (ii) all the costs of furnishing
all opinions by counsel for the Company (including without limitation any
opinions requested by the Agent or Lenders as to any legal matters arising
hereunder) and of the Company's performance of and compliance with all
agreements and conditions on its part to be performed or complied with under
this Agreement and the other Loan Documents including, without limitation, with
respect to confirming compliance with environmental and insurance requirements;
(iii) the reasonable fees, expenses and disbursements of counsel to the Agent in
connection with the negotiation, preparation,
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execution and administration of the Loan Documents and the Loans and any
consents, amendments, waivers or other modifications hereto or thereto, and any
other documents or matters, requested by the Company; (iv) all the costs and
expenses of creating and perfecting the Liens in favor of the Agent for the
benefit of Lenders pursuant to the Loan Documents, including filing and
recording fees and expenses, title insurance, reasonable fees and expenses of
counsel for providing such opinions as Lenders may reasonably request and
reasonable fees and expenses of legal counsel to the Agent (including local
counsel); and (v) all costs and expenses, including reasonable attorneys' fees
(including allocated costs of internal counsel) and costs of settlement incurred
by the Agent and Lenders in enforcing any Obligations of or in collecting any
payments due from the Company hereunder or under the other Loan Documents by
reason of any Event of Default or Potential Event of Default or in connection
with any refinancing or restructuring of the credit arrangements provided under
this Agreement in the nature of a "work-out" or pursuant to any insolvency or
bankruptcy proceedings.
9.3 INDEMNITY.
Subject to the limitations in subsection 9.2 with respect to the
matters specified therein, and without duplication of the provisions of the
Environmental Indemnity Agreement, Section 2.11 of any Aircraft Security
Agreement and Section 3.06 of the Spare Engine Security Agreement, whether or
not the transactions contemplated hereby shall be consummated, the Company
agrees to defend, indemnify, pay and hold harmless the Agent, the Lenders, the
Co-Lead Book Managers, the Syndication Agent, the Arrangers and the
Documentation Agent and the officers, directors, employees, agents and
affiliates of the Agent, the Lenders, the Co-Lead Book Managers, the Syndication
Agent, the Arrangers and the Documentation Agent (collectively called the
"INDEMNITEES") from and against any and all liabilities, obligations, losses,
damages, penalties, actions, judgments, suits, claims, costs, expenses and
disbursements of any kind or nature whatsoever (including without limitation the
reasonable fees and disbursements of counsel for such Indemnitees), whether
direct, indirect or consequential and whether based on any federal, state or
foreign laws, statutes, rules or regulations (including without limitation
securities and commercial laws, statutes and rules or regulations), on common
law or equitable cause or on contract or otherwise, that may be imposed on,
incurred by, or asserted against any such Indemnitee, in any manner arising out
of this Agreement or the other Loan Documents or the transactions contemplated
hereby or thereby (including without limitation the Lenders' agreement to
maintain the Loans hereunder or the use or intended use of the proceeds of the
Loans) or any breach or default by the Company of any provision of the Loan
Documents (collectively called the "INDEMNIFIED LIABILITIES"); provided that the
Company shall not have any obligation to any Indemnitee hereunder with respect
to any Indemnified Liabilities to the extent such Indemnified Liabilities arise
(i) from the gross negligence or willful misconduct of that Indemnitee, (ii)
constitute ordinary and usual operating or overhead expenses of an Indemnitee
(excluding , without limitation, costs and expenses of any outside counsel,
consultant or agent) and (iii) arise out of the breach of any obligation or
representation of an Indemnitee in this Agreement or any other Loan Document.
To the extent that the undertaking to defend, indemnify, pay and hold harmless
set forth in the preceding sentence may be unenforceable because it is violative
of any law or public policy, the Company shall contribute the maximum portion
that it is permitted to pay and satisfy under applicable law
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to the payment and satisfaction of all Indemnified Liabilities incurred by the
Indemnitees or any of them.
9.4 SET-OFF.
In addition to any rights now or hereafter granted under applicable law
and not by way of limitation of any such rights, upon the occurrence and during
the continuance of any Event of Default, to the fullest consent permitted by
law, each Lender and is hereby authorized by the Company at any time or from
time to time, without notice to the Company or to any other Person, any such
notice being hereby expressly waived, to set off and to appropriate and to apply
any and all deposits (general or special, including, but not limited to,
Indebtedness evidenced by certificates of deposit, whether matured or unmatured)
and any other Indebtedness at any time held or owing by that Lender to or for
the credit or the account of the Company against and on account of the
obligations and liabilities of the Company to that Lender under this Agreement,
the Notes, and the other Loan Documents, including, but not limited to, all
claims of any nature or description arising out of or connected with this
Agreement, the Notes, or any other Loan Document, irrespective of whether or not
(i) that Lender shall have made any demand hereunder or (ii) the principal of or
the interest on the Loans or any other amounts due hereunder shall have become
due and payable pursuant to Section 7 and although said obligations and
liabilities, or any of them, may be contingent or unmatured.
9.5 RATABLE SHARING.
The Lenders hereby agree among themselves that if any of them shall,
whether by voluntary payment, by realization upon security, through the exercise
of any right of set-off or banker's lien, by counterclaim or cross action or by
the enforcement of any right under the Loan Documents or otherwise, or as
adequate protection of a deposit treated as cash collateral under the Bankruptcy
Code, receive payment or reduction of a proportion of the aggregate amount of
principal, interest, fees and other amounts then due and owing to that Lender
hereunder or under the other Loan Documents (collectively, the "AGGREGATE
AMOUNTS DUE" to such Lender) which is greater than the proportion received by
any other Lender in respect of the Aggregate Amounts Due to such other Lender,
then the Lender receiving such proportionately greater payment shall (i) notify
the Agent and each other Lender of the receipt of such payment and (ii) apply a
portion of such payment to purchase participations (which it shall be deemed to
have purchased from each seller of a participation simultaneously upon the
receipt by such seller of its portion of such payment) in the Aggregate Amounts
Due to the other Lenders so that all such recoveries of Aggregate Amounts Due
shall be shared by all Lenders in proportion to the Aggregate Amounts Due to
them; provided that if all or part of such proportionately greater payment
received by such purchasing Lender is thereafter recovered from such Lender upon
the bankruptcy or reorganization of the Company or otherwise, those purchases
shall be rescinded and the purchase prices paid for such participations shall be
returned to such purchasing Lender ratably to the extent of such recovery, but
without interest. The Company expressly consents to the foregoing arrangement
and agrees that any holder of a participation so purchased may exercise any and
all rights of banker's lien, set-off or counterclaim with respect to any and all
monies owing by the Company to that holder with respect thereto as fully as if
that holder were owed the amount of the participation held by that holder.
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9.6 AMENDMENTS AND WAIVERS.
A. No amendment, modification, termination or waiver of any provision
of this Agreement or of the Notes, or consent to any departure by the Company
therefrom, shall in any event be effective without the written concurrence of
Requisite Lenders; provided that any such amendment, modification, termination,
waiver or consent which: increases the principal amount of any of the Loans;
changes any Lender's Pro Rata Share; changes in any manner the definition of
"Requisite Lenders"; changes in any manner any provision of this Agreement
which, by its terms, expressly requires the approval or concurrence of all
Lenders; postpones the scheduled final maturity date of any of the Loans;
postpones the date or reduces the amount of any scheduled payment (but not
prepayment) of principal of any of the Loans; postpones the date on which any
interest or any fees are payable; waives a mandatory prepayment of principal
owed as a result of a Borrowing Base Deficiency for a period in excess of 30
days from the date the Company notifies the Agent of the existence of a
Borrowing Base Deficiency; decreases the interest rate borne by any of the Loans
(other than any waiver of any increase in the interest rate applicable to any of
the Loans pursuant to subsection 2.2E) or the amount of any fees payable
hereunder; increases the maximum duration of Interest Periods permitted
hereunder; releases all or substantially all of the Collateral (except as
expressly provided in the Security Agreements); or changes in any manner the
provisions contained in subsection 7.1 or this subsection 9.6 shall be effective
only if evidenced by a writing signed by or on behalf of all Lenders to whom are
owed Obligations being directly affected by such amendment, modification,
termination, waiver or consent. In addition, (i) any amendment, modification,
termination or waiver of any of the provisions contained in Section 3 shall be
effective only if evidenced by a writing signed by or on behalf of the Agent and
Requisite Lenders, (ii) no amendment, modification, termination or waiver of any
provision of any Note shall be effective without the written concurrence of the
Lender which is the holder of that Note, and (iii) no amendment, modification,
termination or waiver of any provision of Section 8 or of any other provision of
this Agreement which, by its terms, expressly requires the approval or
concurrence of the Agent shall be effective without the written concurrence of
the Agent. The Agent may, but shall have no obligation to, with the concurrence
of any Lender, execute amendments, modifications, waivers or consents on behalf
of that Lender. Any waiver or consent shall be effective only in the specific
instance and for the specific purpose for which it was given. No notice to or
demand on the Company in any case shall entitle the Company to any other or
further notice or demand in similar or other circumstances. Any amendment,
modification, termination, waiver or consent effected in accordance with this
subsection 9.6 shall be binding upon each Lender at the time outstanding, each
future Lender and, if signed by the Company, on the Company.
B. If, in connection with any proposed change, waiver, discharge or
termination to any of the provision of this Agreement as contemplated by the
provision in the first sentence of this subsection 9.6, the consent of Requisite
Lenders is obtained but consent of one or more of such other Lenders whose
consent is required is not obtained, then the Company may, so long as all
non-consenting Lenders are so treated, elect to terminate such Lender as a party
to this Agreement; provided that, concurrently with such termination, (i) the
Company shall pay that Lender all principal, interest and fees and other amounts
owed to such Lender through such date of termination, (ii) another financial
institution satisfactory to the Company and the Agent (or if the Agent is also
the Lender to be terminated, the successor Agent) shall agree, as of such date,
to
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become a Lender for all purposes under this Agreement (whether by assignment or
amendment) and to assume all obligations of the Lender to be terminated as of
such date, and (iii) all documents and supporting materials necessary, in the
judgment of the Agent (or if the Agent is also the Lender to be terminated, the
successor Agent) to evidence the substitution of such Lender shall have been
received and approved by the Agent as of such date.
9.7 INDEPENDENCE OF COVENANTS.
All covenants under this Agreement shall be given independent effect so
that if a particular action or condition is not permitted by any of such
covenants, the fact that it would be permitted by an exception to, or would
otherwise be within the limitations of, another covenant shall not avoid the
occurrence of an Event of Default or Potential Event of Default if such action
is taken or condition exists.
9.8 NOTICES.
Unless otherwise specifically provided herein, any notice, request or
other communication herein required or permitted to be given shall be in writing
and may be personally served or sent by telefacsimile or United States mail or
courier service and shall be deemed to have been given when delivered in person
or by courier service, or upon receipt of telefacsimile, or five Business Days
after depositing it in the United States mail with postage prepaid and properly
addressed; provided that notices shall not be effective until received. For the
purposes hereof, the address of each party hereto shall be as set forth under
such party's name on the signature pages hereof or (i) as to the Company and the
Agent, such other address as shall be designated by such Person in a written
notice delivered to the other parties hereto and (ii) as to each other party,
such other address as shall be designated by such party in a written notice
delivered to the Agent.
9.9 SURVIVAL OF REPRESENTATIONS, WARRANTIES AND AGREEMENTS.
A. All representations, warranties and agreements made herein shall
survive the execution and delivery of this Agreement and the making of the Loans
hereunder.
B. Notwithstanding anything in this Agreement or implied by law to the
contrary, (x) the agreements of the Company set forth in subsection 9.3 and the
agreements of the Lenders set forth in subsections 8.2C, 8.4 and 9.5 shall
survive the payment of the Loans, and the termination of this Agreement and (y)
the agreements of the Company set forth in subsections 2.6D, 2.7, 9.2 and 9.4
shall survive the payment of the Loans, and the termination of this Agreement
for a period of two years.
9.10 FAILURE OR INDULGENCE NOT WAIVER; REMEDIES CUMULATIVE.
No failure or delay on the part of the Agent or any Lender in the
exercise of any power, right or privilege hereunder or under any other Loan
Document shall impair such power, right or privilege or be construed to be a
waiver of any default or acquiescence therein, nor shall any single or partial
exercise of any such power, right or privilege preclude other or further
exercise thereof or of any other power, right or privilege. All rights and
remedies existing under this
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Agreement and the other Loan Documents are cumulative to, and not exclusive of,
any rights or remedies otherwise available.
9.11 MARSHALING; PAYMENTS SET ASIDE.
Neither the Agent nor any Lender shall be under any obligation to
marshal any assets in favor of the Company or any other party or against or in
payment of any or all of the Obligations. To the extent that the Company makes a
payment or payments to the Agent or the Lenders (or to the Agent for the benefit
of the Lenders), or the Agent or Lenders enforce any security interests or
exercise their rights of set-off, and such payment or payments or the proceeds
of such enforcement or set-off or any part thereof are subsequently invalidated,
declared to be fraudulent or preferential, set aside and/or required to be
repaid to a trustee, receiver or any other party under any bankruptcy law, any
other state or federal law, common law or any equitable cause, then, to the
extent of such recovery, the obligation or part thereof originally intended to
be satisfied, and all Liens, rights and remedies therefor or related thereto,
shall be revived and continued in full force and effect as if such payment or
payments had not been made or such enforcement or set-off had not occurred.
9.12 SEVERABILITY.
In case any provision in or obligation under this Agreement or the
Notes shall be invalid, illegal or unenforceable in any jurisdiction, the
validity, legality and enforceability of the remaining provisions or
obligations, or of such provision or obligation in any other jurisdiction, shall
not in any way be affected or impaired thereby.
9.13 OBLIGATIONS SEVERAL; INDEPENDENT NATURE OF LENDERS' RIGHTS.
The obligations of the Lenders hereunder are several and no Lender
shall be responsible for the obligations of any other Lender hereunder. None of
the Arrangers, Syndication Agent, Documentation Agent or the Co-Lead Book
Managers in their respective capacities as such shall have any duties or
responsibilities under this Agreement or the other Loan Documents. Nothing
contained herein or in any other Loan Document, and no action taken by Lenders
pursuant hereto or thereto, shall be deemed to constitute Lenders as a
partnership, an association, a joint venture or any other kind of entity. The
amounts payable at any time hereunder to each Lender shall be a separate and
independent debt.
9.14 HEADINGS.
Section and subsection headings in this Agreement are included herein
for convenience of reference only and shall not constitute a part of this
Agreement for any other purpose or be given any substantive effect.
9.15 APPLICABLE LAW.
THIS AGREEMENT AND EACH OF THE LOAN DOCUMENTS SHALL BE GOVERNED BY, AND
SHALL BE CONSTRUED AND ENFORCED IN ACCORDANCE
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WITH, THE LAWS OF THE STATE OF NEW YORK (EXCEPT, IN THE CASE OF SECURITY
AGREEMENTS, AS OTHERWISE PROVIDED THEREIN).
9.16 SUCCESSORS AND ASSIGNS.
This Agreement shall be binding upon the parties hereto and their
respective successors and assigns and shall inure to the benefit of the parties
hereto and the successors and assigns of the Lenders. Except as provided in
subsections 6.6(v), 6.10 and 6.12, neither the Company's rights or obligations
hereunder nor any interest therein may be assigned or delegated by the Company
without the prior written consent of all Lenders.
9.17 CONSENT TO JURISDICTION AND SERVICE OF PROCESS.
ALL JUDICIAL PROCEEDINGS BROUGHT AGAINST ANY PARTY HERETO ARISING OUT
OF OR RELATING TO THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT OR ANY OBLIGATION
MAY BE BROUGHT IN ANY STATE OR FEDERAL COURT OF COMPETENT JURISDICTION IN THE
STATE OF NEW YORK, AND BY EXECUTION AND DELIVERY OF THIS AGREEMENT EACH SUCH
PARTY ACCEPTS FOR ITSELF AND IN CONNECTION WITH ITS PROPERTIES, GENERALLY AND
UNCONDITIONALLY, THE NONEXCLUSIVE JURISDICTION OF THE AFORESAID COURTS AND
WAIVES ANY DEFENSE OF FORUM NON CONVENIENS AND IRREVOCABLY AGREES TO BE BOUND BY
ANY JUDGMENT RENDERED THEREBY IN CONNECTION WITH THIS AGREEMENT, SUCH OTHER LOAN
DOCUMENT OR SUCH OBLIGATION (SUBJECT TO ANY RIGHT OF APPEAL BY A HIGHER COURT).
The Company hereby agrees that service of all process in any such proceeding in
any such court may be made by registered or certified mail, return receipt
requested, to the Company at its address provided in subsection 9.8, such
service being hereby acknowledged by the Company to be sufficient for personal
jurisdiction in any action against the Company in any such court and to be
otherwise effective and binding service in every respect. The Company hereby
appoints CT Corporation System, ▇▇▇▇ ▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇, as its
agent for service of process and agrees that service of process upon such agent
shall be deemed to be service of process upon the Company with respect to any
proceeding related to the Loan Documents. Nothing herein shall affect the right
to serve process in any other manner permitted by law or shall limit the right
of any Lender or the Agent to bring proceedings against the Company in the
courts of any other jurisdiction.
9.18 WAIVER OF JURY TRIAL.
EACH OF THE PARTIES TO THIS AGREEMENT 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 OF THE OTHER LOAN DOCUMENTS OR ANY DEALINGS
BETWEEN THEM RELATING TO THE SUBJECT MATTER OF THIS LOAN TRANSACTION OR THE
LENDER/BORROWER RELATIONSHIP THAT IS BEING ESTABLISHED. The scope of this waiver
is intended to be all-encompassing of any and all disputes that may be filed in
any court and that relate to the subject matter of this transaction, including
without limitation contract claims, tort claims, breach
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of duty claims and all other common law and statutory claims. Each party hereto
acknowledges that this waiver is a material inducement to enter into a business
relationship, that each has already relied on this waiver in entering into this
Agreement, and that each will continue to rely on this waiver in their related
future dealings. Each party hereto further 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 legal
counsel. THIS WAIVER SHALL APPLY TO ANY SUBSEQUENT AMENDMENTS, RENEWALS,
SUPPLEMENTS OR MODIFICATIONS TO THIS AGREEMENT OR ANY OF THE OTHER LOAN
DOCUMENTS OR TO ANY OTHER DOCUMENTS OR AGREEMENTS OR TO ANY OTHER DOCUMENTS OR
AGREEMENTS RELATING TO THE LOANS MADE HEREUNDER. In the event of litigation,
this Agreement may be filed as written consent to a trial by the court.
9.19 CONFIDENTIALITY.
None of the Agent and the Lenders shall disclose any Confidential
Information to any Person without the consent of the Company, such consent not
to be unreasonably withheld or delayed, other than (a) to the Agent's or
Lender's Affiliates and their respective officers, directors, employees, agents
and advisors involved in the administration, monitoring or enforcement of the
Loans and Notes hereunder (in such Person's reasonable judgment) and to actual
or prospective Eligible Assignees and participants, and then only in each case
on a confidential basis, (b) as required by any law, rule or regulation or
judicial process and (c) as requested or required by any state, federal or
foreign authority or examiner regulating banks or banking.
9.20 COUNTERPARTS; EFFECTIVENESS.
This Agreement and any amendments, waivers, consents or supplements
hereto or in connection herewith may be executed in any number of counterparts
and by different parties hereto in separate counterparts, each of which when so
executed and delivered shall be deemed an original, but all such counterparts
together shall constitute but one and the same instrument; signature pages may
be detached from multiple separate counterparts and attached to a single
counterpart so that all signature pages are physically attached to the same
document.
9.21 INTEGRATION.
This Agreement, the Security Agreements, and the other agreements
executed in connection therewith constitute the entire understanding among the
parties hereto with respect to the matters covered thereby, and shall supersede
any prior agreements covering such matters.
9.22 DISCLAIMER OF DAMAGES.
No Indemnitee shall have any liability (whether direct or indirect, in
contract, tort or otherwise) to the Company or any of its security holders or
creditors for or in connection with the transactions contemplated hereby, except
to the extent such liability is determined in a final, non-appealable judgment
by a court of competent jurisdiction to be direct damages arising primarily
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from such Indemnitee's gross negligence or willful misconduct. In no event shall
any Indemnitee be liable to the Company or any of its security holders or
creditors on any theory of liability for any special, indirect, consequential or
punitive damages (including, without limitation, any loss of profits, business
or anticipated savings).
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed and delivered by their respective officers thereunto duly
authorized as of the date first written above.
COMPANY: AMERICA WEST AIRLINES, INC.
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇
--------------------------------------------
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇
Title: Vice President and Treasurer
Notice Address:
▇▇▇ ▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇▇▇▇▇▇▇▇, General Counsel
--------------------------------------
Fax: (▇▇▇)▇▇▇-▇▇▇▇
--------------------------------------------
AGENT AND LENDER:
THE INDUSTRIAL BANK OF JAPAN, LIMITED, as Agent
and Lender
By: /s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇▇
--------------------------------------------
Name: ▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Title: Senior Vice President
Notice Address:
▇▇▇▇ ▇▇▇▇▇▇ ▇▇ ▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
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LENDERS: CITICORP USA, INC.
