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EXHIBIT 10.58
EXECUTION
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THIRD AMENDED AND RESTATED
CREDIT AGREEMENT
DATED AS OF SEPTEMBER 5, 1997
AMONG
ATLAS AIR, INC.,
as Borrower,
THE LENDERS LISTED HEREIN,
as Lenders,
▇▇▇▇▇▇▇ ▇▇▇▇▇ CREDIT PARTNERS L.P.,
as Syndication Agent,
and
BANKERS TRUST COMPANY,
as Administrative Agent
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ATLAS AIR, INC.
THIRD AMENDED AND RESTATED
CREDIT AGREEMENT
TABLE OF CONTENTS
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SECTION 1.
DEFINITIONS............................... 2
1.1 Certain Defined Terms................................................. 2
1.2 Accounting Terms; Utilization of GAAP for Purposes of Calculations
Under Agreement....................................................... 28
1.3 Other Definitional Provisions......................................... 28
SECTION 2.
AMOUNTS AND TERMS OF COMMITMENTS AND LOANS................... 29
2.1 Commitments; Making of Loans; Notes; Register......................... 29
2.2 Interest on the Loans................................................. 33
2.3 Fees.................................................................. 37
2.4 Repayments, Prepayments and Reductions in Revolving Loan
Commitments; General Provisions Regarding Payments.................... 38
2.5 Use of Proceeds....................................................... 44
2.6 Special Provisions Governing Eurodollar Rate Loans.................... 44
2.7 Increased Costs; Taxes; Capital Adequacy.............................. 47
2.8 Obligation of Lenders to Mitigate..................................... 51
SECTION 3.
CONDITIONS TO LOANS.............................. 52
3.1 Conditions to Loans to Finance Aircraft Acquisition................... 52
3.2 Condition to Loans to Finance Cargo Conversion........................ 54
3.3 Conditions to All Loans............................................... 56
3.4 Conditions to Conversion of Revolving Loans Into Term Loans........... 57
3.5 Conditions to Effectiveness........................................... 58
SECTION 4.
COMPANY'S REPRESENTATIONS AND WARRANTIES................ 59
4.1 Organization, Powers, Qualification, Good Standing, Business and
Subsidiaries.......................................................... 59
4.2 Authorization of Borrowing, etc....................................... 60
4.3 Financial Condition................................................... 61
4.4 No Material Adverse Change; No Restricted Junior Payments............. 61
4.5 Title to Properties; Liens............................................ 62
4.6 Litigation; Adverse Facts............................................. 62
4.7 Payment of Taxes...................................................... 62
(i)
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4.8 Performance of Agreements; Materially Adverse Agreements........... 63
4.9 Governmental Regulation............................................ 63
4.10 Securities Activities.............................................. 63
4.11 Employee Benefit Plans............................................. 63
4.12 Certain Fees....................................................... 64
4.13 Environmental Protection........................................... 64
4.14 Employee Matters................................................... 64
4.15 Solvency........................................................... 64
4.16 Disclosure......................................................... 65
SECTION 5.
COMPANY'S AFFIRMATIVE COVENANTS.................... 65
5.1 Financial Statements and Other Reports............................. 65
5.2 Corporate Existence................................................ 70
5.3 Payment of Taxes and Claims; Tax Consolidation..................... 71
5.4 Maintenance of Properties; Insurance............................... 71
5.5 Inspection; Lender Meeting......................................... 71
5.6 Compliance with Laws, etc.......................................... 72
5.7 Environmental Indemnity............................................ 72
5.8 Company's Remedial Action Regarding Hazardous Materials............ 72
5.9 Further Assurances; New Subsidiaries............................... 73
5.10 Appraisals......................................................... 73
5.11 Key Man Life Insurance............................................. 74
5.12 Maintenance Contracts.............................................. 74
5.13 Employee Benefit Plans............................................. 74
SECTION 6.
COMPANY'S NEGATIVE COVENANTS...................... 74
6.1 Indebtedness....................................................... 74
6.2 Liens and Related Matters.......................................... 76
6.3 Investments; Joint Ventures........................................ 77
6.4 Contingent Obligations............................................. 78
6.5 Restricted Junior Payments......................................... 78
6.6 Financial Covenants................................................ 79
6.7 Restriction on Fundamental Changes; Asset Sales and Acquisitions;
New Subsidiaries................................................... 82
6.8 Amendments of Material Agreements.................................. 84
6.9 Restriction on Leases.............................................. 84
6.10 Sales and Lease-Backs.............................................. 85
6.11 Sale or Discount of Receivables.................................... 85
6.12 Transactions with Shareholders and Affiliates...................... 85
6.13 Disposal of Subsidiary Stock....................................... 86
6.14 Conduct of Business................................................ 86
(ii)
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SECTION 7.
EVENTS OF DEFAULT........................... 86
7.1 Failure to Make Payments When Due.................................. 86
7.2 Default in Other Agreements........................................ 87
7.3 Breach of Certain Covenants........................................ 87
7.4 Breach of Warranty................................................. 87
7.5 Other Defaults Under Loan Documents................................ 87
7.6 Involuntary Bankruptcy; Appointment of Receiver, etc............... 88
7.7 Voluntary Bankruptcy; Appointment of Receiver, etc................. 88
7.8 Judgments and Attachments.......................................... 89
7.9 Dissolution........................................................ 89
7.10 Change in Control.................................................. 89
7.11 Failure of Security................................................ 89
7.12 Certificated as Air Carrier........................................ 90
7.13 Material Agreements................................................ 90
SECTION 8.
AGENTS.................................. 91
8.1 Appointment........................................................ 91
8.2 Powers and Duties; General Immunity................................ 91
8.3 Representations and Warranties; No Responsibility For Appraisal of
Creditworthiness................................................... 93
8.4 Right to Indemnity................................................. 93
8.5 Collateral Documents............................................... 93
8.6 Successor Administrative Agent..................................... 94
SECTION 9.
MISCELLANEOUS.............................. 94
9.1 Assignments and Participations in Loans............................ 94
9.2 Expenses........................................................... 96
9.3 Indemnity.......................................................... 97
9.4 Set-Off............................................................ 98
9.5 Ratable Sharing.................................................... 98
9.6 Amendments and Waivers............................................. 99
9.7 Independence of Covenants..........................................100
9.8 Notices............................................................100
9.9 Survival of Representations, Warranties and Agreements.............101
9.10 Failure or Indulgence Not Waiver; Remedies Cumulative..............101
9.11 Marshalling; Payments Set Aside....................................101
9.12 Severability.......................................................102
9.13 Obligations Several; Independent Nature of Lenders' Rights.........102
9.14 Headings...........................................................102
9.15 Applicable Law.....................................................102
9.16 Successors and Assigns.............................................102
(iii)
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9.17 Consent to Jurisdiction and Service of Process.....................102
9.18 Waiver of Jury Trial...............................................103
9.19 Confidentiality....................................................103
9.20 Counterparts; Effectiveness........................................104
9.21 Cooperation in Refinancing, Syndication and Assignment.............104
Signature pages S-1
(iv)
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EXHIBITS
I FORM OF NOTICE OF BORROWING
II FORM OF NOTICE OF CONVERSION/CONTINUATION
IIIA FORM OF REVOLVING NOTE
IIIB FORM OF AMENDED AND RESTATED NOTE
IV FORM OF COMPLIANCE CERTIFICATE
VA FORM OF OPINION OF ▇▇▇▇▇▇ ▇▇▇▇▇▇ & ▇▇▇▇▇▇▇
▇▇ FORM OF SECTION 1110 OPINION
VC FORM OF OPINION OF ▇▇▇▇ ▇▇▇▇▇▇▇▇▇
VI INTENTIONALLY OMITTED
VII FORM OF ASSIGNMENT AGREEMENT
VIII FORM OF CERTIFICATE RE NON-BANK STATUS
IX FORM OF FINANCIAL CONDITION CERTIFICATE
X FORM OF FIRST AIRCRAFT CHATTEL MORTGAGE
XI FORM OF SECOND AIRCRAFT CHATTEL MORTGAGE
(v)
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SCHEDULES
2.1 LENDERS' COMMITMENTS AND PRO RATA SHARES
5.1 SUBSIDIARIES OF COMPANY
6.1 CERTAIN EXISTING INDEBTEDNESS
6.2 CERTAIN EXISTING LIENS
6.3 CERTAIN EXISTING INVESTMENTS
6.4 CERTAIN EXISTING CONTINGENT OBLIGATIONS
(vi)
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ATLAS AIR, INC.
THIRD AMENDED AND RESTATED
CREDIT AGREEMENT
This THIRD AMENDED AND RESTATED CREDIT AGREEMENT is dated as of September
5, 1997 and entered into by and among ATLAS AIR, INC., a Delaware corporation
("Company"), THE FINANCIAL INSTITUTIONS LISTED ON THE SIGNATURE PAGES HEREOF
(each individually referred to herein as a "Lender" and collectively as
"Lenders"), ▇▇▇▇▇▇▇ ▇▇▇▇▇ CREDIT PARTNERS L.P. (formerly known as Pearl Street
L.P.) ("Credit Partners"), as syndication agent (in such capacity, "Syndication
Agent") and BANKERS TRUST COMPANY ("Bankers Trust"), as administrative agent for
Lenders (in such capacity, "Administrative Agent").
R E C I T A L S
WHEREAS, pursuant to that certain Second Amended and Restated Credit
Agreement dated as of February 28, 1997, by and among Company, as Borrower, the
financial institutions listed on the signature pages thereof, Syndication Agent
and Administrative Agent (the "Existing Agreement"), Lenders have made certain
credit facilities available to Company for the purpose of acquisition and
modification of certain aircraft to be used in Company's air cargo business;
WHEREAS, the parties of the Existing Agreement desire to amend and restate
the Existing Agreement in order to (i) extend the maturity of the Loans, (ii)
decrease the Revolving Loan Commitments by $25,000,000 to $250,000,000, (iii)
adjust the financial covenants, and (iv) make certain other amendments to the
Existing Agreement; and
WHEREAS, it is the intention of Company, Administrative Agent and each of
the Lenders that such amendment and restatement of the Existing Agreement shall
not constitute a refinancing of the Loans outstanding on the Third Amended and
Restated Closing Date and that, with respect to the Loans outstanding as of the
Third Amended and Restated Closing Date, the First Aircraft Chattel Mortgages
shall continue to constitute purchase-money security interests subject to
Section 1110 of the Bankruptcy Code.
NOW THEREFORE, in consideration of the premises and agreements, provisions
and covenants herein contained, Company, Lenders, Syndication Agent and
Administrative Agent hereby agree that the Existing Agreement shall be amended
and restated in its entirety 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:
"ACMI Contract" means (i) any contract entered into by Company pursuant to
which Company furnishes the aircraft, crew, maintenance and insurance and
customers bear all other operating expenses and (ii) any similar contract in
which the customer provides the flight crew, all in accordance with Company's
historical practices.
"ACMI Contracted Aircraft" means an aircraft acquired by Company or its
Subsidiaries and dedicated to a new ACMI Contract entered into in connection
with the acquisition of such aircraft (which ACMI Contract shall not represent a
renewal or replacement of a prior ACMI Contract unless the aircraft dedicated to
such prior ACMI Contract was operated under an operating lease and returned to
the lessor) which is in effect on the date of calculation and has a remaining
term of one year or more on the date such aircraft was dedicated to such ACMI
Contract (subject to cancellation terms, which may include the right to cancel
on six months notice). When making any calculation on a Pro Forma Basis effect
shall be given to the acquisition of an ACMI Contracted Aircraft by adding to
the appropriate components of Consolidated Adjusted EBITDA (i) the net projected
annualized revenues from the operation of the ACMI Contracted Aircraft under
such ACMI Contract for that portion of the period for which Consolidated
Adjusted EBITDA is being calculated prior to the acquisition of such aircraft,
assuming operation for the minimum guaranteed number of block hours (less any
block hours subject to cancellation) at the minimum guaranteed rate under such
ACMI Contract less (ii) the projected annualized cash operating expenses from
such operation for the same period for which the related projected revenues are
determined in clause (i) above; provided that such projected cash operating
expenses shall not be less on a per block hour basis than the average historical
per block hour operating expenses of Company for the four full fiscal quarters
immediately preceding the date of calculation, and provided, further, that if
such aircraft is of a model other than a Boeing 747 freighter, such projected
cash operating expenses shall include maintenance costs which shall not be less
than the average for such aircraft type disclosed on the most recently available
DOT Forms 41 with respect to such aircraft type or any summary of such data as
reported in a nationally recognized industry publication. For purposes of this
definition, "ACMI Contract" shall include contracts pursuant to which Company
does not pay any crew costs, in which event pro forma effect shall be given as
described above but excluding from the projected annualized cash operating
expenses all crew costs. Cash operating expenses means for purposes of this
definition consolidated operating expenses, less consolidated depreciation and
amortization and Consolidated Rental Payments, to the extent included in
computing consolidated operating expenses.
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"Adjusted Eurodollar Rate" means, for any Interest Rate Determination Date,
(x) until such time as Reference Lenders are determined in accordance with the
definition thereof, the rate per annum obtained by dividing the offered rate
(expressed as a rate per annum and rounded upward to the nearest 1/16 of one
percent) appearing on the Dow ▇▇▇▇▇/Telerate Monitor on Telerate Access Service
Page 3750 (British Bankers Association Settlement Rate) (or such other page as
may, in the opinion of Administrative Agent, replace such page 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 Loan
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) and (y) thereafter, the rate per
annum obtained by dividing (i) the arithmetic average (rounded upward to the
nearest 1/16 of one percent) of the offered quotation, if any, to first class
banks in the 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 Loan of that Reference Lender 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); provided that if any
Reference Lender fails to provide Administrative Agent with its aforementioned
quotation then the Adjusted Eurodollar Rate shall be determined based on the
quotation(s) provided to Administrative Agent by the other Reference Lender(s).
"Administrative Agent" has the meaning assigned to that term in the
introduction to this Agreement and also means and includes any successor
Administrative Agent appointed pursuant to subsection 8.6.
"Aeronautical Authority" means, at any date, the Federal Aviation
Administration or other governmental airworthiness authority having jurisdiction
over any Eligible Aircraft or Airframe or Engine under the laws of the country
in which the Airframe is then registered.
"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.
"AFL" means Atlas Freighter Leasing, Inc., a Delaware corporation, whose
common stock is wholly-owned by Company, the sole business of which is the
ownership of the AFL Aircraft and the leasing of the AFL Aircraft to Company
pursuant to the AFL Leases and obtaining financing with respect thereto.
"AFL Aircraft" means (i) one Boeing 747-200 Aircraft, serial number 21048,
with four ▇▇▇▇▇ & ▇▇▇▇▇▇▇ JT9D-7J engines attached and (ii) five Boeing 747-200
Aircraft, serial numbers 21221, 21251, 21380, 21644, and 22507, each with four
General Electric CF6-50E2 engines attached.
"AFL Financing" means indebtedness in an aggregate principal amount of
$185,000,000 incurred by AFL as of May 29, 1997 pursuant to the AFL Financing
Agreement.
"AFL Financing Agreement" means that certain Credit Agreement dated as of
May 29, 1997 by and among AFL, the lenders party thereto and Bankers Trust
Company, as Agent, as such agreement may be amended, modified or supplemented
from time to time in accordance with the terms thereof.
"AFL Leases" means one or more triple net leases by and between Company and
AFL with respect to the AFL Aircraft providing for fair market rental rates
sufficient to provide for principal and interest payments under the AFL
Financing Agreement and a market rate of return on the equity interest of AFL,
as lessor thereunder, as such leases may be amended, modified or supplemented
from time to time in accordance with the provisions of this Agreement.
"AFL Restructuring" means the following transactions which occurred
concurrently on May 29, 1997: (i) the termination of the leases relating to the
AFL Aircraft in existence prior to May 29, 1997, (ii) the transfer, as a
dividend, of the AFL Aircraft to Company and the simultaneous contribution of
the AFL Aircraft to AFL as a capital contribution, together with approximately
$10.4 million, (iii) the incurrence of indebtedness pursuant to the AFL
Financing Agreement and the simultaneous repayment of the indebtedness
previously secured by the AFL Aircraft and (iv) the entering into of the AFL
Leases.
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"AFL II" means Atlas Freighter Leasing II, Inc., a Delaware corporation,
whose common stock is wholly-owned by Company, the sole business of which is the
ownership of the AFL II Aircraft, the leasing of the AFL II Aircraft to Company
pursuant to the AFL II Leases and obtaining financing with respect thereto.
"AFL II Aircraft" means (i) four Boeing 747-200 aircraft (including the
engines attached thereto) with serial numbers 21782, 21784, 22337 and 22471 and
(ii) nine General Electric CF6-50E2 engines with serial numbers 530168, 517530,
517790, 455167, 517602, 517547, 517538, 517539 and 517544.
"AFL II Financing" means indebtedness in an aggregate principal amount not
in excess of $185,000,000 incurred by AFL II as of the Third Amended and
Restated Closing Date pursuant to the AFL II Financing Agreement.
"AFL II Financing Agreement" means that certain Credit Agreement dated as
of September 5, 1997 by and among AFL II, the lenders party thereto, ▇▇▇▇▇▇▇
Sachs Credit Partners L.P., as Syndication Agent, and Bankers Trust Company, as
Administrative Agent, as such agreement may be amended, modified or supplemented
from time to time in accordance with the terms thereof.
"AFL II Leases" means one or more triple net leases by and between Company
and AFL II with respect to the AFL II Aircraft providing for fair market rental
rates sufficient to provide for principal and interest payments under the AFL II
Financing Agreement and a market rate of return on the equity interest of AFL
II, as lessor thereunder, as such leases may be amended, modified or
supplemented from time to time in accordance with the provisions of this
Agreement.
"AFL II Restructuring" means the following transactions which shall occur
concurrently on the Third Amended and Restated Closing Date: (i) the
contribution of the AFL II Aircraft to AFL II as a capital contribution, (ii)
the incurrence of indebtedness pursuant to the AFL II Financing Agreement and
the simultaneous repayment of amounts outstanding under this Agreement which are
secured by the AFL II Aircraft and (iii) the entering into of the AFL II Leases.
"Agents" shall mean Administrative Agent and Syndication Agent
collectively.
"Agreement" means this Third Amended and Restated Credit Agreement dated as
of September 5, 1997, as it may be amended, supplemented or otherwise modified
from time to time.
"Aircraft Chattel Mortgage" means any or all of the First Aircraft Chattel
Mortgages and the Second Aircraft Chattel Mortgages.
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"Airframe" means, as the context requires, an Airframe as defined in a
particular Aircraft Chattel Mortgage or all Airframes as defined in all Aircraft
Chattel Mortgages.
"Amended and Restated Notes" means the promissory notes of Company amended
and restated pursuant to subsection 2.1D on the Conversion Date, substantially
in the form of Exhibit IIIB attached hereto.
"Applicable Margin" has the meaning assigned to that term in subsection
2.2A.
"Appraised Value" means, with respect to any Financed Aircraft, the average
of the appraised value of such Financed Aircraft by two Approved Appraisers as
most recently determined pursuant to subsection 5.10.
"Approved Appraiser" means any of the following: B.K. Associates, ▇▇▇▇ ▇.
▇▇▇▇ Associates, ▇▇▇▇▇▇ ▇▇▇▇▇ & ▇▇▇▇▇, Airclaims, Ltd., Aircraft Information
Services, Inc., Simat, Helleisen & ▇▇▇▇▇▇▇, Inc. and AVITAS, Inc.
"Asset Sale" means the sale (including any sale-leaseback transaction) by
Company or any of its Subsidiaries to any other Person of (i) any of the stock
of any of Company's Subsidiaries, (ii) substantially all of the assets of any
division or line of business of Company or any of its Subsidiaries, or (iii) any
other assets (whether tangible or intangible) of Company or any of its
Subsidiaries outside of the ordinary course of business excluding (A) any such
other assets to the extent that the aggregate value of such assets sold in any
single transaction or related series of transactions is equal to $1,000,000 or
less, (B) transactions related to aircraft engines, components, parts or spare
parts pursuant to customary pooling, exchange or similar arrangements, (C) asset
swaps involving aircraft engines, components, parts or spare parts (other than
any engines encumbered pursuant to an Aircraft Chattel Mortgage); provided that
the assets received by the Company or any Subsidiary have a fair market value at
least equal to the assets transferred (provided that with respect to any asset
swap or series of related asset swaps involving assets of Company or any
Subsidiary with a fair market value exceeding $3,000,000, such determination
shall be made by the Board of Directors of Company)) and (D) asset sales
involving obsolete, worn-out, excess or redundant equipment as long as the
proceeds therefrom are used to replace or to upgrade the aircraft or the
equipment installed thereon.
"Assignee Notes" means any promissory notes issued by Company (i) at the
request of a Lender pursuant to subsection 2.1D hereof or (ii) pursuant to the
last sentence of subsection 9.1B(i) in connection with assignments of the
Commitments, Revolving Loans or Term Loans of any Lenders, substantially in the
form of Exhibit IIIA or Exhibit IIIB annexed hereto, as the case may be, as they
may be amended, supplemented or otherwise modified from time to time.
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"Assignment Agreement" means an Assignment Agreement in substantially the
form of Exhibit VII annexed hereto.
"Atlas One" means Atlas One, Inc., a Delaware corporation.
"Bankers Trust" has the meaning assigned to that term in the introduction
to this Agreement.
"Bankruptcy Code" means Title 11 of the United States Code entitled
"Bankruptcy", 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.
"Base Rate Loans" means Loans bearing interest at rates determined by
reference to the Base Rate as provided in subsection 2.2A.
"BFE Agreement" means any agreement entered into by Company, relating to
buyer furnished equipment to be installed on any Financed Aircraft in form and
substance satisfactory to Administrative Agent, as amended, restated, supplement
or otherwise modified from time to time in accordance with this Agreement.
"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 or Colorado or is a
day on which banking institutions located in either such state are authorized or
required by law or other governmental action to close.
"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 accounted for as a capital lease on the balance sheet of that
Person.
"Cash" means money, currency or a credit balance in a Deposit Account.
"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 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 public
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 ▇▇▇▇▇'▇; (iii) commercial paper maturing no more
than one year from the date of creation thereof and having, at the time of the
acquisition thereof, a rating of at least A-1 from S&P or at least P-1 from
▇▇▇▇▇'▇; (iv) certificates of deposit or bankers'
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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 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 ▇▇▇▇▇'▇.
"Cash Proceeds" means, with respect to any Asset Sale, Cash payments
(including any Cash received by way of deferred payment pursuant to, or
monetization of, a note receivable or otherwise, but only as and when so
received) received from such Asset Sale.
"Certificate re Non-Bank Status" means a certificate substantially in the
form of Exhibit VIII annexed hereto delivered by a Lender to Administrative
Agent pursuant to subsection 2.7B(iii).
"Certificated Air Carrier" means a United States "air carrier" within the
meaning of the Federal Aviation Act, operating pursuant to a certificate issued
under Section 401 of such Act, or a carrier of comparable status under any
successor law or provision.
"Collateral" means all of the properties and assets in which Liens are
purported to be granted by the Collateral Documents.
"Collateral Documents" means each First Aircraft Chattel Mortgage and each
Second Aircraft Chattel Mortgage and any security agreement executed pursuant to
subsection 5.9.
"Commitments" means the commitments of Lenders to make and convert Loans as
set forth in subsection 2.1A.
"Company" has the meaning assigned to that term in the introduction to this
Agreement.
"Company Common Stock" means the common stock of Company, par value $0.01
per share.
"Compliance Certificate" means a certificate substantially in the form of
Exhibit IV annexed hereto delivered to Administrative Agent and Lenders by
Company pursuant to subsection 5.1(iv).
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"Condemnation Proceeds" has the meaning assigned to that term in subsection
2.4B(iii)(c).
"Consolidated Adjusted EBITDA" means, for any period, (1) the sum of the
amounts for such period of (i) Consolidated Net Income, (ii) Consolidated
Interest Expense, (iii) provisions for taxes based on income, (iv) total
depreciation expense, (v) total amortization expense, and (vi) other non-cash
items reducing Consolidated Net Income less other non-cash items increasing
Consolidated Net Income less (2) all cash expenditures reducing reserves
appearing on the June 30, 1997 balance sheet of Company, all of the foregoing as
determined on a consolidated basis for Company and its Subsidiaries in
conformity with GAAP.
"Consolidated Capital Expenditures" means, for any period, the sum of (i)
the aggregate of all expenditures (whether paid in cash or other consideration
or accrued as a liability and including that portion of Capital Leases which is
capitalized on the consolidated balance sheet of Company and its Subsidiaries)
by Company and its Subsidiaries during that period that, in conformity with
GAAP, are included in "additions to property, plant or equipment" or comparable
items reflected in the consolidated statement of cash flows of Company and its
Subsidiaries plus (ii) to the extent not covered by clause (i) of this
definition, the aggregate of all expenditures by Company and its Subsidiaries
during that period to acquire (by purchase or otherwise) the business, property
or fixed assets of any Person, or the stock or other evidence of beneficial
ownership of any Person that, as a result of such acquisition, becomes a
Subsidiary of Company.
"Consolidated Current Assets" means, as at any date of determination, the
total assets of Company and its Subsidiaries on a consolidated basis which may
properly be classified as current assets in conformity with GAAP (it being
understood that Cash on hand of $65,000,000 or less shall not be taken into
account for purposes of calculating the Consolidated Working Capital
Adjustment).
"Consolidated Current Liabilities" means, as at any date of determination,
the total liabilities of Company and its Subsidiaries on a consolidated basis
which may properly be classified as current liabilities in conformity with GAAP.
"Consolidated Excess Cash Flow" means, for any Fiscal Year, an amount equal
to the sum of Consolidated Adjusted EBITDA for such Fiscal Year and the
Consolidated Working Capital Adjustment for such Fiscal Year, minus the sum of
the amounts for such Fiscal Year of (i) scheduled repayments of principal of
Indebtedness, mandatory prepayments of the principal of Indebtedness (other than
from the proceeds of Asset Sales), voluntary prepayments of the principal of
Indebtedness to the extent that such amount is not simultaneously reborrowed,
and other permanent reductions in the availability of revolving credit
facilities (ii) Consolidated Interest Expense, (iii) permitted Consolidated
Capital Expenditures (net of any proceeds of any related financing with
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respect to such Consolidated Capital Expenditures), and (iv) the portion of
taxes based on income or revenues actually paid in cash.
"Consolidated Interest Expense" means, for any period, total net interest
expense (to be computed by reducing interest expense by the amount of interest
income) (including that portion attributable to Capital Leases in accordance
with GAAP and capitalized interest) of Company and its Subsidiaries on a
consolidated basis with respect to all outstanding Indebtedness of Company and
its Subsidiaries, including, without limitation, all commissions, discounts and
other fees and charges owed with respect to letters of credit and bankers'
acceptance financing and net costs under Interest Rate Agreements and Currency
Agreements, but excluding, however, any amounts referred to in subsection 2.3
payable to Syndication Agent, Administrative Agent and/or Lenders on or before
the Third Amended and Restated Closing Date.
"Consolidated Net Income" means, for any period, the net income (or loss)
of Company and its Subsidiaries on a consolidated basis for such period taken as
a single accounting period determined in conformity with GAAP; provided that
there shall be excluded (i) the income (or loss) of any Person (other than a
Subsidiary of Company) in which any other Person (other than Company or any of
its Subsidiaries) has a joint interest, except to the extent of the amount of
dividends or other distributions actually paid to Company or any of its
Subsidiaries by such Person during such period, (ii) the income (or loss) of any
Person accrued prior to the date it becomes a Subsidiary of Company or is merged
into or consolidated with Company or any of its Subsidiaries or that Person's
assets are acquired by Company or any of its Subsidiaries, (iii) the income of
any Subsidiary of Company to the extent that the declaration or payment of
dividends or similar distributions by that Subsidiary of that income is not at
the time permitted by operation of the terms of its charter or any agreement,
instrument, judgment, decree, order, statute, rule or governmental regulation
applicable to that Subsidiary, (iv) any after-tax gains or losses attributable
to Asset Sales or returned surplus assets of any pension plan, and (v) (to the
extent not included in clauses (i) through (iv) above) any net extraordinary
gains or net non-cash extraordinary losses.
"Consolidated Net Worth" means, as at any date of determination, the sum of
the capital stock and additional paid-in capital plus retained earnings (or
minus accumulated deficits) of Company and its Subsidiaries on a consolidated
basis determined in conformity with GAAP.
"Consolidated Rental Payments" means, for any period, the aggregate amount
of all rents paid or payable by Company and its Subsidiaries on a consolidated
basis during that period under all Capital Leases and Operating Leases to which
Company or any of its Subsidiaries is a party as lessee (net of sublease income
other than income from ACMI Contracts). For the avoidance of doubt, all rental
payments to AFL II and AFL shall not be included in Consolidated Rental
Payments.
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"Consolidated Total Debt" means, as at any date of determination, the
aggregate stated balance sheet amount of all Indebtedness of Company and its
Subsidiaries, determined on a consolidated basis in accordance with GAAP.
"Consolidated Working Capital" means, as at any date of determination, the
excess of Consolidated Current Assets over Consolidated Current Liabilities.
"Consolidated Working Capital Adjustment" means, for any Fiscal Year on a
consolidated basis, the amount (which may be a negative number) by which the
Consolidated Working Capital of Company and its Subsidiaries as of the beginning
of the period exceeds (or is less than) the Consolidated Working Capital of
Company and its Subsidiaries as of the end of such period.
"Contingent Obligation" means, as applied to any Person, any direct or
indirect liability, contingent or otherwise, of that Person (i) with respect to
any Indebtedness, lease, dividend or other obligation of another if the primary
purpose or intent thereof by the Person incurring the Contingent Obligation is
to provide assurance to the obligee of such obligation of another that such
obligation of another will be paid or discharged, or that any agreements
relating thereto will be complied with, or that the holders of such obligation
will be protected (in whole or in part) against loss in respect thereof, (ii)
with respect to any letter of credit issued for the account of that Person or as
to which that Person is otherwise liable for reimbursement of drawings, or (iii)
under Interest Rate Agreements and Currency Agreements. Contingent Obligations
shall include, without limitation, (a) the direct or indirect guaranty,
endorsement (otherwise than for collection or deposit in the ordinary course of
business), co-making, discounting with recourse or sale with recourse by such
Person of the obligation of another, (b) the obligation to make take-or-pay or
similar payments if required regardless of non-performance by any other party or
parties to an agreement, and (c) any liability of such Person for the obligation
of another through any agreement (contingent or otherwise) (X) to purchase,
repurchase or otherwise acquire such obligation or any security therefor, or to
provide funds for the payment or discharge of such obligation (whether in the
form of loans, advances, stock purchases, capital contributions or otherwise) or
(Y) to maintain the solvency or any balance sheet item, level of income or
financial condition of another if, in the case of any agreement described under
subclauses (X) or (Y) of this sentence, the primary purpose or intent thereof is
as described in the preceding sentence. The amount of any Contingent Obligation
shall be equal to the amount of the obligation so guaranteed or otherwise
supported or, if less, the amount to which such Contingent Obligation is
specifically limited.
"Continuing Directors" shall mean the directors of a Person on the Third
Amended and Restated Closing Date and each other director, if such other
director's nomination for election to the Board of Directors of such Person is
recommended by a majority of the then Continuing Directors.
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"Contractual Obligation", as applied to any Person, means any provision of
any Security issued by that Person or of any material indenture, mortgage, deed
of trust, contract, undertaking, agreement or other 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.
"Conversion Date" means the date on which Revolving Loans are converted to
Term Loans pursuant to subsection 2.1A(ii).
"Credit Partners" has the meaning assigned to that term in the introduction
to this Agreement.
"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 Company or any of its Subsidiaries
against fluctuations in currency values.
"Deposit Account" means a demand, time, savings, passbook or like account
with a bank, savings and loan association, credit union or like organization,
other than an account evidenced by a negotiable certificate of deposit.
"Designated Indebtedness" means Indebtedness incurred pursuant to the Pass
Through Trust Documents, the FINOVA Agreement, the Unsecured Revolving Credit
Facility, the Senior Note Documents, the NationsBanc Agreement, the AFL
Financing Agreement, the AFL II Financing Agreement, any Permitted Extension
Indebtedness and any Other Permitted Indebtedness.
"Determination Date" has the meaning assigned to that term in subsection
6.1(vi).
"Dollars" and the sign "$" mean the lawful money of the United States of
America.
"Eligible Aircraft" means a Boeing 747-200, 747-300, 747-400 or MD-11
aircraft, including any engines installed thereon and any spare engines of the
same type and model, which (i) is in a cargo configuration capable of immediate
operation in the business of Company or is eligible for delivery under any
Modification Agreement with a delivery slot available within a six month period
(or is leased in accordance with the Collateral Documents for a period of longer
than six months until a delivery slot is available), and (ii) has a maximum
gross take-off weight ("MTOW") of at least 800,000 pounds, in the case of any
747-200, 747-300, or 747- 400 aircraft and 630,000 pounds in the case of any
MD-11 aircraft.
"Eligible Assignee" means (A) (i) a commercial bank organized under the
laws of the United States or any state thereof; (ii) a savings and loan
association or savings
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bank organized under the laws of the United States or any state thereof; (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
entity which is an "accredited investor" (as defined in Regulation D under the
Securities Act) which extends credit or buys loans as one of its businesses
including, but not limited to, insurance companies, mutual funds and lease
financing companies, in each case (under clauses (i) through (iv) above) that is
reasonably acceptable to Administrative Agent; and (B) any Lender and any
Affiliate of any Lender; provided that no Affiliate of Company shall be an
Eligible Assignee.
"Employee Benefit 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 Company or any of its ERISA Affiliates.
"Engine" means, as the context requires, an Engine as defined in a
particular Aircraft Chattel Mortgage or Engines as defined in all Aircraft
Chattel Mortgages.
"Environmental Claim" means any investigation, notice, claim, suit or
order, by any governmental authority or any Person arising in connection with
any alleged or actual violation of Environmental Laws or with any Hazardous
Material, or any actual or alleged damage, or harm to health, safety or the
environment.
"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 environmental matters, including, without limitation,
those relating to any Hazardous Materials Activity.
"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 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 any Person, (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 that
Person is, or was at any time, a member; (ii) any trade or business (whether or
not incorporated) which is, or was at any time, 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 that Person is, or was at any time, a member; and
(iii) any member of an affiliated service
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group within the meaning of Section 414(m) or (o) of the Internal Revenue Code
of which that Person, any corporation described in clause (i) above or any trade
or business described in clause (ii) above is, or was at any time, 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 Default" means each of the events set forth in Section 7.
"Event of Loss" shall mean any of the following events with respect to any
Financed Aircraft (whether the Airframe or an Engine of such Financed Aircraft
or Spare Engine or both): (A) loss of such Financed Aircraft or Spare Engine or
the use thereof due to theft or disappearance of such Financed Aircraft or Spare
Engine which shall result in the loss of possession thereof for a period of 120
days (or for a shorter period ending on the date on which there is an insurance
settlement for a total loss on the basis of the theft or disappearance of such
Financed Aircraft or Spare Engine); (B) the destruction, damage beyond repair or
rendition of such Financed Aircraft or Spare Engine permanently unfit for normal
use for any reason whatsoever; (C) the condemnation, confiscation or seizure of,
or requisition of title to, or use or possession (other than use by the United
States Government if Company obtains adequate compensation from the United
States Government) of such Financed Aircraft or Spare Engine; (D) as a result of
any rule, regulation, order or other action by the FAA or other governmental
body having jurisdiction, the use of such Financed Aircraft or Spare Engine in
the normal course of interstate air transportation of persons or cargo shall
have been prohibited for a period of more than nine consecutive months unless
Company, prior to the expiration of such nine month period, shall have
undertaken and shall be diligently carrying forward all steps which are
necessary or desirable to permit the normal use of such property by Company or,
in any event, if such use shall have been prohibited for a period of twelve
consecutive months; (E) the operation or location of such Financed Aircraft or
Spare Engine, while under requisition for use by the United States or any
instrumentality or agency thereof, in any area excluded from coverage by any
insurance policy in effect with respect to such Financed Aircraft or Spare
Engine, if Company shall be unable to obtain indemnity in lieu thereof from the
United States; (F) any damage which results in an insurance settlement with
respect to such Financed Aircraft or Spare Engine on the basis of an actual or
constructive total loss or (G) a divestiture of such Airframe or Spare Engine as
described in Section 4(d)(iii), Section 4(d)(vi), Section 4(d)(vii)(B) or
Section 4(d)(viii)(B) of any Aircraft Chattel Mortgage. An Event of Loss with
respect to any Financed Aircraft shall be deemed to have occurred if an Event of
Loss occurs with respect to the Airframe of such Financed Aircraft.
"Exchange Act" means the Securities Exchange Act of 1934, as amended from
time to time, and any successor statute.
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"Existing Agreement" has the meaning assigned to that term in the Recitals
hereto.
"Facilities" means any and all real property now, hereafter or heretofore
owned, leased, operated or used by Company or any of its predecessors.
"Federal Aviation Act" means the Federal Aviation Act of 1958, as amended
and as recodified in ▇▇▇▇▇ ▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇▇ Code, or any similar legislation of
the United States enacted to supersede, amend or supplement such Act and the
rules and regulations promulgated thereunder.
"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 Federal Aviation Act.
"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 Administrative Agent from three Federal funds
brokers of recognized standing selected by Administrative Agent.
"Financed Aircraft" means all Eligible Aircraft, including the airframes
and engines, purchased by Company with proceeds of Revolving Loans made under
this Agreement and with respect to which a First Aircraft Chattel Mortgage has
been executed and delivered.
"FINOVA Agreement" means that certain Secured Loan Agreement dated as of
April 11, 1996 between FINOVA and Company, as amended, restated, supplemented or
otherwise modified from time to time in accordance with this Agreement.
"First Aircraft Chattel Mortgage" means, with respect to each Eligible
Aircraft purchased with the proceeds of Loans, a Security Agreement and Chattel
Mortgage (Aircraft No. ___) substantially in the form of Exhibit X annexed
hereto granting to Administrative Agent for the benefit of Lenders a purchase
money first priority security interest in such Eligible Aircraft, as such First
Aircraft Chattel Mortgage may be amended, restated, supplemented or otherwise
modified from time to time in accordance with the terms hereof and thereof.
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"Fiscal Year" means (i) with respect to the financial statements to be
delivered by Company pursuant to subsection 5.1, Company's fiscal year on the
date of such delivery and (ii) for all other purposes hereunder, a calendar
year.
"Funding and Payment Office" means the office of Administrative Agent
located at ▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇, Attention: ▇▇▇▇▇▇▇▇▇▇
▇▇▇▇▇▇.
"Funding Date" means the date of the funding of a Loan.
"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 Company to Lenders pursuant to clauses (ii), (iii) and (xiii) of subsection
5.1 shall be 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)). Calculations in connection with the definitions,
covenants and other provisions of this Agreement shall utilize accounting
principles and policies in conformity with those used to prepare the financial
statements referred to in subsection 4.3.
"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.
"Hazardous Materials" means any chemical or other material or substance,
exposure to which 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, Company.
"Indebtedness" means, as applied to any Person, (i) all indebtedness for
borrowed money, (ii) that portion of obligations with respect to Capital Leases
that is properly classified as a liability on a balance sheet in conformity with
GAAP, (iii) notes payable and drafts accepted representing extensions of credit
whether or not representing obligations for borrowed money, (iv) any obligation
owed for all or any part of the deferred purchase price of property or services
(excluding any such obligations incurred under ERISA), which purchase price is
(a) due more than six months from the date of incurrence of the obligation in
respect thereof or (b) evidenced by a note or similar
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written instrument, and (v) all indebtedness secured by any Lien on any property
or asset owned or held by that Person regardless of whether the indebtedness
secured thereby shall have been assumed by that Person or is nonrecourse to the
credit of that Person. Obligations under Interest Rate Agreements and Currency
Agreements constitute Contingent Obligations and not Indebtedness.
"Indemnitee" has the meaning assigned to that term in subsection 9.3.
"Initial Closing Date" means the date on or before May 8, 1996 on which the
initial Loans were made.
"Insurance Proceeds" has the meaning assigned to that term in subsection
2.4B(iii)(c).
"Interest Payment Date" means (i) with respect to any Base Rate Loan, each
March 31, June 30, September 30 and December 31 of each year, commencing on the
first such date to occur after the Third Amended and Restated Closing Date, and
(ii) with respect to any Eurodollar Rate Loan, the last day of each Interest
Period applicable to such Loan; provided that in the case of each Interest
Period of six months "Interest Payment Date" shall also include the date that is
three months after the commencement of such Interest Period.
"Interest Period" has the meaning assigned to that term in subsection 2.2B.
"Interest Rate Agreement" means any interest rate swap agreement, interest
rate cap agreement, interest rate collar agreement or other similar agreement or
arrangement designed to protect Company or any of its Subsidiaries against
fluctuations in interest rates.
"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.
"Investment" means (i) any direct or indirect purchase or other acquisition
by Company or any of its Subsidiaries of, or of a beneficial interest in, any
Securities of any other Person, (ii) any direct or indirect redemption,
retirement, purchase or other acquisition for value, by any Subsidiary of
Company from any Person other than Company or any of its Subsidiaries, of any
equity Securities of such Subsidiary, or (iii) any direct or indirect loan,
advance (other than advances to employees for moving, entertainment and travel
expenses, drawing accounts and similar expenditures in the ordinary course of
business) or capital contribution by Company or any of its Subsidiaries to any
other Person (other than a wholly-owned Subsidiary of Company), including
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all indebtedness and accounts receivable from that other Person that are not
current assets or did not arise from sales to that other Person in the ordinary
course of business. The amount of any Investment shall be the original cost of
such Investment plus the cost of all additions thereto, without any adjustments
for increases or decreases in value, or write-ups, write-downs or write-offs
with respect to such 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.
"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)
and any option, trust or other preferential arrangement having the practical
effect of any of the foregoing.
"Loan" or "Loans" means one or more of the Revolving Loans or Term Loans or
any combination thereof.
"Loan Documents" means this Agreement, the Notes, any guaranty entered into
pursuant to subsection 5.9 and the Collateral Documents.
"Loan Parties" means Company and any persons who enter into guaranties
pursuant to subsection 5.9.
"Margin Stock" has the meaning assigned to that term in Regulation U of the
Board of Governors of the Federal Reserve System as in effect from time to time.
"Material Adverse Effect" means (i) a material adverse effect upon the
business, operations, properties, assets, condition (financial or otherwise) or
prospects of Company or of Company and its Subsidiaries taken as a whole or (ii)
the impairment of the ability of any Loan Party to perform the Obligations, or
the impairment, as a result of actions or inaction by Company, of the ability of
Credit Partners, Syndication Agent, Administrative Agent or Lenders to enforce
the Obligations.
"Material Agreement" means any or all of the Pass Through Trust Documents,
the FINOVA Agreement, the Unsecured Revolving Credit Facility, the Senior Note
Documents, the NationsBanc Agreement, each Purchase Agreement, any Modification
Agreement, any BFE Agreement, the Philippine Lease, the Second Philippine Lease,
the
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AFL Leases, the AFL II Leases, and agreements in respect of Permitted Extension
Indebtedness and Other Permitted Indebtedness.
"Maximum Note Amount" means, with respect to any Eligible Aircraft, 80% of
the Appraised Value of such Eligible Aircraft based on appraisals obtained
pursuant to subsection 5.10 of such Eligible Aircraft made within 30 days prior
to the purchase thereof and giving effect to the proposed modifications of such
Eligible Aircraft pursuant to a Modification Agreement.
"Modification Agreement" means any modification agreement entered into by
Company with respect to the modification of any Financed Aircraft in form and
substance satisfactory to Administrative Agent.
"Moody's" means ▇▇▇▇▇'▇ Investors Service, Inc.
"NationsBanc Agreement" means the Loan Agreement, dated as of March 28,
1997, between Company, as Borrower and NationsBanc Leasing Corporation, as
Lender, as further amended, supplemented and modified in accordance with this
Agreement.
"Net Cash Proceeds" means, with respect to any Asset Sale, Cash Proceeds of
such Asset Sale net of bona fide direct costs of sale including (i) income taxes
reasonably estimated to be actually payable as a result of such Asset Sale
within two years of the date of such Asset Sale and (ii) payment of the
outstanding principal amount of, premium or penalty, if any, and interest on any
Indebtedness (other than the Loans) that is secured by a Lien on the stock or
assets of Company and that is required to be repaid under the terms thereof as a
result of such Asset Sale.
"Non-US Lender" has the meaning assigned to that term in subsection
2.7B(iii)(a).
"Notes" means one or more of the Revolving Notes, the Amended and Restated
Notes or the Assignee Notes, as the context requires.
"Notice of Borrowing" means a notice substantially in the form of Exhibit I
annexed hereto delivered by Company to Administrative Agent pursuant to
subsection 2.1B with respect to a proposed borrowing.
"Notice of Conversion/Continuation" means a notice substantially in the
form of Exhibit II annexed hereto delivered by Company to Administrative 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 obligations of every nature of each Loan Party from
time to time owed to Syndication Agent, Administrative Agent, Lenders or any of
them
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under the Loan Documents, whether for principal, interest, fees, expenses,
indemnification or otherwise.
"Officers' Certificate" means, as applied to any corporation, a certificate
executed on behalf of such corporation by its chairman of the board (if an
officer) or its president or one of its vice presidents and by its chief
financial officer or its treasurer; provided that every Officers' Certificate
with respect to the compliance with a condition precedent to the making of any
Loans hereunder shall include (i) a statement that the officer or officers
making or giving such Officers' Certificate have read such condition and any
definitions or other provisions contained in this Agreement relating thereto,
(ii) a statement that, in the opinion of the signers, they have made or have
caused to be made such examination or investigation as is necessary to enable
them 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
signers, 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) that is not a Capital Lease other
than any such lease under which that Person is the lessor.
"Other Permitted Indebtedness" means Indebtedness incurred for the purpose
of financing the acquisition of aircraft so long as (i) any such Indebtedness
bears interest at a rate which does not exceed 15% per annum, (ii) such
Indebtedness has a final stated maturity later than the final stated maturity of
the Notes after giving effect to the conversion of Revolving Loans into Term
Loans and (iii) the amortization and the other terms, provisions, conditions,
covenants and events of default thereof taken as a whole shall be no more
onerous or restrictive from the perspective of Company and its Subsidiaries or
any less favorable, from the perspective of Lenders, than any other Designated
Indebtedness.
"Part" means, as the context requires, a Part as defined in a particular
Aircraft Chattel Mortgage or Parts as defined in all Aircraft Chattel Mortgages.
"Pass Through Trust Documents" means that certain Pass Through Trust
Agreement dated as of November 30, 1995 between Atlas Air, Inc. and First
Fidelity Bank, National Association, as Trustee (the "Pass Through Trust
Agreement") and any trust indenture and security agreements including any
related trust indenture and security agreement supplements which related to the
equipment notes to be held in trust pursuant to the Pass Through Trust Agreement
and all related agreements, as the same may be amended, restated, supplemented
or otherwise modified from time to time in accordance with this Agreement.
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"Performance Certificate" shall have the meaning assigned to such term in
subsection 5.1(xviii).
"Performance Reduction" means a performance reduction of the Applicable
Margin equal to 0.75% if at the end of any four fiscal quarter period commencing
on or after December 31, 1997 and ending on or prior to December 31, 1999:
The ratio of (x) Consolidated Adjusted EBITDA for such four fiscal quarter
period to (y) Consolidated Interest Expense for such period is greater than
2.30:1.00; and
The ratio of (x) Consolidated Total Debt (less Cash and Cash Equivalents in
excess of $25 million) at the end of any such period plus seven times
Consolidated Rental Payments for such period to (y) Consolidated Adjusted
EBITDA for such period plus Consolidated Rental Payments for such period is
less than 5.00:1.00.
The Performance Reduction shall be determined with reference to the most recent
Performance Certificate delivered by Company to Administrative Agent pursuant to
subsection 5.1(xviii). Any Performance Reduction shall become effective on the
day following the delivery of the relevant Performance Certificate to
Administrative Agent and subject to the next succeeding sentence, the
Performance Reduction shall remain in effect for the remainder of the term of
this Agreement. Notwithstanding anything to the contrary herein, at any time an
Event of Default shall have occurred and be continuing, the Performance
Reduction shall be zero.
