1
Exhibit 10.26
Execution Version
================================================================================
AMENDED AND RESTATED REVOLVING CREDIT AGREEMENT
DATED AS OF DECEMBER 10, 1999
AMONG
AMERICA WEST AIRLINES, INC.
AS THE COMPANY,
THE LENDERS LISTED HEREIN,
AS THE LENDERS,
THE INDUSTRIAL BANK OF JAPAN, LIMITED,
AS ARRANGER, CO-LEAD BOOK MANAGER, INITIAL ISSUING BANK,
AGENT AND LENDER,
CITICORP USA, INC., AS ARRANGER AND SYNDICATION AGENT,
XXXXXXX XXXXX XXXXXX INC., AS CO-LEAD BOOK MANAGER
AND
BANKERS TRUST COMPANY, AS DOCUMENTATION AGENT
================================================================================
2
TABLE OF CONTENTS
PAGE
----
SECTION 1.
DEFINITIONS.................................................. -1-
1.1 CERTAIN DEFINED TERMS.................................. -1-
1.2 ACCOUNTING TERMS; UTILIZATION OF GAAP FOR PURPOSES
OF CALCULATIONS UNDER AGREEMENT....................... -27-
1.3 OTHER DEFINITIONAL PROVISIONS......................... -27-
SECTION 2.
AMOUNTS AND TERMS OF COMMITMENTS AND LOANS.................. -27-
2.1 COMMITMENTS; MAKING OF REVOLVING LOANS; NOTES;
REGISTER.............................................. -27-
A. COMMITMENTS....................................... -27-
B. BORROWING MECHANICS............................... -28-
C. DISBURSEMENT OF FUNDS............................. -29-
D. NOTES............................................. -29-
E. THE REGISTER...................................... -30-
2.2 INTEREST ON THE LOANS.................................. -30-
A. RATE OF INTEREST.................................. -30-
B. INTEREST PERIODS.................................. -31-
C. INTEREST PAYMENTS................................. -32-
D. CONVERSION OR CONTINUATION........................ -32-
E. DEFAULT RATE...................................... -33-
COMPUTATION OF INTEREST............................... -33-
2.3 FEES................................................... -33-
A. COMMITMENT FEES................................... -33-
B. LETTER OF CREDIT FEES............................. -34-
C. AGENT'S FEES....................................... -34-
2.4 PREPAYMENTS AND REDUCTIONS IN COMMITMENTS; GENERAL
PROVISIONS REGARDING PAYMENTS......................... -34-
A. PREPAYMENTS AND UNSCHEDULED REDUCTIONS IN
COMMITMENTS....................................... -34-
B. GENERAL PROVISIONS REGARDING PAYMENTS............. -40-
2.5 USE OF PROCEEDS........................................ -41-
A. GENERAL CORPORATE PURPOSES........................ -41-
B. MARGIN REGULATIONS................................ -41-
2.6 SPECIAL PROVISIONS GOVERNING EURODOLLAR RATE LOANS..... -41-
A. DETERMINATION OF APPLICABLE INTEREST RATE......... -41-
B. INABILITY TO DETERMINE APPLICABLE INTEREST RATE... -41-
-i-
3
C. ILLEGALITY OR IMPRACTICABILITY OF EURODOLLAR
RATE LOANS........................................ -42-
D. COMPENSATION FOR BREAKAGE OR NON- COMMENCEMENT OF
INTEREST PERIODS.................. -43-
E. BOOKING OF EURODOLLAR RATE LOANS.................. -43-
F. ASSUMPTIONS CONCERNING FUNDING OF EURODOLLAR
RATE LOANS........................................ -43-
G. EURODOLLAR RATE LOANS AFTER DEFAULT............... -43-
2.7 INCREASED COSTS; TAXES; CAPITAL ADEQUACY............... -44-
A. COMPENSATION FOR INCREASED COSTS AND TAXES........ -44-
B. WITHHOLDING OF TAXES.............................. -45-
C. CAPITAL ADEQUACY ADJUSTMENT....................... -47-
D. SUBSTITUTE LENDERS................................ -47-
2.8 OBLIGATION OF LENDERS TO MITIGATE...................... -47-
2.9 LETTERS OF CREDIT...................................... -48-
2.10 BORROWING BASE........................................ -54-
A. BORROWING BASE.................................... -55-
B. COLLATERAL........................................ -55-
C. APPROVED APPRAISAL AND APPRAISERS................. -57-
D. BORROWING BASE CERTIFICATE........................ -57-
SECTION 3.
CONDITIONS TO LOANS................................... -58-
3.1 CONDITIONS TO CLOSING DATE............................. -58-
A. COMPANY DOCUMENTS................................. -59-
B. NECESSARY CONSENTS................................ -59-
C. FINANCIAL CONDITION CERTIFICATE................... -59-
D. OPINIONS OF COMPANY'S COUNSEL..................... -59-
E. OPINIONS OF GENERAL COUNSEL....................... -60-
F. OPINIONS OF ARIZONA COUNSEL....................... -60-
G. OPINIONS OF FAA COUNSEL........................... -60-
H. FEES.............................................. -60-
I. EVIDENCE OF INSURANCE............................. -60-
J. REPRESENTATIONS AND WARRANTIES; PERFORMANCE OF
AGREEMENTS........................................ -60-
K. COMPLIANCE CERTIFICATE............................ -60-
L. COMPLETION OF PROCEEDINGS......................... -61-
M. APPRAISAL AND BORROWING BASE CERTIFICATE.......... -00-
X. XXXXXXXX ASSETS................................... -61-
O. SECURITY AGREEMENTS............................... -61-
P. CONSENTS.......................................... -61-
3.2 CONDITIONS TO ALL LOANS................................ -61-
A. CONDITIONS TO ALL LOANS........................... -61-
B. ADDITIONAL COLLATERAL............................. -63-
-ii-
4
SECTION 4.
COMPANY'S REPRESENTATIONS AND WARRANTIES.................... -63-
4.1 ORGANIZATION, POWERS, QUALIFICATION, GOOD
STANDING, BUSINESS AND SUBSIDIARIES................... -64-
A. ORGANIZATION AND POWERS........................... -64-
B. QUALIFICATION AND GOOD STANDING; AIR CARRIER
CERTIFICATION..................................... -64-
C. SUBSIDIARIES...................................... -64-
4.2 AUTHORIZATION OF BORROWING, ETC........................ -65-
A. AUTHORIZATION OF BORROWING........................ -65-
B. NO CONFLICT....................................... -65-
C. GOVERNMENTAL CONSENTS............................. -65-
D. BINDING OBLIGATION................................ -65-
4.3 FINANCIAL CONDITION.................................... -65-
4.4 NO MATERIAL ADVERSE CHANGE; NO RESTRICTED PAYMENTS..... -66-
4.5 TITLE TO PROPERTIES; LIENS............................. -66-
4.6 LITIGATION; ADVERSE FACTS.............................. -66-
4.7 PAYMENT OF TAXES....................................... -67-
4.8 PERFORMANCE OF AGREEMENTS; MATERIALLY ADVERSE
AGREEMENTS............................................ -67-
4.9 GOVERNMENTAL REGULATION................................ -68-
4.10 SECURITIES ACTIVITIES................................. -68-
4.11 EMPLOYEE BENEFIT PLANS................................ -68-
4.12 ENVIRONMENTAL PROTECTION.............................. -69-
4.13 SOLVENCY.............................................. -70-
4.14 DISCLOSURE............................................ -70-
SECTION 5.
COMPANY'S AFFIRMATIVE COVENANTS............................. -70-
5.1 FINANCIAL STATEMENTS AND OTHER REPORTS................. -70-
5.2 CORPORATE EXISTENCE.................................... -75-
5.3 PAYMENT OF TAXES AND CLAIMS; TAX CONSOLIDATION......... -75-
5.4 MAINTENANCE OF PROPERTIES; INSURANCE................... -75-
5.5 INSPECTION............................................. -76-
5.6 COMPLIANCE WITH LAWS, ETC.............................. -76-
5.7 COMPANY'S REMEDIAL ACTION REGARDING HAZARDOUS
MATERIALS............................................. -76-
5.8 FURTHER ASSURANCES..................................... -77-
5.9 EMPLOYEE BENEFIT PLANS................................. -77-
5.10 FAA MATTERS; CITIZENSHIP.............................. -77-
5.11 CHANGES IN GAAP....................................... -78-
-iii-
5
SECTION 6.
COMPANY'S NEGATIVE COVENANTS................................ -78-
6.1 RESERVED............................................... -78-
6.2 LIENS AND RELATED MATTERS.............................. -78-
A. PROHIBITION ON LIENS.............................. -78-
B. NO RESTRICTIONS ON SUBSIDIARY DISTRIBUTIONS TO
COMPANY OR OTHER SUBSIDIARIES..................... -79-
6.3 INVESTMENTS............................................ -79-
6.4 RESTRICTED PAYMENTS.................................... -79-
6.5 FINANCIAL COVENANTS.................................... -80-
A. MINIMUM FIXED CHARGE COVERAGE RATIO............... -80-
B. MAXIMUM LEVERAGE RATIO............................ -80-
C. MINIMUM NET WORTH................................. -80-
D. MINIMUM LIQUIDITY................................. -00-
X. XXXXXXXXXXX DEBT.................................. -80-
6.6 RESTRICTION ON FUNDAMENTAL CHANGES; ASSET SALES AND
ACQUISITIONS; NEW SUBSIDIARIES........................ -81-
6.7 SALES AND LEASE-BACKS.................................. -82-
6.8 TRANSACTIONS WITH AFFILIATES........................... -82-
6.9 CONDUCT OF BUSINESS.................................... -83-
6.10 MERGER OR CONSOLIDATION............................... -83-
6.11 LIMITATION ON ASSET SALES............................. -84-
6.12 LIMITATION ON ISSUANCES AND DISPOSITIONS OF CAPITAL
STOCK OF SUBSIDIARIES................................. -84-
6.13 LIMITATION ON CREATION OF NEW SUBSIDIARIES............ -85-
SECTION 7.
EVENTS OF DEFAULT........................................... -85-
7.1 FAILURE TO MAKE PAYMENTS WHEN DUE...................... -85-
7.2 DEFAULT IN OTHER AGREEMENTS............................ -85-
7.3 BREACH OF CERTAIN COVENANTS............................ -85-
7.4 BREACH OF WARRANTY..................................... -86-
7.5 OTHER DEFAULTS UNDER LOAN DOCUMENTS.................... -86-
7.6 INVOLUNTARY BANKRUPTCY; APPOINTMENT OF RECEIVER,
ETC................................................... -86-
7.7 VOLUNTARY BANKRUPTCY; APPOINTMENT OF RECEIVER, ETC.
..................................................... -86-
7.8 JUDGMENTS AND ATTACHMENTS.............................. -87-
7.9 DISSOLUTION............................................ -87-
7.10 RESERVED.............................................. -87-
7.11 FAILURE OF SECURITY................................... -87-
SECTION 8.
AGENT....................................................... -88-
8.1 APPOINTMENT............................................ -88-
-iv-
6
8.2 POWERS AND DUTIES; GENERAL IMMUNITY.................... -88-
X. XXXXXX; DUTIES SPECIFIED.......................... -88-
B. NO RESPONSIBILITY FOR CERTAIN MATTERS............. -89-
C. EXCULPATORY PROVISIONS............................ -89-
D. AGENT ENTITLED TO ACT AS LENDER................... -89-
8.3 REPRESENTATIONS AND WARRANTIES; NO RELIANCE............ -90-
8.4 RIGHT TO INDEMNITY............................... -90-
8.5 SECURITY AGREEMENTS.................................... -90-
8.6 SUCCESSOR AGENT........................................ -91-
SECTION 9.
MISCELLANEOUS............................................... -91-
9.1 ASSIGNMENTS AND PARTICIPATIONS IN LOANS................ -91-
A. GENERAL........................................... -91-
B. ASSIGNMENTS....................................... -92-
C. PARTICIPATIONS.................................... -93-
D. ASSIGNMENTS TO FEDERAL RESERVE BANKS.............. -94-
E. INFORMATION....................................... -94-
9.2 EXPENSES............................................... -94-
9.3 INDEMNITY.............................................. -95-
9.4 SET-OFF................................................ -95-
9.5 RATABLE SHARING........................................ -96-
9.6 AMENDMENTS AND WAIVERS................................. -96-
9.7 INDEPENDENCE OF COVENANTS.............................. -98-
9.8 NOTICES................................................ -98-
9.9 SURVIVAL OF REPRESENTATIONS, WARRANTIES AND
AGREEMENTS............................................ -98-
9.10 FAILURE OR INDULGENCE NOT WAIVER; REMEDIES
CUMULATIVE............................................ -98-
9.11 MARSHALING; PAYMENTS SET ASIDE........................ -99-
9.12 SEVERABILITY.......................................... -99-
9.13 OBLIGATIONS SEVERAL; INDEPENDENT NATURE OF LENDERS'
RIGHTS................................................ -99-
9.14 HEADINGS.............................................. -99-
9.15 APPLICABLE LAW........................................ -99-
9.16 SUCCESSORS AND ASSIGNS................................ -100-
9.17 CONSENT TO JURISDICTION AND SERVICE OF PROCESS........ -100-
9.18 WAIVER OF JURY TRIAL.................................. -101-
9.19 CONFIDENTIALITY....................................... -101-
9.20 COUNTERPARTS; EFFECTIVENESS........................... -101-
9.21 INTEGRATION........................................... -102-
Schedules
-v-
7
Schedule 2.1 - Commitments
Schedule 2.10 - Eligible Assets
Schedule 2.10A- Borrowing Base Collateral on the Closing Date
Schedule 4.1 - Subsidiaries
Schedule 6.2 - Payment Restrictions
Exhibits
Exhibit A - Form of Aircraft Security Agreement
Exhibit I - Form of Notice of Borrowing
Exhibit II - Form of Notice of Conversion/Continuation
Exhibit III - Form of Note
Exhibit IV - Form of Compliance Certificate
Exhibit V-A - Form of Company's outside counsel legal opinion
(Section 1110)
Exhibit V-B - Form of Company's New York enforceability opinion (Loan
Agreement and Notes)
Exhibit V-C - Form of Company's in-house counsel legal opinion
Exhibit V-D - Form of Company's Arizona counsel legal opinion
Exhibit V-E - Form of Company's New York enforceability opinion (Security
Documents)
Exhibit VI - Form of Assignment Agreement
Exhibit VII - Form of Certificate re: Non-Bank Status
Exhibit VIII - Form of Financial Condition Certificate
Exhibit IX - Form of Borrowing Base Certificate
-vi-
8
AMERICA WEST AIRLINES, INC.
AMENDED AND RESTATED REVOLVING CREDIT AGREEMENT
This AMENDED AND RESTATED REVOLVING CREDIT AGREEMENT is dated as of
December 10, 1999 and entered into by and among AMERICA WEST AIRLINES, INC., a
Delaware corporation (the "COMPANY"), THE FINANCIAL INSTITUTIONS LISTED ON THE
SIGNATURE PAGES HEREOF (each individually referred to herein as a "LENDER" and
collectively, together with the other institutions that become lenders pursuant
to subsection 9.1, as the "LENDERS") and THE INDUSTRIAL BANK OF JAPAN, LIMITED
as initial issuing bank (the "INITIAL ISSUING BANK") and as Arranger and Agent
for the Lenders (in such last capacity, the "AGENT").
R E C I T A L S
WHEREAS, the Company, the financial institutions from time to time party
thereto and the Agent are parties to a Revolving Credit Agreement dated as of
December 12, 1997 (the "Existing Credit Agreement"), pursuant to which such
financial institutions and the Agent provided a revolving and term loan facility
to the Company;
WHEREAS, the Company, the Agent and the Lenders wish to amend and restate
the Existing Credit Agreement to provide the Company a revolving loan facility
under and subject to the terms provided herein;
NOW THEREFORE, in consideration of the premises and agreements, provisions
and covenants herein contained, the Company, the Issuing Bank, the Lenders, and
the Agent hereby agree as follows:
SECTION 1.
DEFINITIONS
1.1 CERTAIN DEFINED TERMS.
The following terms used in this Agreement shall have the following
meanings:
"ACT" means Subtitle VII of Title 49 of the United States Code, and the
rules and regulations promulgated thereunder, as in effect on the date hereof,
and as modified or amended hereafter, or any subsequent legislation that
supplements or supersedes such Subtitle.
"ADJUSTED CONSOLIDATED NET INCOME" means, for any Person for any period,
the aggregate net income (or loss) of such Person and its consolidated
Subsidiaries for such period determined in accordance with GAAP; provided that
the following items shall be excluded in
-1-
9
computing Adjusted Consolidated Net Income (without duplication): (i) the net
income (or loss) of any Person (other than a Subsidiary of such first Person) in
which any other Person (other than such first Person or any of its Subsidiaries)
has a joint or shared interest, except to the extent of the amount of cash
dividends or other distributions actually paid to, and received by, such first
Person or any of its Subsidiaries during such period out of funds legally
available therefor; (ii) the net income (or loss) of any Person accrued prior to
the date it becomes a Subsidiary of such first Person or any of its Subsidiaries
or all or substantially all of the property and assets of such Person are
acquired by such first Person or any of its Subsidiaries; (iii) the net income
(or loss) of any Subsidiary of such first Person which Subsidiary is subject to
a Payment Restriction, except (A) such exclusion shall not apply to the extent
of the amount of cash dividends or other distributions actually paid to, and
received by, such first Person or any of its Subsidiaries during such period
from such Subsidiary in compliance with such Payment Restriction out of funds
legally available therefor and (B) such exclusion shall apply only while and to
the extent that such Payment Restriction is in effect, and upon the elimination
or reduction of such Payment Restriction, the previously excluded net income (or
loss) shall be added back retroactively; (iv) any gains or losses (on an
after-tax basis) attributable to Asset Sales; and (v) all net extraordinary
gains and extraordinary losses.
"ADJUSTED DEBT" of any Person means at any date Indebtedness (including
Guarantees) plus (without duplication) the net present value of all remaining
future minimum aircraft lease payments under noncancellable Operating Leases
discounted at an annual rate of ten percent.
"ADJUSTED EURODOLLAR RATE" means, for any Interest Rate Determination
Date, the rate per annum obtained by dividing (i) the arithmetic average of the
quotes (expressed as a rate per annum and rounded upward to the nearest l/16 of
one percent) appearing on the Reuters LIBO Screen (or such other screen as may,
in the opinion of the Agent, replace such screen on that system for the purpose
of displaying such rate) at or about 11:00 a.m. (London time) on such Interest
Rate Determination Date for U.S. dollar deposits of amounts in same day funds
comparable to the principal amount of the Eurodollar Rate Loans for which the
Adjusted Eurodollar Rate is then being determined with maturities comparable to
the Interest Period for which such Adjusted Eurodollar Rate will apply by (ii) a
percentage equal to 100% minus the stated maximum rate of all reserve
requirements (including, without limitation, any marginal, emergency,
supplemental, special or other reserves) applicable on such Interest Rate
Determination Date to any member bank of the Federal Reserve System in respect
of "Eurodollar liabilities" as defined in Regulation D (or any successor
category of liabilities under Regulation D) for such Interest Period, and if
such rate quotation cannot be obtained by the Agent, the rate per annum obtained
by dividing (i) the arithmetic average (rounded upward to the nearest l/16 of
one percent) of the offered quotation, if any, to first class banks in the
London interbank Eurodollar market by each of the Reference Lenders for U.S.
dollar deposits of amounts in same day funds comparable to the principal amount
of the Eurodollar Rate Loans for which the Adjusted Eurodollar Rate is then
being determined with maturities comparable to such Interest Period as of
approximately 10:00 A.M. (New York time) on such Interest Rate Determination
Date by (ii) a percentage equal to 100% minus the stated maximum rate of all
reserve requirements (including, without limitation, any marginal, emergency,
supplemental, special or other reserves) applicable on such Interest Rate
Determination Date to any member bank of the Federal Reserve System in respect
of "Eurocurrency liabilities" as defined in
-2-
10
Regulation D (or any successor category of liabilities under Regulation D) for
such Interest Period; provided that if any Reference Lender fails to provide the
Agent with its aforementioned quotation then the Adjusted Eurodollar Rate shall
be determined based on the quotation provided by the Agent, and that, if any,
provided to the Agent by the other Reference Lender.
"ADJUSTMENT EVENT" means any event of loss or damage to Rotables which
causes a reduction in the book value of Rotables, as reasonably determined by
the Company, in excess of $5,000,000.
"AFFECTED LENDER" has the meaning assigned to that term in subsection
2.6C.
"AFFECTED LOANS" has the meaning assigned to that term in subsection 2.6C.
"AFFILIATE" means, as applied to any Person, any other Person directly or
indirectly controlling, controlled by, or under common control with, that
Person. For the purposes of this definition, "control" (including, with
correlative meanings, the terms "controlling", "controlled by" and "under common
control with"), as applied to any Person, means the possession, directly or
indirectly, of the power to direct or cause the direction of the management and
policies of that Person, whether through the ownership of voting securities or
by contract or otherwise.
"AGENT" has the meaning assigned to that term in the introduction to this
Agreement and also means and includes any successor Agent appointed pursuant to
subsection 8.6.
"AGREEMENT" means this Amended and Restated Revolving Loan Agreement dated
as of December 10, 1999, as it may be amended, supplemented or otherwise
modified from time to time.
"AIRCRAFT" means an Airframe together with the Engines identified
therewith in Schedule I of, or a supplement to, an Aircraft Security Agreement,
whether or not any of such Engines may at any time of determination be installed
on such Airframe or installed on any other airframe.
"AIRCRAFT RENTAL EXPENSE" means, for any period, the aggregate amount of
all rents expensed by the Company under all Operating Leases of aircraft and
spare aircraft engines to which the Company is a party.
"AIRCRAFT SECURITY AGREEMENT" means an Aircraft Security Agreement
substantially in the form of Exhibit A hereto, as such Aircraft Security
Agreement may be amended, restated, supplemented or otherwise modified from time
to time in accordance with the terms hereof and thereof.
"AIRFRAME" means each Airframe as defined in and from time to time subject
to the Aircraft Security Agreement.
-3-
11
"ALLIANCE AGREEMENTS" means those certain business alliance agreements
among the Company, Continental Airlines, Inc. and Mesa Airlines, Inc. that
include, but are not limited to, code-sharing, frequent flyer, ground handling
and marketing agreements.
"APPLICABLE MARGIN" for each Base Rate Loan and Eurodollar Rate Loan shall
be the percentage set forth below for that type of Loan for the periods set
forth below, subject to adjustment, upward or downward, as shown below,
effective one Business Day following the announcement by Xxxxx'x or S&P of the
change in such agency's rating of the Company's senior unsecured debt
obligations giving rise to such adjustment:
Revolving Period
Rating LIBOR Margin/Base Rate Margin
------ -----------------------------
below B2 by Xxxxx'x or 3.75% / 2.75%
below B by S&P
B2 by Xxxxx'x or 3.00% / 2.00%
B by S&P
B1 by Xxxxx'x or 2.50% / 1.50%
B+ by S&P
Ba3 by Xxxxx'x or 2.25% / 1.25%
BB- by S&P
Ba2 by Xxxxx'x or 2.00% / 1.00%
BB by S&P
Upon a change in the rating of the Company's senior unsecured debt obligations
by Xxxxx'x or S&P, the Agent shall determine if there is a split rating. If so,
the more creditworthy of the two ratings shall be used to determine if the
rating of such obligations has changed in order to determine if an adjustment
shall be made, except that if the less creditworthy of the two ratings is two or
more rating categories below the more creditworthy rating, the applicable rating
shall be deemed to be the rating category which is one rating category below the
more creditworthy rating.
Notwithstanding the foregoing, the Applicable Margin shall equal the Commitment
Fee Rate for the portion of the Loans collateralized with Cash under the terms
of the Cash and Cash Equivalents Security Agreement.
"APPROVED APPRAISAL" has the meaning given such term in subsection
2.10(C)(1).
"APPROVED APPRAISER" has the meaning given such term in subsection
2.10(C)(2).
"ARRANGERS" means Citicorp USA, Inc. and The Industrial Bank of Japan,
Limited.
-4-
12
"ASSET SALE" means any sale, transfer or other disposition (including by
way of merger, consolidation, exchange of assets or sale-leaseback
transactions), in one transaction or a series of related transactions, by the
Company or any of its Subsidiaries to any Person other than the Company or any
of its Subsidiaries of (i) all or any of the Capital Stock of any Subsidiary of
the Company, (ii) all or substantially all of the property and assets of an
operating unit or business of the Company or any of its Subsidiaries or (iii)
any other property and assets of the Company or any of its Subsidiaries outside
the ordinary course of business of the Company or such Subsidiary and, in each
case, that is not governed by the provisions of subsection 6.8; provided that
none of (A) sales or other dispositions of inventory, receivables and other
current assets, (B) sale or other dispositions of surplus equipment, spare
parts, expendable inventories, furniture or fixtures in an aggregate amount not
to exceed $10,000,000 in any Fiscal Year of the Company, (C) sale leasebacks of
aircraft (including aircraft engines installed thereon) in the Company's fleet,
spare aircraft engines, aircraft parts, simulators and passenger loading bridges
or other flight or ground equipment or the Company's office building located at
000 Xxxx Xxx Xxxxxx, Xxxxx, Xxxxxxx or (D) $20,000,000 of other sales in any
Fiscal Year of the Company shall be included within the meaning of "Asset Sale."
"ASSIGNMENT AGREEMENT" means an Assignment Agreement in substantially the
form of Exhibit VI annexed hereto.
"BANKRUPTCY CODE" means Title 11 of the United States Code as now and
hereafter in effect, or any successor statute.
"BASE RATE" means, at any time, the higher of (x) the Prime Rate or (y)
the rate which is 1/2 of 1% in excess of the Federal Funds Effective Rate.
"BASE RATE LOANS" means Loans bearing interest at rates determined by
reference to the Base Rate as provided in subsection 2.2A.
"BORROWING BASE" means an aggregate amount equal to:
(A) 100% of the Dollar amount of Cash and Permitted Cash Equivalents
held by the Agent at such time in the Cash Collateral Account, plus
(B) 85% of the Fair Market Value of all Stage III Aircraft as stated
in the then most recently delivered Approved Appraisal thereof, plus
(C) with respect to Rotables, 60% of the lower of (x) the then
Adjusted Fair Market Value of the Rotables (as hereinafter defined) and
(y) the book value of the Rotables as certified by the Company in the then
most recently delivered Borrowing Base Certificate; the "Adjusted Fair
Market Value of the Rotables" (1) on any date from and after the date of
the then most recently delivered Approved Appraisal (an "Appraisal Date")
and prior to the next succeeding date on which the Company shall deliver a
Borrowing Base Certificate, shall equal the Fair Market Value of the
Rotables as set forth in such Approved Appraisal and (2) on any date
thereafter and prior to the date of the next succeeding Approved
-5-
13
Appraisal, shall equal the product of (x) the book value of the Rotables,
as set forth in the then most recently delivered Borrowing Base
Certificate, multiplied by (y) a fraction, of which the numerator shall be
the Fair Market Value of the Rotables, as of the Appraisal Date referred
to in clause (1) above, and the denominator shall be the book value of the
Rotables, as set forth in the Borrowing Base Certificate delivered on or
next preceding such Appraisal Date, provided, however, that until the
Company delivers a new Approved Appraisal of the Rotables after the
Closing Date, the Approved Appraisal with respect to the Rotables for the
purposes of this subsection shall be the Approved Appraisal dated October
22, 1998, and provided, further, that if a new Approved Appraisal of the
Rotables is not delivered to the Agent on or before January 24, 2000, the
Rotables shall be excluded from the Borrowing Base, plus
(D) 66% of the Fair Market Value of the Maintenance Facility as
stated in the most recently delivered Approved Appraisal thereof, plus
(E) 66% of the Fair Market Value of the Simulators as stated in the
then most recently delivered Approved Appraisal, plus
(F) 66% of the Fair Market Value of the Spare Engines as stated in
the then most recently delivered Approved Appraisal.
"BORROWING BASE CERTIFICATE" means a certificate substantially in the form
of Exhibit IX annexed hereto delivered by the Company pursuant to Section 2.10
with respect to the calculation of the Borrowing Base.
"BORROWING BASE COLLATERAL" means, at any time, Eligible Assets that are
subject to the Lien of a Security Agreement at such time.
"BORROWING BASE DEFICIENCY" means, at any time when the Borrowing Base, as
calculated in the Borrowing Base Certificate then most recently delivered, is
less than Outstanding Amounts, the amount of such deficiency.
"BORROWING BASE VALUE" means, with respect to any Borrowing Base
Collateral, the value attributed to such Borrowing Base Collateral from time to
time pursuant to the definition of Borrowing Base.
"BUSINESS DAY" means any day excluding Saturday, Sunday and any day which
is a legal holiday under the laws of the States of New York, California or
Arizona or is a day on which banking institutions located in any such state are
authorized or required by law or other governmental action to close and, if the
applicable Business Day relates to (i) any Eurodollar Rate Loan, on which
dealings are carried on in the London interbank market or (ii) any Letter of
Credit, on any day which the Issuing Bank is open to conduct business in the
jurisdiction where the applicable Letter of Credit is issued.
-6-
14
"CAPITAL LEASE", as applied to any Person, means any lease of any property
(whether real, personal or mixed) by that Person as lessee that, in conformity
with GAAP, is required to be accounted for as a capital lease on the balance
sheet of that Person, and the amount of Indebtedness represented by such lease
shall be the capitalized amount of the obligations evidenced thereby determined
in accordance with GAAP.
"CAPITAL STOCK" means, with respect to any Person, any and all shares,
interests, participations or other equivalents (however designated, whether
voting or non-voting) of such Person's capital stock, whether now outstanding or
issued after the date of this Agreement, including, without limitation, all
Common Stock.
"CASH" means money, currency or a credit balance.
"CASH AND CASH EQUIVALENT SECURITY AGREEMENT" means the Cash and Cash
Equivalent Security Agreement dated as of December 12, 1997 between the Company
and the Agent, as amended on the date hereof and as such Cash and Cash
Equivalent Security Agreement may be amended, restated, supplemented or
otherwise modified from time to time in accordance with the terms hereof and
thereof.
"CASH COLLATERAL ACCOUNT" has the meaning given such term in the Cash and
Cash Equivalent Security Agreement.
"CASH EQUIVALENTS" means, as at any date of determination, (i) marketable
securities (a) issued or directly and unconditionally guaranteed as to interest
and principal by the United States Government or (b) issued by any agency or
instrumentality of the United States the obligations of which are backed by the
full faith and credit of the United States, in each case maturing within one
year after such date; (ii) marketable direct obligations issued by any state of
the United States of America or any political subdivision of any such state or
any instrumentality thereof, in each case maturing within one year after such
date and having, at the time of the acquisition thereof, the highest rating
obtainable from either S&P or Xxxxx'x; (iii) commercial paper maturing no more
than one year after such date and having, at the time of the acquisition
thereof, a rating of at least A-2 from S&P or at least P-2 from Xxxxx'x; (iv)
certificates of deposit or bankers' acceptances maturing within one year after
such date and issued or accepted by any Lender or by any commercial bank
organized under the laws of the United States of America or any state thereof or
the District of Columbia that (a) is at least "adequately capitalized" (as
defined in the regulations of its primary Federal banking regulator) and (b) has
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 Xxxxx'x.
"CASH PROCEEDS" means, with respect to any Asset Sale, the proceeds of
such Asset Sale in the form of Cash and Cash Equivalents, including payments in
respect of deferred payment obligations (to the extent corresponding to the
principal, but not the interest component thereof)
-7-
15
when received in the form of Cash or Cash Equivalents (except to the extent such
obligations are financed or sold with recourse to the Company or any Subsidiary
of the Company) and proceeds from the conversion of other property received when
converted to Cash or Cash Equivalents.
"CERTIFICATE RE NON-BANK STATUS" means, as to any Lender, a certificate as
to such Lender's exemption from U.S. withholding tax, substantially in the form
of Exhibit VII annexed hereto delivered by such Lender to the Agent pursuant to
subsection 2.7B(iii).
"CHANGE OF CONTROL" means (i) the acquisition at any time by any Person
(other than TPG, L.P. or any of its Affiliates) or two or more Persons acting in
concert of "beneficial ownership" (within the meaning of Section 13(d) under the
Exchange Act and the rules and regulations promulgated thereunder) in excess of
30% of the total voting power of the Voting Stock of the Company; (ii) the sale,
lease, transfer or other disposition, of all or substantially all of the assets
of the Company to any Person (other than TPG, L.P. or any of its Affiliates) or
two or more Persons acting in concert as an entirety or substantially as an
entirety in one transaction or a series of related transactions; (iii) the
merger or consolidation of the Company, with or into another corporation, or the
merger of another corporation into the Company, or any other transaction, with
the effect that a Person (other than TPG, L.P. or any of its Affiliates) or two
or more Persons acting in concert has "beneficial ownership" (within the meaning
of Section 13(d) of the Exchange Act and the rules and regulations promulgated
thereunder) in excess of 30% of the Voting Stock of the Company, or (if the
Company is not the surviving corporation in such transaction) such other
corporation, as the case may be (including indirect ownership through another
Person other than TPG, L.P. or any of its Affiliates or through two or more
Persons acting in concert); or (iv) the liquidation or dissolution of the
Company. For purposes of this definition, the term Person includes a "person"
within the meaning of Section 13(d) of the Exchange Act and the rules and
regulations promulgated thereunder.