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
-----------------------------------
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Title: Sr. Vice President
Address:
Fax:
THE FUJI BANK, LIMITED
By: /s/ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
-----------------------------------
Name: ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
Title: Senior Vice President
Address: ▇▇▇ ▇▇. ▇▇▇▇▇ ▇▇▇▇▇▇,
▇▇▇▇▇ ▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
THE MITSUBISHI TRUST AND BANKING
CORPORATION
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇
-----------------------------------
Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇
Title: Executive Vice President
Address: ▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
BANKERS TRUST COMPANY
By: /s/ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
-----------------------------------
Name: ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
Title: Vice President
Address: ▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
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BANK ONE NA (Successor by merger to
BANK ONE, ARIZONA, NA) (Main Office:
Chicago, Illinois)
By: /s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇
-----------------------------------
Name: ▇▇▇▇▇▇ ▇▇▇▇▇▇
Title: First Vice President
Address:
Fax:
BANK OF SCOTLAND
By: /s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇
-----------------------------------
Name: ▇▇▇▇▇▇ ▇▇▇▇▇▇
Title: Vice President
Address:
Fax:
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EXHIBIT A
FORM OF AIRCRAFT SECURITY AGREEMENT
dated as of
-------------------
made by
AMERICA WEST AIRLINES, INC.
Company
in favor of
THE INDUSTRIAL BANK OF JAPAN, LIMITED,
as Agent
AIRCRAFT SECURITY AGREEMENT (the "Security Agreement"), dated
as of , from AMERICA WEST AIRLINES, INC., a Delaware corporation
(the "Company"), whose mailing address is ▇▇▇ ▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇,
▇▇▇▇▇▇▇ ▇▇▇▇▇, to The Industrial Bank of Japan, Limited, as Agent under the
Amended and Restated Term Loan Agreement referred to below (together with its
successors and assigns in such capacity, the "Agent") for the benefit and on
behalf of itself as such Agent and the lenders (the "Lenders", such term to
include the Issuing Bank as defined in the Credit Agreement) from time to time
party to that certain Amended and Restated Term Loan Agreement dated as of
January , 2002 (as the same may be amended or waived from time to time the
"Credit Agreement") among the Company, the Lenders and the Agent.
WHEREAS:
A. The Lenders have agreed to extend certain financial
accommodations to the Company on the terms and subject to the conditions set
forth in the Credit Agreement.
B. Pursuant to the terms of the Credit Agreement, the Agent has
been appointed as the agent of the Lenders to hold and enforce on their behalf
the rights granted to the Agent herein with respect to the Subject Collateral.
C. Pursuant to the Credit Agreement the Company has agreed to
deliver this Security Agreement for the purposes of, among other things,
securing all payment and performance obligations of every nature of the Company
from time to time owed to the Agent, the Lenders or any of them under the Loan
Documents, whether for principal, interest, fees, expenses, indemnification or
otherwise (collectively, the "Obligations"), and subjecting the properties and
assets hereinafter described to the lien of this Security Agreement as security
for the performance of the Obligations.
NOW, THEREFORE, in consideration of the benefits accruing to
the Company, the receipt and sufficiency of which are hereby acknowledged, the
PARTIES HERE TO AGREE:
ARTICLE I
DEFINITIONS AND INTERPRETATION; GRANTING CLAUSES; SUBSEQUENTLY
MORTGAGED ENGINE; REPRESENTATIONS AND WARRANTIES
SECTION 1.01. Definitions and Interpretation. Unless otherwise
defined herein, all capitalized terms used in this Security Agreement that are
defined in the Credit Agreement (including those terms incorporated by
reference) shall have the respective meanings assigned to them in the Credit
Agreement. The rules of interpretation set forth in Section 1 of the Credit
Agreement shall apply to this Security Agreement. In addition, the following
terms shall have the meanings assigned as follows:
"Act" or "Federal Aviation Act" shall mean Subtitle VII of
Title 49 of the United States Code, and the rules and regulations promulgated
thereunder, as in effect on the date of this Security Agreement, and as modified
or amended hereafter, or any subsequent legislation that supplements or
supersedes such Subtitle.
"Agreed Value" shall mean the value of the Aircraft as
determined from time to time pursuant to an Approved Appraisal.
"Air carrier", "aircraft", "aircraft engines", "appliances"
and "spare parts" shall have the respective meanings given to these terms in the
Act, as in effect on the date of this Security Agreement.
"Airframe" has the meaning given in Section 1.02(a) hereof.
"Approved Appraisal" has the meaning specified in Section 2.10
of the Credit Agreement.
"Commitments" means the commitments of the Lenders to make and
convert Loans as set forth in subsection 2.1A of the Credit Agreement and to
issue Letters of Credit set forth in subsection 2.9 of the Credit Agreement.
"Engine" has the meaning given in Section 1.02(a) hereof.
"Event of Default" means each of the events set forth in
Section 7 of the Credit Agreement.
"Event of Loss" shall mean any of the following events with
respect to the Aircraft, any Airframe or any Engine:
(i) the loss of such property or of the use thereof
for 45 days due to the destruction of or damage to such property which renders
repair uneconomic or which renders such property permanently unfit for normal
use by the Company;
(ii) any damage to such property which results in the
receipt of insurance proceeds with respect to such property on the basis of a
total loss, or a constructive or compromised total loss;
(iii) the theft or disappearance of such property for
a period in excess of 30 days;
(iv) the confiscation, condemnation, or seizure of,
or requisition of title to, or use of, such property by any government or
governmental authority which results in the loss of title or possession of such
property by the Company for a period in excess of 30 consecutive days;
(v) as a result of any law, rule, regulation, order
or other action by the FAA or other government body having jurisdiction, use of
such property in the normal course of the business of air transportation is
prohibited for a period longer than one (1) month; and
(vi) the Aircraft is removed from operational service
and placed in short term storage for a period of more than 90 consecutive days
or the Aircraft is placed in long term storage.
"Federal Aviation Administration" or "FAA" shall mean the
United States Federal Aviation Administration or any successor thereto
administering the functions of the Federal Aviation Administration under the
Act.
"Joint Venture" means a joint venture, partnership or other
similar arrangement, whether in corporate, partnership or other legal form;
provided that in no event shall any corporate Subsidiary of any Person be
considered to be a Joint Venture to which such Person is a party.
"Letters of Credit" means each letter of credit that may be
issued by the Issuing Bank under the terms of subsection 2.9 of the Credit
Agreement.
"Lien" shall mean any lien, mortgage, pledge, assignment,
security interest, charge, hypothecation, preference, priority, privilege, lease
or encumbrance of any kind (including any conditional sale or other title
retention agreement, any lease in the nature thereof, and any agreement to give
any security interest); provided that neither negative pledges nor covenants to
abstain from granting liens on or security interests in assets of the Company
or its Subsidiaries shall constitute Liens.
"Loan" or "Loans" has the meaning given such term in the
Credit Agreement.
"Officer's Certificate" shall mean a certificate signed by a
Responsible Officer and delivered to the Agent.
"Parts" shall mean all appliances, components, parts,
instruments, appurtenances, accessories, furnishings, and other equipment of
whatever nature which may from time to time be incorporated or installed in or
attached to the Airframe or any Engine so long as ownership thereof (subject to
Permitted Liens) shall remain vested in the Company in accordance with the terms
of Section 2.03C hereof and any replacement Part incorporated or installed in or
attached to the Airframe or any Engine in accordance with the terms of Section.
2.03C.
"Permitted Lessee" shall mean any United States "air carrier"
(within the meaning of the Act) that is not subject to a proceeding under Title
7 or 11 of the United States Bankruptcy Code (as now and hereafter in effect or
any successor statute), holds a certificate under Section 41102(a)(1) of the
Act and operates under Federal Aviation Regulation Part 121.
"Permitted Liens" shall mean (i) the Lien of this Security
Agreement, (ii) Liens for taxes, assessments or governmental charges payable by
the Company either not delinquent for a period of more than thirty (30) days or
being contested in good faith by appropriate proceedings so long as during such
thirty (30) day period there is not any material risk of the sale, forfeiture or
loss of the Airframe or any Engine or any interest therein or during such
proceeding there is not any material risk of the sale, forfeiture or loss of the
Airframe or any Engine or any interest therein due to an effective stay or
otherwise, (iii) any lien for the fees or charges of any airport or air
navigation authority or any materialmen's, repairmen's, landlord's, workmen's,
supplier's and other like Liens arising in the ordinary course of business, for
amounts the payment of which is not overdue for a period of more than thirty
(30) days or is being contested in good faith by appropriate proceedings so long
as during such thirty (30) day period there is not any material risk of the
sale, forfeiture or loss of the Airframe or any Engine or any interest therein
or during such proceeding there is not any material risk of the sale, forfeiture
or loss of the Airframe or any Engine or any interest therein due to an
effective stay or otherwise, (iv) Liens which the Agent has specifically
permitted in writing, (v) Liens (other than Liens for taxes) arising out of
judgments or awards against the Company which are being appealed so long as
there is not any material risk of the sale, forfeiture or loss of the Airframe,
any Engine or any interest therein or during such proceeding there is not any
material risk of the sale, forfeiture or loss of the Airframe, any Engine or any
interest therein due to an effective stay or otherwise, (vi) rights of third
parties under arrangements permitted pursuant to Section 2.01D and salvage
rights of insurers expressly permitted by this Security Agreement and (vii)
other rights of the Company and the Agent provided in this Security Agreement.
"Person" means and includes natural persons, corporations,
limited partnerships, general partnerships, joint stock companies, limited
liability companies, Joint Ventures, associations, companies, trusts, banks,
trust companies, land trusts, business trusts or other organizations, whether or
not legal entities, and governments and agencies and political subdivisions
thereof.
"Potential Event of Default" means a condition or event that,
after notice or the passage of time or both, would constitute an Event of
Default.
"Replacement Engine" shall mean any aircraft engine described
in any Security Agreement Supplement from and after the date on which the same
became subject to the Lien of this Security Agreement, unless and until the same
shall be released from the Lien of this Security Agreement pursuant to the terms
hereof.
"Security Agreement" shall mean this instrument as originally
executed as of the date hereof and as it thereafter may from time to time be
supplemented through one or more Security Agreement Supplements or amended by
one or more instruments supplementary or amendatory thereto and which are
executed by the Company and the Agent.
"Supplement" or "Security Agreement Supplement" shall mean a
security agreement supplement in substantially the form of Appendix A hereto,
subjecting any additional aircraft engine to the Lien of this Security
Agreement.
The following capitalized terms are defined in the applicable
Recital or Granting Clause:
Company First Paragraph
Lenders First Paragraph
Credit Agreement First Clause
Subject Collateral Granting Clause
Agent First Paragraph
Obligations Recital "C"
SECTION 1.02. Grant of Security Interest. The Company hereby
grants to and charges in favor of the Agent a security interest in the following
property (collectively the "Subject Collateral") as security for the due and
prompt payment and performance by the Company of the Obligations:
(a) the Airframe and Engines (each term as defined in and
described in Schedule I hereto);
(b) any Replacement Engine described in Schedule I to any
Supplement from time to time hereafter executed and delivered by the
Company pursuant to Section 1.02 hereof;
(c) all proceeds receivable or received when any Airframe
or Engine is sold, exchanged, collected, leased or otherwise disposed
of, including, without limitation, all amounts payable or paid under
insurance, requisition or other payments as the result of any loss
(including an Event of Loss (as hereinafter defined) and Event of
Damage) or Repairable Damage to such Airframe or Engine but (for
avoidance of doubt) shall exclude amounts payable to the Company for
operating a charter or wet lease permitted without the consent of the
Agent pursuant to Section 2.01(D) hereof (collectively, "Proceeds");
(d) all issues from and income and interest on Proceeds,
products, title, interest and claims whatsoever, at law, as well as in
equity, now or hereafter existing, in or to any of the foregoing;
[(e) the Aircraft Sale and Purchase Agreement, dated
between the Company and (the "Purchase Agreement")
and any bills of sale for the Aircraft delivered thereunder;]*
and
(f) to the extent not included in the foregoing, all and
any proceeds (not expressly excluded in the definition of Proceeds) of
any and all of the foregoing Subject Collateral.
[It is expressly agreed that, anything herein contained to the contrary
notwithstanding, the Company shall remain liable under the Purchase Agreement
and the bills of sale delivered thereunder to perform all of its obligations
thereunder in accordance with and pursuant to the terms and provisions thereof
and the Agent and the Lenders shall have no obligation or liability under the
Purchase Agreement or such bills of sale by reason of or arising out of the
assignments hereunder nor shall the Agent or the Lenders be required or
obligated in any manner to perform or fulfill any obligations of the Company
under the Purchase Agreement or such bills of sale.]*
Any lease of the Airframe together with the Engines, whether or not
such Engines are installed on the Airframe or any other airframe and any and all
logs, manuals and other records relating thereto (collectively, the "Aircraft")
shall be subject and subordinate to all of the provisions of the Credit
Agreement and this Security Agreement. Except with the prior written consent of
the Agent or as permitted pursuant to Sections 2.01B, 2.01D, 2.02 and 2.03, the
Company shall not sell or otherwise dispose of any part of, or any interest in,
the Aircraft prior to payment and performance in full of the Obligations and
expiration of the Commitments of the Lenders unless the same shall be released
from the Lien hereof in accordance with Section 2.10(B)(ii)(1) of the Credit
Agreement. If the Company complies with such provisions of Section 2.10B(ii)(1)
of the Credit Agreement with respect to the Aircraft, the Agent shall, at the
Company's written request and expense, promptly upon receipt thereof from the
Company, execute and deliver to the Company a release of the Lien of this
Security Agreement with respect to such Aircraft in such form as the Company
shall reasonably request.
SECTION 1.03. Subsequently Mortgaged Engine.
A. Replacement Engine. The Company may at any time or from time
to time subject to the Lien of this Security Agreement one or more Replacement
Engines, in substitution for one or more of the Engines then constituting part
of the Aircraft and subject to such Lien, provided that each Replacement Engine
so subjected to the Lien of this Security Agreement shall be appropriate for
installation on the Airframe.
----------
*Subject to negotiation on a case by case basis.
* Subject to negotiation on a case by case basis.
B. Supplements. Whenever the Company shall subject any
Replacement Engine to the Lien of this Security Agreement, the Company will on
or prior thereto:
(i) execute and deliver to the Agent a Supplement
properly describing such Replacement Engine;
(ii) deliver to the Agent an Officer's Certificate
confirming (x) that the representations and warranties contained in
Section 1.04 hereof are true and accurate on and as of the date of such
Supplement with respect to such Replacement Engine and the Company as
though made on and as of such date and (y) that the Company has
complied with the conditions contained in Section 2.l0B(ii)(1) of the
Credit Agreement;
(iii) deliver an Approved Appraisal (which may be a desktop
appraisal) with respect to the Airframe including the Replacement
Engine; and
(iv) if such Replacement Engine is Section 1110 Property
(as hereinafter defined), furnish the Agent with an opinion of counsel
reasonably satisfactory to the Agent in form and substance reasonably
satisfactory to the Agent that the Agent will have the benefit of
Section 1110 under this Security Agreement with respect to such
Replacement Engine.
Promptly upon the recordation of such Supplement with the FAA,
the Company will cause to be delivered to the Agent an opinion of counsel
acceptable to the Agent as to the due recording of such Supplement against such
Replacement Engine in accordance with the Act. Upon satisfaction of the
conditions of this Section 1.03B, the Replacement Engine shall become an
"Engine" for all purposes hereof and the engine being substituted for shall
cease to be an "Engine" and shall be released from the Lien of this Security
Agreement. Upon written request and at the Company's expense, the Agent shall
execute and deliver to the Company such releases as the Company may reasonably
request to effectuate the release contemplated in the previous sentence.
SECTION 1.04. Representations and Warranties of the Company.
The Company represents and warrants that, in the case of the Airframe and each
Engine mortgaged hereunder, on the date such Airframe or Engine is mortgaged
hereunder:
(i) the execution, delivery and performance by the
Company of this Security Agreement are within the Company's corporate
power, have been duly authorized by all necessary corporate action, and
do not contravene (1) the Company's articles of incorporation or
by-laws or (2) any law, rule, regulation, order, writ, judgment,
injunction, decree, determination or award or any contractual
restriction binding on the Company or any of its properties and do not
result in or require the creation of any Lien (other than pursuant to
the Loan Documents) upon or with respect to any of its properties other
than that created hereunder;
(ii) no authorization or approval or other action by, and
no notice to or filing with, any governmental authority is required for
the due execution and delivery by the Company of this Security
Agreement, other than as have been duly obtained, taken, given or made;
and
(iii) the Company shall have good and marketable title to
such Airframe or Engine, free and clear of all Liens created or
incurred by it or permitted to exist by it other than the Lien of this
Security Agreement and Permitted Liens.
ARTICLE II COVENANTS
SECTION 2.01. Registration; Maintenance and Operation.
A. Registration. The Company, at its own expense, shall [upon delivery
of the Aircraft under the Purchase Agreement,]* cause the Aircraft to be duly
registered in the name of the Company, and to remain duly registered in the name
of the Company, with the FAA.
B. Maintenance.
1. General. The Company, at its own cost and expense shall (i)
service, repair, maintain and overhaul or cause the same to be done to the
Airframe and each Engine under the Company's FAA-approved Maintenance Program
(the "Approved Maintenance Program") in the same manner and with the same care
as used by the Company with similar aircraft and engines operated by the Company
(except for care required pursuant to return conditions of lease agreements with
respect to aircraft and engines leased by the Company) and so as to keep the
Airframe and each Engine in good operating condition and in passenger
configuration, (ii) maintain the manuals and technical records in an orderly
manner in the English language in accordance with the Approved Maintenance
Program and (iii) cause all heavy maintenance to be performed at a nationally
recognized maintenance facility holding a valid FAA repair facility certificate
and all other maintenance to be performed by FAA approved maintenance providers.
2. Specific Items of Maintenance. The Company agrees that
maintenance and repairs shall include, but shall not be limited to, the
following specific items:
a. to perform or have performed in accordance with
the Approved Maintenance Program all routine maintenance work, including on-line
maintenance on the Aircraft, and to ensure that all such maintenance shall be in
accordance with the regulations and directives of the FAA. The Company shall
cause all maintenance and repairs to the Aircraft to be performed at repair
facilities approved by the FAA, including, with respect to any lease permitted
hereunder, any lessee's FAA approved maintenance facilities;
----------
* Subject to negotiation on a case by case basis.
b. to correct diligently deficiencies revealed at any
time by any inspection by the Company which under the Approved Maintenance
Program reasonably require repair, replacement, overhaul and adjustment;
c. to maintain or cause to be maintained at all times
in an orderly manner and in accordance with all applicable requirements of the
FAA and any other governmental authority having jurisdiction with respect
thereto, all Aircraft documentation, including, without limitation, all records
relating to the location, service, inspection, maintenance, modification, repair
and overhaul of the Airframe, Engines and all Parts installed therein and the
manuals and technical records, and in accurate, current, up-to-date and complete
status (if necessary, through manufacturers' revision service);
d. if required by FAA regulations, to notify the
manufacturer promptly of any modifications or configuration changes to the
Airframe which would have a material effect on or be a material change to the
detail specification and/or the manuals relating to the Airframe (such as
flight, operations and maintenance);
e. to maintain the Engines at all tines in accordance
with the Approved Maintenance Program; and
f. to make all structural repairs in accordance with
the Approved Maintenance Program.
3. Airworthiness Directives. The Company agrees to carry out
or cause to be carried out at its expense on the Aircraft, in accordance with
the terms thereof, any airworthiness directive or any other mandatory F.A.R. or
other regulation, directive or instruction (each, an "Airworthiness Directive")
which the FAA may from time to time issue. All Airworthiness Directives shall be
timely accomplished in accordance with the Approved Maintenance Program and the
terms and conditions of such Airworthiness Directives (including by means of
alternate compliance under the Airworthiness Directive and the Approved
Maintenance Program).
4. Corrosion Control. The Company shall carry out at its
expense such work as may be required for the control of corrosion in accordance
with the Approved Maintenance Program.
5. Repairs. Any repair to the Aircraft shall be accomplished
pursuant to the appropriate manufacturer's repair manual instructions, the
Approved Maintenance Program, or other FAA-approved data.
6. Warranties. Any warranties, express or implied, of
manufacturers, suppliers or subcontractors relating to the Aircraft or any of
the Engines shall inure to the benefit of the Company and be exercised or
enforced by the Company at the Company's sole expense. So long as the Loans have
not been accelerated the Company shall have the right to exercise, enforce,
compromise or release the same, and may apply the proceeds thereof in any manner
it deems
appropriate. The Company shall maintain the Aircraft in such a manner so as not
to knowingly void any available warranties. Upon acceleration of the Loans, all
warranties and all rights with respect to warranties shall revert to the Agent
or its designee and, upon request of the Agent, the Company shall execute such
documents and take such action as may be requested or required to enable the
Agent or its designee to enforce or in any other way receive the benefit of such
warranties.