"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):
(i) Liens for taxes, assessments or governmental charges or claims the
payment of which is not, at the time, required by subsection 5.3;
(ii) statutory Liens of landlords and Liens of carriers,
warehouse-men, mechanics and materialmen and other Liens imposed by law
incurred in the ordinary course of business for sums not yet delinquent or
being contested in good faith by appropriate proceedings that do not
involve any danger of the sale, forfeiture or loss of any Collateral, if
such reserve or other appropriate provision, if any, as shall be required
by GAAP shall have been made therefor;
(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
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contracts, performance and return-of-money bonds and other similar
obligations (exclusive of obligations for the payment of borrowed money);
(iv) any attachment or judgment Lien not constituting an Event of
Default under subsection 7.8;
(v) 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 Company or any of its Subsidiaries;
(vi) any (a) interest or title of a lessor or sublessor under any
lease permitted by subsection 6.9, (b) restriction or encumbrance that the
interest or title of such lessor or sublessor may be subject to, or (c)
subordination of the interest of the lessee or sublessee under such lease
to any restriction or encumbrance referred to in the preceding clause (b);
(vii) Liens arising from filing UCC financing statements relating
solely to leases permitted by this Agreement;
(viii) 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;
(ix) the rights of others under agreements or arrangements to the
extent expressly permitted by the terms of Sections 4(d) and 4(e) of the
First Aircraft Chattel Mortgages;
(x) Liens described in Schedule 6.2 annexed hereto;
(xi) Liens arising pursuant to the NationsBanc Agreement; provided
that such Liens encumber only assets acquired or refinanced with the
proceeds of Indebtedness incurred pursuant to the NationsBanc Agreement;
(xii) Liens arising pursuant to the AFL II Financing Agreement;
provided that such Liens do not encumber any assets other than the AFL II
Aircraft and other assets of AFL II;
(xiii) Liens arising pursuant to the AFL Financing Agreement; provided
that such Liens do not encumber any assets other than the AFL Aircraft and
other assets of AFL;
(xiv) Liens securing Indebtedness incurred in accordance with
subsection 6.1(xii);
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(xv) The rights of others under agreements or arrangements to the
extent expressly permitted by the terms of Sections 4(d) and 4(e) of any
aircraft chattel mortgages entered into in connection with the AFL
Financing Agreement and/or the AFL II Financing Agreement; and
(xvi) Liens granted pursuant to the Collateral Documents.
"Permitted Extension Indebtedness" means renewals, extensions,
substitutions, refinancings or replacements (each an "extension") by Company of
any Indebtedness of Company, including any such successive transactions by
Company, so long as (i) any such Indebtedness bears interest at a rate which
does not exceed 15% per annum, (ii) any such Permitted Extension Indebtedness
shall be in a principal amount that does not exceed the principal amount
immediately prior to such extension, plus the amount of any premium required to
be paid in connection with such extension pursuant to the terms of such
Indebtedness, plus the amount of expenses of Company reasonably incurred in
connection with such extension, (iii) in the case of any extension of
subordinated Indebtedness, such Permitted Extension Indebtedness is made
subordinate to the Obligations at least to the same extent as the Indebtedness
immediately prior to such extension, (iv) such Permitted Extension Indebtedness
has a final stated maturity later than the final stated maturity of the Notes
after giving effect to the conversion of Revolving Loans into Term Loans and (v)
the amortization and the other terms, provisions, conditions, covenants and
events of default thereof taken as a whole shall be no more onerous or
restrictive from the perspective of Company and its Subsidiaries or any less
favorable, from the perspective of Lenders than those contained in the
Indebtedness immediately prior to such extension.
"Person" means and includes natural persons, corporations, limited
partnerships, general partnerships, limited liability companies, joint stock
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.
"Philippine Lease" means, that certain Lease Agreement dated as of February
23, 1995 by and between First Security Bank of Utah, National Association and
Philippine Airlines Inc. as amended by an Amendment dated March 31, 1995, as
modified pursuant to an acknowledgement dated December 31, 1996 by and between
Philippine Airlines and Company, and as assigned to Atlas Air, Inc. pursuant to
an Assignment and Acceptance of Lease dated December 31, 1996 as the Lease
Agreement may be further amended, restated, supplemented or otherwise modified
from time to time in accordance with this Agreement.
"Potential Event of Default" means a condition or event that, after notice
or the expiration of any grace period or both, would constitute an Event of
Default.
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"Pricing Certificate" has the meaning assigned to that term in subsection
5.1(xvi).
"Pricing Reduction" means, if at any time Company's obligations in respect
of the Pass Through Trust Documents are rated by Moody's or S&P at the levels
specified below, a pricing reduction equal to the percentage corresponding to
the applicable rating set forth in the chart below:
Rating Pricing Reduction
------ -----------------
Ba3 or below by Moody's and
BB- or below by S&P None
Ba2 by Moody's and
BB by S&P 0.25%
Ba1 or higher by Moody's and
BB+ by S&P 0.50%
In the event of a split rating, the more creditworthy of the two ratings shall
be used to determine the Pricing Reduction; provided that, if the less
creditworthy of the two ratings is two or more rating categories below the more
creditworthy rating, the more creditworthy rating shall be deemed to be the
rating category which is one rating category above the less creditworthy rating.
The Pricing Reduction shall be determined with reference to the most recent
Pricing Certificate delivered by Company to Administrative Agent pursuant to
subsection 5.1(xvi). Any changes to the Pricing Reduction shall become effective
on the day following the delivery of the relevant Pricing Certificate to
Administrative Agent and shall remain in effect through the next date a Pricing
Certificate is required to be delivered. It is understood and agreed that the
Pricing Reduction percentages provided are not cumulative. Notwithstanding
anything to the contrary herein, at any time an Event of Default shall have
occurred and be continuing, the Pricing Reduction shall be zero.
"Prime Rate" means the rate that Administrative Agent announces from time
to time as its prime lending rate, 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. Administrative Agent or any other Lender
may make commercial loans or other loans at rates of interest at, above or below
the Prime Rate.
"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 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 (including any ACMI Contracted
Aircraft) by Company or any of its
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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
Administrative Agent using the consolidated financial statements of 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, (i) prior to any
Conversion Date the percentage obtained by dividing the Revolving Loan Exposure
of that Lender by the aggregate Revolving Loan Exposure of all Lenders, and (ii)
thereafter, the percentage obtained by dividing the Term Loan Exposure of that
Lender by the aggregate Term Loan Exposure of all Lenders, in each case as such
percentage may be adjusted by assignments permitted pursuant to subsection 9.1.
The Pro Rata Share of each Lender as of the date hereof is set forth opposite
the name of that Lender in Schedule 2.1 annexed hereto.
"Proceedings" has the meaning assigned to that term in subsection 5.1(x).
"Purchase Agreement" means, with respect to the purchase of any Eligible
Aircraft to be financed with the proceeds of Revolving Loans, an aircraft
purchase agreement and any related ▇▇▇▇ of sale providing, among other things,
for the sale to Company of such Eligible Aircraft in form and substance
satisfactory to Administrative Agent.
"Reference Lenders" means Bankers Trust and one or more other Lenders
designated by Credit Partners and Administrative Agent and reasonably
satisfactory to Company.
"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 Facility, including the movement of any Hazardous Material
through the air, soil, surface water, groundwater or property.
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"Requisite Lenders" means Lenders having or holding 50.1% or more of (i)
prior to any Conversion Date, the aggregate Revolving Loan Exposure of all
Lenders and (ii) thereafter, the aggregate Term Loan Exposure of all Lenders.
"Restricted Junior Payment" means (i) any dividend or other distribution,
direct or indirect, on account of any shares of any class of stock of Company
now or hereafter outstanding, except a dividend payable solely in shares of that
class of stock to the holders of that class, (ii) any redemption, retirement,
sinking fund or similar payment, purchase or other acquisition for value, direct
or indirect, of any shares of any class of stock of Company now or hereafter
outstanding, (iii) any payment made to retire, or to obtain the surrender of,
any outstanding warrants, options or other rights to acquire shares of any class
of stock of Company now or hereafter outstanding, and (iv) any payment or
prepayment of principal of, premium, if any, or interest on, or redemption,
purchase, retirement, defeasance (including in-substance or legal defeasance),
sinking fund or similar payment with respect to, any Designated Indebtedness.
"Revolving Loan Commitment" means the commitment of a Lender to make
Revolving Loans to Company pursuant to subsection 2.1A(i), and "Revolving Loan
Commitments" means such commitments of all Lenders in the aggregate.
"Revolving Loan Commitment Termination Date" means September 30, 1999.
"Revolving Loan Exposure" means, with respect to any Lender as of any date
of determination (i) prior to the termination of the Revolving Loan Commitments,
that Lender's Revolving Loan Commitment and (ii) after the termination of the
Revolving Loan Commitments, the aggregate outstanding principal amount of the
Revolving Loans of that Lender.
"Revolving Loans" means the Loans made by Lenders to Company pursuant to
subsection 2.1A(i).
"Revolving Notes" means (i) the promissory notes of Company issued pursuant
to subsection 2.1D on the Initial Closing Date and on each Funding Date on which
Company purchases an aircraft with the proceeds of Revolving Loans and (ii) any
promissory notes issued by Company pursuant to the last sentence of subsection
9.1B(i) in connection with assignments of the Revolving Loan Commitments and
Revolving Loans of any Lenders, in each case substantially in the form of
Exhibit IIIA annexed hereto, as they may be amended, supplemented or otherwise
modified from time to time.
"S&P" means Standard & Poor's Rating Services.
"Second Aircraft Chattel Mortgage" means with respect to each Eligible
Aircraft purchased with the proceeds of Loans, a Second Security Agreement and
Chattel Mortgage (Aircraft No. _____) and substantially in the form of Exhibit
XI annexed
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hereto, granting a security interest in such Eligible Aircraft and Parts
securing all Obligations that are not secured by the First Chattel Mortgage
entered into concurrently therewith, as such Second Aircraft Chattel Mortgage
may be amended, restated, supplemented or otherwise modified from time to time
in accordance with the terms hereof and thereof.
"Second Philippine Lease" means, that certain Lease Agreement dated as of
January 1, 1995 by and between Bankers Trust Company and Philippine Airlines,
Inc., as modified pursuant to an acknowledgement dated May 6, 1997 by and
between Philippine Airlines, Inc. and Company, and as assigned to Atlas Air,
Inc. pursuant to an Assignment and Acceptance of Lease dated May 6, 1997 as the
Lease Agreement may be further amended, restated, supplemented or otherwise
modified from time to time in accordance with this Agreement.
"Securities" means any stock, shares, partnership interests, voting trust
certificates, certificates of interest or participation in any profit-sharing
agreement or arrangement, options, warrants, bonds, debentures, notes, or other
evidences of indebtedness, secured or unsecured, convertible, subordinated or
otherwise, or in general any instruments commonly known as "securities" or any
certificates of interest, shares or participations in temporary or interim
certificates for the purchase or acquisition of, or any right to subscribe to,
purchase or acquire, any of the foregoing.
"Securities Act" means the Securities Act of 1933, as amended from time to
time, and any successor statute.
"Senior Notes" means the 10 3/4% Senior Notes due 2005 of Company issued
pursuant to the Senior Note Documents.
"Senior Note Documents" means the Indenture, dated as of August 13, 1997
between Company and State Street Bank and Trust Company relating to the Senior
Notes and any and all related agreements, as the same may be amended, restated,
supplemented or otherwise modified from time to time in accordance with this
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 believe (nor should it reasonably believe) that it will 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
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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, as the context requires, a Spare Engine as defined in
a particular Aircraft Chattel Mortgage or all Spare Engines as defined in all
Aircraft Chattel Mortgages.
"Special Purpose Subsidiary" means (i) a Subsidiary of Company formed
solely for the purpose of refinancing Notes associated with a Financed Aircraft
or acquiring or refinancing other aircraft with Other Permitted Indebtedness the
only assets of which are such Financed Aircraft and contributions to capital of
such Subsidiary, which together with all other contributions to capital made to
other such Subsidiaries, are not in excess of 15% of the consolidated book value
of the assets of the Company and its Subsidiaries, and the only liability of
which is the Permitted Extension Indebtedness incurred to refinance such Notes;
provided that Company beneficially owns and controls at least 95% of the issued
and outstanding capital stock of such Subsidiary or (ii) a wholly-owned
Subsidiary formed pursuant to subsection 9.21.
"Subsidiary" means, with respect to any Person, any corporation,
partnership, association, joint venture or other business entity of which more
than 50% of the total voting power of shares of stock or other ownership
interests entitled (without regard to the occurrence of any contingency) to vote
in the election of the Person or Persons (whether directors, managers, trustees
or other Persons performing similar functions) having the power to direct or
cause the direction of the management and policies thereof is at the time owned
or controlled, directly or indirectly, by that Person or one or more of the
other Subsidiaries of that Person or a combination thereof.
"Supplemental Type Certificates" has the meaning assigned to that term in
the First Aircraft Chattel Mortgage.
"Syndication Agent" means Credit Partners in its capacity as syndication
agent.
"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 or in which that Person is deemed to be doing business on all or part
of the net income, profits or gains of that Person (whether worldwide, or only
insofar as such income, profits or gains are considered to arise in or to relate
to a particular jurisdiction, or otherwise).
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"Term Loan Commitment" means the commitment of a Lender to convert
Revolving Loans into Term Loans pursuant to subsection 2.1A(ii), and "Term Loan
Commitments" means such commitments of all Lenders in the aggregate.
"Term Loan Exposure" means, with respect to any Lender as of any date of
determination (i) prior to any Conversion Date, that Lender's Term Loan
Commitment and (ii) thereafter, the outstanding principal amount of the Term
Loan of that Lender.
"Term Loans" means the Loans converted into Term Loans pursuant to
subsection 2.1A(ii).
"Third Amended and Restated Closing Date" means the date on or before
September 5, 1997, on which the conditions set forth in subsection 3.5 are met
and this Agreement becomes effective.
"UCC" means the Uniform Commercial Code (or any similar or equivalent
legislation) as in effect in any jurisdiction.
"United States Citizen" has the meaning assigned to that term in subsection
4.1B.
"Unsecured Revolving Credit Facility" means that certain credit facility
between Atlas Air, Inc. and Bank One, Colorado, N.A., which provides for a
$25,000,000 revolving working capital line of credit and a $1,000,000 term real
estate loan, on terms substantially similar to the term sheet delivered to
Administrative Agent as amended, restated, supplemented or otherwise modified
from time to time in accordance with this Agreement.
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.
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.
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SECTION 2.
AMOUNTS AND TERMS OF COMMITMENTS AND LOANS
2.1 Commitments; Making of Loans; Notes; Register.
A. Commitments. Subject to the terms and conditions of this Agreement and
in reliance upon the representations and warranties of Company herein set forth,
each Lender hereby severally agrees to make the Loans described in this
subsection 2.1A.
(i) Revolving Loans. Prior to the Third Amended and Restated Closing
Date, Lenders have made Revolving Loans in the aggregate principal amount
of $234,222,410.60 against the Revolving Loan Commitments, the proceeds of
which were used to purchase and modify Eligible Aircraft. From and after
the Third Amended and Restated Closing Date, each Lender severally agrees,
subject to the conditions set forth in Section 3 and subject to the
limitations set forth below, to lend to Company from time to time during
the period from the Third Amended and Restated Closing Date to but
excluding the Revolving Loan Commitment Termination Date an aggregate
amount, together with the amount of Revolving Loans made prior to the Third
Amended and Restated Closing Date, not exceeding its Pro Rata Share of the
aggregate amount of the Revolving Loan Commitments to be used for the
purposes identified in subsection 2.5A. The amount of each Lender's
Revolving Loan Commitment on the date hereof is set forth opposite its name
on Schedule 2.1 annexed hereto and the aggregate amount of the Revolving
Loan Commitments on the date hereof is $250,000,000; provided that the
Revolving Loan Commitments of Lenders shall be adjusted to give effect to
any assignments of the Revolving Loan Commitments pursuant to subsection
9.1B; and provided, further that the amount of the Revolving Loan
Commitments shall be reduced from time to time by the amount of any
reductions thereto made pursuant to subsection 2.4B(ii). Each Lender's
Revolving Loan Commitment shall expire on the Revolving Loan Commitment
Termination Date and all Revolving Loans and all other amounts owed
hereunder with respect to the Revolving Loans and the Revolving Loan
Commitments shall be paid in full no later than that date unless converted
to Term Loans pursuant to subsection 2.1A(ii). Amounts borrowed under this
subsection 2.1A may be repaid and reborrowed to but excluding the Revolving
Loan Commitment Termination Date. Amounts reborrowed after prepayment
pursuant to subsection 2.4B(iii)(e) shall be allocated ratably among the
Revolving Notes relating to all Financed Aircraft.
Anything to the contrary in this Agreement notwithstanding, the
Revolving Loans shall be subject to the limitation that in no event shall
the Lenders lend an amount in excess of (x) on the date of acquisition of
an Eligible Aircraft the lesser of (i) an amount equal to the purchase
price of such Eligible Aircraft and (ii) 80% of the Appraised Value of such
Eligible Aircraft as of the date of acquisition (but without giving effect
to the contemplated modifications) or (y) on any date Revolving Loans are
made to finance the modification of an Eligible Aircraft, 80% of the cost
thereof as reflected in invoices delivered to Administrative Agent pursuant
to subsection 3.2A (other than the final
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Revolving Loan to finance the cost of modification of such Eligible
Aircraft which may be in an amount up to the lesser of (x) 100% of the
costs of modification associated with such final Revolving Loan and (y) an
amount which when added to all other Loans made with respect to such
Eligible Aircraft does not exceed 80% of the Appraised Value as set forth
in appraisals delivered pursuant to subsection 3.1(iv) after giving effect
to completion of modification).
(ii) Term Loans. Each Lender severally agrees, at the request of
Company, to convert all of its Revolving Loans outstanding on the Revolving
Loan Commitment Termination Date into Term Loans upon the terms and
conditions set forth in this Agreement. Any request by Company for a
conversion of Revolving Loans to Term Loans shall be made at least 30 days
prior to the Revolving Loan Commitment Termination Date and shall be
accompanied by an Officer's Certificate stating that no Potential Event of
Default or Event of Default has occurred and is continuing. On the
Conversion Date, Company shall deliver to each Lender an Amended and
Restated Note with respect to each Financed Aircraft in substantially the
form of Exhibit IIIB annexed hereto and such further documents as
Administrative Agent may reasonably request.
B. Borrowing Mechanics. Revolving Loans made on any Funding Date shall be
in an aggregate minimum amount of $1,500,000. Whenever Company desires that
Lenders make Revolving Loans it shall deliver to Administrative Agent a Notice
of Borrowing no later than 12:00 Noon (New York time) at least three Business
Days in advance of the proposed Funding Date (in the case of a Eurodollar Rate
Loan) or at least one Business Day in advance of the proposed Funding Date (in
the case of a Base Rate Loan). The Notice of Borrowing shall specify (i) the
proposed Funding Date (which shall be a Business Day), (ii) the amount of Loans
requested, (iii) whether such Loans shall be Base Rate Loans or Eurodollar Rate
Loans, (iv) in the case of any Loans requested to be made as Eurodollar Rate
Loans, the initial Interest Period requested therefor and (v) whether such Loans
are for the purpose of the purchase or the modification of an Eligible Aircraft.
Revolving Loans and Term Loans may be continued as or converted into Base Rate
Loans and Eurodollar Rate Loans in the manner provided in subsection 2.2D. In
lieu of delivering the above-described Notice of Borrowing, Company may give
Administrative Agent telephonic notice by the required time of any proposed
borrowing under this subsection 2.1B; provided that such notice shall be
promptly confirmed in writing by delivery of a Notice of Borrowing to
Administrative Agent on or before the applicable Funding Date.
Neither Administrative Agent nor any Lender shall incur any liability to
Company in acting upon any telephonic notice referred to above that
Administrative Agent believes in good faith to have been given by a duly
authorized officer or other person authorized to borrow on behalf of Company or
for otherwise acting in good faith under this subsection 2.1B, and upon funding
of Loans by Lenders in accordance with this Agreement pursuant to any such
telephonic notice Company shall have effected Loans hereunder.
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Company shall notify Administrative Agent prior to the funding of any Loans
in the event that any of the matters to which Company is required to certify in
the applicable Notice of Borrowing is no longer true and correct as of the
applicable Funding Date, and the acceptance by Company of the proceeds of any
Loans shall constitute a re-certification by Company, as of the applicable
Funding Date, as to the matters to which Company is required to certify in the
applicable Notice of Borrowing.
Except as otherwise provided in subsections 2.6B, 2.6C and 2.6G, a Notice
of Borrowing for a Eurodollar Rate Loan (or telephonic notice in lieu thereof)
shall be irrevocable on and after the related Interest Rate Determination Date,
and Company shall be bound to make a borrowing in accordance therewith.
C. Disbursement of Funds. All Revolving Loans under this Agreement shall be
made by Lenders simultaneously and proportionately to their respective Pro Rata
Shares, it being understood that no Lender shall be responsible for any default
by any other Lender in that other Lender's obligation to make a Loan requested
hereunder nor shall the Commitment of any Lender to make the particular type of
Loan requested be increased or decreased as a result of a default by any other
Lender in that other Lender's obligation to make a Loan requested hereunder.
Promptly after receipt by Administrative Agent of a Notice of Borrowing pursuant
to subsection 2.1B (or telephonic notice in lieu thereof), Administrative Agent
shall notify each Lender of the proposed borrowing. Each Lender shall make the
amount of its Loan available to Administrative Agent not later than 12:00 Noon
(New York time) on the applicable Funding Date, in each case in same day funds
in Dollars, at the Funding and Payment Office.
Unless Administrative Agent shall have been notified by any Lender prior to
the Funding Date for any Loans that such Lender does not intend to make
available to Administrative Agent the amount of such Lender's Loan requested on
such Funding Date, Administrative Agent may assume that such Lender has made
such amount available to Administrative Agent on such Funding Date and
Administrative Agent may, in its sole discretion, but shall not be obligated to,
make available to Company a corresponding amount on such Funding Date. If such
corresponding amount is not in fact made available to Administrative Agent by
such Lender, Administrative Agent shall be entitled to recover such
corresponding amount on demand from such Lender together with interest thereon,
for each day from such Funding Date until the date such amount is paid to
Administrative Agent, at the customary rate set by Administrative Agent for the
correction of errors among banks for three Business Days and thereafter at the
Base Rate. If such Lender does not pay such corresponding amount forthwith upon
Administrative Agent's demand therefor, Administrative Agent shall promptly
notify Company and Company shall immediately pay such corresponding amount to
Administrative Agent together with interest thereon, for each day from such
Funding Date until the date such amount is paid to Administrative Agent, at the
rate payable under this Agreement for Base Rate Loans. Nothing in this
subsection 2.1C shall be deemed to relieve any Lender from its obligation to
fulfill its Commitments hereunder or to prejudice any rights that Company may
have against any Lender as a result of any default by such Lender hereunder.
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D. Notes.
(i) Each of the outstanding Revolving Notes shall be deemed amended
and restated to reflect the change in the maturity date from June 30, 1998
to September 30, 1999. If so requested by a Lender, or in the event of any
subsequent assignments pursuant to subsection 9.1 hereto, Assignee Notes
will be issued substantially in the form of Exhibit IIIA or Exhibit IIIB
annexed hereto, with appropriate insertions, to reflect the revised
maturity date and the new Revolving Loan Commitments and/or outstanding
Term Loans, as the case may be, of the assignee and/or the assigning
Lender.
(ii) Following the Third Amended and Restated Closing Date, on each
date on which Company delivers a Notice of Borrowing pursuant to subsection
2.1B for the purpose of financing the purchase of an Eligible Aircraft,
Company shall execute and deliver on such date to each Lender (or to
Administrative Agent for that Lender) with respect to such Eligible
Aircraft a Revolving Note substantially in the form of Exhibit IIIA annexed
hereto to evidence that Lender's Revolving Loans in respect of such
Eligible Aircraft in such Lender's Pro Rata Share of the aggregate
principal amount of such Eligible Aircraft's Maximum Note Amount with other
appropriate insertions. Company shall execute and deliver on the Conversion
Date an Amended and Restated Note substantially in the form of Exhibit IIIB
annexed hereto amending and restating each Revolving Note to evidence that
Lender's Term Loans in the principal amount of such Revolving Note and with
other appropriate insertions.
E. The Register.
(i) Administrative Agent shall maintain, at its address referred to in
subsection 9.8, a register for the recordation of the names and addresses
of Lenders and the Commitments and Loans of each Lender from time to time
(the "Register"). The Register shall be available for inspection by Company
or any Lender at any reasonable time and from time to time upon reasonable
prior notice.
(ii) Administrative Agent shall record in the Register the Revolving
Loan Commitment and the Term Loan Commitment and the Revolving Loans and
Term Loans from time to time of each Lender and each repayment or
prepayment in respect of the principal amount of the Revolving Loans or
Term Loans of each Lender. Any such recordation shall be conclusive and
binding on Company and each Lender, absent manifest error; provided that
failure to make any such recordation, or any error in such recordation,
shall not affect Company's Obligations in respect of the applicable Loans.
(iii) Each Lender shall record on its internal records (including,
without limitation the Notes held by such Lender) the amount of each
Revolving Loan and each Term Loan made by it and each payment in respect
thereof. Any such recordation shall be conclusive and binding on Company,
absent manifest error; provided that failure to make any such recordation,
or any error in such recordation, shall not affect Company's
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Obligations in respect of the applicable Loans; 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) Company, Administrative Agent and Lenders shall deem and treat
the Persons listed as Lenders in the Register as the holders and owners of
the corresponding Commitments and Loans listed therein for all purposes
hereof, and no assignment or transfer of any such Commitment or Loan shall
be effective, in each case unless and until an Assignment Agreement
effecting the assignment or transfer thereof shall have been accepted by
Administrative 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 Commitment or Loan shall be owed to the Lender 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 shall be conclusive and
binding on any subsequent holder, assignee or transferee of the
corresponding Commitments or Loans.
(v) Company hereby designates Administrative Agent to serve as
Company's agent solely for purposes of maintaining the Register as provided
in this subsection 2.1E, and Company hereby agrees that, to the extent
Administrative Agent serves in such capacity, Administrative Agent and its
officers, directors, employees, agents and affiliates shall constitute
Indemnitees for all purposes under subsection 9.3.
2.2 Interest on the Loans.
A. Rate of Interest. Subject to the provisions of subsections 2.6 and 2.7,
each Revolving Loan and each Term Loan 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 any Loan shall be selected by
Company initially at the time a Notice of Borrowing is given with respect to
such Loan pursuant to subsection 2.1B. The basis for determining the interest
rate with respect to any Revolving Loan or any Term Loan may be changed from
time to time pursuant to subsection 2.2D. If on any day a Revolving Loan or a
Term Loan is outstanding with respect to which notice has not been delivered to
Administrative 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 subsections 2.2E and 2.7, each Revolving Loan
and each Term Loan shall bear interest through maturity as follows:
(i) if a Base Rate Loan, then at the sum of the Base Rate plus the
Applicable Margin per annum; or
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(ii) if a Eurodollar Rate Loan, then at the sum of the Adjusted
Eurodollar Rate plus the Applicable Margin per annum.
The "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.
Applicable Margin
-----------------
Base Eurodollar
Time Period Rate Loan Rate Loan
----------- --------- ---------
From the Third Amended and Restated
Closing Date through the Conversion 1.50% 2.50%
Date
Thereafter 2.00% 3.00%
Notwithstanding the foregoing, the Applicable Margin shall be reduced in an
amount equal to the applicable Pricing Reduction effective from the date
following the delivery by Company to Administrative Agent of a Pricing
Certificate through the date a subsequent Pricing Certificate is required to be
delivered. If Company fails to deliver a Pricing Certificate or delivers an
incorrect Pricing Certificate, no Pricing Reduction shall be effective until
Company delivers a correct Pricing Certificate. Additionally, the Applicable
Margin shall be reduced effective the day following the delivery by Company to
Administrative Agent of a Performance Certificate demonstrating Company's
entitlement to a Performance Reduction. The Pricing Reduction and the
Performance Reduction shall be determined independently and both may be
applicable concurrently.
B. Interest Periods. In connection with each Eurodollar Rate Loan, Company
may, pursuant to the applicable Notice of Borrowing or Notice of
Conversion/Continuation, as the case may be, select an interest period (each an
"Interest Period") to be applicable to such Loan, which Interest Period shall
be, at Company's option, either a one, two, three or six month period; provided
that:
(i) the initial Interest Period for any Eurodollar Rate Loan shall
commence on the Funding Date in respect of such Loan, in the case of a Loan
initially made as a Eurodollar Rate Loan, or on the date specified in the
applicable Notice of Conversion/Continuation, in the case of a Loan
converted to a Eurodollar Rate Loan;
(ii) in the case of immediately successive Interest Periods applicable
to a Eurodollar Rate Loan continued as such pursuant to a Notice of
Conversion/Continuation, each successive Interest Period shall commence on
the day on which the next preceding Interest Period expires;
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(iii) 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;
(iv) 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 (v) of this subsection 2.2B, end on the last Business Day
of a calendar month;
(v) no Interest Period with respect to any portion of the Term Loans
shall extend beyond September 30, 2002.
(vi) no Interest Period with respect to any portion of the Term Loans
shall extend beyond a date on which Company is required to make a scheduled
payment of principal of the Term Loans unless the sum of (a) the aggregate
principal amount of Term Loans that are Base Rate Loans plus (b) the
aggregate principal amount of Term Loans that are Eurodollar Rate Loans
with Interest Periods expiring on or before such date equals or exceeds the
principal amount required to be paid on the Term Loans on such date;
(vii) there shall be no more than twelve Interest Periods outstanding
at any time; and
(viii) in the event Company fails to specify an Interest Period for
any Eurodollar Rate Loan in the applicable Notice of Borrowing or Notice of
Conversion/Continuation, Company shall be deemed to have selected an
Interest Period of one month.
C. Interest Payments. Subject to the provisions of subsection 2.2E,
interest on each Loan shall be payable in arrears on and to 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,
Company shall have the option (i) to convert at any time all or any part of its
outstanding Revolving Loans or Term Loans equal to $3,000,000 and integral
multiples of $100,000 in excess of that amount 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 or any
portion of such Loan equal to $3,000,000 and integral multiples of $100,000 in
excess of that amount as a Eurodollar Rate Loan; provided, however, that a
Eurodollar Rate Loan may only be converted into a Base Rate Loan on the
expiration date of an Interest Period applicable thereto.
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Company shall deliver a Notice of Conversion/Continuation to Administrative
Agent no later than 12:00 Noon (New York time) at least one Business Day in
advance of 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, (iv) in the case of a conversion to, or
a continuation of, a Eurodollar Rate Loan, the requested Interest Period, and
(v) 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. In lieu of delivering the above-described Notice of
Conversion/Continuation, Company may give Administrative Agent telephonic notice
by the required time of any proposed conversion/continuation under this
subsection 2.2D; provided that such notice shall be promptly confirmed in
writing by delivery of a Notice of Conversion/Continuation to Administrative
Agent on or before the proposed conversion/continuation date.
Neither Administrative Agent nor any Lender shall incur any liability to
Company in acting upon any telephonic notice referred to above that
Administrative Agent believes in good faith to have been given by a duly
authorized officer or other person authorized to act on behalf of 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
telephonic notice Company shall have effected a conversion or continuation, as
the case may be, hereunder.
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 (or telephonic notice in lieu thereof) shall be irrevocable on and
after the related Interest Rate Determination Date, and Company shall be bound
to effect a conversion or continuation in accordance therewith.
E. Default Rate. Upon the occurrence and during the continuation of any
Event of Default, the outstanding principal amount of all Loans and, to the
extent permitted by applicable law, any interest payments thereon not paid when
due and any fees and other amounts then due and payable hereunder, shall
thereafter bear interest (including post-petition interest in any proceeding
under the Bankruptcy Code or other applicable bankruptcy laws) payable upon
demand at a rate that is 2% per annum in excess of the interest rate otherwise
payable under this Agreement with respect to the applicable Loans (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
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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
Administrative 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. 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.
2.3 Fees.
A. Commitment Fees. Company agrees to pay to Administrative Agent, for
distribution to each Lender in proportion to that Lender's Pro Rata Share,
commitment fees for the period from and including the Third Amended and Restated
Closing Date to and excluding the Revolving Loan Commitment Termination Date
equal to the average of the daily excess of the Revolving Loan Commitments over
the aggregate principal amount of Revolving Loans outstanding multiplied by
one-half of 1% (.50%) per annum, such commitment fees to be calculated on the
basis of a 360-day year and the actual number of days elapsed and to be payable
quarterly in arrears on March 31, June 30, September 30 and December 31 of each
year, commencing on the first such date to occur after the Third Amended and
Restated Closing Date, and on the Revolving Loan Commitment Termination Date.
B. Administrative Fee. Company agrees to pay to Administrative Agent, an
Administrative Agent's fee in the amount of $75,000 on the Third Amended and
Restated Closing Date and on each anniversary thereof.
C. Other Fees. Company agrees to pay to Credit Partners and Administrative
Agent such other fees in the amounts and at the times separately agreed upon
between Company and Credit Partners and Administrative Agent.
2.4 Repayments, Prepayments and Reductions in Revolving Loan Commitments;
General Provisions Regarding Payments.
A. Scheduled Reductions of Term Loan Commitments. Company shall make
principal payments on the Term Loans in installments the last day of each fiscal
quarter commencing on December 31, 1999 in an amount equal to 1/12th of the
principal amount of Term Loans outstanding on the Conversion Date; provided that
such scheduled installments of principal of the Term Loans shall be reduced in
connection with any voluntary or mandatory
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prepayments of the Term Loans in accordance with subsection 2.4B(iv); and
provided, further that the Term Loans and all other amounts owed hereunder with
respect to the Term Loans shall be paid in full no later than September 30,
2002, and the final installment payable by Company in respect of the Term Loans
on such date shall be in an amount, sufficient to repay all amounts owing by
Company under this Agreement with respect to the Term Loans. Any payment
pursuant to this subsection 2.4A will be applied ratably among the Notes
relating to all Financed Aircraft; provided that, at Administrative Agent's
election, any prepayment may be deemed first to pay Loans made to finance labor
costs associated with conversion, if any, and second to pay Loans made to
finance other costs of conversion of the Financed Aircraft and thereafter to all
other Loans.
B. Prepayments and Unscheduled Reductions in Revolving Loan Commitments.
(i) Voluntary Prepayments. Company may, upon not less than three
Business Days' prior written or telephonic notice given to Administrative
Agent by 12:00 Noon (New York time) on the date required and, if given by
telephone, promptly confirmed in writing to Administrative Agent (which
original written or telephonic notice Administrative Agent will promptly
transmit by telefacsimile or telephone to each Lender), at any time and
from time to time prepay, without premium or penalty (other than pursuant
to subsection 2.6D), any Term Loans or Revolving Loans 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 on the expiration of the
Interest Period applicable thereto. Notice of prepayment having been given
as aforesaid, the principal amount of the Loans 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(iv).
(ii) Voluntary Reductions of Revolving Loan Commitments. Company may,
upon not less than three Business Days' prior written or telephonic notice
confirmed in writing to Administrative Agent (which original written or
telephonic notice Administrative Agent will promptly transmit by
telefacsimile or telephone to each Lender), at any time and from time to
time terminate in whole or permanently reduce in part, without premium or
penalty (other than pursuant to subsection 2.6D), the Revolving Loan
Commitments in an amount up to the amount by which the Revolving Loan
Commitments exceed the aggregate amount of all outstanding Revolving Loans
at the time of such proposed termination or reduction; provided that any
such partial reduction of the Revolving Loan Commitments shall be in an
aggregate minimum amount of $3,000,000 and integral multiples of $100,000
in excess of that amount. Company's notice to Administrative Agent shall
designate the date (which shall be a Business Day) of such termination or
reduction and the amount of any partial reduction, and such termination or
reduction of the Revolving Loan Commitments shall be effective on the date
specified in Company's notice and shall reduce the Revolving Loan
Commitment of each Lender proportionately to its Pro Rata Share.
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(iii) Mandatory Prepayments and Mandatory Reductions of Revolving Loan
Commitments.
(a) Prepayments and Reductions from Asset Sales. No later than
the second Business Day following the date of receipt by Company or
any of its Subsidiaries of Cash Proceeds of any Asset Sale, Company
shall (1) if such Asset Sale occurs prior to the Conversion Date,
prepay, without premium or penalty (other than pursuant to subsection
2.6D), the Revolving Loans in an amount equal to the Net Cash Proceeds
of such Asset Sale and (2) if such Asset Sale occurs following the
Conversion Date, prepay, without premium or penalty (other than
pursuant to subsection 2.6D), Term Loans in such amount; provided
that, with respect to Asset Sales which do not include the sale of a
Financed Aircraft, Company may retain Net Cash Proceeds in respect of
such Asset Sales of up to $10 million in any Fiscal Year and $20
million in the aggregate. Concurrently with any prepayment of the
Loans pursuant to this subsection 2.4B(iii)(a), Company shall deliver
to Administrative Agent an Officers' Certificate demonstrating the
derivation of the Net Cash Proceeds of the correlative Asset Sale from
the gross sales price thereof. In the event that Company shall, at any
time after receipt of Cash Proceeds of any Asset Sale requiring a
prepayment pursuant to this subsection 2.4B(iii)(a), determine that
the prepayments previously made in respect of such Asset Sale were in
an aggregate amount less than that required by the terms of this
subsection 2.4B(iii)(a), Company shall promptly make an additional
prepayment of the Revolving Loans or Term Loans, as the case may be,
in the manner described above in an amount equal to the amount of any
such deficit, and Company shall concurrently therewith deliver to
Administrative Agent an Officers' Certificate demonstrating the
derivation of the additional Net Cash Proceeds resulting in such
deficit. Any mandatory prepayments pursuant to this subsection
2.4B(iii)(a) shall be applied as specified in subsection 2.4B(iv).
Notwithstanding the foregoing, so long as (i) the AFL Financing
remains outstanding, Cash Proceeds from the sale or other disposition
of the AFL Aircraft shall not be subject to the provisions of this
subsection 2.4(B)(iii)(a) to the extent that such Cash Proceeds are
applied in accordance with the terms of the AFL Financing Agreement
and (ii) the AFL II Financing remains outstanding, Cash Proceeds from
the sale or other disposition of the AFL II Aircraft shall not be
subject to the provisions of this subsection 2.4(B)(iii)(a) to the
extent that such Cash Proceeds are applied in accordance with the
terms of the AFL II Financing Agreement.
(b) Prepayments and Reductions Due to Issuance of Certain
Indebtedness. On the date of receipt by Company of the cash proceeds
(net of underwriting discounts and commissions and other reasonable
costs associated therewith) from the issuance of Permitted Extension
Indebtedness with respect to a Financed Aircraft, Company shall (1) if
such issuance occurs prior to the Conversion Date, prepay, without
premium or penalty (other than pursuant to subsection 2.6D), the
Revolving Loans in an amount equal to such net cash proceeds and (2)
if such
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issuance occurs following the Conversion Date, prepay, without premium
or penalty (other than pursuant to subsection 2.6D), Term Loans in
such amount. Any such mandatory prepayments shall be applied as
specified in subsection 2.4B(iv). Notwithstanding the foregoing, any
such cash proceeds received pursuant to the AFL II Financing Agreement
shall not be subject to the provisions of this subsection
2.4(B)(iii)(b).
(c) Prepayments and Reductions Due to Insurance and Condemnation
Proceeds. No later than the second Business Day following the date of
receipt by Company or any of its Subsidiaries of any cash payments
under any of the casualty insurance policies covering damage to or
loss of property maintained pursuant to subsection 5.4 resulting from
damage to or loss of all or any portion of the Collateral or any other
tangible asset (net of actual and documented reasonable costs incurred
by Company in connection with adjustment and settlement thereof,
"Insurance Proceeds") or any proceeds resulting from the taking of
assets by the power of eminent domain, condemnation or otherwise (net
of actual and documented reasonable costs incurred by Company in
connection with adjustment and settlement thereof, "Condemnation
Proceeds") (other than (x) the portion of such proceeds promptly
applied to repair or replace the property in respect of which such
proceeds were paid, (y) the portion of such proceeds required to be
paid to Lien holders on aircraft other than Financed Aircraft or (z)
proceeds applied pursuant to subsection 2.4B(iii)(d)), Company shall
(1) if such receipt of cash payments occurs prior to the Conversion
Date, prepay, without premium or penalty (other than pursuant to
subsection 2.6D), the Revolving Loans in an amount equal to such
proceeds and (2) if such receipt of cash payments occurs following the
Conversion Date, prepay, without premium or penalty (other than
pursuant to subsection 2.6D), Term Loans in such amount. Company
shall, no later than 180 days after receipt of any such Insurance
Proceeds or Condemnation Proceeds that have not theretofore been
applied to the Obligations, make an additional prepayment of Revolving
Loans or Term Loans, as the case may be, in the manner described
above, in the full amount of all such proceeds that have not then been
applied to repair or replace the property in respect of which such
proceeds were paid. Any such mandatory prepayments shall be applied as
specified in subsection 2.4B(iv). Notwithstanding the foregoing so
long as (i) the AFL Financing remains outstanding, Insurance Proceeds
and Condemnation Proceeds with respect to the AFL Aircraft shall not
be subject to the provisions of this subsection 2.4(B)(iii)(c) to the
extent such proceeds are applied in accordance with the terms of the
AFL Financing Agreement and (ii) the AFL II Financing remains
outstanding, Insurance Proceeds and Condemnation Proceeds with respect
to the AFL II Aircraft shall not be subject to the provisions of this
subsection 2.4(B)(iii)(c) to the extent such proceeds are applied in
accordance with the terms of the AFL II Financing Agreement.
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(d) Prepayments and Reductions Due to an Event of Loss. No later
than the earlier of (x) the second Business Day following the date of
receipt by Company or any of its Subsidiaries of any Insurance
Proceeds or Condemnation Proceeds with respect to a Financed Aircraft
or (y) 180 days following an Event of Loss with respect to a Financed
Aircraft, Company shall (1) if such receipt of proceeds or Event of
Loss occurs prior to the Conversion Date, prepay, without premium or
penalty (other than pursuant to subsection 2.6D), the Revolving Loans
associated with such Financed Aircraft and (2) if such receipt of
proceeds or Event of Loss occurs following the Conversion Date,
prepay, without premium or penalty (other than pursuant to subsection
2.6D), the Term Loans associated with such Financed Aircraft; provided
that Company and its Subsidiaries shall not be required to make a
prepayment pursuant to this subsection 2.4B(iii)(d) with respect to
any proceeds applied pursuant to Section 4(f)(vi)(A) or 4(f)(vi)(B) of
any Aircraft Chattel Mortgage.
(e) Prepayments and Reductions from Consolidated Excess Cash
Flow. In the event that there shall be Consolidated Excess Cash Flow
for any Fiscal Year, within 100 days after the last day of such Fiscal
Year Company shall (1) prior to the Conversion Date, prepay, without
premium or penalty (other than pursuant to subsection 2.6D), the
Revolving Loans in an amount equal to 50% of such Consolidated Excess
Cash Flow and (2) following the Conversion Date, prepay, without
premium or penalty (other than pursuant to subsection 2.6D), Term
Loans in such amount; provided that, if as of the last day of such
Fiscal Year, the aggregate principal amount of all Loans was less than
60% of the aggregate Appraised Value of all Financed Aircraft, no
prepayment will be required under this subsection 2.4B(iii)(e). Any
such mandatory prepayments shall be applied as specified in subsection
2.4B(iv).
(f) Prepayments Due to Reductions in Appraised Value. Company
shall from time to time prepay, without premium or penalty (other than
pursuant to subsection 2.6D), the Revolving Loans to the extent
necessary so that the outstanding principal amount of any Revolving
Loans made to finance the acquisition or conversion of a Financed
Aircraft shall not at any time exceed 80% of the Appraised Value of
such Financed Aircraft as most recently determined pursuant to
subsection 5.10; provided that, in lieu of making a prepayment
hereunder, Company may provide Administrative Agent for the benefit of
Lenders with cash collateral or a letter of credit in the amount of
such prepayment pursuant to arrangements in form and substance
satisfactory to Administrative Agent.
(g) Prepayments Due to Failure to Register Aircraft with the FAA.
In the event that, with respect to any Financed Aircraft,
Administrative Agent's security interest in such Financed Aircraft is
not fully perfected within five (5) Business Days of the funding of
Loans with respect to such Financed Aircraft, Company shall prepay the
full amount of such Loans.
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(iv) Application of Prepayments.
(a) Application of Voluntary Prepayments by Type of Loans and
Order of Maturity. Any voluntary prepayments pursuant to subsection
2.4B(i) shall be applied ratably among the Notes relating to all of
the Financed Aircraft; provided that, at Administrative Agent's
election, any prepayment may be deemed first to prepay Loans made to
finance labor costs associated with conversion, if any, second to
prepay Loans made to finance other costs of conversion of a Financed
Aircraft and thereafter to all other Loans. Any voluntary prepayments
of the Term Loans pursuant to subsection 2.4B(i) shall be applied to
reduce the scheduled installments of principal of the Term Loans set
forth in subsection 2.4A in inverse order of maturity.
(b) Application of Mandatory Prepayments of Loans. Any mandatory
prepayments of the Loans pursuant to subsection 2.4B(iii) shall be
applied ratably among the Notes relating to all of the Financed
Aircraft; provided that in the event a prepayment pursuant to
subsection 2.4B(iii)(a), (b), (c), (d) (f) or (g) relates to Financed
Aircraft, such prepayment shall be applied first to the Notes relating
to such Financed Aircraft and second ratably among the Notes relating
to all other Financed Aircraft, and then, in the case of Term Loans,
to scheduled amortization payments in inverse order of maturity;
provided further that, at Administrative Agent's election, any such
prepayment may be deemed first to prepay Loans made to finance labor
costs associated with conversion, if any, second to prepay Loans made
to finance other costs of conversion of a Financed Aircraft and
thereafter to all other Loans.
(c) Application of Prepayments to Base Rate Loans and Eurodollar
Rate Loans. Any prepayment of Loans shall be applied first to Base
Rate Loans to the full extent thereof before application to Eurodollar
Rate Loans, in each case in a manner which minimizes the amount of any
payments required to be made by Company pursuant to subsection 2.6D.
C. General Provisions Regarding Payments.
(i) Manner and Time of Payment. All payments by 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
Administrative Agent not later than 12:00 Noon (New York time) on the date
due at the Funding and Payment Office for the account of Lenders; funds
received by Administrative Agent after that time on such due date shall be
deemed to have been paid by Company on the next succeeding Business Day.
Company hereby authorizes Administrative Agent to charge its accounts with
Administrative Agent in order to cause timely payment to be made to
Administrative Agent of all principal, interest, fees
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and expenses due hereunder (subject to sufficient funds being available in
its accounts for that purpose).
(ii) Application of Payments to Principal and Interest. All payments
in respect of the principal amount of any Loan 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. Aggregate principal and interest
payments in respect of Term Loans and Revolving Loans shall be apportioned
among all outstanding Loans to which such payments relate, in each case
proportionately to Lenders' respective Pro Rata Shares. Administrative
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 Administrative Agent and the commitment fees of such
Lender when received by Administrative Agent pursuant to subsection 2.3.
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, Administrative 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 or of the commitment fees hereunder, as the case may be.
(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 all
Loans 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 of any
Loan made under such Note shall not limit or otherwise affect the
obligations of Company hereunder or under such Note with respect to any
Loan or any payments of principal or interest on such Note.
2.5 Use of Proceeds.
A. The proceeds of Revolving Loans shall be applied to finance (i) the
purchase of an Eligible Aircraft pursuant to a Purchase Agreement in an amount
up to the lesser of the purchase price of such Eligible Aircraft and 80% of the
Appraised Value of such Eligible Aircraft (but without giving effect to any
contemplated modifications) and/or (ii) the cost of making a Financed Aircraft
usable by Company as a cargo aircraft by paying for those modifications
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identified in any Modification Agreement and any BFE Agreement (but not for
maintenance costs) in an amount that when added to the amount financed in (i)
does not exceed 80% the Appraised Value of such modified Eligible Aircraft;
provided that the final Revolving Loan to finance the modification of such
Eligible Aircraft may be in an amount equal to the lesser of (x) 100% of the
costs of modification associated with such final Revolving Loan and (y) an
amount which, when added to all other Revolving Loans made with respect to such
Eligible Aircraft, does not exceed 80% of the Appraised Value of such Eligible
Aircraft after giving effect to the completion of modification.
B. Margin Regulations. No portion of the proceeds of any borrowing under
this Agreement shall be used by Company or any of its Subsidiaries in any manner
that might cause the borrowing or the application of such proceeds to violate
Regulation G, 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 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
10:00 A.M. (New York time) on each Interest Rate Determination Date,
Administrative 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 Company and
each Lender.