"CLOSING DATE" means the date when the conditions of Section 3.1 hereof
have been satisfied and this Agreement has become effective.
"CO-LEAD BOOK MANAGERS" means Xxxxxxx Xxxxx Barney Inc. and The Industrial
Bank of Japan, Limited.
"COLLATERAL" means all of the properties and assets that are from time to
time subject to the Liens purported to be granted by the Security Agreements.
"COMMERCIAL LETTER OF CREDIT" means any letter of credit or similar
instrument issued for the purpose of providing the primary payment mechanism in
connection with the purchase of any materials, goods or services by the Company
in the ordinary course of its business.
"COMMITMENT" means the commitment of a Lender to make Revolving Loans to
the Company pursuant to subsection 2.1A, and "COMMITMENTS" means such
commitments of all Lenders in the aggregate.
-8-
16
"COMMITMENT FEE RATE" shall be the percentage set forth below, subject to
adjustment, upward or downward, as shown below, effective one Business Day
following the announcement by Xxxxx'x or S&P of the change in such agency's
rating of the Company's senior unsecured debt obligations giving rise to such
adjustment:
Rating Rate
------ ----
below B2 by Xxxxx'x or
below B by S&P .875%
B2 by Xxxxx'x or
B by S&P .625%
B1 by Xxxxx'x or
B+ by S&P .50%
Ba3 by Xxxxx'x or
BB- by S&P .45%
Ba2 by Xxxxx'x or
BB by S&P .375%
Upon a change in the rating of the Company's senior unsecured debt
obligations by Xxxxx'x or S&P, the Agent shall determine if there is a split
rating. If so, the more creditworthy of the two ratings shall be used to
determine if the rating of such obligations has changed in order to determine if
an adjustment shall be made, except that if the less creditworthy of the two
ratings is two or more rating categories below the more creditworthy rating, the
applicable rating shall be deemed to be the rating category which is one rating
category below the more creditworthy rating.
"COMMODITY AGREEMENT" means any agreement or arrangement designed to
protect the Company or any of its Subsidiaries against fluctuations in the
prices of commodities used by the Company or any of its Subsidiaries in the
ordinary course of its business.
"COMMON STOCK" means, with respect to any Person, any and all shares,
interests, participations or other equivalents (however designated, whether
voting or non-voting) of such Person's common stock, whether now outstanding or
issued after the date of this Agreement, including, without limitation, all
series and classes of such common stock.
"COMPANY" has the meaning assigned to that term in the introduction to
this Agreement and its permitted successors and assigns.
"COMPANY COMMON STOCK" means the Common Stock of the Company, par value
$0.01 per share.
-9-
17
"COMPLIANCE CERTIFICATE" means a certificate substantially in the form of
Exhibit IV annexed hereto delivered to the Agent and the Lenders by the Company
pursuant to subsection 5.1(iii).
"CONDEMNATION PROCEEDS" has the meaning assigned to that term in
subsection 2.4B(iii)(c).
"CONFIDENTIAL INFORMATION" means information that the Company furnishes to
the Agent or any Lender in a writing designated as confidential, but does not
include any such information that is or becomes generally available to the
public or that is or becomes available to the Agent or such Lender from a source
other than the Company.
"CONTRACTUAL OBLIGATION", as applied to any Person, means any provision of
any equity security issued by that Person or of any material indenture,
mortgage, deed of trust, contract, undertaking, agreement or other material
instrument to which that Person is a party or by which it or any of its
properties is bound or to which it or any of its properties is subject.
"CURRENCY AGREEMENT" means any foreign exchange contract, currency swap
agreement, futures contract, option contract, synthetic cap or other similar
agreement or arrangement designed to protect the Company or any of its
Subsidiaries against fluctuations in currency values.
"DEFAULTED ADVANCE" means, with respect to any Lender at any time, the
portion of any Revolving Loan required to be made to the Company by such Lender
pursuant to Section 2.1 or 2.9, as the case may be, at or prior to such time
which has not been made by such Lender or by the Agent for the account of such
Lender pursuant to Section 2.1C or 2.9C, as the case may be, at such time.
"DEFAULTED AMOUNT" means, with respect to any Lender at any time, any
amount required to be paid by such Lender to the Agent or any other Lender
hereunder or under any other Loan Document at or prior to such time which has
not been so paid as of such time, including, without limitation, any amount
required to be paid by such Lender to (i) the Issuing Bank pursuant to Section
2.9 to purchase a participation in a Letter of Credit made by such Issuing Bank,
(ii) the Agent pursuant to Section 2.1 to reimburse the Agent for the amount of
any Loan made by the Agent for the account of such Lender or (iii) any other
Lender pursuant to Section 2.1 to purchase any participation in Loans owing to
such other Lender.
"DEFAULTING LENDER" means, at any time, any Lender that, at such time,
owes a Defaulted Advance or a Defaulted Amount.
"DESIGNATED LOCATIONS" has the meaning given such term in the Spare Parts
Security Agreement.
"DOCUMENTATION AGENT" means Bankers Trust Company.
-10-
18
"DOLLARS" and the sign "$" mean the lawful money of the United States of
America.
"EBITDA" means, with respect to the Company, for any period, the sum of
the amounts for such period of (i) Adjusted Consolidated Net Income, (ii)
Interest Expense, (iii) provisions for taxes based on income including state
franchise taxes based on income, (iv) total consolidated depreciation expense,
(v) total consolidated amortization expense, and (vi) other non-cash items
reducing Adjusted Consolidated Net Income less other non-cash items increasing
Adjusted Consolidated Net Income.
"ELIGIBLE ASSETS" has the meaning given such term in Subsection 2.10.
"ELIGIBLE ASSIGNEE" means (A) (i) a commercial bank organized under the
laws of the United States or any state thereof and having total assets on a
consolidated basis in excess of $1,000,000,000; (ii) a savings and loan
association or savings bank organized under the laws of the United States or any
state thereof and having total assets on a consolidated basis in excess of
$1,000,000,000; (iii) a commercial bank organized under the laws of any other
country or a political subdivision thereof and having total assets on a
consolidated basis in excess of $1,000,000,000; provided that (x) such bank is
acting through a branch or agency located in the United States or (y) such bank
is organized under the laws of a country that is a member of the Organization
for Economic Cooperation and Development or a political subdivision of such
country; and (iv) any other institutional investor organized under the laws of
the United States or any state thereof and having total assets on a consolidated
basis in excess of $1,000,000,000 which extends credit or buys loans as one of
its businesses including, but not limited to, investment banks, insurance
companies, mutual funds and lease financing companies, in each case (under
clauses (i) through (iv) above) that is reasonably acceptable to the Agent and
the Company; and (B) any Lender and any Affiliate of any Lender; provided that
neither the Company nor any Affiliate of the Company shall be an Eligible
Assignee.
"ELIGIBLE SIMULATOR" means a flight simulator of the type described in
Schedule 2.10.
"ELIGIBLE SPARE ENGINE" means an aircraft engine of the type described in
Schedule 2.10.
"ELIGIBLE STAGE III AIRCRAFT" means an aircraft, including engines, that
meets the "Stage III" noise standards of the Federal Aviation Regulations, has
met such standards since it was originally manufactured and delivered and is of
the type described on Schedule 2.10.
"ENGINE" means each aircraft engine from time to time subject to the Lien
of the Aircraft Security Agreement.
"ENVIRONMENTAL CLAIM" means any material investigation, notice, claim,
suit, proceeding, demand or order, by any governmental authority or any Person
arising in connection with any alleged or actual material violation of
Environmental Laws or with any Hazardous Material, or any actual or alleged
damage, or harm to health, safety or the environment.
-11-
19
"ENVIRONMENTAL INDEMNITY AGREEMENT" means the Environmental Indemnity
Agreement dated as of December 12, 1997 between the Company and the Agent, as
amended and restated on the date hereof and as such Environmental Indemnity
Agreement may be amended, restated, supplemented or otherwise modified from time
to time in accordance with the terms hereof or thereof.
"ENVIRONMENTAL LAWS" means any and all current or future statutes,
ordinances, orders, rules, regulations, guidance documents, judgments,
governmental authorizations, or any other requirement of governmental
authorities relating to (a) the prevention or control of pollution or protection
of the environment, (b) solid, gaseous or liquid waste generation, handling,
treatment, storage, disposal, discharge, release, emission or transportation, or
(c) exposure to Hazardous Materials. "Environmental Laws" shall include, but not
be limited to, the Comprehensive Environmental Response, Compensation and
Liability Act (42 U.S.C. 9601 et seq.), the Resource Conservation and Recovery
Act (42 U.S.C. 6901 et seq.), the National Environmental Policy Act (42 U.S.C.
4321 et seq.), the Hazardous Materials Transportation Act (49 U.S.C. 1801 et
seq.), the Toxic Substances Control Act (49 U.S.C. 2601 et seq.), the Clean Air
Act (42 U.S.C. 7401 et seq.), the Federal Water Pollution Control Act (33 U.S.C.
1251 et seq.), the Safe Drinking Water Act (42 U.S.C. 3007 et seq.), the
Emergency Planning and Community Right-to-Know Act (42 U.S.C. 11001 et seq.),
the Occupational Safety and Health Act (29 U.S.C. 641 et seq.), and the State of
Arizona Environmental Quality Act (A.R.S. 49-101 et seq.).
"EQUITY PROCEEDS" means the cash proceeds (net of underwriting discounts
and commissions and other reasonable costs associated therewith) from the
issuance of any equity securities of the Company including, without limitation,
additional issuances of Company Common Stock.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended from time to time, and any successor statute.
"ERISA AFFILIATE" means, as applied to the Company, (i) any corporation
which is, or was at any time, a member of a controlled group of corporations
within the meaning of Section 414(b) of the Internal Revenue Code of which the
Company is a member; (ii) any trade or business (whether or not incorporated)
which is a member of a group of trades or businesses under common control within
the meaning of Section 414(c) of the Internal Revenue Code of which the Company
is a member; and (iii) any member of an affiliated service group within the
meaning of Section 414(m) or (o) of the Internal Revenue Code of which the
Company, any corporation described in clause (i) above or any trade or business
described in clause (ii) above is a member.
"EURODOLLAR RATE LOANS" means Loans bearing interest at rates determined
by reference to the Adjusted Eurodollar Rate as provided in subsection 2.2A.
"EVENT OF DAMAGE" with respect to any Borrowing Base Collateral (other
than Rotables) means any damage to such Borrowing Base Collateral the repair of
which is reasonably
-12-
20
estimated by the Company to cost more than 50% of the Fair Market Value of such
Borrowing Base Collateral.
"EVENT OF DEFAULT" means each of the events set forth in Section 7.
"EVENT OF LOSS" with respect to any Borrowing Base Collateral (other than
Cash and Cash Equivalents) has the meaning given in the Security Agreement to
which such Borrowing Base Collateral is subject.
"EXCHANGE ACT" means the Securities Exchange Act of 1934, as amended from
time to time, and any successor statute.
"FACILITIES" means any and all real property now, hereafter or heretofore
owned, leased, operated or used by the Company or any of its Subsidiaries and
any of their respective predecessors.
"FAIR MARKET VALUE" for any Borrowing Base Collateral means the value of
such Borrowing Base Collateral, as determined by an Approved Appraiser in the
most recently delivered Approved Appraisal thereof, obtainable by a seller at
the time of determination in an arm's-length transaction between an informed and
willing seller under no compulsion to sell and an informed and willing
buyer-user (other than a lessee or other Person currently in possession and a
used equipment dealer or broker) under no compulsion to buy and based on the
then condition of such Borrowing Base Collateral.
"FEDERAL AVIATION ADMINISTRATION" or "FAA" means the United States Federal
Aviation Administration or any successor thereto administering the functions of
the Federal Aviation Administration under the Act.
"FEDERAL AVIATION REGULATIONS" means regulations issued by the FAA.
"FEDERAL FUNDS EFFECTIVE RATE" means, for any period, a fluctuating
interest rate equal for each day during such period to the weighted average of
the rates on overnight Federal funds transactions with members of the Federal
Reserve System arranged by Federal funds brokers, as published for such day (or,
if such day is not a Business Day, for the next preceding Business Day) by the
Federal Reserve Bank of New York, or, if such rate is not so published for any
day on which is a Business Day, the average of the quotations for such day on
such transactions received by the Agent from three Federal funds brokers of
recognized standing selected by the Agent.
"FISCAL YEAR" means with respect to the financial statements to be
delivered by the Company pursuant to subsection 5.1, the Company's fiscal year
referenced in such financial statements; provided, that the Company will not
change its Fiscal Year if such change will cause an unreasonable delay in the
production of the financial statements required by subsection 5.1(ii).
"FUNDING AND PAYMENT OFFICE" means the office of the Agent located at 0000
Xxxxxx xx xxx Xxxxxxxx, Xxx Xxxx, Xxx Xxxx 00000.
-13-
21
"FUNDING DATE" means the date of the funding of a Revolving Loan or
issuance of a Letter of Credit.
"GAAP" means, subject to the limitations on the application thereof set
forth in subsection 1.2, generally accepted accounting principles set forth in
opinions and pronouncements of the Accounting Principles Board of the American
Institute of Certified Public Accountants and statements and pronouncements of
the Financial Accounting Standards Board or in such other statements by such
other entity as may be approved by a significant segment of the accounting
profession. Financial statements and other information required to be delivered
by the Company to the Lenders pursuant to clauses (ii), (iii) and (xiii) of
subsection 5.1 shall be prepared in accordance with GAAP as in effect at the
time of such preparation (and delivered together with the reconciliation
statements provided for in subsection 5.1(v)).
"GUARANTEE" means any obligation, contingent or otherwise, of any Person
directly or indirectly guaranteeing any Indebtedness or other obligation of any
other Person and, without limiting the generality of the foregoing, any
obligation, direct or indirect, contingent or otherwise, of such first Person
(i) to purchase or pay (or advance or supply funds for the purchase or payment
of) such Indebtedness or other obligation of such other Person (whether arising
by virtue of partnership arrangements, or by agreement to keep-well, to purchase
assets, goods, securities or services, to take-or-pay, or to maintain financial
statement conditions or otherwise) or (ii) entered into for purposes of assuring
in any other manner the obligee of such Indebtedness or other obligation of the
payment thereof or to protect such obligee against loss in respect thereof (in
whole or in part). The term "Guarantee" used as a verb has a corresponding
meaning.
"GOVERNMENTAL AUTHORIZATION" means any permit, license, authorization,
plan, directive, consent order or consent decree of or from any federal, state
or local governmental authority, agency or court.
"HAZARDOUS MATERIALS" means any chemical or other material or substance,
exposure to which or Release of is now or hereafter prohibited, limited or
regulated under any law.
"HAZARDOUS MATERIALS ACTIVITY" means any past, current, proposed, or
threatened use, storage, release, generation, treatment, remediation or
transportation of any Hazardous Material (i) from, under, in, into or on the
Facilities or surrounding property; and (ii) caused by, or undertaken by or on
behalf of, the Company, any of its Subsidiaries or any of their respective
predecessors.
"HOLDINGS" means America West Holdings Corporation.
"INDEBTEDNESS" means, with respect to any Person at any date of
determination (without duplication), (i) all indebtedness of such Person for
borrowed money; (ii) all obligations of such Person evidenced by bonds,
debentures, notes or other similar instruments; (iii) all obligations of such
Person in respect of letters of credit or other similar instruments (including
reimbursement obligations with respect thereto); (iv) all obligations of such
Person to pay the deferred and unpaid
-14-
22
purchase price of property or services, which purchase price is due more than
six months after the date of placing such property in service or taking delivery
and title thereto or the completion of such services, except Trade Payables; (v)
all Capitalized Lease obligations of such Person (the amount of the Indebtedness
in respect thereof to be determined as provided in the definition of Capitalized
Lease in this subsection 1.1); (vi) all Indebtedness of other Persons secured by
a Lien on any asset of such Person, whether or not such Indebtedness is assumed
by such Person; provided that the amount of such Indebtedness shall be the
lesser of (A) the fair market value of such asset at such date of determination
and (B) the stated principal amount of such Indebtedness; (vii) all Indebtedness
of other Persons Guaranteed by such Person to the extent such Indebtedness is
Guaranteed by such Person; and (viii) to the extent not otherwise included in
this definition and to the extent treated as a liability under GAAP, obligations
under Currency Agreements, Interest Rate Agreements and Commodity Agreements.
The amount of Indebtedness of any Person at any date shall be the outstanding
balance at such date of all unconditional obligations as described above and the
maximum liability, upon the occurrence of the contingency giving rise to the
obligation, of any contingent obligations at such date; provided that the amount
outstanding at any time of any Indebtedness issued with original issue discount
is the face amount of such Indebtedness less the remaining unamortized portion
of the original issue discount of such Indebtedness at such time as determined
in conformity with GAAP.
"INDEMNITEE" has the meaning assigned to that term in subsection 9.3.
"INITIAL ISSUING BANK" has the meaning specified in the recital of parties
at the head of this Agreement.
"INSURANCE PROCEEDS" has the meaning assigned to that term in subsection
2.9B(iii)(c).
"INTEREST EXPENSE" means, for any period (i) total interest expense
(including that portion attributable to Capital Leases in accordance with GAAP)
plus (ii) without duplication, capitalized interest, in each case, of the
Company and its Subsidiaries with respect to all of their outstanding
Indebtedness, 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.
"INTEREST PAYMENT DATE" means (i) with respect to any Base Rate Loan, the
last day of each month of each year, commencing on the first such date to occur
after the Closing Date, and (ii) with respect to any Eurodollar Rate Loan, the
last day of each Interest Period applicable to such Loan; 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 future agreement,
interest rate option agreement, interest rate swap agreement, interest rate cap
agreement, interest rate collar
-15-
23
agreement, interest rate hedge agreement or other similar agreement or
arrangement designed to protect the Company or any of its Subsidiaries against
fluctuations in interest rates or under which the Company or any of its
Subsidiaries is a party or a beneficiary on the date of this Agreement or
becomes a party or a beneficiary thereafter.
"INTEREST RATE DETERMINATION DATE" means, with respect to any Interest
Period, the second Business Day prior to the first day of such Interest Period.
"INTERNAL REVENUE CODE" means the Internal Revenue Code of 1986, as
amended to the date hereof and from time to time hereafter.
"INVESTMENT" means with respect to any Person, any direct or indirect
advance, loan (other than advances to customers in the ordinary course of
business consistent with past practices that are recorded as accounts receivable
on the balance sheet of such Person or its Subsidiaries) or other extension of
credit or capital contribution by such Person to any other Person (by means of
any transfer of cash or other property to others or any payment for property or
services for the account or use of others; provided, that any transfer of
aircraft to a limited partnership or other entity in connection with the
transaction in which the aircraft are leased to the Company shall not be an
Investment), or any purchase or acquisition by such person of Capital Stock,
bonds, notes, debentures or other similar instruments issued by any other
Person; provided, that advances or loans by the Company to Holdings shall not
constitute an Investment.
"ISSUING BANK" means, on the Closing Date, the Initial Issuing Bank and
thereafter each Lender that becomes an Issuing Bank pursuant to subsection
9.1B(iii) (which such Lender (or such Lender's parent) shall have commercial
paper having a rating of at least A-1 from S&P or P-1 from Moody's or shall be
otherwise by approved by the Agent and the Company, such approvals not to be
unreasonably withheld or delayed) to which a Commitment to issue Letters of
Credit hereunder has been assigned pursuant to subsection 9.1B(iii), as issuer
of Letters of Credit.
"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.
"LETTER OF CREDIT" means each Standby Letter of Credit and Commercial
Letter of Credit that may be issued by the Issuing Bank under the terms of
subsection 2.9.
"LETTERS OF CREDIT USAGE" means, as of any date of determination, the sum
of (i) the maximum aggregate amount which is or at any time thereafter may
become available to be drawn under all Letters of Credit then outstanding (after
giving effect to all contingencies thereunder including, without limitation,
contingencies that increase the amount available to be drawn under
-16-
24
certain terms and conditions, without regard to whether such conditions have in
fact been satisfied and including any drafts drawn thereunder but not yet
honored) and (ii) the aggregate amount of all drawings under Letters of Credit
honored by the Issuing Bank and not theretofore reimbursed by the Company.
Letters of Credit Usage of each Lender shall be determined as if the Lenders had
bought the participations referred to in subsection 2.9A with respect to all
then outstanding Letters of Credit.
"LIEN" means any lien, mortgage, pledge, assignment, security interest,
charge, hypothecation, preference, priority, privilege, lease or encumbrance of
any kind (including any conditional sale or other title retention agreement, any
lease in the nature thereof, and any agreement to give any security interest);
provided, that neither negative pledges nor covenants to abstain from granting
liens on or security interests in assets of the Company or any of its
Subsidiaries shall constitute Liens.
"LOAN" or "LOANS" means one or more of the Revolving Loan or Letters of
Credit or any combination thereof.
"LOAN DOCUMENTS" means this Agreement, the Notes, the Environmental
Indemnity Agreement, the Security Agreements and any letter agreement between
the Company and the Agent establishing fees payable by the Company to the Agent
in connection with this Agreement.
"MAINTENANCE FACILITY" means an aircraft maintenance facility, all right,
title and interest of the Company in and to the real property on which the
maintenance facility is located and the other improvements on such real
property, in each case that have been made subject to the Lien of the
Maintenance Facility Security Agreement.
"MAINTENANCE FACILITY SECURITY AGREEMENT" means the Leasehold Deed of
Trust, Security Agreement, Assignment of Rents, Financing Statement and Fixture
Filing, dated as of December 12, 1997, by the Company to First American Title
Insurance Company, as Trustee for the Agent, as such Maintenance Facility
Security Agreement may be amended, restated, supplemented or otherwise modified
from time to time in accordance with the terms hereof and thereof.
"MARGIN STOCK" has the meaning assigned to that term in Regulation T, U or
X of the Board of Governors of the Federal Reserve System as in effect from time
to time.
"MOODY'S" means Xxxxx'x Investors Service, Inc.
"NET CASH PROCEEDS" means, with respect to any Asset Sale, the Cash
Proceeds of such Asset Sale, net of (i) brokerage commissions and other fees and
expenses (including fees and expenses of counsel and investment bankers) related
to such Asset Sale, (ii) provisions for all taxes payable as a result of such
Asset Sale without regard to the consolidated results of operations of the
Company and its Subsidiaries, take as a whole, (iii) payments made to repay
Indebtedness or any other obligation outstanding at the time of such Asset Sale
that either (A) is secured by a Lien on
-17-
25
the property or assets sold or (B) is required by its own terms to be paid as a
result of such Asset Sale, and (iv) appropriate amounts to be provided by the
Company or any Subsidiary of the Company as a reserve against any liabilities
associated with such Asset Sale, including, without limitation, pension and
other post-employment benefit liabilities, liabilities related to environmental
matters and liabilities under any indemnification obligations associated with
such Asset Sale, all as determined in conformity with GAAP.
"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 the Company on a consolidated basis determined in
conformity with GAAP.
"NON-US LENDER" has the meaning assigned to that term in subsection
2.7B(iii)(a).
"NOTES" means (i) the promissory notes of the Company issued pursuant to
subsection 2.1D and (ii) any promissory notes issued by the Company pursuant to
the last sentence of subsection 9.1B(i) in connection with assignments of the
Commitments and Revolving Loans of any Lenders, in each case substantially in
the form of Exhibit III annexed hereto, as they may be amended, supplemented or
otherwise modified from time to time.
"NOTICE OF BORROWING" means a notice substantially in the form of Exhibit
I annexed hereto delivered by the Company to the 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 the Company to the Agent pursuant
to subsection 2.2D with respect to a proposed conversion or continuation of the
applicable basis for determining the interest rate with respect to the Loans
specified therein.
"OBLIGATIONS" means all payment and performance obligations of every
nature of the Company from time to time owed to the Agent, the Lenders or any of
them under the Loan Documents, whether for principal, interest, fees, expenses,
indemnification or otherwise.
"OFFICER'S CERTIFICATE" means, as applied to any corporation, a
certificate executed on behalf of such corporation by its chairman of the board
(if an officer), president, one of its vice presidents, chief financial officer,
controller, treasurer or assistant treasurer or an assistant secretary; provided
that every Officer's Certificate with respect to the compliance with a condition
precedent to the making of any Loans hereunder shall include (i) a statement
that the officer acting in such capacity making or giving such Officer's
Certificate has read such condition and any definitions or other provisions
contained in this Agreement relating thereto, (ii) a statement that, in the
opinion of the signer, s/he has made or has caused to be made such examination
or investigation as is necessary to enable her/him to express an informed
opinion as to whether or not such condition has been complied with, and (iii) a
statement as to whether, in the opinion of the signer, such condition has been
complied with.
-18-
26
"OPERATING LEASE" means, as applied to any Person, any lease (including,
without limitation, leases that may be terminated by the lessee at any time) of
any property (whether real, personal or mixed) under which such Person is
Lessee, that is not a Capital Lease.
"OUTSTANDING AMOUNTS" means, as of any date of determination, the sum of
the then outstanding principal amount of the Loans and the Letters of Credit
Usage.
"PARTS COLLATERAL" has the meaning given such term in the Spare Parts
Security Agreement.
"PAYMENT RESTRICTION" means, with respect to a Subsidiary of any Person,
any encumbrance, restriction or limitation, whether by operation of the terms of
its charter or by reason of any agreement, instrument, judgment, decree, order,
statute, rule or governmental regulation, on the ability of (i) such Subsidiary
to (a) pay dividends or make other distributions on its Capital Stock or make
payments on any obligation, liability or Indebtedness owed to such Person or any
other Subsidiary of such Person, (b) make loans or advances to such Person or
any other Subsidiary of such Person, or (c) transfer any of its property or
assets to such Person or any other Subsidiary of such Person, or (ii) such
Person or any other Subsidiary of such Person to receive or retain any such (a)
dividend, distributions or payments, (b) loans or advances, or (c) property or
assets.
"PERMITTED CASH EQUIVALENTS" means, at any date of determination, (i)
certificates of deposit or bankers' acceptances maturing within one year after
such date and issued or accepted by the Agent and (ii) subject to agreement of
the Agent and the Company to mutually satisfactory custodial arrangements, other
Cash Equivalents (except that commercial paper described in clause (b)(iii) of
the definition of Cash Equivalents shall have a rating of at least A-1 from S&P
or P-1 from Moody's).
"PERMITTED ENCUMBRANCES" means the following types of Liens (other than
any such Lien imposed pursuant to Section 401(a)(29) or 412(n) of the Internal
Revenue Code or by ERISA) as applied to property not constituting Collateral:
(i) Liens for taxes, assessments or governmental charges or claims
the payment of which is either (a) not delinquent for a period of more
than 30 days or (b) subject to a good faith contest as set forth in
subsection 5.3(A);
(ii) statutory Liens of landlords and Liens of carriers, vendors,
warehousemen, repairmen, mechanics and materialmen and other Liens imposed
by law incurred in the ordinary course of business for sums either (a) not
delinquent for a period of more than 30 days or (b) being contested in
faith by appropriate proceedings that do not involve imminent danger of
the sale, forfeiture or loss of any Collateral, if such reserve or other
appropriate provision, if any, as shall required by GAAP shall have been
made therefor;
(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
-19-
27
to secure the performance of tenders, statutory obligations, surety and
appeal bonds, bids, leases, government contracts, trade contracts,
performance and return-of-money bonds, reimbursement obligations and
chargeback rights of Persons performing services for the Company or any of
its Subsidiaries and other similar obligations (exclusive of obligations
for the payment of borrowed money);
(iv) easements, rights-of-way, restrictions, minor defects,
encroachments or irregularities in title and other similar charges or
encumbrances not interfering in any material respect with the ordinary
conduct of the business of the Company or any of its Subsidiaries;
(v) Liens arising from filing effective Uniform Commercial Code
financing statements relating solely to leases not prohibited by this
Agreement;
(vi) Liens in favor of customs and revenue authorities arising as a
matter of law to secure payment of customs duties in connection with the
importation of goods;
(vii) Liens described in Schedule 6.2 annexed hereto;
(viii) Liens granted pursuant to the Security Agreements;
(ix) judgment and attachment Liens not giving rise to an Event of
Default;
(x) Liens on the assets of any entity or asset existing at the time
such entity is acquired by the Company or any Subsidiary, whether by
merger, consolidation, purchase of assets or otherwise; provided that such
Liens (i) are not created, incurred or assumed by such entity in
contemplation of such entity's being acquired by the Company or any
Subsidiary; (ii) do not extend to any other assets of the Company or any
Subsidiary; and (iii) the Indebtedness secured by such Lien is permitted
pursuant to this Agreement;
(xi) leases or subleases granted to others not interfering in any
material respect with the business of the Company or any Subsidiary;
(xii) any interest or title of a lessor in property subject to any
Capital Lease obligation or Operating Lease which, in each case, is not
prohibited under this Agreement (disregarding for this purpose subsection
6.2);
(xiii) Liens in favor of collecting or payor banks having a right of
setoff, revocation, refund or chargeback with respect to money or
instruments of the Company or any Subsidiary on deposit with or in
possession of such bank;
(xiv) any renewal of or substitution for any Lien permitted by any
of the preceding clauses; provided that the debt secured is not increased
nor the Lien extended to any additional assets; and
-20-
28
(xv) Liens of creditors of any Person to whom any of the Company's
assets are consigned for sale.
"PERMITTED LIEN" with respect to any Collateral, has the meaning given
such term in the Security Agreement to which such Collateral is subject.
"PERSON" means and includes natural persons, corporations, limited
partnerships, general partnerships, joint stock companies, limited liability
companies, Joint Ventures, associations, companies, trusts, banks, trust
companies, land trusts, business trusts or other organizations, whether or not
legal entities, and governments and agencies and political subdivisions thereof.
"PLAN" means any "employee benefit plan" as defined in Section 3(3) of
ERISA which is, or was at any time, maintained or contributed to by the Company
or any of its ERISA Affiliates, other than a multiemployer plan, within the
meaning of Section 4001(a)(3) of ERISA.
"POTENTIAL EVENT OF DEFAULT" means a condition or event that, after notice
or the passage of time or both, would constitute an Event of Default.
"PRICING CERTIFICATE" has the meaning assigned to that term in subsection
5.1(xvi).
"PRIME RATE" means the rate that The Industrial Bank of Japan, Limited,
announces from time to time as its prime lending rate at its New York City
office, as in effect from time to time. The Prime Rate is a reference rate and
does not necessarily represent the lowest or best rate actually charged to any
customer. The Industrial Bank of Japan, Limited or any Lender may make
commercial loans or other loans at rates of interest at, above or below the
Prime Rate.
"PRO FORMA BASIS" means, with respect to compliance with any covenant
hereunder, compliance with such covenant after giving effect to any proposed
incurrence of Indebtedness by the Company or any of its Subsidiaries and the
application of the proceeds thereof, the acquisition (whether by purchase,
merger or otherwise) or disposition (whether by sale, merger or otherwise) of
any company, entity or business or any asset by the Company or any of its
Subsidiaries or any other related action which requires compliance on a Pro
Forma Basis. In making any determination of compliance on a Pro Forma Basis,
such determination shall be performed after good faith consultation with the
Agent using the consolidated financial statements of the Company and its
Subsidiaries which shall be reformulated as if any such incurrence of
Indebtedness and the application of proceeds, acquisition, disposition or other
related action had been consummated at the beginning of the period specified in
the covenant with respect to which Pro Forma Basis compliance is required.
"PRO RATA SHARE" means, with respect to each Lender, the percentage
obtained by dividing the Revolving Loan Exposure of that Lender by the aggregate
Revolving Loan Exposure of all Lenders, as such percentage may be adjusted by
assignments permitted pursuant to subsection 9.1. The initial Pro Rata Share of
each Lender is set forth opposite the name of that Lender in Schedule 2.1
annexed hereto.
-21-
29
"PROCEEDINGS" has the meaning assigned to that term in subsection 5.1(x).