C. Operation.
1. The Company will not maintain, use, service, repair,
overhaul or operate the Aircraft in violation of any law, rule, regulation,
treaty or order of any government or governmental authority (domestic or
foreign) having jurisdiction, or in violation of any airworthiness certificate,
license or registration relating to the Aircraft issued by any such authority or
for a purpose for which the Aircraft is not designed or reasonably suitable or
in any configuration other than passenger configuration.
2. The Company will not operate the Aircraft: (i) in or to any
area excluded from coverage by any insurance required to be maintained by the
terms of this Agreement; or (ii) any areas of actual or threatened armed
hostilities unless such operation is covered by and complies with the insurance
required hereunder.
D. Possession and Leases. The Company will not lease or otherwise in
any manner deliver, transfer or relinquish possession of the Airframe or any
Engine or install or permit any Engine to be installed on any airframe other
than the Airframe without the prior written consent of the Agent; provided that,
so long as no Event of Default exists at the time of such lease, delivery,
transfer or relinquishment of possession or installation and the Company shall
continue to maintain insurance in compliance with this Security Agreement, the
Company may, without the prior written consent of the Agent:
1. deliver possession of the Airframe or any Engine to the
manufacturer thereof or to any person for testing, service, repair,
maintenance or overhaul work on the Airframe or any Engine or any part
thereof or for alterations or modifications in or additions to the
Airframe or Engine(s);
2. install an Engine on an airframe owned by the Company,
leased to the Company or owned or purchased by the Company subject to a
conditional sale or other security agreement, provided that (a) such
airframe is free and clear of all Liens, except: (i) the rights of the
parties to the lease or conditional sale or other security agreement
covering such airframe, or their assignees, (ii) liens of the type
described in the definition hereunder of "Permitted Liens", and (iii)
the rights of other air carriers under normal interchange agreements
which are customary in the airline industry and do not contemplate,
permit or require the transfer of title to the airframe or engines
installed thereon, and (b) any such lease, conditional sale or other
security agreement provides that engines such as the Engine shall not
become subject to the lien of such lease, conditional
sale or other security agreement, notwithstanding the installation
thereof on such airframe; and
3. lease the Aircraft to any Permitted Lessee provided that
(A) such lease shall not have a term of more that six (6) months (or
eighteen (18) months if at the time such lease is executed such
Permitted Lessee has a long term unsecured credit rating of at least BB
by Standard & Poor's Ratings Group), (B) the terms of such lease
expressly provide that the lease is subject and subordinate to this
Security Agreement and all rights of the Agent hereunder, including,
but not limited to, the right of the Agent to repossess the Aircraft
following the acceleration of the Loans, (C) the maintenance, insurance
and other terms of the lease are consistent with the requirements of
this Security Agreement, (D) the lease (1) requires that the Aircraft
remain a U.S. registered aircraft and (2) prohibits further leasing by
the Permitted Lessee and (E) concurrently with entering into such
lease, the Company provides the Agent with a copy thereof together with
insurance certificates and evidence complying with Section 2.04 (which
insurance may be provided by the Permitted Lessee if it otherwise
complies in all respects with Section 2.04 hereof).
The Agent agrees for the benefit of a lessor or secured party
under a lease, conditional sale or other security agreement containing an
agreement complying with Section 2.01(D)(2)(b) which lease, conditional sale or
security agreement also covers an engine or engines owned by the lessor under
such lease or subject to a security interest in favor of the secured party under
such conditional sale or other security agreement that the Agent will not
acquire or claim, as against such lessor or secured party, any right, title or
interest in any such engine or engines as the result of such engine or engines
being installed on the Airframe at any time while such engine or engines is
subject to such lease, conditional sale or other security agreement and owned by
such lessor or subject to a security interest in favor of such secured party.
The rights of any lessee or other transferee who receives
possession by reason of a transfer permitted by this Section 2.01(D) shall be
subject and subordinate to all the terms of this Security Agreement, including,
without limitation, the covenants contained in Sections 2.01(A), (B) and (C) of
this Security Agreement and the Agent's rights, powers and remedies under this
Security Agreement, including the right to repossession pursuant thereto and to
avoid such lease upon such repossession and the Company shall remain primarily
liable under this Security Agreement for the performance of all of the terms
thereof to the same extent as if such lease or transfer had not occurred. The
terms of any such lease shall not permit any lessee to take any action not
permitted to be taken by the Company under this Security Agreement with respect
to the Aircraft.
Any wet lease or similar arrangement under which the Company
provides the crew and maintains operational control of the Aircraft shall not
constitute a delivery, transfer or relinquishment of possession for purposes of
this Section 2.1(D).
E. Plates. On or before the date hereof, or as soon thereafter as
practicable, the Company agrees to affix and maintain in the cockpit of the
Airframe and on each Engine a nameplate bearing the inscription:
SUBJECT TO A SECURITY INTEREST IN FAVOR OF THE INDUSTRIAL BANK OF
JAPAN, LIMITED, AS AGENT, SECURED CREDITOR
F. Insignia. Nothing contained in the Credit Agreement or this Security
Agreement shall prohibit the Company from placing its customary colors and
insignia on the Airframe or any Engine or from otherwise operating the Aircraft
in its livery.
SECTION 2.02. Liens. The Company will not directly or
indirectly create, incur, assume or suffer to exist any Lien on or with respect
to the Aircraft, title thereto or any interest therein or part thereof other
than Permitted Liens. The Company will promptly, at its own expense, take (or
cause to be taken) such actions as may be necessary duly to discharge any Lien
not constituting a Permitted Lien if the same arise at any time.
SECTION 2.03. Parts.
A. Replacement of Parts. The Company, at its own cost and expense, will
promptly replace or cause to be replaced all Parts which may from time to time
become worn out, lost, stolen, destroyed, seized, confiscated, damaged beyond
repair or permanently rendered unfit for use for any reason whatsoever, except
as otherwise provided in this Section 2.03(A) or Section 2.03(D) of this
Security Agreement. All replacement parts (other than replacement parts
temporarily installed as provided in Section 2.03(B) of this Security Agreement
shall be free and clear of all Liens (except Permitted Liens), and shall be in
as good an operating condition, and shall have a value and utility substantially
equal to or greater than, the Parts replaced assuming such replaced Parts were
in the condition and repair required to be maintained by the terms of this
Security Agreement. All Parts at any time removed from the Airframe or any
Engine shall remain the property of the Company, no matter where located, until
such time as such Parts shall be replaced by parts which meet the requirements
for replacement Parts specified above. Upon any replacement part becoming
incorporated or installed in or attached to the Airframe or any Engine, without
further act (subject only to Permitted Liens and any arrangement permitted by
Section 2.03(B) of this Security Agreement), (i) such replacement part shall
become the property of the Company and shall become subject to the Lien of this
Security Agreement and be deemed a Part for all purposes of this Security
Agreement to the same extent as the Parts originally incorporated or installed
in or attached to the Airframe or such Engine and (ii) the replaced Part shall
no longer be deemed a Part under this Security Agreement. Upon written request
and at the Company's expense, the Agent shall execute and deliver to the Company
such releases as the Company may reasonably request to effectuate the release
contemplated in clause (ii) of the previous sentence.
The Company may remove Parts which the Company determines in
its reasonable judgment to be obsolete or no longer suitable or appropriate for
use on the Airframe or any
Engine (each, an "Obsolete Part"), provided that (i) such removal is being
applied by the Company on a fleet-wide basis and does not discriminate against
the Aircraft to the extent applicable having regard to the fleet and equipment
type and the age of the Aircraft and (ii) removal of any such Obsolete Parts
shall not diminish the value, utility or remaining useful life of the Airframe
or such Engine, or materially impair the condition or impair the airworthiness
thereof, below the value, utility, condition, airworthiness or remaining useful
life thereof immediately prior to such removal assuming the Airframe or such
Engine was then of the value and utility and in the condition and airworthiness
required to be maintained by the terms of this Security Agreement.
B. Pooling of Parts; Temporary Replacement Parts. Any Part removed from
the Airframe or any Engine as provided in Section 2.03(A) of this Security
Agreement may be subjected by the Company to a normal pooling or similar
arrangement customary in the airline industry and entered into by the Company in
the ordinary course of its business; provided, that a Part replacing such
removed Part shall be incorporated or installed in or attached to such Airframe
or Engine in accordance with Section 2.03(A) of this Security Agreement as
promptly as practicable after the removal of such removed Part. In addition, the
Company may use temporary parts or pooled parts on the Aircraft as temporary
replacements for Parts, provided that the Company, at its expense as promptly
thereafter as practicable, either (1) causes such pooled or replacement part to
become the property of the Company free and clear of all Liens other than
Permitted Liens or (2) replaces such replacement part with a further replacement
part owned by the Company which meets the requirements of Section 2.03(A) of
this Security Agreement and which shall become the property of the Company, free
and clear of all Liens other than Permitted Liens.
C. Modifications.
1. Except as provided in Section 2.01B(3) hereof, the Company
shall at its expense make such alterations and modifications in and additions to
the Airframe or any Engine as may be required to be made from time to time by
applicable law ("Required Modifications").
2. The Company shall not make any modifications, alterations
or additions (collectively, "Modifications") to the Aircraft, (other than
Required Modifications) which will result in adverse changes to the Aircraft
structure or performance or which will either (a) materially decrease the
utility, value or remaining useful life of the Aircraft or (b) adversely affect
the Aircraft's airworthiness or use for transporting passengers or cargo in
commercial service.
3. All Modifications shall be FAA-approved or in accordance
with the Approved Maintenance Program.
D. Additional Parts. All parts incorporated or installed in or attached
or added to the Airframe or an Engine (other than passenger service items leased
to or owned by the Company including, without limitation, telephone or video
equipment, which such passenger service items
shall not be considered "Parts") as the result of a Modification (the
"Additional Part" or "Additional Parts") shall, without further act, become the
property of the Company and subject to this Security Agreement. Notwithstanding
the foregoing, the Company may, at any time, so long as no Event of Default
shall have occurred and be continuing, remove or suffer to be removed any
Additional Part, provided that such Additional Part (x) (i) is in addition to,
and not in replacement of or substitution for, any Part originally incorporated
or installed in or attached to the Airframe or any Engine at the time of
delivery thereof hereunder or any Part in replacement of or substitution for any
such Part and (ii) can be removed from the Airframe or such Engine without
impairing the airworthiness of the Airframe or such Engine or diminishing the
value, utility or remaining useful life of the Airframe or such Engine which the
Airframe or such Engine would have had at such time had such alteration,
modification or addition not occurred or (y) such Part is an Obsolete Part. Upon
the removal thereof as provided above, such Additional Parts shall no longer be
deemed part of the Airframe or the Engine from which it was removed.
SECTION 2.04. Insurance.
(a) Public Liability and Property Damage Liability Insurance.
(i) The Company, at its own cost and expense, will
maintain or cause to be maintained with respect to the Airframes and
Engines, comprehensive aircraft liability insurance including, without
limitation, bodily injury and/or property damage, inclusive of
liability to third parties and/or passengers, passenger legal liability
and property damage liability insurance and cargo legal liability in
such amounts, against such risks (including, without limitation,
contractual liability and war risk liability), with such retentions as
the Company customarily maintains with respect to similar airframes and
engines owned or operated by the Company (provided, however, that any
self-insured retention and/or deductible shall not exceed [$1,000,000]
per occurrence) (in the event that with the prior consent of the Agent
such insurance contains the War, Hijacking, and Other Perils Exclusion
Clause (AVN 48B), then there must be in place the Extended Coverage
Endorsement protection offered by AVN 52 to include "Buy Back" of
paragraphs C, D, E and G of AVN 48B (or coverage equal thereto under a
separate policy)) and with such insurers or reinsurers (which shall be
insurers or reinsurers of recognized responsibility), and insurance
against such other risks as is usually carried by similar corporations
engaged in the same or similar business and similarly situated as the
Company and owning or operating airframes and engines similar to the
Airframe and Engines; provided that such insurance shall not be in
amounts less than $500,000,000 per occurrence.
(ii) Notwithstanding Section 2.04(a)(i), in the event of
the requisition for use by the United States government of any Airframe
or Engine, the Company shall maintain throughout the period of such
requisition such insurance as would otherwise be required under this
Section 2.04, provided that the Agent shall accept, in lieu of such
insurance
coverage, indemnification or insurance from the United States
government which is substantially the same as otherwise required under
this Section 2.04.
(ii) Any policy of insurance carried and maintained in
accordance with this Section 2.04(a), and any policy taken out in
substitution or replacement for any such policy subject to the terms,
conditions and limitations thereof, shall:
(A) name the initial Lenders and the
Agent and their respective successors and permitted assigns as
additional insureds (each an "Additional Insured");
(B) provide that, in respect of the
interest of any such Additional Insured in such policies, the
insurance shall not be invalidated by any action or inaction
of the Company or any Additional Insured as defined under the
policy of insurance required under this Section 2.04(a) (other
than such Additional Insured) and shall insure each such
Additional Insured regardless of any breach or violation of
any warranty, declaration or condition contained in such
policies by the Company or any other Additional Insured as
defined under the policy of insurance required under this
Section 2.04(a) (other than such Additional Insured);
(C) provide that if such insurance is
canceled for any reason, or any substantial change is made in
the policies which adversely affect the coverage required
herein, or if such insurance is allowed to lapse for
nonpayment of premium, such cancellation, change or lapse
shall not be effective as to any Additional Insured for 30
days (except in the case of war risk coverage in which event
the applicable period shall be seven days or such other period
as may be customary) after receipt by each such Additional
Insured of written notice from such insurers of such
cancellation, change or lapse;
(D) provide that no such Additional
Insured shall have any obligation or liability for premiums or
other payments, if any, in connection with such insurance;
(E) provide that the insurers shall
waive any rights of subrogation against each such Additional
Insured except to the extent that any insured event arises
solely from the gross negligence or willful misconduct of
such Additional Insured as determined by a final judgment of a
court of competent jurisdiction;
(F) provide that such insurer shall
waive the right of such insurer to any set-off or counterclaim
or any other deduction, whether by attachment or otherwise, in
respect of any liability of any such Additional Insured;
(G) provide that all of the provisions
of such policy shall operate in the same manner as if there
were a separate policy covering each such Additional Insured;
provided that such policies shall not operate to increase any
insurer's limit of liability; and
(H) be primary, without right of
contribution from any other insurance which is carried by any
Additional Insured with respect to its interest in the Subject
Collateral.
(b) Insurance Against Loss or Damage to Subject Collateral. The
Company, at its own cost and expense, shall maintain or cause to be maintained
in effect, with insurers or reinsurers of recognized responsibility, all-risk
coverage, including ground and flight insurance on the Aircraft (with flight,
taxiing and ingestion coverages) with respect to any Aircraft, Engines and Parts
temporarily removed from the Airframe pending installation of the same or
similar Engines, engines, or Parts on the Airframe, including, war-risk and
allied perils insurance on the Aircraft in an amount not less than the Agreed
Value covering the perils of:
1. war, invasion, acts of foreign enemies, hostilities
(whether war be declared or not), civil war, rebellion, revolution,
insurrection, martial law, military or usurped power, or attempts at usurpation
of power;
2. strikes, riots, civil commotions or labor disturbances;
3. any act of one or more persons, whether or not agents of a
sovereign power, for political or terrorist purposes and whether the loss or
damage therefrom is accidental or intentional;
4. any malicious act or act of sabotage;
5. confiscation, nationalization, seizure, restraint,
detention, appropriation, requisition of title or use by or under the order of
any government (whether civil, military or de facto) or public or local
authority other than the government or any public or local authority of the
country of registration; and
6. hijacking or any unlawful seizure or wrongful seizure or
wrongful exercise of control of the Aircraft or crew in flight (including any
attempt at such seizure or control) made by any person or persons on board this
Aircraft acting without the consent of the Company.
Such insurance shall be in such form and amounts and with
such retentions as the Company customarily maintains with respect to similar
airframes and engines owned or operated by the Company, provided, however, that
(1) such retentions shall consist only of industry standard deductibles
(determined by the deductible applicable to the aircraft type) and with no
self insurance, (2) each Airframe and Engine shall be insured in an amount not
less than its Agreed Value and (3) any reinsurance shall be on the same terms as
the primary insurance.
Any policies carried and maintained in accordance with this
Section 3.04(b) and any policies taken out in substitution or replacement for
any such policies subject to the terms, conditions and limitations thereof
shall:
(i) name or be amended to name the then Lenders and the
Agent and their respective successors and assigns as additional
insureds and to name the Agent as loss payee (the "Loss Payee");
(ii) provide with respect to coverage provided under this
Section 3.04(b), that (A) in the event of a loss or damage involving
proceeds in excess of $1,000,000, the proceeds in respect of such loss
or damage shall be payable to the Agent and (B) the entire amount of
any loss or damage involving proceeds in the aggregate of $1,000,000 or
less shall be paid to the Company or its order unless an Event of
Default or Potential Event of Default then exists and the insurers have
been notified thereof by the Agent (in which case such payment shall be
made to the Agent);
(iii) provide that if such insurance is canceled for any
reason or any substantial change is made in the policies which
adversely affects the coverage required herein, or if such insurance is
allowed to lapse for nonpayment of premium, such cancellation, change
or lapse shall not be effective as to any such Additional Insured or
the Loss Payee for 30 days (except in the case of war-risk coverage in
which event the applicable period shall be seven days or such other
period as may be customary) after receipt by each such Additional
Insured or the Loss Payee of written notice from such insurer of such
cancellation, change or lapse;
(iv) provide that, in respect of the interest of any such
Additional Insured or the Loss Payee in such policies the insurance
shall not be invalidated by any action or inaction of the Company, the
Loss Payee or any additional insured as defined under the policy of
insurance required by this Section 2.04(b) (other than any action or
inaction of the Loss Payee or such Additional Insured, as the case may
be) and shall insure the Additional Insured and the Loss Payee
regardless of any breach or violation of any warranty, declaration or
condition in such policies by the Company or any other Additional
Insured as defined under the policy of insurance required under this
Section 2.04(b);
(v) provide that the insurers shall waive any rights of
subrogation against the Loss Payee and such Additional Insureds except
to the extent that any insured event arises solely from the gross
negligence or willful misconduct of such Additional Insured as
determined by a final judgement of a court of competent jurisdiction;
(vi) provide that such insurer shall waive any right of
such insurer to any set-off or counterclaim or any other deduction,
whether by attachment or otherwise, in respect of any liability of any
such Additional Insured or Loss Payee;
(vii) be primary and without rights of contribution from
any other insurance which is carried by any such Additional Insured or
the Loss Payee with respect to its interest in the Subject Collateral;
(viii) provide that no such Additional Insured or Loss Payee
shall have any obligation or liability for premiums or other payments,
if any, in connection with such insurance; and
(ix)) the reinsurer shall agree that in the event of any
valid claim arising under such reinsurance policy the reinsurers shall
in lieu of payment to the reinsured, its successors in interest and
assigns will pay to the Persons named as Additional Insureds under the
original insurance affected by the Company that portion of any loss for
which the reinsurers would otherwise be liable to pay the reinsured
(subject to proof of loss) it being understood and agreed that any such
payment shall fully discharge and release the reinsurer from any and
all further liability in connection with such claims.
(c) Application of Insurance Proceeds.
(i) Except as expressly provided in Section 2.04(c)(ii)
or (iii) below, all insurance proceeds (other than proceeds from policies
carried by the Agent or the Lenders) received under policies described in
Section 2.04(b) will be paid to the Agent except as otherwise provided in
Section 2.04(b)(ii) and paid by the Agent to the Company unless an Event of
Default or Potential Event of Default exists, in which event such proceeds shall
be retained by the Agent. If the Agent retains any such insurance proceeds
pursuant to this Section 2.04(c), such proceeds shall, until applied by the
Agent as provided in this Section 2.04(c)(i), Section 2.04(c)(ii) or Section
2.04(c)(iii) hereof, be maintained by the Agent in a segregated account and
shall, at the Company's request therefor, be invested in Permitted Cash
Equivalents.
(ii) Insurance proceeds in respect of any Repairable
Damage with respect to any Aircraft which is not required by subsection
2.4B(iii)(1) of the Credit Agreement to be excluded from the Borrowing Base
shall be retained by the Agent pending repair thereof, and shall be applied by
the Agent in payment (or to reimburse the Company) for repairs to the affected
Aircraft upon receipt from the Company of an Officer's Certificate annexing
copies of invoices relating to such repairs, provided, however, that the Agent
shall not so apply any such proceeds during the occurrence and continuance of
any Potential Event of Default or Event of Default. Any such insurance proceeds
in excess of the total amount required to pay for repair of the affected
Aircraft shall, upon certification by the Company to the Agent in an Officer's
Certificate that such repair has been completed, be paid by the Agent to the
Company provided, however, that the Agent shall not so pay any such insurance
proceeds during the occurrence and continuance of any Potential Event of Default
or Event of Default.