B. Inability to Determine Applicable Interest Rate. In the event that
Administrative 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, Administrative
Agent shall on such date give notice (by telefacsimile or by telephone confirmed
in writing) to Company and each Lender of such determination, whereupon (i) no
Loans may be made as, or converted to, Eurodollar Rate Loans until such time as
Administrative Agent notifies Company and Lenders that the circumstances giving
rise to such notice no longer exist and (ii) any Notice of Borrowing or Notice
of Conversion/Continuation given by Company with respect to the Loans in respect
of which such determination was made shall be deemed to be rescinded by 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 Company and
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Administrative 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 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 or by telephone
confirmed in writing) to Company and Administrative Agent of such determination
(which notice Agent shall promptly transmit to each other Lender). Thereafter
(a) the obligation of the Affected Lender to make Loans as, or 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
Company pursuant to a Notice of Borrowing or a Notice of Conversion/Con-
tinuation, the Affected Lender shall make such Loan as (or convert such Loan to,
as the case may be) 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 Company pursuant to a Notice of Borrowing or a
Notice of Conversion/Continuation, Company shall have the option, subject to the
provisions of subsection 2.6D, to rescind such Notice of Borrowing or Notice of
Conversion/Continuation as to all Lenders by giving notice (by telefacsimile or
by telephone confirmed in writing) to Administrative Agent of such rescission on
the date on which the Affected Lender gives notice of its determination as
described above (which notice of rescission Administrative 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 make or maintain Loans as, or to convert
Loans to, Eurodollar Rate Loans in accordance with the terms of this Agreement.
D. Compensation For Breakage or Non-Commencement of Interest Periods.
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 make or 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 borrowing of any Eurodollar Rate Loan does not occur on a date
specified therefor in a Notice of Borrowing or a telephonic request for
borrowing, or a conversion to or continuation of any Eurodollar Rate Loan does
not occur on a date specified therefor in a Notice of Conversion/Continuation or
a telephonic request for conversion or 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
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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 Company, or (iv) as a consequence of any other default by
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 make, 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.
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)
Company may not elect to have a Loan be made or 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 Borrowing or Notice of Conversion/Continuation given by Company with
respect to a requested borrowing or conversion/continuation that has not yet
occurred shall be deemed to be rescinded by 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 Agreement or any of its obligations hereunder
or any payments to such Lender (or its
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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
agreeing to make, making or maintaining Loans 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, 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 Company (with a copy to Administrative
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 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 (other than a Tax on the overall net
income of any Lender) imposed, levied, collected, withheld or assessed by
or within the United States of America or any political subdivision in or
of the United States of America or any other jurisdiction from or to which
a payment is made by or on behalf of Company or by any federation or
organization of which the United States of America or any such jurisdiction
is a member at the time of payment.
(ii) Grossing-up of Payments. If Company or any other Person is
required by law to make any deduction or withholding on account of any such
Tax from any sum paid or payable by Company to Administrative Agent or any
Lender under any of the Loan Documents:
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(a) Company shall notify Administrative Agent of any such
requirement or any change in any such requirement as soon as Company
becomes aware of it;
(b) Company shall pay any such Tax before the date on which
penalties attach thereto, such payment to be made (if the liability to
pay is imposed on Company) for its own account or (if that liability
is imposed on Administrative Agent or such Lender, as the case may be)
on behalf of and in the name of Administrative Agent or such Lender;
(c) the sum payable by 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, Administrative 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 payment of any Tax which it is required by clause (b)
above to pay, Company shall deliver to Administrative 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;
provided that no such additional amount shall be required to be paid to any
Lender under clause (c) above except to the extent that any change after the
date hereof (in the case of each Lender listed on the signature pages hereof) or
after the date of the Assignment Agreement pursuant to which such Lender became
a Lender (in the case of each other Lender) in any such requirement for a
deduction, withholding or payment as is mentioned therein shall result in an
increase in the rate of such deduction, withholding or payment from that in
effect at the date of this Agreement or at the date of such Assignment
Agreement, as the case may be, in respect of payments to such Lender.
(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 Administrative Agent
for transmission to Company, on or prior to the Third Amended and
Restated 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 Company or Administrative Agent (each in the
reasonable exercise of its discretion), (1) two original copies of
Internal Revenue Service Form 1001 or 4224 (or any successor forms),
properly
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completed and duly executed by such Lender, together with any other
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 or (2) if such Lender is not a "bank" or other Person
described in Section 881(c)(3) of the Internal Revenue Code and cannot
deliver either Internal Revenue Service Form 1001 or 4224 pursuant to
clause (1) above, a Certificate re Non-Bank Status together with two
original copies of Internal Revenue Service Form W-8 (or any successor
form), properly completed and duly executed by such Lender, together
with any other 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 interest 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,
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 (1) deliver to Administrative Agent for transmission to Company
two new original copies of Internal Revenue Service Form 1001 or 4224,
or a Certificate re Non-Bank Status and two original copies of
Internal Revenue Service Form W-8, as the case may be, properly
completed and duly executed by such Lender, together with any other
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
Administrative Agent and Company of its inability to deliver any such
forms, certificates or other evidence.
(c) 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 Third Amended and Restated 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 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
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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 Commitments 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 Company from such Lender of the
statement referred to in the next sentence, 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 Company (with a copy to Administrative 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 Company is required under the
provisions of this subsection 2.7 to make payments in a material amount to any
Lender or in the event any Lender fails to lend to Company in accordance with
this Agreement, 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) 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, (ii)
another financial institution satisfactory to Company and Administrative Agent
(or if Administrative Agent is also the Lender to be terminated, the successor
Administrative Agent) shall agree, as of such date, to 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 Administrative
Agent (or if Administrative Agent is also the Lender to be terminated, the
successor Administrative Agent) to evidence the substitution of such Lender
shall have been received and approved by Administrative Agent as of such date.
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
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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 make, issue, fund or maintain the Commitments 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 making, issuing, funding or maintaining of such
Commitments or 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 Commitments or 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 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 Company pursuant to this subsection 2.8 (setting
forth in reasonable detail the basis for requesting such amount) submitted by
such Lender to Company (with a copy to Administrative Agent) shall be conclusive
absent manifest error.
SECTION 3.
CONDITIONS TO LOANS
The obligations of Administrative Agent and Lenders to make Loans hereunder
are subject to the satisfaction of the following conditions:
3.1 Conditions to Loans to Finance Aircraft Acquisition.
The obligations of Lenders to make Loans to finance the acquisition of an
aircraft on any Funding Date are subject to the following conditions:
(i) Company shall deliver to Administrative Agent an Officer's
Certificate and such supportive documents as may be requested by
Administrative Agent, certifying that the aircraft to be acquired is an
Eligible Aircraft;
(ii) as of the date of purchase of such Eligible Aircraft,
Administrative Agent shall be reasonably satisfied that Company and its
Subsidiaries have entered into binding ACMI Contracts sufficient to ensure
the continued employment (consistent with past practices) of substantially
all other aircraft owned and operated by Company and its Subsidiaries other
than the new aircraft being acquired;
(iii) on the date of purchase of any such Eligible Aircraft,
Administrative Agent, on behalf of Lenders, shall have been granted a first
priority Lien on such Eligible
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Aircraft, spare parts and related assets (including, without limitation,
the Purchase Agreement and any Modification Agreement) and the Purchase
Agreement, any Modification Agreement and any BFE Agreements shall have
been assigned to Administrative Agent and any Persons whose consent is
necessary for an effective assignment of such agreements shall have so
consented, in each case, pursuant to documentation and procedures
acceptable to Administrative Agent;
(iv) Company shall have delivered to Administrative Agent appraisals
from two Approved Appraisers, in form and substance satisfactory to
Administrative Agent, demonstrating that the amount of the Revolving Loan
requested does not exceed 80% of the Appraised Value of the Eligible
Aircraft to be acquired as of the Funding Date and that, after giving
effect to all proposed modifications of such Eligible Aircraft, the Maximum
Note Amount shall not exceed 80% of the Appraised Value of such Eligible
Aircraft as so modified;
(v) a First Aircraft Chattel Mortgage and a Second Aircraft Chattel
Mortgage with respect to the Eligible Aircraft shall have been filed in
such order for recordation with the FAA under the Federal Aviation Act;
(vi) Uniform Commercial Code Financing Statements naming
Administrative Agent as the secured party covering such Eligible Aircraft
and spare parts shall have been duly executed and delivered and duly filed
in all jurisdictions necessary or desirable to perfect a security interest
in the Collateral;
(vii) the FAA ▇▇▇▇ of Sale shall have been delivered for recordation
with the FAA pursuant to the Federal Aviation Act;
(viii) the Eligible Aircraft shall have been registered with the FAA
in the name of Company or if not previously registered in the United
States, an application for registration shall have been filed;
(ix) Administrative Agent shall have received originally executed
copies of one or more favorable written opinions of counsel to Company in
form and substance satisfactory to Administrative Agent dated as of the
Funding Date and setting forth the matters designated in the opinions in
Exhibits VA, VB and VC and such other matters as Administrative Agent may
reasonably request.
(x) Administrative Agent shall have received originally executed
copies of one or more favorable written opinions of FAA counsel or other
counsel in form and substance satisfactory to Administrative Agent dated as
of the Funding Date or the date such Eligible Aircraft is registered with
the FAA if such registration occurs after the Funding Date and setting
forth such matters related to the FAA or other Aeronautical Authority
having jurisdiction over the Eligible Aircraft being acquired as
Administrative Agent may reasonably request;
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(xi) Administrative Agent shall have received evidence satisfactory to
it to the effect that as of such Funding Date Company is an air carrier
certificated under Sections 401 and 604(b) of the Federal Aviation Act;
certificates of airworthiness with respect to the Eligible Aircraft shall
have been duly issued by an Aeronautical Authority pursuant to the Federal
Aviation Act and shall be in full force and effect; and each Engine shall
be in compliance with all airworthiness standards of the FAA or shall be
maintained in accordance with an FAA approved program;
(xii) Company shall have good and marketable title to and a valid
ownership interest in the Collateral free and clear of all Liens other than
Liens permitted by subsection 6.2;
(xiii) no Event of Loss with respect to the Airframe or any Engine to
be delivered shall have occurred and no event or condition which with the
giving of notice or lapse of time or both, would result in any such Event
of Loss shall have occurred and be continuing;
(xiv) Company shall have delivered to Administrative Agent
certificates of insurance naming Administrative Agent on behalf of
Administrative Agent and Lenders as loss payee under casualty insurance
policies with respect to the Eligible Aircraft to be acquired and a
broker's report evidencing compliance with the requirements of the First
Aircraft Chattel Mortgage with respect to such Eligible Aircraft;
(xv) Company shall have delivered to Administrative Agent all
documents executed in connection with the Purchase Agreement related to
such aircraft and such documents shall be in form and substance
satisfactory to Administrative Agent;
(xvi) any Revolving Loan made to finance the purchase of a Financed
Aircraft shall be made no later than ten days after the later of Company's
payment of the purchase price with respect to or acquisition of title to
such Financed Aircraft; and
(xvii) Company shall have delivered to Administrative Agent such other
documents as Administrative Agent may reasonably request and all such
documents shall be in form and substance reasonably satisfactory to
Administrative Agent.
Notwithstanding the foregoing, Administrative Agent may (provided that no
Event of Default has occurred or is continuing) in its sole and absolute
discretion waive the conditions set forth in clauses (iii), (v), (vii), (viii)
and (x) to the extent necessary by reason of the fact that Company is unable to
obtain a deregistration certificate with respect to the applicable Eligible
Aircraft prior to the purchase of such Eligible Aircraft; provided that, if
Administrative Agent's security interest in such Eligible Aircraft is not fully
perfected within five (5) Business Days of full funding of the Loans with
respect to such Eligible Aircraft, Company shall prepay such Loans in accordance
with subsection 2.4B(iii)(g); provided further, that Administrative Agent may
not waive such conditions with respect to more than one Eligible Aircraft at any
time.
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3.2 Condition to Loans to Finance Cargo Conversion.
The obligations of Lenders to make Loans to finance the costs of conversion
of a Financed Aircraft on any Funding Date are subject to the additional
conditions set forth below:
A. Conditions to Each Loan to Finance the Costs of Conversion.
(i) Administrative Agent shall have received an invoice and ▇▇▇▇ of
sale with respect to any Parts delivered in connection with the
modification of Financed Aircraft and with respect to any buyer furnished
equipment, and an invoice for any services or other costs associated with
the modification of such Financed Aircraft and/or such other information
and materials as may be reasonably requested by Administrative Agent
confirming the name of the vendor performing the service, the Parts or
service to be financed by such Revolving Loan, the amount due from or
previously paid by Company, the satisfactory completion of the services for
which such Revolving Loan proceeds shall be applied and such other
information regarding such service as Administrative Agent may request. To
the extent practicable, each Revolving Loan made shall be allocated only to
the costs of conversion other than labor costs associated with such
conversion; and
(ii) with respect to any Revolving Loan to finance the purchase of a
Part, such Revolving Loan shall be made no later than ten days after the
later of Company's payment for or acquisition of title to such Part.
B. Conditions to the Final Loan to Finance the Cost of Conversion.
(i) If there has been any material deviation from the terms of the
Modification Agreement entered into by Company with respect to a Financed
Aircraft after the date of the appraisals delivered pursuant to subsection
3.1(iv), Company shall have delivered to Administrative Agent appraisals
demonstrating that the amount of the Revolving Loans requested when added
to all previous Revolving Loans made with respect to the Financed Aircraft
which has been converted as of the Funding Date does not exceed the lesser
of (x) 100% of the remaining costs of conversion and (y) 80% of the
Appraised Value of the Financed Aircraft;
(ii) Company shall deliver to Administrative Agent an Officer's
Certificate (x) certifying that the conversion of the Financed Aircraft has
been completed and that all obligations of Company with respect to the
modifications of the Financed Aircraft under a Modification Agreement and
any BFE Agreement have been satisfied and (y) stating the total cost of the
purchase and modification of such Financed Aircraft, which shall not be
less than all Loans made in respect of such Financed Aircraft.
(iii) Company shall deliver to Administrative Agent (a) a copy of the
Aircraft re-delivery receipt and evidence of transfer of title to each Part
included in
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the modification, (b) copies of any Supplemental Types Certificates issued
by the FAA, and (c) copies of any FAA Form 337s to be filed in connection
with such modification;
(iv) Administrative Agent shall have received evidence satisfactory to
it to the effect that as of such Funding Date Company is an air carrier
certificated under Sections 401 and 604(b) of the Federal Aviation Act;
certificates of airworthiness with respect to the Eligible Aircraft shall
have been duly issued pursuant to the Federal Aviation Act and shall be in
full force and effect; and each Engine shall be in compliance with all
airworthiness standards of the FAA or shall be maintained in accordance
with an FAA approved program; and
(v) Company shall have delivered to Administrative Agent such other
documents as Administrative Agent may reasonably request and all such
documents shall be in form and substance reasonably satisfactory to
Administrative Agent.
3.3 Conditions to All Loans.
The obligations of Lenders to make Loans on each Funding Date are subject
to the following further conditions precedent:
A. Administrative Agent shall have received before that Funding Date, in
accordance with the provisions of subsection 2.1B, an originally executed Notice
of Borrowing, in each case signed by the chief executive officer, the chief
financial officer or the treasurer of Company or by any executive officer of
Company designated by any of the above-described officers on behalf of Company
in a writing delivered to Administrative Agent.
B. As of that Funding Date:
(i) the representations and warranties contained herein and in the
other Loan Documents shall be true, correct and complete in all material
respects on and as of that Funding Date to the same extent as though made
on and as of that date, except to the extent such representations and
warranties specifically relate to an earlier date, in which case such
representations and warranties shall have been true, correct and complete
in all material respects on and as of such earlier date; provided that,
with respect to any Funding Date referred to in subsection 3.2, Company's
representations and warranties shall be to its best knowledge;
(ii) no event shall have occurred and be continuing or would result
from the consummation of the borrowing contemplated by such Notice of
Borrowing that would constitute an Event of Default or a Potential Event of
Default;
(iii) 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 that Funding Date;
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(iv) no order, judgment or decree of any court, arbitrator or
governmental authority shall purport to enjoin or restrain any Lender from
making the Loans to be made by it on that Funding Date;
(v) the making of the Loans requested on such Funding Date shall not
violate any law including, without limitation, Regulation G, Regulation T,
Regulation U or Regulation X of the Board of Governors of the Federal
Reserve System; and
(vi) there shall not be pending or, to the knowledge of Company,
threatened, any action, suit, proceeding, governmental investigation or
arbitration against or affecting Company or any of its Subsidiaries or any
property of Company or any of its Subsidiaries that has not been disclosed
by Company in writing pursuant to subsection 4.6 or 5.1(x) prior to the
making of the last preceding Loans (or, in the case of the initial Loans,
prior to the execution of this Agreement), and there shall have occurred no
development not so disclosed in any such action, suit, proceeding,
governmental investigation or arbitration so disclosed, that, in either
event, in the opinion of Administrative Agent or of Requisite Lenders,
would be expected to have a Material Adverse Effect; and 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 transactions contemplated by this Agreement or
the making of Loans hereunder.
C. With respect to any Revolving Loans made on a Funding Date for the
purpose of reborrowing prior to the Conversion Date an amount equal to the
amount of mandatory prepayments made pursuant to subsection 2.4B(iii)(e),
Administrative Agent shall have received an opinion of ▇▇▇▇▇▇ ▇▇▇▇▇▇ & ▇▇▇▇▇▇▇,
or such other counsel as may be acceptable to Administrative Agent, dated as of
such Funding Date confirming the applicability of Section 1110 of the Bankruptcy
Code, to such Revolving Loans made on such Funding Date, in form and substance
satisfactory to Administrative Agent.
3.4 Conditions to Conversion of Revolving Loans Into Term Loans.
The obligations of Lenders to convert Revolving Loans into Term Loans on
the Conversion Date are subject to the following conditions precedent:
(i) each of the conditions set forth in Subsections 3.3B and 3.3C
shall have been satisfied as of the Conversion Date;
(ii) Company shall have delivered to Lenders (or to Administrative
Agent for Lenders) executed originals of the Amended and Restated Notes,
duly executed in accordance with subsection 2.1D, drawn to the order of
each Lender and with appropriate insertions;
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(iii) Lenders and their respective counsel shall have received
originally executed copies of one or more favorable written opinions of
counsel for Company in form and substance reasonably satisfactory to
Administrative Agent and its counsel, dated as of the Conversion Date, as
setting forth such matters as Administrative Agent may reasonably request;
and
(iv) Administrative Agent shall have received copies of such other
documents as Administrative Agent may reasonably request and all such
documents shall be in form and substance reasonably satisfactory to
Administrative Agent.
3.5 Conditions to Effectiveness.
The effectiveness of this Agreement is subject to the satisfaction of all
of the following conditions:
(i) each of the parties hereto shall have executed and delivered
counterparts of this Agreement to Administrative Agent;
(ii) Company shall have delivered to Administrative Agent a Financial
Condition Certificate dated the Third Amended and Restated Closing Date,
substantially in the form annexed hereto as Exhibit IX with appropriate
attachments demonstrating that, after giving effect to the full amounts
which will be available under this Agreement, Company and its Subsidiaries,
taken as a whole, are Solvent;
(iii) Lenders and their respective counsel shall have received (A)
originally executed copies of one or more favorable written opinions of
▇▇▇▇▇▇ ▇▇▇▇▇▇ & ▇▇▇▇▇▇▇, counsel for Company, in form and substance
reasonably satisfactory to Administrative Agent and its counsel, dated as
of the Third Amended and Restated Closing Date and setting forth
substantially the matters in the opinions designated in Exhibit VA annexed
hereto and as to such other matters as Administrative Agent acting on
behalf of Lenders may reasonably request, (B) the opinion of ▇▇▇▇▇▇ ▇▇▇▇▇▇
& ▇▇▇▇▇▇▇ regarding Section 1110 of the Bankruptcy Code, dated the Third
Amended and Restated Closing Date and setting forth substantially the
matters in the opinions designated in Exhibit VB annexed hereto, and (C)
evidence satisfactory to Administrative Agent that Company has requested
such counsel to deliver such opinions to Lenders;
(iv) Lenders and their respective counsel shall have received executed
copies of one or more favorable written opinions of ▇▇▇▇ ▇▇▇▇▇▇▇▇▇, General
Counsel of Company, in form and substance reasonably satisfactory to
Administrative Agent and its counsel, dated the Third Amended and Restated
Closing Date, and setting forth substantially the matters in the opinions
designated in Exhibit VC annexed hereto;
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(v) After giving effect to the transactions contemplated hereby
(including the payment of, or taking reserves for, all transactions fees
and expenses), Company shall not have less than $25 million cash on its
consolidated balance sheet;
(vi) Agents shall be satisfied with the capital, organization,
ownership and management structure of Company and its Subsidiaries and with
the form and substance of the ACMI Contracts, any Modification Agreements,
any BFE Agreements, aircraft lease arrangements (including, without
limitation, the Philippine Lease and the Second Philippine Lease), Purchase
Agreements, existing financing agreements and intercreditor arrangements
(including, without limitation, the Senior Note Documents and the Pass
Through Trust Documents) and the AFL II Financing Agreement shall have been
completed or shall be completed concurrently under terms and conditions
reasonably satisfactory to Agents and Lenders; and
(vii) Company shall have taken such actions and delivered to
Administrative Agent such documents as Administrative Agent may reasonably
request and all such documents shall be in form and substance reasonably
satisfactory to Administrative Agent.
SECTION 4.
COMPANY'S REPRESENTATIONS AND WARRANTIES
In order to induce Lenders to enter into this Agreement and to make the
Loans, Company represents and warrants to each Lender, on the date of this
Agreement and on each Funding Date, that the following statements are true,
correct and complete:
4.1 Organization, Powers, Qualification, Good Standing, Business and
Subsidiaries.
A. Organization and Powers. Company is a corporation duly organized,
validly existing and in good standing under the laws of the State of Delaware.
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 thereby.
B. Qualification and Good Standing; Air Carrier Certification. 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 has not had and will not have a Material Adverse Effect. Company
is a "citizen of the United States" within the meaning of the Federal Aviation
Act (a "United States Citizen") and holds an air carrier operating certificate
under the Federal Aviation Act for aircraft capable of carrying 10 or more
individuals or 6,000 pounds or more of cargo.
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C. Subsidiaries. All of the Subsidiaries of Company as of the Third Amended
and Restated 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(xvii). The capital stock of each of the Subsidiaries of Company
identified in Schedule 4.1 annexed hereto (as so supplemented) is duly
authorized, validly issued, fully paid and nonassessable and none of such
capital stock constitutes Margin Stock. Each of the Subsidiaries of 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 has not had and will not have a Material
Adverse Effect. Schedule 4.1 annexed hereto (as so supplemented) correctly sets
forth the ownership interest of Company and each of its Subsidiaries in each of
the Subsidiaries of Company identified therein.
D. Collateral Documents. The security interests created in favor of
Administrative Agent under the Collateral Documents have at all times from and
after the Initial Closing Date constituted and will continue to constitute, as
security for the obligations purported to be secured thereby, a legal, valid and
enforceable security interest in and Lien on all of the Collateral referred to
therein in favor of Administrative Agent for the benefit of the Lenders,
perfected and prior to the rights of all third persons in accordance with the
requirements of all applicable Collateral Documents. Each Loan Party has good
and marketable title to its respective Collateral, and all such Collateral is
free and clear of all Liens except for Liens permitted by subsection 6.2. No
consents, filings or recordings are required in order to perfect (or maintain
the perfection or priority of) the security interests purported to be created by
any of the Collateral Documents, other than such as have been obtained and which
remain in full force and effect and UCC financing statements to be filed, or
delivered to Administrative Agent for filing, on the Third Amended and Restated
Closing Date and periodic UCC continuation filings or as is specifically
otherwise permitted by the terms of any applicable Collateral Document.
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 each Loan Party.
B. No Conflict. The execution, delivery and performance by the Loan Parties
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 Company or any of its
Subsidiaries, the Certificate or Articles of Incorporation or Bylaws of Company
or any of its Subsidiaries or any order, judgment or decree of any court or
other agency of government binding on Company or any of its Subsidiaries, (ii)
conflict with in
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any material respect, result in a material breach of or constitute (with due
notice or lapse of time or both) a material default under any Contractual
Obligation of 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
Company or any of its Subsidiaries (other than any Liens created under any of
the Loan Documents in favor of Administrative 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 Company or any of its Subsidiaries,
except for such approvals or consents which will be obtained on or before the
Third Amended and Restated Closing Date and disclosed in writing to Lenders.
C. Governmental Consents. The execution, delivery and performance by the
Loan Parties 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
unless waived by Administrative Agent in accordance with this Agreement.
D. Binding Obligation. Each of the Loan Documents has been duly executed
and delivered by each of the Loan Parties party thereto and is the legally valid
and binding obligation of each such Loan Party, enforceable against such Loan
Party in accordance with its respective terms, except as may be limited by
bankruptcy, insolvency, reorganization, moratorium or similar laws relating to
or limiting creditors' rights generally or by equitable principles relating to
enforceability.
4.3 Financial Condition.
Company has heretofore delivered to Lenders, at Lenders' request, the
following financial statements and information: (i) the audited consolidated and
consolidating balance sheets of Company and its Subsidiaries as at December 31,
1996, and the related consolidated and consolidating statements of income,
stockholders' equity and cash flows of Company and its Subsidiaries for the
Fiscal Year then ended and (ii) the unaudited consolidated and consolidating
balance sheets of Company and its Subsidiaries as at June 30, 1997 and the
related unaudited consolidated and consolidating statements of income,
stockholders' equity and cash flows of Company and its Subsidiaries for the nine
months then ended. All such statements were prepared in conformity with GAAP and
fairly present the financial position (on a consolidated and, where applicable,
consolidating basis) of the entities described in such financial statements as
at the respective dates thereof and the results of operations and cash flows (on
a consolidated and, where applicable, consolidating basis) of the entities
described therein for each of the periods then ended, subject, in the case of
any such unaudited financial statements, to changes resulting from audit and
normal year-end adjustments. Company does not have any Contingent Obligation,
contingent liability or liability for taxes, long-term lease or unusual forward
or long-term commitment that is not reflected in the foregoing financial
statements or the notes thereto and which in any such case is material in
relation to the business, operations, properties, assets, condition
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(financial or otherwise) or prospects of Company or of Company and its
Subsidiaries taken as a whole.
4.4 No Material Adverse Change; No Restricted Junior Payments.
Since June 30, 1997, no event or change has occurred that has caused or
evidences, either in any case or in the aggregate, a Material Adverse Effect.
Since June 30, 1997, neither Company nor any of its Subsidiaries has directly or
indirectly declared, ordered, paid or made, or set apart any sum or property
for, any Restricted Junior Payment or agreed to do so except as permitted by
subsection 6.5.
4.5 Title to Properties; Liens.
A. 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 6.7. Except as permitted by this Agreement, all such
properties and assets are free and clear of Liens.
B. Each Financed Aircraft operated in the United States has a current and
valid airworthiness certificate issued by the FAA pursuant to the Federal
Aviation Act in effect and is in such condition as may be necessary to enable
the airworthiness certificate to be maintained in good standing. Each Engine has
a rated takeoff horsepower greater than 750 horsepower, or the equivalent of
such horsepower. Each Financed Aircraft operated in the United States is
registered with the FAA in the name of Company, and Company has authority to
operate such Financed Aircraft. Company has good title to such Financed
Aircraft, free and clear of all Liens other than Liens permitted by subsection
6.2.
4.6 Litigation; Adverse Facts.
There are no actions, suits, proceedings, arbitrations or governmental
investigations (whether or not purportedly on behalf of Company or any of its
Subsidiaries) at law or in equity or before or by any federal, state, municipal
or other governmental department, commission, board, bureau, agency or
instrumentality, domestic or foreign, pending or, to the knowledge of Company,
threatened against or affecting Company or any of its Subsidiaries or any
property of Company or any of its Subsidiaries that, individually or in the
aggregate, could reasonably be expected to result in a Material Adverse Effect.
Neither Company nor any of its Subsidiaries is (i) in violation of any
applicable laws that, individually or in the aggregate, could reasonably be
expected to result in a Material Adverse Effect or (ii) subject to or in default
with respect to any final judgments, writs, injunctions, decrees, rules or
regulations of any court or any federal, state, municipal or other governmental
department, commission, board, bureau, agency or instrumentali-
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ty, domestic or foreign, that, individually or in the aggregate, could
reasonably be expected to result in a Material Adverse Effect.
4.7 Payment of Taxes.
Except to the extent permitted by subsection 5.3, all tax returns and
reports of Company and its Subsidiaries required to be filed by any of them have
been timely filed, and all taxes, assessments, fees and other governmental
charges upon Company and its Subsidiaries and upon their respective properties,
assets, income, businesses and franchises which are due and payable have been
paid when due and payable. Company does not know of any proposed tax assessment
against Company or any of its Subsidiaries which is not being actively contested
by Company or such Subsidiary in good faith and by appropriate proceedings;
provided that such reserves or other appropriate provisions, if any, for
liabilities for taxes as shall be required in conformity with GAAP shall have
been made or provided in the financial statements of Company. There are no
agreements with respect to taxes between Company and any tax agency or
authority.
4.8 Performance of Agreements; Materially Adverse Agreements.
A. Neither Company nor any of its Subsidiaries is in default in the
performance, observance or fulfillment of any of the obligations, covenants or
conditions contained in any of its Contractual Obligations, and no condition
exists that, with the giving of notice or the lapse of time or both, would
constitute such a default, except where the consequences, direct or indirect, of
such default or defaults, if any, would not have a Material Adverse Effect.
B. Neither 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 reasonably
be expected to result in a Material Adverse Effect.
4.9 Governmental Regulation.
Neither 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.
A. Neither Company nor any of its Subsidiaries 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.
B. Following application of the proceeds of each Loan, not more than 25% of
the value of the assets (either of Company only or of Company and its
Subsidiaries on a consolidated
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basis) subject to the provisions of subsection 6.2 or 6.7 or subject to any
restriction contained in any agreement or instrument, between any Loan Party, on
the one had, and any Lender or any Affiliate of any Lender, on the other hand,
relating to Indebtedness and within the scope of subsection 7.2, will be Margin
Stock.
4.11 Employee Benefit Plans.
Company maintains a qualified retirement plan under Section 401(k) of the
Internal Revenue Code (the "Company 401(k) Plan"). Company's 401(k) Plan has no
unfunded liabilities in excess of $10,000,000, and Company is in compliance with
all applicable provisions and requirements of ERISA and the regulations and
published interpretations thereunder with respect to each Employee Benefit Plan
and has performed all its obligations under such Employee Benefit Plan in all
material respects. The Company has no Employee Benefit Plans, other than the
Company 401(k) Plan. The Company has no ERISA Affiliates that sponsor, maintain,
contribute to or are liable with respect to any Employee Benefit Plans.
4.12 Certain Fees.
No broker's or finder's fee or commission will be payable with respect to
this Agreement or any of the transactions contemplated hereby, and Company
hereby indemnifies Lenders against, and agrees that it will hold Lenders
harmless from, any claim, demand or liability for any such broker's or finder's
fees alleged to have been incurred in connection herewith or therewith and any
expenses (including reasonable fees, expenses and disbursements of counsel)
arising in connection with any such claim, demand or liability.
4.13 Environmental Protection.
A. All Facilities and operations of the Company are, and have been to the
best of Company's knowledge, in compliance in all material respects with all
Environmental Laws.
B. There are no, and have been no, conditions, occurrences, or Hazardous
Materials Activity (a) arising at any Facilities or at any other location or (b)
arising in connection with the operations of Company (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
Company and which, individually or in the aggregate, could reasonably be
expected to have a Material Adverse Effect.
C. To the best of Company's knowledge, there are no pending or threatened
Environmental Claims against Company, and Company has received no notices,
inquiries, or requests for information with respect to any Environmental Claims.
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4.14 Employee Matters.
There is no strike or work stoppage in existence or threatened involving
Company or any of its Subsidiaries that could reasonably be expected to have a
Material Adverse Effect.
4.15 Solvency.
Company and each of its Subsidiaries is and, upon the incurrence of any
Obligations by Company on any date on which this representation is made, will
be, Solvent.
4.16 Disclosure.
No representation or warranty of Company or any of its Subsidiaries
contained in any Loan Document or in any other document, certificate or written
statement furnished to Lenders by or on behalf of Company or any of its
Subsidiaries for use in connection with the transactions contemplated by this
Agreement contains any untrue statement of a material fact or omits to state a
material fact (known to Company, in the case of any document not furnished by
Company) necessary in order to make the statements contained herein or therein
not misleading in light of the circumstances in which the same were made. Any
projections and pro forma financial information contained in such materials are
based upon good faith estimates and assumptions believed by 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 (or which should upon the
reasonable exercise of diligence be known) to Company (other than matters of a
general economic nature) that, individually or in the aggregate, could
reasonably be expected to result in a Material Adverse Effect and that have not
been disclosed herein or in such other documents, certificates and statements
furnished to Lenders for use in connection with the transactions contemplated
hereby.
SECTION 5.
COMPANY'S AFFIRMATIVE COVENANTS
Company covenants and agrees that, so long as any of the Commitments
hereunder shall remain in effect and until payment in full of all of the Loans
and other Obligations unless Requisite Lenders shall otherwise give prior
written consent, 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.
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. Company will deliver to Administrative Agent and Lenders:
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(i) Monthly Financials: as soon as available and in any event within
30 days after the end of each month ending after the Third Amended and
Restated Closing Date, financial statements prepared by Company in the
ordinary course of business certified by the chief financial officer of
Company that they fairly present the financial condition of Company and its
Subsidiaries for such month, subject to changes resulting from audit and
normal year-end adjustments;
(ii) Quarterly Financials: as soon as available and in any event
within 45 days after the end of each fiscal quarter of each Fiscal Year,
(a) the consolidated and consolidating balance sheets of Company and its
Subsidiaries as at the end of such fiscal quarter and the related
consolidated and consolidating statements of income, stockholders' equity
and cash flows of Company and its Subsidiaries for such fiscal quarter and
for the period from the beginning of the then current Fiscal Year to the
end of such fiscal quarter, setting forth in each case in comparative form
the corresponding figures for the corresponding periods of the previous
Fiscal Year and the corresponding figures from the consolidated plan and
financial forecast for the current Fiscal Year delivered pursuant to
subsection 5.1(xii), all in reasonable detail and certified by the chief
financial officer of Company that they fairly present the financial
condition of Company and its Subsidiaries as at the dates indicated and the
results of their operations and their cash flows for the periods indicated,
subject to changes resulting from audit and normal year-end adjustments,
and (b) a narrative report describing the operations of Company and its
Subsidiaries in the form prepared for presentation to senior management for
such fiscal quarter and for the period from the beginning of the then
current Fiscal Year to the end of such fiscal quarter; provided that
delivery of Company's Form 10-Q for such fiscal quarter shall be deemed to
satisfy the requirements of this subsection 5.1(ii);
(iii) Year-End Financials: as soon as available and in any event
within 90 days after the end of each Fiscal Year, (a) the consolidated and
consolidating balance sheets of Company and its Subsidiaries as at the end
of such Fiscal Year and the related consolidated and consolidating
statements of income, stockholders' equity and cash flows of Company and
its Subsidiaries for such Fiscal Year, setting forth in each case in
comparative form the corresponding figures for the previous Fiscal Year and
the corresponding figures from the consolidated plan and financial forecast
delivered pursuant to subsection 5.1(xii) for the Fiscal Year covered by
such financial statements, all in reasonable detail and certified by the
chief financial officer of Company that they fairly present the financial
condition of Company and its Subsidiaries as at the dates indicated and the
results of their operations and their cash flows for the periods indicated,
(b) a narrative report describing the operations of Company and its
Subsidiaries in the form prepared for presentation to senior management for
such Fiscal Year, and (c) in the case of such consolidated financial
statements, a report thereon of ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ LLP or other independent
certified public accountants of recognized national standing selected by
Company and satisfactory to Administrative Agent, which report shall be
unqualified, shall express no doubts about the ability of Company and its
Subsidiaries to continue as a going concern, and shall state that such
consolidated financial statements fairly present
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the consolidated financial position of Company and its Subsidiaries 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 (except as otherwise disclosed in such
financial statements) 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
delivery of Company's Form 10-K for such Fiscal Year shall be deemed to
satisfy the requirements of clauses (a) and (b) of this subsection
5.1(iii);
(iv) Officers' and Compliance Certificates: together with each
delivery of financial statements of Company and its Subsidiaries pursuant
to subdivisions (ii) and (iii) above after the Third Amended and Restated
Closing Date, (a) an Officers' Certificate of Company stating that the
signers have reviewed the terms of this Agreement and have made, or caused
to be made under their supervision, a review in reasonable detail of the
transactions and condition of Company and its Subsidiaries 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 signers do not have knowledge of the existence as at
the date of such Officers' 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 Company has
taken, is taking and proposes to take with respect thereto; and (b) a
Compliance Certificate demonstrating in reasonable detail compliance during
and at the end of the applicable quarterly and annual accounting periods
with the restrictions contained in Section 6;
(v) Reconciliation Statements: if, as a result of any change in
accounting principles and policies from those used in the preparation of
the audited financial statements referred to in subsection 4.3, the
consolidated financial statements of Company and its Subsidiaries delivered
pursuant to subdivisions (ii), (iii) or (xii) of this subsection 5.1 will
differ in any material respect from the consolidated financial statements
that would have been delivered pursuant to such subdivisions had no such
change in accounting principles and policies been made, then (a) together
with the first delivery of financial statements pursuant to subdivision
(ii), (iii) or (xii) of this subsection 5.1 following such change,
consolidated financial statements of Company and its Subsidiaries for (y)
the current Fiscal Year to the effective date of such change and (z) the
two full Fiscal Years immediately preceding the Fiscal Year in which such
change is made, in each case prepared on a pro forma basis as if such
change had been in effect during such periods, and (b) together with each
delivery of financial statements pursuant to subdivision (ii), (iii) or
(xii) of this subsection 6.1 following such change, a written statement of
the chief accounting officer or chief financial officer of Company setting
forth the differences which would have resulted if such financial
statements had been prepared without giving effect to such change;
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(vi) Accountants' Certification: together with each delivery of
consolidated financial statements of Company and its Subsidiaries pursuant
to subdivision (iii) above, a written statement by the independent
certified public accountants giving the report thereon (a) stating that
their audit examination has included a review of the terms of this
Agreement and the other Loan Documents as they relate to accounting
matters, (b) stating whether, in connection with their audit examination,
any condition or event that constitutes an Event of Default or Potential
Event of Default has come to their attention and, if such a condition or
event has come to their attention, specifying the nature and period of
existence thereof; provided that such accountants shall not be liable by
reason of any failure to obtain knowledge of any such Event of Default or
Potential Event of Default that would not be disclosed in the course of
their audit examination, and (c) stating that based on their audit
examination nothing has come to their attention that causes them to believe
either or both that the information contained in the certificates delivered
therewith pursuant to subdivision (iv) above is not correct or that the
matters set forth in the Compliance Certificates delivered therewith
pursuant to clause (b) of subdivision (iv) above for the applicable Fiscal
Year are not stated in accordance with the terms of this Agreement;
(vii) Accountants' Reports: promptly upon receipt thereof (unless
restricted by applicable professional standards), copies of all reports
submitted to Company by independent certified public accountants in
connection with each annual, interim or special audit of the financial
statements of Company and its Subsidiaries made by such accountants,
including, without limitation, any comment letter submitted by such
accountants to management in connection with their annual audit;
(viii) 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 Company to its
security holders, (b) all regular and periodic reports and all registration
statements (other than on Form S-8 or a similar form) and prospectuses, if
any, filed by 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 press releases and other
statements made available generally by Company or any of its Subsidiaries
to the public concerning material developments in the business of Company
or any of its Subsidiaries;
(ix) Events of Default, etc.: promptly upon any officer of Company
obtaining knowledge (a) of any condition or event that constitutes an Event
of Default or Potential Event of Default, or becoming aware that any Lender
has given any notice (other than to Administrative Agent) or taken any
other action with respect to a claimed Event of Default or Potential Event
of Default, (b) that any Person has given any notice to 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 disclosed in a
current report filed by Company with the Securities and Exchange Commission
on Form 8-K (Items 1, 2, 4, 5 and 6 of such
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Form as in effect on the date hereof), or (d) of the occurrence of any
event or change that has caused or evidences, either in any case or in the
aggregate, a Material Adverse Effect, an Officers' 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 Company has taken, is taking
and proposes to take with respect thereto;
(x) Litigation or Other Proceedings: (a) promptly upon any officer of
Company obtaining knowledge of (X) the institution of, or non-frivolous
threat of, any action, suit, proceeding (whether administrative, judicial
or otherwise), governmental investigation or arbitration against or
affecting Company or any of its Subsidiaries or any property of Company or
any of its Subsidiaries (collectively, "Proceedings") not previously
disclosed in writing by Company to Lenders or (Y) any material development
in any Proceeding that, in any case:
(1) if adversely determined, has a reasonable possibility of
giving rise to a Material Adverse Effect; 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 Company to enable Lenders and their counsel to
evaluate such matters; and (b) within twenty days after the end of each
fiscal quarter of Company, a schedule of all Proceedings involving an
alleged liability of, or claims against or affecting, Company or any of its
Subsidiaries equal to or greater than $1,000,000 and promptly after request
by Administrative Agent such other information as may be reasonably
requested by Administrative Agent to enable Administrative Agent and its
counsel to evaluate any of such Proceedings;
(xi) ERISA Notices: with reasonable promptness, copies of (a) each
annual report (Form 5500 Series) filed by Company or any of its ERISA
Affiliates with the Internal Revenue Service with respect to each Employee
Benefit Plan, (b) any notices received by Company or any of its ERISA
Affiliates with respect to a "multiemployer plan," within the meaning of
Section 4001(a)(3) of ERISA, and (c) such other documents or governmental
reports or filings relating to any Employee Benefit Plan as Administrative
Agent shall reasonably request;
(xii) Financial Plans and Projections: as soon as practicable after
preparation thereof by Company in the normal course of business, Company
shall provide copies of its financial plans and projections and at the
reasonable request of Administrative Agent or Requisite Lenders an
opportunity for Lenders to question and discuss such materials
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with the chief financial officer of Company; provided that, at the request
of Company, all copies of such financial plans and projections shall be
returned to Company after review thereof and the completion of such
discussion;
(xiii) Insurance: as soon as practicable and in any event by the last
day of each Fiscal Year, a report in form and substance satisfactory to
Administrative Agent outlining all material insurance coverage maintained
as of the date of such report by Company and its Subsidiaries and all
material insurance coverage planned to be maintained by Company and its
Subsidiaries in the immediately succeeding Fiscal Year;
(xiv) Environmental Audits and Reports: as soon as practicable
following receipt thereof, copies of all environmental audits and reports,
whether prepared by personnel of 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
result in a Material Adverse Effect;
(xv) Special Purpose Subsidiaries: promptly upon any Special Purpose
Subsidiary becoming a Subsidiary of Company, a written notice setting forth
with respect to such Special Purpose Subsidiary (a) the date on which such
Special Purpose Subsidiary became a Subsidiary of Company and (b) all of
the data required to be set forth in Schedule 4.1 annexed hereto with
respect to all Subsidiaries of Company (it being understood that such
written notice shall be deemed to supplement Schedule 4.1 annexed hereto
for all purposes of this Agreement); and
(xvi) Pricing Certificates (a) together with each delivery of
financial statements of Company and its Subsidiaries pursuant to
subdivisions (ii) and (iii) above, (b) within one Business Day after any
public release by S&P or ▇▇▇▇▇'▇ lowering its credit rating on Company's
obligations under the Pass Through Trust Documents, and (c) at such
additional times as Company may elect, a certificate setting forth the
credit rating on Company's obligations under the Pass Through Trust
Documents (each, a "Pricing Certificate");
(xvii) Performance Certificates: in the event that Company believes it
is entitled to a Performance Reduction, consolidated financial statements
of Company and its Subsidiaries for the most recently ended four fiscal
quarter period (which shall be audited in the case of the financial
statements for year-end) and a certificate setting forth the calculation
necessary to demonstrate Company's entitlement to a Performance Reduction;
and
(xviii) Other Information: with reasonable promptness, such other
information and data with respect to Company or any of its Subsidiaries
as from time to time may be reasonably requested by any Lender.
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5.2 Corporate Existence.
Except as permitted under subsection 6.7, Company will, and will cause each
of its Subsidiaries to, at all times preserve and keep in full force and effect
its corporate existence and all rights and franchises material to its business;
provided, however, that the corporate existence of any such Subsidiary may be
terminated if such termination is in the best interests of Company and its
Subsidiaries and is not materially disadvantageous to any Lender. Company will,
and will cause each of its Subsidiaries to, at all times maintain its corporate
existence as a United States Citizen.
5.3 Payment of Taxes and Claims; Tax Consolidation.
A. Company will, and will cause its Subsidiaries to, pay all taxes,
assessments and other governmental charges imposed upon it or any of its
properties or assets or in respect of any of its income, businesses or
franchises before any penalty, fine or interest accrues thereon, and all claims
(including, without limitation, claims for labor, services, materials and
supplies) for sums that have become due and payable and that by law have or may
become a Lien upon any of its properties or assets, prior to the time when any
penalty fine or interest shall be incurred with respect thereto; provided that
no such charge or claim need be paid if being contested in good faith by
appropriate proceedings promptly instituted and diligently conducted and if such
reserve or other appropriate provision, if any, with respect to any liability
for taxes, as shall be required in conformity with GAAP shall have been made
therefor in the financial statements of the Company.
B. 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 Company or Company).
5.4 Maintenance of Properties; Insurance.
Company will, and will cause its Subsidiaries to, maintain or cause to be
maintained in good repair, working order and condition, ordinary wear and tear
excepted, all material properties used or useful in the business of Company and
its Subsidiaries and from time to time will make or cause to be made all
appropriate repairs, renewals and replacements thereof. Company will maintain or
cause to be maintained, with insurers of recognized responsibility and
reputation, insurance with respect to its properties and business and the
properties and businesses of its Subsidiaries against loss or damage (including,
without limitation, flood insurance, if necessary or advisable) of the kinds
customarily carried or maintained under similar circumstances by corporations
engaged in similar businesses and Company will, with respect to each Financed
Aircraft, maintain the insurance specified in the First Aircraft Chattel
Mortgage with respect to such Financed Aircraft.
Company may self-insure, by way of deductible or equivalent structures or
provisions in insurance policies, the risks required to be insured against
pursuant to this subsection 5.4 in such
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reasonable amounts as are then applicable to other similar aircraft or spare
engines in Company's fleet, and as are not substantially greater than amounts
self-insured by corporations engaged in the same or similar business and
similarly situated with Company; provided, however, that Company may not
self-insure in an amount in excess of $1,000,000 per Financed Aircraft without
the prior written consent of Administrative Agent.
5.5 Inspection; Lender Meeting.
Company will, and will cause its Subsidiaries to, permit any authorized
representatives designated by any Lender to visit and inspect any of the
properties of Company or any of its Subsidiaries, including its and their
financial and accounting records, and, with the permission of Company which
shall not be unreasonably withheld, 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 (provided that Company may, if it so
chooses, be present at or participate in any such discussion), 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 Event of
Default shall have occurred and be continuing, such inspection shall not be
disruptive to Company's business, as reasonably determined by Company. Without
in any way limiting the foregoing, Company will, upon the request of Agents or
Requisite Lenders, participate in a meeting of Agents and Lenders once during
each Fiscal Year to be held at Company's corporate offices (or such other
location as may be agreed to by Company and Agents) at such time as may be
agreed to by Company and Agents.
5.6 Compliance with Laws, etc.
Company will, and will cause its Subsidiaries to, comply with the
requirements of all applicable laws, rules, regulations and orders of any
governmental authority (including, without limitation, Environmental Laws),
noncompliance with which could reasonably be expected to cause a Material
Adverse Effect. Company shall not conduct, and shall not permit the conduct of,
any Hazardous Materials Activity at any Facility or at any other location which
could reasonably be expected to form the basis of an Environmental Claim against
Company and which could reasonably be expected to have a Material Adverse
Effect.
5.7 Environmental Indemnity.
Company agrees to indemnify, defend, and hold harmless Administrative Agent
and Lenders, and the officers, directors, employees, agents and affiliates of
Administrative Agent and Lenders from and against any and all losses, claims,
liability or expenses arising in connection with Environmental Claims against
Company or with any Hazardous Materials Activity.