"REDEEMABLE STOCK" means any class or series of Capital Stock of any
Person that by its terms or otherwise (i) is required to be redeemed prior to
the Termination Date, (ii) may be required to be redeemed at the option of the
holder of such class or series of Capital Stock at any time prior to the
Termination Date, or (iii) is convertible into or exchangeable for Capital Stock
referred to in clause (i) or (ii) above or Indebtedness having a scheduled
maturity prior to the Termination Date; provided that any Capital Stock that
would not constitute Redeemable Stock but for provisions thereof offering
holders thereof the right to require the Company to repurchase or redeem such
Capital Stock upon the occurrence of an "asset sale" occurring prior to the
Termination Date shall not constitute Redeemable Stock if the asset sale
provisions contained in such Capital Stock specifically provide that in respect
of any particular asset sale proceeds, the Company will not repurchase or redeem
any such Capital Stock pursuant to such provisions prior to the Company's
permanent reduction of the aggregate Commitments of the Lenders by an amount at
least equal to such asset sale proceeds (net of associated taxes and transaction
costs).
"REFERENCE LENDERS" means the Agent, Citicorp USA, Inc. and Bankers Trust
Company.
"REFINANCING INDEBTEDNESS" means any Indebtedness of the Company or any of
its Subsidiaries issued in exchange for, or the net proceeds of which are
applied entirely to substantially concurrently repay, refinance, refund or
replace, outstanding Indebtedness of the Company or any of its Subsidiaries (the
"Refinanced Indebtedness"), to the extent such Indebtedness:
(a) is issued in a principal amount (or if such Indebtedness is
issued at an original issue discount, is issued at an original issue
price) not exceeding the outstanding principal amount (or, if such
Refinanced Indebtedness was issued at an original issue discount, not
exceeding the outstanding accreted principal amount) of such Refinanced
Indebtedness; and
(b) if the Refinanced Indebtedness is Indebtedness of the Company
and ranks by contract, by its terms or otherwise junior in right of
payment to the Obligations, (i) does not have a final scheduled maturity
and is not subject to any principal payments, including but not limited to
payments upon mandatory or optional redemption prior to the dates of
analogous payments under the Refinanced Indebtedness, and (ii) has
subordination provisions effective to subordinate such Indebtedness to the
Obligations at least to the extent that such Refinanced Indebtedness is
subordinated to the Obligations: and
(c) if the Refinanced Indebtedness is Indebtedness of the Company
which is pari passu in right of payment with the Obligations, (i) is pari
passu or subordinated in right of payment to the Obligations, (ii) does
not have a final scheduled maturity and is not subject to any principal
payments, including but not limited to, payments upon mandatory or
optional redemption, prior to the final scheduled maturity date of the
Refinanced
-22-
30
Indebtedness, and (iii) is not secured by any Lien on any property of the
Company or any Subsidiary in addition to Liens securing the Refinanced
Indebtedness.
"REGISTER" has the meaning assigned to that term in subsection 2.1.E.
"REGULATION D" means Regulation D of the Board of Governors of the Federal
Reserve System, as in effect from time to time.
"RELEASE" means any release, spill, emission, leaking, pumping, pouring,
injection, escaping, deposit, disposal, discharge, dispersal, dumping, leaching
or migration of Hazardous Materials into the indoor or outdoor environment
(including, without limitation, the abandonment or disposal of any barrels,
containers or other closed receptacles containing any Hazardous Materials), or
into or out of any Facilities, including the movement of any Hazardous Material
through the air, soil, surface water, groundwater or property.
"REPAIRABLE DAMAGE" with respect to any Borrowing Base Collateral (other
than Rotables) means any damage to such Borrowing Base Collateral the repair of
which is reasonably estimated by the Company to cost 50% or less of the Fair
Market Value of such Borrowing Base Collateral.
"REQUISITE LENDERS" means at any time Lenders owed or holding a majority
in interest of the aggregate Revolving Loan Exposure of all Lenders provided,
however, that if any Lender shall be a Defaulting Lender at such time, there
shall be excluded from the determination of Requisite Lenders at such time the
Revolving Loan Exposure attributable to such Defaulting Lender(s).
"RESPONSIBLE OFFICER" means, with respect to the Company, its controller,
treasurer, president or any vice president.
"RESTRICTED PAYMENT" means (i) any declaration or payment of dividends on
or making of any distributions in respect of the Capital Stock of the Company
(other than dividends or distributions payable solely in shares of Capital Stock
(other than Redeemable Stock) or in options, warrants, or other rights to
purchase Capital Stock (other than Redeemable Stock)) to holders of Capital
Stock of the Company, (ii) any purchase, redemption or other acquisition or
retirement for value (other than through the issuance solely of Capital Stock
(other than Redeemable Stock) or options, warrants or other rights to purchase
Capital Stock (other than Redeemable Stock)) of any Capital Stock or warrants,
rights (other than exchangeable or convertible Indebtedness of the Company not
prohibited under clause (iii) below) or options to acquire Capital Stock of the
Company; (iii) any redemption, repurchase, defeasance (including, but not
limited to, in substance or legal defeasance), or other acquisition or
retirement for value (other than through the issuance solely of Capital Stock
(other than Redeemable Stock) or warrants, rights or options to acquire Capital
Stock (other than Redeemable Stock)) (collectively, a "prepayment"), directly or
indirectly (including by way of amendment of the terms of any Indebtedness in
connection with any retirement or acquisition of such Indebtedness), other than
at any scheduled maturity thereof or by any
-23-
31
scheduled repayment or scheduled sinking fund payment, of any Indebtedness of
the Company which is subordinated in right of payment to the Obligations or
which matures after the Termination Date (except out of the proceeds of
Refinancing Indebtedness) and (iv) any advances or loans by the Company to
Holdings.
"REVOLVING LOAN EXPOSURE" means, with respect to any Lender as of any date
of determination prior to the termination of the Commitments, that Lender's
Commitment (whether used or unused).
"REVOLVING LOANS" means the Loans made by the Lenders to the Company
pursuant to subsection 2.1A(i) or 2.9C.
"ROTABLES" means Parts Collateral at Designated Locations.
"S&P" means Standard & Poor's Ratings Group, a division of McGraw Hill,
Inc.
"SECURITIES ACT" means the Securities Act of 1933, as amended from time to
time, and any successor statute.
"SECURITY AGREEMENTS" means the Aircraft Security Agreement, Spare Engine
Security Agreement, Cash and Cash Equivalent Security Agreement, Maintenance
Facility Security Agreement, and Spare Parts Security Agreement.
"SIMULATORS" means each Eligible Simulator from time to time subject to
the Lien of the Spare Engine Security Agreement.
"SOLVENT" means, with respect to any Person, that as of the date of
determination both (A) (i) the then fair saleable value of the property of such
Person is (y) greater than the total amount of liabilities (including contingent
liabilities) of such Person and (z) not less than the amount that will be
required to pay the probable liabilities on such Person's then existing debts as
they become absolute and matured considering all financing alternatives and
potential asset sales reasonably available to such Person; (ii) such Person's
capital is not unreasonably small in relation to its business or any
contemplated or undertaken transaction; and (iii) such Person does not intend to
incur, or believes that it will not incur, debts beyond its ability to pay such
debts as they become due; and (B) such Person is "solvent" within the meaning
given that term and similar terms under applicable laws relating to fraudulent
transfers and conveyances. For purposes of this definition, the amount of any
contingent liability at any time shall be computed as the amount that, in light
of all of the facts and circumstances existing at such time, represents the
amount that can reasonably be expected to become an actual or matured liability.
"SPARE ENGINE" means each Eligible Spare Engine from time to time subject
to the Lien of the Spare Engine Security Agreement.
-24-
32
"SPARE ENGINE SECURITY AGREEMENT" means the Spare Engine and Simulator
Security Agreement dated as of December 12, 1997, between the Company and the
Agent, as amended and supplemented as of the date hereof and as such Spare
Engine Security Agreement may be amended, restated, supplemented or otherwise
modified from time to time in accordance with the terms hereof and thereof.
"SPARE PARTS SECURITY AGREEMENT" means the Spare Parts Security Agreement
dated as of December 12, 1997, between the Company and the Agent, as amended and
supplemented as of the date hereof and as such Spare Parts Security Agreement
may be amended, restated, supplemented or otherwise modified from time to time
in accordance with the terms hereof and thereof.
"STAGE III AIRCRAFT" means each Eligible Stage III Aircraft that is an
Aircraft.
"STANDBY LETTER OF CREDIT" means any letter of credit or similar
instrument other than Commercial Letters of Credit.
"SUBSIDIARY" means, with respect to any Person, any corporation,
partnership, association, limited liability company, trust or estate, joint
venture or other business entity of which more than 50% of the issued and
outstanding shares of Voting Stock at the time of determination are owned or
controlled, directly or indirectly, by that Person or one or more of the other
Subsidiaries of that Person or a combination thereof.
"SYNDICATION AGENT" means Citicorp USA, Inc.
"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.
"TERMINATION DATE" means the earlier of the third anniversary of the
Closing Date and the date of the termination in whole of the Commitments
pursuant to Sections 2.4(B)(ii), 2.4(B)(iii)(2) or 7 hereof.
"TOTAL UTILIZATION OF COMMITMENTS" means, at any date of determination,
the sum of (i) the aggregate outstanding principal amount of all Revolving Loans
and (ii) the Letter of Credit Usage.
"TRADE PAYABLES" means, with respect to any Person, any accounts payable
or any other indebtedness or monetary obligation to trade creditors created,
assumed or Guaranteed by such Person or any of its Subsidiaries and arising in
the ordinary course or business in connection with the acquisition of goods or
services.
-25-
33
"UNITED STATES CITIZEN" has the meaning assigned to that term in
subsection 4.1B.
"VOTING STOCK" means any class or classes of Capital Stock pursuant to
which the holders thereof have the general voting power under ordinary
circumstances to vote for the election of directors, managers or trustees of any
Person (or Persons performing similar functions) irrespective of whether or not
at the time stock of any class or classes will have or might have such voting
power by the reason of the happening of any contingency.
"WHOLLY OWNED" denotes a Subsidiary all of the Voting Stock of which
(other than any director's qualifying shares or Investments by foreign nationals
mandated by applicable law) is owned directly or indirectly by the Company.
1.2 ACCOUNTING TERMS; UTILIZATION OF GAAP FOR PURPOSES OF
CALCULATIONS UNDER AGREEMENT.
Except as otherwise expressly provided in this Agreement, all accounting
terms not otherwise defined herein shall have the meanings assigned to them in
conformity with GAAP. Each reference to a consolidated balance sheet or other
financial statement of the Company shall, at any time or for any period during
which the Company has no Subsidiaries, be deemed to mean and refer to a balance
sheet or other financial statement of the Company alone.
1.3 OTHER DEFINITIONAL PROVISIONS.
References to "Sections" and "subsections" shall be to Sections and
subsections, respectively, of this Agreement unless otherwise specifically
provided. Any of the terms defined in subsection 1.1 may, unless the context
otherwise requires, be used in the singular or the plural, depending on the
reference.
SECTION 2.
AMOUNTS AND TERMS OF COMMITMENTS AND LOANS
2.1 COMMITMENTS; MAKING OF REVOLVING LOANS; NOTES; REGISTER.
A. COMMITMENTS. Subject to the terms and conditions of this Agreement and
in reliance upon the representations and warranties of the Company herein set
forth, each Lender hereby severally agrees to make the Revolving Loans all as
described in this subsection 2.1A.
(i) Revolving Loans. From and after the Closing Date, each Lender
severally agrees, subject to the conditions set forth in Section 3 and subject
to the limitations set forth below, to make Revolving Loans to the Company from
time to time during the period from the Closing Date to and including the
Termination Date in an aggregate amount, not exceeding its Pro Rata Share of the
aggregate amount of the Commitments to be used for the purposes identified in
subsection 2.5A. The amount of each Lender's Commitment on the date hereof is
-26-
34
set forth opposite its name on Schedule 2.1 annexed hereto and the aggregate
amount of the Commitments on the date hereof is $125,000,000, provided that: (1)
at no time shall the Total Utilization of Commitments exceed the least of (x)
$125,000,000, (y) the Borrowing Base at such time and (z) the aggregate
Commitments as such Commitments shall have been reduced from time to time
pursuant to subsections 2.4B(ii) and 2.4B(iii)(2); (2) the Commitments of
Lenders shall be adjusted to give effect to any assignments of the Commitments
pursuant to subsection 9.1B; and (3) the amount of the Commitments shall be
reduced from time to time by the amount of any reductions thereto made pursuant
to subsections 2.4B(ii) and 2.4B(iii)(2). Each Lender's Commitment shall expire
at 5:00 p.m. (New York time) on the Termination Date and all Revolving Loans and
all other amounts owed hereunder with respect to the Revolving Loans and the
Commitments shall be paid in full. Amounts borrowed under this subsection
2.1A(i) may be repaid and reborrowed to and including the Termination Date. On
or before the Termination Date, the Company shall provide cash collateral in the
amount of, and as security for, all outstanding Letters of Credit under
arrangements satisfactory in form and substance to the Issuing Bank and use its
best efforts to replace and terminate such Letters of Credit as soon thereafter
as possible.
B. BORROWING MECHANICS. Revolving Loans made on any Funding Date shall be
in an aggregate minimum amount of $3,000,000 in increments of $100,000 (except
for such lesser amounts as may be required pursuant to subsection 2.9C).
Whenever the Company desires that the Lenders make Revolving Loans it shall
deliver (which delivery may be made by telecopier, promptly followed by delivery
by overnight courier) to the Agent a Notice of Borrowing no later than 1:00 p.m.
(New York time) at least three Business Days in advance of the proposed Funding
Date (in the case of Eurodollar Rate Loans) or on the proposed Funding Date (in
the case of Base Rate Loans). The Notice of Borrowing shall specify (i) the
proposed Funding Date (which shall be a Business Day), (ii) the amount of
Revolving Loans requested, (iii) whether such Revolving Loans shall be Base Rate
Loans or Eurodollar Rate Loans and (iv) in the case of any loans requested to be
made as Eurodollar Rate Loans, the initial Interest Period requested therefor.
Revolving Loans may be continued as or converted into Base Rate Loans and
Eurodollar Rate Loans in the manner provided in subsection 2.2D.
Neither the Agent nor any Lender shall incur any liability to the Company
in acting upon any notice referred to above that Agent believes in good faith to
have been given by a Responsible Officer or other person authorized to borrow on
behalf of the Company or for otherwise acting in good faith under this
subsection 2.1B, and upon funding of Revolving Loans by the Lenders to the Agent
and the funding of such Revolving Loans by the Agent to the Company in
accordance with this Agreement pursuant to any such notice the Company shall
have effected the borrowing of Revolving Loans hereunder.
The Company shall notify the Agent prior to the funding of any Loans in
the event that any of the matters to which the 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 the Company of the proceeds of
any Revolving Loans shall constitute a re-certification by the
-27-
35
Company, as of the applicable Funding Date, as to the matters to which the
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 shall be irrevocable on and after the
related Interest Rate Determination Date, and the 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 the Lenders simultaneously and in proportion to their respective Pro
Rata Shares, it being understood that no Lender shall be responsible for any
default by any Defaulting Lender in that Defaulting Lender's obligation to make
a Revolving 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 Defaulting Lender in that Defaulting Lender's obligation to
make a Loan requested hereunder. Promptly after receipt by the Agent of a Notice
of Borrowing pursuant to subsection 2.1B, the Agent shall notify each Lender of
the proposed borrowing. Each Lender shall make the amount of its Revolving Loan
available to the Agent not later than 2:00 p.m. (New York time) on the
applicable Funding Date, in each case in same day funds in Dollars, at the
Funding and Payment Office. After the Agent's receipt of proceeds of the
Revolving Loans from the Lenders and satisfaction of the applicable conditions
precedent set forth in Section 3, the Agent shall make such proceeds available
to the Company on the applicable Funding Date by transferring same day funds
equal to such proceeds received by the Agent to the account of the Company
designated in writing by the Company to the Agent.
Unless the Agent shall have been notified by any Lender prior to the
Funding Date for any Revolving Loans that such Lender does not intend to make
available to the Agent the amount of such Lender's Revolving Loan requested on
such Funding Date, the Agent may assume that such Lender has made such amount
available to the Agent on such Funding Date and the Agent may, in its sole
discretion, but shall not be obligated to, make available to the Company a
corresponding amount on such Funding Date. If all or part of such corresponding
amount is not in fact made available to the Agent by such Lender, the Agent
shall be entitled to recover such Defaulted Amount on demand from such
Defaulting Lender together with interest thereon, for each day from such Funding
Date until the date such Defaulted Amount is paid to the Agent at the Federal
Funds Effective Rate for three Business Days, and thereafter at the Base Rate.
If such Defaulting Lender does not pay such Defaulted Amount forthwith upon the
Agent's demand therefor, the Agent shall promptly notify the Company and the
Company shall immediately pay such Defaulted Amount to the Agent together with
interest thereon, for each day from such Funding Date until the date such
Defaulted Amount is paid to the Agent, at the Base Rate. If such Lender pays to
the Agent the Defaulted Amount, such amount so paid shall constitute a Revolving
Loan, and the Agent shall promptly return to the Company such corresponding
amount in same day funds. Nothing in this subsection 2.1C shall be deemed to
relieve any Lender from its obligation to fulfill its Commitment hereunder or to
prejudice any rights that the Company may have against any Lender as a result of
any default by such Lender hereunder.
-28-
36
D. NOTES. On the Closing Date, the Company shall execute and deliver to
each Lender (or to the Agent for each Lender) a Note substantially in the form
of Exhibit III annexed hereto to evidence that Lender's Revolving Loans in the
principal amount of the lesser of the Commitment of such Lender or the amount of
Revolving Loans from time to time outstanding and evidenced thereby and with
other appropriate insertions.
E. THE REGISTER.
(i) The Agent shall maintain, at its address referred to in
subsection 9.8, a register for the registration of the names and addresses
of the Lenders and the Commitments and Loans of each Lender from time to
time (the "REGISTER"). The Register shall be available for inspection by
the Company or any Lender at any reasonable time and from time to time
upon reasonable prior notice.
(ii) The Agent shall record in the Register the Commitment and the
Revolving Loans from time to time of each Lender and each repayment or
prepayment in respect of the principal amount of the Revolving Loans. Any
such recordation shall be conclusive and binding on the Company and each
Lender, absent manifest error; provided that failure to make any such
recordation, or any error in such recordation, shall not affect the
Company's Obligations in respect of the applicable Loans.
(iii) Each Lender shall record on its internal records (including,
without limitation the applicable Notes held by such Lender) the amount of
each Revolving Loan made by it and each payment or other reduction in
respect thereof. Any such recordation shall be conclusive and binding on
the Company, absent manifest error; provided that failure to make any such
recordation, or any error in such recordation, shall not affect the
Company's Obligations in respect of the applicable Revolving 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) The Company, the Agent and the Lenders shall deem and treat the
Persons listed as Lenders in the Register as the holders and owners of the
corresponding Commitments and Revolving Loans listed therein for all
purposes hereof, and no assignment or transfer of any such Commitment or
Revolving Loans shall be effective, in each case unless and until an
Assignment Agreement effecting the assignment or transfer thereof shall
have been accepted by the Agent and recorded in the Register as provided
in subsection 9.1B(ii). Prior to such recordation, all amounts owed with
respect to the applicable Commitment, Revolving Loans 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.
2.2 INTEREST ON THE LOANS.
-29-
37
A. RATE OF INTEREST. Subject to the provisions of subsections 2.6 and 2.7,
each Revolving 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 Revolving Loan shall be selected by the 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 may be changed from time to time pursuant to subsection 2.2D. If
on any day a Revolving Loan is outstanding with respect to which notice has not
been delivered to the Agent in accordance with the terms of this Agreement
specifying the applicable basis for determining the rate of interest, then for
that day that Loan shall bear interest determined by reference to the Base Rate.
Subject to the provisions of subsection 2.2E and 2.7, each Revolving Loan
shall bear interest through maturity as follows:
(i) if a Base Rate Loan, then at a rate per annum equal to the sum
of the Base Rate plus the Applicable Margin; or
(ii) if a Eurodollar Rate Loan, then at a rate per annum equal to
the sum of the Adjusted Eurodollar Rate plus the Applicable Margin.
B. INTEREST PERIODS. In connection with each Eurodollar Rate Loan, the
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 the 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) each Interest Period shall commence on the day on which the
next preceding Interest Period expires;
(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
-30-
38
at the end of such Interest Period) shall, subject to clause (vii) of this
subsection 2.2B, end on the last Business Day of a calendar month;
(v) there shall be no more than ten (10) Interest Periods
outstanding at any time;
(vi) in the event the Company fails to specify an Interest Period
for any Eurodollar Rate Loan in the applicable Notice of Borrowing or
Notice of Conversion/Continuation, the Company shall be deemed to have
selected an Interest Period of one month; and
(vii) no Interest Period shall extend beyond the scheduled
Termination Date; .
C. INTEREST PAYMENTS. Subject to the provisions of subsection 2.2E,
interest on each Loan shall be payable in arrears on and to, but not including,
each Interest Payment Date applicable to that Loan, upon any prepayment of that
Loan (to the extent accrued on the amount being prepaid) and at maturity
(including final maturity).
D. CONVERSION OR CONTINUATION. Subject to the provisions of subsection
2.6, the Company shall have the option (i) to convert at any time all or any
part of its outstanding Revolving 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. A Eurodollar Rate Loan
converted into a Base Rate Loan on any day other than the last day of an
Interest Period applicable thereto shall be subject to breakage fees in
accordance with Section 2.6D.
The Company shall deliver a Notice of Conversion/Continuation to the Agent
no later than 12:00 noon (New York time) on the proposed conversion date (in the
case of a conversion to a Base Rate Loan) and at least three Business Days in
advance of the proposed conversion/continuation date (in the case of a
conversion to, or a continuation of, a Eurodollar Rate Loan). A Notice of
Conversion/Continuation shall specify (i) the proposed conversion/continuation
date (which shall be a Business Day), (ii) the amount and type of the Loan to be
converted/continued, (iii) the nature of the proposed conversion/continuation,
(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.
Neither the Agent nor any Lender shall incur any liability to the Company
in acting upon any notice referred to above that the Agent believes in good
faith to have been given by a duly authorized officer or other person authorized
to act on behalf of the Company or for otherwise acting in good faith under this
subsection 2.2D, and upon conversion or continuation of the applicable basis for
determining the interest rate with respect to any Revolving Loans in
-31-
39
accordance with this Agreement pursuant to any such notice the 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 shall be irrevocable on and after the related Interest Rate
Determination Date, and the Company shall be bound to effect a conversion or
continuation in accordance therewith.
E. DEFAULT RATE. Any amounts not paid when due hereunder or under any
other Loan Document, including, but not limited to, outstanding principal of a
Loan and, to the extent permitted by applicable law, any interest payments
thereon and any fees and other amounts, shall thereafter bear interest payable
upon demand from the date when due until the date of payment at a rate which is
2% per annum in excess of the interest rate otherwise payable under this
Agreement with respect to the applicable Loans (or, in the case of any such fees
and other amounts, at a rate which is 2% per annum in excess of the interest
rate otherwise payable under this Agreement for Base Rate Loans); provided that,
in the case of Eurodollar Rate Loans, upon the expiration of the Interest Period
in effect at the time any such increase in interest rate is effective such
Eurodollar Rate Loans shall thereupon become Base Rate Loans and shall
thereafter bear interest payable upon demand at a rate which is 2% per annum in
excess of the interest rate otherwise payable under this Agreement for Base Rate
Loans. Payment or acceptance of the increased rates of interest provided for in
this subsection 2.2E is not a permitted alternative to timely payment and shall
not constitute a waiver of any Event of Default or otherwise prejudice or limit
any rights or remedies of the Agent or any Lender.
F. COMPUTATION OF INTEREST. Interest on each Loan shall be computed on the
basis of a 360-day year, in each case for the actual number of days elapsed in
the period during which it accrues, unless such Loan is a Base Rate Loan with a
Base Rate based upon the Prime Rate, in which event interest shall be computed
on the basis of a year of 365 or 366 days, as the case may be, for the actual
number of days elapsed in the period during which it accrues. In computing
interest on any Loan, the date of the making of such Loan or the first day of an
Interest Period applicable to such Loan or, with respect to a Base Rate Loan
being converted from a Eurodollar Rate Loan, the date of conversion of such
Eurodollar Rate Loan to such Base Rate Loan, as the case may be, shall be
included, and the date of payment of such Loan or the expiration date of an
Interest Period applicable to such Loan or, with respect to a Base Rate Loan
being converted to a Eurodollar Rate Loan, the date of conversion of such Base
Rate Loan to such Eurodollar Rate Loan, as the case may be, shall be excluded
provided that if a Loan is repaid on the same day on which it is made, one day's
interest shall be paid on that Loan.
2.3 FEES.
A. COMMITMENT FEES. The Company agrees to pay to the Agent, for
distribution to each Lender in proportion to that Lender's Pro Rata Share,
commitment fees for the period from and including the Closing Date to and
excluding the Termination Date equal to the average of the daily excess of the
Commitments over the sum of the aggregate principal amount of
-32-
40
Revolving Loans outstanding and the Letter of Credit Usage multiplied by the
Commitment Fee Rate, 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 Closing Date, and ending on
the Termination Date; provided, however, that any commitment fee accrued with
respect to the Commitment of a Defaulting Lender during the period prior to the
time such Lender became a Defaulting Lender and unpaid at such time shall not be
payable by the Company so long as such Lender shall be a Defaulting Lender; and
provided further that no commitment fee shall accrue on any of the Commitment of
a Defaulting Lender so long as such Lender shall be a Defaulting Lender.
B. LETTER OF CREDIT FEES. The Company agrees to pay (i) the fee set forth
in subsection 2.9E(2) and (ii) the fee set forth in subsection 2.9E(1)(ii).
C. AGENT'S FEES. The Company and the Agent shall enter into one or more
letter agreements establishing administrative fees payable by the Company to the
Agent for its administrative services hereunder which fees shall be for the
account of the Agent and not the Lenders.
2.4 PREPAYMENTS AND REDUCTIONS IN COMMITMENTS; GENERAL PROVISIONS REGARDING
PAYMENTS
A. REPAYMENT OF PRINCIPAL AMOUNT OF REVOLVING LOANS . On the Termination
Date, the Company shall pay to the Agent for the account of the Lenders the
aggregate outstanding principal amount of all Revolving Loans, together with all
accrued and unpaid interest thereon and all fees and other amounts payable by
the Company under this Agreement.
B. PREPAYMENTS AND UNSCHEDULED REDUCTIONS IN COMMITMENTS.
(i) Voluntary Prepayments. The Company may, with respect to
Eurodollar Rate Loans, upon not less than three Business Days' prior
written notice given to the Agent by 12:00 noon (New York time) on the
date so required and, with respect to Base Rate Loans, upon prior written
notice given to the Agent by 12:00 noon (New York time) on the date of
prepayment, at any time and from time to time prepay, without premium or
penalty (other than pursuant to subsection 2.6D, if applicable), any
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 prior to the expiration date of the Interest Period applicable
thereto upon compliance with subsection 2.6D. Notice of prepayment having
been given as aforesaid, the principal amount of the Loans 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).
-33-
41
(ii) Voluntary Reductions of Commitments. The Company may, upon not
less than three Business Days' prior written notice to the Agent, 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 Commitments in an amount up to the amount by which the Commitments
exceed the Total Utilization of Commitments at the time of such proposed
termination or reduction (as reduced by the amount, if any, of any
voluntary prepayment of such outstanding Revolving Loans effected under
subsection 2.4B(i) on the date of such termination or reduction); provided
that any such partial reduction of the Commitments shall be in an
aggregate minimum amount of $3,000,000 (including any such partial
reduction resulting from any voluntary prepayment pursuant to subsection
2.4B(i) as aforesaid) and integral multiples of $100,000 in excess of that
amount. The Company's notice to the 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
Commitments shall be effective on the date specified in the Company's
notice and shall reduce the Commitment of each Lender proportionately to
its Pro Rata Share.
(iii) Mandatory Prepayments and Mandatory Reductions of Loans.
(1) Prepayments Due to Reductions in Borrowing Base.
(a) The Company shall from time to time prepay, without
premium or penalty (other than pursuant to subsection 2.6D),
amounts outstanding under the Commitments equal in the
aggregate to the amount of any Borrowing Base Deficiency at
such time. Such prepayment shall be effected by the Company
prepaying the outstanding principal of Revolving Loans in the
amount of such Borrowing Base Deficiency, provided, however,
that if such prepayment is insufficient to reduce the
Outstanding Amounts to the amount of the Borrowing Base,
concurrently therewith the Company shall also provide
collateral for any outstanding Letters of Credit by depositing
Cash or Permitted Cash Equivalents into the Cash Collateral
Account (which collateral when in the Cash Collateral Account
shall be includable in the Borrowing Base) in such additional
amounts as shall be sufficient to increase the Borrowing Base
to the Outstanding Amounts. Such prepayment (and collateral
arrangements, if any) shall be made not later than three (3)
Business Days following the delivery of (x) a regularly
scheduled monthly Borrowing Base Certificate delivered
pursuant to subsection 2.10D and/or subsection 2.4B(iii)(1)(c)
showing a Borrowing Base Deficiency or (y) an updated
Borrowing Base Certificate delivered pursuant to subsection
2.4B(iii)(1)(b), 2.4B(iii)(1)(d), 3.2A(ii) or 7.11 showing a
Borrowing Base Deficiency.
(b) In addition to any notice required by subsection
5.1(xii), if an event occurs that could reasonably be expected
to cause loss of or
-34-
42
substantial damage to Borrowing Base Collateral (excluding
Rotables) the Fair Market Value of which exceeds $5,000,000,
the Company shall deliver to the Agent a written notice within
three (3) Business Days after a Responsible Officer of the
Company obtains actual knowledge of such event. Such notice
shall identify the specific item(s) of such Borrowing Base
Collateral subject to such event of loss or damage, describe
the nature of the event of loss or damage and include an
estimate of whether such loss or damage can reasonably be
expected to exceed $10,000,000. As soon as it can reasonably
determine whether such event is an Event of Loss, Event of
Damage or Repairable Damage with respect to the affected
Borrowing Base Collateral but in any event not later than 60
days after the Company's notice with respect to such event,
the Company shall deliver to the Agent an updated Borrowing
Base Certificate in which the Company shall certify that such
event is either an Event of Loss, Event of Damage or
Repairable Damage, with respect to the item(s) of affected
Borrowing Base Collateral. If the Company fails to deliver
such updated Borrowing Base Certificate by such date, it shall
be deemed to have delivered an updated Borrowing Base
Certificate as provided in this subsection 2.4B(iii)(1)(b)
certifying that such event is an Event of Loss of the affected
Borrowing Base Collateral. Such updated Borrowing Base
Certificate shall exclude from the Borrowing Base any such
Borrowing Base Collateral subject to an Event of Loss, Event
of Damage or Repairable Damage, provided, however, that (1)
any such Borrowing Base Collateral other than the Maintenance
Facility that has suffered Repairable Damage shall not be
excluded if (A) such Repairable Damage is covered by insurance
which will pay proceeds in at least the amount of the repair
costs (net of any permitted self-insurance and deductibles)
and the Agent is the loss payee of such insurance pursuant to
the terms of the relevant Security Agreement, each as
certified by the Company in the updated Borrowing Base
Certificate and (B) the Company elects to repair such
Borrowing Base Collateral as certified in the updated
Borrowing Base Certificate and (2) Borrowing Base Collateral
comprising the Maintenance Facility that has suffered
Repairable Damage shall not be excluded and the Borrower shall
repair the Maintenance Facility unless (A) the cost of such
repair is likely to exceed $10,000,000 as reasonably estimated
by the Company, as certified by the Company in such updated
Borrowing Base Certificate, or by the Agent (following
consultation, in the case of the Agent, with an Approved
Appraiser) by notice delivered by the Agent to the Company and
(B) the Repairable Damage is not covered by insurance which
will pay proceeds to the Agent, as loss payee, in at least the
amount of the repair costs (net of any permitted
self-insurance and deductibles), as certified by the Company
in such updated Borrowing Base Certificate. If such updated
Borrowing Base Certificate shows a Borrowing Base
-35-
43
Deficiency, the Company shall make a prepayment (and/or
provide collateral) as provided in subsection 2.4B(iii)(1)(a).