(iii) If an Event of Default shall have occurred and be
continuing, the Agent shall apply all insurance proceeds (including proceeds of
any earnings on any Permitted Cash Equivalents in which such insurance proceeds
have been invested) then on deposit with it pursuant to Section 2.04(c)(i) or
Section 2.04(c)(ii) hereof (all such insurance and other proceeds and earnings
being herein collectively called "Section 2.04(c) Proceeds") to payment of the
Obligations then due. At such time as no Potential Event of Default or Event of
Default shall be continuing, any Section 2.04(c) Proceeds remaining on deposit
with the Agent shall be (x) applied as provided in Section 2.04(c)(ii), if then
applicable, or (y) if Section 2.04(c)(ii) is not then applicable, shall be paid
by the Agent to the Company.
(iv) If any of the Lenders or the Agent becomes subject to
any claim covered by any insurance policy maintained pursuant to this Section
2.04, the Company shall make available any information reasonably required by
such Lender or the Agent in connection with such claim.
(d) Reports. On or before the date hereof and thereafter
annually on or before the scheduled expiration date for such policy, the
Company's aviation insurance broker will furnish to the Agent a certificate and
letter of undertaking, signed by the Company's independent aviation insurance
broker, stating the types of coverage and limits carried and maintained on the
Aircraft and certifying that such insurance complies with the terms and
conditions of this Section 2.04. The Company will cause its aviation insurance
broker to advise the Agent in writing promptly of any default in the payment of
any premium and of any other act or omission on the part of the Company in any
such case of which it has knowledge and which is likely to cause cancellation of
all or any part of any insurance carried by the Company with respect to the
Aircraft. The Company will cause such insurance broker to agree to advise the
Agent in writing if and when it becomes evident to such broker that any
insurance policy carried and maintained on the Aircraft pursuant to this Section
2.04 will not be renewed at the expiration date. The Company will also cause
such insurance broker to deliver to the Agent, on or prior to the date of
expiration of any insurance policy referenced in a previously delivered
certificate of insurance, a new certificate of insurance, confirming to such
parties that such insurance as certified on the date thereof continues in full
force and effect. If the Company shall fail to maintain insurance as required
hereby, the Agent may, at its option, provide such insurance, and in such event,
the Company shall, upon demand, reimburse the Agent for the cost of such
insurance; provided, however, that no exercise of said option shall affect the
provisions of this Security Agreement, including the provisions that failure by
the Company to maintain the prescribed insurance shall constitute an Event of
Default, or otherwise constitute a waiver of any other rights the Agent may have
against the Company.
(e) Notice of Proceeds. The Company shall promptly notify
the Agent upon a Responsible Officer of the Company obtaining actual knowledge
thereof of the occurrence of an event of loss or damage to any Aircraft which is
reasonably expected to result in the receipt of insurance proceeds reasonably
estimated by the Company to exceed $1,000,000.
SECTION 2.05. Infection. At reasonable times and upon
reasonable notice, the Agent or its authorized representative may, at their own
expense (unless an Event of Default then exists or a Potential Event of Default
arising under the maintenance requirements of this Security Agreement, in which
case the reasonable expenses of such inspection shall be paid by the Company or
unless subsection 2.10 of the Credit Agreement provides that such inspection
shall be at the expense of the Company), inspect the Aircraft and inspect of the
books and records and FAA-required books and records of the Company in each case
relating to the maintenance of the Aircraft. Any such inspection of the Aircraft
shall be a visual, walk-around inspection (including on-board inspection) and
may include inspection of areas exposed by any open panels, bays or the like,
but shall not include opening any panels, bays or the like without the express
written consent of the Company; provided that no exercise of such inspection
right shall interfere with the normal operation of the Aircraft by, or the
business of, the Company. The Agent shall have no duty to make any such
inspection nor shall it incur any liability or obligation by reason of not
making any such inspection.
SECTION 2.06. Further Assurances. (a) The Company agrees from
time to time, at its sole expense, to promptly execute and deliver all further
instruments and documents, and take all further action, that the Agent may
request, in order to perfect and protect any security interest granted or
purported to be granted hereby or to enable the Agent to exercise and enforce
its rights and remedies hereunder with respect to any of the Subject Collateral.
Without limiting the generality of the foregoing, such further actions shall
include executing and delivering such amendments or supplements to the schedules
to this Security Agreement, executing and filing such financing or continuation
statements, or amendments thereto, executing, filing and recording such
documents or instruments with the Federal Aviation Administration, and executing
and filing such other instruments or notices, in each case as the Agent on
behalf of the Lenders may reasonably request, in order to perfect and preserve
the security interest granted or purported to be granted hereby.
(b) The Company hereby authorizes the Agent to file
one or more financing or continuation statements or similar instruments or
documents, and amendments thereto, relative to all or any part of the Subject
Collateral without the signature of the Company where permitted by law.
SECTION 2.07. Recording and Filing; Opinions of Counsel. The
Company will bear the expense of and be responsible for recording and
re-recording, registering and re-registering and filing and re-filing this
Security Agreement and each and every Security Agreement Supplement and such
other instruments from time to time as may be reasonably requested by the Agent
in all such jurisdictions and offices as the Agent shall from tine to time
require in order that (a) the Lien hereof be and continues to be a first
priority Lien on all of the Subject Collateral to the fullest extent permitted
under applicable law, subject to Permitted Liens, (b) all of the Subject
Collateral is and remains security for the Obligations, and (c) the rights and
remedies of the Agent may be established, confirmed, maintained and protected;
and the Company will furnish to the Agent evidence satisfactory to the Agent of
every such recording, registering and filing which is not filed, recorded or
registered by the Agent. The
foregoing includes, without limitation, the execution and delivery by the
Company of all documents, financing statements and continuation statements
deemed reasonably necessary by the Agent to perfect the Agent's rights as
secured party. The Company, at its own cost and expense, shall on the date of
this Security Agreement cause this Security Agreement to be duly filed for
recordation with the FAA and shall make such other filings to perfect the Lien
of this Security Agreement against the Subject Collateral as shall be reasonably
requested by the Agent. The Company will furnish to the Agent an opinion of
counsel reasonably satisfactory to the Agent or other evidence reasonably
satisfactory to the Agent to the effect that such filings or refilings and such
recordations or re-recordations have been duly accomplished and as to any Liens
of record against the Aircraft or any Engine in the office where such filings or
refilings or recordations or re-recordations have been accomplished.
[SECTION 2.08. Section 1110. TO THE EXTENT PROVIDED THEREBY
(OR TO THE FULLEST EXTENT IT MAY LAWFULLY SO AGREE, WHETHER OR NOT PROVIDED
THEREBY), THE COMPANY HEREBY AGREES THAT ANY RIGHT OF THE AGENT TO TAKE
POSSESSION OF THE SECTION 1110 PROPERTY IN COMPLIANCE WITH THE PROVISIONS OF
THIS SECURITY AGREEMENT AND IN ACCORDANCE WITH SECTION ▇▇▇▇ ▇▇ ▇▇▇▇▇ ▇▇ ▇▇ ▇▇▇
▇▇▇▇▇▇ ▇▇▇▇▇▇ CODE OR ANY SIMILAR PROVISION OF ANY SUPERSEDING STATUTE, AS
AMENDED FROM TIME TO TIME, SHALL NOT BE AFFECTED BY THE PROVISIONS OF SECTIONS
362, 363 OR 1129 OF SAID TITLE, OR OTHER ANALOGOUS PART OF ANY SUPERSEDING
STATUTE, AS AMENDED FROM TIME TO TIME, AND ACCORDINGLY, IT IS THE INTENTION OF
THE PARTIES HERETO THAT WITH RESPECT TO THE SECTION 1110 PROPERTY, THIS
SECURITY AGREEMENT BE AFFORDED THE BENEFITS OF SAID SECTION 1110.]**
(a) [SECTION 2.09. First Placed in Service. Schedule I hereto specifically
identifies, to the extent known to the Company with respect to Aircraft not
first placed in service by the Company, if the Aircraft was first placed in
service after October 22, 1994 or was acquired by the Company with the proceeds
of the Credit Agreement ("Section 1110 Property"). Each Security Agreement
Supplement adding a Replacement Engine to be subject to the Lien of this
Security Agreement shall also identify to the extent known to the Company
whether such Engine was first placed in service after October 22, 1994.]**
SECTION 2.10. Power of Attorney. The Company hereby
irrevocably appoints the Agent as the Company's attorney-in-fact and agent to
the extent permitted by law, effective on or after the acceleration of the
Loans, but prior to the Agent obtaining physical possession of
----------
** The Company agrees that this Security Agreement will grant to the Agent
the benefits of Section 1110 if such Section applies to the Airframe,
any Engine or any Replacement Engine.
** The Company agrees that this Security Agreement will grant to the Agent
the benefits of Section 1110 if such Section applies to the Airframe,
any Engine or any Replacement Engine.
the Subject Collateral, in the Company's name and without any action on the part
of the Company to do, at the Agent's option, any act the Agent reasonably
believes necessary to protect the interests of the Agent in the Subject
Collateral. The appointment of the Agent and the rights and powers in connection
therewith, being coupled with an interest and with full power of substitution
and resubstitution for the Company, are and shall remain irrevocable until all
of the Obligations have been fully paid and performed and the Commitments of the
Lenders under the Credit Agreement have expired or been terminated.
SECTION 2.11. Indemnification. The Company shall assume
liability for and will indemnify, protect, save, and keep harmless the Agent and
each of the Lenders, and their respective agents, employees, successors and
permitted assigns (collectively, the "Indemnified Parties") from and against any
and all liabilities, losses, damages, taxes, claims, actions, suits, costs,
demands and/or expenses of whatsoever kind, including, without limitation, legal
expenses, imposed on, incurred by, or asserted against the Agent, the Company,
the Subject Collateral (or any part thereof or interest therein), arising out of
the [purchase]***, ownership, delivery, possession, use, operation, condition,
performance, quality, suitability, airworthiness, maintenance, modification,
registration, loss, confiscation, seizure, requisition, or lease of the Aircraft
(collectively, the "Indemnified Events"). Notwithstanding the foregoing, the
Company shall not indemnify an Indemnified Party in respect of (i) any
Indemnified Events suffered or incurred after the release of the Lien of this
Security Agreement pursuant to the terms hereof, (ii) Indemnified Events that
consist of fees, costs or expenses which such Indemnified Party has expressly
agreed to pay in any provision of this Security Agreement or constitute ordinary
and usual operating or overhead expenses of an Indemnified Party (excluding,
without limitation, costs and expenses of any outside counsel, consultant or
agent), (iii) Indemnified Events arising from the gross negligence or willful
misconduct of such Indemnified Party, (iv) any Indemnified Events arising out of
any breach by the Agent of Section 2.12 hereof, (v) any tax arising as a result
of a voluntary transfer of any Indemnified Party's interest pursuant to Section
9.1 of the Credit Agreement provided that no Event of Default exists at the time
of such transfer, (vi) taxes, withholdings, imposts or duties imposed on, based
on or measured by the gross or net income, receipts, maximum tax, profits,
gains, capital, franchise, excess profits or net worth of an Indemnified Party
other than, in each case, resulting from the activities or presence of the
Company in the taxing jurisdiction or the use, location or registration of the
Aircraft (or any part thereof) in such taxing jurisdiction, (vii) taxes on items
of tax preference or any minimum tax imposed by the federal government of the
United States, (viii) interest, penalties, fines or additions to taxes that
would not have been imposed but for any failure to file any tax return or
information return in a timely and proper manner after timely notice by the
Company of such filing requirement and provision by the Company (at the
Company's expense) of all properly completed forms necessary in connection
therewith and (ix) any tax imposed as a result of a connection between an
Indemnified Party and the jurisdiction imposing such taxes, including, without
limitation, engaging or having engaged in business in, having or having had an
office, branch or permanent establishment in, or being or having been a citizen
or resident of, or present
----------
*** Subject to negotiation on a case by case basis.
in, or incorporated or created in or under the laws of such jurisdiction other
than as a result of a connection arising from this transaction. Each Indemnified
Party shall file its tax returns and deal with taxing authorities in good faith,
and will honor all reasonable requests from the Company to file, or provide the
Company with, such information (but excluding information such Indemnified Party
considers confidential) as is necessary to complete forms or other documentation
(in each case, prepared by the Company at its sole expense) as shall enable such
Indemnified Party or the Company to claim a reduced rate of tax or exemption
from tax with respect to any taxes subject to payment or indemnification by the
Company hereunder to which it may be entitled. If the Company is or may be
required to make any payment under this Section 2.11, any relevant Indemnified
Party shall, at the reasonable request of the Company, consult with the Company
in good faith to consider what action may be taken to resist payment of the
amount claimed. Each indemnity pursuant to this Section 2.11 shall be in the
amount which, after taking into account all taxes required to be paid by the
Agent as a result of the receipt or accrual of such amount, shall be equal to
the amount of the indemnity then due. The Company's obligations under this
Section 2.11 shall survive the expiration or termination of this Security
Agreement and the release of the Lien hereof from any or all of the Subject
Collateral.
SECTION 2.12. Use and Possession. Notwithstanding the terms of
any provision contained in this Security Agreement or the Credit Agreement,
except as provided in Section 3.01(e) of this Security Agreement, the Company
shall have the exclusive right to use and possess the Aircraft, to collect,
retain, use and enjoy all rents and accounts and to exercise its right, title
and interest in contracts, leases, licenses, permits and governmental approvals
subject at all times to (a) the right of the Agent to receive insurance proceeds
pursuant to Section 2.04(c) hereof, (b) the applicable restrictions and
limitations contained in Section 5.4 of the Credit Agreement and (c) such use,
possession, retaining, enjoyment or exercise not otherwise constituting an Event
of Default.
ARTICLE III EVENTS OF DEFAULT AND REMEDIES
SECTION 3.01. Remedies, Obtaining the Aircraft Upon Default.
The Company agrees that, if the Loans have been accelerated, then, subject to
any mandatory requirements of applicable law then in effect, the Agent, in
addition to any rights now or hereafter existing under applicable law, shall
have all rights as a secured creditor under the UCC in all relevant
jurisdictions and may:
(a) to the extent permitted by law, personally, or by agents
or attorneys, immediately take possession of the Aircraft or any part
thereof, from the Company with or without notice or process of law, and
for that purpose may enter upon the Company's premises where all or any
part of the Aircraft is located and remove the same; and
(b) instruct the obligor or obligors on any agreement,
instrument or other obligation relating to the Aircraft to make any
payment included in the Subject Collateral required by the terms of
such instrument or agreement directly to the Agent; and
(c) sell or assign, or direct the Company to sell or assign,
the Aircraft or any part thereof, and take possession of the proceeds
of any such sale or assignment; and
(d) take possession of the Aircraft or any part thereof, by
directing the Company in writing to deliver the same to the Agent at
any place or places designated by the Agent, in which event the Company
shall at its own expense forthwith fly or cause to be flown all or any
part of the Aircraft to such airport or airports in the United States
so designated by the Agent and there delivered to the Agent, and the
Company shall pay all reasonable and necessary expenses to (i) store
and keep all or any part of the Aircraft so delivered to the Agent at
such place or places pending further action by the Agent as provided in
Section 4.02, and (ii) while all or any part of the Aircraft shall be
so stored and kept, provide guards and maintenance services as shall be
necessary to protect the same and to preserve and maintain them in good
condition; and
(e) revoke all or any of the rights of the Company provided
for pursuant to Section 2.12 of this Security Agreement by written
notice to the Company indicating which rights are revoked;
it being understood that the Company's obligation so to deliver the Aircraft or
any part thereof is of the essence of this Security Agreement and that,
accordingly, upon application to a court of equity having jurisdiction, the
Agent shall be entitled to a decree requiring specific performance by the
Company of said obligation.
SECTION 3.02. Remedies; Disposition of the Aircraft. (a) The
Aircraft, or any part thereof repossessed by the Agent under or pursuant to
Section 4.01, whether or not so repossessed by the Agent, may be sold, assigned,
leased or otherwise disposed of under one or more contracts or as an entirety,
and without the necessity of gathering at the place of sale the property to be
sold, and in general in such manner, at such time or times, at such place or
places and on such terms as the Agent may, in compliance with any mandatory
requirements of applicable law, determine to be commercially reasonable. The
Aircraft or any part thereof may be sold, leased or otherwise disposed of, in
the condition in which the same existed when taken by the Agent or after any
overhaul or repair which the Agent shall determine to be commercially
reasonable. Any such disposition which shall be a private sale or other private
proceedings permitted by such requirements shall be made upon not less than 10
days' written notice to the Company specifying the time at which such
disposition is to be made and the intended sale price or other consideration
therefor. Any such disposition which shall be a public sale permitted by such
requirements shall be made upon not less than 10 days' written notice to the
Company specifying the time and place of such sale. To the extent permitted by
any such requirement of law, the Agent and the Lenders may bid for and become
the purchaser of the Aircraft or any part thereof, offered for sale in
accordance with this Section without accountability to the Company (except to
the extent of surplus money received as provided in Section 3.03) and may bid
the amount of the Obligations to be applied as credits against such purchase.
If, under mandatory requirements of applicable law, the Agent shall be required
to make disposition of the Aircraft or any part thereof within a period of time
which does not permit the giving of notice to the
Company as hereinabove specified, the Agent need give the Company only such
notice of disposition as shall be required by such mandatory requirements of
applicable law. Any sale of, or the grant of options to purchase, or any other
realization upon, the Aircraft or any part thereof shall operate to divest all
right, title, interest, claim and demand, either at law or in equity, of the
Company therein and thereto, and shall be a perpetual bar both at law and in
equity against the Company and against any and all Persons claiming or
attempting to claim the Aircraft so sold, optioned or realized upon, or any part
thereof, from, through and under the Company but without limitation of the
Company's rights under Section 3.03 third hereof. At the request of the Agent,
the Company shall deliver such instruments of title or other instruments to
ratify or document such sale but such instruments shall not be necessary to make
such sale final or binding.
(b) The Company covenants (to the extent that it may lawfully
do so) that it will not at any time insist upon, or plead, or in any
manner whatsoever claim or take the benefit or advantage of, any
appraisement, valuation, stay, extension or redemption law wherever
enacted, nor at any time hereafter in force in any locality where any
property subject to the Lien hereof may be situated, in order to
prevent, hinder or delay the enforcement or foreclosure of this
Security Agreement or the execution of any power granted herein to the
Agent, or the absolute sale of the Aircraft, or any part thereof, or
the final and absolute putting into possession thereof, immediately
after such sale, by any purchaser at any sale under this Section 3.02
but without limitation of the Company's rights under Section 3.03 third
hereof; and the Company, so far as it now or thereafter lawfully may,
hereby waives the benefit of all such laws. The Company waives, to the
extent that it lawfully may, all right to have the property in the
Subject Collateral marshalled upon any foreclosure hereof, and agrees
that any court having jurisdiction to foreclose this Security Agreement
may order the sale of the Subject Collateral as an entirety. If the
Agent seeks to take possession of any or all of the Subject Collateral
or avail itself of any provisional remedy by court process, the Company
hereby irrevocably waives (to the extent it may lawfully do so) any
bonds and any surety or security required by any statute, court rule or
otherwise as an incident to such possession, or remedy, and waives any
demand for possession prior to the commencement of any suit or action
to recover.
(c) if the Loans are accelerated, at the request of the Agent,
the Company shall promptly execute and deliver to the Agent such
instruments of title and other documents as the Agent may deem
necessary or advisable to enable the Agent or an agent or
representative designated by the Agent, at such time or times and place
or places as the Agent may specify, to obtain possession or control of
all or any part of the Subject Collateral. To the extent permitted by
law, if the Company shall for any reason fail to execute and deliver
such instruments and documents after such request by the Agent, the
Agent may (x) obtain a judgment conferring on the Agent the right to
immediate possession and/or control and requiring the Company to
deliver such instruments of title and other documents as the Agent may
deem necessary or advisable to enable the Agent or an agent or
representative designated by the Agent, at such time or times and place
or places as the Agent may specify, to obtain possession and/or control
of all or any part of the Subject Collateral, to the entry of which
judgment the Company hereby specifically consents.
SECTION 3.03. Application of Proceeds. Except as may otherwise
be required by law, any moneys or property actually received by the Agent
pursuant to the exercise of any rights or remedies referred to in Article III
shall (subject to the determination of the Agent as to the incurrence of costs
and expenses appropriate and the use of such moneys and property in connection
with the exercise of such rights or remedies and as to the manner of such
exercise) be applied in the following order:
first, to the payment of costs and expenses incurred in the
enforcement of rights and remedies under this Security Agreement;
second, to the payment of all of the Obligations (except for
such Obligations that shall have been paid pursuant to first item of
this Section 3.03), ratably according to the then unpaid amounts
thereof, without preference or priority of any kind among such various
Obligations; and
third, the remainder, if any, to the Company, its successors
or assigns, to such Person as the Agent may be legally required to be
paid to or as a court of competent jurisdiction may direct.