5.8 Company's Remedial Action Regarding Hazardous Materials.
Company will promptly take, and will cause each of its Subsidiaries
promptly to take, any and all necessary remedial action in connection with the
presence, storage, use, disposal,
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transportation or Release of any Hazardous Materials on, under or about any
Facility in order to comply with all applicable Environmental Laws and
Governmental Authorizations. In the event Company or any of its Subsidiaries
undertakes any remedial action with respect to any Hazardous Materials on, under
or about any Facility, Company or such Subsidiary will conduct and complete such
remedial action 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,
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 by Company or such Subsidiary.
5.9 Further Assurances; New Subsidiaries.
At any time or from time to time upon the request of Administrative Agent,
Company will, at its expense, promptly execute, acknowledge and deliver such
further documents and do such other acts and things as Administrative 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. In furtherance and not
in limitation of the foregoing, Company will cause any Subsidiary whose total
assets exceed 15% of the consolidated total assets of Company, in each case
determined in accordance with GAAP (other than a Special Purpose Subsidiary or
Atlas One), to take such actions as Administrative Agent may reasonably request
from time to time to ensure that the Obligations are guarantied by any such
Subsidiary. If, after the Third Amended and Restated Closing Date, Company or
any of its Subsidiaries (other than a Special Purpose Subsidiary or Atlas One)
acquires any asset, other than an aircraft financed with Loans hereunder or with
Other Permitted Indebtedness, with a fair market value in excess of $5 million,
or the value of spare parts of Company and its Subsidiaries not subject to Liens
securing Designated Indebtedness exceeds $25 million in the aggregate, Company
shall so notify Administrative Agent and take, or cause such Subsidiaries to
take, such actions as Administrative Agent may reasonably request from time to
time (including, without limitation, the execution and delivery of guaranties,
security agreements, mortgages, deeds of trust, financing statements and other
documents, the filing or recording of any of the foregoing, title insurance with
respect to any of the foregoing that relates to an interest in real property,
and the delivery of stock certificates and other collateral with respect to
which perfection is obtained by possession) to ensure that the Obligations are
secured by a first priority security interest in such asset or spare parts
(other than capital stock of a Subsidiary), as the case may be; provided that,
in the case of any engine otherwise subject to such security interest, such Lien
may be released at the request of Company in connection with a refinancing
thereof with Other Permitted Indebtedness. Notwithstanding the foregoing, so
long as (i) the AFL II Financing remains outstanding nothing herein shall cause
or give rise to an obligation on the part of the Company or AFL II to require a
guaranty or grant of security interest in the assets of AFL II and (ii) the AFL
Financing remains outstanding nothing herein shall cause or give rise to an
obligation on the part of the Company or AFL to require a guaranty or grant of
security interest in the assets of AFL. The Lenders acknowledge that the
security interest and Lien created by the Collateral Documents does not extend
to the assets of AFL or AFL II now existing or hereafter acquired.
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5.10 Appraisals.
Upon Administrative Agent's request after the occurrence and during the
continuance of an Event of Default and in any event no less than once each
calendar year, Company will obtain appraisals of each of the Financed Aircraft
from two Approved Appraisers, in form and substance satisfactory to
Administrative Agent.
5.11 Key Man Life Insurance.
Company shall use its best efforts to obtain Key Man Life Insurance with
respect to ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ in an amount and for a period to be agreed upon by
Company and Administrative Agent, and with respect to which Administrative
Agent, on behalf of Lenders, shall be named beneficiary.
5.12 Maintenance Contracts.
Company shall maintain contracts with respect to the maintenance of each
Financed Aircraft sufficient to insure compliance with the Federal Aviation Act,
in form and substance reasonably satisfactory to Administrative Agent.
5.13 Employee Benefit Plans.
Company will not establish or permit to be established any Employee Benefit
Plans for Company or any of its employees and will not permit any ERISA
Affiliate to establish any Employee Benefit Plan which, in either case, could
result in a liability for Company, under ERISA, in excess of $10 million.
SECTION 6.
COMPANY'S NEGATIVE COVENANTS
Company covenants and agrees that, so long as any of the Commitments
hereunder shall remain in effect and until payment in full of all of the Loans
and other Obligations, unless Requisite Lenders shall otherwise give prior
written consent, Company shall perform, and shall cause each of its Subsidiaries
to perform, all covenants in this Section 6.
6.1 Indebtedness.
Company shall not, and shall not permit any of its Subsidiaries to,
directly or indirectly, create, incur, assume or guaranty, or otherwise become
or remain directly or indirectly liable with respect to, any Indebtedness,
except:
(i) Company may become and remain liable with respect to the Obliga-
tions;
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(ii) Company and its Subsidiaries may become and remain liable with
respect to Contingent Obligations permitted by subsection 6.4 and, upon any
matured obligations actually arising pursuant thereto, the Indebtedness
corresponding to the Contingent Obligations so extinguished;
(iii) Company and its Subsidiaries may become and remain liable with
respect to Indebtedness in respect of Capital Leases; provided that such
Capital Leases are permitted under the terms of subsection 6.9;
(iv) Company and its Subsidiaries, as applicable, may remain liable
with respect to Indebtedness described in Schedule 6.1 annexed hereto;
(v) Company may become and remain liable with respect to Permitted
Extension Indebtedness; provided, that with respect to any transaction in
which Permitted Extension Indebtedness is incurred with respect to any
Financed Aircraft, the cash proceeds from such Permitted Extension
Indebtedness are sufficient to repay in full the Notes associated with such
Financed Aircraft;
(vi) so long as no Event of Default or Potential Event of Default
shall have occurred and be continuing or would result therefrom and Company
delivers an Officers' Certificate to Administrative Agent and Lenders, in
form and substance reasonably satisfactory to Administrative Agent,
confirming that, on a Pro Forma Basis after giving effect to such
incurrence of Indebtedness, (i) the ratio of Consolidated Total Debt (less
Cash and Cash Equivalents held by Company in excess of $25 million) as of
the last day of the most recently ended fiscal quarter (the "Determination
Date") plus seven times Consolidated Rental Payments to Consolidated
Adjusted EBITDA plus Consolidated Rental Payments for the four fiscal
quarter period ending on such Determination Date does not exceed the ratio
set forth in subsection 6.6B for the fiscal quarter in which such
Indebtedness is to be incurred, (ii) the ratio of Consolidated Adjusted
EBITDA for such four fiscal quarter period to Consolidated Interest Expense
for such four-fiscal quarter period is not less than the ratio set forth in
subsection 6.6A for the fiscal quarter in which such Indebtedness is to be
incurred;
(vii) Company may become and remain liable with respect to
Indebtedness under the Unsecured Revolving Credit Facility in an aggregate
principal amount not to exceed $26 million at any time outstanding;
(viii) Company may become and remain liable with respect to
Indebtedness under the NationsBanc Agreement;
(ix) AFL may become and remain liable with respect to all of the
obligations under the AFL Financing documents and Company may become and
remain liable with respect to the AFL Leases;
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(x) AFL II may become and remain liable with respect to all of the
obligations under the AFL II Financing documents and Company may become and
remain liable with respect to the AFL II Leases;
(xi) Company may become and remain liable with respect to the Senior
Notes; and
(xii) Company and its Subsidiaries may become and remain liable with
respect to other Indebtedness in an aggregate principal amount not to
exceed, without duplication, when added to the maximum aggregate liability,
contingent or otherwise, of Company and its Subsidiaries outstanding in
accordance with subsection 6.4(vi), $30 million at any time outstanding.
6.2 Liens and Related Matters.
A. Prohibition on Liens. 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
(including any document or instrument in respect of goods or accounts
receivable) of 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;
(ii) Liens in respect of Permitted Extension Indebtedness and Other
Permitted Indebtedness; provided that such Liens encumber only assets
subject to purchase money Liens securing such Indebtedness; and
(iii) other Liens securing Indebtedness in an aggregate amount not to
exceed $10 million at any time outstanding.
B. Equitable Lien in Favor of Lenders. If Company or any of its
Subsidiaries shall create or assume any Lien upon any of its properties or
assets, whether now owned or hereafter acquired, other than Liens excepted by
the provisions of subsection 6.2A, it shall make or cause to be made effective
provision whereby the Obligations will be secured by such Lien equally and
ratably with any and all other Indebtedness secured thereby as long as any such
Indebtedness shall be so secured; provided that, notwithstanding the foregoing,
this covenant shall not be construed as a consent by Requisite Lenders to the
creation or assumption of any such Lien not permitted by the provisions of
subsection 6.2A.
C. No Further Negative Pledges. Except with respect to specific property
encumbered to secure payment of particular Indebtedness or to be sold pursuant
to an
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executed agreement with respect to an Asset Sale, neither Company nor any
of its Subsidiaries shall enter into any agreement prohibiting the creation or
assumption of any Lien upon any of its properties or assets, whether now owned
or hereafter acquired.
D. No Restrictions on Subsidiary Distributions to Company or Other
Subsidiaries. Except (i) as provided herein, as (ii) described on Schedule 6.2
annexed hereto, (iii) with respect to Special Purpose Subsidiaries and (iv)
pursuant to the AFL Financing Agreement or the AFL II Financing Agreement,
Company will not, and will not permit any of its Subsidiaries to, create or
otherwise cause or suffer to exist or become effective any consensual
encumbrance or restriction of any kind on the ability of any such Subsidiary to
(i) pay dividends or make any other distributions on any of such Subsidiary's
capital stock owned by Company or any other Subsidiary of Company, (ii) repay or
prepay any Indebtedness owed by such Subsidiary to Company or any other
Subsidiary of Company, (iii) make loans or advances to Company or any other
Subsidiary of Company, or (iv) transfer any of its property or assets to Company
or any other Subsidiary of Company.
6.3 Investments; Joint Ventures.
Company shall not, and shall not permit any of its Subsidiaries to,
directly or indirectly, make or own any Investment in any Person, including any
Joint Venture, except:
(i) Company may make and own Investments in Cash Equivalents;
(ii) Company and its Subsidiaries may continue to own the Investments
owned by them as of the Third Amended and Restated Closing Date in any
Subsidiaries of Company;
(iii) Company may make and own Investments in Special Purpose
Subsidiaries; provided that Company delivers to Administrative Agent an
Officer's Certificate in form and substance satisfactory to Administrative
Agent demonstrating that such Special Purpose Subsidiary meets the
requirements set forth in the definition thereof;
(iv) Company may make Investments in Joint Ventures in an aggregate
amount not to exceed in any Fiscal Year, (A) the lesser of 25% of
Consolidated Net Income for such Fiscal Year and $10 million less (B) the
sum of (x) the aggregate amount of dividends on Company Common Stock
declared or paid in such Fiscal Year and (y) the aggregate amount
contributed to capital of Special Purpose Subsidiaries in such Fiscal Year;
provided that Company shall not incur liabilities related to any such Joint
Venture in excess of Company's Investment therein;
(v) Company and its Subsidiaries may continue to own the Investments
owned by them and described in Schedule 6.3 annexed hereto and Investments
made in compliance with subsection 6.3(iv);
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(vi) Company may make the contributions to AFL of the AFL Aircraft and
cash contemplated pursuant to the AFL Restructuring;
(vii) Company may make the contribution to AFL II of the AFL II
Aircraft contemplated pursuant to the AFL II Restructuring; and
(viii) Company and its Subsidiaries may make and own other Investments
in an aggregate amount not to exceed $15 million at any time outstanding.
Notwithstanding the foregoing, except in connection with the AFL
Restructuring or the AFL II Restructuring, Company may not make any direct or
indirect loan, advance or capital contribution to AFL or AFL II, respectively.
6.4 Contingent Obligations.
Company shall not, and shall not permit any of its Subsidiaries to,
directly or indirectly, create or become or remain liable with respect to any
Contingent Obligation, except:
(i) any Subsidiary may become and remain liable with respect to
Contingent Obligations arising under their guaranties of the Obligations;
(ii) Company may become and remain liable with respect to Contingent
Obligations under Interest Rate Agreements and Currency Agreements with a
Lender;
(iii) Company and its Subsidiaries may become and remain liable with
respect to Contingent Obligations in respect of customary indemnification
and purchase price adjustment obligations incurred in connection with Asset
Sales or other sales of assets or securities;
(iv) Company and its Subsidiaries, as applicable, may remain liable
with respect to Contingent Obligations described in Schedule 6.4 annexed
hereto;
(v) Company and its Subsidiaries may become and remain liable with
respect to Contingent Obligations to the extent such Contingent Obligations
are permitted pursuant to subsections 6.9 and 6.10; and
(vi) Company and its Subsidiaries may become and remain liable with
respect to other Contingent Obligations; provided that the maximum
aggregate liability, contingent or otherwise, of Company and its
Subsidiaries in respect of all such Contingent Obligations when added,
without duplication, to the aggregate principal amount of Indebtedness
outstanding in accordance with subsection 6.1(xii) shall at no time exceed
$30 million.
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6.5 Restricted Junior Payments.
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 Junior Payment; provided that Company may make scheduled payments of
principal and interest or mandatory prepayments of principal (including through
the exercise of remedies) from time to time on Designated Indebtedness; and
provided, further, that so long as no Event of Default or Potential Event of
Default has occurred and is continuing, or would result therefrom:
(i) Company may prepay Designated Indebtedness from the proceeds of
Permitted Extension Indebtedness or Other Permitted Indebtedness;
(ii) Company may make Restricted Junior Payments with respect to
Company Common Stock not to exceed in any Fiscal Year, the lesser of 25% of
Consolidated Net Income for such Fiscal Year and $10 million;
(iii) Company may repurchase Company Common Stock in an amount not to
exceed in any Fiscal Year $15 million for purposes of establishing or
contributing to an employee compensation plan; provided that any such
repurchased Company Common Stock resold to employees of Company shall, to
the extent of the price paid for such Company Common Stock by such
employee, be excluded from the calculation of the $15 million limit set
forth above;
(iv) Company may apply Equity Proceeds to prepay Designated
Indebtedness;
(v) Company and AFL shall be permitted to consummate the AFL
Restructuring; and
(vi) Company and AFL II shall be permitted to consummate the AFL II
Restructuring.
6.6 Financial Covenants.
A. Minimum Interest Coverage Ratio. Company shall not permit the ratio of
(i) Consolidated Adjusted EBITDA to (ii) Consolidated Interest Expense for the
four fiscal quarter period ending as of the last day of any fiscal quarter of
Company set forth below to be less than the correlative ratio indicated:
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=======================================================================
Minimum
Fiscal Quarter Ending Interest
Coverage
Ratio
=======================================================================
June 30, 1997 1.90:1.00
-----------------------------------------------------------------------
September 30, 1997 1.90:1.00
-----------------------------------------------------------------------
December 31, 1997 1.90:1.00
-----------------------------------------------------------------------
March 31, 1998 1.90:1.00
-----------------------------------------------------------------------
June 30, 1998 1.90:1.00
-----------------------------------------------------------------------
September 30, 1998 1.90:1.00
-----------------------------------------------------------------------
December 31, 1998 1.90:1.00
-----------------------------------------------------------------------
March 31, 1999 1.90:1.00
-----------------------------------------------------------------------
June 30, 1999 1.90:1.00
-----------------------------------------------------------------------
September 30, 1999 2.00:1.00
-----------------------------------------------------------------------
December 31, 1999 2.00:1.00
-----------------------------------------------------------------------
March 31, 2000 2.10:1.00
-----------------------------------------------------------------------
June 30, 2000 2.10:1.00
-----------------------------------------------------------------------
September 30, 2000 2.20:1.00
-----------------------------------------------------------------------
December 31, 2000 2.20:1.00
-----------------------------------------------------------------------
March 31, 2001 2.20:1.00
-----------------------------------------------------------------------
June 30, 2001 2.20:1.00
-----------------------------------------------------------------------
September 30, 2001 2.30:1.00
-----------------------------------------------------------------------
December 31, 2001 2.30:1.00
-----------------------------------------------------------------------
March 31, 2002 2.40:1.00
-----------------------------------------------------------------------
June 30, 2002 2.40:1.00
-----------------------------------------------------------------------
September 30, 2002 2.50:1.00
=======================================================================
B. Maximum Leverage Ratio. Company shall not permit the ratio of (i)
Consolidated Total Debt as of each date set forth below (less Cash and Cash
Equivalents held by Company in excess of $25 million as of such date) plus seven
times Consolidated
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Rental Payments (for the four fiscal quarter period ending with the most
recently ended fiscal quarter) to (ii) Consolidated Adjusted EBITDA plus
Consolidated Rental Payments for the four fiscal quarter period ending as of the
last day of any fiscal quarter of Company set forth below to exceed the
correlative ratio indicated:
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======================================================================
Maximum
Fiscal Quarter Ending Leverage
Ratio
======================================================================
June 30, 1997 5.75:1.00
----------------------------------------------------------------------
September 30, 1997 6.25:1.00
----------------------------------------------------------------------
December 31, 1997 6.75:1.00
----------------------------------------------------------------------
March 31, 1998 6.75:1.00
----------------------------------------------------------------------
June 30, 1998 7.00:1.00
----------------------------------------------------------------------
September 30, 1998 7.00:1.00
----------------------------------------------------------------------
December 31, 1998 6.75:1.00
----------------------------------------------------------------------
March 31, 1999 6.50:1.00
----------------------------------------------------------------------
June 30, 1999 6.25:1.00
----------------------------------------------------------------------
September 30, 1999 5.75:1.00
----------------------------------------------------------------------
December 31, 1999 5.75:1.00
----------------------------------------------------------------------
March 31, 2000 5.75:1.00
----------------------------------------------------------------------
June 30, 2000 5.50:1.00
----------------------------------------------------------------------
September 30, 2000 5.50:1.00
----------------------------------------------------------------------
December 31, 2000 5.25:1.00
----------------------------------------------------------------------
March 31, 2001 5.25:1.00
----------------------------------------------------------------------
June 30, 2001 5.25:1.00
----------------------------------------------------------------------
September 30, 2001 5.00:1.00
----------------------------------------------------------------------
December 31, 2001 5.00:1.00
----------------------------------------------------------------------
March 31, 2002 4.75:1.00
----------------------------------------------------------------------
June 30, 2002 4.75:1.00
----------------------------------------------------------------------
September 30, 2002 4.50:1.00
======================================================================
C. Minimum Consolidated Net Worth. Company shall not permit Consolidated
Net Worth at any time during any of the periods set forth below to be less than
the correlative amount indicated:
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====================================================================
Minimum Consolidated
Fiscal Year Ending Net Worth
====================================================================
1997 $215 million
--------------------------------------------------------------------
1998 $225 million
--------------------------------------------------------------------
1999 $250 million
--------------------------------------------------------------------
2000 $275 million
--------------------------------------------------------------------
2001 $300 million
--------------------------------------------------------------------
2002 $350 million
====================================================================
6.7 Restriction on Fundamental Changes; Asset Sales and Acquisitions; New
Subsidiaries.
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, whether now owned or hereafter acquired, or acquire by purchase or
otherwise all or any portion of the business, property or fixed assets of, 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 Company may be merged with or into Company or
any wholly-owned Subsidiary of Company that has entered into a valid and
effective guaranty and security agreement to the extent required by
subsection 5.9, 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 Company or any such wholly-owned Subsidiary of Company;
provided that, in the case of such a merger, Company or such wholly-owned
Subsidiary shall be the continuing or surviving corporation;
(ii) 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;
(iii) subject to subsection 6.13, Company and its Subsidiaries may
make Asset Sales of assets having a fair market value not in excess of $100
million in any Fiscal Year or $500 million in the aggregate; provided that
(w) with respect to the sale of any Financed Aircraft, the cash proceeds of
the sale of such Financed Aircraft are sufficient to repay in full the
Notes associated with such Financed Aircraft; (x) the consideration
received for such assets shall be in an amount at least equal to
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the fair market value thereof; (y) the consideration received shall be at
least 75% cash; and (z) the proceeds of such Asset Sales shall be applied
as required by subsection 2.4B(iii)(a);
(iv) Company may lease or transfer any Financed Aircraft to the extent
expressly permitted by Section 4(d) of the First Aircraft Chattel Mortgage
with respect to such Financed Aircraft or as contemplated by subsection
9.21;
(v) Company may make acquisitions of the capital stock of another
Person or all or substantially all of the assets of a division or line of
business of another Person provided that, (a) the acquisition primarily
involves the acquisition of assets to be used in the business of Company,
(b) with respect to such acquisition any newly acquired or created
Subsidiary of Company shall be a wholly-owned Subsidiary and, to the extent
required by subsection 5.9, shall execute a guaranty of the Obligations and
grant a security interest in the assets acquired to Administrative Agent
for the benefit of Lenders which may be subordinate to debt incurred in
such acquisition, (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,
Company shall be in compliance on a Pro Forma Basis with financial
covenants in subsection 6.6 and such compliance shall be evidenced by an
Officer's Certificate demonstrating such compliance, (e) Administrative
Agent shall have reviewed and be reasonably satisfied with the nature and
amount of all contingent liabilities or other liabilities not on the
balance sheet of Company assumed in connection with such acquisition and a
business plan prepared by Company with respect to such acquisition and (f)
the aggregate amount of cash payments made in connection with all such
acquisitions, other than with the proceeds from sales or issuances of
equity by Company, does not exceed $100,000,000;
(vi) Company and its Subsidiaries may make Consolidated Capital
Expenditures in connection with the purchase of up to twelve Eligible
Aircraft during each Fiscal Year, such number of Eligible Aircraft
permitted during any Fiscal Year to be increased by any number of Eligible
Aircraft permitted to be purchased, but not purchased, during the previous
Fiscal Year (but in no event shall any such number of Eligible Aircraft
once carried forward to the next Fiscal Year be carried forward to any
Fiscal Year thereafter) together with Consolidated Capital Expenditures
with respect to the acquisition, in the normal course of business, of spare
parts and spare engines associated with such Eligible Aircraft;
(vii) Company and its Subsidiaries may make Consolidated Capital
Expenditures with respect to maintenance of aircraft in the normal course
of business;
(viii) Company and its Subsidiaries may make other Consolidated
Capital Expenditures not in excess of $10 million during any Fiscal Year;
provided that, any amount of such other Consolidated Capital Expenditures
permitted, but not made, in any Fiscal Year may be carried forward to and
made during the immediately succeeding Fiscal
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Year (but no amount once carried forward to the next Fiscal Year may be
carried forward to any Fiscal Year thereafter);
(ix) Company and AFL shall be permitted to consummate the AFL
Restructuring;
(x) Company and AFL II shall be permitted to consummate the AFL II
Restructuring; and
(xi) Company shall be permitted to dispose of or acquire assets
pursuant to the consolidation and relocation of its offices and operations
to Colorado; provided that the aggregate consideration paid with respect to
the acquisition of assets shall be in an amount not to exceed $20 million.
6.8 Amendments of Material Agreements.
Company shall not permit (i) the certificate or articles of incorporation
or bylaws of any Loan Party to be amended or otherwise modified in any manner
which could reasonably be expected to have a Material Adverse Effect or (ii) any
Material Agreement to be amended or otherwise modified in any manner with
respect to any provision providing material representations and warranties to
Company, indemnification rights to Company, or limiting Company's remedies or
rights upon the other party to such agreements failure to perform or which could
otherwise reasonably be expected to have Material Adverse Effect on the value of
any Financed Aircraft.
6.9 Restriction on Leases.
Company shall not, and shall not permit any of its Subsidiaries to, become
liable in any way, whether directly or by assignment or as a guarantor or other
surety, for the obligations of the lessee under any lease, whether an Operating
Lease or a Capital Lease (other than intercompany leases between Company and its
wholly-owned Subsidiaries); provided however that Company may become so
obligated to the extent that, and only to the extent that, immediately after
giving effect to the incurrence of liability with respect to such lease, the
Consolidated Rental Payments at the time in effect during the then current
Fiscal Year do not exceed $60 million plus the amount of Consolidated Rental
Payments made during such Fiscal Year in respect of up to four 747-400F
aircraft, subject to the agreement dated June 9, 1997 between Company and The
Boeing Company regarding the purchase of 10 new 747-400F aircraft, leased by the
Company within twelve months following the Third Amended and Restated Closing
Date, plus an amount not to exceed $12 million during any Fiscal Year, equal to
Consolidated Rental Payments incurred in connection with sale and leaseback
transactions described in subsection 6.10, plus Consolidated Rental Payments
assumed pursuant to acquisitions permitted under subsection 6.7(v).
Notwithstanding the foregoing, the AFL Leases and the AFL II Leases shall be
permitted hereunder and shall not be taken into account for purposes of
determining compliance with the foregoing provisions of this subsection 6.9.
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6.10 Sales and Lease-Backs.
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, (i) which Company or any of its Subsidiaries has sold or
transferred or is to sell or transfer to any other Person (other than Company or
any of its Subsidiaries) or (ii) which Company or any of its Subsidiaries
intends to use for substantially the same purpose as any other property which
has been or is to be sold or transferred by Company or any of its Subsidiaries
to any Person (other than Company or any of its Subsidiaries) in connection with
such lease; provided that 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 Company or any of its Subsidiaries would be permitted to
enter into, and remain liable under, such lease under subsection 6.9.
Notwithstanding the foregoing provisions of this subsection 6.10, this
subsection 6.10 shall not restrict or prohibit in any manner consummation of the
AFL Restructuring or the AFL II Restructuring.
6.11 Sale or Discount of Receivables.
Company shall not, and shall not permit any of its Subsidiaries to,
directly or indirectly, sell with recourse, or discount or otherwise sell for
less than the face value thereof, any of its notes or accounts receivable.
6.12 Transactions with Shareholders and Affiliates.
Company shall not, and shall not permit any of its Subsidiaries to,
directly or indirectly, enter into or permit to exist any transaction
(including, without limitation, the purchase, sale, lease or exchange of any
property or the rendering of any service) with any holder of 10% or more of any
class of equity Securities of Company or with any Affiliate of Company or of any
such holder, on terms that are less favorable to Company or that Subsidiary, as
the case may be, than those that might be obtained at the time from Persons who
are not such a holder or Affiliate; provided that the foregoing restriction
shall not apply to (i) reasonable and customary fees paid to and indemnification
of members of the Boards of Directors of Company and its Subsidiaries, (ii)
reasonable and customary salaries, bonuses and other compensation paid to and
indemnification of employees of Company or any of its Subsidiaries in accordance
with past practice or approved by the compensation committee of Company or (iii)
transactions contemplated in connection with the AFL Restructuring or the AFL II
Restructuring.
6.13 Disposal of Subsidiary Stock.
Company shall not:
(i) directly or indirectly sell, assign, pledge or otherwise encumber
or dispose of any shares of capital stock or other equity Securities of any
of its Subsidiaries, except
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to qualify directors if required by applicable law or to a wholly-owned
Subsidiary of Company; or
(ii) permit any of its Subsidiaries directly or indirectly to sell,
assign, pledge or otherwise encumber or dispose of any shares of capital
stock or other equity Securities of any of its Subsidiaries (including such
Subsidiary), except to Company, another wholly-owned Subsidiary of Company,
or to qualify directors if required by applicable law.
Notwithstanding the foregoing, each of AFL and AFL II shall be permitted to
issue preferred stock in an amount not to exceed $100,000 each to a third party.
6.14 Conduct of Business.
From and after the Third Amended and Restated Closing Date, Company shall
not, and shall not permit any of its Subsidiaries to, engage in any business
other than (i) the businesses engaged in by Company and its Subsidiaries on the
Third Amended and Restated Closing Date and similar or related businesses and
(ii) such other lines of business as may be consented to by Requisite Lenders.
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.
Failure by Company to pay any installment of principal of any Loan when
due, whether at stated maturity, by acceleration, by notice of voluntary
prepayment, by mandatory prepayment or otherwise; or failure by Company to pay
any interest on any Loan or any fee or any other amount due under this Agreement
within five days after the date due; or
7.2 Default in Other Agreements.
(i) Failure of Company or any of its Subsidiaries to pay when due following
applicable grace periods (a) any principal of or interest on any Indebtedness
(other than Indebtedness referred to in subsection 7.1) in an individual
principal amount of $5 million or more or any items of Indebtedness with an
aggregate principal amount of $10 million or more or (b) any Contingent
Obligation in an individual principal amount of $5 million or more or any
Contingent Obligations with an aggregate principal amount of $10 million or
more, in each case beyond the end of any grace period provided therefor; or (ii)
breach or default by Company or any of its Subsidiaries with respect to any
other material term of (a) any evidence of any Indebtedness in an individual
principal amount of $5 million or more or any items of Indebtedness with an
aggre-
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gate principal amount of 10 million or more or any Contingent Obligation in an
individual principal amount of $5 million or more or any Contingent Obligations
with an aggregate principal amount of $10 million or more or (b) any loan
agreement, mortgage, indenture or other agreement relating to such Indebtedness
or Contingent Obligation(s), if the effect of such breach or default is to
cause, or to permit the holder or holders of that Indebtedness or Contingent
Obligation(s) (or a trustee on behalf of such holder or holders) to cause, that
Indebtedness or Contingent Obligation(s) to become or be declared due and
payable prior to its stated maturity or the stated maturity of any underlying
obligation, as the case may be (upon the giving or receiving of notice, lapse of
time, both, or otherwise); provided that the foregoing shall not apply to
Indebtedness under the AFL Financing Agreement or the AFL II Financing
Agreement; or
7.3 Breach of Certain Covenants.
Failure of Company to perform or comply in any material respect with any
term or condition contained in subsection 2.5 or 5.2 or subsection 6.1, 6.2 (as
it relates to prohibitions on Liens on Financed Aircraft), 6.5, 6.7 (as it
relates to the sale of any Financed Aircraft or all or substantially all of the
assets of Company or to the merger of Company into any other Person), 6.8, 6.10
and 6.13 of this Agreement or in clauses (i) and (ii) of Section 4(c), Section
4(d) or Section 4(g) of any First Aircraft Chattel Mortgage; or
7.4 Breach of Warranty.
Any representation, warranty, certification or other statement made by
Company or any of its Subsidiaries in any Loan Document or in any statement or
certificate at any time given by 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) Any Loan Party 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 15 days after the
earlier of (a) an officer of Company becoming aware of such default or (b)
receipt by Company of notice from Administrative Agent or any Lender of such
default or (y) with respect to a default under subsection 6.6, the earlier of
(a) an officer of 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 having jurisdiction in the premises shall enter a decree or
order for relief in respect of 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,
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which decree or order is not stayed; or any other similar relief shall be
granted under any applicable federal or state law; or (ii) an involuntary case
shall be commenced against Company or any of its material 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 having
jurisdiction in the premises for the appointment of a receiver, liquidator,
sequestrator, trustee, custodian or other officer having similar powers over
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 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 Company or any of its Subsidiaries, and any
such event described in this clause (ii) shall continue for 60 days unless
dismissed, bonded or discharged; or
7.7 Voluntary Bankruptcy; Appointment of Receiver, etc.
(i) Company or any of its material 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 for all or a
substantial part of its property; or Company or any of its Subsidiaries shall
make any assignment for the benefit of creditors; or (ii) 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 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 money judgment, writ or warrant of attachment or similar process
involving (i) in any individual case an amount in excess of $5 million or (ii)
in the aggregate at any time an amount in excess of $10 million (in either case
not adequately covered by insurance as to which a solvent and unaffiliated
insurance company has acknowledged coverage) shall be entered or filed against
Company or any of its Subsidiaries or any of their respective assets and shall
remain undischarged, unvacated, unbonded or unstayed for a period of 60 days (or
in any event later than five days prior to the date of any proposed sale
thereunder); or
7.9 Dissolution.
Any order, judgment or decree shall be entered against Company or any of
its material Subsidiaries decreeing the dissolution or split up of Company or
that Subsidiary and such order shall remain undischarged or unstayed for a
period in excess of 30 days; or
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7.10 Change in Control.
(i) (a) ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, his spouse, descendants or an entity controlled
by any of the foregoing, or a trust for the benefit of any of the foregoing,
shall cease to beneficially own and control shares of capital stock of Company
representing at least 40% of the combined voting power of all Securities of
Company entitled to vote in the election of directors, other than Securities
having such power only by reason of the happening of a contingency, or (b) any
Person or any two or more Persons acting in concert (in any such case, excluding
▇▇. ▇▇▇▇▇▇▇) shall have acquired beneficial ownership (within the meaning of
Rule 13d-3 of the Securities and Exchange Commission under the Exchange Act),
directly or indirectly, of Securities of Company (or other Securities
convertible into such Securities) representing 20% or more of the combined
voting power of all Securities of Company entitled to vote in the election of
directors, other than Securities having such power only by reason of the
happening of a contingency or (c) the Board of Directors of Company shall not
consist of a majority of Continuing Directors or (ii) a "Change of Control"
shall occur under the Pass Through Trust Documents, the Senior Note Documents or
any other Material Agreement (as in effect on the date of such occurrence); or
7.11 Failure of Security.
Upon execution and delivery thereof, any Collateral Document shall, at any
time, cease to be in full force and effect (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 such
Collateral Document 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 any Loan Party, or Administrative Agent shall not have
or shall cease to have a valid security interest in any Collateral purported to
be covered thereby, perfected and with the priority required by the relevant
Collateral Document, for any reason other than the failure of Administrative
Agent or any Lender to take any action within its control, subject only to Liens
permitted under the applicable Collateral Documents; or
7.12 Certificated as Air Carrier.
Company for any reason ceases to be a United States Citizen or to hold an
air carrier operating certificate under the Federal Aviation Act for aircraft
capable of carrying 10 or more individuals or 6,000 pounds or more of cargo; or
7.13 Material Agreements.
Any Material Agreement, other than the Philippine Lease and the Second
Philippine Lease, shall at any time be terminated other than by its terms or
cease to be in full force and effect other than by its terms, or any party to
any Modification Agreement or any Purchase Agreement shall default in the
observance or performance of any material covenants or agreements contained in
any such agreement; provided that the foregoing shall not be deemed to prohibit
the repayment or refinancing of debt otherwise permitted under this Agreement:
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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 (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 Company, and the obligation of
each Lender to make any Loan shall thereupon terminate and (ii) upon the
occurrence and during the continuation of any other Event of Default,
Administrative Agent shall, upon the written request or with the written consent
of Requisite Lenders, by written notice to 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, and the obligation of each Lender
to make any Loan shall thereupon terminate.
Notwithstanding anything contained in the second preceding paragraph, if at
any time within 60 days after an acceleration of the Loans pursuant to such
paragraph Company shall pay all arrears of interest and all payments on account
of principal which shall have become due otherwise than as a result of such
acceleration (with interest on principal and, to the extent permitted by law, on
overdue interest, at the rates specified in this Agreement) and all Events of
Default and Potential Events of Default (other than non-payment of the principal
of and accrued interest on the Loans, in each case which is due and payable
solely by virtue of acceleration) shall be remedied or waived pursuant to
subsection 9.6, then Requisite Lenders, by written notice to Company, may at
their option rescind and annul such acceleration and its consequences; but such
action shall not affect any subsequent Event of Default or Potential Event of
Default or impair any right consequent thereon. The provisions of this paragraph
are intended merely to bind Lenders to a decision which may be made at the
election of Requisite Lenders and are not intended to benefit Company and do not
grant Company the right to require Lenders to rescind or annul any acceleration
hereunder, even if the conditions set forth herein are met.
SECTION 8.
AGENTS
8.1 Appointment.
Credit Partners is hereby appointed Syndication Agent hereunder and each
Lender hereby authorizes Syndication Agent to act as its agent in accordance
with the terms of this Agreement and the other Loan Documents. Bankers Trust is
hereby appointed Administrative Agent hereunder and under the other Loan
Documents and each Lender hereby authorizes Administrative Agent to act as its
agent in accordance with the terms of this Agreement and the other Loan
Documents. Agents agree to act upon the express conditions contained in this
Agreement and the other Loan Documents, as applicable. The provisions of this
Section 8 are solely for the benefit of Agents and Lenders and 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, each Agent shall act
solely as an agent of 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 Company or any of its Subsidiaries. Syndication Agent, without consent of or
notice to any party hereto, may
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assign any and all of its rights or obligations hereunder to any of its
Affiliates, including, without limitation, Credit Partners. As of the Third
Amended and Restated Closing Date, all obligations of Syndication Agent
hereunder shall terminate.
8.2 Powers and Duties; General Immunity.
▇. ▇▇▇▇▇▇; Duties Specified. Each Lender irrevocably authorizes each of the
Agents 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 such Agent by the terms hereof and thereof,
together with such powers, rights and remedies as are reasonably incidental
thereto. Agents shall have only those duties and responsibilities that are
expressly specified in this Agreement and the other Loan Documents. Agents may
each exercise such powers, rights and remedies and perform such duties by or
through their agents or employees. Agents 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 Agents any obligations in respect of this Agreement or any of the
other Loan Documents except as expressly set forth herein or therein.
B. No Responsibility for Certain Matters. Agents 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 Agents to Lenders or by or on behalf of Company
to Agents or any Lender in connection with the Loan Documents and the
transactions contemplated thereby or for the financial condition or business
affairs of Company or any other Person liable for the payment of any
Obligations, nor shall Agents 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, Agents shall not have any liability arising
from confirmations of the amount of outstanding Loans or the component amounts
thereof.
C. Exculpatory Provisions. None of Agents nor any of their respective
officers, directors, partners, employees or agents shall be liable to Lenders
for any action taken or omitted by Agents under or in connection with any of the
Loan Documents except to the extent caused by their respective gross negligence
or willful misconduct. If Agents shall request instructions from 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, Agents shall
be entitled to refrain from such act or taking such action unless and until
Agents shall have received instructions from Requisite Lenders. Without
prejudice to the generality of the foregoing, (i) each 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
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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 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 any Agent as a result of such 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. Each 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 Requisite
Lenders.
D. Agents Entitled to Act as Lenders. 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, any Agent in its individual capacity as a Lender hereunder.
With respect to its participations in the Loans, each 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 each Agent in its individual
capacity. Each 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 Company or any of its Affiliates as if it were not performing the
duties specified herein, and may accept fees and other consideration from
Company for services in connection with this Agreement and otherwise without
having to account for the same to Lenders.
8.3 Representations and Warranties; No Responsibility For Appraisal of Credit-
worthiness.
Each Lender represents and warrants that it has made its own independent
investigation of the financial condition and affairs of Company and its
Subsidiaries in connection with the making of the Loans hereunder and that it
has made and shall continue to make its own appraisal of the creditworthiness of
Company and its Subsidiaries. No Agent shall 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 or at any time or times thereafter, and no Agent
shall have any responsibility with respect to the accuracy of or the
completeness of any information provided to Lenders.
8.4 Right to Indemnity.
Each Lender, in proportion to its Pro Rata Share, severally agrees to
indemnify Administrative Agent (and its respective affiliates and partners), to
the extent that Administrative Agent shall not have been reimbursed by 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
Administrative Agent in
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exercising its powers, rights and remedies or performing its duties hereunder or
under the other Loan Documents or otherwise in its capacity as Administrative
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 Administrative Agent's gross
negligence or willful misconduct.
8.5 Collateral Documents.
Without limiting the generality of subsection 8.1, each Lender hereby
further authorizes Administrative Agent to enter into the Collateral Documents
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 Collateral Documents; provided that, except
as otherwise provided below, Administrative Agent shall not enter into or
consent to any amendment, modification, termination or waiver of any provision
contained in any Collateral Document without prior written consent of 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 Collateral
Document, it being understood and agreed that all powers, rights and remedies
under the Collateral Documents may be exercised solely by Administrative Agent
for the benefit of Lenders in accordance with the terms thereof. Each Lender
hereby authorizes Administrative Agent (i) to release or subordinate Collateral
as permitted or required under this Agreement or the Collateral Documents, and
agrees that a certificate executed by Administrative 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 Collateral Documents 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 Administrative Agent.
Administrative Agent may resign at any time by giving 30 days' prior
written notice thereof to Lenders and Company. Upon any such notice of
resignation, Requisite Lenders shall have the right, upon consultation with
Company, to appoint a successor Administrative Agent. Upon the acceptance of any
appointment hereunder by a successor Administrative Agent, that successor
Administrative Agent shall thereupon succeed to and become vested with all the
rights, powers, privileges and duties of the retiring Administrative Agent and
the retiring or removed Administrative Agent shall be discharged from its duties
and obligations under this Agreement. After any retiring Administrative Agent's
resignation hereunder as Administrative 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 Administrative Agent under this Agreement.
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SECTION 9.
MISCELLANEOUS
9.1 Assignments and Participations in Loans.
A. General. Each Lender shall have the right at any time to (i) sell,
assign or transfer to any Eligible Assignee, or (ii) sell participations to any
Person in, all or any part of its Commitments or any Loan or 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, without the consent
of Company, require 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 (a) an Assignment Agreement effecting such sale,
assignment or transfer shall have been accepted by Administrative Agent and
recorded in the Register as provided in subsection 9.1B(ii) or (b) the sale,
assignment or transfer is made in accordance with subsection 9.21. Except as
otherwise provided in this subsection 9.1, no Lender shall, as between 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 Commitments or the Loans, or the other Obligations owed to
such Lender.
B. Assignments.
(i) Amounts and Terms of Assignments. Each Commitment, 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 Company and Administrative Agent or (b) 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 Commitments, Loans, and other
Obligations of the assigning Lender) to any other Eligible Assignee with
the giving of notice to Company and with the consent of Administrative
Agent and Company (which consent shall not be unreasonably withheld). Any
assignment of Loans hereunder shall effect a pro rata assignment of the
Notes with respect to each Financed Aircraft. 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 with respect to its
Commitments, Loans, or other Obligations or the portion thereof so
assigned. The parties to each such assignment shall execute and deliver to
Administrative Agent, for its acceptance and recording in the Register, an
Assignment Agreement, together with a processing and recordation fee of
$3,000 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
Administrative Agent pursuant to subsection 2.7B(iii)(a); provided, however
that such processing fee shall not be required where the assignee is an
existing Lender. 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
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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 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
Commitments hereunder shall be modified to reflect the Commitment of such
assignee and any remaining Commitment of such assigning Lender and, if any
such assignment occurs after the issuance of the Notes hereunder, the
assigning Lender shall, upon the effectiveness of such assignment or as
promptly thereafter as practicable, surrender its applicable Notes to
Administrative Agent for cancellation, and thereupon new Notes shall be
issued to the assignee substantially in the form of Exhibit IIIA annexed
hereto or Exhibit IIIB, as the case may be, with appropriate insertions, to
reflect the new Commitments and/or outstanding Term Loans, as the case may
be, of the assignee and/or the assigning Lender.
(ii) Acceptance by Administrative 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 Administrative Agent pursuant to subsection 2.7B(iii)(a),
Administrative Agent shall, if such Assignment Agreement has been completed
and is in substantially the form of Exhibit VII hereto and if
Administrative Agent has consented to the assignment evidenced thereby to
the extent such consent is required pursuant to subsection 9.1B(i)), (a)
accept such Assignment Agreement by executing a counterpart thereof as
provided therein (which acceptance shall evidence any required consent of
Administrative Agent to such assignment), (b) record the information
contained therein in the Register and (c) give prompt notice thereof to
Company. Administrative Agent shall maintain a copy of each Assignment
Agreement delivered to and accepted by it as provided in this subsection
9.1B(ii).
C. Participations. The holder of any participation, other than an Affiliate
of the Lender granting such participation, shall not be entitled to require such
Lender to take or omit to take any action hereunder except action directly
affecting (i) the extension of the scheduled final maturity date of any Loan
allocated to such participation, (ii) a reduction of the principal amount of or
the rate of interest payable on any Loan allocated to such participation or
(iii) a release of Collateral, and all amounts payable by Company hereunder
(including without limitation amounts payable to such Lender pursuant to
subsections 2.6D and 2.7) shall be determined as if such Lender had not sold
such participation. Company and each Lender hereby acknowledge and agree that,
solely for purposes of subsection 9.5, (a) any participation will give rise to a
direct obligation of Company to the participant and (b) the participant shall be
considered to be a "Lender".
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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 Company and such Lender, be
relieved of any of its obligations hereunder as a 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 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,
Company agrees to pay promptly (i) all the actual and reasonable costs and
expenses of preparation of the Loan Documents; (ii) all the costs of furnishing
all opinions by counsel for Company (including without limitation any opinions
requested by Lenders as to any legal matters arising hereunder) and of 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 Administrative Agent in connection with the
negotiation, preparation, 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 Company; (iv) all the
costs and expenses of creating and perfecting the Liens in favor of
Administrative Agent for the benefit of Lenders pursuant to the Loan Documents,
including filing and recording fees and expenses, title insurance, fees and
expenses of counsel for providing such opinions as Lenders may reasonably
request and fees and expenses of legal counsel to Administrative Agent
(including local counsel); (v) all other actual and reasonable costs and
expenses incurred by Administrative Agent in connection with the syndication of
the Commitments and the negotiation, preparation and execution of the Loan
Documents and the transactions contemplated hereby and thereby; provided that
such costs and expenses of syndication shall not exceed $10,000; and (vi) after
the occurrence of an Event of Default, all costs and expenses, including
reasonable attorneys' fees (including allocated costs of internal counsel) and
costs of settlement, incurred by Administrative Agent and Lenders in enforcing
any Obligations of or in collecting any payments due from Company hereunder or
under the other Loan Documents by reason of such 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.
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9.3 Indemnity.
In addition to the payment of expenses pursuant to subsection 9.2, whether
or not the transactions contemplated hereby shall be consummated, Company agrees
to defend, indemnify, pay and hold harmless Agents and Lenders, and the
officers, directors, partners, employees, agents and affiliates of Agents and
Lenders (collectively called the "Indemnitees") from and against any and all
other 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 in connection with any investigative,
administrative or judicial proceeding commenced or threatened by any Person,
whether or not any such Indemnitee shall be designated as a party or a potential
party thereto), 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, rules or
regulations and Environmental Laws), 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 relating to or arising out of this Agreement
or the other Loan Documents or the transactions contemplated hereby or thereby
(including without limitation Lenders' agreement to make the Loans hereunder or
the use or intended use of the proceeds of any of the Loans) or the statements
contained in the commitment letter delivered by any Lender to Company with
respect thereto (collectively called the "Indemnified Liabilities"); provided
that Company shall not have any obligation to any Indemnitee hereunder with
respect to any Indemnified Liabilities to the extent such Indemnified
Liabilities arise solely from the gross negligence or willful misconduct of that
Indemnitee as determined by a final judgment of a court of competent
jurisdiction. 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, Company shall contribute the
maximum portion that it is permitted to pay and satisfy under applicable law 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 of any Event of
Default each Lender is hereby authorized by Company at any time or from time to
time, without notice to 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, but not
including trust accounts) and any other Indebtedness at any time held or owing
by that Lender to or for the credit or the account of Company against and on
account of the obligations and liabilities of 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
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Section 7 and although said obligations and liabilities, or any of them, may be
contingent or unmatured.
9.5 Ratable Sharing.
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
Administrative 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
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. 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 Company to
that holder with respect thereto as fully as if that holder were owed the
amount of the participation held by that holder.
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 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 amount of any of the Commitments or
reduces 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 (but not the date of any scheduled installment of principal)
of any of the Loans; postpones the date or reduces the amount of any scheduled
payment (but not prepayment) (other than the prepayment required by subsection
2.4B(iii)(g))) of principal of any of the Loans; postpones the date on which any
interest or any fees are payable; 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
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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; 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 Credit
Partners, Administrative 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, (iii) no increase in the Commitments of any Lender over the amount
thereof then in effect shall be effective without the written concurrence of
that Lender, it being understood and agreed that in no event shall waivers or
modifications of conditions precedent, covenants, Events of Default, Potential
Events of Default or of a mandatory prepayment or a reduction of any or all of
the Commitments be deemed to constitute an increase of the Commitment of any
Lender and that an increase in the available portion of any Commitment of any
Lender shall not be deemed to constitute an increase in the Commitment of such
Lender, and (iv) no amendment, modification, termination or waiver of any
provision of Section 7 or of any other provision of this Agreement which, by
its terms, expressly requires the approval or concurrence of any Agent shall be
effective without the written concurrence of such Agent. Administrative 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
Company in any case shall entitle 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 Company, on Company. Notwithstanding anything in this
subsection 9.6A to the contrary, the Notes and Aircraft Chattel Mortgages may
be amended in the manner and for the purposes set forth in subsection 9.21
without the consents required by this subsection 9.6A.
B. If, in connection with any proposed change, waiver, discharge or
termination to any of the provision of this Agreement as contemplated by the
proviso 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 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)
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 Company and Administrative Agent (or if
Administrative Agent is also the Lender to be terminated, the successor
Administrative Agent) shall agree, as of such date, to 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 Administrative
Agent (or if Administrative Agent is also the Lender to be
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terminated, the successor Administrative Agent) to evidence the substitution of
such Lender shall have been received and approved by Administrative 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 or other
communication herein required or permitted to be given shall be in writing and
may be personally served, telexed 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, upon receipt of telefacsimile or telex, or three
Business Days after depositing it in the United States mail with postage prepaid
and properly addressed; provided that notices to Credit Partners, Syndication
Agent and Administrative Agent 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 Company and
Administrative 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 Administrative 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, the agreements of Company set forth in subsections 2.6D, 2.7, 9.2, 9.3
and 9.4 and the agreements of 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.