(c) If an event occurs that could reasonably be expected
to cause loss of or substantial damage to Borrowing Base
Collateral (excluding Rotables) the Fair Market Value of which
is equal to or less than $5,000,000, the Company shall report
such event in the first regularly scheduled monthly Borrowing
Base Certificate delivered pursuant to subsection 2.10D
following actual knowledge of such event by a Responsible
Officer of the Company. Such Borrowing Base Certificate shall
identify the specific item(s) of Borrowing Base Collateral
subject to such event of loss or damage, and describe the
event of loss or damage. The Company shall determine whether
such event is an Event of Loss, Event of Damage or Repairable
Event with respect to the affected Borrowing Base Collateral
as soon as reasonably practicable and shall so certify in the
next succeeding monthly Borrowing Base Certificate if possible
but, in any event, not later than the second next succeeding
monthly Borrowing Base Certificate, provided, however, that
the failure to so certify in such second succeeding Borrowing
Base Certificate shall be deemed to be a certification by the
Company in such certificate that such event is an Event of
Loss of the affected Borrowing Base Collateral. The Borrowing
Base Certificate that makes such certification shall exclude
from the Borrowing Base any Borrowing Base Collateral subject
to an Event of Loss, Event of Damage or Repairable Damage,
provided, however, that Borrowing Base Collateral that has
suffered Repairable Damage shall not be excluded if (A) such
Borrowing Base Collateral is covered by insurance which will
pay proceeds in at least the amount of the repair costs (net
of any permitted self-insurance or deductibles) and the Agent
is the loss payee of such insurance pursuant to the terms of
the relevant Security Agreement, each as certified by the
Company in such Borrowing Base Certificate, and (B) the
Company elects to repair such Borrowing Base Collateral as
certified in such Borrowing Base Certificate. If such
Borrowing Base Certificate shows a Borrowing Base Deficiency,
the Company shall make a prepayment (and/or provide
collateral) as provided in subsection 2.4B(iii)(1)(a).
(d) If an event occurs that could reasonably be expected
to cause an Adjustment Event (as reasonably determined by the
Company), the Company shall deliver to the Agent a written
notice within three (3) Business Days after a Responsible
Officer of the Company obtains actual knowledge of such event.
Such notice shall identify the location and type (to the
extent reasonably possible) of the affected Rotables, describe
the event of loss or damage and include an estimate of whether
such loss or damage can reasonably be expected to exceed
$10,000,000. As soon as it
-36-
44
can reasonably determine whether such event is an Adjustment
Event but in any event not later than 60 days after the
Company's notice of such event, the Company shall deliver to
the Agent an updated Borrowing Base Certificate in which the
Company shall certify whether or not such event is an
Adjustment Event. If the Company fails to deliver such updated
Borrowing Base Certificate by such date, it shall be deemed to
have delivered an updated Borrowing Base Certificate
certifying that such event is an Adjustment Event of the
affected Rotables. If such updated Borrowing Base Certificate
certifies that an Adjustment Event has occurred, it shall
exclude from the Borrowing Base the book value of the Rotables
subject to the Adjustment Event and shall specify the amount
of such book value excluded for purposes of calculating the
Borrowing Base Value of the Rotables. If such updated
Borrowing Base Certificate certifies that an Adjustment Event
has not occurred, it shall make an appropriate adjustment in
the book value of the affected Rotables, as certified in such
Borrowing Base Certificate, to take into account the loss or
damage to the affected Rotables and shall specify the amount
of such adjustment for purposes of calculating the Borrowing
Base Value of the Rotables. (For the avoidance of doubt, the
Company shall make or not make adjustments to the book value
of Rotables subject to events of loss or damage not covered by
this subsection 2.4B(iii)(1)(d) in accordance with its normal
accounting procedures as applied without regard to the
procedures established in this subsection). If such updated
Borrowing Base Certificate shows a Borrowing Base Deficiency,
the Company shall make a prepayment (and/or provide
collateral) as provided in subsection 2.4B(iii)(1)(a).
(e) If either (A) a notice of loss or damage delivered
by the Company pursuant to subsection 2.4B(iii)(1)(b) or (d)
estimates that the applicable loss or damage can reasonably be
expected to exceed $10,000,000 or (B) following receipt of
notice of loss or damage pursuant to such subsection and
consultation with an Approved Appraiser, the Agent reasonably
estimates that such loss or damage can reasonably be expected
to exceed $10,000,000 and so notifies the Company, the
affected Borrowing Base Collateral shall be excluded from the
Borrowing Base on an interim basis until delivery of an
updated Borrowing Base Certificate pursuant to subsection
2.4B(iii)(1)(b) or (d) determines whether such exclusion shall
be permanent, provided, however, that such interim exclusion
shall be reversed and not applied in the calculation of any
Borrowing Base Deficiency requiring any prepayment under this
Agreement and shall be solely for purposes of determining
whether the Borrowing Base is sufficient to support the making
of additional Revolving Loans or the issuance of Letters of
Credit pursuant to the terms of this Agreement.
-37-
45
(f) If the Company elects to repair any Borrowing Base
Collateral (other than the Maintenance Facility) subject to
Repairable Damage and so certifies in any Borrowing Base
Certificate or, in the case of the Maintenance Facility only,
is required to repair Repairable Damage to the Maintenance
Facility, the Company shall complete such repair as soon as
reasonably practicable.
(g) In any Borrowing Base Certificate delivered as
provided in subsection 2.4B(iii)(1)(b) or (c) which requires
the exclusion of any Borrowing Base Collateral pursuant to the
terms of such subsection, the Company may also request the
release of the Lien of the Security Agreement to which such
Borrowing Base Collateral is subject and, provided that no
Potential Event of Default or Event of Default then exists, as
certified by the Company in such Borrowing Base Certificate,
and any Borrowing Base Deficiency certified in such Borrowing
Base Certificate is timely paid and additional Collateral (if
any) is provided as required by subsection 2.4B(iii)(1)(a),
the Agent shall release such Lien on such Borrowing Base
Collateral simultaneously with the satisfaction of the
conditions contained in this subsection 2.4B(iii)(1)(g) by
executing and delivering such releases as may be reasonably
requested by the Company.
(2) Prepayments and Termination of Commitments Due to Change
of Control. Within five Business Days after the occurrence of a
Change of Control, the Company will notify the Agent of such Change
of Control (the giving of such notice not being a prerequisite to
the Agent's giving its notice as provided in this subsection
2.4B(iii)(2)). The Agent shall, upon receipt of the notice from the
Company required by the preceding sentence, give the Company and the
Lenders notice delivered not more than 60 (sixty) days following the
occurrence of a Change of Control or, if later, not more than 60
(sixty) days following delivery of the notice set forth in the
immediately preceding sentence, except as provided in the last
sentence of this subsection 2.4B(iii)(2), that (A) the Company will
be required to prepay all amounts outstanding under the Commitments
on a date specified by the Agent in such notice (which shall be not
less than ten (10) days after the date of delivery of such notice)
and (B) the Lenders' Commitments to make Loans and issue Letters of
Credit shall terminate on the date so specified by the Agent. On the
date specified in such notice, except as provided in the last
sentence of this subsection 2.4B(iii)(2), the Company shall (A) pay
all outstanding principal and interest on all Loans and all other
fees and amounts payable under any Loan Document, including, without
limitation, with respect to Letter of Credit Usage, and (B) provide
cash collateral in the amount of, and as security for, all
outstanding Letters of Credit under arrangements satisfactory in
form and substance to the Issuing Bank and use its best efforts to
replace and terminate such Letters of Credit as soon thereafter as
possible. Notwithstanding
-38-
46
the foregoing terms of this subsection 2.4B(iii)(2), by notice to
the Company and the Agent within five Business Days after receipt by
a Lender of a notice by the Agent as provided in this clause, such
Lender may elect not to have its portion of the Commitments prepaid
as provided in this clause, in which case such portion shall not be
prepaid nor its Commitment terminated and its Pro Rata Share shall
be adjusted in relationship to the other remaining outstanding
Commitments, provided, however, that if the Commitment of the
Issuing Bank has been so terminated, all outstanding Letters of
Credit shall be cash collateralized or terminated and replaced as
provided in clause (B) of the preceding sentence of this subsection
2.4B(iii)(2).
(iv) Application of Prepayments.
(a) Application of Voluntary Prepayments. Any voluntary
prepayments pursuant to subsection 2.4B(i) shall be applied ratably
among the Notes.
(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.
(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 the
Company pursuant to subsection 2.6D.
C. GENERAL PROVISIONS REGARDING PAYMENTS.
(i) Manner and Time of Payment. All payments by the Company of
principal, interest, fees and other Obligations hereunder and under the
Notes shall be made in Dollars in same day funds, without defense, set-off
or counterclaim, free of any restriction or condition, and delivered to
the Agent not later than 2:00 p.m. (New York time) on the date due at the
Funding and Payment Office for the account of Lenders; funds received by
the Agent after that time on such due date shall be deemed to have been
paid by the Company on the next succeeding Business Day.
(ii) Application of Payments to Principal and Interest. All payments
in respect of the principal amount of any Loan shall include payment of
accrued interest on the principal amount being repaid or prepaid, and all
such payments shall be applied to the payment of interest before
application to principal.
(iii) Apportionment of Payments. Except as otherwise provided in
subsection 2.4B(iii)(2), aggregate principal and interest payments in
respect of Revolving Loans shall be apportioned among all outstanding
Loans to which such payments relate, in each
-39-
47
case proportionately to each Lender's respective Pro Rata Share. The Agent
shall promptly distribute to each Lender, at its primary address set forth
below its name on the appropriate signature page hereof or at such other
address as such Lender may request, its Pro Rata Share of all such
payments received by the Agent and the commitment fees of such Lender when
received by the 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, the
Agent shall give effect thereto in apportioning payments received
thereafter.
(iv) Payments on Business Days. Whenever any payment to be made
hereunder shall be stated to be due on a day that is not a Business Day,
such payment shall be made on the next succeeding Business Day and such
extension of time shall be included in the computation of the payment of
interest hereunder or of the commitment and Letter of Credit 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 the 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. GENERAL CORPORATE PURPOSES. The proceeds of Revolving Loans shall be
used by the Company for its general corporate purposes.
B. MARGIN REGULATIONS. No portion of the proceeds of any borrowing under
this Agreement shall be used by the Company or any of its Subsidiaries in any
manner that might cause the borrowing or the application of such proceeds to
violate Regulation U, Regulation T or Regulation X of the Board of Governors of
the Federal Reserve System or any other regulation of such Board or to violate
Section 7(c) of the Exchange Act, in each case as in effect on the date or dates
of such borrowing and such use of proceeds.
2.6 SPECIAL PROVISIONS GOVERNING EURODOLLAR RATE LOANS.
Notwithstanding any other provision of this Agreement to the contrary, the
following provisions shall govern with respect to Eurodollar Rate Loans as to
the matters covered:
-40-
48
A. DETERMINATION OF APPLICABLE INTEREST RATE. As soon as practicable after
1:00 p.m. (New York time) on each Interest Rate Determination Date, the Agent
shall determine (which determination shall, absent manifest error, be final,
conclusive and binding upon all parties) the interest rate that shall apply to
the Eurodollar Rate Loans for which an interest rate is then being determined
for the applicable Interest Period and shall promptly give notice thereof (in
writing or by telephone confirmed in writing) to the Company and each Lender.
B. INABILITY TO DETERMINE APPLICABLE INTEREST RATE. In the event that the
Agent shall have determined (which determination shall be final and conclusive
and binding upon all parties hereto), on any Interest Rate Determination Date
with respect to any Eurodollar Rate Loans, that by reason of circumstances
affecting the interbank Eurodollar market adequate and fair means do not exist
for ascertaining the interest rate applicable to such Loans on the basis
provided for in the definition of Adjusted Eurodollar Rate, the Agent shall on
such date give notice by telefacsimile to the Company and each Lender of such
determination, whereupon (i) no Loans may be made as, or converted to,
Eurodollar Rate Loans until such time as the Agent notifies the Company and
Lenders that the circumstances giving rise to such notice no longer exist and
(ii) any Notice of Borrowing or Notice of Conversion/Continuation given by the
Company with respect to the Loans in respect of which such determination was
made shall be deemed to be rescinded by the Company.
C. ILLEGALITY OR IMPRACTICABILITY OF EURODOLLAR RATE LOANS. In
the event that on any date any Lender shall have determined (which determination
shall be final and conclusive and binding upon all parties hereto but shall be
made only after consultation with the Company and the Agent) that the making,
maintaining or continuation of its Eurodollar Rate Loans (i) has become unlawful
as a result of compliance by such Lender in good faith with any law, treaty,
governmental rule, regulation, guideline or order (or would conflict with any
such treaty, governmental rule, regulation, guideline or order enacted, entered
into or promulgated after the date of this Agreement not having the force of law
even though the failure to comply therewith would not be unlawful) or (ii) has
become impracticable, or would cause such Lender material hardship, as a result
of contingencies occurring after the date of this Agreement which materially and
adversely affect the interbank Eurodollar market or the position of such Lender
in that market, then, and in any such event, such Lender shall be an "AFFECTED
LENDER" and it shall on that day give notice (by telefacsimile) to the Company
and the Agent of such determination (which notice the Agent shall promptly
transmit to each other Lender). Thereafter (a) the obligation of the Affected
Lender to 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 the Company pursuant to a Notice of Borrowing
or a Notice of Conversion/Continuation, 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
-41-
49
Rate Loans on the date of such termination. Notwithstanding the foregoing, to
the extent a determination by an Affected Lender as described above relates to a
Eurodollar Rate Loan then being requested by the Company pursuant to a Notice of
Borrowing or a Notice of Conversion/Continuation, the 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) to the Agent of such rescission on the date on which
the Affected Lender gives notice of its determination as described above (which
notice of rescission the Agent shall promptly transmit to each other Lender).
Except as provided in the immediately preceding sentence, nothing in this
subsection 2.6C shall affect the obligation of any Lender other than an Affected
Lender to make or maintain Loans as, or to convert Loans to, Eurodollar Rate
Loans in accordance with the terms of this Agreement.
In the event any Affected Lender shall give a notice to the Company
pursuant to this subsection 2.6C, the Company may give notice to such Lender
(with copies to the Agent) that it wishes to seek one or more Eligible Assignees
to assume the Commitments of such Lender and to purchase its outstanding Loans,
Obligations and Notes. Each Lender giving a notice to the Company pursuant to
this subsection 2.6C agrees to sell its Commitments, Loans, Obligations, Notes
and interest in this Agreement and the other Loan Documents pursuant to
subsection 9.1B to any such Eligible Assignee for an amount equal to the sum of
the outstanding unpaid principal of and accrued interest on such Loans,
Obligations and Notes plus all other fees and amounts due such Lender hereunder
calculated, in each case, to the date such Commitment, Loans, Obligations, Notes
and interest are purchased, whereupon such Lender shall have no further
Commitment hereunder.
D. COMPENSATION FOR BREAKAGE OR NON-COMMENCEMENT OF INTEREST PERIODS. The
Company shall compensate each Lender, upon written request by that Lender (which
request shall set forth the basis for requesting such amounts), for all
reasonable losses, expenses and liabilities (including, without limitation, any
interest paid by that Lender to lenders of funds borrowed by it to 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 conversion to or continuation
of any Eurodollar Rate Loan does not occur on a date specified therefor in a
Notice of Conversion/Continuation, (ii) if any prepayment or other principal
payment or any conversion of any of its Eurodollar Rate Loans occurs on a date
prior to the last day of an Interest Period applicable to that Loan, (iii) if
any prepayment of any of its Eurodollar Rate Loans is not made on any date
specified in a notice of prepayment given by the Company, or (iv) as a
consequence of any other default by the Company in the repayment of its
Eurodollar Rate Loans when required by the terms of this Agreement.
E. BOOKING OF EURODOLLAR RATE LOANS. Any Lender may make, carry or
transfer Eurodollar Rate Loans at, to, or for the account of any of its branch
offices or the office
-42-
50
of an Affiliate of that Lender; provided that such action does not increase the
Company's liability under subsection 2.7.
F. ASSUMPTIONS CONCERNING FUNDING OF EURODOLLAR RATE LOANS.
Calculation of all amounts payable to a Lender under this subsection 2.6 and
under subsection 2.7A shall be made as though that Lender had actually funded
each of its relevant Eurodollar Rate Loans through the purchase of a Eurodollar
deposit bearing interest at the rate obtained pursuant to clause (i) of the
definition of Adjusted Eurodollar Rate in an amount equal to the amount of such
Eurodollar Rate Loan and having a maturity comparable to the relevant Interest
Period and through the transfer of such Eurodollar deposit from an offshore
office of that Lender to a domestic office of that Lender in the United States
of America; provided, however, that each Lender may fund each of its Eurodollar
Rate Loans in any manner it sees fit and the foregoing assumptions shall be
utilized only for the purposes of calculating amounts payable under this
subsection 2.6 and under subsection 2.7A.
G. EURODOLLAR RATE LOANS AFTER DEFAULT. After the occurrence of and
during the continuation of a Potential Event of Default or an Event of Default,
(i) the Company may not elect to have a Revolving 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 the Company with respect to a requested borrowing or
conversion/continuation that has not yet occurred shall be deemed to be
rescinded by the Company.
2.7 INCREASED COSTS; TAXES; CAPITAL ADEQUACY.
A. COMPENSATION FOR INCREASED COSTS AND TAXES. Subject to the
provisions of subsection 2.7B, in the event that any Lender shall determine
(which determination shall, absent manifest error, be final and conclusive and
binding upon all parties hereto) that any law, treaty or governmental rule,
regulation or order, or any change therein or in the interpretation,
administration or application thereof (including the introduction of any new
law, treaty or governmental rule, regulation or order), or any determination of
a court or governmental authority, in each case that becomes effective after the
date hereof, or compliance by such Lender with any guideline, request or
directive issued or made after the date hereof by any central bank or other
governmental or quasi-governmental authority (whether or not having the force of
law):
(i) subjects such Lender (or its applicable lending office) to any
additional Tax (other than any Tax on the overall net income of such
Lender) with respect to this Agreement or any of its obligations hereunder
or any payments to such Lender (or its applicable lending office) of
principal, interest, fees or any other amount payable hereunder;
-43-
51
(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, the Company shall promptly pay to such
Lender, upon receipt of the statement referred to in the next sentence, such
additional amount or amounts (in the form of an increased rate of, or a
different method of calculating, interest or otherwise as such Lender in its
sole discretion shall determine) as may be necessary to compensate such Lender
for any such increased cost or reduction in amounts received or receivable
hereunder. Such Lender shall deliver to the Company (with a copy to the Agent) a
written statement, setting forth in reasonable detail the basis for calculating
the additional amounts owed to such Lender under this subsection 2.7A, which
statement shall be conclusive and binding upon all parties hereto absent
manifest error.
B. WITHHOLDING OF TAXES.
(i) Payments to Be Free and Clear. All sums payable by the Company
under this Agreement and the other Loan Documents shall be paid free and
clear of and (except to the extent required by law) without any deduction
or withholding on account of any Tax (other than a Tax on the overall net
income of any Lender or tax in lieu thereof) imposed, levied, collected,
withheld or assessed by any governmental authority, domestic or foreign.
(ii) Grossing-up of Payments. If the Company or any other Person is
required by law to make any deduction or withholding on account of any
such Tax from any sum paid or payable by the Company to the Agent or any
Lender under any of the Loan Documents:
(a) the Company shall notify the Agent or such Lender of any
such requirement or any change in any such requirement as soon as the
Company becomes aware of it;
(b) the Company shall remit any such Tax before the date on
which penalties attach thereto, such remittance to be made (if the
liability is imposed on the
-44-
52
Company) for its own account or (if that liability is imposed on the Agent
or such Lender, as the case may be) on behalf of and in the name of the
Agent or such Lender;
(c) the sum payable by the Company in respect of which the
relevant deduction, withholding or payment is required shall be increased
to the extent necessary to ensure that, after the making of that
deduction, withholding or payment, the Agent or such Lender, as the case
may be, receives on the due date a net sum equal to what it would have
received had no such deduction, withholding or payment been required or
made; and
(d) within 30 days after paying any sum from which it is
required by law to make any deduction or withholding, and within 30 days
after the due date of remittance of any Tax which it is required by clause
(b) above to remit, the Company shall deliver to the Agent evidence
satisfactory to the other affected parties of such deduction, withholding
or payment and of the remittance thereof to the relevant taxing or other
authority.
(iii) Evidence of Exemption from U.S. Withholding Tax.
(a) Each Lender that is organized under the laws of any
jurisdiction other than the United States or any state or other political
subdivision thereof (for purposes of this subsection 2.7B(iii), a "NON-US
LENDER") shall deliver to the Agent for transmission to the Company, on or
prior to the Closing Date (in the case of each Lender listed on the
signature pages hereof) or on the date of the Assignment Agreement
pursuant to which it becomes a Lender (in the case of each other Lender),
and at such other times as may be necessary in the determination of the
Company or the Agent (each in the reasonable exercise of its discretion),
(1) two original copies of Internal Revenue Service Form 1001 or 4224 (or
any successor forms), 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 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.
-45-
53
(b) Each Lender required to deliver any forms, certificates or
other evidence with respect to United States federal income tax
withholding matters pursuant to subsection 2.7B(iii)(a) hereby agrees
that, from time to time after the initial delivery by such Lender of such
forms, certificates or other evidence, whenever a lapse in time or change
in circumstances renders such forms, certificates or other evidence
obsolete or inaccurate in any material respect, such Lender shall (l)
deliver to the Agent for transmission to the Company two new original
copies of Internal Revenue Service Form 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 the Agent and the Company of its inability to deliver
any such forms, certificates or other evidence.
(c) The Company shall not be required to pay any additional
amount to any Non-US lender under clause (c) of subsection 2.7B(ii) if
such Lender shall have failed to satisfy the requirements of subsection
2.7B(iii)(a); provided that if such Lender shall have satisfied such
requirements on the Closing Date (in the case of each Lender listed on the
signature pages hereof) or on the date of the Assignment Agreement
pursuant to which it became a Lender (in the case of each other Lender),
nothing in this subsection 2.7B(iii)(c) shall relieve the Company of its
obligation to pay any additional amounts pursuant to clause (c) of
subsection 2.7B(ii) in the event that, as a result of any change in any
applicable law, treaty or governmental rule, regulation or order, or any
change in the interpretation, administration or application thereof, such
Lender is no longer properly entitled to deliver forms, certificates or
other evidence at a subsequent date establishing the fact that such Lender
is not subject to withholding as described in subsection 2.7B(iii)(a).
C. CAPITAL ADEQUACY ADJUSTMENT. If any Lender shall have determined that
the adoption, effectiveness, phase-in or applicability after the date hereof of
any law, rule or regulation (or any provision thereof) regarding capital
adequacy, or any change therein or in the interpretation or administration
thereof by any governmental authority, central bank or comparable agency charged
with the interpretation or administration thereof, or compliance by any Lender
(or its applicable lending office) with any guideline, request or directive
regarding capital adequacy (whether or not having the force of law) of any such
governmental authority, central bank or comparable agency, has or would have the
effect of reducing the rate of return on the capital of such Lender or any
corporation controlling such Lender as a consequence of, or with reference to,
such Lender's Loans or 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 the Company from such Lender of
the statement referred to in the next sentence, the Company shall pay to such
Lender such
-46-
54
additional amount or amounts as will compensate such Lender or such controlling
corporation on an after-tax basis for such reduction. Such Lender shall deliver
to the Company (with a copy to the Agent) a written statement, setting forth in
reasonable detail the basis of the calculation of such additional amounts, which
statement shall be conclusive and binding upon all parties hereto absent
manifest error.
D. SUBSTITUTE LENDERS. In the event the Company is required under the
provisions of this subsection 2.7 to make payments in a material amount to any
Lender or in the event any Lender fails to lend to the Company or participate in
any Letter of Credit and any drawing thereunder in accordance with this
Agreement, the Company may, so long as no Event of Default or Potential Event of
Default shall have occurred and be continuing, elect to terminate such Lender as
a party to this Agreement; provided that, concurrently with such termination,
(i) the Company shall pay that Lender all principal, interest and fees and other
amounts (including without limitation, amounts, if any, owed under this
subsection 2.7) owed to such Lender through such date of termination, (ii)
either the Company shall elect to reduce the Commitment by such Lender's portion
thereof or an Eligible Assignee 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 such Lender to be terminated as of such date, and
(iii) all documents and supporting materials necessary, in the judgment of the
Agent (or if the Agent is also the Lender to be terminated, the successor Agent)
to evidence the substitution of such Lender (if applicable) shall have been
received and approved by the 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 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 the Company agrees to pay all
incremental expenses incurred by such Lender as a result of utilizing such other
lending office as described in clause (i) above. A certificate as to the amount
of any such expenses payable by the Company pursuant to this subsection 2.8
(setting forth in reasonable
-47-
55
detail the basis for requesting such amount) submitted by such Lender to the
Company (with a copy to the Agent) shall be conclusive absent manifest error.
2.9 LETTERS OF CREDIT.
A. Subject to the terms and conditions of this Agreement and in reliance
upon the representations and warranties set forth herein, in addition to
requesting that Lenders make Revolving Loans, the Company may request, in
accordance with the provisions of this subsection 2.9, that the Issuing Bank
issue Letters of Credit for the account of the Company (alone, or with one or
more Subsidiaries); provided that (i) in no event shall the Issuing Bank issue
(a) any Standby Letter of Credit having an expiration date more than the earlier
of (A) 2 years after its date of issuance and (B)10 Business Days before the
scheduled Termination Date or (b) any Commercial Letter of Credit having an
expiration date more than the earlier of (A) 180 days after its date of issuance
and (B) 30 days before the scheduled Termination Date and (ii) the Issuing Bank
will not issue any Letter of Credit (a) on or after the Termination Date or (b)
if, after giving effect to such issuance, the Letters of Credit Usage would
exceed $20,000,000 or the Total Utilization of Commitments would exceed the
least of (x) $125,000,000, (y) the Borrowing Base and (z) the aggregate amount
of the Commitments, as such Commitments shall have been reduced from time to
time pursuant to subsection 2.4B(ii). The Company shall, if such Letter of
Credit is issued, be an account party in respect of such Letter of Credit. The
issuance of any Letter of Credit shall require the satisfaction of each
condition set forth in Section 3. All Letters of Credit shall be in U.S. dollars
and payable at sight.
Immediately upon the issuance of each Letter of Credit, each Lender with a
Commitment shall be deemed to, and hereby agrees to, have irrevocably purchased
from the Issuing Bank a participation in such Letter of Credit and any drawing
thereunder in an amount equal to such Lender's Pro Rata Share of the maximum
amount which is or at any time may become available to be drawn thereunder.
If an Event of Default has occurred and is continuing, the Company shall
deposit funds in a segregated account with the Issuing Bank to secure payment to
the beneficiaries thereof of the maximum amount available to be drawn (after
giving effect to all contingencies under such Letters of Credit including,
without limitation, contingencies that increase the amount available to be drawn
under certain terms and conditions, without regard to whether such conditions
have in fact been satisfied) under any outstanding undrawn Letters of Credit, if
any, and any funds so deposited shall be (i) paid to such beneficiaries thereof
if the conditions to such drawings are satisfied or (ii) if such Event of
Default is cured, returned to the Company or (iii) upon expiry of one or more
such Letters of Credit, to the extent drawings have not been made thereunder,
applied to the Obligations then due and payable and, if all such Obligations
have been satisfied, returned to the Company. Each payment or deposit of funds
required by this paragraph shall (without duplication) be treated for all
purposes of this Agreement as a drawing duly honored by the Issuing Bank under
the related Letter of Credit, unless and until paid or returned as provided in
the next preceding sentence; provided, that in the event that the Lenders make
the deposit required by this paragraph pursuant to Section 2.9D, the Issuing
Bank shall return to such
-48-
56
Lenders the amount of such deposit to the extent that any Letter of Credit
expires and is not drawn.
B. Whenever the Company desires the issuance of a Letter of Credit, it
shall deliver to the Agent and the Issuing Bank a written notice no later than
1:00 p.m.(New York time) at least 5 Business Days (or such shorter period as may
be acceptable to the Issuing Bank; provided that the Issuing Bank will act as
soon as practicable) prior to the proposed date of issuance. That notice shall
be deemed a representation by the Company that all conditions precedent to such
issuance have been satisfied and shall specify (i) the proposed date of issuance
(which shall be a Business Day), (ii) the face amount of the Letter of Credit,
(iii) the expiration date of the Letter of Credit, (iv) the name and address of
the beneficiary and the name and telephone number of a contact at the
beneficiary, (v) the name and address of the recipient and the name and address
of a contact at the recipient, if other than the beneficiary and (vi) the
requested text and a precise description of the documents and the proposed
verbatim text of any certificate to be presented by the beneficiary of such
Letter of Credit which, if presented by such beneficiary prior to the expiration
date of such Letter of Credit, would require the Issuing Bank to make payment
under the Letter of Credit; provided that the Issuing Bank, in its reasonable
judgment, may require changes in any such text, documents and certificates. In
determining whether to pay under any Letter of Credit, to the extent permitted
by applicable law, the Issuing Bank shall be responsible only to determine that
the documents and certificates required to be delivered under that Letter of
Credit have been delivered and that they comply on their face with the
requirements of that Letter of Credit. Promptly after issuance of a Letter of
Credit, the Issuing Bank shall notify the Agent (who shall notify each Lender)
of such issuance and the amount of each such other Lender's respective
participation therein, determined in accordance with the terms of subsection
2.9A. The Issuing Bank shall promptly notify the Agent (who shall notify each
Lender) of each amendment to any Letter of Credit and shall include a copy of
any such amendment in such notice. The Issuing Bank shall notify the Agent (who
shall notify each Lender) each month of the balance of all outstanding
Commercial Letters of Credit, if any.
If the Issuing Bank has been notified that a Lender is unable, due solely
to a bankruptcy, insolvency, receivership or similar event with respect to such
Lender or compliance by such Lender with orders of regulatory authorities
applicable to it, to participate in a Letter of Credit and any drawings
thereunder, the Issuing Bank shall notify the Company promptly following receipt
of notice of such inability and in any event shall, within two Business Days
after receipt of the notice requesting the issuance of a Letter of Credit,
notify the Company of such Defaulting Lender's Pro Rata Share of the maximum
amount which may become available to be drawn thereunder. The Company shall, on
the Business Day the Letter of Credit is issued, unless it shall then have
replaced the Defaulting Lender with an Eligible Assignee as contemplated by the
next sentence, deposit Cash equal to such Pro Rata Share into a segregated
account maintained by the Agent which Cash shall be invested, as the Company may
direct, in Permitted Cash Equivalents). At any time after receipt of the Issuing
Bank's notice of the Defaulting Lender's Pro Rata Share, the Company may at its
election replace the Defaulting Lender with an Eligible Assignee pursuant to and
in compliance with the terms and conditions of subsection 2.7D and such
replacement Lender shall pay funds equal to such Pro Rata Share to
-49-
57
the Issuing Bank. The amount so deposited shall be (i) paid to the Issuing Bank
on the same day the Issuing Bank honors a drawing under the Letter of Credit if
the conditions to a drawing are satisfied or (ii) to the extent that any such
deposit has been made by the Company, provided that no Potential Event of
Default or Event of Default has occurred and is continuing, returned to the
Company together with earnings thereon (a) if no payment to such beneficiary has
been made and the final date available for drawings under the Letter of Credit
has passed or such Letter of Credit has otherwise expired by its terms or is
returned by the beneficiary thereof for cancellation and is so canceled or (b)
upon the Company's replacement of the Defaulting Lender with an Eligible
Assignee pursuant to and in compliance with the terms and conditions of
subsection 2.7D and the purchase by such replacement Lender of a participation
in outstanding Letters of Credit in compliance with subsections 2.9A and 2.9B.
C. In the event of any drawing under any Letter of Credit by the
beneficiary thereof, the Issuing Bank shall give prompt written notice by
facsimile to the Company and the Lenders (x) confirming receipt of such drawing
and (y) of the date on which the Issuing Bank intends to honor such drawing, and
the Company shall reimburse the Issuing Bank on the day on which such drawing is
honored in an amount in U.S. dollars in same day funds equal to the amount of
such drawing; provided that, anything contained in this Agreement to the
contrary notwithstanding, in the case of any drawing under any Letter of Credit
on or prior to the Termination Date, unless the Company shall have deposited
funds equal to the amount of such drawing with the Issuing Bank on or prior to
the day on which such drawing is honored, the Company shall be deemed to have
timely given a Notice of Borrowing to the Agent requesting the Lenders to make
Revolving Loans which are Base Rate Loans on the date on which such drawing is
honored in an amount equal to the amount of such drawing and (ii) the Lenders
shall, on the date of such drawing, make Revolving Loans which are Base Rate
Loans in the amount of such drawing, the proceeds of which shall be applied
directly by the Agent to reimburse the Issuing Bank for the amount of such
drawing; and provided, further, that, if for any reason, proceeds of Revolving
Loans are not received by the Issuing Bank on such date in an amount equal to
the amount of such drawing (less the Issuing Bank's share of Revolving Loans),
the Company shall reimburse the Issuing Bank, on the Business Day immediately
following the date on which the Company receives notification from the Issuing
Bank that it has not received such amount of proceeds, in an amount in same day
funds equal to the excess of the amount of such drawing over the amount of such
Revolving Loans which are so received (less the Issuing Bank's share thereof, as
aforesaid), plus accrued interest on such amount at the rate set forth in
subsection 2.9(E)(1)(i). The Company shall, promptly upon obtaining notice or
knowledge thereof by any Responsible Officer, give prompt notice to the Agent
and the Issuing Bank of an impending drawing on any Letter of Credit.