SECTION 3.04. Remedies Cumulative. Each and every right, power
and remedy hereby specifically given to the Agent shall be in addition to every
other right, power and remedy specifically given under this Security Agreement
or the Credit Agreement and other Loan Documents or now or hereafter existing at
law or in equity, or by statute and each and every right, power and remedy
whether specifically herein given or otherwise existing may be exercised from
time to time or simultaneously and as often and in such order as may be deemed
expedient by the Agent. All such rights, powers and remedies shall be cumulative
and the exercise or the beginning of exercise of one shall not be deemed a
waiver of the right to exercise of any other or others. No delay or omission of
the Agent in the exercise of any such right, power or remedy shall impair any
such right, power or remedy or shall be construed to be a waiver of any Event of
Default or an acquiescence therein.
ARTICLE IV AGENT
SECTION 4.01. Agent As provided in Section 8 of the Credit
Agreement, each Lender has appointed The Industrial Bank of Japan, Limited, as
its Agent for purposes of this Security Agreement. In such capacity, The
Industrial Bank of Japan, Limited, shall be entitled to all of the rights and
benefits accorded the Agent by Section 8 of the Credit Agreement. Following the
payment in full of all Obligations and the termination or expiration of the
Loan Documents, the provisions of Section 8 of the Credit Agreement shall be
deemed to continue in full force and effect for the benefit of the Agent under
this Security Agreement. For the avoidance of doubt, nothing in this Section
4.01 is intended to create any liability or obligation on the Company.
ARTICLE V MISCELLANEOUS PROVISIONS
SECTION 5.01. Notices. All notices and communications to be
given under this Security Agreement shall be given in the manner provided in the
Credit Agreement.
SECTION 5.02. Waiver. To the extent permitted by applicable
law, no failure on the part of the Agent or any Lender to exercise and no delay
in exercising, and no course of dealing with respect to, any right, remedy,
power or privilege under this Security Agreement shall operate as a waiver of
such right, remedy, power or privilege, nor shall any single or partial exercise
of any right, remedy, power or privilege under this Security Agreement preclude
any other or further exercise of any such right, remedy, power or privilege or
the exercise of any other right, remedy, power or privilege. The rights,
remedies, powers and privileges provided in this Security Agreement are
cumulative and not exclusive of any rights, remedies, powers and privileges
provided by law.
SECTION 5.03. Expenses Etc. The Company agrees to pay or to
reimburse the Agent and the Lenders for all reasonable costs and expenses
(including reasonable attorney's fees and expenses) that may be incurred by the
Agent or the Lenders for any expense or loss incurred in connection with any
Event of Default, including, but not limited to, any effort to enforce any of
the provisions of, or any of the obligations of the Company in respect of, this
Security Agreement and the other Loan Documents (including in any bankruptcy,
workout or similar proceeding).
SECTION 5.04. Amendments, Etc. To the extent permitted by
applicable law, any provision of this Security Agreement may be modified,
supplemented or waived only by an instrument in writing duly executed by the
Company and the Agent (after such consent as may be required, if any, by the
Lenders pursuant to the Credit Agreement). Any such modification, supplement or
waiver shall be for such period and subject to such conditions as shall be
specified in the instrument effecting the same and shall be binding upon the
Agent, the Lenders and the Company, and any such waiver shall be effective only
in the specific instance and for the purposes for which given.
SECTION 5.05. Successors and Assigns. This Security Agreement
shall be binding upon and inure to the benefit of the Company, the Agent, the
other Lenders and their respective successors and permitted assigns. Except as
provided in subsections 6.6(v), 6.10 and 6.12 of the Credit Agreement, the
Company shall not assign or transfer its rights under this Security Agreement
without the prior written consent of the Agent.
SECTION 5.06. Survival. All representations and warranties
made in this Security Agreement or in any certificate or other document
delivered pursuant to or in connection with this Security Agreement shall
survive the execution and delivery of this Security Agreement or such
certificate or other document (as the case may be) or any deemed repetition of
any such representation or warranty.
SECTION 5.07. Severability. To the extent permitted by
applicable law, any provision of this Security Agreement that 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 of this Security
Agreement, and any such prohibition or unenforceability in any jurisdiction
shall not invalidate or render unenforceable such provision in any other
jurisdiction.
SECTION 5.08. Captions. The captions and section headings
appearing in this Security Agreement are included solely for convenience of
reference and are not intended to affect the interpretation of any provision of
this Security Agreement.
SECTION 5.09. Counterparts. This Security Agreement may be
executed in any number of counterparts, all of which taken together shall
constitute one and the same instrument and any of the parties to this Security
Agreement may execute this Security Agreement by signing any such counterpart.
SECTION 5.10. GOVERNING LAW. THIS SECURITY AGREEMENT
SHALL BE DELIVERED IN THE STATE OF NEW YORK AND GOVERNED BY, AND CONSTRUED AND
ENFORCED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK.
IN WITNESS WHEREOF, the Company and the Agent have caused this
instrument to be duly executed as of the day and year first above written.
AMERICA WEST AIRLINES, INC.,
a Delaware corporation
By: ___________________________
Name:
Title:
THE INDUSTRIAL BANK OF JAPAN,
LIMITED, as Agent
By: ___________________________
Name:
Title:
SCHEDULE I
to
Aircraft Security Agreement
The following aircraft and the aircraft engines listed below, which
aircraft, together with the engines listed therewith below, shall constitute a
single "Aircraft" as said term is defined in the Security Agreement to which
this Schedule I is attached and made a part thereof:
Airframe
[Description]
UNITED STATES REGISTRATION NUMBER: __________________
MANUFACTURER'S SERIAL NO.: ________________
Engines
___________________ ENGINES
ENGINE SERIAL NOS.: _______________
(each of which engines has 750 or more
rated takeoff horsepower or the equivalent thereof)
APPENDIX A
to
Aircraft Security Agreement
SUPPLEMENTAL AIRCRAFT SECURITY AGREEMENT
SUPPLEMENTAL AIRCRAFT SECURITY AGREEMENT dated as of
________________, 19__ from AMERICA WEST AIRLINES, INC., a Delaware corporation
(the "Company"), whose mailing address is ▇▇▇ ▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇,
▇▇▇▇▇▇▇ ▇▇▇▇▇, to The Industrial Bank of Japan, Limited, as Agent under the
Amended and Restated Revolving Credit Agreement referred to below (together with
its successors and assigns in such capacity, the "Agent") for the benefit and on
behalf of itself as such Agent and the lenders (the "Lenders", such term to
include the Issuing Bank as defined in the Credit Agreement) from time to time
party to that certain Amended and Restated Revolving Credit Agreement dated as
of December , 1999 (as the same may be amended or waived from time to time
the "Credit Agreement") among the Company, the Lenders and the Agent.
WHEREAS, the Company has heretofore executed and delivered to
the Agent an Aircraft Security Agreement dated as of _____________________ (the
"Security Agreement"), covering an aircraft of the Company (terms used in this
instrument having the meanings assigned thereto in the Security Agreement);
WHEREAS, the Security Agreement has been duly recorded with
the FAA on __________________ and assigned Conveyance No. __________________
pursuant to the Act;
WHEREAS, this Supplemental Security Agreement relates to the
aircraft engine described in Schedule I hereto; and
WHEREAS, the Security Agreement provides for the execution and
delivery from time to time of Supplemental Security Agreements, each
substantially in the form hereof, for the purpose of subjecting a Replacement
Engine to the Lien of the Security Agreement.
NOW, THEREFORE, as contemplated by the Security Agreement, the
Company hereby grants to the Agent for its benefit and the benefit of the
Lenders a security interest in the property described in Schedule I hereto as
security for the due and prompt payment of the Obligations.
This Supplemental Security Agreement shall be construed as
supplemental to the Security Agreement and shall form a part thereof; and the
Security Agreement is hereby incorporated by reference herein to the same extent
as if fully set forth herein and is hereby ratified, approved and confirmed in
all respects.
IN WITNESS WHEREOF, the parties hereto have caused this Supplemental
Security Agreement to be duly executed, as of the day and year first above
written.
AMERICA WEST AIRLINES, INC.
a Delaware corporation
By: ___________________________
Name:
Title:
THE INDUSTRIAL BANK OF JAPAN,
LIMITED, as Agent
By: ___________________________
Name:
Title:
SCHEDULE I
to
Supplemental Security Agreement
The following aircraft and the aircraft engines listed below, which
aircraft, together with the engines listed therewith below, shall constitute a
single "Aircraft" as said term is defined in the Supplemental Security
Agreement to which this Schedule I is attached and made a part thereof:
Airframe
[Description]
UNITED STATES REGISTRATION NUMBER: ______________
MANUFACTURER'S SERIAL NO.: ______________
Engines
____________________________ ENGINES
ENGINE SERIAL NOS.: ______________
(each of which engines has 750 or more rated
takeoff horsepower or the equivalent thereof)
Exhibit B
EXECUTION VERSION
RECEIVABLES SECURITY AGREEMENT
THIS RECEIVABLES SECURITY AGREEMENT (this "Receivables Security
Agreement") is made and entered into as of January 18, 2002 by AMERICA WEST
AIRLINES, INC., a Delaware corporation (the "Debtor"), and THE INDUSTRIAL BANK
OF JAPAN, LIMITED, as agent for the Lenders (as defined below) (in such
capacity, the "Agent" or "Secured Party"). All capitalized terms used but not
otherwise defined herein or pursuant to Section 1 hereof shall have the
respective meanings assigned thereto in the Term Loan Agreement (as defined
below).
W I T N E S S E T H:
WHEREAS, The Industrial Bank of Japan, Limited, as Agent (the "Agent")
for each of the lenders (the "Lenders" and collectively with the Agent, the
"Secured Parties") now or hereafter party to the Term Loan Agreement (as defined
below) have agreed to provide to the Debtor a term loan facility pursuant to the
Amended and Restated Term Loan Agreement dated as of January , 2002 (as from
time to time amended, revised, modified, supplemented or amended and restated,
the "Term Loan Agreement") by and among the Debtor, the Agent and the Lenders
from time to time party thereto (the "Lenders"); and
WHEREAS, as collateral security for payment and performance by the
Debtor of its Obligations, and the payment and performance of its obligations
and liabilities (whether now existing or hereafter arising) under the Term Loan
Agreement or under any of the other Loan Documents to which it is now or
hereafter becomes a party (collectively, the "Secured Obligations"), the Debtor
is willing to grant to the Agent for the benefit of the Secured Parties a
security interest in certain of its personal property and assets pursuant to the
terms of this Receivables Security Agreement; and
WHEREAS, the Secured Parties are unwilling to maintain the Loans to the
Debtor under the Term Loan Agreement unless the Debtor enters into this
Receivables Security Agreement;
NOW, THEREFORE, in order to induce the Secured Parties to maintain the
Loans under the Term Loan Agreement, and in further consideration of the
premises and the mutual covenants contained herein, the parties hereto agree as
follows:
1. CERTAIN DEFINITIONS. Terms used in this Receivables Security
Agreement, not otherwise expressly defined herein or in the Term Loan Agreement,
as the case may be, and for which meanings are provided in the Uniform
Commercial Code of the State of New York (the WUCC"), shall have such meanings.
2. GRANT OF SECURITY INTEREST. Notwithstanding anything to the contrary
contained herein, it is understood and agreed that the Receivables Collateral
(as hereinafter defined) shall only include those receivables set forth on
Schedule 9(a) hereto, as such schedule may be amended, supplemented or restated
from time to time by the Debtor, which categories include,
among others, the Debtor's charter services accounts receivable, ground handling
accounts receivable, accounts receivable with respect to certain promotions
(including, without limitation, frequent flyer promotions), in each case as set
forth on such Schedule 9(a). Subject to occurrence of the conditions set forth
in Section 3(d) hereof (and effective only if such conditions occur), the Debtor
hereby grants to the Secured Party for the benefit of the Secured Parties as
collateral security for the payment, performance and satisfaction of all of the
Debtor's Secured Obligations a continuing first priority security interest in
and to, and collaterally assigns to the Secured Party for the benefit of the
Secured Parties, the following property of the Debtor or in which the Debtor has
or may have or acquire an interest or the power to transfer rights therein,
whether now owned or existing or hereafter created, acquired or arising and
wheresoever located, including the following:
(a) All accounts, and including accounts receivable,
contracts, bills, acceptances, choses in action, and other forms of
monetary obligations at any time owing to the Debtor arising out of
property sold, leased, licensed, assigned or otherwise disposed of or
for services rendered or to be rendered by the Debtor, and all of the
Debtor's rights with respect to any property represented thereby,
whether or not delivered, property returned by customers and all rights
as an unpaid vendor or lienor, including rights of stoppage in transit
and of recovering possession by proceedings including replevin and
reclamation (collectively referred to hereinafter as "Accounts"), in
each case only to the extent that such Accounts arise from, or are
related to, the specified accounts receivable set forth on Schedule
9(a);
(b) All chattel paper, including tangible chattel paper,
electronic chattel paper, or any hybrid thereof (collectively referred
to hereinafter as "Chattel Paper"), in each case only to the extent
that such Chattel Paper arises from, or is related to, the specified
accounts receivable set forth on Schedule 9(a);
(c) All instruments, including all promissory notes
(collectively referred to hereinafter as "Instruments"), in each case
only to the extent that such Instruments arise from, or are related to,
the specified accounts receivable set forth on Schedule 9(a);
(d) All rights to payment or performance under letters of
credit including rights to proceeds of letters of credit
("Letter-of-Credit Rights"), and all guaranties, endorsements, Liens,
other contingent obligations or supporting obligations of any Person
securing or supporting the payment, performance, value or liquidation
of any of the foregoing (collectively, with Letter-of-Credit Rights,
referred to hereinafter as "Supporting Obligations"), in each case only
to the extent that such Supporting Obligations arise from, or are
related to, the specified accounts receivable set forth on Schedule
9(a);
(e) All books and records relating to any of the foregoing
(including customer data, credit files, ledgers, computer programs,
printouts, and other computer materials and records (and all media on
which such data, files, programs, materials and records are or may be
stored)); and
2
(f) All proceeds, products and replacements of, accessions to,
and substitutions for, any of the foregoing, including without
limitation proceeds of insurance policies insuring any of the
foregoing.
All of the property and interests in property described in subsections
(a) through (f) are herein collectively referred to as the "Receivables
Collateral." Notwithstanding the foregoing, "Receivables Collateral" shall not
include any general intangibles or other rights arising under any contracts,
instruments, licenses or other documents as to which the grant of a security
interest would (i) constitute a violation of a valid and enforceable restriction
in favor of a third party on such grant, unless and until any required consents
shall have been obtained or (ii) give any other party to such contract,
instrument, license or other document the right to terminate its obligations
thereunder.
3. PERFECTION; CONDITIONS TO GRANT OF SECURITY INTEREST.
(a) At the time of execution of this Receivables Security
Agreement, the Debtor shall have furnished the Secured Party with
financing statements in form, number and substance suitable for filing,
and duly authorized by the Debtor, sufficient under applicable law, and
satisfactory to the Secured Party in order that upon the filing of the
same and occurrence of the conditions set forth in Section 3(d) hereof
the Secured Party shall have a duly perfected security interest in all
Receivables Collateral in which a security interest can be perfected by
the filing of financing statements;
(b) Upon the occurrence of the conditions set forth in Section
3(d) hereof, to the extent expressly required by the terms hereof, or
otherwise as the Secured Party may reasonably request, the Debtor shall
furnish the Secured Party with properly executed issuer acknowledgments
of the Secured Party's interest in Letter-of-Credit Rights, and
evidence of the placement of a restrictive legend on tangible chattel
paper (and the tangible components, if any, of electronic Chattel
Paper), and take appropriate action reasonably acceptable to the
Secured Party sufficient to establish the Secured Party's control of
electronic Chattel Paper (and the electronic components of hybrid
Chattel Paper), as appropriate, with respect to Receivables Collateral
in which either (i) a security interest can be perfected only by
control or such restrictive legending, or (ii) a security interest
perfected by control or accompanied by such restrictive legending shall
have priority as against a lien creditor, a purchaser of such
Receivables Collateral from the Debtor, or a security interest
perfected by Persons not having control or not accompanied by such
restrictive legending, in each case in form and substance reasonably
acceptable to the Secured Party and sufficient under applicable law so
that the Secured Party shall have a security interest in all such
Receivables Collateral perfected by control;
(c) Upon the occurrence of the conditions set forth in Section
3(d) hereof, to the extent expressly required by the terms hereof, or
otherwise as the Secured Party may reasonably request, the Debtor shall
deliver to the Secured Party or, if the Secured Party shall
specifically consent in each instance, an agent or bailee of the
Secured Party, possession of all Receivables Collateral with respect to
which either a security interest can be perfected only by possession or
a security interest perfected by possession shall have priority as
against Persons not having possession, and including in the case of
3
Instruments, duly executed endorsements affixed thereto in form and
substance reasonably acceptable to the Secured Party and sufficient
under applicable law so that the Secured Party shall have a security
interest in all such Receivables Collateral perfected by possession;
subject in each case only to Permitted Liens (as defined in the next
sentence). Permitted Liens, as used in this Receivables Security
Agreement, shall mean (i) the Lien of this Receivables Security
Agreement, (ii) Liens for taxes, assessments or governmental charges
payable by the Debtor either not delinquent for a period of more than
thirty (30) days or being contested in good faith by appropriate
proceedings so long as during such thirty (30) day period there is not
any material risk of the forfeiture or loss of any Receivables
Collateral or any interest therein or during such proceeding there is
not any material risk of the forfeiture or loss of the Receivables
Collateral or any interest therein due to an effective stay or
otherwise, (iii) any Lien for the fees or charges of any airport or air
navigation authority or any materialmen's, repairmen's, landlord's,
workmen's, supplier's and other like Liens arising in the ordinary
course of business, for amounts the payment of which is not overdue for
a period of more than thirty (30) days or is being contested in good
faith by appropriate proceedings so long as during such thirty (30) day
period there is not any material risk of the forfeiture or loss of any
Receivables Collateral or any interest therein or during such
proceeding there is not any material risk of the forfeiture or loss of
the Receivables Collateral or any interest therein due to an effective
stay or otherwise, (iv) Liens which the Secured Party has specifically
permitted in writing, (v) Liens (other than Liens for taxes) arising
out of judgments or awards against the Debtor which are being appealed
so long as during such thirty (30) day period there is not any material
risk of the forfeiture or loss of any Receivables Collateral or any
interest therein or during such proceeding there is not any material
risk of the forfeiture or loss of the Receivables Collateral or any
interest therein due to an effective stay or otherwise, and (vi) other
rights of the Debtor and the Secured Party provided in this Receivables
Security Agreement. All financing statements (including all amendments
thereto and continuations thereof), control agreements, acknowledgments
and other documents, electronic identification, restrictive legends,
and instruments furnished in connection with the creation, enforcement,
protection, perfection or priority of the Secured Party's security
interest in Receivables Collateral, including such items as are
described above in this Section 3, are sometimes referred to herein as
"Perfection Documents." The delivery of possession of items of or
evidencing Receivables Collateral, causing other Persons to execute and
deliver Perfection Documents as appropriate, the filing or recordation
of Perfection Documents, the establishment of control over items of
Receivables Collateral, and the taking of such other actions as may be
necessary or advisable in the determination of the Secured Party to
create, enforce, protect, perfect, or establish or maintain the
priority of, the security interest of the Secured Party in the
Receivables Collateral is sometimes referred to herein as "Perfection
Action"; and
(d) The security interest provided for in this Receivables
Security Agreement shall be granted effective on the earlier of (i) the
occurrence of an Event of Default and (ii) a Triggering Event (as
defined in the next sentence). A Triggering Event shall occur at any
time when the aggregate amount of Receivables Collateral, as set forth
on Schedule 9(a) hereto (as such Schedule 9(a) is amended, restated,
updated and revised from time to time) is $6,000,000 or less.
4
4. MAINTENANCE OF SECURITY INTEREST; FURTHER ASSURANCES.
(a) The Debtor will from time to time at its own expense,
deliver specific assignments of Receivables Collateral or such other
Perfection Documents, and take such other or additional Perfection
Action, as may be required by the terms of the Loan Documents or as the
Secured Party may reasonably request in connection with the
administration or enforcement of this Receivables Security Agreement or
related to the Receivables Collateral or any part thereof in order to
carry out the terms of this Receivables Security Agreement, to perfect,
protect, maintain the priority of or enforce the Secured Party's
security interest in the Receivables Collateral, subject only to
Permitted Liens, or otherwise to better assure and confirm to the
Secured Party its rights, powers and remedies. Without limiting the
foregoing, upon the occurrence and during the continuance of an Event
of Default, the Debtor hereby irrevocably authorizes the Secured Party
to file (with, or to the extent permitted by applicable law, without
the signature of the Debtor appearing thereon) financing statements
(including amendments thereto and initial financing statements in lieu
of continuation statements) or other Perfection Documents (including
copies thereof) showing the Debtor as "debtor" at such time or times
and in all filing offices as the Secured Party may from time to time
reasonably determine to be necessary or advisable to perfect or protect
the rights of the Secured Party, or otherwise to give effect to the
transactions herein contemplated.