9.10 Failure or Indulgence Not Waiver; Remedies Cumulative.
No failure or delay on the part of Administrative 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 Agreement and the other Loan Documents are
cumulative to, and not exclusive of, any rights or remedies otherwise available.
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9.11 Marshalling; Payments Set Aside.
Neither Administrative Agent nor any Lender shall be under any obligation
to marshal any assets in favor of Company or any other party or against or in
payment of any or all of the Obligations. To the extent that Company makes a
payment or payments to Administrative Agent or Lenders (or to Administrative
Agent for the benefit of Lenders), or Administrative 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 Lenders hereunder are several and no Lender shall be
responsible for the obligations or Commitments of any other Lender hereunder.
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, and each Lender shall be entitled to protect and enforce its
rights arising out of this Agreement and it shall not be necessary for any other
Lender to be joined as an additional party in any proceeding for such purpose.
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 SHALL BE GOVERNED BY, AND SHALL BE CONSTRUED AND ENFORCED IN
ACCORDANCE WITH, THE INTERNAL LAWS OF THE STATE OF NEW YORK, WITHOUT REGARD TO
CONFLICTS OF LAWS PRINCIPLES.
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110
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 Lenders (it being understood that
Lenders' rights of assignment are subject to subsection 9.1). Neither Company's
rights or obligations hereunder nor any interest therein may be assigned or
delegated by Company without the prior written consent of all Lenders.
9.17 Consent to Jurisdiction and Service of Process.
ALL JUDICIAL PROCEEDINGS BROUGHT AGAINST COMPANY 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 COMPANY 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 TO APPEAL TO A COURT IN THE STATE OF NEW YORK).
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 Company at its address provided in subsection 9.8, such service
being hereby acknowledged by Company to be sufficient for personal jurisdiction
in any action against Company in any such court and to be otherwise effective
and binding service in every respect. Nothing herein shall affect the right to
serve process in any other manner permitted by law or shall limit the right of
any Lender to bring proceedings against 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 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
103
111
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 IS IRREVOCABLE, MEANING THAT IT MAY NOT BE
MODIFIED EITHER ORALLY OR IN WRITING, AND 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
RELATING TO THE LOANS MADE HEREUNDER. In the event of litigation, this Agreement
may be filed as a written consent to a trial by the court.
9.19 Confidentiality.
Each Lender shall hold all non-public information obtained pursuant to the
requirements of this Agreement which has been identified as confidential by
Company in accordance with such Lender's customary procedures for handling
confidential information of this nature, it being understood and agreed by
Company that in any event a Lender may make disclosures to any Person who
evaluates, approves, structures or administers the Loans on behalf of a Lender
and who is subject to this confidentiality provision, or, reasonably required by
any bona fide assignee, transferee or participant in connection with the
contemplated assignment or transfer by such Lender of any Loans or any
participation therein or as required or requested by any governmental or
regulatory agency (including, without limitation, the National Association of
Insurance Commissioners) or representative thereof or pursuant to legal process
or in accordance with any applicable law or regulation; provided that, unless
specifically prohibited by applicable law or court order, each Lender shall
notify Company of any request by any governmental or regulatory agency or
representative thereof (other than any such request in connection with any
examination of the financial condition of such Lender by such governmental or
regulatory agency) for disclosure of any such non-public information prior to
disclosure of such information; and provided, further that in no event shall any
Lender be obligated or required to return any materials furnished by Company or
any of its Subsidiaries.
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. This Agreement shall become effective upon the execution of a
counterpart hereof by each of the parties hereto and receipt by Company,
Syndication Agent and Administrative Agent of written or telephonic notification
of such execution and authorization of delivery thereof.
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112
9.21 Cooperation in Refinancing, Syndication and Assignment.
Company, Administrative Agent and Lenders agree that, in connection with
the refinancing, syndication or assignment of the Notes, to the extent deemed
reasonably necessary by Company or Administrative Agent, some or all of the
Financed Aircraft may be transferred to a Special Purpose Subsidiary which will
lease such aircraft to Company under arrangements reasonably acceptable to
Company and Administrative Agent all in a manner designed to retain the economic
obligations and benefits of the Company, Administrative Agent and Lenders
hereunder and under the other Loan Documents. Company, Administrative Agent and
Lenders further agree that, in connection with an assignment of Notes to a
Person who will not become a Lender hereunder, Administrative Agent and Lenders
shall agree to any amendments to the Notes to be assigned and the related
Aircraft Chattel Mortgages and/or releases of the related First Aircraft Chattel
Mortgage and Second Aircraft Chattel Mortgage, in each case, as requested by
Company; provided that the terms of such amended Notes and Aircraft Chattel
Mortgages do not violate any term of this Agreement and provided, further, that
such amendments shall be effective only upon and simultaneous with (i) the
assignment of such Notes and Aircraft Chattel Mortgages to such Person, (ii)
indefeasible payment in full to Lenders of an amount equal to all amounts owing
under such Notes and (iii) releases from any liability relating to such Notes
and Aircraft Chattel Mortgages of Administrative Agent and Lenders in form and
substance satisfactory to Administrative Agent.
[Remainder of page intentionally left blank]
105
113
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:
ATLAS AIR, INC.
By:
------------------------------
Name:
Title:
Notice Address:
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇ ▇▇▇▇▇▇▇▇▇
Senior Vice President,
General Counsel and Secretary
ADMINISTRATIVE AGENT:
BANKERS TRUST COMPANY,
as Administrative Agent and Lender
By:
---------------------------------------
Name:
Title:
Notice Address:
Bankers Trust Company
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇-▇
114
SYNDICATION AGENT:
▇▇▇▇▇▇▇ ▇▇▇▇▇ CREDIT PARTNERS L.P., as
Syndication Agent and Lender
---------------------------------------
Notice Address:
▇▇▇▇▇▇▇ Sachs Credit Partners L.P.
c/o Goldman, ▇▇▇▇▇ & Co.
▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇▇▇▇
LENDERS:
BANK ONE, COLORADO, N.A.
By:
---------------------------------------
Name:
Title:
CITY NATIONAL BANK
By:
---------------------------------------
Name:
Title:
COLORADO NATIONAL BANK
By:
---------------------------------------
Name:
Title:
S-2
115
FIRST SECURITY BANK
By:
---------------------------------------
Name:
Title:
FUJI BANK
By:
---------------------------------------
Name:
Title:
IMPERIAL BANK, A CALIFORNIA BANKING
CORPORATION
By:
---------------------------------------
Name:
Title:
S-3
116
KEYBANK, NATIONAL ASSOCIATION
By:
---------------------------------------
Name:
Title:
KEYPORT LIFE INSURANCE COMPANY
By: Chancellor LGT Senior Secured Management,
Inc., as Portfolio Advisor
By:
---------------------------------------
Name:
Title:
THE MAINSTAY FUNDS, on behalf of its
HIGH YIELD CORPORATE BOND FUND SERIES
By: ▇▇▇▇▇▇-▇▇▇▇▇▇▇ Financial Corporation
Its: Investment Advisor
By:
---------------------------------------
Name:
Title:
MASSACHUSETTS MUTUAL LIFE INSURANCE
CO.
By:
---------------------------------------
Name:
Title:
S-4
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▇▇▇▇▇▇▇ ▇▇▇▇▇ SENIOR FLOATING RATE
FUND, INC.
By:
---------------------------------------
Name:
Title:
NORWEST-COLORADO N.A.
By:
---------------------------------------
Name:
Title:
OCTAGON CREDIT INVESTORS LOAN PORTFOLIO
(A UNIT OF THE CHASE MANHATTAN BANK)
By:
---------------------------------------
Name:
Title:
THE SAKURA BANK, LIMITED
By:
---------------------------------------
Name:
Title:
SENIOR DEBT PORTFOLIO
By: Boston Management & Research,
as Investment Advisor
By:
---------------------------------------
Name:
Title:
S-5
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SOUTHERN PACIFIC THRIFT AND LOAN
ASSOCIATION
By:
---------------------------------------
Name:
Title:
TRANSAMERICA BUSINESS CREDIT CORP.
By:
---------------------------------------
Name:
Title:
▇▇▇ ▇▇▇▇▇▇ AMERICAN CAPITAL PRIME RATE
INCOME TRUST
By:
---------------------------------------
Name:
Title:
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119
EXHIBIT 10.58
EXHIBIT I
(FORM OF NOTICE OF BORROWING)
NOTICE OF BORROWING
Pursuant to that certain Third Amended and Restated Credit Agreement dated
as of September 5, 1997, as amended, supplemented or otherwise modified to the
date hereof (said Credit Agreement, as so amended, supplemented or otherwise
modified, being the "CREDIT AGREEMENT", the terms defined therein and not
otherwise defined herein being used herein as therein defined), by and among
Atlas Air, Inc., a Delaware corporation ("COMPANY"), the financial institutions
listed therein as Lenders ("LENDERS"), ▇▇▇▇▇▇▇ Sachs Credit Partners L.P.
(formerly known as Pearl Street L.P.), as syndication agent ("SYNDICATION
AGENT"), and Bankers Trust Company, as administrative agent ("ADMINISTRATIVE
AGENT"), this represents Company's request to borrow from Lenders, in accordance
with their applicable Pro Rata Shares, as follows:
1. Date of borrowing: ___________________, _________
(the "FUNDING DATE")
2. Amount of borrowing: $___________________
3. Interest rate option: |_| a. Base Rate Loans
|_| b. Eurodollar Rate Loans with an
initial Interest Period of
____________ month(s)
4. Purpose of borrowing: |_| a. Purchase of Aircraft
|_| b. Modification of Aircraft
5. Aircraft to be financed with such borrowing:
__________________________ (the "AIRCRAFT").
The proceeds of such Loans are to be deposited in Company's account at
Administrative Agent.
The undersigned officer, to the best of his or her knowledge, and Company
(if the borrowing is for modification of the Aircraft: to the best of its
knowledge) certify that:
(i) the representations and warranties contained in the Credit
Agreement and the other Loan Documents are true, correct and complete in
all material respects on and as of the Funding Date to the same extent as
though made on and as of the date hereof, except to the extent such
representations and warranties specifically relate to an earlier
120
date, in which case such representations and warranties were true,
correct and complete in all material respects on and as of such earlier
date;
(ii) no event has occurred and is continuing or would result from the
consummation of the borrowing contemplated hereby that would constitute an
Event of Default or a Potential Event of Default;
(iii) Company has performed in all material respects all agreements
and satisfied all conditions which the Credit Agreement provides shall be
performed or satisfied by it on or before the date hereof;
(iv) the Company is an air carrier certified under Sections 401 and
604(b) of the Federal Aviation Act;
(v) if the Aircraft is registered to be registered in the United
States, certificates of airworthiness have been duly issued pursuant to the
Federal Aviation Act and are in full force and effect; and
(vi) each Engine of the Aircraft is in compliance with all
airworthiness standards of the FAA or shall be maintained in accordance
with an FAA approved program.
If the borrowing is for the modification of an Aircraft, the invoices
required to determine the amount of such borrowing are attached hereto.
DATED: ATLAS AIR, INC.
--------------------
By:
----------------------------
Name:
Title:
121
EXHIBIT II
(FORM OF NOTICE OF CONVERSION/CONTINUATION)
NOTICE OF CONVERSION/CONTINUATION
Pursuant to that certain Third Amended and Restated Credit Agreement dated
as of September 5, 1997, as amended, supplemented or otherwise modified to the
date hereof (said Credit Agreement, as so amended, supplemented or otherwise
modified, being the "CREDIT AGREEMENT", the terms defined therein and not
otherwise defined herein being used herein as therein defined), by and among
Atlas Air, Inc., a Delaware corporation ("COMPANY"), the financial institutions
listed therein as Lenders ("LENDERS"), ▇▇▇▇▇▇▇ ▇▇▇▇▇ Credit Partners L.P.
(formerly known as Pearl Street L.P.), as syndication agent ("SYNDICATION
AGENT"), and Bankers Trust Company, as administrative agent ("ADMINISTRATIVE
AGENT"), this represents Company's request to borrow from Lenders, in accordance
with their applicable Pro Rata Shares, as follows:
1. Date of conversion/continuation: __________________, _______
2. Amount of Loans being converted/continued: $___________________
3. Nature of conversion/continuation:
|_| a. Conversion of Base Rate Loans to Eurodollar Rate Loans
|_| b. Conversion of Eurodollar Rate Loans to Base Rate Loans
|_| c. Continuation of Eurodollar Rate Loans as such
4. If Loans are being continued as or converted to Eurodollar
Rate Loans, the duration of the new Interest Period that
commences on the conversion/ continuation date:
_______________ month(s)
5. The Loans being continued or converted hereby relate to the
Note or Notes listed below:
Amount of Note Date of Note Related Aircraft
-------------- ------------ ----------------
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122
In the case of a conversion to or continuation of Eurodollar Rate Loans,
the undersigned officer, to the best of his or her knowledge, and Company
certify that no Event of Default or Potential Event of Default has occurred and
is continuing under the Credit Agreement.
DATED: _____________________ ATLAS AIR, INC.
By:
----------------------------
Name:
Title:
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123
EXHIBIT IIIA
(FORM OF REVOLVING NOTE)
ATLAS AIR, INC.
PROMISSORY NOTE DUE SEPTEMBER 30, 1999
$(1) New York, New York
____________, 199_
FOR VALUE RECEIVED, ATLAS AIR, INC., a Delaware corporation ("COMPANY"),
promises to pay to the order of (2) ("PAYEE") or its registered assigns, on or
before September 30, 1999, the lesser of (x) (3) ($(1)) and (y) the unpaid
principal amount of all purchase money advances made in respect of the Aircraft
referred to below by Payee to Company as Revolving Loans under the Credit
Agreement referred to below.
Company also promises to pay interest on the unpaid principal amount
hereof, from the date hereof until paid in full, at the rates and at the times
which shall be determined in accordance with the provisions of that certain
Third Amended and Restated Credit Agreement dated as of September 5, 1997 by and
among Company, the financial institutions listed therein as Lenders, ▇▇▇▇▇▇▇
Sachs Credit Partners L.P., as Syndication Agent and Bankers Trust Company, as
Administrative Agent (said Credit Agreement, as it may be amended, supplemented
or otherwise modified from time to time, being the "CREDIT AGREEMENT", the terms
defined therein and not otherwise defined herein being used herein as therein
defined).
This Note is one of Company's "Revolving Notes" in the aggregate principal
amount of $250,000,000 and is issued pursuant to and entitled to the benefits of
the Credit Agreement, to which reference is hereby made for a more complete
statement of the terms and conditions under which the Revolving Loans evidenced
hereby were made and are to be repaid.
This Note is being issued with reference to the purchase and/or
modification of the following Eligible Aircraft: _______________________ (the
"AIRCRAFT").
----------
(1) Insert amount of Lender's Pro Rata share of Maximum Note Amount.
(2) Insert Lender's name in capital letters.
(3) Insert amount of Lender's Pro Rata share of Maximum Note Amount.
IIIA-1
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All payments of principal and interest in respect of this Note shall be
made in lawful money of the United States of America in same day funds at the
Funding and Payment Office or at such other place as shall be designated in
writing for such purpose in accordance with the terms of the Credit Agreement.
Unless and until an Assignment Agreement effecting the assignment or transfer of
this Note shall have been accepted by Administrative Agent as provided in
subsection 9.1B(ii) of the Credit Agreement, Company and Administrative Agent
shall be entitled to deem and treat Payee as the owner and holder of this Note
and the Loans evidenced hereby. Payee hereby agrees, by its acceptance hereof,
that before disposing of this Note or any part hereof it will make a notation
hereon of all principal payments previously made hereunder and of the date to
which interest hereon has been paid; provided, however, that the failure to make
a notation of any payment made on this Note shall not limit or otherwise affect
the obligations of Company hereunder with respect to payments of principal of or
interest on this Note.
Whenever any payment on this Note shall be stated to be due on a day which
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 on this Note.
This Note is subject to mandatory prepayment as provided in subsection
2.4B(iii) of the Credit Agreement and to prepayment at the option of Company as
provided in subsection 2.4B(i) of the Credit Agreement.
THIS NOTE AND THE RIGHTS AND OBLIGATIONS OF COMPANY AND PAYEE HEREUNDER
SHALL BE GOVERNED BY, AND SHALL BE CONSTRUED AND ENFORCED IN ACCORDANCE WITH,
THE INTERNAL LAWS OF THE STATE OF NEW YORK (INCLUDING SECTION 5-1401 OF THE
GENERAL OBLIGATIONS LAW OF THE STATE OF NEW YORK), WITHOUT REGARD TO CONFLICTS
OF LAWS PRINCIPLES.
Upon the occurrence of an Event of Default, the unpaid balance of the
principal amount of this Note, together with all accrued and unpaid interest
thereon, may become, or may be declared to be, due and payable in the manner,
upon the conditions and with the effect provided in the Credit Agreement.
This Note is secured by the Collateral described in the Chattel Mortgage
and Security Agreement (Aircraft No. __) dated as of ____________________,
between Company and Administrative Agent, each Second Aircraft Chattel Mortgage,
whether now or hereafter in effect, and the other Collateral Documents.
The terms of this Note are subject to amendment only in the manner provided
in the Credit Agreement.
This Note is subject to restrictions on transfer or assignment as provided
in subsections 9.1 and 9.16 of the Credit Agreement.
IIIA-2
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No reference herein to the Credit Agreement and no provision of this Note
or the Credit Agreement shall alter or impair the obligations of Company, which
are absolute and unconditional, to pay the principal of and interest on this
Note at the place, at the respective times, and in the currency herein
prescribed.
Company promises to pay all costs and expenses, including reasonable
attorneys' fees, all as provided in subsection 9.2 of the Credit Agreement,
incurred in the collection and enforcement of this Note. Company and any
endorsers of this Note hereby consent to renewals and extensions of time at or
after the maturity hereof, without notice, and hereby waive diligence,
presentment, protest, demand and notice of every kind and, to the full extent
permitted by law, the right to plead any statute of limitations as a defense to
any demand hereunder.
IN WITNESS WHEREOF, Company has caused this Note to be duly executed and
delivered by its officer thereunto duly authorized as of the date and at the
place first written above.
ATLAS AIR, INC.
By:
-------------------------
Name:
Title:
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126
TRANSACTIONS
ON
REVOLVING NOTE
Outstanding
Type of Amount of Amount of Principal
Loan Made Loan Made Principal Paid Balance Notation
Date This Date This Date This Date This Date Made By
---- ----------- ----------- ----------- ----------- -------
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EXHIBIT IIIB
(FORM OF TERM NOTE)
ATLAS AIR, INC.
PROMISSORY NOTE DUE SEPTEMBER 30, 2002
$(1) New York, New York
September 30, 1999
FOR VALUE RECEIVED, ATLAS AIR, INC., a Delaware corporation ("COMPANY"),
promises to pay to the order of (2) ("PAYEE") or its registered assigns the
principal amount of (3) ($(1)) in the installments referred to below.
Company also promises to pay interest on the unpaid principal amount
hereof, from the date hereof until paid in full, at the rates and at the times
which shall be determined in accordance with the provisions of that certain
Third Amended and Restated Credit Agreement dated as of September 5, 1997 by and
among Company, the financial institutions listed therein as Lenders, ▇▇▇▇▇▇▇
▇▇▇▇▇ Credit Partners L.P., as Syndication Agent and Administrative Agent (said
Credit Agreement, as it may be amended, supplemented or otherwise modified from
time to time, being the "CREDIT AGREEMENT", the terms defined therein and not
otherwise defined herein being used herein as therein defined).
Company shall make principal payments on this Note in consecutive quarterly
installments, commencing on December 31, 1999 and ending on September 30, 2002.
Each such installment shall be due on the date specified in the Credit Agreement
and in an amount determined in accordance with the provisions thereof; provided
that the last such installment shall be in an amount sufficient to repay the
entire unpaid principal balance of this Note, together with all accrued and
unpaid interest thereon.
This Note is one of Company's "Term Notes" in the aggregate principal
amount of $4 and is issued pursuant to and entitled to the benefits of the
Credit Agreement, to
--------
(1) Insert amount of Lender's Term Loan in numbers.
(2) Insert Lender's name in capital letters.
(3) Insert amount of Lender's Term Loan in words.
(4) Insert aggregate amount of all Term Loans in numbers.
IIIB-1
128
which reference is hereby made for a more complete statement of the terms and
conditions under which the Term Loan evidenced hereby was made and is to be
repaid.
This Note is being issued upon conversion of a Revolving Note dated
_____________ which was issued with reference to the purchase and/or
modification of the following Eligible Aircraft: _____________________________.
All payments of principal and interest in respect of this Note shall be
made in lawful money of the United States of America in same day funds at the
Funding and Payment Office or at such other place as shall be designated in
writing for such purpose in accordance with the terms of the Credit Agreement.
Unless and until an Assignment Agreement effecting the assignment or transfer of
this Note shall have been accepted by Administrative Agent as provided in
subsection 9.1B(ii) of the Credit Agreement, Company and Administrative Agent
shall be entitled to deem and treat Payee as the owner and holder of this Note
and the Loan evidenced hereby. Payee hereby agrees, by its acceptance hereof,
that before disposing of this Note or any part hereof it will make a notation
hereon of all principal payments previously made hereunder and of the date to
which interest hereon has been paid; provided, however, that the failure to make
a notation of any payment made on this Note shall not limit or otherwise affect
the obligations of Company hereunder with respect to payments of principal of or
interest on this Note.
Whenever any payment on this Note shall be stated to be due on a day which
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 on this Note.
This Note is subject to mandatory prepayment as provided in subsection
2.4B(iii) of the Credit Agreement and to prepayment at the option of Company as
provided in subsection 2.4B(i) of the Credit Agreement.
THIS NOTE AND THE RIGHTS AND OBLIGATIONS OF COMPANY AND PAYEE HEREUNDER
SHALL BE GOVERNED BY, AND SHALL BE CONSTRUED AND ENFORCED IN ACCORDANCE WITH,
THE INTERNAL LAWS OF THE STATE OF NEW YORK (INCLUDING SECTION 5-1401 OF THE
GENERAL OBLIGATIONS LAW OF THE STATE OF NEW YORK), WITHOUT REGARD TO CONFLICTS
OF LAWS PRINCIPLES.
Upon the occurrence of an Event of Default, the unpaid balance of the
principal amount of this Note, together with all accrued and unpaid interest
thereon, may become, or may be declared to be, due and payable in the manner,
upon the conditions and with the effect provided in the Credit Agreement.
This Note is secured by the Collateral described in the Chattel Mortgage
and Security Agreement (Aircraft No. ___) dated as of ___________________,
between Company and Administrative Agent, each Second Aircraft Chattel
Mortgage, whether now or hereafter in effect, and the other Collateral
Documents.
IIIB-2
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The terms of this Note are subject to amendment only in the manner provided
in the Credit Agreement.
This Note is subject to restrictions on transfer or assignment as provided
in subsections 9.1 and 9.16 of the Credit Agreement.
No reference herein to the Credit Agreement and no provision of this Note
or the Credit Agreement shall alter or impair the obligations of Company, which
are absolute and unconditional, to pay the principal of and interest on this
Note at the place, at the respective times, and in the currency herein
prescribed.
Company promises to pay all costs and expenses, including reasonable
attorneys' fees, all as provided in subsection 9.2 of the Credit Agreement,
incurred in the collection and enforcement of this Note. Company and any
endorsers of this Note hereby consent to renewals and extensions of time at or
after the maturity hereof, without notice, and hereby waive diligence,
presentment, protest, demand and notice of every kind and, to the full extent
permitted by law, the right to plead any statute of limitations as a defense to
any demand hereunder.
IN WITNESS WHEREOF, Company has caused this Note to be duly executed and
delivered by its officer thereunto duly authorized as of the date and at the
place first written above.
ATLAS AIR, INC.
By:
--------------------------
Name:
Title:
IIIB-3
130
PAYMENTS
ON
TERM NOTE
Outstanding
Amount of Principal
Principal Paid Balance Notation
Date This Date This Date Made By
---- --------- --------- -------
IIIB-4
131
EXHIBIT IV
(FORM OF COMPLIANCE CERTIFICATE)
COMPLIANCE CERTIFICATE
THE UNDERSIGNED HEREBY CERTIFY THAT:
(1) We are the duly elected (Title) and (Title) of Atlas Air, Inc., a
Delaware corporation ("COMPANY");
(2) We have reviewed the terms of that certain Third Amended and
Restated Credit Agreement dated as of September 5, 1997, as amended,
supplemented or otherwise modified to the date hereof (said Credit
Agreement, as so amended, supplemented or otherwise modified, being the
"CREDIT AGREEMENT", the terms defined therein and not otherwise defined
herein being used herein as therein defined), by and among Atlas Air, Inc.,
a Delaware corporation ("COMPANY"), the financial institutions listed
therein as Lenders ("LENDERS"), ▇▇▇▇▇▇▇ ▇▇▇▇▇ Credit Partners L.P.
(formerly known as Pearl Street L.P.), as syndication agent ("SYNDICATION
AGENT"), and Bankers Trust Company, as administrative agent
("ADMINISTRATIVE AGENT"), and the terms of the other Loan Documents, and we
have made, or have caused to be made under our supervision, a review in
reasonable detail of the transactions and condition of Company and its
Subsidiaries during the accounting period covered by the attached financial
statements; and
(3) The examination described in paragraph (2) above did not disclose,
and we have no knowledge of, the existence of any condition or event which
constitutes an Event of Default or Potential Event of Default during or at
the end of the accounting period covered by the attached financial
statements or as of the date of this Certificate(, except as set forth
below).
(Set forth (below) (in a separate attachment to this Certificate) are all
exceptions to paragraph (3) above listing, in detail, the nature of the
condition or event, the period during which it has existed and the action which
Company has taken, is taking, or proposes to take with respect to each such
condition or event:
-------------------------------------------------------------------------------
-------------------------------------------------------------------------------
-------------------------------------------------------------------------------
-------------------------------------------------------------------------------)
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The foregoing certifications, together with the computations set forth in
Attachment No. 1 annexed hereto and made a part hereof and the financial
statements delivered with this Certificate in support hereof, are made and
delivered this __________ day of _____________, 199_ pursuant to subsection
5.1(iv) of the Credit Agreement.
ATLAS AIR, INC.
By:
--------------------------
Name:
Title:
▇▇-▇
▇▇▇
▇▇▇▇▇▇▇▇▇▇ ▇▇. ▇
TO COMPLIANCE CERTIFICATE
This Attachment No. 1 is attached to and made a part of a Compliance
Certificate dated as of ____________, 199_ and pertains to the period from
____________, 199_ to ____________, 199_. Subsection references herein relate to
subsections of the Credit Agreement.
A. INDEBTEDNESS
1. Indebtedness permitted under subsection 6.1(xii): $___________
2. Aggregate liability, contingent or otherwise, outstanding
under subsection 6.4(vi): $___________
3. Maximum permitted under subsection
6.1(xii)(($30,000,000)-(A.2)): $___________
B. LIENS
1. Indebtedness secured by Liens permitted under subsec-
tion 6.2A(v): $___________
2. Maximum permitted under subsection 6.2A(v): $10,000,000
C. INVESTMENTS
1. Consolidated book value of the assets of Company and
its Subsidiaries: $___________
2. 15% of C.1: $___________
3. Investments permitted under subsection 6.3(iii): $___________
4. Maximum permitted under subsection 6.3(iii) (C.2): $___________
5. Investments permitted under subsection 6.3(viii): $___________
6. Maximum permitted under subsection 6.3(viii): $5,000,000
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134
D. INVESTMENTS IN JOINT VENTURES(1)
1. Lesser of 25% of Consolidated Net Income for Fiscal
Year and $10,000,000: $___________
2. Dividends declared or paid during Fiscal Year: $___________
3. Contributions to capital of Special Purpose Subsidiaries
during Fiscal Year: $___________
4. Investments made under subsection 6.3(iv): $___________
5. Maximum permitted under subsection 6.3(iv) (1 - 2 - 3): $___________
E. CONTINGENT OBLIGATIONS
1. Contingent Obligations permitted under subsec-
tion 6.4(vi): $___________
2. Indebtedness outstanding under subsection 6.1 (xii): $___________
3. Maximum permitted under subsection 6.4(vi)
(($30,000,000)-(E-2)): $___________
F. RESTRICTED JUNIOR PAYMENTS(2)
1. Lesser of 25% of Consolidated Net Income for Fiscal
Year and $10,000,000: $___________
2. Dividends declared and paid under subsection 6.5(ii): $___________
3. Maximum permitted under subsection 6.5(ii) (F.1): $___________
----------
(1) To be determined with respect to Compliance Certificate delivered with
delivery of year-end financial statements pursuant to subdivision 5.1(iii)
in respect of such Fiscal Year.
(2) To be determined with respect to Compliance Certificate delivered with
delivery of year-end financial statements pursuant to subdivision 5.1(iii)
in respect of such Fiscal Year.
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135
G. MINIMUM INTEREST COVERAGE RATIO (for the four-Fiscal Quarter
period ending _____________, 199_)
1. Consolidated Net Income: $___________
2. Consolidated Interest Expense: $___________
3. Provisions for taxes based on income: $___________
4. Total depreciation expense: $___________
5. Total amortization expense: $___________
6. Other non-cash items reducing Consolidated Net Income: $___________
7. All cash expenditures relating to reserves on the June 30,
1997 balance sheet $___________
8. Other non-cash items increasing Consolidated Net Income: $___________
9. Consolidated Adjusted EBITDA (adjusted for periods
ending prior to December 31, 1996) (1 + 2 + 3 + 4 +
5 + 6 - 7)-(8): $___________
10.Interest Coverage Ratio (9):(2): _____:1:00
11. Minimum ratio required under subsection 6.6A: _____:1:00
H. MAXIMUM LEVERAGE RATIO (as of _____________, 199_)
1. Consolidated Total Debt: $___________
2. Cash and Cash Equivalents in excess of $25,000,000: $___________
3. Consolidated Rental Payments $___________
4. Consolidated Adjusted EBITDA (G.9 above) $___________
5. Leverage Ratio (H.1 - H.2) + (7 x H.3): (H.4 + H.3): _____:1:00
6. Maximum ratio permitted under subsection 6.6B: _____:1:00
IV-5
136
I. MINIMUM CONSOLIDATED NET WORTH (as of _____________, 199_)
1. Consolidated Net Worth: $___________
2. Minimum required under subsection 6.6E: $___________
J. FUNDAMENTAL CHANGES
1. Aggregate value of assets sold in Asset Sales during current
Fiscal Year permitted under subsection 6.7(iii): $___________
2. Maximum permitted under subsection 6.7(iii): $100,000,000
3. Aggregate value of assets sold in Asset Sales after Closing
Date in one or more transactions permitted under subsection
6.7(iii): $___________
4. Maximum permitted under subsection 6.7(iii): $500,000,000
K. CONSOLIDATED CAPITAL EXPENDITURES
1. Consolidated Capital Expenditures for Fiscal Year-to-
date: $___________
2. Maximum Consolidated Capital Expenditures Amount permitted
under subsection 6.7 (viii) for Fiscal Year: $___________
L. LEASES
1. Obligations under leases $___________
2. Maximum permitted under subsection 6.9 $___________
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137
EXHIBIT VII
[FORM OF ASSIGNMENT AGREEMENT]
ASSIGNMENT AGREEMENT
This ASSIGNMENT AGREEMENT (this "Agreement") is entered into by and between
the parties designated as Assignor ("Assignor") and Assignee ("Assignee") above
the signatures of such parties on the Schedule of Terms attached hereto and
hereby made an integral part hereof (the "Schedule of Terms") and relates to
that certain Credit Agreement described in the Schedule of Terms (said Credit
Agreement, as amended, supplemented or otherwise modified to the date hereof and
as it may hereafter be amended, supplemented or otherwise modified from time to
time, being the "Credit Agreement", the terms defined therein and not otherwise
defined herein being used herein as therein defined).
IN CONSIDERATION of the agreements, provisions and covenants herein
contained, the parties hereto hereby agree as follows:
SECTION 1. Assignment and Assumption.
(a) Effective upon the Settlement Date specified in Item 4 of the Schedule
of Terms (the "Settlement Date"), Assignor hereby sells and assigns to Assignee,
without recourse, representation or warranty (except as expressly set forth
herein), and Assignee hereby purchases and assumes from Assignor, that
percentage interest in all of Assignor's rights and obligations as a Lender
arising under the Credit Agreement and the other Loan Documents with respect to
Assignor's Commitment and outstanding Loans, if any, which represents, as of the
Settlement Date, the percentage interest specified in Item 3 of the Schedule of
Terms of all rights and obligations of Lenders arising under the Credit
Agreement and the other Loan Documents with respect to the Commitments and any
outstanding Loans (the "Assigned Share").
(b) In consideration of the assignment described above, Assignee hereby
agrees to pay to Assignor, on the Settlement Date, the principal amount of any
outstanding Loans included within the Assigned Share, such payment to be made by
wire transfer of immediately available funds in accordance with the applicable
payment instructions set forth in Item 5 of the Schedule of Terms.
(c) Assignor hereby represents and warrants that Item 3 of the Schedule of
Terms correctly sets forth the amount of the Commitment and the Pro Rata Share
corresponding to the Assigned Share.
(d) Assignor and Assignee hereby agree that, upon giving effect to the
assignment and assumption described above, (i) Assignee shall be a party to the
Credit Agreement and shall have
VII-1
138
all of the rights and obligations of a Lender under the Loan Documents, and
shall be deemed to have made all of the covenants and agreements contained in
the Loan Documents, arising out of or otherwise related to the Assigned Share,
and (ii) Assignor shall be absolutely released from any of such obligations,
covenants and agreements assumed or made by Assignee in respect of the Assigned
Share. Assignee hereby acknowledges and agrees that the agreement set forth in
this Section 1(d) is expressly made for the benefit of Company, Administrative
Agent, Assignor and the other Lenders and their respective successors and
permitted assigns.
(e) Assignor and Assignee hereby acknowledge and confirm their
understanding and intent that (i) this Agreement shall effect the assignment by
Assignor and the assumption by Assignee of Assignor's rights and obligations
with respect to the Assigned Share, (ii) any other assignments by Assignor of a
portion of its rights and obligations with respect to the Commitments and any
outstanding Loans shall have no effect on the Commitment and the Pro Rata Share
corresponding to the Assigned Share as set forth in Item 3 of the Schedule of
Terms or on the interest of Assignee in any outstanding Loans corresponding
thereto, and (iii) from and after the Settlement Date, Administrative Agent
shall make all payments under the Credit Agreement in respect of the Assigned
Share (including without limitation all payments of principal and accrued but
unpaid interest and commitment fees with respect thereto) (A) in the case of any
such interest and fees that shall have accrued prior to the Settlement Date, to
Assignor, and (B) in all other cases, to Assignee; provided that Assignor and
Assignee shall make payments directly to each other to the extent necessary to
effect any appropriate adjustments in any amounts distributed to Assignor and/or
Assignee by Administrative Agent under the Loan Documents in respect of the
Assigned Share in the event that, for any reason whatsoever, the payment of
consideration contemplated by Section 1(b) occurs on a date other than the
Settlement Date.
SECTION 2. Certain Representations, Warranties and Agreements.
(a) Assignor represents and warrants that it is the legal and beneficial
owner of the Assigned Share, free and clear of any adverse claim.
(b) Assignor shall not be responsible to Assignee for the execution,
effectiveness, genuineness, validity, enforceability, collectibility or
sufficiency of any of the Loan Documents or for any representations, warranties,
recitals or statements made 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 Assignor to Assignee or by or on behalf
of Company or any of its Subsidiaries to Assignor or Assignee in connection with
the Loan Documents and the transactions contemplated thereby or for the
financial condition or business affairs of Company or any other Person liable
for the payment of any Obligations, nor shall Assignor 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.
VII-2
139
(c) Assignee represents and warrants that it is an Eligible Assignee; that
it has experience and expertise in the making of loans such as the Loans; that
it has acquired the Assigned Share for its own account in the ordinary course of
its business and without a view to distribution of the Loans within the meaning
of the Securities Act or the Exchange Act or other federal securities laws (it
being understood that, subject to the provisions of subsection 9.1 of the Credit
Agreement, the disposition of the Assigned Share or any interests therein shall
at all times remain within its exclusive control); and that it has received,
reviewed and approved a copy of the Credit Agreement (including all Exhibits and
Schedules thereto).
(d) Assignee represents and warrants that it has received from Assignor
such financial information regarding Company and its Subsidiaries as is
available to Assignor and as Assignee has requested, that it has made its own
independent investigation of the financial condition and affairs of Company and
its Subsidiaries in connection with the assignment evidenced by this Agreement,
and that it has made and shall continue to make its own appraisal of the
creditworthiness of Company and its Subsidiaries. Assignor shall have no duty or
responsibility, either initially or on a continuing basis, to make any such
investigation or any such appraisal on behalf of Assignee or to provide Assignee
with any other credit or other information with respect thereto, whether coming
into its possession before the making of the initial Loans or at any time or
times thereafter, and Assignor shall not have any responsibility with respect to
the accuracy of or the completeness of any information provided to Assignee.
(e) Each party to this Agreement represents and warrants to the other party
hereto that it has full power and authority to enter into this Agreement and to
perform its obligations hereunder in accordance with the provisions hereof, that
this Agreement has been duly authorized, executed and delivered by such party
and that this Agreement constitutes a legal, valid and binding obligation of
such party, enforceable against such party in accordance with its terms, except
as enforceability may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium or other similar laws affecting creditors' rights
generally and by general principles of equity.
SECTION 3. Miscellaneous.
(a) Each of Assignor and Assignee hereby agrees from time to time, upon
request of the other such party hereto, to take such additional actions and to
execute and deliver such additional documents and instruments as such other
party may reasonably request to effect the transactions contemplated by, and to
carry out the intent of, this Agreement.
(b) Neither this Agreement nor any term hereof may be changed, waived,
discharged or terminated, except by an instrument in writing signed by the party
(including, if applicable, any party required to evidence its consent to or
acceptance of this Agreement) against whom enforcement of such change, waiver,
discharge or termination is sought.
(c) Unless otherwise specifically provided herein, any notice or other
communication herein required or permitted to be given shall be in writing and
may be personally served, telexed
VII-3
140
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, upon
receipt of telefacsimile or telex, or three Business Days after depositing it in
the United States mail with postage prepaid and properly addressed. For the
purposes hereof, the notice address of each of Assignor and Assignee shall be as
set forth on the Schedule of Terms or, as to either such party, such other
address as shall be designated by such party in a written notice delivered to
the other such party. In addition, the notice address of Assignee set forth on
the Schedule of Terms shall serve as the initial notice address of Assignee for
purposes of subsection 9.8 of the Credit Agreement.
(d) In case any provision in or obligation under this Agreement 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.
(e) THIS AGREEMENT AND THE RIGHTS AND OBLIGATIONS OF THE PARTIES HEREUNDER
SHALL BE GOVERNED BY, AND SHALL BE CONSTRUED AND ENFORCED IN ACCORDANCE WITH,
THE INTERNAL LAWS OF THE STATE OF NEW YORK (INCLUDING WITHOUT LIMITATION SECTION
5-1401 OF THE GENERAL OBLIGATIONS LAW OF THE STATE OF NEW YORK), WITHOUT REGARD
TO CONFLICTS OF LAWS PRINCIPLES.
(f) This Agreement shall be binding upon, and shall inure to the benefit
of, the parties hereto and their respective successors and assigns.
(g) This Agreement may be executed in one or more 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.
(h) This Agreement shall become effective upon the date (the "Effective
Date") upon which all of the following conditions are satisfied: (i) the
execution of a counterpart hereof by each of Assignor and Assignee, (ii) the
execution of a counterpart hereof by Company as evidence of its consent hereto
to the extent required under subsection 9.1B(i) of the Credit Agreement, (iii)
the receipt by Administrative Agent of the processing and recordation fee
referred to in subsection 9.1B(i) of the Credit Agreement, (iv) in the event
Assignee is a Non-US Lender (as defined in subsection 2.7B(iii)(a) of the Credit
Agreement), the delivery by Assignee to Administrative Agent of such forms,
certificates or other evidence with respect to United States federal income tax
withholding matters as Assignee may be required to deliver to Administrative
Agent pursuant to said subsection 2.7B(iii)(a), (v) the execution of a
counterpart hereof by Administrative Agent as evidence of its acceptance hereof
in accordance with subsection 9.1B(ii) of the Credit Agreement, and (vi) the
receipt by Administrative Agent of originals or telefacsimiles of the
counterparts described above and authorization of delivery thereof.
VII-4
141
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed and delivered by their respective officers thereunto duly
authorized, such execution being made as of the Effective Date in the applicable
spaces provided on the Schedule of Terms.
[Remainder of page intentionally left blank]
VII-5
142
SCHEDULE OF TERMS
1. Borrower: Atlas Air, Inc.
2. Name and Date of Credit Agreement: Third Amended and Restated Credit
Agreement dated as of September 5, 1997, by and among Atlas Air, Inc.,
the financial institutions listed therein as Lenders, ▇▇▇▇▇▇▇ ▇▇▇▇▇
Credit Partners L.P., as syndication agent, and Bankers Trust Company,
as administrative agent.
3. Amounts:
(a) Aggregate Commitments of all Lenders: $250,000,000
(b) Assigned Share/Pro Rata Share: ___________%
(c) Amount of Assigned Share of Commitments: $___________
4. Settlement Date: ____________, 199_
5. Payment Instructions:
ASSIGNOR: ASSIGNOR:
_____________________________ _____________________________
_____________________________ _____________________________
_____________________________ _____________________________
Attention: _________________ Attention: _________________
Reference: _________________ Reference: _________________
6. Notice Addresses:
ASSIGNOR: ASSIGNOR:
_____________________________ _____________________________
_____________________________ _____________________________
_____________________________ _____________________________
Attention: _________________ Attention: _________________
Reference: _________________ Reference: _________________
7. Signatures:
[NAME OF ASSIGNOR], [NAME OF ASSIGNEE],
as Assignor as Assignee
By: By:
------------------------------ ------------------------------
Name: Name:
Title: Title:
VII-6
143
Accepted in accordance with sub-
section 9.1B(ii) [, and consented to in
accordance with subsection 9.1B(i),]
of the Credit Agreement
BANKERS TRUST COMPANY,
as Administrative Agent
By:
-------------------------------
Name:
Title:
ATLAS AIR, INC.,
By:
-------------------------------
Name:
Title:
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144
EXHIBIT VIII
[FORM OF CERTIFICATE RE NON-BANK STATUS]
CERTIFICATE RE NON-BANK STATUS
Reference is hereby made to that certain Third Amended and Restated Credit
Agreement dated as of September 5, 1997 (said Credit Agreement, as amended,
supplemented or otherwise modified to the date hereof, being the "Credit
Agreement") by and among Atlas Air, Inc., a Delaware corporation ("Company"),
the financial institutions listed therein as Lenders ("Lenders"), ▇▇▇▇▇▇▇ Sachs
Credit Partners L.P. (formerly known as Pearl Street L.P.), as syndication agent
("Syndication Agent"), and Bankers Trust Company, as administrative agent
("Administrative Agent"). Pursuant to subsection 2.7B(iii) of the Credit
Agreement, the undersigned hereby certifies that it is not a "bank" or other
Person described in Section 881(c)(3) of the Internal Revenue Code of 1986, as
amended.
[NAME OF LENDER]
By:
-----------------------------
Name:
Title:
VIII-1
145
EXHIBIT IX
[FORM OF FINANCIAL CONDITION CERTIFICATE]
FINANCIAL CONDITION CERTIFICATE
This FINANCIAL CONDITION CERTIFICATE (this "Certificate") is delivered in
connection with that certain Third Amended and Restated Credit Agreement dated
as of September 5, 1997, as amended, supplemented or otherwise modified to the
date hereof (said Credit Agreement, as so amended, supplemented or otherwise
modified, being the "Credit Agreement", the terms defined therein and not
otherwise defined herein being used herein as therein defined), by and among
Atlas Air, Inc., a Delaware corporation ("Company"), the financial institutions
listed therein as Lenders ("Lenders"), ▇▇▇▇▇▇▇ ▇▇▇▇▇ Credit Partners L.P.
(formerly known as Pearl Street L.P.), as syndication agent ("Syndication
Agent"), and Bankers Trust Company, as administrative agent ("Administrative
Agent"). Capitalized terms used herein without definition have the same meanings
as in the Credit Agreement.
A. I am the duly qualified and acting chief financial officer of Company.
In such capacity I have participated actively in the management of its financial
affairs and am familiar with its financial statements and those of its
Subsidiaries. I have, together with other officers of Company, acted on behalf
of Company in connection with the negotiation of the Credit Agreement and I am
familiar with the terms and conditions thereof.
B. I have carefully reviewed the contents of this Certificate, and I have
conferred with counsel for Company for the purpose of discussing the meaning of
its contents.
C. In connection with preparing for the consummation of the transactions
and financings contemplated by the Credit Agreement (the "Proposed
Transactions"), I have participated in the preparation of, and I have reviewed,
pro forma projections of net income and cash flows for Company and its
Subsidiaries for the fiscal years of Company ending December 31, 1997 through
September, 2002, inclusive (the "Projected Financial Statements"). The Projected
Financial Statements were prepared on the basis of information available at
[June 30, 1997]. I know of no facts that have occurred since such date that
would lead me to believe that the Projected Financial Statements are inaccurate
in any material respect. The Projected Financial Statements do not reflect (i)
any potential changes in interest rates from those assumed in the Projected
Financial Statements, (ii) any potential material, adverse changes in general
business conditions, or (iii) any potential changes in income tax laws.
D. In connection with the preparation of the Projected Financial
Statements, I have made such investigations and inquiries as I have deemed
necessary and prudent therefor and, specifically, have relied on historical
information with respect to revenues, expenses and other relevant items supplied
by the supervisory personnel of Company and its Subsidiaries directly
responsible for the various operations involved. Although any assumptions and
any projections
IX-1
146
by necessity involve uncertainties and approximations, I believe, based on my
discussions with other members of management, that the assumptions on which the
Projected Financial Statements are based are reasonable. Based thereon, I
believe that the projections for Company and its Subsidiaries, taken as a whole,
reflected in the Projected Financial Statements provide reasonable estimations
of future performance, subject, as stated above, to the uncertainties and
approximations inherent in any projections.
Based on the foregoing, I have reached the following conclusions:
1. Company is not now, nor will the incurrence of the Obligations
under the Credit Agreement and the incurrence of the other obligations
contemplated by the Proposed Transactions render Company "insolvent" as
defined in this paragraph 1. The recipients of this Certificate and I have
agreed that, in this context, "insolvent" means that the present fair value
of assets is less than the amount that will be required to pay the probable
liability on existing debts as they become absolute and matured. We have
also agreed that the term "debts" includes any legal liability, whether
matured or unmatured, liquidated or unliquidated, absolute, fixed or
contingent. Valuation of Company on the basis thereof would reflect the net
value of Company as $__________ representing the difference between asset
values of $__________ (based upon, with respect to aircraft, the book value
of the aircraft as of June 30, 1997 which I believe to be not less than the
present fair value thereof) and liabilities of $__________.
2. By the incurrence of the Obligations under the Credit Agreement and
the incurrence of the other obligations contemplated by the Proposed
Transactions, Company will not incur debts beyond its ability to pay as
such debts mature. I have based my conclusion in part on the Projected
Financial Statements, which demonstrate that Company will have positive
cash flow after paying all of its scheduled anticipated indebtedness
(including scheduled payments under the Credit Agreement, the other
obligations contemplated by the Proposed Transactions and other permitted
indebtedness). I have concluded that the realization of current assets in
the ordinary course of business and anticipated refinancings will be
sufficient to pay recurring current debt and short-term and long-term debt
service as such debts mature, and that the cash flow (including earnings
plus non-cash charges to earnings) will be sufficient to provide cash
necessary to repay the Loans and other Obligations under the Credit
Agreement, the other obligations contemplated by the Proposed Transactions
and other long-term indebtedness as such debt matures.
3. The incurrence of the Obligations under the Credit Agreement and
the incurrence of the other obligations contemplated by the Proposed
Transactions will not leave Company with property remaining in its hands
constituting "unreasonably small capital." In reaching this conclusion, I
understand that "unreasonably small capital" depends upon the nature of the
particular business or businesses conducted or to be conducted, and I have
reached my conclusion based on the needs and anticipated needs for capital
of the businesses conducted or anticipated to be conducted by Company and
its Subsidiaries in light of the Projected Financial Statements and
available credit capacity.