D. In the event that the Issuing Bank shall not be reimbursed by the
Company for any drawing under any Letter of Credit issued by it as provided in
subsection 2.9C, other than as a result of a default by a Lender in making a
Revolving Loan as provided in subsection 2.9C, the Issuing Bank shall promptly
notify the Agent of the unreimbursed amount of such drawing. The Agent shall
notify each Lender of such Lender's respective participation therein. Each
Lender shall make available to the Issuing Bank an amount equal to its
respective participation in same
-50-
58
day funds, at the office of the Issuing Bank specified in such notice, not later
that 2:00 p.m. (New York time) on the Business Day after the date notified by
the Issuing Bank. In the event that any Lender fails to make available to the
Issuing Bank the amount of such Defaulting Lender's participation in such Letter
of Credit as provided in this subsection 2.9D, the Issuing Bank shall be
entitled to recover such amount on demand from such Defaulting Lender together
with interest at the Federal Funds Effective Rate for three Business Days and
thereafter at the Base Rate. Nothing in this subsection 2.9D shall be deemed to
prejudice the right of any Lender to recover from the Issuing Bank any amounts
made available by such Lender to the Issuing Bank pursuant to this subsection
2.9D in the event that it is determined by a court of competent jurisdiction
that the payment with respect to a Letter of Credit by the Issuing Bank in
respect of which payment was made by such Lender constituted gross negligence or
willful misconduct on the part of the Issuing Bank. The Issuing Bank shall
distribute to each Lender which has paid all amounts payable by it under this
subsection 2.9D with respect to any Letter of Credit issued by the Issuing Bank,
such Lender's Pro Rata Share of all payments received by the Issuing Bank from
the Company in reimbursement of drawings honored by the Issuing Bank under such
Letter of Credit when such payments are received.
E. (1) The Company agrees to pay the following amounts to the Issuing Bank
with respect to each Letter of Credit issued by the Issuing Bank:
(i) with respect to drawings made under any Letter of Credit,
interest, payable on demand on the amount paid by the Issuing Bank in
respect of each such drawing from the date of the drawing to the date such
amount is reimbursed by the Company (including any such reimbursement out
of the proceeds of Revolving Loans pursuant to subsection 2.9C) at a rate
which is at all times equal to 2% per annum in excess of the rate of
interest otherwise payable under this Agreement for Revolving Loans for
distribution to the Lenders on a pro rata basis; and
(ii) with respect to the issuance, amendment or transfer of each
Letter of Credit and each drawing made thereunder, a $300 fee or such
other documentary and processing charges in accordance with the Issuing
Bank's standard schedule for such charges in effect at the time of such
issuance, amendment, transfer or drawing, as the case may be.
(2) The Company agrees to pay to the Agent a fee on all outstanding
Letters of Credit equal to the product of (i) the daily average maximum amount
available to be drawn (after giving effect to all contingencies under such
Letters of Credit including, without limitation, contingencies that increase the
amount available to be drawn under certain terms and conditions, without regard
to whether such conditions have in fact been satisfied) under such outstanding
Letters of Credit and (ii) the Applicable Margin (except as provided below in
this clause (3)) for Eurodollar Rate Loans, payable in arrears on March 31, June
30, September 30, and December 31 of each year. The Agent shall pay to the
Issuing Bank an amount of each such fee payment equal to the product of (A) the
daily average maximum amount available to be
-51-
59
drawn under such outstanding Letters of Credit (after giving effect to all
contingencies under such Letters of Credit including, without limitation,
contingencies that increase the amount available to be drawn under certain terms
and conditions, without regard to whether such conditions have in fact been
satisfied) and (B) 0.125% (such retained amount, the "L/C FRONT FEE") and shall
distribute the remainder of such fee payment to each Lender (including the
Issuing Bank) in proportion to its Pro Rata Share. For any Letter of Credit
collateralized with Cash, for purposes of the fee calculation described in the
first sentence of this clause (2), the Applicable Margin shall be replaced with
the Commitment Fee Rate. No Lender which has notified the Agent pursuant to
subsection 2.9B that it is unable to participate in a Letter of Credit shall be
entitled to receive any payment of fees pursuant to this subsection 2.9E(2),
accrued with respect to any period prior to the time such Lender became a
Defaulting Lender and unpaid at such time, so long as such Lender shall be a
Defaulting Lender; and so long as any Lender shall be a Defaulting Lender (x) to
the extent that the Company shall have paid such Defaulting Lender's Pro Rata
Share of the maximum amount available to be drawn under undrawn outstanding
Letters of Credit pursuant to subsection 2.9B, the daily maximum amount
available to be drawn under all outstanding Letters of Credit, as used in
calculating the daily average maximum amount available to be drawn under all
outstanding Letters of Credit for purposes of the first sentence of this
subsection 2.9E(2), shall be calculated by deducting therefrom an amount equal
to such payment by the Company, and (y) no payment of fees accrued under this
subsection 2.9E(2) accrued with respect to any period while such Lender was a
Defaulting Lender shall be made to such Defaulting Lender.
F. The obligation of the Company to reimburse the Issuing Bank for
drawings paid in good faith under the Letters of Credit issued by the Issuing
Bank shall be unconditional and irrevocable and shall be paid strictly in
accordance with the terms of this Agreement under all circumstances (except as
required by applicable law), including, without limitation (except as required
by applicable law), the following circumstances:
(1) any lack of validity or enforceability of any Letter of Credit;
(2) the existence of any claim, setoff, defense or other right which
the Company or any of its Affiliates may have at any time against a beneficiary
or any transferee of any such Letter of Credit (or any persons or entities for
whom any such beneficiary or transferee may be acting), the Issuing Bank, or any
other Person, whether in connection with this Agreement, the transactions
contemplated herein or any unrelated transaction;
(3) any draft, demand, certificate or any other document presented
under any such Letter of Credit proving to be forged, fraudulent, invalid or
insufficient in any respect or any statement therein being untrue or inaccurate
in any respect; provided that the payment under such Letter of Credit shall not
have constituted gross negligence or willful misconduct of the Issuing Bank;
(4) payment by the Issuing Bank under any Letter of Credit against
presentation of a demand, draft or certificate or other document which does not
comply on its face with the
-52-
60
terms of such Letter of Credit; provided that the payment under such Letter of
Credit shall not have constituted gross negligence or willful misconduct of the
Issuing Bank;
(5) any other circumstances or happening whatsoever, whether or not
similar to any of the foregoing; provided that such other circumstance or
happening shall not have been the result of the Issuing Bank's gross negligence
or willful misconduct; or
(6) the fact that a Default or an Event of Default shall have
occurred and be continuing.
G. If by reason of (x) any change after the Closing Date in applicable
law, regulation, rule, decree or regulatory requirement or any change in the
interpretation or application by any judicial or regulatory authority of any
law, regulation, rule, decree or regulatory requirement (including any change
whether or not proposed or published prior to the Closing Date) or (y)
compliance by the Issuing Bank or any Lender with any direction, request or
requirement (whether or not having the force of law) issued after the Closing
Date by any governmental authority or monetary authority (including any change
whether or not proposed or published prior to the Closing Date), including,
without limitation, Regulation D:
(i) any reserve, deposit or similar requirement is or shall be
applicable, imposed or modified in respect of any Letter of Credit or
participations therein purchased by any Lender; or
(ii) there shall be imposed on the Issuing Bank or any Lender any
other condition regarding this Subsection 2.9 or any Letter of Credit or
participation therein;
and the result of the foregoing is to directly or indirectly increase the cost
to the Issuing Bank or any Lender of issuing, making or maintaining any Letter
of Credit or of purchasing or maintaining any participation therein or to reduce
the amount receivable in respect thereof by the Issuing Bank or any Lender, then
and in any such case the Issuing Bank or any Lender may, at any time, notify the
Company and the Company shall pay on demand such amounts as the Issuing Bank or
such Lender may specify to be necessary to compensate the Issuing Bank or such
Lender for such additional cost or reduced receipt. The Issuing Bank or any
Lender, upon determining that any additional amounts are due under this
subsection 2.9G, shall promptly notify the Company of the amount of any costs
covered by the preceding sentence. The determination by the Issuing Bank or such
Lender of any amount due pursuant to this subsection 2.9G as set forth in a
certificate setting forth the calculation thereof in reasonable detail, shall,
in the absence of manifest error, be final, conclusive and binding on all of the
parties hereto.
H. In addition to amounts payable as elsewhere provided in this subsection
2.9, the Company hereby agrees to protect, indemnify, pay and save the Issuing
Bank harmless from and against any and all claims, demands, liabilities,
damages, losses, costs, charges and expenses (including reasonable attorneys'
fees and allocated costs of internal counsel) which the Issuing
-53-
61
Bank may incur or be subject to as a consequence, direct or indirect, of (i) the
issuance of the Letter of Credit, other than as a result of the gross negligence
or willful misconduct of the Issuing Bank or (ii) the failure of the Issuing
Bank to honor a drawing under any Letter of Credit as a result of any act or
omission, whether rightful or wrongful, or any present or future de jure or de
facto government or governmental authority (all such acts or omissions herein
called "GOVERNMENT ACTS").
As between the Company and the Issuing Bank, the Company assumes all risks
of the acts and omissions of, or misuse of such Letter of Credit by, the
respective beneficiaries of such Letters of Credit. In furtherance and not in
limitation of the foregoing, to the extent permitted by applicable law, the
Issuing Bank shall not be responsible: (i) for the form, validity, sufficiency,
accuracy, genuineness or legal effect of any document submitted by any party in
connection with the application for and issuance of or any drawing under such
Letters of Credit, even if it should in fact prove to be in any or all respects
invalid, insufficient, inaccurate, fraudulent or forged; (ii) for the validity
or sufficiency of any instrument transferring or assigning or purporting to
transfer or assign any such Letter of Credit or the rights or benefits
thereunder or proceeds thereof, in whole or in part, which may prove to be
invalid or ineffective for any reason; (iii) for failure of the beneficiary of
any such Letter of Credit to comply fully with conditions required in order to
draw upon such Letter of Credit; (iv) for errors, omissions, interruptions or
delays in transmission or delivery of any messages, by mail, cable, telegraph,
telex or otherwise, whether or not they be in cipher; (v) for errors in
interpretation of technical terms; (vi) for any loss or delay in the
transmission or otherwise of any document required in order to make a drawing
under any such Letter of Credit or of the proceeds thereof; (vii) for the
misapplication by the beneficiary of any such Letter of Credit of the proceeds
of any drawing under such Letter of Credit; and (viii) for any consequences
arising from causes beyond the control of the Issuing Bank. None of the above
shall affect, impair, or prevent the vesting of any of the Issuing Bank's rights
or powers hereunder.
In furtherance and extension and not in limitation of the specific
provisions hereinabove set forth, any action taken or omitted by the Issuing
Bank under or in connection with the Letters of Credit issued by it or the
related certificates, if taken or omitted in good faith and in accordance with
the terms of the Letter of Credit or applicable law, shall not put the Issuing
Bank under any resulting liability to the Company.
Notwithstanding anything to the contrary contained in this subsection
2.9H, the Company shall have no obligation to indemnify the Issuing Bank in
respect of any liability incurred by the Issuing Bank to the extent such
liability arises out of the gross negligence or willful misconduct of the
Issuing Bank. The right of indemnification in this subsection 2.9H shall not
prejudice any rights that the Company otherwise have against the Issuing Bank
with respect to a Letter of Credit issued hereunder.
2.10 BORROWING BASE.
-54-
62
A. BORROWING BASE. The Borrowing Base shall be calculated based upon the
Eligible Assets that from time to time are subject to the Liens of the Security
Agreements and constitute Borrowing Base Collateral. The Borrowing Base shall
exclude any Borrowing Base Collateral that has suffered loss or damage and is
required to be excluded by subsection 2.4B(iii)(1). In addition, if the portion
of the Borrowing Base attributable to the Rotables exceeds fifty percent (50%)
of all Borrowing Base Collateral as determined in any monthly calculation of the
Borrowing Base contained in a Borrowing Base Certificate, such excess amount
shall be excluded from the calculation of the Borrowing Base for such month.
B. COLLATERAL.
(i) Eligible Assets. The Eligible Assets may from time to time
include the property of the types listed on Schedule 2.10 hereto, which
schedule shall include, without limitation, (a) Cash and Permitted Cash
Equivalents from time to time in the Cash Collateral Account, (b) Eligible
Stage III Aircraft, (c) the Maintenance Facility, (d) Eligible Simulators,
(e) Eligible Spare Engines and (f) Rotables (collectively, the Collateral
identified in clauses (a) through (f) and on Schedule 2.10, the "ELIGIBLE
ASSETS"). Initially the Borrowing Base Collateral shall include the
Maintenance Facility, the Simulators and the Spare Engines specified in
Schedule 2.10A hereto and the Rotables and the Company shall cause all
such Collateral to be subject to the Liens of Security Agreements on the
Closing Date. Thereafter, subject to subsection 2.10B(ii), the Borrowing
Base Collateral may include the Maintenance Facility, Simulators, Spare
Engines, Rotables and other Eligible Assets which the Company elects from
time to time to make subject to the Liens of Security Agreements,
provided, however, that no Eligible Assets shall be included in the
monthly calculation of the Borrowing Base unless the Lien of a Security
Agreement has been perfected in such Collateral and such Collateral
constitutes Borrowing Base Collateral.
(ii) Release and Addition of Eligible Assets.
(1) Release. Except under the circumstances set forth in the
penultimate sentence of this subsection 2.10B(ii)(1), the Agent shall not
release the Liens of the Security Agreements on the Maintenance Facility and the
Parts Collateral until payment in full of all outstanding Loans and all other
amounts owed to the Lenders and the Agent under the Notes and other Loan
Documents, the termination of the Commitments and the termination of all
outstanding Letters of Credit (unless such Letters of Credit have been cash
collateralized pursuant to subsection 2.1(A) or 2.4B(iii)(2). The Agent shall
from time to time release the Lien of the applicable Security Agreement from
Borrowing Base Collateral other than the Maintenance Facility and the Rotables,
provided that, prior to such release, (i) the Company shall make any prepayment
and furnish additional collateral (if any) required by subsection 2.4B(iii)(1)
if a Borrowing Base Deficiency would result from the reduction in the Borrowing
Base that such release of such Lien would cause as calculated by the Borrowing
Base Certificate delivered pursuant to clause (iv) below, (ii) no Event of
Default or Potential Event of Default has occurred and is continuing, (iii) the
Company has requested such release in writing and
-55-
63
certified that it is entitled to such release under the applicable Security
Agreement and this subsection 2.10 and (iv) the Company shall have delivered an
updated Borrowing Base Certificate giving pro forma effect to such release and
certifying that no Borrowing Base Deficiency will result therefrom (after taking
into account any additional Eligible Assets added to the Borrowing Base pursuant
to, and in compliance with, subsection 2.10B(ii)(2) concurrently with or prior
to release of such Lien). Notwithstanding anything in this subsection
2.10B(ii)(1) to the contrary, the Agent acknowledges that (I) the Lien of the
Spare Parts Security Agreement will be released from the Parts Collateral in
accordance with the terms thereof, and (II) the Maintenance Facility may be
released from the Lien of the Maintenance Facility Security Agreement if an
Event of Loss or an Event of Damage has occurred with respect to the Maintenance
Facility and the Company complies with the requirements set forth in clauses (i)
through (iv) of the second sentence of this subsection 2.10B(ii)(1). Following
the release of the Lien of a Security Agreement on any Borrowing Base Collateral
pursuant to the terms of this subsection 2.10B(ii)(1), unless and until such
Borrowing Base Collateral is again subjected to the Lien of a Security
Agreement, such Borrowing Base Collateral shall no longer be included in the
calculation of the Borrowing Base or in a future Borrowing Base Certificate.
(2) Addition. The Company may from time to time subject
Eligible Assets (other than Rotables) to the Lien of the relevant Security
Agreements upon written notice thereof to the Agent and such additional
Collateral shall be included in the next calculation of the Borrowing Base
delivered in a Borrowing Base Certificate after (A) except in the case of Cash
and Cash Equivalents in the Cash Collateral Account, an Approved Appraisal has
been delivered to the Agent for such Eligible Assets, (B) the Lien of the
relevant Security Agreement has been perfected in such Eligible Assets, (C)
appropriate filings have been made to protect the Lien and rights of the Agent
in any such Eligible Assets as are deemed necessary by the Agent, (D) the Agent
shall have received such opinions as it shall reasonably request with respect to
any such Eligible Assets, (E) the Agent shall have received insurance
certificates and other documents required by the relevant Security Agreement and
all other documents and actions required by the terms of such Security Agreement
shall have been delivered or shall have occurred to the satisfaction of the
Agent, (F) the Company shall have delivered all other documents and taken all
other actions reasonably requested by the Agent with respect to any such
Eligible Assets, (G) the Agent has satisfied itself that such Eligible Assets
are "Aircraft", "Spare Engines" or "Simulators", as the case may be, within the
meaning of this Agreement and as described in Schedule 2.10 hereof and (H) the
Agent shall notify the Company in writing that it is satisfied that the
conditions of this Section 2.10B(ii)(2) have been satisfied. Rotables shall
become subject to the Lien of the Spare Parts Security Agreement as provided
therein, without also being required to satisfy any of the requirements of this
subsection applicable to Eligible Assets of other types.
(3) Expenses. The Company shall pay all expenses of the Agent
in connection with the release and addition of Eligible Assets to the Borrowing
Base and the release or granting and perfection of Liens of Security Agreements
in connection therewith, including, but not limited to, reasonable fees and
expenses of counsel for the Agent, reasonable fees and expenses of special FAA
counsel and filing fees.
-56-
64
C. APPROVED APPRAISAL AND APPRAISERS.
(1) Approved Appraisal. An Approved Appraisal for any
Borrowing Base Collateral shall mean (A) an appraisal and inspection report
satisfactory to the Agent delivered to the Agent by an Approved Appraiser not
later than the time that such Borrowing Base Collateral becomes subject to the
perfected Lien of a Security Agreement, (B) a desk top appraisal (except, in the
case of Rotables and Spare Engines only, an appraisal and inspection report)
satisfactory to the Agent delivered annually thereafter to the Agent by an
Approved Appraiser not later than the anniversary of the delivery date of the
first appraisal, (C) an appraisal and inspection report or desk top appraisal
satisfactory to the Agent delivered to the Agent no earlier than three months
nor later than nine months after delivery of the initial or most recent regular
Approved Appraisal or at any time after the Company has notified the Agent that
such Borrowing Base Collateral has been damaged, and (D) in the case of Rotables
only, an appraisal and inspection report satisfactory to the Agent delivered to
the Agent by an Approved Appraiser at the written request of the Company at any
time. In the case of Rotables only, an inspection of the Rotables conducted as
part of an Approved Appraisal shall mean an inspection of a sample of the
Rotables by the Approved Appraiser for the purpose of determining the accuracy
of the inventory reports maintained by the Company for the Rotables. The
Approved Appraiser delivering any Approved Appraisal shall be selected by the
Agent. The Company shall pay the fees and expenses of the Approved Appraiser in
connection with delivery of an Approved Appraisal, except for an Approved
Appraisal delivered pursuant to clause (C) of the first sentence of this
subsection (unless such Approved Appraisal has been delivered following notice
by the Company delivered pursuant to subsection 2.4B(iii)(1)(b) of loss or
damage to Borrowing Base Collateral which the Company estimates in such notice
or the Agent estimates in a notice delivered pursuant to subsection
2.4B(iii)(1)(e) may exceed $10,000,000, in which case the Company shall pay the
fees and expenses in connection with such Approved Appraisal). Any inspection of
Borrowing Base Collateral by an Approved Appraiser shall be conducted in
compliance with the inspection provisions of the relevant Security Agreement.
(2) Approved Appraisers. Approved Appraisers for Borrowing
Base Collateral shall mean AVITAS, Inc. and Simat Hellieson & Xxxxxxx Inc. or
any other appraiser for such Eligible Assets approved in writing by the Agent
and consented to by the Company, such consent not to be unreasonably withheld or
delayed.
D. BORROWING BASE CERTIFICATE. On the Closing Date and no later than the
25th day of each month thereafter until payment of all Loans outstanding
hereunder and all other amounts payable to the Lenders and the Agent under the
Notes and other Loan Documents, termination or expiry of all outstanding Letters
of Credit and termination of the Commitments of the Lenders, the Company shall
deliver a Borrowing Base Certificate to the Agent relating to the then most
recently ended month (except solely in the case of the Borrowing Base
Certificate delivered on the Closing Date, which such Borrowing Base Certificate
shall, except for Fair Market Values of any Eligible Assets determined by
Approved Appraisers as at any other dates as provided herein, relate to November
29, 1999); provided, however, that in addition to such regular monthly
certificates, the Company shall also deliver Borrowing Base Certificates when
-57-
65
required, pursuant to subsection 2.4B(iii)(1), 2.10B(ii)(1) or 3.2(A)(ii). Each
Borrowing Base Certificate shall replace and supersede for all purposes of this
Agreement the Borrowing Base Certificate then most recently delivered. Such
Borrowing Base Certificate shall (1) state each component of Borrowing Base
Collateral then subject to perfected Liens of the Security Agreements, (2) state
the portion of the Borrowing Base established by each component Borrowing Base
Collateral by the formula stated in the definition of Borrowing Base, (3) state
the Borrowing Base by aggregating each of the values stated pursuant to the
preceding clause (2), and (4) state the then Outstanding Amounts and the amount
of any Borrowing Base Deficiency. The Borrowing Base Certificate shall (A)
certify that none of the Borrowing Base Collateral included in the calculation
of the Borrowing Base is subject to an Event of Loss, Event of Damage,
Repairable Event or Adjustment Event or, if any of such Borrowing Base
Collateral is subject to an Event of Loss, Event of Damage, Repairable Damage or
Adjustment Event, such Borrowing Base Certificate shall contain the relevant
exclusions for any such Borrowing Base Collateral subject to such Event of Loss,
Event of Damage, Repairable Damage or Adjustment Event as required by
subsections 2.4B(iii)(1) and 2.10A hereof, (B) certify that no reduction in the
Borrowing Base is required pursuant to subsection 2.4B(iii)(1)(e) or, if the
Company cannot so certify, contain the exclusion required by such subsection and
(C) certify that the portion of the Borrowing Base attributable to Rotables
stated in the Borrowing Base Certificate does not exceed fifty percent (50%) of
the aggregate Borrowing Base stated in such certificate or that, if the portion
of the Borrowing Base attributable to the Rotables does exceed fifty percent
(50%) of the aggregate Borrowing Base, the portion of the Borrowing Base
attributable to the Rotables in such certificate for purposes of calculating the
Borrowing Base excludes such excess amount. In determining the book value of
Rotables in any Borrowing Base Certificate, the Company shall use its normal
accounting procedures except to the extent that the timing of such procedures
may be shortened pursuant to subsection 2.4B(iii)(1)(d). The Borrowing Base
Certificate shall be certified to be true and accurate by a Responsible Officer
of the Company. Notwithstanding any Borrowing Base Certificate delivered by the
Company, in the event of any dispute between the Company and the Agent regarding
the then Outstanding Amounts, the records of the Agent shall determine such
Outstanding Amounts, absent manifest error.
SECTION 3.
CONDITIONS TO LOANS
The obligations of the Agent and the Lenders to make and maintain
Revolving Loans and of the Issuing Bank to issue any Letter of Credit hereunder
are subject to the satisfaction of the following conditions:
3.1 CONDITIONS TO CLOSING DATE.
The obligations of the Lenders to make Loans (including the obligation of
the Issuing Bank to issue Letters of Credit) on or after the Closing Date are,
in addition to the conditions
-58-
66
precedent specified in subsection 3.2, subject to prior or concurrent
satisfaction of the following conditions:
A. COMPANY DOCUMENTS. The Company shall deliver or cause to be delivered
to the Lenders (or to the Agent for the Lenders with sufficient originally
executed copies, where appropriate, for each Lender) the following, each, unless
otherwise noted, dated or certified on, as the case may be, the Closing Date:
(i) certified copies of its Certificate of Incorporation, together
with a good standing certificate from the Secretary of State of the State
of Delaware and each other state in which it is qualified as a foreign
corporation to do business and, to the extent generally available, a
certificate or other evidence of good standing as to payment of any
applicable franchise or similar taxes from the appropriate taxing
authority of each of such states, each dated a recent date prior to the
Closing Date;
(ii) copies of its Bylaws, certified by its corporate secretary or
an assistant secretary;
(iii) resolutions of its Board of Directors approving and
authorizing the execution, delivery and performance of this Agreement and
the other Loan Documents, certified by its corporate secretary or an
assistant secretary as being in full force and effect without modification
or amendment;
(iv) signature and incumbency certificates of its officers executing
this Agreement and the other Loan Documents;
(v) executed originals of this Agreement, the Notes (duly executed
in accordance with subsection 2.1D, drawn to the order of each Lender and
with appropriate insertions) and the other Loan Documents; and
(vi) such other documents as the Agent may reasonably request.
B. NECESSARY CONSENTS. The Company shall have obtained all consents
necessary or reasonably advisable in connection with the transactions
contemplated by the Loan Documents, and each of the foregoing shall be in full
force and effect and in form and substance satisfactory to the Agent.
C. FINANCIAL CONDITION CERTIFICATE. The Company shall have delivered to
the Agent a Financial Condition Certificate dated the Closing Date,
substantially in the form annexed hereto as Exhibit VIII, with appropriate
attachments demonstrating that, after giving effect to the consummation of the
financing transactions contemplated hereby, the Company and its Subsidiaries,
taken as a whole, are Solvent.
-59-
67
D. OPINIONS OF COMPANY'S COUNSEL. The Agent and its counsel shall have
received (i) executed copies of a favorable written opinion of Xxxxxx Godward
LLP regarding Section 1110 of the Bankruptcy Code, dated the Closing Date and
setting forth substantially the matters in the opinions designated in Exhibit
V-A annexed hereto and (ii) executed copies of a favorable written opinion of
Shearman & Sterling, regarding the enforceability of this Agreement and the
Notes, dated the Closing Date and setting forth substantially the matters in the
opinions designated in Exhibit V-B annexed hereto.
E. OPINIONS OF GENERAL COUNSEL. The Agent and its counsel shall have
received executed copies of one or more favorable written opinions of Xxxxxxx X.
Xxxxxxx, Esq., Senior Vice President and Chief Administrative Officer of the
Company, in form and substance reasonably satisfactory to the Agent and its
counsel, dated the Closing Date, and setting forth substantially the matters in
the opinions designated in Exhibit V-C annexed hereto.
F. OPINIONS OF ARIZONA COUNSEL. The Agent and its counsel shall have
received executed copies of one or more favorable written opinions of Xxxxx and
Roca LLP, local Arizona counsel, regarding perfection of the Agent's security
interest in the Collateral, in form and substance satisfactory to the Agent and
its counsel, dated the Closing Date, and stating forth substantially the matters
in the opinions designated in Exhibit V-D annexed hereto.
G. OPINIONS OF FAA COUNSEL. The Agent and its counsel shall have received
executed copies of a favorable written opinion of Daugherty, Fowler, Peregrin &
Xxxxxx regarding perfection of the security interests in certain of the
Collateral established by the Security Agreements filed with the FAA on the
Closing Date.
H. FEES. The Company shall have paid to the Agent and the Syndication
Agent, for distribution (as appropriate) to the Agent, the Syndication Agent and
the Lenders, the fees payable on the Closing Date referred to in the commitment
letter and fee letter, in each case dated November 8, 1999, among the Company,
the Agent and the Syndication Agent.
I. EVIDENCE OF INSURANCE. The Company shall have delivered to the Agent
certificates of insurance with respect to Borrowing Base Collateral subject to
Security Agreements as of the Closing Date, naming the Agent (on behalf of the
Agent, the Issuing Bank and the Lenders) as loss payee under the casualty
insurance policies and as additional insured under the liability policies of the
Company and a broker's report from the Company's insurance broker evidencing
compliance with the requirements of each Security Agreement, all as required
pursuant to subsection 5.4 hereof or pursuant to the Security Agreements.
J. REPRESENTATIONS AND WARRANTIES; PERFORMANCE OF
AGREEMENTS. The representations and warranties of the Company contained herein
and in the other Loan Documents are true, correct and complete in all material
respects on and as of the Closing Date to the same extent as though made on and
as of that date (except to the extent the same expressly relate to an earlier
date, in which case such representations and warranties were true, correct and
complete in all material respects as of such date) and that the Company shall
-60-
68
have performed in all material respects all agreements and satisfied all
conditions which this Agreement provides shall be performed or satisfied by it
on or before the Closing Date.
K. COMPLIANCE CERTIFICATE. The Company shall have delivered to the Agent a
Compliance Certificate dated the Closing Date as of September 30, 1999,
substantially in the form annexed hereto as Exhibit IV.
L. COMPLETION OF PROCEEDINGS. All corporate and other proceedings taken or
to be taken in connection with the transactions contemplated hereby and all
documents incidental thereto shall be reasonably satisfactory in form and
substance to the Agent and its counsel, and the Agent and such counsel shall
have received all such counterpart originals or certified copies of such
documents as the Agent may reasonably request.
M. APPRAISAL AND BORROWING BASE CERTIFICATE. The Company shall
have delivered to the Agent one or more Approved Appraisals of all Borrowing
Base Collateral (other than Cash and Cash Equivalents) subject to the Lien of a
Security Agreement on the Closing Date, each by an Approved Appraiser in form
and substance satisfactory to the Agent. The Company shall have delivered to the
Agent the Borrowing Base Certificate contemplated to be delivered on the Closing
Date by the terms of subsection 2.10.
N. ELIGIBLE ASSETS. The Collateral as of the Closing Date shall include
the Eligible Assets listed in Schedule 2.10A hereto which is scheduled to be
included in the Borrowing Base by the Closing Date as certified in the Borrowing
Base Certificate delivered on the Closing Date and, without limitation of the
foregoing, such Eligible Assets shall be subject to the perfected Liens of the
applicable Security Agreements.
O. SECURITY AGREEMENTS. All documents required to be delivered, filings
required to be made and action required to be taken by the terms of any Security
Agreement referred to in subsection 3.1N shall have been accomplished in
accordance with such terms. The Company shall have executed and delivered to the
Agent amendments, supplements and restatements, as the case may be, in form and
substance reasonably satisfactory to the Agent, to the Maintenance Facility
Security Agreement, Spare Engine Security Agreement, the Spare Parts Security
Agreement, the Cash and Cash Equivalent Security Agreement and the Environmental
Indemnity Agreement.
P. CONSENTS. All consents required to be delivered in connection with the
Maintenance Facility Security Agreement and the Spare Engine Security Agreement,
including, without limitation, the execution and delivery of the consent of the
City of Phoenix to the Maintenance Facility Security Agreement; provided, that
on or after the Closing Date the Company shall notify the City of Phoenix of the
amendment to the Maintenance Facility Security Agreement.
3.2 CONDITIONS TO ALL LOANS.
-61-
69
A. CONDITIONS TO ALL LOANS. The obligations of the Lenders to make Loans
and of the Issuing Bank to issue any Letter of Credit on any Funding Date are
subject to the Closing Date having occurred and the satisfaction of the
following additional conditions:
(i) The amount of such Loan or Letter of Credit, together with the
amounts outstanding on all other Loans and the Letter of Credit Usage made
to such Funding Date, shall not exceed the least of (x) $125,000,000, (y)
the Borrowing Base and (z) the aggregate amount of the Commitments as such
Commitments shall have been reduced from time to time pursuant to
subsections 2.4B(ii) and 2.4B(iii)(2);
(ii) Any Eligible Assets which are scheduled to be added to the
Borrowing Base on or before the Funding Date of such Loan or Letter of
Credit pursuant to Section 2.10B shall in fact have been added to the
Borrowing Base by such Funding Date as certified in a Borrowing Base
Certificate delivered by such Funding Date and shall be subject to
perfected Liens of the relevant Security Agreements;
(iii) The Company shall have delivered to the Agent such other
documents as may reasonably request and all such documents shall be in
form and substance reasonably satisfactory to the Agent;
(iv) As a condition to the making of a Loan on such Funding Date,
the Agent shall have received before that Funding Date, in accordance with
the provisions of subsection 2.1B, a Notice of Borrowing, in each case
signed by a Responsible Officer of the Company;
(v) As a condition to the issuance of a Letter of Credit on such
Funding Date, the Agent shall have received before that Funding Date, in
accordance with the provisions of subsection 2.9B, an originally executed
written notice from the Company, in accordance with the provisions of
subsection 2.9B, in each case signed by a Responsible Officer of the
Company;
(vi) As of that Funding Date, if a Loan is being made or a Letter of
Credit issued:
(a) the representations and warranties of the Company
contained herein and in the other Loan Documents and in the
applicable Borrowing Base Certificate 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 the same expressly relate to an earlier date, in which case
such representations and warranties were true, correct and complete
in all material respects as of such date), and the Company shall be
deemed to have represented to the Agent, the Issuing Bank and the
Lenders to such effect and as to the matters set forth in clauses
(b) through (e) of this subsection 3.2A(vi);
-62-
70
(b) 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;
(c) 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 and issuing Letters of Credit hereunder;
(d) no Change of Control shall have occurred (other than a
Change of Control in respect of which (x) the date specified in the
notice sent from the Agent to the Company and the Lenders pursuant
to subsection 2.4B(iii)(2) for prepayment of the Loans and
termination of the Commitments shall have occurred and (y) any
Lender shall have elected to have its Commitment continue pursuant
to subsection 2.4B(iii)(2)); and
(e) if a Letter of Credit is being issued on such Funding
Date, the Company shall have paid the fee required by subsection
2.9E (1)(ii) with respect to such Letter of Credit, and the fees
required by subsection 2.9E(2) to the extent such fees are due on or
before such Funding Date.