(b) With respect to any and all Receivables Collateral, the
Debtor agrees to do and cause to be done all things reasonably
necessary to perfect, maintain the priority of and keep in full force
the security interest granted in favor of the Secured Party, including,
but not limited to, the prompt payment upon demand therefor by the
Secured Party of all fees and expenses (including documentary stamp,
excise or intangibles taxes) incurred in connection with the
preparation, delivery, or filing of any Perfection Document or the
taking of any Perfection Action to perfect, protect or enforce a
security interest in Receivables Collateral in favor of the Secured
Party, subject only to Permitted Liens. All amounts not so paid when
due shall constitute additional Secured Obligations and (in addition to
other rights and remedies resulting from such nonpayment) shall bear
interest from the date of demand until paid in full at the default rate
set forth in Section 2.2E of the Term Loan Agreement (the "Default
Rate").
(c) Effective upon the occurrence of the conditions set forth
in Section 3(d) hereof, the Debtor agrees to maintain among its books
and records appropriate notations or evidence of, and to make or cause
to be made appropriate disclosure upon its financial statements of, the
security interest granted hereunder to the Secured Party.
(d) Effective upon the occurrence of the conditions set forth
in Section 3(d) hereof, the Debtor agrees that, in the event any
proceeds (other than goods) of Receivables Collateral shall be or
become commingled with other property not constituting Receivables
Collateral, then such proceeds may, to the extent permitted by law, be
identified by application of the lowest intermediate balance rule to
such commingled property.
5
(e) The Debtor agrees that at all times it will not
intentionally discriminate to the Secured Party's material detriment
against the Receivables Collateral in its collection of the Debtor's
accounts receivable generally.
5. RECEIPT OF PAYMENT. In the event an Event of Default shall occur and
be continuing and the Debtor (or any of its affiliates, Subsidiaries,
stockholders, directors, officers, employees or agents) shall receive any
proceeds of Receivables Collateral, including without limitation monies, checks,
notes, drafts or any other items of payment, the Debtor shall hold all such
items of payment in trust for the Secured Party, and as the property of the
Secured Party, separate from the funds and other property of the Debtor, and no
later than the fifth Business Day following the receipt thereof, at the election
of the Secured Party, the Debtor shall cause such Receivables Collateral to be
forwarded to the Secured Party for its custody, possession and disposition in
accordance with the terms hereof and of the other Loan Documents.
6. PRESERVATION AND PROTECTION OF RECEIVABLES COLLATERAL.
(a) The Secured Party shall be under no duty or liability with
respect to the collection, protection or preservation of the
Receivables Collateral, or otherwise. The Debtor shall be responsible
for the safekeeping of its Receivables Collateral, and in no event
shall the Secured Party have any responsibility for (i) any loss or
damage thereto or destruction thereof occurring or arising in any
manner or fashion from any cause, (ii) any diminution in the value
thereof, or (iii) any act or default of any carrier, warehouseman,
bailee or forwarding agency thereof or other Person in any way dealing
with or handling such Receivables Collateral.
(b) The Debtor agrees (i) effective upon the occurrence of the
conditions set forth in Section 3(d) hereof, to pay when due all taxes,
charges and assessments against the Receivables Collateral in which it
has any interest, unless being contested in good faith by appropriate
proceedings diligently conducted and against which adequate reserves
have been established in accordance with GAAP and evidenced to the
satisfaction of the Secured Party and provided that all enforcement
proceedings in the nature of levy or foreclosure are effectively
stayed, and (ii) to cause to be terminated and released all Liens
(other than Permitted Liens) on the Receivables Collateral. Upon the
failure of the Debtor to so pay or contest such taxes, charges, or
assessments, or cause such Liens to be terminated, the Secured Party at
its option may pay or contest any of them or amounts relating thereto
(the Secured Party having the sole right to determine the legality or
validity and the amount necessary to discharge such taxes, charges,
Liens or assessments) but shall not have any obligation to make any
such payment or contest. All sums so disbursed by the Secured Party,
including reasonable attorneys' fees, court costs, expenses and other
charges related thereto, shall be payable promptly after demand by the
Debtor to the Secured Party and shall be additional Secured Obligations
secured by the Receivables Collateral and the other Loan Documents, and
any amounts not so paid (in addition to other rights and remedies
resulting from such nonpayment) shall bear interest from the date of
demand until paid in full at the Default Rate.
6
7. STATUS OF DEBTOR AND RECEIVABLES COLLATERAL GENERALLY. The Debtor
represents and warrants to, and covenants with, the Secured Party, with
respect to itself and the Receivables Collateral as to which it has or
acquires any interest as provided herein, that:
(a) It is (or as to Receivables Collateral acquired after the
date hereof will be upon the acquisition of the same) and, except as
permitted by the Term Loan Agreement and subsection (b) of this Section
7, will continue to be, the owner of the Receivables Collateral, free
and clear of all Liens, other than the security interest hereunder in
favor of the Secured Party and Permitted Liens, and that it will at its
own cost and expense defend such Receivables Collateral and any
products and proceeds thereof against all claims and demands of all
Persons (other than holders of Permitted Liens) at any time claiming
the same or any interest therein adverse to the Secured Party. Upon the
failure of the Debtor to so defend, the Secured Party may do so at its
option but shall not have any obligation to do so. All sums so
disbursed by the Secured Party, including reasonable attorneys' fees,
court costs, expenses and other charges related thereto, shall be
payable promptly after demand by the Debtor to the Secured Party and
shall be additional Secured Obligations secured by the Receivables
Collateral and the other Loan Documents, and any amounts not so paid on
demand (in addition to other rights and remedies resulting from such
nonpayment) shall bear interest from the date of demand until paid in
full at the Default Rate.
(b) It shall not (i) sell, assign, transfer, lease, license or
otherwise dispose of any of, or grant any option with respect to, the
Receivables Collateral, except that prior to the occurrence and
continuance of an Event of Default, the Debtor may collect Receivables
Collateral and use the proceeds thereof in the ordinary course of its
business, (ii) create or suffer to exist any Lien upon or with respect
to any of the Receivables Collateral except for the security interests
created by this Receivables Security Agreement and Permitted Liens, or
(iii) take any other action in connection with any of the Receivables
Collateral that would materially impair the value of the interest or
rights of the Debtor in the Receivables Collateral taken as a whole or
that would materially impair the interest or rights of the Secured
Party.
(c) It has full power, legal right and lawful authority to
enter into this Receivables Security Agreement and to perform its
terms, including the grant of the security interests in the Receivables
Collateral herein provided for.
(d) No authorization, consent, approval or other action by,
and no notice to or filing with, any Governmental Authority or any
other Person is required either (i) for the grant by the Debtor of the
security interests granted hereby or for the execution, delivery or
performance of this Receivables Security Agreement by the Debtor, or
(ii) for the perfection of or the exercise by the Secured Party, of its
rights and remedies hereunder, except for any action required by the
UCC to perfect the security interest conferred hereunder.
(e) No effective financing statement or other Perfection
Document similar in effect, nor any other Perfection Action, covering
all or any part of the Receivables Collateral purported to be granted
or taken by or on behalf of the Debtor (or by or on
7
behalf of any other Person and which remains effective as against all
or any part of the Receivables Collateral) has been filed in any
recording office, delivered to another Person for filing (whether upon
the occurrence of a contingency or otherwise), or otherwise taken, as
the case may be.
(f) (i) The exact legal name of the Debtor as it appears in
its organizational documents as of the date hereof and at any time
during the five (5) year period ending as of the date hereof (the
"Covered Period") is America West Airlines, Inc., (ii) the Debtor is a
corporation organized and existing under the laws of the State of
Delaware, (iii) the address of the chief executive office of the Debtor
as of the date hereof and at any time during the Covered Period is ▇▇▇
▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇, (iv) there are no trade
names or trade styles used by the Debtor as of the date hereof and at
any time during the Covered Period other than "America West". The
Debtor shall not change its name, change its jurisdiction of formation
(whether by reincorporation, merger or otherwise), change the location
of its chief executive office, utilize any additional location where
tangible personal property constituting Receivables Collateral
(including Account Records and Account Documents) may be located,
change or use any additional or different trade name or style, except
in each case upon giving not less than thirty (30) days' prior written
notice to the Secured Party and taking or causing to be taken at the
Debtor's expense all such Perfection Action, including the delivery of
such Perfection Documents, as may be reasonably requested by the
Secured Party to perfect or protect, or maintain the perfection and
priority of, the Lien of the Secured Party in Receivables Collateral
contemplated hereunder.
8. INSPECTION. At reasonable times and upon reasonable notice, the
Secured Party or its authorized representative may, at their own expense (unless
an Event of Default then exists, in which case the reasonable expenses of such
inspection shall be paid by the Debtor), inspect the books and records of the
Debtor (and to make extracts or copies from such records), and the premises upon
which any of the Receivables Collateral is located, to discuss the Debtor's
affairs and finances with any Person (other than Persons obligated on any
Accounts ("Account Debtors") and to verify with any Person other than Account
Debtors the amount, quality, quantity, value and condition of, or any other
matter relating to, the Receivables Collateral and, if an Event of Default has
occurred and is continuing, to discuss the Debtor's affairs and finances with
the Debtor's Account Debtors and to verify the amount, quality, value and
condition of, or any other matter relating to, the Receivables Collateral with
such Account Debtors. Any such inspection shall not interfere with the normal
business of the Debtor. The Secured Party shall have no duty to make any such
inspection nor shall it incur any liability or obligation by reason of not
making any such inspection.
9. SPECIFIC COLLATERAL.
(a) ACCOUNTS. With respect to its Accounts whether now
existing or hereafter created or acquired and wheresoever located, the
Debtor represents, warrants and covenants to the Secured Party, that:
(i) The Debtor shall keep accurate and complete
records of its Accounts constituting Receivables Collateral
("Account Records") and quarterly,
8
together with the Compliance Certificate, the Debtor shall
provide the Secured Party with an updated Schedule 9(a) in
form and substance reasonably acceptable to the Secured Party
describing all such Accounts created or acquired by the Debtor
("Schedule of Accounts"); provided, however, that the Debtor's
failure to execute and deliver any such Schedule of Accounts
shall not affect or limit the Secured Party's security
interest or other rights in and to any Accounts. If
requested by the Secured Party, the Debtor shall furnish the
Secured Party with copies of proof of delivery and other
documents relating to the Accounts so scheduled, including
without limitation repayment histories and present status
reports (collectively, "Account Documents") and such other
matter and information relating to the status of then existing
Accounts as the Secured Party shall request.
(ii) All Account Records and, Account Documents are
and shall at all times be located only at the Debtor's current
chief executive office, or a location as to which the Debtor
has complied with Section 7(f) hereof:
(iii) The Accounts constituting Receivables
Collateral are genuine, are in all respects what they purport
to be, are not evidenced by instrument or document or, if
evidenced by an instrument or document, are only evidenced by
one original instrument or document.
(iv) The Accounts constituting Receivables Collateral
cover bona fide sales, leases, licenses or other dispositions
of property usually dealt in by the Debtor, or the rendition
by the Debtor of services, to an Account Debtor in the
ordinary course of business.
(v) The amounts of the face value of any Account
shown or reflected on any Schedule of Accounts, invoice
statement, or certificate delivered to the Secured Party, are
actually owing to the Debtor and are not contingent for any
reason; and there are no setoffs, discounts, allowances,
claims, counterclaims or disputes of any kind or description
in an amount greater than $1,000,000 in the aggregate, or
greater than $1,000,000 individually, existing or asserted
with respect thereto and the Debtor has not made any agreement
with any Account Debtor thereunder for any deduction
therefrom, except as may be stated in the Schedule of Accounts
and reflected in the calculation of the face value of each
respective invoice related thereto.
(vi) Except for conditions generally applicable to
the Debtor's industry and markets, there are no facts, events,
or occurrences known to the Debtor pertaining particularly to
any Accounts constituting Receivables Collateral which are
reasonably expected to materially impair in any way the
validity, collectibility or enforcement of such Accounts that
would reasonably be likely, in the aggregate, to be of
material economic value, or in the aggregate materially reduce
the amount payable thereunder from the amount of the invoice
face value shown on any Schedule of Accounts, or on any
certificate, contract, invoice or statement delivered to the
Secured Party with respect thereto.
9
(vii) The goods or services giving rise thereto are
not, and were not at the time of the sale or performance
thereof, subject to any Lien, claim, encumbrance or security
interest, except those of the Secured Party and Permitted
Liens.
(viii) Effective upon the occurrence of the
conditions set forth in Section 3(d) hereof, in the event any
amounts due and owing in excess of $1,000,000 individually, or
$1,000,000 in the aggregate amount, are in dispute between any
Account Debtor and the Debtor (which shall include without
limitation any dispute in which an offset claim or
counterclaim may result), the Debtor shall provide the Secured
Party with written notice thereof as soon as practicable,
explaining in detail the reason for the dispute, all claims
related thereto and the amount in controversy.
(b) SUPPORTING OBLIGATIONS. With respect to its Supporting
Obligations whether now existing or hereafter created or acquired and
wheresoever located, the Debtor represents, warrants and covenants to
the Secured Party, that:
(i) The Debtor shall (x) maintain at all times, and
furnish to the Secured Party from time to time at the Secured
Party's request, a current list identifying in reasonable
detail each Supporting Obligation relating to any Receivables
Collateral from a single obligor in excess of $1,000,000, and
(y) upon the request of the Secured Party from time to time
following the occurrence and during the continuance of any
Event of Default, deliver to the Secured Party the originals
of all documents evidencing or constituting Supporting
Obligations, together with such other documentation (executed
as appropriate by the Debtor) and information as may be
necessary to enable the Secured Party to realize upon the
Supporting Obligations in accordance with their respective
terms or transfer the Supporting Obligations as may be
permitted under the Loan Documents or by applicable law.
(ii) With respect to each letter of credit giving
rise to Letter-of-Credit Rights that has an aggregate stated
amount available to be drawn in excess of $1,000,000,
effective upon the occurrence of the conditions set forth in
Section 3(d) hereof, the Debtor shall, at the request of the
Secured Party cause the issuer thereof to execute and deliver
to the Secured Party a Qualifying Control Agreement (as
defined in Schedule 1 hereto).
(iii) With respect to each transferable letter of
credit giving rise to Letter-of-Credit Rights that has an
aggregate stated amount available to be drawn in excess of
$1,000,000, the Debtor shall, within thirty (30) days of the
issuance of each such letter of credit at the Secured Party's
request upon and during the continuance of any Event of
Default, deliver to the Secured Party a duly executed, undated
transfer form in blank sufficient in form and substance under
the terms of the related letter of credit to effect, upon
completion and delivery to the letter of credit issuer
together with any required fee, the transfer of such letter of
credit to the transferee identified in such form. The Debtor
hereby expressly authorizes the
10
Secured Party following the occurrence and during the
continuance of any Event of Default to complete and tender
each such transfer form as transferor in its own name or in
the name, place and stead of the Debtor in order to effect any
such transfer, either to the Secured Party or to another
transferee, as the case may be, in connection with any sale or
other disposition of Receivables Collateral or for any other
purpose permitted under the Loan Documents or by applicable
law.
(c) CHATTEL PAPER. With respect to its Chattel Paper
constituting Receivables Collateral whether now existing or hereafter
created or acquired and wheresoever located, the Debtor represents,
warrants and covenants to the Secured Party, that:
(i) The Debtor shall at all times retain sole
physical possession of the originals of all Chattel Paper
constituting Receivables Collateral (other than electronic
Chattel Paper and the electronic components of hybrid Chattel
Paper); provided, however, that (x) upon the request of the
Secured Party upon the occurrence and during the continuance
of any Event of Default, the Debtor shall immediately deliver
physical possession of such Chattel Paper to the Secured Party
or its designee, and (y) in the event that there shall be
created more than one original counterpart of any physical
document that alone or in conjunction with any other physical
or electronic document constitutes Chattel Paper, then such
counterparts shall be numbered consecutively starting with "1"
and the Debtor shall retain the counterpart numbered "1".
(ii) Effective upon the occurrence of the conditions
set forth in Section 3(d) hereof, all counterparts of all
tangible Chattel Paper constituting Receivables Collateral
(and the tangible components of hybrid Chattel Paper) shall be
conspicuously legended as follows: "A FIRST PRIORITY SECURITY
INTEREST IN THIS CHATTEL PAPER HAS BEEN GRANTED TO THE
INDUSTRIAL BANK OF JAPAN, LIMITED, FOR ITSELF AND AS AGENT FOR
CERTAIN LENDERS PURSUANT TO A RECEIVABLES SECURITY AGREEMENT
DATED AS OF JANUARY , 2002, AS AMENDED FROM TIME TO TIME. NO
SECURITY INTEREST OR OTHER INTEREST IN FAVOR OF ANY OTHER
PERSON MAY BE CREATED BY THE TRANSFER OF PHYSICAL POSSESSION
OF THIS CHATTEL PAPER OR OF ANY COUNTERPART HEREOF EXCEPT BY
OR WITH THE CONSENT OF THE AFORESAID THE INDUSTRIAL BANK OF
JAPAN, LIMITED, AS AGENT AS PROVIDED IN AFORESAID RECEIVABLES
SECURITY AGREEMENT." In the case of electronic Chattel Paper
constituting Receivables Collateral (including the electronic
components of hybrid Chattel Paper), the Debtor shall not
create or acquire any such Chattel Paper unless, prior to such
acquisition or creation, it shall have taken such Perfection
Action as the Secured Party may require to perfect by control
the security interest of the Secured Party in such Collateral.
(ii) Other than in the ordinary course of business
and in keeping with reasonable and customary practice, the
Debtor shall not amend, modify, waive or terminate any
provision of, or fail to exercise promptly and diligently each
11
material right or remedy conferred under or in connection
with, any Chattel Paper constituting Receivables Collateral,
in any case in such a manner as could reasonably be expected
to materially adversely affect the value of such affected
Chattel Paper as collateral.
(d) INSTRUMENTS. With respect to its Instruments constituting
Receivables Collateral whether now existing or hereafter created or
acquired and wheresoever located, the Debtor represents, warrants and
covenants to the Secured Party, that:
(i) The Debtor shall (i) maintain at all times, and
furnish to the Secured Party from time to time at the Secured
Party's request, a current list identifying in reasonable
detail Instruments constituting Receivables Collateral of
which the Debtor is the payee or holder and having a face
amount payable in excess of $1,000,000, and (ii) upon the
request of the Secured Party from time to time following the
occurrence and during the continuance of any Event of Default,
deliver to the Secured Party the originals of all such
Instruments, together with duly executed undated endorsements
in blank affixed thereto and such other documentation and
information as may be necessary to enable the Secured Party to
realize upon such Instruments in accordance with their
respective terms or transfer such Instruments as may be
permitted under the Loan Documents or by applicable law.
(ii) Other than in the ordinary course of business
and in keeping with reasonable and customary practice, the
Debtor shall not amend, modify, waive or terminate any
provision of, or fail to exercise promptly and diligently each
material right or remedy conferred under or in connection
with, any Instrument constituting Receivables Collateral, in
any case in such a manner as could reasonably be expected to
materially adversely affect the value of such affected
Instrument as collateral.