IX-2
147
4. To the best of my knowledge, Company has not executed the Credit
Agreement or any documents mentioned therein, or made any transfer or
incurred any obligations thereunder, with actual intent to hinder, delay or
defraud either present or future creditors.
I understand that Agent and Lenders are relying on the truth and accuracy
of the foregoing in connection with the extension of credit to Company pursuant
to the Credit Agreement.
[Remainder of page intentionally left blank]
IX-3
148
I represent the foregoing information to be, to the best of my knowledge
and belief, true and correct and execute this Certificate this ____ day of
________, 1997.
ATLAS AIR, INC.
By:
---------------------------------
Name:
Title:
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149
EXHIBIT X
(FORM OF)
FIRST SECURITY AGREEMENT AND CHATTEL MORTGAGE
(AIRCRAFT NO. _____)
THIS FIRST SECURITY AGREEMENT AND CHATTEL MORTGAGE is dated ________, 199_,
(this "Mortgage"), and entered into by and between Atlas Air, Inc., a Delaware
corporation ("Company"), and Bankers Trust Company, as agent for and
representative of ("Administrative Agent") the financial institutions
("Lenders") party to the Credit Agreement referred to below.
PRELIMINARY STATEMENTS
Company has entered into that certain Third Amended and Restated Credit
Agreement dated as of September 5, 1997 (said credit agreement, as it may be
amended, restated, supplemented or otherwise modified from time to time, being
the "Credit Agreement") with the financial institutions listed therein as
Lenders, ▇▇▇▇▇▇▇ Sachs Credit Partners L.P., as Syndication Agent, and
Administrative Agent, pursuant to which Lenders have agreed, on the terms and
conditions set forth in the Credit Agreement, to make purchase money loans to
Company in the principal amount of up to $___________ (the "Loans") to enable
Company to purchase and modify the Aircraft Collateral (as defined below). The
indebtedness with respect to the Aircraft Collateral resulting from such Loans
made by Lenders is to be evidenced by certain promissory notes of Company to the
order of Lenders of even date herewith issued under and pursuant to the Credit
Agreement (such promissory notes, as they may be amended, modified,
supplemented, renewed, converted or extended from time to time, being the
"Notes"). It is a condition precedent to the making by Lenders of the Loans
under the Credit Agreement that this Mortgage be executed, delivered and filed
for recordation.
NOW, THEREFORE, in consideration of the premises and in order to induce
Lenders to make the Loans, Company hereby agrees with Administrative Agent as
follows:
SECTION 1. Mortgage and Grant of Security.
To secure the due and punctual payment of the Notes, together with accrued
interest thereon, and all other amounts from time to time payable by Company
under the Credit Agreement, this Mortgage and the other Loan Documents to the
extent such amounts relate to Loans made to finance the purchase of the
Aircraft (as defined below) and the cost of making the Aircraft usable by
Company as a cargo aircraft (including payment of amounts that would
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150
become due but for the operation of the automatic stay under Section 362(a) of
the United States Bankruptcy Code), and to secure performance of all
obligations and covenants of Company under the Credit Agreement, this Mortgage
and the other Loan Documents to the extent such obligations relate to Loans
made to finance the purchase of the Aircraft Collateral and the cost of making
the Aircraft usable by Company as a cargo aircraft (all such payment and
performance obligations of Company, the "Secured Obligations"), Company hereby
mortgages to Administrative Agent, for the benefit of Lenders, and their
respective successors and assigns, and hereby grants and assigns to
Administrative Agent, for the benefit of Lenders, and their respective
successors and assigns, a first priority purchase money security interest in
the Aircraft and the Spare Engine (the "Aircraft Collateral") and a first
priority security interest in all estate, right, title and interest of Company
in, to and under, the other below described property wherever the same may be
located (the "Aircraft Related Collateral"):
(a) Aircraft Collateral. All of Company's right, title and interest in and
to:
(i) the airframe (the Aircraft except for the Engines or engines from
time to time installed thereon), which is described on Schedule I hereto
together with any and all Parts (as hereinafter defined) incorporated or
installed in or attached to such airframe and all Parts removed from such
airframe until such Parts are replaced in accordance with Section 4(e)
hereof (such airframe, together with any and all such Parts, hereinafter
referred to as the "Airframe");
(ii) each of the engines, which are listed in Schedule II hereto or
which are described in a Supplemental Chattel Mortgage (a "Supplemental
Chattel Mortgage") substantially in the form of Exhibit A attached hereto,
supplementing this Mortgage, and listed by manufacturer's serial numbers in
such Schedule or in such Supplemental Chattel Mortgage, whether or not from
time to time thereafter installed on the Airframe or on any other airframe
or aircraft, including any engine designated as a spare engine (the "Spare
Engine"), and any replacement engine which may be substituted for such
engine in accordance with the provisions of Section 4(f) hereof, together,
in each case, with any and all Parts incorporated or installed in or
attached thereto and any and all Parts removed therefrom, until such Parts
are replaced in accordance with Section 4(e) hereof (each such engine,
spare engine and replacement engine, together with any and all such Parts,
hereinafter referred to as an "Engine" (and the engines identified on such
schedule as spares and each replacement thereof hereinafter referred to as
"Spare Engines") and collectively, the "Engines");
(iii) all appliances, parts, instruments, appurtenances, accessories,
furnishings and other equipment of whatever nature (other than complete
Engines or engines), which may from time to time be incorporated or
installed in or attached to the Airframe or any Engine, including all such
appliances, parts, instruments, appurtenances, accessories, furnishings and
other equipment purchased by Company for incorporation or installation in
or attachment to the Airframe or any Engine pursuant to the terms
of the Modification Agreement and any Buyer-Furnished
Equipment whether or not identified in a Supplemental Chattel Mortgage
(collectively referred to herein as "Parts"); and
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(iv) all records, logs and other materials required by applicable law
or regulation to be maintained and all other records, logs and materials
maintained in the ordinary course of business with respect to the
properties described in paragraphs (i), (ii) and (iii) above (together with
such Airframe and Engines (other than the Spare Engine), the "Aircraft").
(b) Aircraft Related Collateral. All of Company's right, title and interest
in and to:
(i) all the tolls, rents, issues, profits, revenues and other income
of the property subject or required to be subject to the lien of this
Mortgage other than any such amounts payable pursuant to an ACMI Contract;
(ii) all monies and securities deposited or required to be deposited
with the Administrative Agent pursuant to any term of this Mortgage and
held or required to be held by Administrative Agent hereunder;
(iii) the Purchase Agreement to the extent it relates to the Aircraft
(include any agreement assigned therewith);
(iv) the Modification Agreement and each BFE Agreement to the extent
each relates to the Aircraft together with all rights, powers, privileges,
options, licenses and other benefits of Company (including such
indemnities, rights of assignment, rights and remedies for breach of any
warranty and/or claims for damages, rights to receive title to parts and
materials, and the rights to any and each and every other guarantee,
condition and warranty contained or implied in the Modification Agreement),
as buyer under such agreement including upon an Event of Default to receive
and collect all payments of any kind now or hereafter payable or receivable
by or for the benefit or account of Company as buyer under the Modification
Agreement or such BFE Agreement to the extent it relates to the Aircraft
and after the occurrence and during the continuation of an Event of Default
the right to (A) give or receive any instrument, notice or other
communication, (B) exercise any election or option or accept any redelivery
of the Aircraft or any part thereof or delivery of any Buyer-Furnished
Equipment or grant any waiver, consent or other approval and (C) enter into
any amendment, supplement or other modification or agreement relating to
the Modification Agreement or such BFE Agreement or any provision thereof
to the extent it relates to the Aircraft;
(v) all amounts payable to Company by any manufacturer, supplier or
vendor of any of the Aircraft Collateral or any component thereof pursuant
to any warranty or indemnity covering any such Collateral;
(vi) all amounts payable as proceeds of insurance, as an award or
otherwise in connection with any confiscation, condemnation, requisition or
other taking of any Aircraft Collateral to the extent payable to
Administrative Agent hereunder; and
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(vii) all proceeds of any and all of the properties described above,
including, without limitation, all payments under insurance proceeds or
payment under any indemnity, payable by reason of any loss or damage to the
Aircraft or any Engine.
Company does hereby warrant and represent that it has not assigned or
pledged, and hereby covenants that it will not assign or pledge, so long as the
assignment hereunder shall remain in effect, any of its right, title or interest
hereby assigned to anyone other than Administrative Agent, and that it will not,
except as provided herein or in the Credit Agreement, enter into any agreement
amending or supplementing the Purchase Agreement, the Modification Agreement or
any BFE Agreement to the extent it relates to the Aircraft, execute any waiver
or modification of, or consent under any such agreement, settle or compromise
any claim arising under any such agreement, or submit or consent to the
submission of any dispute, difference or other matter arising under or in
respect of any such agreement, to arbitration thereunder.
SECTION 2. Definitions.
Unless the context otherwise requires, the following terms shall have the
following meanings for all purposes of this Mortgage and shall be equally
applicable to both the singular and the plural forms of such terms. Terms
defined in the Credit Agreement and not otherwise defined herein are used herein
as therein defined.
"Act" means the Federal Aviation Act of 1958, as amended and
recodified in ▇▇▇▇▇ ▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇▇ Code, or any similar legislation of
the United States enacted to supersede, amend or supplement such Act and
the rules and regulations promulgated thereunder.
"Administrative Agent" has the meaning specified in the first
paragraph of this instrument.
"Aircraft" has the meaning specified in Section 1 hereof.
"Aircraft Collateral" has the meaning specified in Section 1 hereof.
"Aircraft Related Collateral" has the meaning specified in Section 1
hereof.
"Airframe" has the meaning specified in Section 1 hereof.
"BFE Agreement" means any agreement entered into by Company from time
to time, in form and substance satisfactory to Administrative Agent, with
respect to Buyer-Furnished Equipment, in each case as the same may be
amended, modified or supplemented from time to time.
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"Buyer-Furnished Equipment" means all materials and parts to be
provided under a Modification Agreement by Company with respect to the
Aircraft, including all parts to be acquired by Company under the BFE
Agreements.
"Company" has the meaning specified in the first paragraph of this
instrument.
"Credit Agreement" has the meaning specified in the Preliminary
Statements.
"Domestic Air Carrier" means any United States "domestic air carrier,"
as defined in Part 121 of the Federal Aviation Regulations, that is
operating in accordance with the operating certificate and appropriate
operations specifications issued under Part 121 or any successor
regulations.
"Engine" has the meaning specified in Section 1 hereof.
"Event of Default" means any Event of Default as defined in the Credit
Agreement.
"Foreign Air Carrier" means any "foreign air carrier" as defined in
the Act, as to which there is in force a permit issued pursuant to Section
402 of said Act or operators of aircraft operating under or governed by the
provisions of Parts 121, 123 or 129 of the Federal Aviation Regulations, in
each case that are certificated in a country that is a signatory to the
Convention on International Civil Aviation and are operating in conformity
with the Annexes thereunder and that fly routes into the United States on a
regularly scheduled basis.
"Loans" has the meaning specified in the Preliminary Statements.
"Modification Agreement" means (identify specific modification
agreement).
"Mortgage" has the meaning specified in the first paragraph of this
instrument.
"Notes" has the meaning specified in the Preliminary Statements.
"Parts" has the meaning specified in Section 1 hereof.
"Purchase Agreement" means (identify specific purchase agreement).
"Second Mortgage" means the Second Security Agreement and Chattel
Mortgage to be entered into with respect to the Aircraft Collateral and the
Aircraft Related Collateral as contemplated by the Credit Agreement, as
the same may be amended, modified or supplemented from time to time.
"Secured Obligations" has the meaning specified in Section 1 hereof.
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"Second Mortgage" means the Second Security Agreement and Chattel
Mortgage dated as of the date hereof between Company and Administrative
Agent as the same may be amended, modified or supplemented from time to
time.
"Spare Engine" has the meaning specified in Section 1.
"Supplemental Chattel Mortgage" has the meaning specified in Section 1
hereof.
SECTION 3. Representations and Warranties.
Company hereby represents and warrants that, in the case of the Airframe or
each Engine initially or subsequently mortgaged hereunder on the date the
Airframe or such Engine is mortgaged hereunder as follows:
(a) Company has good and marketable title to the Aircraft Collateral
free and clear of all Liens except for the lien of this Mortgage and
Permitted Encumbrances and has full power and authority to mortgage and
grant the lien and security interest in the Aircraft Collateral and
Aircraft Related Collateral intended by the terms hereof and in the manner
aforesaid and has not assigned or pledged any of its right, title or
interest hereby assigned to anyone other than Administrative Agent.
(b) Company is a "citizen of the United States" as defined in Section
40102(15) of Title 49 of the United States Code and is an air carrier
certificated under Sections 401 and 604(b) of the Act and holds all
necessary air carrier operating certificates.
(c) The Airframe is duly registered in the name of Company in
accordance with the Act; and the Airframe is not registered under the laws
of any other country.
(d) This Mortgage or a Supplemental Chattel Mortgage, as the case may
be, is in due form for recording in accordance with the Act and, has been
duly filed for recording in accordance with the Act against the Aircraft or
such Engine(s) as the case may be.
(e) An airworthiness certificate has been duly issued under the Act
for the Aircraft (evidence of which has been supplied to Administrative
Agent), and the airworthiness certificate for the Aircraft is in full force
and effect.
(f) The Aircraft and Engines are in such condition so as to comply
with the requirements of Section 4(c) hereof; and the insurance required by
Section 4(g) hereof is in full force and effect.
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(g) This Mortgage or this Mortgage as supplemented by a Supplemental
Chattel Mortgage constitutes the legally valid and binding obligation of
Company enforceable against it in accordance with its terms and, except as
enforcement may be limited by bankruptcy, insolvency, reorganization,
moratorium, or similar laws or equitable principles relating to or limiting
creditors' rights generally, creates a valid, perfected and first priority
mortgage on and purchase money security interest in the Aircraft
Collateral, securing the payment and performance of the Secured
Obligations.
(h) Company has delivered to Administrative Agent for filing financing
statements under Article 9 of the Uniform Commercial Code of the States of
Colorado and New York (and such other states as may be required) with
respect to that portion of the Aircraft Collateral not covered by the
filing system established under the Act and with respect to the Aircraft
Related Collateral; and except for the filings described in this paragraph
and in paragraph (d) above of this Section 2, no filing or recording of any
instrument shall be required to establish and perfect a first priority
security interest in the Aircraft Collateral or Aircraft Related Collateral
under the laws of the United States or any State thereof.
(i) The chief place of business and the chief executive office of
Company is located at ▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇.
(j) Administrative Agent shall have a "purchase-money equipment
security interest" in the Airframe or such Engine within the meaning of
Section 1110 of the United States Bankruptcy Code, and shall be entitled to
all the benefits of said Section with respect to the Airframe or such
Engine.
(k) (i) The Modification Agreement is in full force and effect, and no
provision thereof has been waived, amended, supplemented or canceled in any
respect except to the extent permitted in the Credit Agreement; (ii)
Company is not in default of the Modification Agreement; (iii) no consents,
other than the consent of (the party modifying the Aircraft under the
Modification Agreement), are necessary for the assignment of the
Modification Agreement pursuant to this Mortgage; and (iv) Company has not
previously assigned, pledged or otherwise hypothecated its rights under the
Modification Agreement to the extent it relates to the Aircraft.
SECTION 4. Covenants.
Company hereby covenants that so long as this Mortgage is in effect:
(a) Liens. Company will not directly or indirectly create, incur,
assume or suffer to exist any Lien, on or with respect to any of the
Aircraft Collateral, or Aircraft Related Collateral, title thereto or any
interest therein, except the lien of this Mortgage and Permitted
Encumbrances. Company will promptly, at its own expense, take such
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action as may be necessary to duly discharge any such Lien not excepted
above if the same shall arise at any time.
(b) Taxes. Company will pay, and hereby indemnifies Administrative
Agent from and against, any and all fees and taxes, levies, imposts,
duties, charges or withholdings, together with any penalties, fines or
interest thereon (any of the foregoing for the purposes of this Section
4(b) being called a "Tax"), which may from time to time be imposed on or
asserted against Administrative Agent or any Lender or the Airframe or any
Engine or any part thereof or interest therein by any Federal, state or
local government or other taxing authority in the United States or by any
foreign government or subdivision thereof or by any foreign taxing
authority in connection with, relating to or resulting from: (i) the
Airframe or any Engine or any part thereof of interest therein; (ii) the
manufacture, purchase, ownership, mortgaging, lease, sublease, use,
storage, maintenance, sale or other disposition of the Airframe or any
Engine; (iii) any rentals or other earnings therefor or arising therefrom
or the income or other proceeds received with respect thereto; or (iv) this
Mortgage; provided, however, that, unless the payment of any such Tax shall
be a condition to the enforceability of this Mortgage or the perfection of
the lien hereof or unless proceedings shall have been commenced to
foreclose any lien which may have attached as security for such Tax,
nothing in this Section shall require the payment of any Tax so long as and
to extent that validity thereof shall be contested in good faith by
appropriate legal proceedings promptly instituted and diligently conducted
and Company shall have set aside on its books adequate reserves with
respect thereto in accordance with generally accepted accounting
principles.
(c) Registration; Maintenance and Operation. Company, at its own cost
and expense, will (i) be a "citizen of the United States" as defined in
Section 40102(15) of Title 49 of the United States Code and will be an air
carrier certificated under Sections 401 and 604(b) of the Act and hold all
necessary air carrier operating certificates; (ii) cause the Airframe to be
duly registered and remain duly registered in the name of Company in
accordance with the Act; and (iii) service, repair, inspect, test, maintain
and overhaul the Airframe and each Engine and install replacement equipment
and parts on the Airframe and each Engine (A) so as to keep the Airframe
and each Engine in such operating condition as may be required to permit
the Airframe and each Engine to be utilized in commercial operations
throughout the world, (B) so as to enable the airworthiness certification
of the Airframe to be maintained in good standing at all times under the
Act, except when aircraft of the same type, model or series as the Airframe
(powered by engines of the same type as those with which the Airframe shall
be equipped at the time of grounding) registered in the United States have
been grounded by the FAA; provided, however, that if following its
issuance, the United States FAA airworthiness certificate of the Aircraft
shall be withdrawn, then subject to the provisions of Section 4(f) hereof,
so long as Company is diligently taking or causing to be taken all
necessary action to promptly correct the condition which caused such
withdrawal, no Event of Default shall arise from such withdrawal, (C) in
accordance with Company's FAA-approved maintenance, inspection and
maintenance control programs, and in the same manner and with the same care
used by Company with respect to the same or similar aircraft and
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engines owned or operated by Company so as to keep the same in as
good operating condition as when originally mortgaged hereunder or as when
redelivered under the Modification Agreement, ordinary wear and tear
excepted, which practices shall at all times be at or above the standard of
the industry in the United States for prudent maintenance of similar
equipment, and (D) in such manner as may be necessary to maintain in full
force all warranties of the manufacturers thereof. Nothing herein shall be
deemed to prevent Company from subjecting the Aircraft to the modification
contemplated by the Modification Agreement. Company shall maintain all
records, logs and other materials which may be required to permit the
Airframe and each Engine to be so utilized.
Company will comply with all airworthiness directives, mandatory notes
or modifications or similar requirements affecting the same (including
those issued by the manufacturer or supplier) in such condition so as to
comply with the provisions of this Mortgage and the rules and regulations
of the FAA from time to time in force and applicable to the Aircraft and
Engines. Neither the Airframe nor any Engine will be maintained, used or
operated in violation of any law or any rule, regulation or order of any
government or governmental authority having jurisdiction (domestic or
foreign), or in violation of any airworthiness certificate, license or
registration relating to the Airframe or such Engine issued by any such
authority, and in the event that such laws, rules, regulations or orders
require alteration of the Airframe or any Engine, Company, at its own cost
and expense, will conform thereto or obtain conformance therewith and will
maintain the same in proper operating condition under such laws, rules,
regulations and orders, provided, however, that Company may, in good faith
(after having delivered to Administrative Agent an Officer's Certificate
stating the facts with respect thereto), contest the validity or
application of any such law, rule, regulation or order in any reasonable
manner which does not, in Administrative Agent's opinion, adversely affect
the interests under this Mortgage of Administrative Agent or any Lender.
Company will not operate, use or locate the Airframe or any Engine,
(I) in any area in which any insurance required to be maintained pursuant
to Section 4(g) shall not be at the time in full force and effect, or in
any area excluded from coverage by an insurance policy in effect with
respect to the Airframe or such Engine, except in the case of a requisition
for use by the United States of America, and then only if Company obtains
indemnity in lieu of such insurance from the United States of America
against the risks and in the amounts required by said Section covering such
area, or (II) in any recognized or threatened area of hostilities unless
fully covered to Administrative Agent's satisfaction by war risk and
political risk and allied perils insurance or unless the Airframe or such
Engine is operated or used under contract with the Government of the United
States of America under which contract that Government assumes liabilities
for any damages, loss, destruction or failure to return possession of the
Airframe or such Engine at the end of the term of such contract and for
injury to persons or damage to property of others.
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Company shall not use the Aircraft nor suffer it to be used in any
manner or for any purpose excepted from any of the insurance on or in
respect of the Aircraft or for the purpose of carriage of goods of any
description excepted from such insurance nor do, or permit to be done,
anything which, or admit to do anything the admission of which, may
invalidate any of such insurance.
(d) Possession. Company will not, without the prior written consent of
Administrative Agent, sell, assign, lease or otherwise in any manner
deliver, transfer or relinquish possession or control of, or transfer the
right, title or interest of Company in, the Airframe or any Engine except
that, unless a Potential Event of Default shall have occurred and be
continuing, Company may without the prior written consent of Administrative
Agent:
(i) transfer possession of the Airframe or any Engine other than
by lease to the United States of America or any instrumentality
thereof pursuant to the Civil Reserve Air Fleet Program (as
administered pursuant to Executive Order 12656, or any substitute
order) or any similar or substitute programs;
(ii) transfer possession of the Airframe or any Engine to the
manufacturer thereof for testing or other similar purposes or any
other organization for service, repairs, maintenance or overhaul or,
to the extent permitted by Section 4(e) hereof, for alterations or
modifications;
(iii) subject the Airframe to normal interchange agreements with
Domestic Carriers or any Engine to normal interchange or pooling
agreements or arrangements of the type customary in the United States
airline industry and entered into by Company in the ordinary course of
business which do not contemplate or require the transfer of title to,
use for the remainder of its useful life, or registration of the
Airframe or title to or use for the remainder of its useful life of
such Engine and if Company's title to or use for the remainder of its
useful life, of the Airframe or any Engines shall be divested under
any such agreement or arrangement, such divesture shall be deemed to
be an Event of Loss with respect to the Airframe or such Engine and
Company shall comply with Section 4(f) in respect thereof;
(iv) install an Engine on an airframe which is owned by Company
free and clear of all Liens except (A) those permitted under clauses
(i) or (ii) of the definition of Permitted Encumbrances in the Credit
Agreement, (B) those that apply only to the engines (other than the
Engines), appliances, parts, instruments, appurtenances, accessories,
furnishings and other equipment (other than Parts) installed on such
airframe (but not to the airframe as an entirety), and (C) the rights
of any Domestic Carrier, under normal interchange agreements which are
customary in the airline industry and do not contemplate or require
the transfer of title to such airframe or the engines installed
thereon;
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(v) install an Engine on an airframe leased to Company or owned
by Company subject to a conditional sale or other security agreement,
provided: (A) such airframe is free and clear of all Liens, except the
rights of the parties to the lease or conditional sale or other
security agreement covering such airframe and except Liens of the type
permitted by clause (iv) above; and (B) Administrative Agent shall
have received from the lessor, conditional vendor or secured party and
each of the purchasers, mortgagees and encumbrancers of such lessor,
conditional vendor or secured party of such airframe a written
agreement (which may be the lease, conditional sale agreement or
mortgage covering such airframe), whereby such lessor, conditional
vendor or secured party and each of the purchasers, mortgagees and
encumbrancers of such lessor, conditional vendor or secured party
expressly and effectively agrees that neither it nor its successors
and assigns will acquire or claim any right, title or interest in any
Engine by reason of such Engine being installed on such airframe at
any time when such Engine is subject to this Mortgage;
(vi) install an Engine on an airframe owned by Company, leased by
Company or owned by Company subject to a conditional sale or other
security agreement under circumstances where neither clause (iv) nor
clause (v) above is applicable; provided that any divesture of title
to such Engine resulting from such installation shall be deemed to be
an Event of Loss with respect to such Engine and Company shall comply
with Section 4(f) in respect thereof;
(vii) lease any Engine and/or the Airframe to a Domestic Air
Carrier other than an ACMI Contract or wet lease permitted under
clause (ix) below, in the ordinary course of its business, for a term
(including without limitation, any option of the lessee to renew or
extend) not to exceed six (6) months (in the case of a lease of an
Engine without the Airframe, not to exceed twelve (12) months),
provided that (A) no such lease contemplates or requires the transfer
of title to or registration of the Airframe or title to any Engine,
(B) if Company's title to any Engine or the Airframe shall be divested
under any such agreement or arrangement, such divestiture shall be
deemed to be an Event of Loss for all purposes, (C) any such lease
shall provide that the lessee may not deliver, transfer or relinquish
possession or sublease the Airframe or any Engine without the prior
written consent of Administrative Agent, other than as permitted by
Section 4(d)(i), (ii) or (iii) hereof, (D) the lease agreement shall
provide that any amounts payable by the lessee to Company thereunder
are assigned hereunder to Administrative Agent for the benefit of
Lenders and that if an Event of Default has occurred and is
continuing, upon notice to the lessee by Administrative Agent, the
lessee shall pay all such amounts to Administrative Agent for the
benefit of Lenders unless and until such lessee shall have received
notice from Administrative Agent for the benefit of Lenders, that the
Event of Default has been cured, (E) the lease agreement shall provide
that the lessee shall agree to maintain and operate any Engine and/or
the Airframe in accordance with Section 4(c) hereof,
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and (F) any such lease will be permissible only if Administrative
Agent receives a perfected first priority security interest in any
such lease;
(viii) lease any Engine and/or the Airframe to a Foreign Air
Carrier other than an ACMI Contract or wet lease permitted under
clause (ix) below, in the ordinary course of its business, under
arrangements that provide for a term (including, without limitation,
any option of the lessee to renew or extend) not to exceed six (6)
months (in the case of a lease of an Engine without the Airframe, not
to exceed twelve (12) months), provided that (A) no such lease
contemplates or requires the transfer of title to or registration of
the Airframe or title to any Engine, (B) if Company's title to any
Engine or the Airframe shall be divested under any such agreement or
arrangement, such divestiture shall be deemed to be an Event of Loss
for all purposes, (C) any such lease shall provide that the lessee may
not deliver, transfer or relinquish possession or sublease the
Airframe or any Engine without the prior written consent of
Administrative Agent other than as permitted by Section 4(d)(i), (ii)
or (iii) hereof, (D) the lease agreement shall provide that any
amounts payable by the lessee to Company thereunder are assigned
hereunder to Administrative Agent for the benefit of Lenders and that
if an Event of Default has occurred and is continuing, upon notice to
the lessee by Administrative Agent, the lessee shall pay all such
amounts to Administrative Agent for the benefit of Lenders, (E) the
lease agreement shall provide that the lessee shall agree to maintain
and operate any Engine and/or the Airframe in accordance with Section
4(c) hereof, and (F) any such lease will be permissible only if
Administrative Agent receives a perfected first priority security
interest in any such lease;
(ix) enter into an ACMI Contract or wet lease for the Airframe
and the Engines or engines installed thereon with any third party
pursuant to which Company has operational control of the Airframe and
any Engines installed thereon such operation to be performed solely by
employees of Company possessing all current certificates and licenses
that would be required under the applicable laws of the United States
for the performance by such employees of similar functions within the
United States; provided that Company's obligations hereunder shall
continue in full force and effect notwithstanding any such ACMI
Contract or wet lease; and
(x) sell the Aircraft or the Spare Engine upon satisfaction of
the conditions and compliance with the terms of subsection 6.7 of the
Credit Agreement.
provided, however, that the rights of any transferee (other than pursuant to a
sale permitted by the terms hereof) who receives possession of the Airframe or
any Engine permitted by the terms hereof shall be made subject and subordinate
to, and any lease permitted by this Section 4(d) (other than a lease permitted
by Section 4(d)(ix)) shall be made expressly subject and subordinate to, the
lien and security interest of this Mortgage
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and all of Administrative Agent's rights hereunder and Company shall
remain primarily liable hereunder for the performance of all the terms of
this Mortgage to the same extent as if such transfer had not occurred, and
any such instrument of transfer (other than a lease permitted by Section
4(d)(ix)) shall include appropriate provisions for the maintenance and
insurance of the Airframe or such Engine, and any such instrument of
transfer shall expressly prohibit any further transfer of the Airframe or
such Engine or any assignment of the rights thereunder; and provided,
further, that no such lease, pooling arrangement or other transfer or
relinquishment of the possession of the Airframe or any Engine shall in any
way discharge or diminish any of Company's obligations to Administrative
Agent hereunder or under the Credit Agreement. In the event Administrative
Agent shall have received from the lessor, conditional vendor or secured
party of any airframe leased to Company or purchased by Company subject to
a conditional sale or other security agreement, a written agreement
complying with clause (B) of Section 4(d)(v), and the lease or conditional
sale or other security agreement covering such airframe also covers an
engine or engines owned by the lessor under such lease, conditionally owned
by the conditional vendor under such conditional sale agreement, or subject
to such security agreement, Administrative Agent hereby agrees for the
benefit of such lessor, conditional vendor or secured party that
Administrative Agent will not acquire or claim, as against such lessor,
conditional vendor or secured party, any right, title or interest in any
such engine as the result of such engine being installed on the Airframe at
any time while such engine is subject to such lease or conditional sale or
other security agreement and owned by such lessor, conditionally owned by
such conditional vendor or subject to such security agreement.
(e) Replacement and Pooling of Parts; Alterations, Modifications and
Additions.
(i) Company will deliver the Aircraft to (the party modifying the
Aircraft under the Modification Agreement) for modification under the
Modification Agreement no later than __________, __, 199_ (six months
after the date of this Mortgage).
(ii) Except as otherwise provided in Section 4(e)(iv), Company,
at its own cost and expense, will promptly replace all Parts, which
may from time to time be incorporated or installed in or attached to
the Airframe or any Engine and 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. In addition, in the ordinary course of maintenance,
service, repair or testing, Company at its own cost and expense may
remove any Parts, whether or not worn out, lost, stolen, destroyed,
seized, confiscated, damaged beyond repair or permanently rendered
unfit for use, provided that, except as otherwise provided in Section
4(e)(iv), Company at its own cost and expense shall replace such Parts
as promptly as practicable. All replacement Parts shall be free and
clear of all Liens (except Permitted Encumbrances and for pooling
arrangements to the extent permitted by Section 4(e)(iii)), and shall
be in as good
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operating condition as, and shall have a value and utility at
least equal to, the Parts replaced assuming such property were in the
condition and repair required to be maintained by the terms hereof.
All Parts at any time removed from the Airframe or any Engine
shall remain subject to the lien and security interest of this
Mortgage, no matter where located until such time as such Parts shall
be replaced by parts which have been incorporated or installed in or
attached to the Airframe or any Engine and which meet the requirements
for replacement parts specified above. Immediately upon any
replacement Part becoming incorporated or installed in or attached to
the Airframe or any Engine as above provided, without further act, (A)
such replacement Part shall become subject to the lien and security
interest of this Mortgage and shall be deemed part of the Airframe or
such Engine for all purposes hereof to the same extent as the property
originally comprising, or installed on, such Airframe or such Engine,
and (B) title to the replaced part shall thereupon become free and
clear of all rights of Administrative Agent hereunder and shall no
longer be deemed a Part hereunder.
(iii) Any Part removed from the Airframe or any Engine as
provided in Section 4(e)(ii) may be subjected by Company to a normal
pooling arrangement of the type customary in the airline industry
entered into by Company in the ordinary course of its business and
entered into with Domestic Carriers or Foreign Air Carriers that are
not the subject of any bankruptcy, insolvency, or similar proceeding,
voluntary or involuntary, provided the Part replacing such removed
Part shall be incorporated or installed in or attached to the Airframe
or such Engine in accordance with Section 4(e)(ii) as promptly as
possible after the removal of such removed part. In addition, any
replacement Part when incorporated or installed in or attached to the
Airframe or any Engine in accordance with Section 4(e)(ii) may be
owned subject to such a pooling arrangement, provided Company, at
its expense, as promptly thereafter as possible, either (A) causes
such replacement Part to become subject to the lien and security
interest of this Mortgage in accordance with Section 4(e)(ii) by
Company's acquiring title thereto for the benefit of Administrative
Agent free and clear of all Liens (except Permitted Encumbrances) or
(B) replaces such replacement Part by incorporating or installing in
or attaching to the Airframe or such Engine a further replacement Part
owned by Company free and clear of all Liens (except Permitted
Encumbrances).
(iv) Company, at its own cost and expense, shall make or cause to
be made such alterations and modifications in and additions to the
Airframe and the Engines as may be required from time to time to meet
the standards of the FAA or other governmental authority having
jurisdiction; provided, that Company may, in good faith, contest the
validity or application of any such standard in any reasonable matter
that shall not adversely affect the Lien of this Mortgage or Lenders.
Company also agrees, at its own cost and expense, to make or cause to
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be made such alterations and modifications in and additions to the
Airframe and the Engines as may be required from time to time to meet
the standards or requirements of any directive issued by a
manufacturer relating to the Airframe or any Engine. In addition so
long as no Potential Event of Default or Event of Default shall have
occurred and be continuing, Company, at its own cost and expense, may
from time to time make such alterations and modifications in and
additions to the Airframe and any Engine as Company may deem desirable
in the proper conduct of its business, provided no such alteration,
modification or addition diminishes the value or utility or impairs
the condition or airworthiness of the Airframe or such Engine below
the value, utility, condition or airworthiness thereof immediately
prior to such alteration, modification or addition assuming the
Airframe or such Engine were then in the condition and airworthiness
required to be maintained by the terms of this Mortgage.
All Parts owned by Company incorporated or installed in or
attached to or added to the Airframe or any Engine as the result of
such alteration, modification or addition shall, without further act,
become subject to the lien and security interest of this Mortgage;
provided, that, so long as no Potential Event of Default or Event of
Default shall have occurred and be continuing, Company may remove and
not replace any such Part if it (A) is in addition to, and not in
replacement of or in substitution for, any Part incorporated or
installed in or attached to the Airframe or such Engine on the date
hereof, on the date the Engine first becomes subject to the lien of
this Mortgage or the date the Airframe or Engine is redelivered under
the Modification Agreement or any Part in replacement of or
substitution for any such Part, (B) is not required to be incorporated
or installed in or attached or added to the Airframe or such Engine
pursuant to the terms of Section 4(c) hereof or any other provision of
this Mortgage and (C) can be removed from the Airframe or such Engine
without diminishing or impairing the value, utility or airworthiness
which the Airframe or such Engine would have had (if following the
modification contemplated by Section 4(e)(i), after giving effect to
such Modification) at such time had such alteration, modification or
addition not occurred, assuming the Collateral Aircraft was otherwise
in the condition required by this Mortgage. Upon the removal by
Company of any such Part, as above provided, title thereto shall,
without further act, be free and clear of all rights of the
Administrative Agent hereunder and such Part shall no longer be deemed
a Part hereunder.
(f) Event of Loss.
(i) If an Event of Loss shall occur with respect to an Airframe
(or the Airframe and any Engine then installed thereon), Company will
promptly notify Administrative Agent thereof in writing (in any event
within five (5) days of such occurrence) and will prepay, at the times
and in the amounts required, the Notes and remaining Secured
Obligations in accordance with the terms of the Credit Agreement.
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(ii) If an Event of Loss shall occur with respect to an Engine
when not installed on the Airframe or under other circumstances in
which there has not occurred an Event of Loss with respect to the
Aircraft, Company will promptly notify Administrative Agent thereof in
writing (in any event within five (5) days of such occurrence) and
will, not later than sixty (60) days after the occurrence of such
Event of Loss, mortgage hereunder, by complying with all of the terms
of subsection (iv) below, another engine of the same or another
manufacturer of the same or an improved model and suitable for
installation and use on the Airframe and which shall be owned by
Company free of all Liens (other than Permitted Encumbrances) and
shall have a value and utility at least equal to (and be in as good
operating condition as) such Engine immediately prior to such Event of
Loss, assuming compliance by Company with all of the terms of this
Mortgage with respect to such Engine. Upon compliance with the terms
of the preceding sentence within such 60-day period, Administrative
Agent will execute and deliver to Company a partial release, in
recordable form, releasing the lien of this Mortgage to the extent
that it covers such Engine with respect to which such Event of Loss
occurred. Such additional engine shall thereupon constitute an
"Engine" for all purposes hereof and shall be deemed to constitute
part of the Aircraft.
(iii) Whenever Company shall subject any Engine to the lien and
security interest of this Mortgage (as contemplated by paragraph (ii)
above), Company will on or prior thereto:
(A) deliver to Administrative Agent and duly file for
recording under the Act, a Supplemental Chattel Mortgage
substantially in the form of Exhibit A hereto duly executed by
Company appropriately describing such engine to be subjected to
the lien and security interest of this Mortgage;
(B) deliver to Administrative Agent for filing financing
statements under Article 9 of the Uniform Commercial Code of the
States of Colorado and New York (or such other States as may be
required at such time) covering the security interest created by
this Mortgage to protect the security interest of Administrative
Agent in the Engine to be subjected to the lien and security
interest of this Mortgage;
(C) deliver to Administrative Agent an Officers' Certificate
dated the date of execution of said Supplemental Chattel
Mortgage, stating:
(I) that the representations and warranties contained
in Section 3 hereof are true and correct on and as of such
date of execution with respect to such Engine and Company;
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(II) that, upon consummation of the terms of this
Section 4(f), no Potential Event of Default or Event of
Default will exist; and
(III) that all conditions precedent contemplated in
this Section 4(f)(iii) have been complied with.
(D) furnish Administrative Agent with evidence of compliance
with the insurance provisions of Section 4(g) hereof with respect
to such Engine as Administrative Agent may reasonably request;
(E) furnish Administrative Agent with such evidence of title
as Administrative Agent may reasonably request concerning such
Engine;
(F) cause to be delivered to Administrative Agent an
appraisal by the Approved Appraisers relating to the Engine to be
subjected to the lien and the security interest of this Mortgage
stating that it has a value and utility at least equal to, and in
as good operating condition as the Engine subject to such Event
of Loss immediately prior to such Event of Loss, assuming
compliance by Company with all the terms of this Mortgage with
respect to such Engine; and
(G) cause to be delivered to Administrative Agent an opinion
or opinions of counsel dated the date of execution of such
Supplemental Chattel Mortgage, stating:
(I) that the engine specifically described in said
Supplemental Chattel Mortgage, is free and clear of all
recorded Liens,
(II) that said Supplemental Chattel Mortgage (1) has
been duly authorized, executed and delivered by Company, and
(2) creates a valid, perfected and first priority security
interest in and to the engine described in said Supplemental
Chattel Mortgage, enforceable against all third parties and
securing the payment of all obligations purported to be
secured thereby and that all action required to perfect
fully such security interest has been taken and completed,
(III) that said Supplemental Chattel Mortgage has been
duly filed for recordation in accordance with the provisions
of the Act to continue the perfection and priority of the
security interest intended to be created by the Mortgage,
and
(IV) and as to such other matters as Administrative
Agent may reasonably request.
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Promptly upon the recording of each Supplemental Chattel Mortgage
under the Act, Company will cause to be delivered to Administrative
Agent an opinion of counsel for Company as to the due recording of
such Supplemental Chattel Mortgage in accordance with the Act.
(iv) With respect to the Airframe or any Engine, as between the
Administrative Agent and Company, any payments on account of an Event
of Loss (other than insurance proceeds or other payments the
application of which is provided for in Section 4(g) below and under
the terms of the Credit Agreement) received from any government
authority or other person shall be applied as follows:
(A) if such payments are received with respect to an Event
of Loss to an Engine that has been or is being replaced by
Company pursuant to the terms hereof, such payment shall be paid
over to or retained by Company upon satisfaction of the
conditions for replacement contained in paragraph (iii) above;
and
(B) if such payments are received with respect to an Event
of Loss as to the Aircraft, such payments shall be applied to the
prepayment of the Notes required pursuant to the terms of the
Credit Agreement and shall be held pursuant to the terms of this
Mortgage or the Second Mortgage, or if the Second Mortgage shall
have been satisfied and discharged, the balance, if any, shall be
paid over to or retained by Company.
(v) In the event of a requisition for use by the United States
Government of the Airframe or any Engine, Company shall promptly
notify Administrative Agent of such requisition and all of Company's
obligations under this Mortgage shall continue to the same extent as
if such requisition had not occurred. Any payments received by
Administrative Agent or Company from the United States Government for
the use of the Airframe or such Engine, shall be paid over to, or
retained by, Company.
(vi) Any amount referred to in paragraph (iv) or (v) of this
Section 4(f) which is payable to or retained by Company shall not be
paid to Company or retained by Company, if at the time of such payment
or retention any Event of Default or a Potential Event of Default
shall have occurred and be continuing, but shall be held by or paid
over to Administrative Agent as security for the obligations of
Company under this Mortgage, the Second Mortgage and the other Loan
Documents, and, if Administrative Agent shall declare the Credit
Agreement to be in default, shall be applied against Company's
obligations hereunder and thereunder as and when due. At such time as
there shall not be continuing any such Event of Default or Potential
Event of Default, such amount shall be paid to
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Company to the extent not previously applied in accordance with the
preceding sentence.
(g) Insurance.
(i) Company will at all times carry and maintain on or with
respect to the Aircraft, at its own cost and expense, public liability
(including without limitation, contractual liability, cargo liability,
passenger legal liability, bodily injury and product liability, but
excluding manufacturer's product liability) and property damage
insurance with insurers of recognized responsibility and reputation in
amounts, of the type and covering the risks customarily carried with
respect to similar aircraft by corporations engaged in the same or
similar business and similarly situated with Company but in no event
in an amount less than $500,000,000 per occurrence (which shall
include war risk, governmental confiscation and expropriation and
allied perils coverage). During any period when the Aircraft is on the
ground and not in operation, Company may carry or cause to be carried,
in lieu of insurance required by this Section, insurance otherwise
conforming with the provisions of this Section except that the amounts
of coverage shall not be required to exceed the amounts of
comprehensive airline liability insurance, and the scope of risk
covered and type of insurance shall be the same, as are customarily
carried with respect to similar aircraft on the ground by corporations
engaged in the same or similar business and similarly situated with
Company. Any policies of insurance carried in accordance with this
Section 4(g) and any policies taken out in substitution or replacement
of any such policies (A) shall be amended to name Administrative Agent
and Lenders as additional named insureds, (B) shall be primary without
right of contribution from any other insurance which is carried by
Company, (C) shall expressly provide that all provisions thereof,
except the limits of the liability, shall operate in the same manner
as if there were a separate policy covering each insured, and (D)
shall provide that the insurer shall waive any right of subrogation
against Administrative Agent or Lenders.
(ii) Company will at all times carry and maintain with insurers
of recognized responsibility and reputation on or with respect to the
Aircraft, at its own cost and expense, aircraft ground and flight
all-risk hull insurance as well as fire and extended coverage
insurance on Engines and other equipment while removed from the
Airframe (which shall include war risk, governmental confiscation and
expropriation (other than by the United States Government) and allied
perils including (A) strikes, riots, civil commotions or labor
disturbances, (B) any malicious act or act of sabotage and (C)
hijacking (air piracy) or any unlawful 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 aboard the
Aircraft acting without the consent of the insured, if and to the
extent the same shall be maintained by Company with respect to similar
aircraft owned or operated by Company on the same routes or if the
Aircraft is operated on routes
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where the custom is for Domestic Carriers similarly situated with
Company flying comparable routes with similar aircraft to carry such
insurance), of the type usually carried by corporations engaged in the
same or similar business and similarly situated with Company; provided
that such insurance (including any self-insurance to the extent
permitted below) shall at all times prior to delivery under the
Modification Agreement be for an amount not less than the greater of
(W) $30,000,000 and (X) an amount equal to the purchase price under
the Purchase Agreement, and at all times from and after delivery under
the Modification Agreement, the greater of (Y) $50,000,000 and (Z) the
amount under clause (X) plus the total cost of all modifications under
the Modification Agreement. During any period when the Aircraft is on
the ground and not in operation Company may carry or cause to be
carried, in lieu of the insurance required by this Section, insurance
otherwise conforming hereto except that the scope of risk covered and
type of insurance shall be the same as are from time to time
customarily carried with respect to similar aircraft by corporations
engaged in the same or similar business and similarly situated with
Company for aircraft on the ground in an amount at least equal to the
applicable amount provided above. All such insurance shall name
Administrative Agent and Lenders as additional insureds and loss
payees to the extent their interest may appear and shall provide that
any loss to the Airframe or an Engine in excess of $2,000,000, (and,
if a Potential Event of Default or Event of Default has occurred and
is continuing, any such loss) shall be payable to Administrative Agent
for the benefit of Lenders; and shall be primary without right of
contribution from any other insurance which is carried by
Administrative Agent with respect to its interest therein.
Company may self-insure, by way of deductible or equivalent
provisions in insurance policies, the risks required to be insured
against pursuant to this Section 4(g)(ii) in such reasonable amounts
as are then applicable to other similar aircraft in Company's fleet
which are of a value comparable to the Aircraft and as are not
substantially greater than amounts self-insured by corporations
engaged in the same or similar business and similarly situated with
Company; provided, however, that Company may not self-insure in an
amount in excess of $1,000,000 without the prior written consent of
Administrative Agent.
(iii) Any policies of insurance required pursuant to either
paragraph (i) or paragraph (ii) above shall: (A) be amended to name
Administrative Agent and Lenders as additional named insureds, but
without Administrative Agent or Lenders being thereby liable for
premiums; (B) provide that in respect of the interest of
Administrative Agent or Lenders in such policies the insurance shall
not be invalidated by any action or inaction of Company and shall
insure the interests of Administrative Agent and Lenders regardless of
any breach or violation by Company or any Person (other than
Administrative Agent) of any warranty, declaration, condition or
exclusion from coverage contained in such policies; (C) provide that
if such insurance is cancelled, or if any material change is made in
the coverage which affects the interest of Administrative Agent or any
Lender, or
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if such insurance is allowed to lapse for nonpayment of premium, such
cancellation, change or lapse shall not be effective as to
Administrative Agent for thirty (30) days (seven (7) days, or such
shorter or longer period as may from time to time be customarily
available in the industry, in the case of any war risk and allied
perils coverage) after receipt by Administrative Agent of written
notice from such insurers of such cancellation, change or lapse; (D)
be in full force and effect throughout any geographical areas at any
time traversed by the Aircraft and shall be payable in U.S. dollars;
(E) waive any right of the insurers to any set-off or counterclaim or
any other deduction, whether by attachment or otherwise in respect of
any liability of Administrative Agent; and (F) waive all rights of
subrogation against Administrative Agent.
(iv) In the case of a lease or contract with the United States or
any agency or instrumentality thereof in respect of the Airframe or
any Engine, a valid agreement by the United States or such agency or
instrumentality to indemnify Company against the same risks against
which Company is required hereunder to insure shall be considered
adequate insurance with respect to the Airframe or such Engine to the
extent of the risks and in the amounts that are the subject of any
such agreement to indemnify.
(v) On or prior to the date hereof, and annually thereafter on or
prior to January 21, Company will furnish to Administrative Agent (A)
a report signed by a firm of independent aircraft insurance brokers,
appointed by Company and not objected to by Administrative Agent,
describing in reasonable detail acceptable to Administrative Agent the
insurance then carried and maintained on or with respect to the
Aircraft and the Engines and stating that in the opinion of such firm
such insurance complies with the terms of this Section 4(g) and is
adequate to protect the interests of Company and Administrative Agent,
and (B) certificates of the insurer or insurers evidencing the
insurance covered by the report. Company will cause such brokers to
advise Administrative Agent in writing (x) promptly of any default in
the payment of any premium and of any other act or omission on the
part of Company of which such firm has knowledge and which might
invalidate or render unenforceable, in whole or in part, any insurance
on the Aircraft or any Engine and (y) at least thirty (30) days prior
to the expiration or termination date, or date of effectiveness of any
material change, of any insurance carried and maintained on the
Aircraft hereunder.