(vii) With respect to the initial Funding Date after the Closing
Date, the Agent and its counsel shall have received executed copies of a
favorable written opinion of Shearman & Sterling, regarding the
enforceability of the other Loan Documents governed by New York law (other
than this Agreement and the Notes), dated as of the Closing Date and
setting forth substantially the matters in the opinions designated in
Exhibit V-E annexed hereto
B. ADDITIONAL COLLATERAL. The obligations of the Lenders to make Revolving
Loans and of the Issuing Bank to issue any Letter of Credit on any Funding Date
subsequent to the Closing Date are subject to satisfaction on or before such
Funding Date of the following conditions with respect to any Eligible Assets
added to the Borrowing Base after the Closing Date:
(i) Each such item of such Collateral shall be subject to the
perfected Lien of a Security Agreement;
(ii) Such filings shall have been made as are deemed
reasonably necessary by the Agent to perfect such Liens and the
rights and interests of the Agent under such Security Agreement;
-63-
71
(iii) The Agent shall have received such opinions as it shall
reasonably request with respect to such Security Agreement (to the
extent not previously the subject of opinions of the counsel
referred to in clauses (1) and (2) referred below) and Eligible
Assets, including, but not limited to (1) an opinion of FAA counsel
with respect to Collateral perfected by a filing at the FAA and (2)
a Section 1110 opinion from counsel reasonably satisfactory to the
Agent in form and substance satisfactory to the Agent with respect
to such Collateral as has Section 1110 protection;
(iv) The Agent shall have received insurance certificates and
other documents required by such Security Agreement with respect to
such Collateral and all other documents and actions required by the
terms of such Security Agreement shall have been delivered or shall
have occurred; and
(v) The Company shall have delivered all other documents and
taken all other actions reasonably requested by the Agent with
respect to such Additional Collateral and Security Agreement.
SECTION 4.
COMPANY'S REPRESENTATIONS AND WARRANTIES
In order to induce the Lenders to enter into this Agreement and to make
the Revolving Loans and to induce the Issuing Bank to issue the Letters of
Credit, the Company represents and warrants to the Agent, the Issuing Bank and
each Lender, as of the date of this Agreement, the Closing Date and 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. The Company is a corporation duly organized,
validly existing and in good standing under the laws of the State of Delaware.
The Company has all requisite corporate power and authority to own and operate
its properties, to carry on its business as now conducted and as proposed to be
conducted, to enter into the Loan Documents and to carry out the transactions
contemplated hereby and thereby.
B. QUALIFICATION AND GOOD STANDING; AIR CARRIER CERTIFICATION.
The Company is qualified to do business and in good standing in every
jurisdiction where its assets are located and wherever necessary to carry out
its business and operations, except in jurisdictions where the failure to be so
qualified or in good standing would not in the reasonable determination of the
Company be expected to impair the ability of the Company to perform its payment
or other material obligations under the Loan Documents. The Company is an "air
carrier" within the meaning of the Act and holds a certificate under Sections
41102(a)(1) and
-64-
72
41103 of the Act. The Company is a "citizen of the United States" as defined in
Section 40102(a)(15) of the Act (a "UNITED STATES CITIZEN") and holds an air
carrier operating certificate issued pursuant to Chapter 447 under the Act for
aircraft capable of carrying 10 or more individuals or 6,000 pounds or more of
cargo. The Company possesses all necessary certificates, franchises, licenses,
permits, rights and concessions and consents which are material to the operation
of the routes flown by it and the conduct of its business and operations as
currently conducted.
C. SUBSIDIARIES. All of the Subsidiaries of the Company as of the Closing
Date are identified in Schedule 4.1 annexed hereto, as said Schedule 4.1 may be
supplemented from time to time pursuant to the provisions of subsection 5.1(xi).
Each of the Subsidiaries of the Company identified in Schedule 4.1 annexed
hereto (as so supplemented) is a corporation duly organized, validly existing
and in good standing under the laws of its respective jurisdiction of
incorporation set forth therein, has all requisite corporate power and authority
to own and operate its properties and to carry on its business as now conducted
and as proposed to be conducted, and is qualified to do business and in good
standing in every jurisdiction where its assets are located and wherever
necessary to carry out its business and operations, in each case except where
failure to be so qualified or in good standing or a lack of such corporate power
and authority would not in the reasonable determination of the Company be
expected to impair the ability of the Company to perform its payment or other
material obligations under the Loan Documents. Schedule 4.1 annexed hereto (as
so supplemented) correctly sets forth the ownership interest of the Company and
each of its Subsidiaries in each of the Subsidiaries of the Company identified
therein.
4.2 AUTHORIZATION OF BORROWING, ETC.
A. AUTHORIZATION OF BORROWING. The execution, delivery and performance of
the Loan Documents have been duly authorized by all necessary corporate action
on the part of the Company.
B. NO CONFLICT. The execution, delivery and performance by the Company of
the Loan Documents and the consummation of the transactions contemplated by the
Loan Documents do not and will not (i) violate any provision of any law or any
governmental rule or regulation applicable to the Company or any of its
Subsidiaries, the Certificate or Articles of Incorporation or Bylaws of the
Company or any of its Subsidiaries or any order, judgment or decree of any court
or other agency of government binding on the Company or any of its Subsidiaries,
(ii) conflict with, result in a breach of or constitute (with due notice or
lapse of time or both) a default under any Contractual Obligation of the Company
or any of its Subsidiaries, (iii) result in or require the creation or
imposition of any Lien upon any of the properties or assets of the Company or
any of its Subsidiaries (other than any Liens created under any of the Loan
Documents in favor of the Agent on behalf of Lenders), or (iv) require any
approval of stockholders or any approval or consent of any Person under any
Contractual Obligation of the Company or any of its Subsidiaries, except for
such approvals or consents which will be obtained on or before the Closing Date
and disclosed in writing to Lenders.
-65-
73
C. GOVERNMENTAL CONSENTS. The execution, delivery and performance by the
Company of the Loan Documents and the consummation of the transactions
contemplated by the Loan Documents do not and will not require any registration
with, consent or approval of, or notice to, or other action to, with or by, any
federal, state or other governmental authority or regulatory body which has not
been obtained or made on or prior to the date required to be obtained or made
except for such matters relating to performance as would ordinarily be done in
the ordinary course of business after the Closing Date or if not made or
obtained would materially affect such performance.
D. BINDING OBLIGATION. Each of the Loan Documents has been duly executed
and delivered by the Company and is the legally valid and binding obligation of
the Company, enforceable against the Company in accordance with its respective
terms, except as may be limited by bankruptcy, insolvency, reorganization,
moratorium, fraudulent transfer or other similar laws relating to or affecting
the enforcement of creditors' rights generally, including materiality,
reasonableness, good faith and fair dealing, and by general principles of equity
(regardless of whether considered in a proceeding in equity or at law).
4.3 FINANCIAL CONDITION.
The Company has heretofore delivered to the Lenders, at the Lenders'
request, the following financial statements and information: (i) the audited
balance sheets of the Company as at December 31, 1998, and the related
statements of income, stockholders' equity and cash flows of the Company for the
Fiscal Year then ended and (ii) the unaudited balance sheet of the Company as at
June 30, 1999 and the related unaudited statements of income, stockholders'
equity and cash flows of the Company for the nine months then ended. All such
statements were prepared in conformity with GAAP and fairly present the
financial position of the Company as at the respective dates thereof and the
results of operations and cash flows of the Company for each of the periods then
ended subject, in the case of the unaudited statements, to year-end audit and
adjustments. Except as disclosed in writing to the Agent after the date of this
Agreement, the Company does not have any material contingent liability or
liability for taxes, long-term lease or unusual forward or long-term commitment
that is not reflected in the foregoing financial statements (or in the most
recently delivered financial statements delivered pursuant to subsection 5.1((i)
or (ii)) or the notes thereto and which in any such case is material in relation
to the business, operations, properties, assets, condition (financial or
otherwise) or, with respect to the initial borrowing hereunder only, the
prospects of the Company.
4.4 NO MATERIAL ADVERSE CHANGE; NO RESTRICTED PAYMENTS.
Since December 31, 1998, no material adverse change has occurred in the
financial condition or operations of the Company. For purposes of the previous
sentence, the term "material adverse change" shall mean the material impairment
of the Company's ability to perform its payment and other material obligations
under the Loan Documents; this sentence is intended to pertain to substantial
economic events such as (1) any actual or imminent regulatory or judicial order
revoking or materially restricting the Company's ability to operate as an
airline
-66-
74
or to operate any of the aircraft types in its fleet that is not subject to
judicial stay or (2) any labor strike action that causes operations to be
substantially suspended for a period exceeding three weeks. Since December 31,
1998, neither the 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 Payment or agreed to do so except as would have been permitted by
subsection 6.4, as if such subsection was in effect at all times after December
31, 1998.
4.5 TITLE TO PROPERTIES; LIENS.
Except for any property covered by any Security Agreement (the terms of
which shall govern such property to the extent provided therein), the Company
and its Subsidiaries have (i) good, sufficient and legal title to (in the case
of fee interests in real property), (ii) valid leasehold interests in (in the
case of leasehold interests in real or personal property), or (iii) good title
to (in the case of all other personal property), all of the properties and
assets reflected in the financial statements referred to in subsection 4.3 or in
the most recent financial statements delivered pursuant to subsection 5.1, in
each case except for assets disposed of since the date of such financial
statements in the ordinary course of business or as otherwise permitted under
subsection 6.6. Except as otherwise permitted by this Agreement, to the actual
knowledge of the Company, all such properties and assets are free and clear of
Liens.
4.6 LITIGATION; ADVERSE FACTS.
There are no actions, suits, proceedings, arbitrations or governmental
investigations (whether or not purportedly on behalf of the Company or any of
its Subsidiaries) at law or in equity or before or by any federal, state,
municipal or other governmental department, commission, board, bureau, agency or
instrumentality, domestic or foreign, pending or, to the knowledge of the
Company, threatened against or affecting the Company or any of its Subsidiaries
or any property of the Company or any of its Subsidiaries that, individually or
in the aggregate, are reasonably likely to be adversely determined and could in
the reasonable determination of the Company be expected to impair the ability of
the Company to perform its payment or other material obligations under the Loan
Documents. Neither the Company nor any of its Subsidiaries is (i) in violation
of any applicable laws that, individually or in the aggregate, could in the
reasonable determination of the Company be expected to impair the ability of the
Company to perform its payment or other material obligations under the Loan
Documents or (ii) subject to or in default with respect to any final judgments,
writs, injunctions, decrees, rules or regulations of any court or any federal,
state, municipal or other governmental department, commission, board, bureau,
agency or instrumentality, domestic or foreign, that, individually or in the
aggregate, could in the reasonable determination of the Company be expected to
impair the ability of the Company to perform its payment or other material
obligations under the Loan Documents.
-67-
75
4.7 PAYMENT OF TAXES.
Except to the extent permitted by subsection 5.3, all federal income tax
returns and other material tax returns and reports of the Company and its
Subsidiaries required to be filed by any of them have been timely filed (or
extensions have been obtained with respect thereto), and all federal income
taxes and material Taxes upon the Company and its Subsidiaries and upon their
respective properties, assets, income, businesses and franchises which are due
and payable have been paid when before any penalty, fine or interest accrues
thereon. Except as disclosed in writing to the Agent after the Closing Date,
there are no agreements with respect to Taxes between the Company and any taxing
agency or authority.
4.8 PERFORMANCE OF AGREEMENTS; MATERIALLY ADVERSE AGREEMENTS.
A. Neither the Company nor any of its Subsidiaries is in default in the
performance, observance or fulfillment of any of the material obligations,
covenants or conditions contained in any of its Contractual Obligations, and no
condition exists that, with the giving of notice or the lapse of time or both,
would constitute such a default.
B. Neither the Company nor any of its Subsidiaries is a party to or is
otherwise subject to any agreements or instruments or any charter or other
internal restrictions which, individually or in the aggregate, could in the
reasonable determination of the Company be expected to impair the ability of the
Company to perform its payment or other material obligations under the Loan
Documents.
4.9 GOVERNMENTAL REGULATION.
Neither the Company nor any of its Subsidiaries is subject to regulation
under the Public Utility Holding Company Act of 1935, the Federal Power Act, the
Interstate Commerce Act or the Investment Company Act of 1940 or under any other
federal or state statute or regulation which may limit its ability to incur
Indebtedness or which may otherwise render all or any portion of the Obligations
unenforceable.
4.10 SECURITIES ACTIVITIES.
Neither the Company nor any of its Subsidiaries owns or is engaged
principally, or as one of its important activities, in the business of extending
credit for the purpose of purchasing or carrying any Margin Stock, nor shall any
proceeds of any Loan be used to purchase or carry Margin Stock or to extend
credit to any Person for the purpose of purchasing or carrying any Margin Stock
in a manner that violates or causes a violation of Regulations T, U or X of the
Board of Governors of the Federal Reserve System or any other regulation of such
Board.
-68-
76
4.11 EMPLOYEE BENEFIT PLANS.
Each Plan maintained by the Company or an ERISA Affiliate is in compliance
in all material respects with all applicable laws. Except in such instances
where an omission or failure would in the reasonable determination of the
Company impair the ability of the Company to perform its payment or other
material obligations under the Loan Documents (a) all returns, reports and
notices required to be filed with any regulatory agency with respect to any Plan
have been filed timely and (b) neither the Company nor any ERISA Affiliate has
failed to make any contribution or pay any amount due or owing as required by
the terms of any Plan. There are no pending or, to the best of the Company's
knowledge, threatened claims, lawsuits, investigations or actions (other than
routine claims for benefits in the ordinary course) asserted or instituted
against the assets of any Plan or its related trust or against any fiduciary of
a Plan with respect to the operation of such Plan that are likely to result in
liability of the Company that in the reasonable determination of the Company
would impair the ability of the Company to perform its payment or other material
obligations under the Loan Documents. Except in such instances where an omission
or failure would not in the reasonable determination of the Company impair the
ability of the Company to perform its payment or other material obligations
under the Loan Documents, each Plan maintained by the Company or an ERISA
Affiliate that is intended to be "qualified" within the meaning of section
401(a) of the Code is, and has been during the period from its adoption to date,
so qualified, both as to form and operation and all necessary governmental
approvals, including a favorable determination as to the qualification under the
Code of such Plan and each amendment thereto, have been or will be timely
obtained. Neither the Company nor any ERISA Affiliate has engaged in any
prohibited transaction, within the meaning of section 406 of ERISA or section
4975 of the Code, in connection with any Plan which could result in liability of
the Company that would in the reasonable determination of the Company impair the
ability of the Company to perform its payment or other material obligations
under the Loan Documents. Neither the Company nor any ERISA Affiliate has any
contingent liability with respect to any post-retirement benefits under a
welfare benefit plan as defined in ERISA other than a liability for continuation
coverage described in Part 6 of Title 1 of ERISA, except where such liability
could not in the reasonable determination of the Company be expected to impair
the ability of the Company to perform its payment or other material obligations
under the Loan Documents. Neither the Company nor any ERISA Affiliate maintains,
has established or has ever participated in a multiple employer welfare benefit
arrangement within the meaning of ERISA except to the extent that such
participation would not in the reasonable determination of the Company be
expected to impair the ability of the Company to perform its payment or other
material obligations under the Loan Documents. The Company has not incurred any
potential liability with respect to a multiemployer plan, as defined in section
3(37) of ERISA or a plan described in section 4063(a) of ERISA except to the
extent that such liability would not in the reasonable determination of the
Company be expected to impair the ability of the Company to perform its payment
or other material obligations under the Loan Documents. Neither the Company nor
any ERISA Affiliate has incurred any liability under Title IV of ERISA that has
not been satisfied, and no condition exists that could reasonably be expected to
result in the Company or an ERISA Affiliate incurring any liability under Title
IV of ERISA that would in the reasonable determination of the Company impair the
-69-
77
ability of the Company to perform its payment or other material obligations
under the Loan Documents.
4.12 ENVIRONMENTAL PROTECTION.
A. All Facilities and operations of the Company and its Subsidiaries are,
and have been to the Company's knowledge, in compliance with all Environmental
Laws except for any noncompliance which, individually or in the aggregate, could
not in the reasonable determination of the Company be expected to impair the
ability of the Company to perform its payment or other material obligations
under the Loan Documents.
B. There are no, and have been no, conditions, occurrences, or Hazardous
Materials Activity (a) arising at any Facilities or, to the knowledge of the
Company, at any other location or (b) arising in connection with the operations
of the Company or its Subsidiaries (including the transportation of Hazardous
Materials in accordance with applicable regulations), which conditions,
occurrences or Hazardous Materials Activity could reasonably be expected to form
the basis of an Environmental Claim against the Company or any of its
Subsidiaries and which, individually or in the aggregate, could in the
reasonable determination of the Company be expected to impair the ability of the
Company to perform its payment or other material obligations under the Loan
Documents.
C. To the Company's knowledge, there are no pending or threatened
Environmental Claims against the Company or its Subsidiaries, and the Company
and its Subsidiaries have received no notices, inquiries, or requests for
information with respect to any Environmental Claims which in either case are
reasonably likely to be adversely determined and could individually or in the
aggregate in the reasonable determination of the Company be expected to impair
the ability of the Company to perform its payment or other material obligations
under the Loan Documents.
D. Except as disclosed to the Agent in writing, the Company is not
currently operating or required to be operating under any compliance order,
schedule, decree or agreement, any consent decree, order or agreement, and/or
any corrective action decree, order or agreement issued or entered into under
any Environmental Law the failure to comply with which could individually or in
the aggregate in the reasonable determination of the Company be expected to
impair the ability of the Company to perform its payment or other material
obligations under the Loan Documents.
E. The Company has provided the Agent copies of all environmental audits,
assessments or other evaluations in its possession or subject to its control
prepared with respect to the Maintenance Facility, except for audits,
assessments or other evaluations that are confidential and privileged as
attorney-client communication.
4.13 SOLVENCY.
-70-
78
The Company is and, upon the incurrence of any Obligations by the Company
on any date on which this representation is made, will be, Solvent.
4.14 DISCLOSURE.
No representation or warranty of the Company contained in any Loan
Document or in any other document, certificate or written statement furnished to
the Agent or Lenders by or on behalf of the Company or any of its Subsidiaries
for use in connection with the transactions contemplated by this Agreement
contains any untrue statement as and when made, as any of such representations
and warranties may made from time to time in accordance with this Agreement and
the other Loan Documents. Any projections and pro forma financial information
contained in such materials are based upon good faith estimates and assumptions
believed by the Company to be reasonable at the time made, it being recognized
by Lenders that such projections as to future events are not to be viewed as
facts and that actual results during the period or periods covered by any such
projections may differ from the projected results. There are no facts known to
any Responsible Officer of the Company (other than matters of a general economic
nature) that, individually or in the aggregate, could in the reasonable
determination of the Company be expected to impair the ability of the Company to
perform its payment or other material obligations under the Loan Documents.
4.15 YEAR 2000 MATTERS.
Any reprogramming required to permit the proper functioning (but only to
the extent that such proper functioning would otherwise be impaired by the
occurrence of the year 2000) in and following the year 2000 of computer systems
and other equipment containing embedded microchips, whether owned or operated by
the Company or any of its Subsidiaries or used or relied upon in the conduct of
their business (including any such systems and other equipment supplied by
others or with which the computer systems of the Company or any of its
Subsidiaries interface), and the testing of all such systems and other equipment
as so reprogrammed, has been completed on or prior to the Closing Date, except
for such reprogramming the failure to perform any of which could not
individually or in the aggregate in the reasonable determination of the Company
be expected to impair the ability of the Company to perform its payment or other
material obligations under the Loan Documents.
SECTION 5.
COMPANY'S AFFIRMATIVE COVENANTS
The 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, the Company shall perform, and shall cause each of its
Subsidiaries to perform, all covenants in this Section 5.
5.1 FINANCIAL STATEMENTS AND OTHER REPORTS.
-71-
79
The Company will maintain, and cause each of its Subsidiaries to maintain,
a system of accounting established and administered in accordance with sound
business practices to permit preparation of financial statements in conformity
with GAAP. The Company will deliver to the Agent and Lenders:
(i) Quarterly Financials: as soon as available and in any event
within 60 days after the end of each fiscal quarter of each Fiscal Year
(other than the last quarter of each Fiscal Year), (a) the consolidated
balance sheets of each of the Company and Holdings as at the end of such
fiscal quarter and the related consolidated statements of income and
stockholders' equity of each such company for such fiscal quarter and
consolidated cash flows of each such company for the period from the
beginning of then current Fiscal Year to the end of such fiscal quarter,
all in reasonable detail and certified by the chief financial officer,
controller or treasurer of such company that they fairly present the
consolidated financial condition of such company as at the dates indicated
and the results of its operations and their cash flows for the periods
indicated and (b) a narrative report describing the operations of such
company in the form prepared for presentation to senior management for
such fiscal quarter and for the period from the beginning of then current
Fiscal Year to the end of such fiscal quarter; provided that delivery of
such company's Form 10-Q for such fiscal quarter shall be deemed to
satisfy all of the requirements of this subsection 5.1(i):
(ii) Year-End Financials: as soon as available and in any event
within 105 days after the end of each Fiscal Year, (a) the consolidated
balance sheets of each of the Company and Holdings at the end of such
Fiscal Year and the related consolidated statements of income,
stockholders' equity and cash flows of such company for such Fiscal Year,
setting forth in each case in comparative form the corresponding figures
for the previous Fiscal Year and, in the case of the Company, the
corresponding figures from the annual financial plan delivered pursuant to
subsection 5.1(viii) for the Fiscal Year covered by such financial
statements of the Company, all in reasonable detail, (b) a narrative
report describing the operations of such company in the form prepared for
presentation to senior management for such Fiscal Year, and (c) an
accountant's report thereon of KPMG Peat Marwick L.L.P. or other
independent certified public accountants of recognized national standing
selected by such company, which report shall be unqualified, shall express
no doubts about the ability of such company to continue as a going
concern, and shall state that such consolidated financial statements
fairly present the consolidated financial position of such company as at
the dates indicated and the results of their operations and their cash
flows for the periods indicated in conformity with GAAP applied on a basis
consistent with prior years and that the examination by such accountants
in connection with such consolidated financial statements has been made in
accordance with generally accepted auditing standards; provided that (i)
references in such opinion to changes in GAAP, changes in accounting
standards, highlighting contents of footnotes, limitations in the scope of
the audit or exclusions from the audit information not required by GAAP
that are, in each case, customary in industry practice and not prejudicial
to the opinion stated therein shall not be deemed to be "qualifications"
for the purpose of this subsection and (ii) delivery of such
-72-
80
company's Form 10-K for such Fiscal Year shall be deemed to satisfy all of
the requirements of this subsection 5.1(ii);
(iii) Officer's and Compliance Certificates: together with each
delivery of financial statements of the Company pursuant to subdivisions
(i) and (ii) above after the Closing Date, (a) an Officer's Certificate of
the Company stating that the signer has reviewed the terms of this
Agreement and has made, or caused to be made under his or her supervision,
a review in reasonable detail of the transactions and condition of the
Company during the accounting period covered by such financial statements
and that such review has not disclosed the existence during or at the end
of such accounting period, and that the signer does not have knowledge of
the existence as at the date of such Officer's Certificate, of any
condition or event that constitutes an Event of Default or Potential Event
of Default, or, if any such condition or event existed or exists,
specifying the nature and period of existence thereof and what action the
Company has taken, is taking and proposes to take with respect thereto;
and (b) a Compliance Certificate demonstrating in reasonable detail
compliance (or non-compliance) during and at the end of the applicable
quarterly and annual accounting periods with the restrictions contained in
subsections 6.4 and 6.5;
(iv) SEC Filings and Press Releases: promptly upon their becoming
available, copies of (a) all financial statements, reports, notices and
proxy statements sent or made available generally by the Company to its
security holders, (b) all regular and periodic reports and all
registration statements and prospectuses, if any, filed by the Company or
any of its Subsidiaries with any securities exchange or with the
Securities and Exchange Commission or any governmental or private
regulatory authority, and (c) all material press releases and other
statements made available generally by the Company or any of its
Subsidiaries to the public concerning material developments in the
business of the Company or any of its Subsidiaries;
(v) Events of Default, etc.: promptly upon any Responsible Officer
of the Company obtaining knowledge (a) of any condition or event that
constitutes an Event of Default or Potential Event of Default, (b) that
any creditor has given any notice to the Company or any of its
Subsidiaries or taken any other action with respect to a claimed default
or event or condition of the type referred to in subsection 7.2, (c) of
any condition or event that would be required to be disclosed in a current
report filed by the Company with the Securities and Exchange Commission on
Form 8-K if the Company were required to file such reports under the
Exchange Act, or (d) of the occurrence of any event or change that has
caused or evidences, either in any case or in the aggregate, in the
reasonable determination of the Company, impairment of the ability of the
Company to perform its payment or other material obligations under the
Loan Documents, an Officer's Certificate specifying the nature and period
of existence of such condition, event or change, or specifying the notice
given or action taken by any such Person and the nature of such claimed
Event of Default, Potential Event of Default, default, event or condition,
and what action the Company has taken, is taking and proposes to take with
respect thereto;
-73-
81
(vi) Litigation or Other Proceedings: To the extent not disclosed
pursuant to this subsection, (a) promptly upon any Responsible Officer of
the Company obtaining knowledge of (X) the institution of, or threat of,
any action, suit, proceeding (whether administrative, judicial or
otherwise), governmental investigation or arbitration against or affecting
the Company or any of its Subsidiaries or any property of the Company or
any of its Subsidiaries (collectively, "PROCEEDINGS") or (Y) any material
development in any Proceeding that, in any case:
(1) is reasonably likely to be adversely determined and
assuming that all damages demanded in such litigation are awarded,
is in the reasonable determination of the Company likely to impair
the ability of the Company to perform its payment or other material
obligations under the Loan Documents; or
(2) seeks to enjoin or otherwise prevent the consummation of,
or to recover any damages or obtain relief as a result of, the
transactions contemplated hereby;
written notice thereof together with such other information as may be
reasonably available to the Company to enable the Agent and its counsel to
evaluate such matters; and (b) within twenty days after the end of each
Fiscal Year, a schedule of all Proceedings involving an alleged liability
of, or claims against or affecting, the Company or any of its Subsidiaries
equal to or greater than $20,000,000 and promptly after request by the
Agent such other information as may be reasonably requested by the Agent
to enable the Agent and its counsel to evaluate any of such Proceedings;
(vii) ERISA Reports: promptly after the receipt by the Company of a
request therefor by the Agent or a Lender copies of any annual and other
reports (including Schedule B thereto) with respect to a Plan filed by the
Company or any ERISA Affiliate with the United States Department of Labor,
the Internal Revenue Service or the Pension Benefit Guaranty Corporation;
(viii) Annual Financial Plan: annually, as soon as practicable after
preparation thereof by the Company in the ordinary course of business but
in no event later than January 31 of each year, the Company shall provide
the Agent and each Lender copies of its annual financial plan;
(ix) Environmental Audits and Reports: as soon as practicable
following receipt thereof, copies of all environmental audits and reports,
whether prepared by personnel of the Company or any of its Subsidiaries or
by independent consultants, with respect to significant environmental
matters at any Facility or which relate to an Environmental Claim which
could in the reasonable determination of the Company be expected to impair
the ability of the Company to perform its payment or other material
obligations under the Loan Documents;
-74-
82
(x) Pricing Certificates: (a) within one Business Day after any
public release by S&P or Xxxxx'x raising or lowering its credit rating on
the Company's senior unsecured debt obligations and (b) at such additional
times as the Company may elect, a certificate setting forth the credit
rating on the Company's senior unsecured debt obligations (each, a
"PRICING CERTIFICATE");
(xi) Additional Subsidiaries: to the extent permitted hereunder
pursuant to subsection 6.13, with reasonable promptness, upon the
formation thereof, the name, corporate structure and allocation of Voting
Securities of each Subsidiary of the Company, including, without
limitation, providing a supplement Schedule 4.1 hereto with all relevant
information included with respect to such new Subsidiary;
(xii) Insurance Proceeds: promptly notify the Agent upon a
Responsible Officer of the Company obtaining actual knowledge of the
occurrence of an event of loss or damage to any Collateral that is
reasonably expected to result in receipt of insurance proceeds reasonably
estimated by the Company to exceed $5,000,000.
(xiii) Plan Audits and Liabilities: promptly after the Company or
any ERISA Affiliate (a) contacts the Internal Revenue Service for the
purpose of participation in a closing agreement or any voluntary
resolution program with respect to a Plan which could in the reasonable
determination of the Company impair the ability of the Company to perform
its payment or other material obligations under the Loan Documents or (b)
knows or has reason to know that any event with respect to any Plan
occurred that could in the reasonable determination of the Company impair
the ability of the Company to perform its payment or other material
obligations under the Loan Documents a notification thereof;
(xiv) Funding Changes and New Plan Benefits: promptly after the
change, a notification of any material increases in the benefits, or
material change in funding method, with respect to which the Company may
have any liability, or the establishment of any material new Plan with
respect to which the Company may have any liability or the commencement of
contributions to any Plan to which the Company or any ERISA Affiliate was
not previously contributing, except to the extent that such an event would
not in the reasonable determination of the Company be expected to impair
the ability of the Company to perform its payment or other material
obligations under the Loan Documents;
(xv) Claims and Proceedings: promptly after receipt of written
notice of commencement thereof, notification of all (i) claims made by
participants or beneficiaries with respect to any Plan and (ii) actions,
suits and proceedings before any court or governmental department,
commission, board, bureau, agency or instrumentality, domestic or foreign,
affecting the Company or any ERISA Affiliate with respect to any Plan,
except those which, in the aggregate, if adversely determined could not in
the reasonable determination of the Company impair the ability of the
Company to perform its payment or other material obligations under the
Loan Documents;
-75-
83
(xvi) ERISA Reportable Events: promptly after the occurrence of any
reportable event (as defined in ERISA) relating to a Plan with respect to
which the Company or an ERISA Affiliate may have any liability (other than
any such event with respect to which the Pension Benefit Guaranty
Corporation has waived the ERISA reportable event notification requirement
by regulation or notice); and
(xvii) Other Information: with reasonable promptness, such other
information and data with respect to the Company or any of its
Subsidiaries as from time to time may be reasonably requested by the Agent
or any Lender.
5.2 CORPORATE EXISTENCE.
Except as permitted under subsection 6.6(v), the Company will do or cause
to be done all things necessary to preserve and keep in full force and effect
its corporate existence and the corporate, partnership or other existence of
each Subsidiary of the Company and the rights (charter and statutory) and
franchises of the Company and any Subsidiary of the Company; provided, that the
Company shall not be required to preserve any such corporate, partnership or
other existence of any Subsidiary or any such right or franchise, if the Board
of Directors of the Company shall determine in the exercise of its business
judgment that the preservation thereof is no longer desirable in the conduct of
the business of the Company or any Subsidiary and that abandonment of any such
right or franchise shall not in the reasonable determination of the Company
impair the ability of the Company to perform its payment or other material
obligations under the Loan Documents.
5.3 PAYMENT OF TAXES AND CLAIMS; TAX CONSOLIDATION.
A. The Company will, and will cause its Subsidiaries to, pay or discharge
or cause to be paid or discharged, before the same shall become delinquent, (i)
all taxes, assessments and governmental charges levied or imposed upon the
Company or any Subsidiary or upon the income, profits or property of the Company
or any Subsidiary, and (ii) all lawful claims for labor, materials and supplies
that, if unpaid, might by law become a lien on the property of the Company or
any Subsidiary; provided, however, that the Company shall not be required to pay
or discharge or cause to be paid or discharged any such tax, assessment, charge
or claim the amount, applicability or validity of which is being contested in
good faith by appropriate proceedings and with respect to which an adequate
reserve has been established by the Company to the extent required by GAAP.