10. RIGHTS AND REMEDIES UPON EVENT OF DEFAULT. Upon the occurrence and
during the continuance of an Event of Default, the Secured Party shall have the
following rights and remedies in addition to any rights and remedies set forth
elsewhere in this Receivables Security Agreement or the other Loan Documents,
all of which may be exercised with or, if allowed by law, without notice to the
Debtor:
(a) All of the rights and remedies of a secured party under
the UCC or under other applicable law, all of which rights and remedies
shall be cumulative, and none of which shall be exclusive, to the
extent permitted by law, in addition to any other rights and remedies
contained in this Receivables Security Agreement or any other Loan
Document;
(b) The right to foreclose the Liens and security interests
created under this Receivables Security Agreement by any available
judicial procedure or without judicial process;
12
(c) The right to (i) enter upon the premises of the Debtor through
self-help and without judicial process, without first obtaining a final judgment
or giving the Debtor notice or opportunity for a hearing on the validity of the
Secured Party's claim and without any obligation to pay rent to the Debtor, or
any other place or places where any Receivables Collateral is located and kept,
and remove the Receivables Collateral therefrom to the premises of the Secured
Party or any agent of the Secured Party, for such time as the Secured Party may
desire, in order effectively to collect or liquidate the Receivables Collateral,
(ii) require the Debtor or any bailee or other agent of the Debtor to assemble
the Receivables Collateral and make it available to the Secured Party at a place
to be designated by the Secured Party that is reasonably convenient to both
parties, and (iii) notify any or all Persons party to a Qualifying Control
Agreement or who otherwise have possession of or control over any Receivables
Collateral of the occurrence of an Event of Default and other appropriate
circumstances, and exercise control over and take possession or custody of any
or all Receivables Collateral in the possession, custody or control of such
other Persons;
(d) The right to (i) exercise all of the Debtor's rights and
remedies with respect to the collection of Accounts, Chattel Paper,
Instruments, Supporting Obligations and General Intangibles, in each
case to the extent constituting Receivables Collateral (collectively,
"Payment Collateral"), including the right to demand payment thereof
and enforce payment, by legal proceedings or otherwise; (ii) settle,
adjust, compromise, extend or renew all or any Payment Collateral or
any legal proceedings pertaining thereto; (iii) discharge and release
all or any Payment Collateral; (iv) take control, in any manner, of any
item of payment or proceeds referred to in Section 5 above; (v)
prepare, file and sign the Debtor's name on any Proof of Claim in
bankruptcy, notice of Lien, assignment or satisfaction of Lien or
similar document in any action or proceeding adverse to any obligor
under any Payment Collateral or otherwise in connection with any
Payment Collateral; (vi) endorse the name of the Debtor upon any
chattel paper, document, instrument, invoice, freight ▇▇▇▇, ▇▇▇▇ of
lading or similar document or agreement relating to any Receivables
Collateral; (vii) use the information recorded on or contained on the
Debtor's internet website or otherwise in any data processing equipment
and computer hardware and software relating to any Receivables
Collateral to which the Debtor has access; (viii) open the Debtor's
mail and collect any and all amounts due to the Debtor from any
Account Debtors or other obligor in respect of Payment Collateral; (ix)
take over the Debtor's post office boxes or make other arrangements as
the Secured Party deems necessary to receive the Debtor's mail,
including notifying the post office authorities to change the address
for delivery of the Debtor's mail to such address as the Secured Party
may designate; (x) notify any or all Account Debtors or other obligor
on any Payment Collateral that such Payment Collateral has been
assigned to the Secured Party and that Secured Party has a security
interest therein (provided that the Secured Party may at any time give
such notice to an Account Debtor that is a department, agency or
authority of the United States government); the Debtor hereby agrees
that any such notice, in the Secured Party's sole discretion, may (but
need not) be sent on the Debtor's stationery, in which event the Debtor
shall co-sign such notice with the Secured Party; and (xi) do all acts
and things and execute all documents necessary, in the Secured Party's
sole discretion, to collect the Payment Collateral; and
13
(e) The right to sell all or any Receivables Collateral in its
then existing condition, at such time or tines, at public or private
sale or sales, with such notice as may be required by law, in lots or
in bulk, for cash or on credit, with or without representations and
warranties, all as the Secured Party, in its sole discretion, may deem
advisable. The Secured Party shall have the right to conduct such sales
on the Debtor's premises or elsewhere and shall have the right to use
the Debtor's premises without charge for such sales for such time or
times as the Secured Party may see fit. The Secured Party may, if it
deems it reasonable, postpone or adjourn any sale of the Receivables
Collateral from time to time by an announcement at the time and place
of such postponed or adjourned sale, and such sale may, without further
notice, be made at the time and place to which it was so adjourned. The
Debtor agrees that the Secured Party no obligation to preserve rights
to the Receivables Collateral against prior parties or to marshal any
Receivables Collateral for the benefit of any Person. The Secured Party
is hereby granted a license or other right to use, without charge, the
Debtor's labels, patents, copyrights, rights of use of any name, trade
secrets, trade names, trademarks and advertising matter, or any
property of a similar nature, as it pertains to the Receivables
Collateral, in completing production of, advertising for sale and
selling any Receivables Collateral and the Debtor's rights under any
license and any franchise agreement shall inure to the Secured Party's
benefit. In addition, the Debtor agrees that in the event notice is
necessary under applicable law, written notice mailed to the Debtor in
the manner specified herein ten (10) days prior to the date of public
sale of any of the Receivables Collateral or prior to the date after
which any private sale or other disposition of the Receivables
Collateral will be made shall constitute commercially reasonable notice
to the Debtor. All notice is hereby waived with respect to any of the
Receivables Collateral which threatens to decline speedily in value or
is of a type customarily sold on a recognized market. The Secured Party
may purchase all or any part of the Receivables Collateral at public
or, if permitted by law, private sale, free from any right of
redemption which is hereby expressly waived by the Debtor and, in lieu
of actual payment of such purchase price, may set off the amount of
such price against the Secured Obligations.
The net cash proceeds resulting from the collection, liquidation, sale,
or other disposition of the Receivables Collateral shall be applied first to the
expenses (including all reasonable attorneys' fees) of retaking, holding,
storing, processing and preparing for sale, selling, collecting, liquidating and
the like, and then to the satisfaction of all Secured Obligations in accordance
with the terms of the Term Loan Agreement. The Debtor shall be liable to the
Secured Party and shall pay to the Secured Party on demand any deficiency which
may remain after such sale, disposition, collection or liquidation of the
Receivables Collateral.
11. ATTORNEY-IN-FACT. The Debtor hereby appoints the Secured Party as
the Debtor's attorney-in-fact for the purposes of carrying out the provisions of
this Receivables Security Agreement and taking any action and executing any
instrument which the Secured Party may deem necessary or advisable to accomplish
the purposes hereof, which appointment is irrevocable and coupled with an
interest; provided, that the Secured Party shall have and may exercise rights
under this power of attorney only upon the occurrence and during the continuance
of an Event of Default. Without limiting the generality of the foregoing, upon
the occurrence
14
and during the continuance of an Event of Default, the Secured Party shall have
the right and power
(a) to ask, demand, collect, ▇▇▇ for, recover, compromise,
receive and give acquittance and receipts for moneys due and to become
due under or in respect of any of the Receivables Collateral;
(b) to receive, endorse and collect any drafts or other
instruments, documents and chattel paper in connection with clause (a)
above;
(c) to endorse the Debtor's name on any checks, notes, drafts
or any other payment relating to or constituting proceeds of the
Receivables Collateral which comes into the Secured Party's possession
or the Secured Party's control, and deposit the same to the account of
the Secured Party on account and for payment of the Secured
Obligations.
(d) to file any claims or take any action or institute any
proceedings that the Secured Party may deem necessary or desirable for
the collection of any of the Receivables Collateral or otherwise to
enforce the rights of the Secured Party with respect to any of the
Receivables Collateral; and
(e) to execute, in connection with any sale or other
disposition of Receivables Collateral provided for herein, any
endorsement, assignments, or other instruments of conveyance or
transfer with respect thereto.
12. REINSTATEMENT. The granting of a security interest in the
Receivables Collateral and the other provisions hereof shall continue to be
effective or be reinstated, as the case may be, if at any time any payment of
any of the Secured Obligations is rescinded or must be remitted to or must
otherwise be returned by the Secured Party or is repaid by the Secured Party in
whole or in part in good faith settlement of a pending or threatened avoidance
claim, whether upon the insolvency, bankruptcy or reorganization of the Debtor
or otherwise, all as though such payment had not been made. The provisions of
this Section 12 shall survive repayment of all of the Secured Obligations and
the termination or expiration of this Receivables Security Agreement in any
manner.
13. CERTAIN WAIVERS BY THE DEBTOR. The Debtor waives to the extent
permitted by applicable law (a) any right to require the Secured Party or any
other obligee of the Secured Obligations to (x) proceed against any Person or
entity, (y) proceed against or exhaust any Receivables Collateral or other
collateral for the Secured Obligations, or (z) pursue any other remedy in its
power; (b) any defense arising by reason of any disability or other defense of
any other Person, or by reason of the cessation from any cause whatsoever of the
liability of any other Person or entity, (c) any right of subrogation, (d) any
right to enforce any remedy which the Secured Party or any other obligee of the
Secured Obligations now has or may hereafter have against any other Person and
any benefit of and any right to participate in any collateral or security
whatsoever now or hereafter held by the Secured Party. The Debtor authorizes the
Secured Party and each other obligee of the Secured Obligations without notice
(except notice required by applicable law) or demand and without affecting its
liability hereunder or under the Loan Documents from time to time to: (i) take
and hold security, other than the Receivables
15
Collateral herein described, for the payment of such Secured Obligations or any
part thereof, and exchange, enforce, waive and release the Receivables
Collateral herein described or any part thereof or any such other security; and
(ii) apply such Receivables Collateral or other security and direct the order or
manner of sale thereof as the Secured Party or such obligee in its discretion
may determine.
The Secured Party may at any time deliver (without representation,
recourse or warranty) the Receivables Collateral or any part thereof to the
Debtor and the receipt thereof by the Debtor shall be a complete and full
acquittance for the Receivables Collateral so delivered, and the Secured Party
shall thereafter be discharged from any liability or responsibility therefor.
14. CONTINUED POWERS. Until the Secured Obligations shall have been
irrevocably paid in full, the power of sale and other rights, powers and
remedies granted to the Secured Party hereunder shall continue to exist and may
be exercised by the Secured Party at any time and from time to time irrespective
of the fact that any of the Secured Obligations or any part thereof may have
become barred by any statute of limitations or that any part of the liability of
the Guarantor may have ceased.
15. OTHER RIGHTS. The rights, powers and remedies given to the Secured
Party by this Receivables Security Agreement shall be in addition to all rights,
powers and remedies given to the Secured Party under any Loan Document or by
virtue of any statute or rule of law. Any forbearance or failure or delay by the
Secured Party in exercising any right, power or remedy hereunder shall not be
deemed to be a waiver of such right, power or remedy, and any single or partial
exercise of any right, power or remedy hereunder shall not preclude the further
exercise thereof; and every right, power and remedy of the Secured Party shall
continue in full force and effect until such right, power or remedy is
specifically waived in accordance with the terms of the Loan Documents.
16. ANTI-MARSHALING PROVISIONS. The right is hereby given by the Debtor
to the Secured Party to make releases (whether in whole or in part) of all or
any part of the Receivables Collateral agreeable to the Secured Party without
notice to, or the consent, approval or agreement of other parties and interests,
including junior lienors, which releases shall not impair in any manner the
validity of or priority of the Liens and security interests in the remaining
Receivables Collateral conferred hereunder, nor release the Debtor from personal
liability for the Secured Obligations. Notwithstanding the existence of any
other security interest in the Receivables Collateral held by the Secured Party,
the Secured Party shall have the right to determine the order in which any or
all of the Receivables Collateral shall be subjected to the remedies provided in
this Receivables Security Agreement. The Debtor hereby waives any and all right
to require the marshaling of assets in connection with the exercise of any of
the remedies permitted by applicable law or provided herein or in any Loan
Document.
17. ENTIRE AGREEMENT. This Receivables Security Agreement, together
with the other Loan Documents, constitutes and expresses the entire
understanding between the parties hereto with respect to the subject matter
hereof, and supersedes all prior negotiations, agreements and understandings,
inducements, commitments or conditions, express or implied, oral or written,
except as contained in the Loan Documents. The express terms hereof control and
supersede any course of performance or usage of the trade inconsistent with any
of the terms hereof. Neither
16
this Receivables Security Agreement nor any portion or provision hereof may be
changed, altered, modified, supplemented, discharged, canceled, terminated, or
amended orally or in any manner other than as provided in the Loan Documents.
18. THIRD PARTY RELIANCE. The Debtor hereby consents and agrees that
all issuers of or obligors in respect of any Receivables Collateral, and all
securities intermediaries, warehousemen, bailees, public officials and other
Persons having any interest in, possession of, control over or right, privilege,
duty or discretion in respect of, any Receivables Collateral shall be entitled
to accept the provisions hereof as conclusive evidence of the right of the
Secured Party to exercise its rights hereunder with respect to the Receivables
Collateral, notwithstanding any other notice or direction to the contrary
heretofore or hereafter given by the Debtor or any other Person to any of such
Persons.
19. BINDING AGREEMENT; ASSIGNMENT. This Receivables Security Agreement,
and the terms, covenants and conditions hereof, shall be binding upon and inure
to the benefit of the parties hereto, and to their respective successors and
assigns, except that the Debtor shall not be permitted to assign this
Receivables Security Agreement or any interest herein or, except as expressly
permitted herein, in the Receivables Collateral or any part thereof, or
otherwise, except as expressly permitted herein, pledge, encumber or grant any
option with respect to the Receivables Collateral or any part thereof. All
references herein to the Secured Party shall include any successor thereof or
permitted assignee, and any other obligees from time to time of the Secured
Obligations.
20. AGENT. As provided in Section 8 of the Term Loan Agreement, each
Lender has appointed The Industrial Bank of Japan, Limited, as its Agent for
purposes of this Receivables Security Agreement. In such capacity, The
Industrial Bank of Japan, Limited, shall be entitled to all of the rights and
benefits accorded the Agent by Section 8 of the Term Loan Agreement. Following
the payment in full of all Secured Obligations and the termination or expiration
of the Loan Documents, the provisions of Section 8 of the Term Loan Agreement
shall be deemed to continue in full force and effect for the benefit of the
Agent under this Receivables Security Agreement. For the avoidance of doubt,
nothing in this Section 20 is intended to create any liability or obligation on
the Debtor.
21. SEVERABILITY. The provisions of this Receivables Security Agreement
are independent of and separable from each other. If any provision hereof shall
for any reason be held invalid or unenforceable, such invalidity or
unenforceability shall not affect the validity or enforceability of any other
provision hereof, but this Receivables Security Agreement shall be construed as
if such invalid or unenforceable provision had never been contained herein.
22. COUNTERPARTS. This Receivables Security Agreement may be executed
in any number of counterparts each of which when so executed and delivered shall
be deemed an original, and it shall not be necessary in making proof of this
Receivables Security Agreement to produce or account for more than one such
counterpart executed by the Debtor against whom enforcement is sought.
23. TERMINATION. Subject to the provisions of Section 12, this
Receivables Security Agreement and all obligations of the Debtor hereunder
(excluding those obligations and
17
liabilities that expressly survive such termination) shall terminate without
delivery of any instrument or performance of any act by any party upon
irrevocable payment and performance, in full, of the obligations of the Debtor
provided for in the Loan Documents. Upon such termination of this Receivables
Security Agreement, the Secured Party shall, at the request and sole expense of
the Debtor, promptly deliver to the Debtor such termination statements and take
such further actions as the Debtor may reasonably request to terminate of
record, or otherwise to give appropriate notice of the termination of, any Lien
conferred hereunder.
24. INDEMNIFICATION. Without limitation of any other indemnification
provision in any Loan Document, the Debtor agrees to indemnify and hold harmless
the Secured Party and each of his attorneys, agents and advisors (each, an
"Indemnified Party"), from and against any and all claims, damages, losses,
liabilities, costs, and expenses (including, without limitation, reasonable
attorneys' fees) that may be incurred by or asserted or awarded against any
Indemnified Party, in each case arising out of or in connection with or by
reason of (including, without limitation, in connection with any investigation,
litigation or proceeding or preparation of defense in connection therewith) the
Loan Documents, any of the transactions contemplated herein or the actual or
proposed use of the proceeds of the advances or other extension of credit under
the Loan Documents, except to the extent such claim, damage, loss, liability,
cost, or expense is found in a final, non-appealable judgment by a court of
competent jurisdiction to have resulted from such Indemnified Party's gross
negligence or willful misconduct. In the case of an investigation, litigation or
other proceeding to which the indemnity in this Section 24 applies, such
indemnity shall be effective whether or not such investigation, litigation or
proceeding is brought by the Debtor, any of its directors, shareholders or
creditors, or an Indemnified Party or any other Person, or any Indemnified Party
is otherwise a party thereto and whether or not the transactions contemplated
hereby are consummated. The Debtor agrees that no Indemnified Party shall have
any liability (whether direct or indirect, in contract or tort or otherwise) to
it, any of its subsidiaries or affiliates, or any security holders or creditors
thereof arising out of, related to or in connection with the transactions
contemplated herein or in the other Loan Documents, except to the extent that
such liability is found in a final non-appealable judgment by a court of
competent jurisdiction to have directly resulted from such Indemnified Party's
gross negligence or willful misconduct. The Debtor agrees not to assert any
claim against the Secured Party, any of his attorneys, agents or advisers, on
any theory of liability, for special, indirect, consequential, or punitive
damages arising out of or otherwise relating to the Loan Documents, any of the
transactions contemplated therein or the actual or proposed use of the proceeds
of the Loans or other extensions of credit under the Loan Documents. The
agreements in this Section 24 shall survive repayment of all of the Secured
Obligations and the termination or expiration of this Receivables Security
Agreement in any manner.
25. NOTICES. Any notice required or permitted hereunder shall be given
in accordance with Section 9.8 of the Term Loan Agreement.
26. RULES OF INTERPRETATION. The rules of interpretation
contained in Section 1 of the Term Loan Agreement shall be applicable to this
Receivables Security Agreement and are hereby incorporated by reference. All
representations and warranties contained herein shall survive the delivery of
documents and any extension of credit referred to herein or secured hereby.
18
27. WAIVER. To the extent permitted by applicable law, no failure on
the part of the Agent or any Lender to exercise and no delay in exercising, and
no course of dealing with respect to, any right, remedy, power or privilege
under this Receivables Security Agreement shall operate as a waiver of such
right, remedy, power or privilege, nor shall any single or partial exercise of
any right, remedy, power or privilege under this Receivables Security Agreement
preclude any other or further exercise of any such right, remedy, power or
privilege or the exercise of any other right, remedy, power or privilege. The
rights, remedies, powers and privileges provided in this Receivables Security
Agreement are cumulative and not exclusive of any rights, remedies, powers and
privileges provided by law.
28. GOVERNING LAW. THIS RECEIVABLES SECURITY AGREEMENT SHALL BE
DELIVERED IN THE STATE OF NEW YORK AND GOVERNED BY, AND CONSTRUED AND ENFORCED
IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK.
[SIGNATURE PAGES FOLLOW]
19
IN WITNESS WHEREOF, the parties have duly executed this Receivables
Security Agreement on the day and year first written above.
DEBTOR:
AMERICA WEST AIRLINES, INC.
By:
--------------------------------
Name:
------------------------------
Title:
-----------------------------
SECURED PARTY:
THE INDUSTRIAL BANK OF JAPAN,
LIMITED, AS AGENT
-----------------------------------
By:
--------------------------------
Name:
------------------------------
Title:
-----------------------------
Signature Page
EXHIBIT II
[Date]
The Industrial Bank of Japan,
as Agent
▇▇▇▇ ▇▇▇▇▇▇ ▇▇ ▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇
Re: Form of Notice of Conversion/Continuation Under the Amended
and Restated Term Loan Agreement dated as of January , 2002
Ladies and Gentlemen:
We refer you to the Amended and Restated Term Loan Agreement as of
January , 2002 by and among America West Airlines, Inc. (the "Company"), the
lending institutions named therein and The Industrial Bank of Japan, Limited, as
agent for itself and such other lending institutions (as amended, supplemented
or otherwise modified from time to time, the "Credit Agreement"). Capitalized
terms used herein without definition have the meanings specified in the Credit
Agreement.
Pursuant to Section 2.2D of the Credit Agreement, the Company hereby
notifies you of the following Conversion/Continuation:
(a) Proposed Conversion/Continuation Date(1):
(b) Amount of Loans to be Converted/Continued:
(c) Type of Loans to be Converted/Continued (Base Rate Loans or
Eurodollar Rate Loans):
(d) Nature of the proposed Conversion/Continuation (Base Rate
Loans or Eurodollar Rate Loans):
-----------------------------
(1) The Company shall deliver a Notice of Conversion/Continuation to the Agent
no later than 12:00 noon (New York time) on the proposed Conversion Date with
respect to a Base Rate Loan and three Business Days in advance of the proposed
Conversion/Continuation date with respect to a Eurodollar Rate Loan.
(e) No Potential Event of Default or Event of Default has occurred and is
continuing and no Potential Event of Default or Event of Default would
occur after giving effect to the proposed conversion/continuation(2):
AMERICA WEST AIRLINES, INC.
By:
--------------------------------
Name:
Title:
-------------------------------
(2) To be included only with respect to Eurodollar Rate Loans.
EXHIBIT III
FORM OF TERM NOTE
$[ ] January , 2002
FOR VALUE RECEIVED, the undersigned AMERICA WEST AIRLINES, INC., a
Delaware corporation (the "Company"), hereby promises to pay to the order of
[ ] (the "Lender" ):
(a) from time to time at the times and in the amounts provided
in the Term Loan Agreement (as hereinafter defined) and prior to or on
the Termination Date (as defined in the Term Loan Agreement) the
principal amount of [$ ] maintained by the Lender pursuant to
the Amended and Restated Term Loan Agreement dated as of January ,
2002 (as amended and in effect from time to time, the "Term Loan
Agreement"), among the Company, the Lender, the Agent and the other
parties thereto; and
(b) interest on the principal balance hereof from time to time
outstanding from the Closing Date (as defined in the Term Loan
Agreement) under the Term Loan Agreement through and including the date
of repayment in full of the Obligations owed to the Lender at the times
and at the rates provided in the Term Loan Agreement.
All capitalized terms used in this Note and not otherwise defined
herein shall have the same meanings herein as in the Term Loan Agreement. This
Note evidences the Loan maintained under, and has been issued by the Company in
accordance with, the terms of the Term Loan Agreement, and is issued in
substitution for and replacement of the Revolving Note dated December 10, 1999
issued by the Company to the Lender pursuant to the Amended and Restated
Revolving Credit Agreement dated as of December 10, 1999. The Lender and any
Eligible Assignee of the Lender under Section 9.1 of the Term Loan Agreement is
entitled to the benefits of the Term Loan Agreement, the Security Agreements and
the other Loan Documents.