(vi) All insurance payments and other payments received by
Administrative Agent or Company from insurance referred to in
paragraph (ii) above shall be, if received by Company, immediately
paid to Administrative Agent and shall be held and applied:
(A) If such payment is received as a result of an Event of
Loss referred to in paragraph (i) of Section 4(f) hereof, such
payment shall be applied to prepay the Notes and pay any other
Secured Obligations and all
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other obligations required to be paid in accordance with the
terms of the Credit Agreement or if already paid in full by
Company, paid to Company provided no Potential Event of Default
or Event of Default shall have occurred and be continuing; and
(B) If such payment is received as a result of an Event of
Loss referred to in paragraph (ii) Section 4(f) hereof, such
payment shall be paid to Company upon compliance by Company with
the terms of said Section, provided that no Potential Event of
Default or Event of Default shall have occurred and be
continuing.
All insurance payments and other payments received by Administrative
Agent or Company from insurance referred to in paragraph (ii) above
and paid other than as a result of an Event of Loss shall be paid by
Administrative Agent to or be retained by Company, and promptly
applied by Company to the extent necessary to repair the damage to the
Airframe or the Engine for which such insurance was paid, provided
that Administrative Agent shall not be required to make any such
payment to Company if a Potential Event of Default or Event of Default
has occurred and is continuing, but shall be held or paid over to
Administrative Agent as security for the obligations of Company under
this Mortgage, the Second Mortgage and the other Loan Documents, and,
if Administrative Agent shall declare the Credit Agreement to be in
default, shall be applied against Company's obligations hereunder and
thereunder as and when due. Retention by Administrative Agent of any
amounts pursuant to the preceding sentence shall not relieve Company
of its obligations to make promptly all repairs and replacements
required by Sections 4(c) and (e) hereof and to pay for the same with
Company's funds.
(vii) Nothing in this Section 4(g) shall prohibit Administrative
Agent, or any Lender from obtaining insurance with respect to the
Aircraft for its own account. Company may, at its own expense, carry
insurance with respect to its interest in the Aircraft in amounts in
excess of that required to be maintained by this Section 4(g). No
insurance maintained by Administrative Agent or any Lender shall
prevent Company from carrying the insurance required or permitted by
this Section or adversely affect such insurance or the cost thereof.
Proceeds of any such insurance carried by Company, Administrative
Agent or Lender shall be paid as provided in the insurance policy
relating thereto and Administrative Agent shall have no duty to obtain
any such insurance.
(h) Inspection. Company will permit any officers, employees or
authorized representatives of Administrative Agent to inspect, at Company's
cost and expense, the Aircraft Collateral and Aircraft Related Collateral,
or any part thereof, and to examine, copy or make extracts from, any and
all books, records and documents in the possession of Company relating to
such Collateral or any part thereof and performance of this Mortgage, all
at such reasonable times and as often as may be requested. Administrative
Agent shall have no duty to make any such inspection or examination and
shall not incur
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any liability or obligation by reason of making or not making any such
inspection or examination.
(i) Insignia. Company shall, at its own cost and expense, cause the
Airframe and each Engine included in the Aircraft Collateral to be legibly
marked (in a reasonably prominent location, which in the case of the
Airframe shall be adjacent to the airworthiness certificate) with such a
plate, disk, or other marking of customary size, and bearing the legend
"Mortgaged to Bankers Trust Company, as Administrative Agent" or such other
legend, as shall in the opinion of Administrative Agent be appropriate or
desirable to evidence the fact that it is subject to the lien and security
interest created by this Mortgage. Company shall not remove or deface, or
permit to be removed or defaced, any such plate, disk, or other marking or
the identifying manufacturer's serial number, and, in the event of such
removal or defacement, shall promptly cause such plate, disk, or other
marking or serial number to be promptly replaced. Except as provided above,
Company shall not allow the name of any person, association or corporation
to be placed on the Airframe or any Engine as a designation that might be
interpreted as a claim of ownership or of any security interest therein,
except that Company or any permitted lessee may place its customary colors
and insignia or the insignia of the manufacturer on the Airframe or any
Engine.
(j) Modification Agreement and BFE Agreements.
(i) Company shall not upon the occurrence and during the
continuation of an Event of Default under the Credit Agreement enter
into any agreement to amend, rescind, cancel or terminate the
Modification Agreement or any BFE Agreement to the extent it relates
to the Aircraft, without the prior written consent of Administrative
Agent.
(ii) If Administrative Agent and Company shall at any time be in
dispute as to the entitlement of Administrative Agent to exercise any
right hereunder upon an Event of Default in respect of the
Modification Agreement or any BFE Agreement, Company agrees that (the
party modifying the Aircraft under the Modification Agreement) or the
vendor of the Buyer- Furnished Equipment, as the case may be, shall
perform the corresponding obligations exclusively at the direction of
Administrative Agent.
SECTION 5. Remedies.
(a) If any Event of Default shall occur and be continuing, then
Administrative Agent may, without notice of any kind to Company, exercise
in respect of the Aircraft Collateral and Aircraft Related Collateral, (i)
all the rights and remedies of a secured party on default under the Uniform
Commercial Code as in effect at the time in any applicable jurisdiction
(whether or not the Uniform Commercial Code applies to the affected
Aircraft Collateral), (ii) all the rights and remedies provided for in this
Mortgage, the Credit
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Agreement and any other Loan Document, and in any other agreement between
Company and Administrative Agent, and (iii) such other rights and remedies
as may be provided by law or otherwise.
(b) After an Event of Default has occurred and is continuing,
Administrative Agent may, without notice, take possession of the Aircraft
Collateral or any part thereof and may exclude Company, and all persons
claiming under Company, wholly or partly therefrom. At the request of
Administrative Agent, Company shall promptly deliver or cause to be
delivered to Administrative Agent or to whomsoever Administrative Agent
shall designate, at such time or times and place or places as
Administrative Agent may specify, and fly or cause to be flown to such
airport or airports in the United States as Administrative Agent may
specify, without risk or expense to Administrative Agent, the Aircraft
Collateral or any part thereof. In addition, Company will provide, without
cost or expense to Administrative Agent, storage facilities for the
Aircraft Collateral. If Company shall for any reason fail to deliver the
Aircraft Collateral or any part thereof after demand by Administrative
Agent, Administrative Agent may, without being responsible for loss or
damage, (i) obtain a judgment conferring on Administrative Agent the right
to immediate possession or requiring Company to deliver immediate
possession of the Aircraft Collateral or any part thereof to Administrative
Agent, to the entry of which judgment Company hereby specifically consents,
or (ii) with or without such judgment, pursue the Aircraft Collateral or
any part thereof wherever it may be found and may enter any of the premises
of Company where the Aircraft Collateral may be and search for the Aircraft
Collateral and take possession of and remove the same. Company agrees to
pay to Administrative Agent, upon demand, all expenses incurred in taking
any such action; and all such expenses shall, until paid, be secured by the
lien of this Mortgage. Upon every such taking of possession, Administrative
Agent may, from time to time, make all such reasonable expenditures for
maintenance, insurance, repairs, replacements, alterations, additions and
improvements to and of the Aircraft Collateral, as it may deem proper. In
each such case, Administrative Agent shall have the right to maintain, use,
operate, store, lease, control or manage the Aircraft Collateral or any
part thereof and to carry on the business and exercise all rights and
powers of Company relating to the Aircraft Collateral, as Administrative
Agent shall deem best, including the right to enter into any and all such
agreements with respect to the maintenance, use, operation, storage,
leasing, control, management or disposition of the Aircraft Collateral or
any part thereof as Administrative Agent may determine. Further, after the
occurrence and during the continuation of an Event of Default,
Administrative Agent shall be entitled to collect and receive directly all
tolls, rents, revenues, issues, income, products and profits of the
Aircraft Collateral or any part thereof (other than any received under any
ACMI Contract). Such tolls, rents, revenues, issues, income, products and
profits shall be applied to pay the expenses of the use, operation,
storage, leasing, control, management or disposition of the Aircraft
Collateral, and of all maintenance, insurance, repairs, replacements,
alterations, additions and improvements, and to make all payments which
Administrative Agent may be required or may elect to make, if any, for
taxes, assessments, or other proper charges upon the Aircraft Collateral
and all other payments which Administrative Agent may be required or
authorized to make under any provision of this
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Mortgage, as well as just and reasonable compensation for the services of
Administrative Agent and of all persons properly engaged and employed for
such purposes by Administrative Agent.
(c) Administrative Agent, with or without taking possession of the
Aircraft Collateral, may, without notice:
(i) to the extent permitted by law, sell at one or more sales, as
an entirety or in separate lots or parcels, the Aircraft Collateral or
any part thereof, at public or private sale, at such place or places
and at such time or times and upon such terms, including terms of
credit (which may include the retention of title by Administrative
Agent to the property so sold), as Administrative Agent may determine,
whether or not the Aircraft Collateral shall be at the place of sale;
and
(ii) proceed to protect and enforce its rights under this
Mortgage by suit, whether for specific performance of any covenant
herein contained or in aid of the exercise of any power herein granted
or for the foreclosure of this Mortgage and the sale of the Aircraft
Collateral under the judgment or decree of a court of competent
jurisdiction or for the enforcement of any other right.
(d) After an Event of Default has occurred and is continuing, Company
agrees to the fullest extent that it lawfully may, that it will not (and
hereby irrevocably waives its right to) at any time plead, or claim the
benefit or advantage of, any appraisement, valuation, stay, extension,
moratorium, or redemption law now or hereafter in force, in order to
prevent or hinder the enforcement of this Mortgage or the absolute sale of
the Aircraft Collateral. Company, for itself and all who may claim under
it, waives, to the extent that it lawfully may, all right to have all or
any portion of the Aircraft Collateral marshalled upon any foreclosure
hereof.
(e) Each and every remedy of Administrative Agent shall be cumulative
and shall not be exclusive of any other remedies provided now or hereafter
at law, in equity or otherwise. Company shall reimburse Administrative
Agent, upon demand, for all fees and other expenses paid or incurred by
Administrative Agent in exercising any rights, powers or remedies granted
hereby. All such fees and expenses shall, until paid, be secured by the
lien of this Mortgage.
SECTION 6. Application of Proceeds.
The proceeds of any sale, lease or other disposition of all or any of the
Aircraft Collateral or Aircraft Related Collateral under this Mortgage and all
other sums realized by Administrative Agent pursuant to this Mortgage or any
proceedings hereunder shall be applied in the following order of priority:
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174
First: To the payment of the costs and expenses of such sale, lease,
disposition or other realization, including reasonable compensation to
Administrative Agent's agents and counsel, and all expenses, liabilities
and advances made or incurred by Administrative Agent in connection
therewith, including, without limitation, taxes upon or with respect to the
sale, lease, disposition or realization and the payment of taxes and Liens,
if any, prior to the lien and security interest of this Mortgage (except
any taxes or Liens to which the respective sale, lease, disposition or
realization shall have been subject) and to the payment of expenses and the
reimbursement of payments incurred or made by Administrative Agent pursuant
to Section 9 hereof;
Second: To the ratable payment of interest accrued and unpaid on the
Notes to and including the date of such application;
Third: To the ratable payment of principal of the Notes, which payment
shall be applied to the principal installments of the Notes in the manner
specified by the Credit Agreement;
Fourth: To the payment of all other amounts payable by Company under
the Credit Agreement, this Mortgage or any other Loan Document with respect
to the Loans made to finance the purchase of the Aircraft Collateral and
the cost of making the Aircraft usable by Company as a cargo aircraft; and
Fifth: To the extent the security interest under the Second Mortgage
remains in effect, as required to be applied thereunder, otherwise to
Company or to such other Person(s) as may lawfully be entitled, or as any
court of competent jurisdiction may direct, the remainder.
SECTION 7. Administrative Agent as Attorney.
Company hereby irrevocably appoints Administrative Agent the true and
lawful attorney of Company (with full power of substitution) in the name, place
and stead of, and at the expense of, Company at any time after the occurrence
and during the continuation of an Event of Default (i) to ask, demand, collect,
▇▇▇ for, recover, compound, receive and give acquittance and receipts for moneys
due and to become due under or in respect of any of the Aircraft Collateral and
Aircraft Related Collateral, (ii) to make all necessary transfers of all or any
part of the Aircraft Collateral and Aircraft Related Collateral in connection
with any sale, lease or other disposition made pursuant hereto, (iii) to execute
and deliver for value all necessary or appropriate bills of sale, assignments
and other instruments in connection with any such sale, lease or other
disposition, and (iv) generally to do, at Administrative Agent's option and
Company's cost and expense, at any time, or from time to time, all acts and
things that Administrative Agent deems necessary to protect, preserve or realize
upon the Aircraft Collateral and Aircraft Related Collateral and Administrative
Agent's security interest therein, in order to effect the intent of this
Mortgage, all as fully and effectively as Company might do, Company hereby
ratifying and
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175
confirming all that its said attorney (or any substitute) shall lawfully do
hereunder and pursuant hereto.
SECTION 8. Cash Collateral.
All monies received by Administrative Agent to be held and applied under
this Section, and all monies if any, required to be paid to Administrative Agent
hereunder, which disposition is not elsewhere herein otherwise specifically
provided for shall be held by Administrative Agent and applied from time to time
as provided herein, in the Second Mortgage and in the Credit Agreement and the
other Loan Documents and shall be held in an account in the name of
Administrative Agent and invested in Cash Equivalents for the benefit and at the
risk of Company.
SECTION 9. Administrative Agent's Right to Perform.
If Company fails to make any payment required to be made by it hereunder or
fails to perform or comply with any of its agreements contained herein,
Administrative Agent may itself make such payment or perform or comply with such
agreement (including, without limitation, the agreement of Company to maintain
insurance pursuant to Section 4(g) hereof), and the amount of such payment and
the amount of the reasonable expenses of Administrative Agent incurred in
connection with such payment or the performance of or compliance with such
agreement, as the case may be, together with interest thereon at the rate
specified in the Credit Agreement from time to time, shall be payable by Company
to Administrative Agent on demand and shall constitute additional indebtedness
secured by the lien and security interest of this Mortgage.
SECTION 10. Further Assurances.
Company at its expense will promptly and duly execute and deliver such
documents and assurances and take such action as may be necessary or desirable,
or as Administrative Agent may from time to time request, in order to correct
any defect, error or omission which may at any time hereafter be discovered in
the contents of this Mortgage or in the execution or delivery hereof, and/or in
order to more effectively carry out the intent and purpose of this Mortgage and
to establish, protect and perfect the rights, remedies and security interests
created or intended to be created in favor of Administrative Agent hereunder,
including, without limitation, the execution, delivery and filing of any
instruments with the FAA and of any Uniform Commercial Code financing and
continuation statements with respect to the security interests created hereby,
in form and substance satisfactory to Administrative Agent, in such
jurisdictions as Administrative Agent may reasonably request. Company hereby
authorizes Administrative Agent to file any such statements without the
signature of Company to the extent permitted by applicable law.
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176
SECTION 11. Right to Possession Under Bankruptcy Code.
This Mortgage constitutes a purchase money equipment security interest in
the Aircraft Collateral within the meaning of Section 1110 of the United States
Bankruptcy Code, and Administrative Agent shall be entitled to the benefits
thereof. Notwithstanding, if at any time the Bankruptcy Code shall be amended in
such manner as to repeal or otherwise restrict the availability or applicability
of the provisions of Section 1110 of the United States Bankruptcy Code, the
right of Administrative Agent to take possession of the Aircraft Collateral in
compliance with the provisions of this instrument shall not be affected thereby.
SECTION 12. Continuing Security Interest.
This Mortgage shall create a continuing security interest in the Aircraft
Collateral and Aircraft Related Collateral and shall (a) remain in full force
and effect until the indefeasible payment in full of the Secured Obligations,
(b) be binding upon Company, its successors and assigns and (c) inure, together
with the rights and remedies of Administrative Agent hereunder, to the benefit
of Administrative Agent and its successors, transferees and assigns. Without
limiting the generality of the foregoing clause (c), Administrative Agent or any
Lender may, subject to any restrictions contained in the Credit Agreement,
assign or otherwise transfer the Credit Agreement or any Note to any other
person or entity, and such other benefits in respect thereof granted to
Administrative Agent herein or otherwise. Upon the indefeasible payment in full
of the Secured Obligations, the security interest granted hereby shall terminate
and all rights to the Aircraft Collateral and Aircraft Related Collateral shall
revert to Company. Upon any such termination, Administrative Agent will execute
and deliver to Company, at Company's expense, such instruments of release and
termination as Company may reasonably request to evidence such termination.
SECTION 13. Miscellaneous.
Any provision of this Mortgage which is prohibited or unenforceable in any
jurisdiction shall, as to such jurisdiction, be ineffective to the extent of
such prohibition or unenforceability without invalidating the remaining
provisions hereof, and any such prohibition or unenforceability in any
jurisdiction shall not invalidate or render unenforce- able such provision in
any other jurisdiction. To the extent permitted by applicable law, Company
hereby waives any provision of law which renders any provision hereof prohibited
or unenforceable in any respect. No term or provision of this Mortgage may be
changed, waived, discharged or terminated orally, but only by an instrument in
writing signed by Company and Administrative Agent. The captions and headings in
this Mortgage are for convenience of reference only and shall not define or
limit any of the terms or provisions hereof.
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SECTION 14. Consent to Jurisdiction and Service of Process.
All judicial proceedings brought against Company with respect to this
Mortgage may be brought in any state or federal court of competent jurisdiction
in the State of New York or Colorado and by execution and delivery of this
Mortgage Company accepts for itself and in connection with the Aircraft
Collateral and Aircraft Related Collateral, generally and unconditionally, the
nonexclusive jurisdiction of the aforesaid courts and irrevocably agrees
to be bound by any judgment rendered thereby in connection with this Mortgage.
Company hereby agrees that service of process in any such proceeding in any such
court may be made by registered or certified mail return receipt requested to
Company at its address provided on the signature pages of the Mortgage, such
service being hereby acknowledged by Company to be effective and binding service
in every respect. A copy of any such process so served shall be mailed by
registered mail to Company, at its address specified in Section 16 hereof,
except that unless otherwise provided by applicable law, any failure to mail
such copy shall not affect the validity of service of process. If any agent
appointed by Company refuses to accept service, Company hereby agrees that
service upon it by mail shall constitute sufficient notice. Nothing herein shall
affect the right to serve process in any other manner permitted by law or shall
limit the right of Administrative Agent to bring proceedings against Company in
the courts of any other jurisdiction.
SECTION 15. GOVERNING LAW; TERMS.
THIS MORTGAGE SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE
INTERNAL LAWS OF THE STATE OF NEW YORK, EXCEPT AS REQUIRED BY MANDATORY
PROVISION OF LAW AND EXCEPT TO THE EXTENT THAT THE VALIDITY OR PERFECTION OF THE
SECURITY INTEREST HEREUNDER, OR REMEDIES HEREUNDER, IN RESPECT OF ANY PARTICULAR
AIRCRAFT COLLATERAL ARE GOVERNED BY THE LAWS OF A JURISDICTION OTHER THAN THE
STATE OF NEW YORK. Unless otherwise defined herein or in the Credit Agreement,
terms used in Article 9 of the Uniform Commercial Code in the State of New York
are used herein as therein defined.
SECTION 16. Addresses for Notices.
All notices and other communications provided for hereunder shall be in
writing (including facsimile communication) and mailed or telecopied or
delivered to Company or Administrative Agent, as the case may be, addressed to
it at the address of such party specified on the signature page hereof, or as to
either party at such other address as shall be designated by such party in a
written notice to each other party complying as to delivery with the terms of
this Section 16. All such notices and other communications shall, when mailed,
be effective when deposited in the mails, addressed as aforesaid.
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178
SECTION 17. Counterparts.
This Mortgage may be executed in one or more counterparts, each of which
shall be deemed an original and all of which together shall constitute one and
the same Mortgage.
(Remainder of page intentionally left blank.)
X-30
179
IN WITNESS WHEREOF, Company and Administrative Agent have caused this
Mortgage to be duly executed and delivered by their respective officers
thereunto duly authorized as of the date first above written.
ATLAS AIR, INC.
By:
----------------------------
Name:
Title:
Notice Address:
Atlas Air, Inc.
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇ ▇▇▇▇▇▇▇▇▇
Senior Vice President and
General Counsel
BANKERS TRUST COMPANY,
as Administrative Agent
By:
----------------------------
Name:
Title:
Notice Address:
Bankers Trust Company
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇ ▇▇▇▇▇▇▇▇
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SCHEDULE I
to First Security Agreement
and Chattel Mortgage
AIRFRAME
Manufacturer's United States
Manufacturer Model Serial Number Registry No.
------------ ----- ------------- ------------
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181
SCHEDULE II
to First Security Agreement
and Chattel Mortgage
ENGINES
Manufacturer's
Manufacturer Model Serial Number
------------ ----- -------------
Each such engine having 750 or more rated takeoff horsepower or the equivalent
thereof.
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182
EXHIBIT A
to First Security Agreement
and Chattel Mortgage
FIRST SUPPLEMENTAL CHATTEL MORTGAGE NO. ___
THIS FIRST SUPPLEMENTAL CHATTEL MORTGAGE is dated __________, 19__ between
Atlas Air, Inc., a Delaware corporation (the "Company"), and Bankers Trust
Company, as agent for and representative of (in such capacity, "Administrative
Agent") the financial institutions ("Lenders") party to the Third Amended and
Restated Credit Agreement dated as of September 5, 1997 among Company, Lenders,
▇▇▇▇▇▇▇ Sachs Credit Partners L.P., as syndication agent, and Bankers Trust
Company, as administrative agent.
Company and Mortgagee have heretofore entered into a First Security
Agreement and Chattel Mortgage dated __________, 199__ (the "Mortgage") and the
terms defined therein and not otherwise defined herein are used herein as
therein defined. The Mortgage provides for the execution and delivery of
supplements thereto substantially in the form hereof, for the purpose of
particularly describing each Engine subjected to the lien of the Mortgage
pursuant to Section 4(f) thereof, and shall specifically mortgage such Engine to
Administrative Agent.
The Mortgage relates to the Engine(s) described below and a counterpart of
the Mortgage has been recorded by the Federal Aviation Administration on
__________, 19__, and has been assigned Conveyance No. __________.
NOW, THEREFORE, that, to secure the due and punctual payment and
performance of the Secured Obligations and in consideration of the premises and
of the covenants contained in the Mortgage, Company hereby mortgages to
Administrative Agent, its successors and assigns, and grants and assigns to
Administrative Agent, its successors and assigns for the benefit of Lenders, a
first priority purchase money security interest in all estate, right, title and
interest of Company in and to the property described in Schedule I annexed
hereto (whether or not such Engine shall be installed on or attached to the
Airframe), and the proceeds thereof.
This First Supplemental Chattel Mortgage shall be construed as supplemental
to the Mortgage and shall form a part thereof, and the Mortgage is hereby
incorporated by reference herein and is hereby ratified, approved and confirmed.
THIS FIRST SUPPLEMENTAL CHATTEL MORTGAGE IS INTENDED TO BE DELIVERED IN THE
STATE OF NEW YORK AND SHALL BE GOVERNED BY THE INTERNAL LAWS OF THAT STATE.
This First Supplemental Chattel Mortgage may be executed in one or more
counterparts, each of which shall be deemed an original and all of which
together shall constitute one and the same First Supplemental Chattel Mortgage.
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183
(Balance of page intentionally left blank.)
X-35
184
IN WITNESS WHEREOF, the parties hereto have caused this First Supplemental
Chattel Mortgage to be duly executed and delivered by their respective officers
thereunto duly authorized as of the date first above written.
ATLAS AIR, INC.
By:
----------------------------
Name:
Title:
Notice Address:
Atlas Air, Inc.
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇ ▇▇▇▇▇▇▇▇▇
Senior Vice President and
General Counsel
BANKERS TRUST COMPANY,
as Administrative Agent
By:
----------------------------
Name:
Title:
Notice Address:
Bankers Trust Company
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇ ▇▇▇▇▇▇▇▇
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185
SCHEDULE I
to First Supplemental
Chattel Mortgage
SCHEDULE OF ENGINES
Manufacturer's
Manufacturer Model Serial Number
------------ ----- -------------
Such engine having 750 or more rated takeoff horsepower or the equivalent
thereof
X-37
186
EXHIBIT XI
(FORM OF)
SECOND SECURITY AGREEMENT AND CHATTEL MORTGAGE
(AIRCRAFT NO. ________)
THIS SECOND SECURITY AGREEMENT AND CHATTEL MORTGAGE is dated __________,
199__, (this "Mortgage"), and entered into by and between Atlas Air, Inc., a
Delaware corporation ("Company"), and Bankers Trust Company, as agent for and
representative of ("Administrative Agent") the financial institutions
("Lenders") party to the Credit Agreement referred to below.
PRELIMINARY STATEMENTS
Company has entered into that certain Third Amended and Restated Credit
Agreement dated as of September 5, 1997 (said credit agreement, as it may be
amended, restated, supplemented or otherwise modified from time to time, being
the "Credit Agreement") with the financial institutions listed therein as
Lenders, ▇▇▇▇▇▇▇ Credit Partners L.P., as Syndication Agent, and Administrative
Agent, pursuant to which Lenders have agreed, on the terms and conditions set
forth in the Credit Agreement, to make purchase money loans to Company in the
principal amount of up to $___________ (the "Aircraft Loans") to enable Company
to purchase and modify the Aircraft Collateral (as defined below). Lenders have
also agreed pursuant to the Credit Agreement to make additional loans (the
"Additional Loans") for the acquisition and modification of Eligible Aircraft
(as defined in the Credit Agreement) and have made one or more purchase money
loans to Company for Financed Aircraft (as defined in the Credit Agreement)
other than the Aircraft (all such Eligible Aircraft and other Financed Aircraft
hereinafter referred to as "Other Aircraft"). The indebtedness with respect to
such other Financed Aircraft and the Eligible Aircraft resulting from such
Additional Loans that Lenders have made and have agreed to make, have been and
will (to the extent made) be evidenced by certain promissory notes of Company to
the order of Lenders of even date with such Additional Loans issued under and
pursuant to the Credit Agreement (such promissory notes, as they may be amended,
modified, supplemented, renewed, converted or extended from time to time, being
the "Additional Notes"). It is the intent of Company and Lenders that in
addition to securing the Aircraft Loans, the Aircraft Collateral and Aircraft
Related Collateral secure Company's other obligations under the Credit Agreement
including those obligations under the Additional Notes, and that such security
interest be second in interest only to the first priority security interest in
the Aircraft Collateral and Aircraft Related Collateral granted pursuant to the
First Mortgage (as defined below). It is a condition precedent to the making by
Lenders of the Aircraft Loans under the Credit Agreement that this Mortgage be
executed, delivered and filed for recordation.
XI-1
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NOW, THEREFORE, in consideration of the premises and in order to induce
Lenders to make the Aircraft Loans, Company hereby agrees with Administrative
Agent as follows:
SECTION 1. Mortgage and Grant of Security.
To secure the due and punctual payment of the Additional Notes, together
with accrued interest thereon, and all other amounts from time to time payable
by Company under the Credit Agreement, the First Mortgage, this Mortgage and the
other Loan Documents to the extent such amounts relate to the Additional Notes
or the Other Aircraft or are not otherwise secured by the First Mortgage
(including payment of amounts that would become due but for the operation of the
automatic stay under Section 362(a) of the United States Bankruptcy Code), and
to secure performance of all obligations and covenants of Company under the
Credit Agreement, the First Mortgage, this Mortgage and the other Loan Documents
to the extent such obligations relate to the Additional Notes or the Other
Aircraft or are not otherwise secured by the First Mortgage (all such payment
and performance obligations of Company, the "Secured Obligations"), Company
hereby mortgages to Administrative Agent, for the benefit of Lenders, and their
respective successors and assigns, and hereby grants and assigns to
Administrative Agent, for the benefit of Lenders, and their respective
successors and assigns, a second priority security interest in the Aircraft and
the Spare Engine (the "Aircraft Collateral") and the other below-described
property wherever the same may be located (the "Aircraft Related Collateral")
such security interest second in priority only to the security interests granted
pursuant to the First Mortgage with respect to the Aircraft Collateral and
Aircraft Related Collateral:
(a) Aircraft Collateral. All of Company's right, title and interest in and
to:
(i) the airframe (the Aircraft except for the Engines or engines from
time to time installed thereon), which is described on Schedule I hereto
together with any and all Parts (as hereinafter defined) incorporated or
installed in or attached to such airframe and all Parts removed from such
airframe until such Parts are replaced in accordance with Section 4(e)
hereof (such airframe, together with any and all such Parts, hereinafter
referred to as the "Airframe");
(ii) each of the engines, which are listed in Schedule II hereto or
which are described in a Supplemental Chattel Mortgage and listed by
manufacturer's serial numbers in such Schedule or in such Supplemental
Chattel Mortgage (a "Supplemental Chattel Mortgage") substantially in the
form of Exhibit A attached hereto, supplementing this Mortgage, whether or
not from time to time thereafter installed on the Airframe or on any other
airframe or aircraft, including any engine designated a spare engine (the
"Spare Engine"), and any replacement engine which may be substituted for
such engine in accordance with the provisions of Section 4(f) hereof,
together, in each case, with any and all Parts incorporated or installed in
or attached thereto and any and all Parts removed therefrom, until such
Parts are replaced in accordance with Section 4(e) hereof (each such
engine, spare engine and replacement engine, together with any and all such
Parts, hereinafter referred to as an "Engine" (and the engines identified
on such schedule as
XI-2
188
spares and each replacement thereof hereinafter referred to as "Spare
Engines") and collectively, the "Engines");
(iii) all appliances, parts, instruments, appurtenances, accessories,
furnishings and other equipment of whatever nature (other than complete
Engines or engines), which may from time to time be incorporated or
installed in or attached to the Airframe or any Engine, including all such
appliances, parts, instruments, appurtenances, accessories, furnishings and
other equipment purchased by Company for incorporation or installation in
or attachment to the Airframe or any Engine pursuant to the terms of the
Modification Agreement and any Buyer-Furnished Equipment whether or not
identified in a Supplemental Chattel Mortgage (collectively referred to
herein as "Parts"); and
(iv) all records, logs and other materials required by applicable law
or regulation to be maintained and all other records, logs and materials
maintained in the ordinary course of business with respect to the
properties described in paragraphs (i), (ii) and (iii) above (together with
such Airframe and Engines (other than the Spare Engine), the "Aircraft").
(b) Aircraft Related Collateral. All of Company's right, title and interest
in and to:
(i) all the tolls, rents, issues, profits, revenues and other income
of the property subject or required to be subject to the lien of this
Mortgage other than any such amounts payable pursuant to an ACMI Contract;
(ii) all monies and securities deposited or required to be deposited
with the Administrative Agent pursuant to any term of this Mortgage and
held or required to be held by Administrative Agent hereunder;
(iii) the Purchase Agreement to the extent it relates to the Aircraft
(include any agreement assigned therewith);
(iv) the Modification Agreement and each BFE Agreement to the extent
each relates to the Aircraft together with all rights, powers, privileges,
options, licenses and other benefits of Company (including such
indemnities, rights of assignment, rights and remedies for breach of any
warranty and/or claims for damages, rights to receive title to parts and
materials, and the rights to any and each and every other guarantee,
condition and warranty contained or implied in the Modification Agreement),
as buyer under such agreement including upon an Event of Default to receive
and collect all payments of any kind now or hereafter payable or receivable
by or for the benefit or account of Company as buyer under the Modification
Agreement or such BFE Agreement to the extent it relates to the Aircraft
and after the occurrence and during the continuation of an Event of Default
the right to (A) give or receive any instrument, notice or other
communication, (B) exercise any election or option or accept any redelivery
of the Aircraft or any part thereof or delivery of any Buyer-Furnished
Equipment or grant any waiver, consent or other approval and (C) enter into
any amendment, supplement or other modification or
XI-3
189
agreement relating to the Modification Agreement or such BFE Agreement or
any provision thereof to the extent it relates to the Aircraft;
(v) all amounts payable to Company by any manufacturer, supplier or
vendor of any of the Aircraft Collateral or any component thereof pursuant
to any warranty or indemnity covering any such Collateral;
(vi) all amounts payable as proceeds of insurance, as an award or
otherwise in connection with any confiscation, condemnation, requisition or
other taking of any Aircraft Collateral to the extent payable to
Administrative Agent hereunder; and
(vii) all proceeds of any and all of the properties described above,
including, without limitation, all payments under insurance proceeds or
payment under any indemnity, payable by reason of any loss or damage to the
Aircraft or any Engine.
Company does hereby warrant and represent that it has not assigned or
pledged, and hereby covenants that it will not assign or pledge, so long as the
assignment hereunder shall remain in effect, any of its right, title or interest
hereby assigned to anyone other than Administrative Agent, and that it will not,
except as provided in the First Mortgage, herein or in the Credit Agreement,
enter into any agreement amending or supplementing the Purchase Agreement, the
Modification Agreement or any BFE Agreement to the extent it relates to the
Aircraft, execute any waiver or modification of, or consent under any such
agreement, settle or compromise any claim arising under any such agreement, or
submit or consent to the submission of any dispute, difference or other matter
arising under or in respect of any such agreement, to arbitration thereunder.
SECTION 2. Definitions.
Unless the context otherwise requires, the following terms shall have the
following meanings for all purposes of this Mortgage and shall be equally
applicable to both the singular and the plural forms of such terms. Terms
defined in the Credit Agreement and not otherwise defined herein are used herein
as therein defined.
"Act" means the Federal Aviation Act of 1958, as amended and
recodified in ▇▇▇▇▇ ▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇▇ Code, or any similar legislation
of the United States enacted to supersede, amend or supplement such
Act and the rules and regulations promulgated thereunder.
"Additional Loans" has the meaning specified in the Preliminary
Statements.
"Additional Notes" has the meaning specified in the Preliminary
Statements.
"Administrative Agent" has the meaning specified in the first
paragraph of this instrument.
XI-4
190
"Aircraft" has the meaning specified in Section 1 hereof.
"Aircraft Collateral" has the meaning specified in Section 1
hereof.
"Aircraft Loans" has the meaning specified in the Preliminary
Statements.
"Aircraft Related Collateral" has the meaning specified in
Section 1 hereof.
"Airframe" has the meaning specified in Section 1 hereof.
"BFE Agreement" means any agreement entered into by Company from
time to time, in form and substance satisfactory to Administrative
Agent, with respect to Buyer-Furnished Equipment, in each case as the
same may be amended, modified or supplemented from time to time.
"Buyer-Furnished Equipment" means all materials and parts to be
provided under the Modification Agreement by Company with respect to
the Aircraft, including all parts to be acquired by Company under the
BFE Agreements.
"Company" has the meaning specified in the first paragraph of
this instrument.
"Credit Agreement" has the meaning specified in the Preliminary
Statements.
"Domestic Air Carrier" means any United States "domestic air
carrier," as defined in Part 121 of the Federal Aviation Regulations,
that is operating in accordance with the operating certificate and
appropriate operations specifications issued under Part 121 or any
successor regulations.
"Engine" has the meaning specified in Section 1 hereof.
"Event of Default" means any Event of Default as defined in the
Credit Agreement.
"First Mortgage" means the First Security Agreement and Chattel
Mortgage dated as of the date hereof between Company and
Administrative Agent as the same may be amended, modified or
supplemented from time to time.
"Foreign Air Carrier" means any "foreign air carrier" as defined
in the Act, as to which there is in force a permit issued pursuant to
Section 402 of said Act or operators of aircraft operating under or
governed by the provisions of Parts 121, 123 or 129 of the Federal
Aviation Regulations, in each case that are certificated in a country
that is a signatory to the Convention on International Civil Aviation
and are operating in conformity with the Annexes thereunder and that
fly routes into the United States on a regularly scheduled basis.
XI-5
191
"Loans" has the meaning specified in the Preliminary Statements.
"Modification Agreement" means (identify specific modification
agreement).
"Mortgage" has the meaning specified in the first paragraph of
this instrument.
"Other Aircraft" has the meaning specified in the Preliminary
Statements.
"Parts" has the meaning specified in Section 1 hereof.
"Purchase Agreement" means (identify specific purchase
agreement).
"Secured Obligations" has the meaning specified in Section 1
hereof.
"Spare Engine" has the meaning specified in Section 1.
"Supplemental Chattel Mortgage" has the meaning specified in
Section 1 hereof.
SECTION 3. Representations and Warranties.
Company hereby represents and warrants that, in the case of the Airframe or
each Engine initially or subsequently mortgaged hereunder on the date the
Airframe or such Engine is mortgaged hereunder as follows:
(a) Company has good and marketable title to the Aircraft Collateral
free and clear of all Liens except for the lien of the First Mortgage, the
lien of this Mortgage and Permitted Encumbrances and has full power and
authority to mortgage and grant the lien and security interest in the
Aircraft Collateral and Aircraft Related Collateral intended by the terms
hereof and in the manner aforesaid and has not assigned or pledged any of
its right, title or interest hereby assigned to anyone other than
Administrative Agent.
(b) Company is a "citizen of the United States" as defined in Section
40102(15) of Title 49 of the United States Code and is an air carrier
certificated under Sections 401 and 604(b) of the Act and holds all
necessary air carrier operating certificates.
(c) The Airframe is duly registered in the name of Company in
accordance with the Act; and the Airframe is not registered under the laws
of any other country.
(d) This Mortgage or a Supplemental Chattel Mortgage, as the case may
be, is in due form for recording in accordance with the Act, and has been
duly filed for recording in accordance with the Act against the Aircraft or
such Engine(s), as the case may be.
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(e) An airworthiness certificate has been duly issued under the Act
for the Aircraft (evidence of which has been supplied to Administrative
Agent), and the airworthiness certificate for the Aircraft is in full force
and effect.
(f) The Aircraft and Engines are in such condition so as to comply
with the requirements of Section 4(c) hereof; and the insurance required by
Section 4(g) hereof is in full force and effect.
(g) This Mortgage or this Mortgage as supplemented by a Supplemental
Chattel Mortgage constitutes the legally valid and binding obligation of
Company enforceable against it in accordance with its terms and, except as
enforcement may be limited by bankruptcy, insolvency, reorganization,
moratorium, or similar laws or equitable principles relating to or limiting
creditors' rights generally, creates a valid, perfected and second priority
mortgage on and security interest in the Aircraft Collateral, securing the
payment and performance of the Secured Obligations.
(h) Company has delivered to Administrative Agent for filing financing
statements under Article 9 of the Uniform Commercial Code of the States of
Colorado and New York (and such other states as may be required) with
respect to that portion of the Aircraft Collateral not covered by the
filing system established under the Act and with respect to the Aircraft
Related Collateral; and except for the filings described in this paragraph
and in paragraph (d) above of this Section 2, no filing or recording of any
instrument shall be required to establish and perfect a second priority
security interest in the Aircraft Collateral or Aircraft Related Collateral
under the laws of the United States or any State thereof.
(i) The chief place of business and the chief executive office of
Company is located at ▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇.
(j) (i) The Modification Agreement is in full force and effect, and no
provision thereof has been waived, amended, supplemented or canceled in any
respect except to the extent permitted in the Credit Agreement; (ii)
Company is not in default of the Modification Agreement; (iii) no consents,
other than the consent of (the party modifying the Aircraft under the
Modification Agreement), are necessary for the assignment of the
Modification Agreement pursuant to this Mortgage; and (iv) Company has not
previously assigned, pledged or otherwise hypothecated its rights under the
Modification Agreement to the extent it relates to the Aircraft.
SECTION 4. Covenants.
Company hereby covenants that so long as this Mortgage is in effect:
(a) Liens. Company will not directly or indirectly create, incur,
assume or suffer to exist any Lien, on or with respect to any of the
Aircraft Collateral, or Aircraft
XI-7
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Related Collateral, title thereto or any interest therein, except the lien
of the First Mortgage, the lien of this Mortgage and Permitted
Encumbrances. Company will promptly, at its own expense, take such action
as may be necessary to duly discharge any such Lien not excepted above if
the same shall arise at any time.
(b) Taxes. Company will pay, and hereby indemnifies Administrative
Agent from and against, any and all fees and taxes, levies, imposts,
duties, charges or withholdings, together with any penalties, fines or
interest thereon (any of the foregoing for the purposes of this Section
4(b) being called a "Tax"), which may from time to time be imposed on or
asserted against Administrative Agent or any Lender or the Airframe or any
Engine or any part thereof or interest therein by any Federal, state or
local government or other taxing authority in the United States or by any
foreign government or subdivision thereof or by any foreign taxing
authority in connection with, relating to or resulting from: (i) the
Airframe or any Engine or any part thereof of interest therein; (ii) the
manufacture, purchase, ownership, mortgaging, lease, sublease, use,
storage, maintenance, sale or other disposition of the Airframe or any
Engine; (iii) any rentals or other earnings therefor or arising therefrom
or the income or other proceeds received with respect thereto; or (iv) this
Mortgage; provided, however, that, unless the payment of any such Tax shall
be a condition to the enforceability of this Mortgage or the perfection of
the lien hereof or unless proceedings shall have been commenced to
foreclose any lien which may have attached as security for such Tax,
nothing in this Section shall require the payment of any Tax so long as and
to extent that validity thereof shall be contested in good faith by
appropriate legal proceedings promptly instituted and diligently conducted
and Company shall have set aside on its books adequate reserves with
respect thereto in accordance with generally accepted accounting
principles.
(c) Registration; Maintenance and Operation. Company, at its own cost
and expense, will (i) be a "citizen of the United States" as defined in
Section 40102(15) of Title 49 of the United States Code and will be an air
carrier certificated under Sections 401 and 604(b) of the Act and hold all
necessary air carrier operating certificates; (ii) cause the Airframe to be
duly registered and remain duly registered in the name of Company in
accordance with the Act; and (iii) service, repair, inspect, test, maintain
and overhaul the Airframe and each Engine and install replacement equipment
and parts on the Airframe and each Engine (A) so as to keep the Airframe
and each Engine in such operating condition as may be required to permit
the Airframe and each Engine to be utilized in commercial operations
throughout the world, (B) so as to enable the airworthiness certification
of the Airframe to be maintained in good standing at all times under the
Act, except when aircraft of the same type, model or series as the Airframe
(powered by engines of the same type as those with which the Airframe shall
be equipped at the time of grounding) registered in the United States have
been grounded by the FAA; provided, however, that if following its
issuance, the United States FAA airworthiness certificate of the Aircraft
shall be withdrawn, then subject to the provisions of Section 4(f) hereof,
so long as Company is diligently taking or causing to be taken all
necessary action to promptly correct the condition which caused such
withdrawal, no Event of Default shall arise from such withdrawal, (C) in
accordance with Company's FAA-approved mainte-
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▇▇▇▇▇, inspection and maintenance control programs, and in the same manner
and with the same care used by Company with respect to the same or similar
aircraft and engines owned or operated by Company so as to keep the same in
as good operating condition as when originally mortgaged hereunder or as
when redelivered under the Modification Agreement, ordinary wear and tear
excepted, which practices shall at all times be at or above the standard of
the industry in the United States for prudent maintenance of similar
equipment, and (D) in such manner as may be necessary to maintain in full
force all warranties of the manufacturers thereof. Nothing herein shall be
deemed to prevent Company from subjecting the Aircraft to the modification
contemplated by the Modification Agreement. Company shall maintain all
records, logs and other materials which may be required to permit the
Airframe and each Engine to be so utilized.
Company will comply with all airworthiness directives, mandatory notes
or modifications or similar requirements affecting the same (including
those issued by the manufacturer or supplier) in such condition so as to
comply with the provisions of this Mortgage and the rules and regulations
of the FAA from time to time in force and applicable to the Aircraft and
Engines. Neither the Airframe nor any Engine will be maintained, used or
operated in violation of any law or any rule, regulation or order of any
government or governmental authority having jurisdiction (domestic or
foreign), or in violation of any airworthiness certificate, license or
registration relating to the Airframe or such Engine issued by any such
authority, and in the event that such laws, rules, regulations or orders
require alteration of the Airframe or any Engine, Company, at its own cost
and expense, will conform thereto or obtain conformance therewith and will
maintain the same in proper operating condition under such laws, rules,
regulations and orders, provided, however, that Company may, in good faith
(after having delivered to Administrative Agent an Officer's Certificate
stating the facts with respect thereto), contest the validity or
application of any such law, rule, regulation or order in any reasonable
manner which does not, in Administrative Agent's opinion, adversely affect
the interests under this Mortgage of Administrative Agent or any Lender.
Company will not operate, use or locate the Airframe or any Engine,
(I) in any area in which any insurance required to be maintained pursuant
to Section 4(g) shall not be at the time in full force and effect, or in
any area excluded from coverage by an insurance policy in effect with
respect to the Airframe or such Engine, except in the case of a requisition
for use by the United States of America, and then only if Company obtains
indemnity in lieu of such insurance from the United States of America
against the risks and in the amounts required by said Section covering such
area, or (II) in any recognized or threatened area of hostilities unless
fully covered to Administrative Agent's satisfaction by war risk and
political risk and allied perils insurance or unless the Airframe or such
Engine is operated or used under contract with the Government of the United
States of America under which contract that Government assumes liabilities
for any damages, loss, destruction or failure to return possession of the
Airframe or such Engine at the end of the term of such contract and for
injury to persons or damage to property of others.
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195
Company shall not use the Aircraft nor suffer it to be used in any manner
or for any purpose excepted from any of the insurance on or in respect of the
Aircraft or for the purpose of carriage of goods of any description excepted
from such insurance nor do, or permit to be done, anything which, or admit to do
anything the admission of which, may invalidate any of such insurance.