B. The Company will not, and will not permit any of its Subsidiaries to,
file or consent to the filing of any consolidated income tax return with any
Person (other than any Subsidiary of the Company or the Company or Holdings).
5.4 MAINTENANCE OF PROPERTIES; INSURANCE.
The Company will, and will cause each of its Subsidiaries to, maintain all
properties used or useful in the conduct of its business in good condition,
repair and working order and supply such properties with all necessary equipment
and make all necessary repairs, renewals, replacements,
-76-
84
betterments and improvements thereto, all as in the judgment of the Company may
be necessary so that the business carried on in connection therewith may be
properly and advantageously conducted at all times; provided, however, that
nothing in this subsection shall prevent the Company or any Subsidiary from
discontinuing the operation and maintenance of any such properties if such
discontinuance is, in the good faith judgment of the Company or such Subsidiary,
as the case may be, desirable in the conduct of its respective business and
shall not impair the ability of the Company to perform its payment or other
material obligations under the Loan Documents. In addition to the insurance
required pursuant to each of the Security Agreements, the Company will insure
and keep insured, and will cause each of its Subsidiaries to insure and keep
insured, with reputable insurance companies, such of their respective
properties, to such an extent and against such risks, and will maintain
liability insurance, to the extent that property of a similar character is
usually so insured by companies engaged in a similar business and owning similar
properties in accordance with good business practice.
5.5 INSPECTION.
The Company will, and will cause its Subsidiaries to, permit any
authorized representatives designated by the Agent or any Lender to visit and
inspect any of the properties (other than with respect to Collateral, inspection
of which is governed by the applicable Security Agreements) of the Company or
any of its Subsidiaries, including its and their financial and accounting
records, and to make copies and take extracts therefrom, and to discuss its and
their affairs, finances and accounts with its and their officers and independent
public accountants, all upon reasonable notice and at such reasonable times
during normal business hours and as often as may be reasonably requested;
provided that so long as no Potential Event of Default or Event of Default shall
have occurred and be continuing, such inspection shall not be disruptive to the
Company's business, as reasonably determined by the Company.
5.6 COMPLIANCE WITH LAWS, ETC.
The Company will, and will cause each of its Subsidiaries to, comply with
all applicable statutes, rules, regulations, orders and restrictions of the
United States of America, all states and municipalities thereof, and of any
governmental department, commission, board, regulatory authority, bureau, agency
and instrumentality of the foregoing, in respect of the conduct of their
respective businesses and the ownership of their respective properties, except
such as are being contested in good faith by appropriate proceedings and except
for such noncompliance as would not in any case or in the aggregate in the
reasonable determination of the Company impair the ability of the Company to
perform its payment or other material obligations under the Loan Documents. The
Company shall not conduct, any Hazardous Materials Activity at any Facility or
at any other location in a manner that does not comply with Environmental Laws.
5.7 COMPANY'S REMEDIAL ACTION REGARDING HAZARDOUS MATERIALS.
A. MAINTENANCE FACILITY. To the extent required by Environmental Laws, the
Company will promptly take, and will cause each of its Subsidiaries promptly to
take, any and all
-77-
85
necessary remedial action (except to the extent that such remedial action is
taken by other Persons responsible for such remedial action through contractual
arrangements with the Company) in connection with the presence, storage, use,
disposal, transportation or Release of any Hazardous Materials on, under or
about the Maintenance Facility in order to comply with all applicable
Environmental Laws and Governmental Authorizations. In the event the Company or
any of its Subsidiaries undertakes any remedial action with respect to any
Hazardous Materials on, under or about the Maintenance Facility, the Company or
such Subsidiary will conduct and complete such remedial action (or will cause
such action to be taken pursuant to contractual rights of the Company against
third parties) in compliance with all applicable Environmental Laws, and in
accordance with the policies, orders and directives of all federal, state and
local governmental authorities except when, and only to the extent that, the
Company's or such Subsidiary's liability for such presence, storage, use,
disposal, transportation or discharge of any Hazardous Materials is being
contested in good faith and by appropriate proceedings diligently conducted by
the Company or such Subsidiary.
B. COMPANY FACILITIES. To the extent required by Environmental Laws, the
Company will take, and will cause each of its Subsidiaries to take, any and all
necessary remedial action (except to the extent that such remedial action is
taken by other Persons responsible for such remedial action through contractual
arrangements with the Company) in connection with the presence, storage, use,
disposal, transportation or Release of any Hazardous Materials on, under or
about any Facility (other than the Maintenance Facility) in order to comply
timely with all applicable Environmental Laws and Governmental Authorizations
except for such non-compliance as would not in any case or in the aggregate in
the reasonable determination of the Company impair the ability of the Company to
perform its payment and other material obligations under the Loan Documents. In
the event the Company or any of its Subsidiaries undertakes any remedial action
with respect to any Hazardous Materials on, under or about any Facility (other
than the Maintenance Facility), the Company or such Subsidiary will conduct and
complete such remedial action (or will cause such action to be taken pursuant to
contractual rights of the Company against third parties) in compliance with all
applicable Environmental Laws, and in accordance with the policies, orders and
directives of all federal, state and local governmental authorities except when,
and only to the extent that, the Company's or such Subsidiary's liability for
such presence, storage, use, disposal, transportation or discharge of any
Hazardous Materials is being contested in good faith and by appropriate
proceedings diligently conducted by the Company or such Subsidiary or except for
such non-compliance as would not in any case or in the aggregate in the
reasonable determination of the Company impair the ability of the Company to
perform its payment and other material obligations under the Loan Documents.
5.8 FURTHER ASSURANCES.
At any time or from time to time upon the request of the Agent, the
Company will, at its expense, promptly execute, acknowledge and deliver such
further documents and do such other acts and things as the Agent may reasonably
request in order to effect fully the purposes of the Loan Documents and to
provide for payment of the Obligations in accordance with the terms of this
Agreement, the Notes and the other Loan Documents.
-78-
86
5.9 EMPLOYEE BENEFIT PLANS.
The Company shall take such actions as are reasonably practicable to
ensure that the Plans with respect to which it may have any liability are
operated in material compliance with all applicable laws, except to the extent
that the failure to do so could not in the reasonable determination of the
Company be expected to impair the ability of the Company to perform its payment
or other material obligations under the Loan Documents. Neither the Company nor
a Subsidiary shall amend, adopt or terminate any Plan unless such action could
not in the reasonable determination of the Company be expected to impair the
ability of the Company to perform its payment or other material obligations
under the Loan Documents.
5.10 FAA MATTERS; CITIZENSHIP.
The Company will at all times hereunder be an "air carrier" within the
meaning of the Act and hold a certificate under Section 41102(a)(1) of the Act.
The Company will at all times hereunder be a United States Citizen holding an
air carrier operating certificate issued pursuant to Chapter 447 of the Act for
aircraft capable of carrying 10 or more individuals or 6,000 pounds or more of
cargo. The Company will possess and maintain all necessary consents, franchises,
licenses, permits, rights and concessions and consents which are material to the
operation of the routes flown by it and the conduct of its business and
operations as currently conducted.
5.11 CHANGES IN GAAP.
Should there be a change in GAAP from that in effect on the Closing Date,
such that the defined terms set forth in subsection 1.1 or the covenants set
forth in Section 6 would then be calculated in a different manner or with
different components or would render the same not meaningful criteria for
evaluating the matters contemplated to be evidenced by such covenants, the
Company will, upon the request of the Agent and the Lenders, and the Agent and
Lenders will, upon the request of the Company, within 30 days of such request,
amend this Agreement as necessary to preserve the intent of the financial
covenants contained herein on the Closing Date. In the event that the parties
hereto are unable to agree upon such an amendment within such 30 day period,
such defined terms and covenants shall be calculated in accordance with GAAP as
in effect immediately prior to such change.
SECTION 6.
COMPANY'S NEGATIVE COVENANTS
The 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, the Company shall perform, and shall cause each of its
Subsidiaries to perform, all covenants in this Section 6.
6.1 RESERVED.
-79-
87
6.2 LIENS AND RELATED MATTERS.
A. PROHIBITION ON LIENS. The Company shall not, and shall not permit any
of its Subsidiaries to, directly or indirectly create, incur, assume or permit
to exist any Lien on or with respect to any property or asset of any kind (other
than Collateral) (including any document or instrument in respect of goods or
accounts receivable) of the Company or any of its Subsidiaries, whether now
owned or hereafter acquired, or any income or profits therefrom, or file or
permit the filing of, or permit to remain in effect, any financing statement or
other similar notice of any Lien with respect to any such property, asset,
income or profits under the Uniform Commercial Code of any state or under any
similar recording or notice statute, except:
(i) Permitted Encumbrances;
(ii) purchase money Liens securing Indebtedness used to acquire
aircraft (including aircraft engines installed thereon), spare aircraft
engines, aircraft parts, simulators, passenger loading bridges or other
flight or ground support equipment; and
(iii) other Liens securing or relating to Indebtedness and other
liabilities and obligations in an aggregate amount not to exceed
$100,000,000 at any time outstanding.
B. NO RESTRICTIONS ON SUBSIDIARY DISTRIBUTIONS TO COMPANY OR
OTHER SUBSIDIARIES. Except (i) as provided herein and (ii) as described on
Schedule 6.2 annexed hereto, the Company will not, and will not permit any of
its Subsidiaries to, create or otherwise cause or suffer to exist or become
effective any Payment Restriction.
6.3 INVESTMENTS.
The Company shall not, and shall not permit any Subsidiary to make any
Investment other than (i) Investments made from proceeds from Asset Sales as
permitted by subsection 6.11 or from other sales or other disposition of assets
permitted under Section 6.6(ii); (ii) Investments consisting of Cash
Equivalents; (iii) accounts receivable if credited or acquired in the ordinary
course of business and payable or dischargeable in accordance with customary
trade terms; (iv) payroll advances and advances for business and travel expenses
in the ordinary course of business; (v) Investments by the Company in its
Subsidiaries in the ordinary course of business or otherwise in accordance with
Section 6.8; (vi) Investments by any Subsidiary of the Company in the Company or
in any other Subsidiary; (vii) Investments by the Company for the purpose of
acquiring businesses reasonably related to the business of the Company in an
aggregate amount not exceeding $5,000,000 in any Fiscal Year of the Company;
(viii) Investments made by way of any endorsement of negotiable instruments
received by the Company or any Subsidiary in the ordinary course of its business
and presented by it to any bank for collection or deposit; (ix) stock,
obligations or securities received in settlement of debts created in the
ordinary course of business owing to the Company or any Subsidiary; (x)
Investments by the Company in any Subsidiary for the purpose of receivables
financing; (xi) an Investment not in excess of the amount of Restricted Payments
that the Company is permitted to make (immediately prior to making such
Investment) under subsection 6.4 of this
-80-
88
Agreement; (xii) in addition to any other permitted investments, any other
Investments by the Company in an aggregate amount not exceeding $1,000,000 at
any time; and (xiii) Investments made in connection with marketing alliance
agreements, distribution agreements and other similar agreements under which a
portion of the consideration to the Company includes an opportunity for
Investment in the Capital Stock of other Persons, which Investments shall not
exceed $20,000,000 in any Fiscal Year.
6.4 RESTRICTED PAYMENTS.
The Company shall not, and shall not permit any of its Subsidiaries to,
directly or indirectly, declare, order, pay, make or set apart any sum for any
Restricted Payment if, at the time of such Restricted Payment or action with
respect thereto, (i) an Event of Default or Potential Event of Default has
occurred and is continuing, or would result therefrom or (ii) the aggregate
amount expended by the Company and its Subsidiaries for all Restricted Payments
(the amount of any Restricted Payment if other than cash to be the fair market
value of the property included in such payment as determined in good faith the
Board of Directors of the Company as evidenced by a Board Resolution) from and
after the date of this Agreement shall exceed an amount equal to $200,000,000
plus the sum of (x) Equity Proceeds from any offering made by the Company after
October 1, 1999 plus (y) an amount equal to 50% of the Adjusted Consolidated Net
Income of the Company generated on or after October 1, 1999 through the last day
of the most recently completed fiscal quarter immediately preceding the quarter
in which the Restricted Payment occurs, calculated on a cumulative basis as if
such period were a single accounting period. For the purposes of this subsection
6.4, any guaranty of indebtedness of Holdings or any Affiliate of the Company in
excess of $70,000,000 shall, to the extent of such excess, constitute a
Restricted Payment.
6.5 FINANCIAL COVENANTS.
A. MINIMUM FIXED CHARGE COVERAGE RATIO. The Company shall not permit the
ratio of (i) EBITDA plus Aircraft Rental Expense to (ii) Interest Expense plus
Aircraft Rental Expense for any four-fiscal quarter period ending as of the last
day of any fiscal quarter of the Company to be less than 1.15 to 1.00.
B. MAXIMUM LEVERAGE RATIO. The Company shall not permit the ratio of (i)
Adjusted Debt of the Company on a consolidated basis as of such date to (ii) Net
Worth as of the last day of any fiscal quarter of the Company to be more than
3.75 to 1.00. If the Company incurs nonrecurring, noncash charges in a Fiscal
Year, and such charges or the net loss resulting therefrom reduce the Company's
Net Worth, Net Worth will exclude the lesser of the noncash charges and the net
loss resulting therefrom, in an amount not greater than $50,000,000 for such
Fiscal Year and not greater than $100,000,000 in the aggregate, and will also
exclude any loss arising from a one-time nonrecurring noncash charge in respect
of a write off of excess reorganization value.
C. MINIMUM NET WORTH. The Company shall not permit Net Worth at any time
to be less than the sum of (A) $645,000,000, plus (B) an amount equal to 50% of
the Adjusted Consolidated Net Income of the Company for the period from June 30,
1999 to the date of
-81-
89
determination without regard to net losses except set forth in the following
sentence, plus (C) 50% of the Equity Proceeds of any offering by the Company
after the Closing Date. If the Company incurs nonrecurring, noncash charges in a
Fiscal Year, and such charges or the net loss resulting therefrom reduce the
Company's Net Worth, Net Worth will exclude the lesser of the noncash charges
and the net loss resulting therefrom, in an amount not greater than $50,000,000
for such Fiscal Year and not greater than $100,000,000 in the aggregate, and
will also exclude any loss arising from a one-time nonrecurring noncash charge
in respect of a write off of excess reorganization value.
D. MINIMUM LIQUIDITY. The Company shall not permit the reserve of
unrestricted Cash and Cash Equivalents of the Company and its Wholly Owned
Subsidiaries (without regard to Cash and Cash Equivalents in the Cash Collateral
Account) to be less than the amount set forth below at any date of determination
thereof, subject to adjustment, upward or downward, as shown below, effective
one Business Day following the announcement by Xxxxx'x or S&P of the change in
such agency's rating of the Company's senior unsecured debt obligations giving
rise to such adjustment:
Reserve of unrestricted Cash and
Rating Cash Equivalents
------ ----------------
B2 or below by Xxxxx'x or
B or below by S&P $100,000,000
B1 by Xxxxx'x or
B+ by S&P $75,000,000
Ba3 by Xxxxx'x or
BB- by S&P $62,500,000
Ba2 by Xxxxx'x or
BB by S&P $50,000,000
Ba1 or higher by Xxxxx'x or $25,000,000
BB+ or higher by S&P
Upon a change in the rating of the Company's senior unsecured debt obligations
by Xxxxx'x or S&P, the Agent shall determine if there is a split rating. If so,
the more creditworthy of the two ratings shall be used to determine if the
rating of such obligations has changed in order to determine if an adjustment
shall be made, except that if the less creditworthy of the two ratings is two or
more rating categories below the more creditworthy rating, the applicable rating
shall be deemed to be the rating category which is one rating category below the
more creditworthy rating.
6.6 RESTRICTION ON FUNDAMENTAL CHANGES; ASSET SALES AND ACQUISITIONS; NEW
SUBSIDIARIES.
-82-
90
The Company shall not, and shall not permit any of its Subsidiaries to,
enter into any transaction of merger or consolidation, or liquidate, wind-up or
dissolve itself (or suffer any liquidation or dissolution), or convey, sell,
lease, sub-lease, transfer or otherwise dispose of, in one transaction or a
series of transactions, all or any part of its business, property or fixed
assets, whether now owned or hereafter acquired, or acquire by purchase or
otherwise all or any portion of the business, property or fixed assets
(excluding therefrom purchases and acquisitions in the ordinary course of
business by the Company and its Subsidiaries of property from any Person not
constituting all or substantially all of the property of such Person), or stock
or other evidence of beneficial ownership of, any Person or any division or line
of business of any Person, except:
(i) any Subsidiary of the Company may be merged with or into the
Company or any Wholly Owned Subsidiary of the Company or be liquidated,
wound up or dissolved, or all or any part of its business, property or
assets may be conveyed, sold, leased, transferred or otherwise disposed
of, in one transaction or a series of transactions, to the Company or any
such Wholly Owned Subsidiary of the Company; provided that, in the case of
such a merger, the Company or such Wholly Owned Subsidiary shall be the
continuing or surviving corporation; and
(ii) the Company and its Subsidiaries may sell or otherwise dispose
of assets in transactions that do not constitute Asset Sales; provided
that the consideration received for such assets shall be in an amount at
least equal to the fair market value thereof; and
(iii) the Company and its Subsidiaries may make Asset Sales to the
extent permitted by subsection 6.11 hereto; and
(iv) the Company may make acquisitions of all or substantially all
of the capital stock of another Person or all or substantially all of the
assets of the business of another Person (including any division or line
of business of such Person) provided that, (a) the acquisition primarily
involves the acquisition of assets to be used in the business of the
Company, (b) with respect to such acquisition any newly acquired
Subsidiary of the Company shall be a Wholly Owned Subsidiary, (c)
immediately before and after giving effect thereto, no Potential Event of
Default or Event of Default shall have occurred and be continuing, (d)
immediately after giving effect to the acquisition, the Company shall be
in compliance on a Pro Forma Basis with financial covenants in subsection
6.5 and such compliance shall be evidenced by an Officer's Certificate
demonstrating such compliance and (e) the aggregate purchase price in
connection with all such acquisitions (excluding therefrom any
Indebtedness assumed in connection with such acquisitions and any portion
of the purchase price thereof paid with the Company's Common Stock) does
not exceed $200,000,000;
(v) the Company may enter into a consolidation or merger that
complies with subsections 6.10 and 6.12 hereof.
-83-
91
6.7 SALES AND LEASE-BACKS.
The Company shall not, and shall not permit any of its Subsidiaries to,
directly or indirectly, become or remain liable as lessee or as a guarantor or
other surety with respect to any lease, whether an Operating Lease or a Capital
Lease, of any property (whether real, personal or mixed), whether now owned or
hereafter acquired, other than aircraft (including aircraft engines installed
thereon), spare aircraft engines, aircraft parts, simulators, passenger loading
bridges or other flight or ground support equipment, in each case which (i) the
Company or any of its Subsidiaries has sold or transferred or is to sell or
transfer to any other Person (other than the Company or any of its Subsidiaries)
or (ii) the Company or any of its Subsidiaries intends to use for substantially
the same purpose as any other property which has been or is to be sold or
transferred by the Company or any of its Subsidiaries to any Person (other than
the Company or any of its Subsidiaries) in connection with such lease; provided
that the Company and its Subsidiaries may become and remain liable as lessee,
guarantor or other surety with respect to any such lease if and to the extent
that the annual aggregate rentals under all such leases shall not exceed
$20,000,000.
6.8 TRANSACTIONS WITH AFFILIATES.
A. Neither the Company nor any Subsidiary of the Company shall, directly
or indirectly (i) sell, lease, transfer or otherwise dispose of any of its
properties or assets, or issue securities to, (ii) purchase any property, assets
or securities from, (iii) make any Investment in, or (iv) enter into or suffer
to exist any contract or agreement with or for the benefit of, an Affiliate or
holder of 5% or more of any class of Capital Stock (and any Affiliate of such
holder) of the Company (an "AFFILIATE TRANSACTION"), other than (x) Affiliate
Transactions permitted under subsection 6.8B hereof and (y) Affiliate
Transactions (including lease transactions) which are on fair and reasonable
terms no less favorable to the Company or such Subsidiary, as the case may be,
than those as might reasonably have been obtainable at such time from an
unaffiliated party; provided that if an Affiliate Transaction or series of
related Affiliate Transactions involves or has a value in excess of $15,000,000,
the Company or such Subsidiary, as the case may be, shall not enter into such
Affiliate Transaction or series of related Affiliate Transactions unless a
majority of the disinterested members of the Board of Directors of the Company
or such Subsidiary shall reasonably and in good faith determine that such
Affiliate Transaction is fair to the Company or such Subsidiary, as the case may
be, or is on terms no less favorable to the Company or such Subsidiary, as the
case may be, than those as might reasonably have been obtained at such time from
an unaffiliated party.
B. The provisions of subsection 6.8A shall not apply to (i) any agreement
as in effect as of the date hereof, or any amendment thereto in effect as of the
date hereof or any transaction contemplated thereby (including pursuant to any
amendment thereto) so long as any such agreement or amendment or transaction is
not disadvantageous to the Lenders in any material respect; (ii) any transaction
between the Company and any Wholly Owned Subsidiary or between Wholly Owned
Subsidiaries, provided such transactions are not otherwise prohibited by this
Agreement; (iii) reasonable and customary fees and compensation paid to, and
indemnity provided on behalf of, officers, directors, employees or consultants
of the Company or any Subsidiary, as determined by
-84-
92
the Board of Directors of the Company or any Subsidiary or the senior management
thereof in good faith; (iv) any Restricted Payments not prohibited by subsection
6.4; (v) any payments or other transactions pursuant to any tax sharing
agreement between the Company and any other Person with which the Company is
required or permitted to file a consolidated tax return or with which the
Company is or could be part of a consolidated group for tax purposes; and (vi)
transactions with Continental Airlines, Inc., Mesa Airlines, Inc. and their
respective Affiliates as contemplated by the Alliance Agreements.
6.9 CONDUCT OF BUSINESS.
From and after the date hereof, the Company shall not, and shall not
permit any of its Subsidiaries to, engage in any business other than (i) the
businesses engaged in by the Company and its Subsidiaries on the date hereof and
similar or related businesses and (ii) such other lines of business as may be
consented to by Requisite Lenders.
6.10 MERGER OR CONSOLIDATION.
The Company shall not consolidate with or merge into any other corporation
or convey, lease or transfer its properties and assets substantially as an
entirety to any Person, unless: (i) in the case of a consolidation or merger,
the Company is the surviving entity, or (ii) if the Company is not the surviving
entity, such surviving entity or the Person that acquires by conveyance, lease
or transfer the properties and assets of the Company substantially as an
entirety, shall be a corporation organized and existing under the laws of the
United States of America or any State or the District of Columbia, and shall
expressly assume, by an agreement executed and delivered to the Agent, in form
satisfactory to the Agent, the Company's Obligations to repay the Loans and all
other Obligations of the Company; (iii) immediately before and after giving
effect to such transaction, no Event of Default or Potential Event of Default
shall have occurred and be continuing; and (iv) the Company has delivered to the
Agent an Officer's Certificate and, in the case of any transaction described in
clause (ii) above, an opinion of counsel from counsel satisfactory to the Agent,
in form and substance satisfactory to the Agent, stating that such
consolidation, merger, conveyance, lease or transfer and such agreement comply
with this subsection and that all conditions precedent herein provided for
relating to such transaction have been complied with and addressing such other
matters as may be reasonably requested by the Agent.
6.11 LIMITATION ON ASSET SALES.
In the event and to the extent that on any date after the Closing Date the
Company and its Subsidiaries shall receive Net Cash Proceeds from one or more
Asset Sales (other than Asset Sales by the Company or any Subsidiary to the
Company or another Subsidiary), then the Company shall, or shall cause such
Subsidiary to, within 12 months after such date apply an amount equal to the
amount by which the aggregate amount of Net Cash Proceeds for such 12 month
period exceeds $15,000,000 (A) to repay Indebtedness of the Company or
Indebtedness of any of its Subsidiaries, in each case owing to a Person other
than the Company or any of its Subsidiaries, and/or (B) subject to subsection
6.6(iv), as an Investment (or enter into a definitive agreement committing to so
invest
-85-
93
within 12 months after the date of such agreement), in property or assets of a
nature or type or that are used in a business (or in a Person having property
and assets of a nature or type, or engaged in a business) similar or related to
the nature or type of the property and assets of, or the business of, the
Company and its Subsidiaries existing on the date thereof (as determined in good
faith by the board of directors of the Company or such Subsidiary, as the case
may be, whose determination shall be conclusive and evidenced by a resolution of
the board of directors of the Company or such Subsidiary). The amount of such
Net Cash Proceeds required to be applied (or to be committed to be applied)
during such 12-month period as set forth in clause (A) or (B) of the preceding
sentence shall constitute "EXCESS PROCEEDS."
6.12 LIMITATION ON ISSUANCES AND DISPOSITIONS OF CAPITAL STOCK OF SUBSIDIARIES.
Other than Subsidiaries which comply with Section 6.13, each Subsidiary of
the Company shall at all times be a Wholly Owned Subsidiary of the Company. The
Company (i) shall not, and shall not permit any Subsidiary to, transfer, convey,
sell, encumber or otherwise dispose of any Capital Stock of a Subsidiary, or
securities convertible or exchangeable into, or options, warrants, rights or any
other interest with respect to, Capital Stock of a Subsidiary to any Person
(other than the Company or a Wholly Owned Subsidiary) and (ii) shall not permit
any Subsidiary to issue shares of its Capital Stock (other than directors'
qualifying shares), or securities convertible or exchangeable into, or options,
warrants, rights or any other interest with respect to, its Capital Stock to any
Person other than to the Company or a Wholly Owned Subsidiary; provided, that
the limitations of this subsection shall not apply to any transaction between or
among the Company and one or more direct or indirect Wholly Owned Subsidiaries
of the Company whereby the Company merges, consolidates or otherwise combines
with such Wholly Owned Subsidiary and pursuant to which all existing holders of
Capital Stock of the Company receive, upon conversion or otherwise in exchange
for securities owned by such holders, Capital Stock of a corporation which
immediately prior to such exchange is a Wholly Owned Subsidiary, and which
securities have rights and preferences identical to those of the securities
replaced, so long as (a) immediately before and after giving effect to such
transaction no Potential Default or Event of Default shall have occurred and be
continuing, and (ii) such transaction is otherwise in conformity with and not
prohibited by this Agreement.
6.13 LIMITATION ON CREATION OF NEW SUBSIDIARIES.
The Company may create new Subsidiaries provided that (i) the total assets
of all Subsidiaries in the aggregate (other than (a) single purpose Subsidiaries
created solely for the purpose of financing aircraft and (b) Subsidiaries
created solely for the purpose of acquiring assets from Persons other than the
Company or any of its Subsidiaries) does not at any time exceed ten percent
(10%) of the consolidated total assets of the Company, in each case determined
in accordance with GAAP and (ii) the Company complies with the provisions of
subsection 5.1(xi) hereof.
-86-
94
SECTION 7.
EVENTS OF DEFAULT
If any of the following conditions or events ("EVENTS OF DEFAULT") shall
occur:
7.1 FAILURE TO MAKE PAYMENTS WHEN DUE.
(i) Failure by the Company to pay any installment of principal of any Loan
when due, whether at stated maturity, by acceleration, by notice of voluntary
prepayment, by mandatory prepayment or otherwise; or (ii) failure by the Company
to pay any interest on any Loan or any fee or any other amount due under this
Agreement or any other Loan Document within five Business Days after the date
due; or
7.2 DEFAULT IN OTHER AGREEMENTS.
The Company or any Subsidiary (a) fails to make (whether as primary
obligor or as guarantor or other surety) any principal payment of or interest or
premium, if any, on any Indebtedness (other than Indebtedness referred to in
subsection 7.1) beyond any period of grace provided with respect thereto,
provided that the aggregate amount of all Indebtedness as to which such a
payment default shall occur and be continuing is equal to or exceeds
$10,000,000, or (b) fails to duly observe, perform or comply with any agreement
with any Person or any term or condition of any instrument, if such failure,
either individually or in the aggregate, shall have caused or shall have the
ability to cause the acceleration of the payment of Indebtedness with an
aggregate face amount which is equal to or exceeds $10,000,000; or
7.3 BREACH OF CERTAIN COVENANTS.
Failure of the Company to perform or comply in any material respect with
any term or condition contained in subsections 2.5B, 5.2, 5.10, 6.2, 6.5, 6.7
and 6.9 of this Agreement and (excluding subsection 5.10) such failure shall not
have been remedied within five days after a Responsible Officer of the Company
knows (or, in the reasonable exercise of such Responsible Officer's discretion,
should have known) of such failure; or
7.4 BREACH OF WARRANTY.
Any representation, warranty, certification or other statement made by the
Company or any of its Subsidiaries in any Loan Document or in any statement or
certificate at any time given by the Company or any of its Subsidiaries in
writing pursuant hereto or thereto or in connection herewith or therewith shall
be false in any material respect on the date as of which made; or
-87-
95
7.5 OTHER DEFAULTS UNDER LOAN DOCUMENTS.
(i) The Company shall default in the performance of or compliance with any
term contained in this Agreement or any of the other Loan Documents, other than
any such term referred to in any other subsection of this Section 7, and such
default shall not have been remedied or waived (x) within 30 days after the
earlier of (a) a Responsible Officer of the Company becoming aware of such
default or (b) receipt by the Company of notice from the Agent or any Lender of
such default or (y) with respect to a default under subsection 6.5, the earlier
of (a) an officer of the Company becoming aware of the default after the
applicable measurement date and (b) the delivery of financial statements
pursuant to subsection 5.1 or (ii) a guaranty, if any, of the Obligations for
any reason ceases to be in full force and effect; or
7.6 INVOLUNTARY BANKRUPTCY; APPOINTMENT OF RECEIVER, ETC.
(i) A court shall enter a decree or order for relief in respect of the
Company or any of its Subsidiaries in an involuntary case under the Bankruptcy
Code or under any other applicable bankruptcy, insolvency or similar law now or
hereafter in effect; or any other similar relief shall be granted under any
applicable federal or state law; or (ii) an involuntary case shall be commenced
against the Company or any of its Subsidiaries under the Bankruptcy Code or
under any other applicable bankruptcy, insolvency or similar law now or
hereafter in effect; or a decree or order of a court for the appointment of a
receiver, liquidator, sequestrator, trustee, custodian or other officer having
similar powers over the Company or any of its Subsidiaries, or over all or a
substantial part of its property, shall have been entered; or there shall have
occurred the involuntary appointment of an interim receiver, trustee or other
custodian of the Company or any of its Subsidiaries for all or a substantial
part of its property; or a warrant of attachment, execution or similar process
shall have been issued against any substantial part of the property of the
Company or any of its Subsidiaries, and any such event described in this clause
(i) or clause (ii) shall continue for 60 days unless dismissed, bonded or
discharged; or
7.7 VOLUNTARY BANKRUPTCY; APPOINTMENT OF RECEIVER, ETC.
(i) The Company or any of its Subsidiaries shall have an order for relief
entered with respect to it or commence a voluntary case under the Bankruptcy
Code or under any other applicable bankruptcy, insolvency or similar law now or
hereafter in effect, or shall consent to the entry of an order for relief in an
involuntary case, or to the conversion of an involuntary case to a voluntary
case, under any such law, or shall consent to the appointment of or taking
possession by a receiver, trustee or other custodian of all or a substantial
part of its property; or the Company or any of its Subsidiaries shall make any
assignment for the benefit of creditors; or (ii) the Company or any of its
Subsidiaries shall be unable, or shall fail generally, or shall admit in writing
its inability, to pay its debts as such debts become due; or the Board of
Directors of the Company or any of its Subsidiaries (or any committee thereof)
shall adopt any resolution or otherwise authorize any action to approve any of
the actions referred to in clause (i) above or this clause (ii); or
-88-
96
7.8 JUDGMENTS AND ATTACHMENTS.
Any final judgment or order (not covered by insurance) for the payment of
money in excess of $25,000,000 in the aggregate for all such final judgments or
orders against the Company or any of its Subsidiaries treating any deductibles,
self-insurance or retention as not so covered shall be rendered against the
Company or any Subsidiary and shall not be discharged, and there shall be any
period of 60 consecutive days following entry of the final judgment or order
that causes the aggregate amount for all such final judgements or orders
outstanding against the Company or its Subsidiaries to exceed $25,000,000 during
which a stay of enforcement of such final judgment or order, by reason of a
pending appeal or otherwise, shall not be in effect; or
7.9 DISSOLUTION.
Any order, judgment or decree shall be entered against the Company or any
of its Subsidiaries decreeing the dissolution or split up of the Company or that
Subsidiary and such order shall remain undischarged or unstayed for a period in
excess of 30 days; or
7.10 RESERVED.
7.11 FAILURE OF SECURITY.
Upon execution and delivery thereof, any Security Agreement shall, at any
time, cease to be in full force and effect in any material respect (other than
by reason of a release of Collateral thereunder in accordance with the terms
hereof or thereof, the satisfaction in full of the Obligations or any other
termination of such Security Agreement in accordance with the terms hereof or
thereof) or shall be declared null and void, or the validity or enforceability
thereof shall be contested in writing by the Company, or the Agent shall not
have or shall in any material respect cease to have a valid and perfected first
priority security interest in any Collateral (or in the case of the Spare Parts
Security Agreement, Rotables only) purported to be covered thereby, subject only
to Permitted Liens and, in each case, the Company shall fail to (i) deliver a
Borrowing Base Certificate excluding therefrom the Collateral subject to such
Security Agreement within ten (10) days after a Responsible Officer of the
Company knows of such failure and (ii) make a prepayment (and/or provide
collateral) in accordance with subsection 2.4B(iii)(1)(a);
THEN (i) upon the occurrence of any Event of Default described in subsection 7.6
or 7.7, each of (a) the unpaid principal amount of and accrued interest on the
Loans and (b) all other Obligations shall automatically become immediately due
and payable, without presentment, demand, protest or other requirements of any
kind, all of which are hereby expressly waived by the Company, and 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,
the Agent shall, upon the written request or with the written consent of
Requisite Lenders, by written notice to the Company, declare all or any portion
of the amounts described in clauses (a) and (b) above to be, and the same shall
forthwith become, immediately due and payable, and the obligation of each Lender
to make any Loan shall thereupon terminate. Following the occurrence and during
the continuation of an Event of Default,
-89-
97
the Agent may exercise any remedy provided in the Security Agreements or any
other Loan Document or otherwise available to it.