The Company has the right in certain circumstances and the obligation
under certain other circumstances to prepay the whole or part of the principal
of this Note on the terms and conditions specified in the Term Loan Agreement;
provided, that the Company may not repay or prepay the PIK Note issued to the
Lender unless and until this Term Note has been repaid or prepaid in full
(including, without limitation, repayment following acceleration of the Loans
and the PIK Notes).
If any one or more of the Events of Default shall occur, the entire
unpaid principal amount of this Note and all of the unpaid interest accrued
thereon may become or be declared due and payable in the manner and with the
effect provided in the Term Loan Agreement.
No delay or omission on the part of the Lender or any holder hereof in
exercising any right hereunder shall operate as a waiver of such right or of any
other rights of the Lender or such holder, nor shall any delay, omission or
waiver on any one occasion be deemed a bar or waiver of the same or any other
right on any further occasion.
The Company and every endorser and guarantor of this Note or the
obligation represented hereby waives to the full extent permitted by law,
presentment, demand, notice, protest and all other demands and notices in
connection with the delivery, acceptance, performance, default or enforcement of
this Note, and assents to any extension or postponement of the time of payment
or any other indulgence, to any release of collateral and to the addition or
release of any other party or person primarily or secondarily liable.
THIS NOTE AND THE OBLIGATIONS OF THE COMPANY HEREUNDER SHALL BE
GOVERNED BY, AND SHALL BE CONSTRUED AND ENFORCED IN ACCORDANCE WITH, THE LAWS OF
THE STATE OF NEW YORK.
IN WITNESS WHEREOF, the undersigned has caused this Note to be signed
in its corporate name by its duly authorized officer as of the day and year
first above written.
AMERICA WEST AIRLINES, INC.
By:
---------------------------------
Name:
Title:
EXHIBIT III-A
FORM OF PIK NOTE
January , 2002
FOR VALUE RECEIVED, the undersigned AMERICA WEST AIRLINES, INC., a
Delaware corporation (the "Company"), hereby promises to pay to the order of
[ ] (the "Lender"):
(a) from time to time, at the times, in the amounts and in the
manner provided in the Term Loan Agreement (as hereinafter defined)
interest equal to two percent per annum of the outstanding principal
amount of the Lender's Loan (as defined in the Term Loan Agreement as
defined below) to the Company pursuant to the Amended and Restated Term
Loan Agreement dated as of January _, 2002 (as amended and in effect
from time to time, the "Term Loan Agreement"), among the Company, the
Lender, the Agent and the other parties thereto, provided, however,
that such interest shall be capitalized as the principal of this PIK
Note from month to month as further set out in the Schedule hereto and
paid in kind until this PIK Note is due and payable; and
(b) on December 31, 2004, the aggregate principal amount owed
under this PIK Note is due and payable, and
(c) interest on the principal balance hereof from time to time
outstanding from the Closing Date (as defined in the Term Loan
Agreement) through and including December 31, 2004 shall accrue at the
times, at the rates and in the manner provided in the Term Loan
Agreement and shall be compounded monthly, provided, however, that such
interest shall be added to the principal of this PIK Note from month to
month as further set out in the Schedule hereto and paid in kind until
this PIK Note is due and payable.
All capitalized terms used in this PIK Note and not otherwise defined
herein shall have the same meanings herein as in the Term Loan Agreement. This
PIK Note evidences the Company's payment in kind of interest on the Loan
maintained by the Lender under, and has been issued by the Company in accordance
with, the terms of the Term Loan Agreement. The Lender and any Eligible Assignee
of the Lender under Section 9.1 of the Term Loan Agreement is entitled to the
benefits of the Term Loan Agreement, the Security Agreements and the other Loan
Documents.
The Company has the right in certain circumstances and the obligation
under certain other circumstances to prepay the whole or part of the principal
of this PIK Note on the terms and conditions specified in the Term Loan
Agreement; provided, however, that the Company may not prepay this PIK Note
unless and until the Lender's Term Note has been prepaid in full (including,
without limitation, following acceleration of the Loans and the PIK Notes).
If any one or more Events of Default shall occur, the entire unpaid
principal amount of this PIK Note and all of the unpaid interest accrued thereon
may become or be declared due and payable in the manner and with the effect
provided in the Term Loan Agreement; provided, that, after such acceleration
interest shall no longer be paid in kind under this PIK Note but shall be
payable when accrued and shall continue to accrue on the outstanding principal
amount of the Lender's Loan and this PIK Note and on all such unpaid and accrued
interest at a rate per annum equal to the default rate set forth in Section 2.2E
of the Term Loan Agreement (4% per annum).
No delay or omission on the part of the Lender or any holder hereof in
exercising any right hereunder shall operate as a waiver of such right or of any
other rights of the Lender or such holder, nor shall any delay, omission or
waiver on any one occasion be deemed a bar or waiver of the same or any other
right on any further occasion.
The Company and every endorser and guarantor of this PIK Note or the
obligation represented hereby waives to the full extent permitted by law,
presentment, demand, notice, protest and all other demands and notices in
connection with the delivery, acceptance, performance, default or enforcement of
this PIK Note, and assents to any extension or postponement of the time of
payment or any other indulgence, to any release of collateral and to the
addition or release of any other party or person primarily or secondarily
liable.
THIS PIK NOTE AND THE OBLIGATIONS OF THE COMPANY HEREUNDER SHALL BE
GOVERNED BY, AND SHALL BE CONSTRUED AND ENFORCED IN ACCORDANCE WITH, THE LAWS OF
THE STATE OF NEW YORK.
IN WITNESS WHEREOF, the undersigned has caused this PIK Note to be
signed in its corporate name by its duly authorized officer as of the day and
year first above written.
AMERICA WEST AIRLINES, INC.
By:
-----------------------------
Name:
Title:
EXHIBIT IV
AMERICA WEST AIRLINES, INC.,
FORM OF COMPLIANCE CERTIFICATE
Reference is made to the Amended and Restated Term Loan Agreement dated
as of January , 2002 (as it may be amended, restated or supplemented or
otherwise modified from time to time, the "Credit Agreement") among America West
Airlines, Inc. (the "Company"), the lenders from time to time party thereto (the
"Banks"), and The Industrial Bank of Japan, Limited, as agent for the Banks (in
such capacity, the "Agent").
The undersigned, the Vice President & Treasurer of the Company, and
acting on behalf of the Company, hereby certifies as of the date hereof that he
is the officer named above of the Company, and is duly authorized to execute and
deliver this Certificate to the Banks and the Agent on behalf of the Company,
and that:
1. The undersigned has reviewed and is familiar with the terms of the
Credit Agreement and has made, or has caused to be made under his supervision, a
review of the provisions of the Credit Agreement and related definitions and the
transactions and conditions (financial or otherwise) of the Company and its
Subsidiaries, if any, during the period covered by this Certificate sufficient
in his opinion to be able to provide this certification.
2. To the best knowledge of the undersigned, no Potential Event of
Default or Event of Default exists.
3. The reserve of Cash and Cash Equivalents (that in either case are
free from Liens) of the Company and its Wholly Owned Subsidiaries (without
regard to Cash and Cash Equivalents in the Cash Collateral Account) is more than
$100,000,000.
4. Attached hereto is a revised Schedule 9(a) to the Receivables
Security Agreement, which such schedule shall replace Schedule 9(a) in full. The
aggregate value of the Receivables Collateral as reflected on the Schedule 9(a)
attached hereto exceeds $6,000,000.
IN WITNESS WHEREOF, the undersigned has executed this Certificate on
behalf of the Company as of 200 .
AMERICA WEST AIRLINES, INC.
By:
-------------------------------
Name:
Title: Vice President and Treasurer
EXHIBIT VI
FORM OF ASSIGNMENT AGREEMENT
Dated as of _________________________
Reference is made to the Amended and Restated Term Loan Agreement,
dated as of January __, 2002 (as from time to time amended and in effect, the
"Credit Agreement"), by and among America West Airlines, Inc., a Delaware
corporation (the "Company"), The Industrial Bank of Japan, Limited and the other
banking institutions referred to therein as Lenders (collectively, the
"Lenders"), and The Industrial Bank of Japan, Limited, as agent (hereinafter, in
such capacity, the "Agent") for the Lenders. Capitalized terms used herein and
not otherwise defined shall have the meanings assigned to such terms in the
Credit Agreement.
_____________________ (the "Assignor") and (the __________________ (the
"Assignee") hereby agree as follows:
1. ASSIGNMENT. Subject to the terms and conditions of this Assignment and
Acceptance, the Assignor hereby sells and assigns to the Assignee, and the
Assignee hereby purchases and assumes without recourse to the Assignor, a $_____
interest in and to the rights, benefits, indemnities and obligations of the
Assignor under the Credit Agreement equal to __% in respect of the Assignor's
Loans as in effect immediately prior to the Effective Date (as hereinafter
defined).
2. ASSIGNOR'S REPRESENTATIONS. The Assignor (i) represents and warrants that (A)
it is legally authorized to enter into this Assignment Agreement, (B) as of the
date hereof, its Pro Rata Share is __%, the aggregate outstanding principal
balance of its Loans equals $__ [and the aggregate outstanding principal balance
of its PIK Note is $__] (ii) makes no representation or warranty, express or
implied, and assumes no responsibility with respect to any statements,
warranties or representations made in or in connection with the Credit Agreement
or any of the other Loan Documents or the execution, legality, validity,
enforceability, genuineness, sufficiency or value of the Credit Agreement, the
other Loan Documents or any other instrument or document furnished pursuant
thereto or the attachment, perfection or priority of any security interest or
mortgage, other than that it is the legal and beneficial owner of the interest
being assigned by it hereunder free and clear of any claim or encumbrance; (iii)
makes no representation or warranty and assumes no responsibility with respect
to the financial condition of the Company or any of its Subsidiaries or any
other Person primarily or secondarily liable in respect of any of the
Obligations, or the performance or observance by the Company or any of its
Subsidiaries or any other Person primarily or secondarily liable in respect of
any of the Obligations of any of its obligations under the Credit Agreement or
any of the other Loan Documents or any other instrument or document delivered or
executed pursuant thereto; and (iv) attaches hereto the Term Note [and PlK Note]
delivered to it under the Credit Agreement.
3. The Assignor requests that the Company exchange the Assignor's Term Note [and
PIK Note] for a new Term Note [and PIK Note] payable to the Assignor and the
Assignee as follows:
Notes Payable to [Amount of PIK Note] Amount of Term
the Order of: Note
Assignor [$_______________] $_________
Assignee [$_______________] $_________
4. ASSIGNEE'S REPRESENTATIONS. The Assignee (i) represents and warrants that (A)
it is duly and legally authorized to enter into this Assignment Agreement, (B)
the execution, delivery and performance of this Assignment Agreement do not
conflict with any provision of law or of the charter or by-laws of the Assignee,
or of any agreement binding on the Assignee, (C) all acts, conditions and things
required to be done and performed and to have occurred prior to the execution,
delivery and performance of this Assignment Agreement, and to render the same
the legal, valid and binding obligation of the Assignee, enforceable against it
in accordance with its terms, have been done and performed and have occurred in
due and strict compliance with all applicable laws; (ii) confirms that it has
received a copy of the Credit Agreement, together with copies of the most recent
financial statements delivered pursuant to Section 5.1(i) and (ii) thereof and
such other documents and information as it has deemed appropriate to make its
own credit analysis and decision to enter into this Assignment Agreement; (iii)
agrees that it will, independently and without reliance upon the Assignor, the
Agent or any other Lender and based on such documents and information as it
shall deem appropriate at the time, continue to make its own credit decisions in
taking or not taking action under the Credit Agreement; (iv) represents and
warrants that it is an Eligible Assignee; (v) appoints and authorizes the Agent
to take such action as agent on its behalf and to exercise such powers under the
Credit Agreement and the other Loan Documents as are delegated to the Agent by
the terms thereof, together with such powers as are reasonably incidental
thereto; (vi) represents and warrants that as of the date hereof, it is not
entitled to any additional amounts payable under Section 2.7 of the Credit
Agreement and as of the date hereof, no Tax would be imposed upon any amounts
payable to it hereunder; (vii) agrees to be bound by the provisions of Section 8
of the Credit Agreement; and (viii) agrees that it will perform in accordance
with their terms all the obligations which by the terms of the Credit Agreement
are required to be performed by it as a Lender.
5. EFFECTIVE DATE. The effective date for this Assignment Agreement shall be
_______ (the "Effective Date"). Following the execution of this Assignment
Agreement, each party hereto shall deliver its duly executed counterpart hereof
to the Agent for acceptance by the Agent and recording in the Register by the
Agent.
6. RIGHTS UNDER CREDIT AGREEMENT. Upon such acceptance and recording, from and
after the Effective Date, (i) the Assignee shall be a party to the Credit
Agreement and, to the extent provided in this Assignment Agreement, have the
rights and obligations of a Lender thereunder, and (ii) the Assignor shall, with
respect to that portion of its interest under the Credit Agreement assigned
hereunder, relinquish its rights and be released from its obligations under
the Credit Agreement; provided, however, that the Assignor shall retain its
rights to be indemnified pursuant to Section 9.3 of the Credit Agreement with
respect to any claims or actions arising prior to the Effective Date.
7. PAYMENTS. Upon such acceptance of this Assignment Agreement by the Agent and
such recording, from and after the Effective Date, the Agent shall make all
payments in respect of the rights and interests assigned hereby (including
payments of principal, interest, fees and other amounts) to the Assignee. The
Assignor and the Assignee shall make any appropriate adjustments in payments for
periods prior to the Effective Date by the Agent or with respect to the making
of this assignment directly between themselves.
8. GOVERNING LAW. THIS ASSIGNMENT AGREEMENT SHALL BE GOVERNED BY, AND SHALL BE
CONSTRUED AND ENFORCED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK.
9. COUNTERPARTS. This Assignment Agreement may be executed in any number of
counterparts which shall together constitute but one and the same agreement.
IN WITNESS WHEREOF, intending to be legally bound, each of the
undersigned has caused this Assignment and Acceptance to be executed on its
behalf by its officer thereunto duly authorized, as of the date first above
written.
[THE ASSIGNOR]
By:
----------------------------------
Name:
Title:
[THE ASSIGNEE]
By:
----------------------------------
Name:
Title:
CONSENTED TO:
THE INDUSTRIAL BANK OF
JAPAN, LIMITED, as Agent
By:
------------------------------------------
Name:
Title:
EXHIBIT VIII
Financial Condition Certificate
I, _________________________________, hereby certify that I am the
__________________________________ of America West Airlines, Inc., a Delaware
corporation (the "Company"), that I am familiar with its properties, businesses,
assets, finances and operations and that I am duly authorized to execute this
certificate on behalf of the Company, which is being delivered pursuant to
Section 3.1C of the Amended and Restated Term Loan Agreement, dated as of
January , 2002 (the "Credit Agreement") among the Lenders named therein (the
"Lenders") and The Industrial Bank of Japan, as Agent for the Lenders (the
"Agent"). Terms defined in the Credit Agreement are used herein as therein
defined unless otherwise defined herein.
For purposes of this certificate, the terms below shall have the
following definitions:
(a) "present fair saleable value"
The amount that could be obtained by an independent
willing seller from an independent willing buyer if
the assets of the Company and its Subsidiaries taken
as a whole are sold with reasonable promptness in an
arm's-length transaction under present conditions for
the sale of comparable business enterprises.
(b) "contingent liabilities"
The maximum estimated amount of liabilities
reasonably likely to result from pending litigation,
asserted claims and assessments, guaranties,
uninsured risks and other contingent liabilities of
the Company and its Subsidiaries taken as a whole
after giving effect to the borrowing under the Credit
Agreement.
(c) "would constitute an unreasonably small capital"
As of the date hereof, the Company and its
Subsidiaries taken as a whole is a going concern and
has sufficient capital to ensure that it will
continue to be a going concern in the business in
which it is engaged and proposes to be engaged.
I further certify that I have reviewed the Loan Documents and
the contents of this certificate and, in connection therewith, have made such
investigation and inquiries as I deem necessary and appropriate therefor.
I hereby further certify that:
1. On the date hereof, after giving effect to the transactions
contemplated by the Credit Agreement, the Government Guaranteed Loan and the
other Loan Documents, the
present fair saleable value of any and all property of the Company and its
Subsidiaries taken as a whole is greater than the total amount of liabilities,
including contingent liabilities, of the Company and its Subsidiaries taken as a
whole.
2. On the date hereof, after giving effect to the transactions
contemplated by the Credit Agreement, the Government Guaranteed Loan and the
other Loan Documents, the present fair saleable value of the assets of the
Company and its Subsidiaries taken as a whole exceeds the amount that will be
required to pay the probable liability of the Company and its Subsidiaries taken
as a whole on its existing debts as they become absolute and matured considering
all financing alternatives and potential asset sales reasonably available to the
Company.
3. The Company and its Subsidiaries do not intend to or
believe that they will incur debts and liabilities that will be beyond their
ability to pay as such debts and liabilities mature.
4. On the date hereof, after giving effect to the transactions
contemplated by the Credit Agreement, the Government Guaranteed Loan and the
other Loan Documents, the Company and its Subsidiaries are not engaged in a
transaction, and are not about to engage in business or a transaction, for which
their property would constitute an unreasonably small capital.
5. The Company and its Subsidiaries taken as a whole is
solvent within the meaning given that term and similar terms under applicable
laws relating to fraudulent transfers and conveyances.
This certificate is being delivered solely to satisfy the
Company's obligations pursuant to Section 3.C of the Credit Agreement and in my
capacity as of the Company (and not in my personal capacity). All
statements made herein are to the best of my knowledge after making such
inquiries and analyses as I have deemed necessary or appropriate for the
opinions herein stated.
IN WITNESS WHEREOF, the undersigned has executed this
certificate on behalf of the Company this day of January, 2002.
AMERICA WEST AIRLINES, INC.
By:
-------------------------------
Title:
EXHIBIT IX
Date: _________
BORROWING BASE CERTIFICATE
________________________________________________________________________________
Reference is made to the Amended and Restated Term Loan Agreement dated as
of January __, 2002 (as may be amended, restated or supplemented or otherwise
modified from time to time, the "Credit Agreement") among America West
Airlines, Inc. (the "Company"), the lenders from time to time party thereto and
The Industrial Bank of Japan Limited, Los Angeles Agency, as arranger, initial
issuing bank and as agent for such lenders. Capitalized terms used herein and
not otherwise defined herein shall have the meanings assigned to such terms in
the Credit Agreement. The undersigned, being the Vice President and Treasurer
of the Company, does hereby certify for and on behalf of the Company, as of
__________ the following:
________________________________________________________________________________
BORROWING BASE COLLATERAL
________________________________________________________________________________
A CASH AND PERMITTED CASH A Collateral Balance:
EQUIVALENTS _____________________________________
Borrowing Base Value:
________________________________________________________________________________
B STAGE III AIRCRAFT B Appraised Value:
_____________________________________
Borrowing Base Value:
________________________________________________________________________________
C ROTABLES C Book Value:
_____________________________________
Adjusted Fair Market Value:
_____________________________________
Lower of Book Value or Adjusted
Fair Market Value:
_____________________________________
Borrowing Base Value:
________________________________________________________________________________
D MAINTENANCE FACILITY/HANGAR D Appraised Value:
_____________________________________
Borrowing Base:
________________________________________________________________________________
F SPARE ENGINES F Appraised Value:
_____________________________________
Borrowing Base Value:
________________________________________________________________________________
_____________________________________________________________________________
TOTAL BORROWING BASE VALUE:
_____________________________________________________________________________
TOTAL LOANS $ __________
_____________________________________________________________________________
DEFICIENCY $ __________
_____________________________________________________________________________
In addition, the Company certifies that:
(1) None of the Borrowing Base Collateral included in the calculation of the
Borrowing Base is subject to an Event of Loss, Event of Damage, Repairable
Event or Adjustment Event;
(2) No reduction in the Borrowing Base is required pursuant to subsection
2.4B(ii)(1)(e) of the Credit Agreement; and
(3) The portion of the Borrowing Base attributable to Rotables stated above
does not exceed thirty five percent (35%) (rounded to the nearest whole
number) of the aggregate Borrowing Base.
AMERICA WEST AIRLINES, INC.
By: _______________________________
Name:
Title:
Exhibit X
America West Airlines, Inc. ("AWA") will be entering into a joint
venture arrangement with GE Capital Aviation Training, Ltd. ("GECAT"), pursuant
to which AWA and GECAT will enter into a limited liability company agreement
(the "LLC Agreement") relating to a Delaware limited liability company (the "JV
LLC"). AWA will make an initial capital contribution to the JV LLC in the amount
of up to $500,000 and will make additional capital contributions to the JV LLC
as may be required or allowed pursuant to the LLC Agreement.
In connection with the joint venture arrangement, AWA will sublease a
portion of its new Phoenix, Arizona facility that is currently under
construction to the JV LLC. Following the formation of the JV LLC, AWA will
assign lease agreements for six flight simulators to the JV LLC. The JV LLC may
enter into additional lease agreements for flight simulators. Upon the
expiration of the term of the JV LLC or the occurrence of certain dissolution
events, the JV LLC will assign some or all of the lease agreements to AWA and,
in certain circumstances, AWA will have the option to purchase the flight
simulators.