(d) Possession. Company will not, without the prior written consent of
Administrative Agent, sell, assign, lease or otherwise in any manner deliver,
transfer or relinquish possession or control of, or transfer the right, title or
interest of Company in, the Airframe or any Engine except that, unless a
Potential Event of Default shall have occurred and be continuing, Company may
without the prior written consent of Administrative Agent:
(i) transfer possession of the Airframe or any Engine other than by
lease to the United States of America or any instrumentality thereof
pursuant to the Civil Reserve Air Fleet Program (as administered pursuant
to Executive Order 12656, or any substitute order) or any similar or
substitute programs;
(ii) transfer possession of the Airframe or any Engine to the
manufacturer thereof for testing or other similar purposes or any other
organization for service, repairs, maintenance or overhaul or, to the
extent permitted by Section 4(e) hereof, for alterations or modifications;
(iii) subject the Airframe to normal interchange agreements with
Domestic Carriers or any Engine to normal interchange or pooling agreements
or arrangements of the type customary in the United States airline industry
and entered into by Company in the ordinary course of business which do not
contemplate or require the transfer of title to, use for the remainder of
its useful life, or registration of the Airframe or title to or use for the
remainder of its useful life of such Engine and if Company's title to or
use for the remainder of its useful life, of the Airframe or any Engines
shall be divested under any such agreement or arrangement, such divesture
shall be deemed to be an Event of Loss with respect to the Airframe or such
Engine and Company shall comply with Section 4(f) in respect thereof;
(iv) install an Engine on an airframe which is owned by Company free
and clear of all Liens except (A) those permitted under clauses (i) or (ii)
of the definition of Permitted Encumbrances in the Credit Agreement, (B)
those that apply only to the engines (other than the Engines), appliances,
parts, instruments, appurtenances, accessories, furnishings and other
equipment (other than Parts) installed on such airframe (but not to the
airframe as an entirety), and (C) the rights of any Domestic Carrier, under
normal interchange agreements which are customary in the airline industry
and do not contemplate or require the transfer of title to such airframe or
the engines installed thereon;
XI-10
196
(v) install an Engine on an airframe leased to Company or owned by
Company subject to a conditional sale or other security agreement,
provided: (A) such airframe is free and clear of all Liens, except the
rights of the parties to the lease or conditional sale or other security
agreement covering such airframe and except Liens of the type permitted by
clause (iv) above; and (B) Administrative Agent shall have received from
the lessor, conditional vendor or secured party and each of the purchasers,
mortgagees and encumbrancers of such lessor, conditional vendor or secured
party of such airframe a written agreement (which may be the lease,
conditional sale agreement or mortgage covering such airframe), whereby
such lessor, conditional vendor or secured party and each of the
purchasers, mortgagees and encumbrancers of such lessor, conditional vendor
or secured party expressly and effectively agrees that neither it nor its
successors and assigns will acquire or claim any right, title or interest
in any Engine by reason of such Engine being installed on such airframe at
any time when such Engine is subject to this Mortgage;
(vi) install an Engine on an airframe owned by Company, leased by
Company or owned by Company subject to a conditional sale or other security
agreement under circumstances where neither clause (iv) nor clause (v)
above is applicable; provided that any divesture of title to such Engine
resulting from such installation shall be deemed to be an Event of Loss
with respect to such Engine and Company shall comply with Section 4(f) in
respect thereof;
(vii) lease any Engine and/or the Airframe to a Domestic Air Carrier
other than an ACMI Contract or wet lease permitted under clause (ix) below,
in the ordinary course of its business, for a term (including without
limitation, any option of the lessee to renew or extend) not to exceed six
(6) months (in the case of a lease of an Engine without the Airframe, not
to exceed twelve (12) months), provided that (A) no such lease contemplates
or requires the transfer of title to or registration of the Airframe or
title to any Engine, (B) if Company's title to any Engine or the Airframe
shall be divested under any such agreement or arrangement, such divestiture
shall be deemed to be an Event of Loss for all purposes, (C) any such lease
shall provide that the lessee may not deliver, transfer or relinquish
possession or sublease the Airframe or any Engine without the prior written
consent of Administrative Agent, other than as permitted by Section
4(d)(i), (ii) or (iii) hereof, (D) the lease agreement shall provide that
any amounts payable by the lessee to Company thereunder are assigned
hereunder to Administrative Agent for the benefit of Lenders and that if an
Event of Default has occurred and is continuing, upon notice to the lessee
by Administrative Agent, the lessee shall pay all such amounts to
Administrative Agent for the benefit of Lenders unless and until such
lessee shall have received notice from Administrative Agent for the benefit
of Lenders, that the Event of Default has been cured, (E) the lease
agreement shall provide that the lessee shall agree to maintain and operate
any Engine and/or the Airframe in accordance with Section 4(c) hereof,
XI-11
197
and (F) any such lease will be permissible only if Administrative Agent
receives a perfected first priority security interest in any such lease;
(viii) lease any Engine and/or the Airframe to a Foreign Air Carrier
other than an ACMI Contract or wet lease permitted under clause (ix) below,
in the ordinary course of its business, under arrangements that provide for
a term (including, without limitation, any option of the lessee to renew or
extend) not to exceed six (6) months (in the case of a lease of an Engine
without the Airframe, not to exceed twelve (12) months), provided that (A)
no such lease contemplates or requires the transfer of title to or
registration of the Airframe or title to any Engine, (B) if Company's title
to any Engine or the Airframe shall be divested under any such agreement or
arrangement, such divestiture shall be deemed to be an Event of Loss for
all purposes, (C) any such lease shall provide that the lessee may not
deliver, transfer or relinquish possession or sublease the Airframe or any
Engine without the prior written consent of Administrative Agent other than
as permitted by Section 4(d)(i), (ii) or (iii) hereof, (D) the lease
agreement shall provide that any amounts payable by the lessee to Company
thereunder are assigned hereunder to Administrative Agent for the benefit
of Lenders and that if an Event of Default has occurred and is continuing,
upon notice to the lessee by Administrative Agent, the lessee shall pay all
such amounts to Administrative Agent for the benefit of Lenders, (E) the
lease agreement shall provide that the lessee shall agree to maintain and
operate any Engine and/or the Airframe in accordance with Section 4(c)
hereof, and (F) any such lease will be permissible only if Administrative
Agent receives a perfected first priority security interest in any such
lease;
(ix) enter into an ACMI Contract or wet lease for the Airframe and the
Engines or engines installed thereon with any third party pursuant to which
Company has operational control of the Airframe and any Engines installed
thereon such operation to be performed solely by employees of Company
possessing all current certificates and licenses that would be required
under the applicable laws of the United States for the performance by such
employees of similar functions within the United States; provided that
Company's obligations hereunder shall continue in full force and effect
notwithstanding any such ACMI Contract or wet lease; and
(x) sell the Aircraft or the Spare Engine upon satisfaction of the
conditions and compliance with the terms of subsection 6.7 of the Credit
Agreement.
provided, however, that the rights of any transferee (other than pursuant to a
sale permitted by the terms hereof) who receives possession of the Airframe or
any Engine permitted by the terms hereof shall be made subject and subordinate
to, and any lease permitted by this Section 4(d) (other than a lease permitted
by Section 4(d)(ix)) shall be made expressly subject and subordinate to, the
lien and security interest of this Mortgage
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and all of Administrative Agent's rights hereunder and Company shall remain
primarily liable hereunder for the performance of all the terms of this Mortgage
to the same extent as if such transfer had not occurred, and any such instrument
of transfer (other than a lease permitted by Section 4(d)(ix)) shall include
appropriate provisions for the maintenance and insurance of the Airframe or such
Engine, and any such instrument of transfer shall expressly prohibit any further
transfer of the Airframe or such Engine or any assignment of the rights
thereunder; and provided, further, that no such lease, pooling arrangement or
other transfer or relinquishment of the possession of the Airframe or any Engine
shall in any way discharge or diminish any of Company's obligations to
Administrative Agent hereunder or under the Credit Agreement. In the event
Administrative Agent shall have received from the lessor, conditional vendor or
secured party of any airframe leased to Company or purchased by Company subject
to a conditional sale or other security agreement, a written agreement complying
with clause (B) of Section 4(d)(v), and the lease or conditional sale or other
security agreement covering such airframe also covers an engine or engines owned
by the lessor under such lease, conditionally owned by the conditional vendor
under such conditional sale agreement, or subject to such security agreement,
Administrative Agent hereby agrees for the benefit of such lessor, conditional
vendor or secured party that Administrative Agent will not acquire or claim, as
against such lessor, conditional vendor or secured party, any right, title or
interest in any such engine as the result of such engine being installed on the
Airframe at any time while such engine is subject to such lease or conditional
sale or other security agreement and owned by such lessor, conditionally owned
by such conditional vendor or subject to such security agreement.
(e) Replacement and Pooling of Parts; Alterations, Modifications and
Additions.
(i) Company will deliver the Aircraft to (the party modifying the
Aircraft under the Modification Agreement) for modification under the
Modification Agreement no later than ___________, 199__ (six months after
the date of this Mortgage).
(ii) Except as otherwise provided in Section 4(e)(iv), Company, at its
own cost and expense, will promptly replace all Parts, which may from time
to time be incorporated or installed in or attached to the Airframe or any
Engine and 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. In addition, in the
ordinary course of maintenance, service, repair or testing, Company at its
own cost and expense may remove any Parts, whether or not worn out, lost,
stolen, destroyed, seized, confiscated, damaged beyond repair or
permanently rendered unfit for use, provided that, except as otherwise
provided in Section 4(e)(iv), Company at its own cost and expense shall
replace such Parts as promptly as practicable. All replacement Parts shall
be free and clear of all Liens (except the lien of the First Mortgage and
Permitted Encumbrances and for pooling arrangements to the extent permitted
by Sec-
XI-13
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tion 4(e)(iii)), and shall be in as good operating condition as, and shall
have a value and utility at least equal to, the Parts replaced assuming
such property were in the condition and repair required to be maintained by
the terms hereof.
All Parts at any time removed from the Airframe or any Engine shall
remain subject to the lien and security interest of this Mortgage, no
matter where located until such time as such Parts shall be replaced by
parts which have been incorporated or installed in or attached to the
Airframe or any Engine and which meet the requirements for replacement
parts specified above. Immediately upon any replacement Part becoming
incorporated or installed in or attached to the Airframe or any Engine as
above provided, without further act, (A) such replacement Part shall become
subject to the lien and security interest of this Mortgage and shall be
deemed part of the Airframe or such Engine for all purposes hereof to the
same extent as the property originally comprising, or installed on, such
Airframe or such Engine, and (B) title to the replaced part shall thereupon
become free and clear of all rights of Administrative Agent hereunder and
shall no longer be deemed a Part hereunder.
(iii) Any Part removed from the Airframe or any Engine as provided in
Section 4(e)(ii) may be subjected by Company to a normal pooling
arrangement of the type customary in the airline industry entered into by
Company in the ordinary course of its business and entered into with
Domestic Carriers or Foreign Air Carriers that are not the subject of any
bankruptcy, insolvency, or similar proceeding, voluntary or involuntary,
provided the Part replacing such removed Part shall be incorporated or
installed in or attached to the Airframe or such Engine in accordance with
Section 4(e)(ii) as promptly as possible after the removal of such removed
part. In addition, any replacement Part when incorporated or installed in
or attached to the Airframe or any Engine in accordance with Section
4(e)(ii) may be owned subject to such a pooling arrangement, provided
Company, at its expense, as promptly thereafter as possible, either (A)
causes such replacement Part to become subject to the lien and security
interest of this Mortgage in accordance with Section 4(e)(ii) by Company's
acquiring title thereto for the benefit of Administrative Agent free and
clear of all Liens (except the lien of the First Mortgage and Permitted
Encumbrances) or (B) replaces such replacement Part by incorporating or
installing in or attaching to the Airframe or such Engine a further
replacement Part owned by Company free and clear of all Liens (except the
lien of the First Mortgage and Permitted Encumbrances).
(iv) Company, at its own cost and expense, shall make or cause to be
made such alterations and modifications in and additions to the Airframe
and the Engines as may be required from time to time to meet the standards
of the FAA or other governmental authority having jurisdiction; provided,
that Company may, in good faith, contest the validity or application of any
such standard in any reasonable matter that shall not adversely affect the
Lien of this Mortgage or Lenders. Company also agrees, at its own cost and
expense, to make or cause to
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be made such alterations and modifications in and additions to the Airframe
and the Engines as may be required from time to time to meet the standards
or requirements of any directive issued by a manufacturer relating to the
Airframe or any Engine. In addition so long as no Potential Event of
Default or Event of Default shall have occurred and be continuing, Company,
at its own cost and expense, may from time to time make such alterations
and modifications in and additions to the Airframe and any Engine as
Company may deem desirable in the proper conduct of its business, provided
no such alteration, modification or addition diminishes the value or
utility or impairs the condition or airworthiness of the Airframe or such
Engine below the value, utility, condition or airworthiness thereof
immediately prior to such alteration, modification or addition assuming the
Airframe or such Engine were then in the condition and airworthiness
required to be maintained by the terms of this Mortgage.
All Parts owned by Company incorporated or installed in or attached to
or added to the Airframe or any Engine as the result of such alteration,
modification or addition shall, without further act, become subject to the
lien and security interest of this Mortgage; provided, that, so long as no
Potential Event of Default or Event of Default shall have occurred and be
continuing, Company may remove and not replace any such Part if it (A) is
in addition to, and not in replacement of or in substitution for, any Part
incorporated or installed in or attached to the Airframe or such Engine on
the date hereof, on the date the Engine first becomes subject to the lien
of this Mortgage or the date the Airframe or Engine is redelivered under
the Modification Agreement or any Part in replacement of or substitution
for any such Part, (B) is not required to be incorporated or installed in
or attached or added to the Airframe or such Engine pursuant to the terms
of Section 4(c) hereof or any other provision of this Mortgage and (C) can
be removed from the Airframe or such Engine without diminishing or
impairing the value, utility or airworthiness which the Airframe or such
Engine would have had (if following the modification contemplated by
Section 4(e)(i), after giving effect to such Modification) at such time had
such alteration, modification or addition not occurred, assuming the
Collateral Aircraft was otherwise in the condition required by this
Mortgage. Upon the removal by Company of any such Part, as above provided,
title thereto shall, without further act, be free and clear of all rights
of the Administrative Agent hereunder and such Part shall no longer be
deemed a Part hereunder.
(f) Event of Loss.
(i) If an Event of Loss shall occur with respect to an Airframe (or
the Airframe and any Engine then installed thereon), Company will promptly
notify Administrative Agent thereof in writing (in any event within five
(5) days of such occurrence) and will prepay, at the times and in the
amounts required, the Additional Notes and remaining Secured Obligations in
accordance with the terms of the Credit Agreement.
XI-15
201
(ii) If an Event of Loss shall occur with respect to an Engine when
not installed on the Airframe or under other circumstances in which there
has not occurred an Event of Loss with respect to the Aircraft, Company
will promptly notify Administrative Agent thereof in writing (in any event
within five (5) days of such occurrence) and will, not later than sixty
(60) days after the occurrence of such Event of Loss, mortgage hereunder,
by complying with all of the terms of subsection (iv) below, another engine
of the same or another manufacturer of the same or an improved model and
suitable for installation and use on the Airframe and which shall be owned
by Company free of all Liens (other than the lien of the First Mortgage and
Permitted Encumbrances) and shall have a value and utility at least equal
to (and be in as good operating condition as) such Engine immediately prior
to such Event of Loss, assuming compliance by Company with all of the terms
of this Mortgage with respect to such Engine. Upon compliance with the
terms of the preceding sentence within such 60-day period, Administrative
Agent will execute and deliver to Company a partial release, in recordable
form, releasing the lien of this Mortgage to the extent that it covers such
Engine with respect to which such Event of Loss occurred. Such additional
engine shall thereupon constitute an "Engine" for all purposes hereof and
shall be deemed to constitute part of the Aircraft.
(iii) Whenever Company shall subject any Engine to the lien and
security interest of this Mortgage (as contemplated by paragraph (ii)
above), Company will on or prior thereto:
(A) deliver to Administrative Agent and duly file (immediately
following the Supplemental Chattel Mortgage with respect to such
Engine under the First Mortgage) for recording under the Act, a
Supplemental Chattel Mortgage substantially in the form of Exhibit A
hereto duly executed by Company appropriately describing such engine
to be subjected to the lien and security interest of this Mortgage;
(B) deliver to Administrative Agent for filing (immediately after
the financing statements with respect to such Engine to be filed in
accordance with the First Mortgage) financing statements under Article
9 of the Uniform Commercial Code of the States of Colorado and New
York (or such other States as may be required at such time) covering
the security interest created by this Mortgage to protect the security
interest of Administrative Agent in the Engine to be subjected to the
lien and security interest of this Mortgage;
(C) deliver to Administrative Agent an Officers' Certificate
dated the date of execution of said Supplemental Chattel Mortgage,
stating:
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202
(I) that the representations and warranties contained in
Section 3 hereof are true and correct on and as of such date of
execution with respect to such Engine and Company;
(II) that, upon consummation of the terms of this Section
4(f), no Potential Event of Default or Event of Default will
exist; and
(III) that all conditions precedent contemplated in this
Section 4(f)(iii) have been complied with.
(D) furnish Administrative Agent with evidence of compliance with
the insurance provisions of Section 4(g) hereof with respect to such
Engine as Administrative Agent may reasonably request;
(E) furnish Administrative Agent with such evidence of title as
Administrative Agent may reasonably request concerning such Engine;
(F) cause to be delivered to Administrative Agent an appraisal by
the Approved Appraisers relating to the Engine to be subjected to the
lien and the security interest of this Mortgage stating that it has a
value and utility at least equal to, and in as good operating
condition as the Engine subject to such Event of Loss immediately
prior to such Event of Loss, assuming compliance by Company with all
the terms of this Mortgage with respect to such Engine; and
(G) cause to be delivered to Administrative Agent an opinion or
opinions of counsel dated the date of execution of such Supplemental
Chattel Mortgage, stating:
(I) that the engine specifically described in said
Supplemental Chattel Mortgage, is free and clear of all recorded
Liens other than the lien of the First Mortgage,
(II) that said Supplemental Chattel Mortgage (1) has been
duly authorized, executed and delivered by Company, and (2)
creates a valid, perfected second priority security interest in
and to the engine described in said Supplemental Chattel
Mortgage, enforceable against all third parties and securing the
payment of all obligations purported to be secured thereby and
that all action required to perfect fully such security interest
has been taken and completed,
(III) that said Supplemental Chattel Mortgage has been duly
filed for recordation (immediately following the Supplemental
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Chattel Mortgage with respect to such Engine under the First
Mortgage) in accordance with the provisions of the Act to
continue the perfection and priority of the security interest
intended to be created by the Mortgage, and
(IV) and as to such other matters as Administrative Agent
may reasonably request.
Promptly upon the recording of each Supplemental Chattel Mortgage under the
Act, Company will cause to be delivered to Administrative Agent an opinion
of counsel for Company as to the due recording of such Supplemental Chattel
Mortgage in accordance with the Act.
(iv) With respect to the Airframe or any Engine, as between the
Administrative Agent and Company, any payments on account of an Event of
Loss (other than insurance proceeds or other payments the application of
which is provided for in Section 4(g) below and under the terms of the
Credit Agreement) received from any government authority or other person
shall be applied as follows:
(A) if such payments are received with respect to an Event of
Loss to an Engine that has been or is being replaced by Company
pursuant to the terms hereof, such payment shall be paid over to or
retained by Company upon satisfaction of the conditions for
replacement contained in paragraph (iii) above; and
(B) if such payments are received with respect to an Event of
Loss as to the Aircraft, such payments shall be applied to the
prepayment of any outstanding Additional Notes required pursuant to
the terms of the Credit Agreement and shall be held pursuant to the
terms of this Mortgage, or if this Mortgage shall have been satisfied
and discharged, the balance, if any, shall be paid over to or retained
by Company.
(v) In the event of a requisition for use by the United States
Government of the Airframe or any Engine, Company shall promptly notify
Administrative Agent of such requisition and all of Company's obligations
under this Mortgage shall continue to the same extent as if such
requisition had not occurred. Any payments received by Administrative Agent
or Company from the United States Government for the use of the Airframe or
such Engine, shall be paid over to, or retained by, Company.
(vi) Any amount referred to in paragraph (iv) or (v) of this Section
4(f) which is payable to or retained by Company shall not be paid to
Company or retained by Company, if at the time of such payment or retention
any Event of Default or a Potential Event of Default shall have occurred
and be continuing, but
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shall be held by or paid over to Administrative Agent as security for the
obligations of Company under the First Mortgage, this Mortgage and the
other Loan Documents, and, if Administrative Agent shall declare the Credit
Agreement to be in default, shall be applied against Company's obligations
hereunder and thereunder as and when due. At such time as there shall not
be continuing any such Event of Default or Potential Event of Default, such
amount shall be paid to Company to the extent not previously applied in
accordance with the preceding sentence.
(g) Insurance.
(i) Company will at all times carry and maintain on or with respect to
the Aircraft, at its own cost and expense, public liability (including
without limitation, contractual liability, cargo liability, passenger legal
liability, bodily injury and product liability, but excluding
manufacturer's product liability) and property damage insurance with
insurers of recognized responsibility and reputation in amounts, of the
type and covering the risks customarily carried with respect to similar
aircraft by corporations engaged in the same or similar business and
similarly situated with Company but in no event in an amount less than
$500,000,000 per occurrence (which shall include war risk, governmental
confiscation and expropriation and allied perils coverage). During any
period when the Aircraft is on the ground and not in operation, Company may
carry or cause to be carried, in lieu of insurance required by this
Section, insurance otherwise conforming with the provisions of this Section
except that the amounts of coverage shall not be required to exceed the
amounts of comprehensive airline liability insurance, and the scope of risk
covered and type of insurance shall be the same, as are customarily carried
with respect to similar aircraft on the ground by corporations engaged in
the same or similar business and similarly situated with Company. Any
policies of insurance carried in accordance with this Section 4(g) and any
policies taken out in substitution or replacement of any such policies (A)
shall be amended to name Administrative Agent and Lenders as additional
named insureds, (B) shall be primary without right of contribution from any
other insurance which is carried by Company, (C) shall expressly provide
that all provisions thereof, except the limits of the liability, shall
operate in the same manner as if there were a separate policy covering each
insured, and (D) shall provide that the insurer shall waive any right of
subrogation against Administrative Agent or Lenders.
(ii) Company will at all times carry and maintain with insurers of
recognized responsibility and reputation on or with respect to the
Aircraft, at its own cost and expense, aircraft ground and flight all-risk
hull insurance as well as fire and extended coverage insurance on Engines
and other equipment while removed from the Airframe (which shall include
war risk, governmental confiscation and expropriation (other than by the
United States Government) and allied perils including (A) strikes, riots,
civil commotions or labor disturbances,
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(B) any malicious act or act of sabotage and (C) hijacking (air piracy) or
any unlawful 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 aboard the Aircraft acting without the consent of the
insured, if and to the extent the same shall be maintained by Company with
respect to similar aircraft owned or operated by Company on the same routes
or if the Aircraft is operated on routes where the custom is for Domestic
Carriers similarly situated with Company flying comparable routes with
similar aircraft to carry such insurance), of the type usually carried by
corporations engaged in the same or similar business and similarly situated
with Company; provided that such insurance (including any self-insurance to
the extent permitted below) shall at all times prior to delivery under the
Modification Agreement be for an amount not less than the greater of (W)
$30,000,000 and (x) an amount equal to the purchase price under the
Purchase Agreement, and at all times from and after delivery under the
Modification Agreement, the greater of (Y) $50,000,000 and (Z) the amount
under clause (X) plus the total cost of all modifications under the
Modification Agreement. During any period when the Aircraft is on the
ground and not in operation Company may carry or cause to be carried, in
lieu of the insurance required by this Section, insurance otherwise
conforming hereto except that the scope of risk covered and type of
insurance shall be the same as are from time to time customarily carried
with respect to similar aircraft by corporations engaged in the same or
similar business and similarly situated with Company for aircraft on the
ground in an amount at least equal to the applicable amount provided above.
All such insurance shall name Administrative Agent and Lenders as
additional insureds and loss payees to the extent their interest may appear
and shall provide that any loss to the Airframe or an Engine in excess of
$2,000,000, (and, if a Potential Event of Default or Event of Default has
occurred and is continuing, any such loss) shall be payable to
Administrative Agent for the benefit of Lenders; and shall be primary
without right of contribution from any other insurance which is carried by
Administrative Agent with respect to its interest therein.
Company may self-insure, by way of deductible or equivalent provisions
in insurance policies, the risks required to be insured against pursuant to
this Section 4(g)(ii) in such reasonable amounts as are then applicable to
other similar aircraft in Company's fleet which are of a value comparable
to the Aircraft and as are not substantially greater than amounts
self-insured by corporations engaged in the same or similar business and
similarly situated with Company; provided, however, that Company may not
self-insure in an amount in excess of $1,000,000 without the prior written
consent of Administrative Agent.
(iii) Any policies of insurance required pursuant to either paragraph
(i) or paragraph (ii) above shall: (A) be amended to name Administrative
Agent and Lenders as additional named insureds, but without Administrative
Agent or Lenders being thereby liable for premiums; (B) provide that in
respect of the interest of Administrative Agent or Lenders in such policies
the insurance shall not
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be invalidated by any action or inaction of Company and shall insure the
interests of Administrative Agent and Lenders regardless of any breach or
violation by Company or any Person (other than Administrative Agent) of any
warranty, declaration, condition or exclusion from coverage contained in
such policies; (C) provide that if such insurance is cancelled, or if any
material change is made in the coverage which affects the interest of
Administrative Agent or any Lender, or if such insurance is allowed to
lapse for nonpayment of premium, such cancellation, change or lapse shall
not be effective as to Administrative Agent for thirty (30) days (seven (7)
days, or such shorter or longer period as may from time to time be
customarily available in the industry, in the case of any war risk and
allied perils coverage) after receipt by Administrative Agent of written
notice from such insurers of such cancellation, change or lapse; (D) be in
full force and effect throughout any geographical areas at any time
traversed by the Aircraft and shall be payable in U.S. dollars; (E) waive
any right of the insurers to any set-off or counterclaim or any other
deduction, whether by attachment or otherwise in respect of any liability
of Administrative Agent; and (F) waive all rights of subrogation against
Administrative Agent.
(iv) In the case of a lease or contract with the United States or any
agency or instrumentality thereof in respect of the Airframe or any Engine,
a valid agreement by the United States or such agency or instrumentality to
indemnify Company against the same risks against which Company is required
hereunder to insure shall be considered adequate insurance with respect to
the Airframe or such Engine to the extent of the risks and in the amounts
that are the subject of any such agreement to indemnify.
(v) On or prior to the date hereof, and annually thereafter on or
prior to January 21, Company will furnish to Administrative Agent (A) a
report signed by a firm of independent aircraft insurance brokers,
appointed by Company and not objected to by Administrative Agent,
describing in reasonable detail acceptable to Administrative Agent the
insurance then carried and maintained on or with respect to the Aircraft
and the Engines and stating that in the opinion of such firm such insurance
complies with the terms of this Section 4(g) and is adequate to protect the
interests of Company and Administrative Agent, and (B) certificates of the
insurer or insurers evidencing the insurance covered by the report. Company
will cause such brokers to advise Administrative Agent in writing (x)
promptly of any default in the payment of any premium and of any other act
or omission on the part of Company of which such firm has knowledge and
which might invalidate or render unenforceable, in whole or in part, any
insurance on the Aircraft or any Engine and (y) at least thirty (30) days
prior to the expiration or termination date, or date of effectiveness of
any material change, of any insurance carried and maintained on the
Aircraft hereunder.
(vi) All insurance payments and other payments received by
Administrative Agent or Company from insurance referred to in paragraph
(ii) above shall
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be, if received by Company, immediately paid to Administrative Agent and
shall be held and applied:
(A) If such payment is received as a result of an Event of Loss
referred to in paragraph (i) of Section 4(f) hereof, such payment
shall be applied to prepay the Additional Notes and pay any other
Secured Obligations in accordance with the terms of the Credit
Agreement or if already paid in full by Company, paid to Company
provided no Potential Event of Default or Event of Default shall have
occurred and be continuing; and
(B) If such payment is received as a result of an Event of Loss
referred to in paragraph (ii) Section 4(f) hereof, such payment shall
be paid to Company upon compliance by Company with the terms of said
Section, provided that no Potential Event of Default or Event of
Default shall have occurred and be continuing.
All insurance payments and other payments received by Administrative
Agent or Company from insurance referred to in paragraph (ii) above
and paid other than as a result of an Event of Loss shall be paid by
Administrative Agent to or be retained by Company, and promptly
applied by Company to the extent necessary to repair the damage to the
Airframe or the Engine for which such insurance was paid, provided
that Administrative Agent shall not be required to make any such
payment to Company if a Potential Event of Default or Event of Default
has occurred and is continuing, but shall be held or paid over to
Administrative Agent as security for the obligations of Company under
this Mortgage and the other Loan Documents, and, if Administrative
Agent shall declare the Credit Agreement to be in default, shall be
applied against Company's obligations hereunder and thereunder as and
when due. Retention by Administrative Agent of any amounts pursuant to
the preceding sentence shall not relieve Company of its obligations to
make promptly all repairs and replacements required by Sections 4(c)
and (e) hereof and to pay for the same with Company's funds.
(vii) Nothing in this Section 4(g) shall prohibit Administrative
Agent, or any Lender from obtaining insurance with respect to the
Aircraft for its own account. Company may, at its own expense, carry
insurance with respect to its interest in the Aircraft in amounts in
excess of that required to be maintained by this Section 4(g). No
insurance maintained by Administrative Agent or any Lender shall
prevent Company from carrying the insurance required or permitted by
this Section or adversely affect such insurance or the cost thereof.
Proceeds of any such insurance carried by Company, Administrative
Agent or Lender shall be paid as provided in the insurance policy
relating thereto and Administrative Agent shall have no duty to obtain
any such insurance.
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(h) Inspection. Company will permit any officers, employees or authorized
representatives of Administrative Agent to inspect, at Company's cost and
expense, the Aircraft Collateral and Aircraft Related Collateral, or any part
thereof, and to examine, copy or make extracts from, any and all books, records
and documents in the possession of Company relating to such Collateral or any
part thereof and performance of this Mortgage, all at such reasonable times and
as often as may be requested. Administrative Agent shall have no duty to make
any such inspection or examination and shall not incur any liability or
obligation by reason of making or not making any such inspection or examination.
(i) Insignia. Company shall, at its own cost and expense, cause the
Airframe and each Engine included in the Aircraft Collateral to be legibly
marked (in a reasonably prominent location, which in the case of the Airframe
shall be adjacent to the airworthiness certificate) with such a plate, disk, or
other marking of customary size, and bearing the legend "Mortgaged to Bankers
Trust Company, as Administrative Agent" or such other legend, as shall in the
opinion of Administrative Agent be appropriate or desirable to evidence the fact
that it is subject to the lien and security interest created by this Mortgage.
Company shall not remove or deface, or permit to be removed or defaced, any such
plate, disk, or other marking or the identifying manufacturer's serial number,
and, in the event of such removal or defacement, shall promptly cause such
plate, disk, or other marking or serial number to be promptly replaced. Except
as provided above, Company shall not allow the name of any person, association
or corporation to be placed on the Airframe or any Engine as a designation that
might be interpreted as a claim of ownership or of any security interest
therein, except that Company or any permitted lessee may place its customary
colors and insignia or the insignia of the manufacturer on the Airframe or any
Engine.
(j) Modification Agreement and BFE Agreements.
(i) Company shall not upon the occurrence and during the continuation
of an Event of Default under the Credit Agreement enter into any agreement
to amend, rescind, cancel or terminate the Modification Agreement or any
BFE Agreement to the extent it relates to the Aircraft, without the prior
written consent of Administrative Agent.
(ii) If Administrative Agent and Company shall at any time be in
dispute as to the entitlement of Administrative Agent to exercise any right
hereunder upon an Event of Default in respect of the Modification Agreement
or any BFE Agreement, Company agrees that (the party modifying the Aircraft
under the Modification Agreement) or the vendor of the Buyer-Furnished
Equipment, as the case may be, shall perform the corresponding obligations
exclusively at the direction of Administrative Agent.
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SECTION 5. Remedies.
(a) If any Event of Default shall occur and be continuing, then
Administrative Agent may, without notice of any kind to Company, subject to
the rights of "Administrative Agent" under the First Mortgage, exercise in
respect of the Aircraft Collateral and Aircraft Related Collateral, (i) all
the rights and remedies of a secured party on default under the Uniform
Commercial Code as in effect at the time in any applicable jurisdiction
(whether or not the Uniform Commercial Code applies to the affected
Aircraft Collateral), (ii) all the rights and remedies provided for in this
Mortgage, the Credit Agreement and any other Loan Document, and in any
other agreement between Company and Administrative Agent, and (iii) such
other rights and remedies as may be provided by law or otherwise. The
rights of Administrative Agent in the remainder of this Section 5 are
subject to the rights of "Administrative Agent" under the First Mortgage.
(b) After an Event of Default has occurred and is continuing,
Administrative Agent may, without notice, take possession of the Aircraft
Collateral or any part thereof and may exclude Company, and all persons
claiming under Company, wholly or partly therefrom. At the request of
Administrative Agent, Company shall promptly deliver or cause to be
delivered to Administrative Agent or to whomsoever Administrative Agent
shall designate, at such time or times and place or places as
Administrative Agent may specify, and fly or cause to be flown to such
airport or airports in the United States as Administrative Agent may
specify, without risk or expense to Administrative Agent, the Aircraft
Collateral or any part thereof. In addition, Company will provide, without
cost or expense to Administrative Agent, storage facilities for the
Aircraft Collateral. If Company shall for any reason fail to deliver the
Aircraft Collateral or any part thereof after demand by Administrative
Agent, Administrative Agent may, without being responsible for loss or
damage, (i) obtain a judgment conferring on Administrative Agent the right
to immediate possession or requiring Company to deliver immediate
possession of the Aircraft Collateral or any part thereof to Administrative
Agent, to the entry of which judgment Company hereby specifically consents,
or (ii) with or without such judgment, pursue the Aircraft Collateral or
any part thereof wherever it may be found and may enter any of the premises
of Company where the Aircraft Collateral may be and search for the Aircraft
Collateral and take possession of and remove the same. Company agrees to
pay to Administrative Agent, upon demand, all expenses incurred in taking
any such action; and all such expenses shall, until paid, be secured by the
lien of this Mortgage. Upon every such taking of possession, Administrative
Agent may, from time to time, make all such reasonable expenditures for
maintenance, insurance, repairs, replacements, alterations, additions and
improvements to and of the Aircraft Collateral, as it may deem proper. In
each such case, Administrative Agent shall have the right to maintain,
use, operate, store, lease, control or manage the Aircraft or any part
thereof and to carry on the business and exercise all rights and powers of
Company relating to the Aircraft Collateral, as Administrative Agent shall
deem best, including the right to enter into any and all such agreements
with respect to the maintenance, use, operation, storage, leasing, control,
management or disposition of the Aircraft Collateral or any part thereof as
Administrative Agent may determine. Further, after the occurrence and
during the
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continuation of an Event of Default, Administrative Agent shall be entitled
to collect and receive directly all tolls, rents, revenues, issues, income,
products and profits of the Aircraft Collateral or any part thereof (other
than any received under any ACMI Contract). Such tolls, rents, revenues,
issues, income, products and profits shall be applied to pay the expenses
of the use, operation, storage, leasing, control, management or disposition
of the Aircraft Collateral, and of all maintenance, insurance, repairs,
replacements, alterations, additions and improvements, and to make all
payments which Administrative Agent may be required or may elect to make,
if any, for taxes, assessments, or other proper charges upon the Aircraft
Collateral and all other payments which Administrative Agent may be
required or authorized to make under any provision of this Mortgage, as
well as just and reasonable compensation for the services of Administrative
Agent and of all persons properly engaged and employed for such purposes by
Administrative Agent.
(c) Administrative Agent, with or without taking possession of the Aircraft
Collateral, may, without notice:
(i) to the extent permitted by law, sell at one or more sales, as an
entirety or in separate lots or parcels, the Aircraft Collateral or any
part thereof, at public or private sale, at such place or places and at
such time or times and upon such terms, including terms of credit (which
may include the retention of title by Administrative Agent to the property
so sold), as Administrative Agent may determine, whether or not the
Aircraft shall be at the place of sale; and
(ii) proceed to protect and enforce its rights under this Mortgage by
suit, whether for specific performance of any covenant herein contained or
in aid of the exercise of any power herein granted or for the foreclosure
of this Mortgage and the sale of the Aircraft Collateral under the judgment
or decree of a court of competent jurisdiction or for the enforcement of
any other right.
(d) After an Event of Default has occurred and is continuing, Company
agrees to the fullest extent that it lawfully may, that it will not (and hereby
irrevocably waives its right to) at any time plead, or claim the benefit or
advantage of, any appraisement, valuation, stay, extension, moratorium, or
redemption law now or hereafter in force, in order to prevent or hinder the
enforcement of this Mortgage or the absolute sale of the Aircraft Collateral.
Company, for itself and all who may claim under it, waives, to the extent that
it lawfully may, all right to have all or any portion of the Aircraft Collateral
marshalled upon any foreclosure hereof.
(e) Each and every remedy of Administrative Agent shall be cumulative and
shall not be exclusive of any other remedies provided now or hereafter at law,
in equity or otherwise. Company shall reimburse Administrative Agent, upon
demand, for all fees and other expenses paid or incurred by Administrative Agent
in exercising any rights, powers or remedies granted hereby. All such fees and
expenses shall, until paid, be secured by the lien of this Mortgage.
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SECTION 6. Application of Proceeds.
The proceeds of any sale, lease or other disposition of all or any of the
Aircraft Collateral or Aircraft Related Collateral under this Mortgage and all
other sums realized by Administrative Agent pursuant to this Mortgage or any
proceedings hereunder shall be applied in the following order of priority:
First: To the payment of the costs and expenses of such sale, lease,
disposition or other realization, including reasonable compensation to
Administrative Agent's agents and counsel, and all expenses, liabilities
and advances made or incurred by Administrative Agent in connection
therewith, including, without limitation, taxes upon or with respect to the
sale, lease, disposition or realization and the payment of taxes and Liens
(except for the lien of the First Mortgage), if any, prior to the lien and
security interest of this Mortgage (except any taxes or Liens to which the
respective sale, lease, disposition or realization shall have been subject)
and to the payment of expenses and the reimbursement of payments incurred
or made by Administrative Agent pursuant to Section 9 hereof;
Second: To the ratable payment of interest accrued and unpaid on the
Additional Notes to and including the date of such application;
Third: To the ratable payment of principal of the Additional Notes,
which payment shall be applied to the principal installments of the
Additional Notes in the manner specified by the Credit Agreement;
Fourth: To the payment of all other amounts payable by Company under
the Credit Agreement, this Mortgage or any other Loan Document; and
Fifth: To Company or to such other Person(s) as may lawfully be
entitled, or as any court of competent jurisdiction may direct, the
remainder.
SECTION 7. Administrative Agent as Attorney.
Company hereby irrevocably appoints Administrative Agent the true and
lawful attorney of Company (with full power of substitution) in the name, place
and stead of, and at the expense of, Company at any time after the occurrence
and during the continuation of an Event of Default (i) to ask, demand, collect,
▇▇▇ for, recover, compound, receive and give acquittance and receipts for moneys
due and to become due under or in respect of any of the Aircraft Collateral and
Aircraft Related Collateral, (ii) to make all necessary transfers of all or any
part of the Aircraft Collateral and Aircraft Related Collateral in connection
with any sale, lease or other disposition made pursuant hereto, (iii) to execute
and deliver for value all necessary or appropriate bills of sale, assignments
and other instruments in connection with any such sale, lease or other
disposition, and (iv) generally to do, at Administrative Agent's option and
Company's cost and expense, at any time, or from time to time, all acts and
things that Administrative Agent deems
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necessary to protect, preserve or realize upon the Aircraft Collateral and
Aircraft Related Collateral and Administrative Agent's security interest
therein, in order to effect the intent of this Mortgage, all as fully and
effectively as Company might do, Company hereby ratifying and confirming all
that its said attorney (or any substitute) shall lawfully do hereunder and
pursuant hereto.
SECTION 8. Cash Collateral.
All monies received by Administrative Agent to be held and applied under
this Section, and all monies if any, required to be paid to Administrative Agent
hereunder, which disposition is not elsewhere herein otherwise specifically
provided for shall be held by Administrative Agent and applied from time to time
as provided herein and in the Credit Agreement and the other Loan Documents and
shall be held in an account in the name of Administrative Agent and invested in
Cash Equivalents for the benefit and at the risk of Company.
SECTION 9. Administrative Agent's Right to Perform.
If Company fails to make any payment required to be made by it hereunder or
fails to perform or comply with any of its agreements contained herein,
Administrative Agent may itself make such payment or perform or comply with such
agreement (including, without limitation, the agreement of Company to maintain
insurance pursuant to Section 4(g) hereof), and the amount of such payment and
the amount of the reasonable expenses of Administrative Agent incurred in
connection with such payment or the performance of or compliance with such
agreement, as the case may be, together with interest thereon at the rate
specified in the Credit Agreement from time to time, shall be payable by Company
to Administrative Agent on demand and shall constitute additional indebtedness
secured by the lien and security interest of this Mortgage.
SECTION 10. Further Assurances.
Company at its expense will promptly and duly execute and deliver such
documents and assurances and take such action as may be necessary or desirable,
or as Administrative Agent may from time to time request, in order to correct
any defect, error or omission which may at any time hereafter be discovered in
the contents of this Mortgage or in the execution or delivery hereof, and/or in
order to more effectively carry out the intent and purpose of this Mortgage and
to establish, protect and perfect the rights, remedies and security interests
created or intended to be created in favor of Administrative Agent hereunder,
including, without limitation, the execution, delivery and filing of any
instruments with the FAA and of any Uniform Commercial Code financing and
continuation statements with respect to the security interests created hereby,
in form and substance satisfactory to Administrative Agent, in such
jurisdictions as Administrative Agent may reasonably request. Company hereby
authorizes Administrative Agent to file any such statements without the
signature of Company to the extent permitted by applicable law.
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SECTION 11. RESERVED
SECTION 12. Continuing Security Interest.
This Mortgage shall create a continuing security interest in the Aircraft
Collateral and Aircraft Related Collateral and shall (a) except as provided
below, remain in full force and effect until the indefeasible payment in full of
the Secured Obligations, (b) be binding upon Company, its successors and assigns
and (c) inure, together with the rights and remedies of Administrative Agent
hereunder, to the benefit of Administrative Agent and its successors,
transferees and assigns; provided, however, that if Lenders transfer or assign
their rights with respect to the Aircraft Loans without transferring all their
rights under the Credit Agreement with respect to Additional Loans, and the
security interest created under the First Mortgage is assigned therewith, upon
payment in full of the consideration for such transfer or assignment, the
security interest granted hereby shall terminate. Without limiting the
generality of the foregoing clause (c), Administrative Agent or any Lender may,
subject to any restrictions contained in the Credit Agreement, assign or
otherwise transfer the Credit Agreement and any Additional Note to any other
person or entity, and such other benefits in respect thereof granted to
Administrative Agent herein or otherwise. Upon the indefeasible payment in full
of the Secured Obligations, or unless an Event of Default shall have occurred
and be continuing, upon the termination of the security interest granted by the
First Mortgage and the satisfaction of any payment obligations of Company under
the Credit Agreement, Section 4 of this Mortgage or any other Loan Document as a
result of the events leading to such termination of the security interest
granted by the First Mortgage, the security interest granted hereby shall
terminate and all rights to the Aircraft Collateral and Aircraft Related
Collateral shall revert to Company. Upon any such termination, Administrative
Agent will execute and deliver to Company, at Company's expense, such
instruments of release and termination as Company may reasonably request to
evidence such termination.
SECTION 13. Miscellaneous.
Any provision of this Mortgage which is prohibited or unenforceable in any
jurisdiction shall, as to such jurisdiction, be ineffective to the extent of
such prohibition or unenforceability without invalidating the remaining
provisions hereof, and any such prohibition or unenforceability in any
jurisdiction shall not invalidate or render unenforce- able such provision in
any other jurisdiction. To the extent permitted by applicable law, Company
hereby waives any provision of law which renders any provision hereof prohibited
or unenforceable in any respect. No term or provision of this Mortgage may be
changed, waived, discharged or terminated orally, but only by an instrument in
writing signed by Company and Administrative Agent. The captions and headings in
this Mortgage are for convenience of reference only and shall not define or
limit any of the terms or provisions hereof.
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SECTION 14. Consent to Jurisdiction and Service of Process.
All judicial proceedings brought against Company with respect to this
Mortgage may be brought in any state or federal court of competent jurisdiction
in the State of New York or Colorado and by execution and delivery of this
Mortgage Company accepts for itself and in connection with the Aircraft
Collateral and Aircraft Related Collateral, generally and unconditionally, the
nonexclusive jurisdiction of the aforesaid courts and irrevocably agrees to be
bound by any judgment rendered thereby in connection with this Mortgage. Company
hereby agrees that service of process in any such proceeding in any such court
may be made by registered or certified mail return receipt requested to Company
at its address provided on the signature pages of the Mortgage, such service
being hereby acknowledged by Company to be effective and binding service in
every respect. A copy of any such process so served shall be mailed by
registered mail to Company, at its address specified in Section 16 hereof,
except that unless otherwise provided by applicable law, any failure to mail
such copy shall not affect the validity of service of process. If any agent
appointed by Company refuses to accept service, Company hereby agrees that
service upon it by mail shall constitute sufficient notice. Nothing herein shall
affect the right to serve process in any other manner permitted by law or shall
limit the right of Administrative Agent to bring proceedings against Company in
the courts of any other jurisdiction.
SECTION 15. GOVERNING LAW; TERMS.
THIS MORTGAGE SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE
INTERNAL LAWS OF THE STATE OF NEW YORK, EXCEPT AS REQUIRED BY MANDATORY
PROVISION OF LAW AND EXCEPT TO THE EXTENT THAT THE VALIDITY OR PERFECTION OF THE
SECURITY INTEREST HEREUNDER, OR REMEDIES HEREUNDER, IN RESPECT OF ANY PARTICULAR
AIRCRAFT COLLATERAL ARE GOVERNED BY THE LAWS OF A JURISDICTION OTHER THAN THE
STATE OF NEW YORK. Unless otherwise defined herein or in the Credit Agreement,
terms used in Article 9 of the Uniform Commercial Code in the State of New York
are used herein as therein defined.
SECTION 16. Addresses for Notices.
All notices and other communications provided for hereunder shall be in
writing (including facsimile communication) and mailed or telecopied or
delivered to Company or Administrative Agent, as the case may be, addressed to
it at the address of such party specified on the signature page hereof, or as to
either party at such other address as shall be designated by such party in a
written notice to each other party complying as to delivery with the terms of
this Section 16. All such notices and other communications shall, when mailed,
be effective when deposited in the mails, addressed as aforesaid.
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215
SECTION 17. Counterparts.
This Mortgage may be executed in one or more counterparts, each of which
shall be deemed an original and all of which together shall constitute one and
the same Mortgage.
(Remainder of page intentionally left blank.)
XI-30
216
IN WITNESS WHEREOF, Company and Administrative Agent have caused this
Mortgage to be duly executed and delivered by their respective officers
thereunto duly authorized as of the date first above written.
ATLAS AIR, INC.
By:
-----------------------------
Name:
Title:
Notice Address:
Atlas Air, Inc.
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇ ▇▇▇▇▇▇▇▇▇
Senior Vice President and
General Counsel
BANKERS TRUST COMPANY,
as Administrative Agent
By:
-----------------------------
Name:
Title:
Notice Address:
Bankers Trust Company
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇ ▇▇▇▇▇▇▇▇
XI-31
217
SCHEDULE I
to Second Security Agreement
and Chattel Mortgage
AIRFRAME
Manufacturer's United States
Manufacturer Model Serial Number Registry No.
------------ ----- ------------- ------------
XI-32
218
SCHEDULE II
to Second Security Agreement
and Chattel Mortgage
ENGINES
Manufacturer's
Manufacturer Model Serial Number
------------ ----- -------------
Each such engine having 750 or more rated takeoff horsepower or the equivalent
thereof.
XI-33
219
EXHIBIT A
to Second Security Agreement
and Chattel Mortgage
SECOND SUPPLEMENTAL CHATTEL MORTGAGE NO. ___
THIS SECOND SUPPLEMENTAL CHATTEL MORTGAGE is dated __________, 19__ between
Atlas Air, Inc., a Delaware corporation (the "Company"), and Bankers Trust
Company, as agent for and representative of ("Administrative Agent") the
financial institutions ("Lenders") party to the Third Amended and Restated
Credit Agreement dated as of September 5, 1997 among Company, Lenders, ▇▇▇▇▇▇▇
Sachs Credit Partners L.P., as syndication agent, and Bankers Trust Company, as
administrative agent.
Company and Mortgagee have heretofore entered into a Second Security
Agreement and Chattel Mortgage dated __________, 199__ (the "Mortgage") and the
terms defined therein and not otherwise defined herein are used herein as
therein defined. The Mortgage provides for the execution and delivery of
supplements thereto substantially in the form hereof, for the purpose of
particularly describing each Engine subjected to the lien of the Mortgage
pursuant to Section 4(f) thereof, and shall specifically mortgage such Engine to
Administrative Agent.
The Mortgage relates to the Engine(s) described below and a counterpart of
the Mortgage has been recorded by the Federal Aviation Administration on
__________, 19__, and has been assigned Conveyance No. __________.
NOW, THEREFORE, that, to secure the due and punctual payment and
performance of the Secured Obligations and in consideration of the premises and
of the covenants contained in the Mortgage, Company hereby mortgages to
Administrative Agent, its successors and assigns, and grants and assigns to
Administrative Agent, its successors and assigns for the benefit of Lenders, a
second priority security interest, second only to the security interests granted
by the First Mortgage, in all estate, right, title and interest of Company in
and to the property described in Schedule I annexed hereto (whether or not such
Engine shall be installed on or attached to the Airframe), and the proceeds
thereof.
This Second Supplemental Chattel Mortgage shall be construed as
supplemental to the Mortgage and shall form a part thereof, and the Mortgage is
hereby incorporated by reference herein and is hereby ratified, approved and
confirmed.
THIS SECOND SUPPLEMENTAL CHATTEL MORTGAGE IS INTENDED TO BE DELIVERED IN
THE STATE OF NEW YORK AND SHALL BE GOVERNED BY THE INTERNAL LAWS OF THAT STATE.
XI-34
220
This Second Supplemental Chattel Mortgage may be executed in one or more
counterparts, each of which shall be deemed an original and all of which
together shall constitute one and the same Second Supplemental Chattel Mortgage.
[Balance of page intentionally left blank.]
XI-35
221
IN WITNESS WHEREOF, the parties hereto have caused this Second Supplemental
Chattel Mortgage to be duly executed and delivered by their respective officers
thereunto duly authorized as of the date first above written.
ATLAS AIR, INC.
By:
-----------------------------
Name:
Title:
Notice Address:
Atlas Air, Inc.
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇ ▇▇▇▇▇▇▇▇▇
Senior Vice President and
General Counsel
BANKERS TRUST COMPANY,
as Administrative Agent
By:
-----------------------------
Name:
Title:
Notice Address:
Bankers Trust Company
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇ ▇▇▇▇▇▇▇▇
XI-36
222
SCHEDULE I
to Second Supplemental
Chattel Mortgage
SCHEDULE OF ENGINES
Manufacturer's
Manufacturer Model Serial Number
------------ ----- -------------
Such engine having 750 or more rated takeoff horsepower or the equivalent
thereof
XI-37