SECTION 8.
AGENT
8.1 APPOINTMENT.
The Industrial Bank of Japan, Limited, is hereby appointed the Agent
hereunder and under the other Loan Documents and each Lender and the Issuing
Bank hereby authorizes the Agent to act as its agent in accordance with the
terms of this Agreement and the other Loan Documents. The Agent agrees to act
upon the express conditions contained in this Agreement and the other Loan
Documents, as applicable. The provisions of this Section 8 (except subsections
8.5 and 8.6) are solely for the benefit of the Agent, the Issuing Bank and the
Lenders, and the Company shall have no rights as a third party beneficiary of
any of the provisions thereof. In performing its functions and duties under this
Agreement, the Agent shall act solely as an agent of the Lenders and the Issuing
Bank and does not assume and shall not be deemed to have assumed any obligation
towards or relationship of agency or trust with or for the Company or any of its
Subsidiaries.
8.2 POWERS AND DUTIES; GENERAL IMMUNITY.
X. XXXXXX; DUTIES SPECIFIED. Each Lender irrevocably authorizes the Agent
to take such action on such Lender's behalf and to exercise such powers, rights
and remedies hereunder and under the other Loan Documents as are specifically
delegated or granted to the Agent by the terms hereof and thereof, together with
such powers, rights and remedies as are reasonably incidental thereto. The Agent
shall have only those duties and responsibilities that are expressly specified
in this Agreement and the other Loan Documents. The Agent may exercise such
powers, rights and remedies and perform such duties by or through its agents or
employees. The Agent shall not have, by reason of this Agreement or any of the
other Loan Documents, a fiduciary relationship in respect of any Lender or the
Issuing Bank; and nothing in this Agreement or any of the other Loan Documents,
expressed or implied, is intended to or shall be so construed as to impose upon
the Agent any obligations in respect of this Agreement or any of the other Loan
Documents except as expressly set forth herein or therein.
B. NO RESPONSIBILITY FOR CERTAIN MATTERS. The Agent shall not be
responsible to any Lender or the Issuing Bank for the execution, effectiveness,
genuineness, validity, enforceability, collectibility or sufficiency of this
Agreement or any other Loan Document or for any representations, warranties,
recitals or statements made herein or therein or made in any written or oral
statements or in any financial or other statements, instruments, reports or
certificates or any other documents furnished or made by the Agent to the
Lenders or the Issuing Bank or by or on behalf of the Company to the Agent or
any Lender or the Issuing Bank in connection with the Loan Documents and the
transactions contemplated thereby or for the financial condition or business
affairs of the Company or any other Person liable for the payment of any
Obligations, nor shall the
-90-
98
Agent be required to ascertain or inquire as to the performance or observance of
any of the terms, conditions, provisions, covenants or agreements contained in
any of the Loan Documents or as to the use of the proceeds of the Loans or as to
the existence or possible existence of any Event of Default or Potential Event
of Default. Anything contained in this Agreement to the contrary
notwithstanding, the Agent shall not have any liability arising from
confirmations of the amount of outstanding Loans or the component amounts
thereof.
C. EXCULPATORY PROVISIONS. Neither the Agent nor any of its officers,
directors, employees or agents shall be liable to the Lenders or the Issuing
Bank for any action taken or omitted by the Agent under or in connection with
any of the Loan Documents except to the extent caused by their respective gross
negligence or willful misconduct. If the Agent shall request instructions from
the Lenders or the Issuing Bank with respect to any act or action (including the
failure to take an action) in connection with this Agreement or any of the other
Loan Documents, the Agent shall be entitled to refrain from such act or taking
such action unless and until the Agent shall have received instructions from the
Requisite Lenders. Without prejudice to the generality of the foregoing, (i) the
Agent shall be entitled to rely, and shall be fully protected in relying, upon
any communication, instrument or document believed by it to be genuine and
correct and to have been signed or sent by the proper person or persons, and
shall be entitled to rely and shall be protected in relying on opinions and
judgments of attorneys (who may be attorneys for the Company and its
Subsidiaries), accountants, experts and other professional advisors selected by
it; and (ii) neither a Lender nor the Issuing Bank shall have any right of
action whatsoever against the Agent as a result of the Agent acting or (where so
instructed) refraining from acting under this Agreement or any of the other Loan
Documents in accordance with the instructions of Requisite Lenders. The Agent
shall be entitled to refrain from exercising any power, discretion or authority
vested in it under this Agreement or any of the other Loan Documents unless and
until it has obtained the instructions of the Requisite Lenders.
D. AGENT ENTITLED TO ACT AS LENDER. The agency hereby created shall in no
way impair or affect any of the rights and powers of, or impose any duties or
obligations upon, the Agent in its individual capacity as a Lender or Issuing
Bank hereunder. With respect to its participations in the Loans, the Agent shall
have the same rights and powers hereunder as any other Lender and may exercise
the same as though it were not performing the duties and functions delegated to
it hereunder, and the term "Lender" or "Lenders" or any similar term shall,
unless the context clearly otherwise indicates, include the Agent in its
individual capacity. The Agent and its Affiliates may accept deposits from, lend
money to and generally engage in any kind of banking, trust, financial advisory
or other business with the Company or any of its Affiliates as if it were not
performing the duties specified herein, and may accept fees and other
consideration from the Company for services in connection with this Agreement
and otherwise without having to account for the same to the Lenders.
-91-
99
8.3 REPRESENTATIONS AND WARRANTIES; NO RELIANCE.
Each Lender and the Issuing Bank represents and warrants that it has made
its own independent investigation of the financial condition and affairs of the
Company and its Subsidiaries in connection with the making of the Loans
hereunder and that it has made and shall continue to make its own analysis of
the creditworthiness of the Company and its Subsidiaries. The Agent shall not
have any duty or responsibility, either initially or on a continuing basis, to
make any such investigation or any such appraisal on behalf of Lenders and the
Issuing Bank or to provide any Lender and the Issuing Bank 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 the Agent
shall not have any responsibility with respect to the accuracy of or the
completeness of any information provided to the Lenders and the Issuing Bank.
8.4 RIGHT TO INDEMNITY.
Each Lender, in proportion to its Pro Rata Share, severally agrees to
indemnify the Agent and the Issuing Bank (and their respective affiliates and
partners), to the extent that the Agent or the Issuing Bank, as the case may be,
shall not have been reimbursed by the Company, for and against any and all
liabilities, obligations, losses, damages, penalties, actions, judgments, suits,
costs, expenses (including, without limitation, counsel fees and disbursements)
or disbursements of any kind or nature whatsoever which may be imposed on,
incurred by or asserted against the Agent or the Issuing Bank, as the case may
be, in exercising their respective powers, rights and remedies or performing
their respective duties hereunder or under the other Loan Documents or otherwise
in their respective capacities as Agent and Issuing Bank, in any way relating to
or arising out of this Agreement or the other Loan Documents; provided that no
Lender shall be liable for any portion of such liabilities, obligations, losses,
damages, penalties, actions, judgments, suits, costs, expenses or disbursements
resulting from the Agent's or the Issuing Bank's, as the case may be, gross
negligence or willful misconduct.
8.5 SECURITY AGREEMENTS.
Without limiting the generality of subsection 8.1, each Lender hereby
further authorizes the Agent to enter into the Security Agreements as secured
party on behalf of and for the benefit of such Lender and agrees to be bound by
the terms of each of the Security Agreements; provided that, except as otherwise
provided below, the Agent shall not enter into or consent to any amendment,
modification, termination or waiver of any provision contained in any Security
Agreement without prior written consent of the Requisite Lenders. Anything
contained in any of the Loan Documents to the contrary notwithstanding, each
Lender agrees that no Lender shall have any right individually to realize upon
any of the Collateral under any Security Agreement, it being understood and
agreed that all powers, rights and remedies under the Security Agreements may be
exercised solely by the Agent for the benefit of Lenders in accordance with the
terms thereof. Each Lender hereby authorizes the Agent (i) to release or
subordinate Collateral as permitted or required under this Agreement or the
Security Agreements, and agrees that a certificate executed by the Agent
evidencing such release of Collateral shall be conclusive evidence of such
release as to any third
-92-
100
party and (ii) to enter into any amendments of the Security Agreements to cure
any ambiguity, defect or inconsistency or to amend provisions relating to
ministerial or administrative matters which do not materially adversely affect
the rights of the Lenders thereunder.
8.6 SUCCESSOR AGENT.
The Agent may resign at any time by giving 30 days' prior written notice
thereof to the Lenders and the Company and may be removed at any time with cause
by the Required Lenders, such resignation or removal to be effective only upon
acceptance of its appointment of a successor Agent as provided herein. Upon any
such notice of resignation or removal, the Requisite Lenders shall have the
right to appoint a successor Agent and shall notify the Company in writing of
such appointment; provided, that, unless a Potential Event of Default or Event
of Default shall have occurred and then be continuing, the Required Lenders
shall obtain the Company's written consent to the appointment of such successor
Agent (such consent not to be unreasonably withheld or delayed). Upon the
acceptance of any appointment hereunder by a successor Agent, that successor
Agent shall thereupon succeed to and become vested with all the rights, powers,
privileges and duties of the retiring Agent and the retiring or removed Agent
shall be discharged from its duties and obligations under this Agreement. After
any retiring Agent's resignation or removal hereunder as Agent, the provisions
of this Section 8 shall inure to its benefit as to any actions taken or omitted
to be taken by it while it was the Agent under this Agreement.
SECTION 9.
MISCELLANEOUS
9.1 ASSIGNMENTS AND PARTICIPATIONS IN LOANS.
A. GENERAL. Each Lender shall have the right at any time to (i) 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 require the Company to
file a registration statement with the Securities and Exchange Commission or
apply to qualify such sale, assignment, transfer or participation under the
securities laws of any state; provided, further that no such sale, assignment or
transfer described in clause (i) above shall be effective unless and until an
Assignment Agreement effecting such sale, assignment or transfer shall have been
accepted by the Agent and recorded in the Register as provided in subsection
9.1B(ii). Except as otherwise provided in this subsection 9.1, no Lender shall,
as between the Company and such Lender, be relieved of any of its obligations
hereunder as a result of any sale, assignment or transfer of, or any granting of
participations in, all or any part of its Commitments or the Loans, or the other
Obligations owed to such Lender.
-93-
101
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 the Company and the 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 consent of the Company (unless an Event of Default or Potential Event
of Default has occurred and is continuing) and the Agent (which consent in
either case shall not be unreasonably withheld or delayed). To the extent
of any such assignment in accordance with either clause (a) or (b) above,
the assigning Lender shall be relieved of its obligations thereafter
arising with respect to its Commitments, Loans, or other Obligations or
the portion thereof so assigned. The parties to each such assignment shall
execute and deliver to the Agent, for its acceptance and recording in the
Register, an Assignment Agreement, together with a processing and
recordation fee of $3,500 and such forms, certificates or other evidence,
if any, with respect to United States federal income tax withholding
matters as the assignee under such Assignment Agreement may be required to
deliver to the Agent pursuant to subsection 2.7B(iii)(a). Upon such
execution, delivery and acceptance, from and after the effective date
specified in such Assignment Agreement, (y) the assignee thereunder shall
be a party hereto and, to the extent that rights and obligations hereunder
have been assigned to it pursuant to such Assignment Agreement, shall have
the rights and obligations of a Lender hereunder and (z) the assigning
Lender thereunder shall, to the extent that rights and obligations
hereunder have been assigned by it pursuant to such Assignment Agreement,
relinquish its rights and be released from its obligations thereafter
arising under this Agreement (and, in the case of an Assignment Agreement
covering all or the remaining portion of an assigning Lender's rights and
obligations under this Agreement, such Lender shall cease to be a party
hereto). The 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 the Agent for cancellation, and thereupon new Notes
shall be issued to the assignee substantially in the form of Exhibit III
annexed hereto, as the case may be, with appropriate insertions, to
reflect the new Commitments and/or outstanding Loans, as the case may be,
of the assignee and/or the assigning Lender.
(ii) Acceptance by the Agent; Recordation in Register. Upon its
receipt of an Assignment Agreement executed by an assigning Lender and an
assignee representing that it is an Eligible Assignee, together with the
processing and recordation fee referred to in subsection 9.1B(i) and any
forms, certificates or other evidence with respect to United States
federal income tax withholding matters that such assignee may be required
to deliver to the Agent pursuant to subsection 2.7B(iii)(a), the Agent
shall, if such Assignment Agreement has been completed and is in
substantially the form of Exhibit VI hereto and if the Agent and the
Company (unless an Event of Default or Potential Event of Default has
occurred and is
-94-
102
continuing) have consented to the assignment evidenced thereby, (a) accept
such Assignment Agreement by executing a counterpart thereof as provided
therein (which acceptance shall evidence any required consent of the Agent
to such assignment), (b) record the information contained therein in the
Register and (c) give prompt notice thereof to the Company. The Agent
shall maintain a copy of each Assignment Agreement delivered to and
accepted by it as provided in this subsection 9.1B(ii).
(iii) Successor Issuing Bank. Upon the replacement of an Issuing
Bank, the new Issuing Bank shall issue and deliver substitute Letters of
Credit to replace the outstanding and unpaid Letters of Credit issued by
the former Issuing Bank, but only to the extent the beneficiaries of such
outstanding Letters of Credit have agreed to accept replacement Letters of
Credit. The Company shall use its best efforts to return or cause to be
returned to the former Issuing Bank all outstanding Letters of Credit
issued by the former Issuing Bank. Notwithstanding anything to the
contrary contained herein, the Company shall provide cash collateral for
all Letters of Credit issued by the former Issuing Bank that have not been
returned to the former Issuing Bank, and shall further indemnify the
former Issuing Bank for all costs, expenses and liabilities under Letters
of Credit issued by such former Issuing Bank.
C. PARTICIPATIONS. No participation granted hereunder shall relieve the
granting Lender from its Commitment of other obligations hereunder and the
Agent, the Company and other Lenders shall continue to deal solely and directly
with such Lender in connection with such Lender's rights and obligations under
this Agreement and the other Loan Documents, provided, however, that (i) the
selling Lender's obligations under this Agreement shall remain unchanged, (ii)
such Lender shall remain solely responsible to the other parties hereto for the
performance of such obligations, (iii) the participating banks or other entities
shall be entitled to the provisions of subsections 2.6, 2.7, 9.3 and 9.5,
provided, however, that the costs to which a participant shall be entitled to
obtain pursuant thereto shall be determined by reference to such participant's
selling Lender and shall be recoverable solely from such selling Lender and (iv)
the Company, the Agent, the Issuing Bank and the other Lenders shall continue to
deal solely and directly with the selling Lender in connection with such
Lender's rights and obligations under this Agreement and the other Loan
Documents; provided, however, as between the selling Lender and any such
participant, the selling Lender may grant such participant rights with respect
to amendments, modifications or waivers with respect to any fees payable
hereunder to such Lender (including the amount and the dates fixed for the
payment of any such fees) or the amount of principal or the rate of interest
payable on, or the release of any obligations of the Company hereunder and under
the other Loan Documents. No participant shall be a third party beneficiary of
this Agreement and shall not be entitled to enforce any rights provided to its
selling Lender against the Company under this Agreement.
D. ASSIGNMENTS TO FEDERAL RESERVE BANKS. In addition to the assignments
and participations permitted under the foregoing provisions of this subsection
9.1, any Lender may assign and pledge all or any portion of its Loans, the other
Obligations owed to such Lender, and its Notes to any Federal Reserve Bank as
collateral security pursuant to Regulation A of the Board of Governors of the
Federal Reserve System and any operating circular issued by such Federal
-95-
103
Reserve Bank; provided that (i) no Lender shall, as between the Company and such
Lender, be relieved of any of its obligations hereunder as result of any such
assignment and pledge and (ii) in no event shall such Federal Reserve Bank be
considered to be a "Lender" or be entitled to require the assigning Lender to
take or omit to take any action hereunder.
E. INFORMATION. Each Lender may furnish any information concerning the
Company and its Subsidiaries in the possession of that Lender from time to time
to assignees and participants (including prospective assignees and
participants), subject to subsection 9.19.
9.2 EXPENSES.
Whether or not the transactions contemplated hereby shall be consummated,
the Company agrees to pay promptly (i) all the reasonable costs and expenses of
preparation of the Loan Documents; (ii) all the costs of furnishing all opinions
by counsel for the Company (including without limitation any opinions requested
by the Agent or Lenders as to any legal matters arising hereunder) and of the
Company's performance of and compliance with all agreements and conditions on
its part to be performed or complied with under this Agreement and the other
Loan Documents including, without limitation, with respect to confirming
compliance with environmental and insurance requirements; (iii) the reasonable
fees, expenses and disbursements of counsel to the Agent in connection with the
negotiation, preparation, execution and administration of the Loan Documents and
the Loans and any consents, amendments, waivers or other modifications hereto or
thereto, and any other documents or matters, requested by the Company; (iv) all
the costs and expenses of creating and perfecting the Liens in favor of the
Agent for the benefit of Lenders pursuant to the Loan Documents, including
filing and recording fees and expenses, title insurance, reasonable fees and
expenses of counsel for providing such opinions as Lenders may reasonably
request and reasonable fees and expenses of legal counsel to the Agent
(including local counsel); (v) all other reasonable costs and expenses incurred
by the Agent in connection with the syndication of the Commitments; and (vi) all
costs and expenses, including reasonable attorneys' fees (including allocated
costs of internal counsel) and costs of settlement incurred by the Agent and
Lenders in enforcing any Obligations of or in collecting any payments due from
the Company hereunder or under the other Loan Documents by reason of any Event
of Default or Potential Event of Default or in connection with any refinancing
or restructuring of the credit arrangements provided under this Agreement in the
nature of a "work-out" or pursuant to any insolvency or bankruptcy proceedings.
9.3 INDEMNITY.
Subject to the limitations in subsection 9.2 with respect to the matters
specified therein, and without duplication of the provisions of the
Environmental Indemnity Agreement, Section 2.11 of the Aircraft Security
Agreement and Section 3.06 of the Spare Engine Security Agreement, whether or
not the transactions contemplated hereby shall be consummated, the Company
agrees to defend, indemnify, pay and hold harmless the Agent, the Issuing Bank,
the Lenders, the Co-Lead Book Managers, the Syndication Agent, the Arrangers and
the Documentation Agent and the officers, directors, employees, agents and
affiliates of the Agent, the Issuing Bank, the Lenders, the Co-Lead Book
Managers, the Syndication Agent, the Arrangers and the Documentation Agent
(collectively
-96-
104
called the "INDEMNITEES") from and against any and all liabilities, obligations,
losses, damages, penalties, actions, judgments, suits, claims, costs, expenses
and disbursements of any kind or nature whatsoever (including without limitation
the reasonable fees and disbursements of counsel for such Indemnitees), whether
direct, indirect or consequential and whether based on any federal, state or
foreign laws, statutes, rules or regulations (including without limitation
securities and commercial laws, statutes and rules or regulations), on common
law or equitable cause or on contract or otherwise, that may be imposed on,
incurred by, or asserted against any such Indemnitee, in any manner arising out
of this Agreement or the other Loan Documents or the transactions contemplated
hereby or thereby (including without limitation the Lenders' agreement to 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 the
Agent, the Issuing Bank or any Lender to the Company with respect thereto or any
breach or default by the Company of any provision of the Loan Documents
(collectively called the "INDEMNIFIED LIABILITIES"); provided that the Company
shall not have any obligation to any Indemnitee hereunder with respect to any
Indemnified Liabilities to the extent such Indemnified Liabilities arise (i)
from the gross negligence or willful misconduct of that Indemnitee, (ii)
constitute ordinary and usual operating or overhead expenses of an Indemnitee
(excluding, without limitation, costs and expenses of any outside counsel,
consultant or agent) and (iii) arise out of the breach of any obligation or
representation of an Indemnitee in this Agreement or any other Loan Document. To
the extent that the undertaking to defend, indemnify, pay and hold harmless set
forth in the preceding sentence may be unenforceable because it is violative of
any law or public policy, the Company shall contribute the maximum portion that
it is permitted to pay and satisfy under applicable law to the payment and
satisfaction of all Indemnified Liabilities incurred by the Indemnitees or any
of them.
9.4 SET-OFF.
In addition to any rights now or hereafter granted under applicable law
and not by way of limitation of any such rights, upon the occurrence and during
the continuance of any Event of Default, to the fullest consent permitted by
law, each Lender and is hereby authorized by the Company at any time or from
time to time, without notice to the Company or to any other Person, any such
notice being hereby expressly waived, to set off and to appropriate and to apply
any and all deposits (general or special, including, but not limited to,
Indebtedness evidenced by certificates of deposit, whether matured or unmatured)
and any other Indebtedness at any time held or owing by that Lender to or for
the credit or the account of the Company against and on account of the
obligations and liabilities of the Company to that Lender under this Agreement,
the Notes, and the other Loan Documents, including, but not limited to, all
claims of any nature or description arising out of or connected with this
Agreement, the Notes, or any other Loan Document, irrespective of whether or not
(i) that Lender shall have made any demand hereunder or (ii) the principal of or
the interest on the Loans or any other amounts due hereunder shall have become
due and payable pursuant to Section 7 and although said obligations and
liabilities, or any of them, may be contingent or unmatured.
-97-
105
9.5 RATABLE SHARING.
The Lenders hereby agree among themselves that if any of them shall,
whether by voluntary payment, by realization upon security, through the exercise
of any right of set-off or banker's lien, by counterclaim or cross action or by
the enforcement of any right under the Loan Documents or otherwise, or as
adequate protection of a deposit treated as cash collateral under the Bankruptcy
Code, receive payment or reduction of a proportion of the aggregate amount of
principal, interest, fees and other amounts then due and owing to that Lender
hereunder or under the other Loan Documents (collectively, the "AGGREGATE
AMOUNTS DUE" to such Lender) which is greater than the proportion received by
any other Lender in respect of the Aggregate Amounts Due to such other Lender,
then the Lender receiving such proportionately greater payment shall (i) notify
the Agent and each other Lender of the receipt of such payment and (ii) apply a
portion of such payment to purchase participations (which it shall be deemed to
have purchased from each seller of a participation simultaneously upon the
receipt by such seller of its portion of such payment) in the Aggregate Amounts
Due to the other Lenders so that all such recoveries of Aggregate Amounts Due
shall be shared by all Lenders in proportion to the Aggregate Amounts Due to
them; provided that if all or part of such proportionately greater payment
received by such purchasing Lender is thereafter recovered from such Lender upon
the bankruptcy or reorganization of the Company or otherwise, those purchases
shall be rescinded and the purchase prices paid for such participations shall be
returned to such purchasing Lender ratably to the extent of such recovery, but
without interest. The Company expressly consents to the foregoing arrangement
and agrees that any holder of a participation so purchased may exercise any and
all rights of banker's lien, set-off or counterclaim with respect to any and all
monies owing by the Company to that holder with respect thereto as fully as if
that holder were owed the amount of the participation held by that holder.
9.6 AMENDMENTS AND WAIVERS.
A. No amendment, modification, termination or waiver of any provision of
this Agreement or of the Notes, or consent to any departure by the Company
therefrom, shall in any event be effective without the written concurrence of
Requisite Lenders; provided that any such amendment, modification, termination,
waiver or consent which: increases the 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) 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 subsection 2.2E) or the amount
of any fees payable hereunder; increases the maximum duration of Interest
Periods permitted hereunder; releases all or substantially all of the Collateral
(except as expressly provided in the Security Agreements); or changes in any
manner the provisions contained in subsection 7.1 or this subsection 9.6 shall
be effective only if evidenced by a writing signed by or on behalf of all
Lenders to whom are owed Obligations being directly affected by such
-98-
106
amendment, modification, termination, waiver or consent. In addition, (i) any
amendment, modification, termination or waiver of any of the provisions
contained in Section 3 shall be effective only if evidenced by a writing signed
by or on behalf of the Agent and Requisite Lenders, (ii) no amendment,
modification, termination or waiver of any provision of any Note shall be
effective without the written concurrence of the Lender which is the holder of
that Note, (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 the Agent shall be
effective without the written concurrence of such the Agent. The Agent may, but
shall have no obligation to, with the concurrence of any Lender, execute
amendments, modifications, waivers or consents on behalf of that Lender. Any
waiver or consent shall be effective only in the specific instance and for the
specific purpose for which it was given. No notice to or demand on the Company
in any case shall entitle the Company to any other or further notice or demand
in similar or other circumstances. Any amendment, modification, termination,
waiver or consent effected in accordance with this subsection 9.6 shall be
binding upon each Lender at the time outstanding, each future Lender and, if
signed by the Company, on the Company.
B. If, in connection with any proposed change, waiver, discharge or
termination to any of the provision of this Agreement as contemplated by the
provision in the first sentence of this subsection 9.6, the consent of Requisite
Lenders is obtained but consent of one or more of such other Lenders whose
consent is required is not obtained, then the Company may, so long as all
non-consenting Lenders are so treated, elect to terminate such Lender as a party
to this Agreement; provided that, concurrently with such termination, (i) the
Company shall pay that Lender all principal, interest and fees and other amounts
owed to such Lender through such date of termination, (ii) another financial
institution satisfactory to the Company and the Agent (or if the Agent is also
the Lender to be terminated, the successor Agent) shall agree, as of such date,
to become a Lender for all purposes under this Agreement (whether by assignment
or amendment) and to assume all obligations of the Lender to be terminated as of
such date, and (iii) all documents and supporting materials necessary, in the
judgment of the Agent (or if the Agent is also the Lender to be terminated, the
successor Agent) to evidence the substitution of such Lender shall have been
received and approved by the Agent as of such date.
9.7 INDEPENDENCE OF COVENANTS.
All covenants under this Agreement shall be given independent effect so
that if a particular action or condition is not permitted by any of such
covenants, the fact that it would be permitted by an exception to, or would
otherwise be within the limitations of, another covenant shall not avoid
-99-
107
the occurrence of an Event of Default or Potential Event of Default if such
action is taken or condition exists.
9.8 NOTICES.
Unless otherwise specifically provided herein, any notice, request or
other communication herein required or permitted to be given shall be in writing
and may be personally served or sent by telefacsimile or United States mail or
courier service and shall be deemed to have been given when delivered in person
or by courier service, or upon receipt of telefacsimile, or five Business Days
after depositing it in the United States mail with postage prepaid and properly
addressed; provided that notices shall not be effective until received. For the
purposes hereof, the address of each party hereto shall be as set forth under
such party's name on the signature pages hereof or (i) as to the Company and the
Agent, such other address as shall be designated by such Person in a written
notice delivered to the other parties hereto and (ii) as to each other party,
such other address as shall be designated by such party in a written notice
delivered to the Agent.
9.9 SURVIVAL OF REPRESENTATIONS, WARRANTIES AND AGREEMENTS.
A. All representations, warranties and agreements made herein shall
survive the execution and delivery of this Agreement and the making of the Loans
hereunder.
B. Notwithstanding anything in this Agreement or implied by law to the
contrary, (x) the agreements of the Company set forth in subsection 9.3 and the
agreements of the Lenders set forth in subsections 8.2C, 8.4 and 9.5 shall
survive the payment of the Loans, and the termination of this Agreement and (y)
the agreements of the Company set forth in subsections 2.6D, 2.7, 9.2 and 9.4
shall survive the payment of the Loans, and the termination of this Agreement
for a period of two years.
9.10 FAILURE OR INDULGENCE NOT WAIVER; REMEDIES CUMULATIVE.
No failure or delay on the part of the Agent or any Lender in the exercise
of any power, right or privilege hereunder or under any other Loan Document
shall impair such power, right or privilege or be construed to be a waiver of
any default or acquiescence therein, nor shall any single or partial exercise of
any such power, right or privilege preclude other or further exercise thereof or
of any other power, right or privilege. All rights and remedies existing under
this Agreement and the other Loan Documents are cumulative to, and not exclusive
of, any rights or remedies otherwise available.
9.11 MARSHALING; PAYMENTS SET ASIDE.
Neither the Agent nor any Lender shall be under any obligation to marshal
any assets in favor of the Company or any other party or against or in payment
of any or all of the Obligations. To the extent that the Company makes a payment
or payments to the Agent or the Lenders (or to the Agent for the benefit of the
Lenders), or the Agent or Lenders enforce any security interests or exercise
their rights of set-off, and such payment or payments or the proceeds of such
enforcement
-100-
108
or set-off or any part thereof are subsequently invalidated, declared to be
fraudulent or preferential, set aside and/or required to be repaid to a trustee,
receiver or any other party under any bankruptcy law, any other state or federal
law, common law or any equitable cause, then, to the extent of such recovery,
the obligation or part thereof originally intended to be satisfied, and all
Liens, rights and remedies therefor or related thereto, shall be revived and
continued in full force and effect as if such payment or payments had not been
made or such enforcement or set-off had not occurred.
9.12 SEVERABILITY.
In case any provision in or obligation under this Agreement or the Notes
shall be invalid, illegal or unenforceable in any jurisdiction, the validity,
legality and enforceability of the remaining provisions or obligations, or of
such provision or obligation in any other jurisdiction, shall not in any way be
affected or impaired thereby.
9.13 OBLIGATIONS SEVERAL; INDEPENDENT NATURE OF LENDERS' RIGHTS.
The obligations of the Lenders hereunder are several and no Lender shall
be responsible for the obligations or Commitments of any other Lender hereunder.
None of the Arrangers, Syndication Agent, Documentation Agent or the Co-Lead
Book Managers in their respective capacities as such shall have any duties or
responsibilities under this Agreement or the other Loan Documents. Nothing
contained herein or in any other Loan Document, and no action taken by Lenders
pursuant hereto or thereto, shall be deemed to constitute Lenders as a
partnership, an association, a joint venture or any other kind of entity. The
amounts payable at any time hereunder to each Lender shall be a separate and
independent debt.
9.14 HEADINGS.
Section and subsection headings in this Agreement are included herein for
convenience of reference only and shall not constitute a part of this Agreement
for any other purpose or be given any substantive effect.
9.15 APPLICABLE LAW.
THIS AGREEMENT AND EACH OF THE LOAN DOCUMENTS SHALL BE GOVERNED BY, AND
SHALL BE CONSTRUED AND ENFORCED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW
YORK (EXCEPT, IN THE CASE OF SECURITY AGREEMENTS, AS OTHERWISE PROVIDED
THEREIN). Each Letter of Credit shall be governed by, and shall be construed in
accordance with, the laws or rules designated in such Letter of Credit, or, if
no such laws or rules are designated, the Uniform Customs and Practice for
Documentary Credits (1993 Revision), International Chamber of Commerce,
Publication No. 500 or any later revision which may be in effect from time to
time (the "UNIFORM CUSTOMS") and, as to matters not governed by the Uniform
Customs, the laws of the State of New York.
-101-
109
9.16 SUCCESSORS AND ASSIGNS.
This Agreement shall be binding upon the parties hereto and their
respective successors and assigns and shall inure to the benefit of the parties
hereto and the successors and assigns of the Lenders. Except as provided in
subsections 6.6(v), 6.10 and 6.12, neither the Company's rights or obligations
hereunder nor any interest therein may be assigned or delegated by the Company
without the prior written consent of all Lenders.
9.17 CONSENT TO JURISDICTION AND SERVICE OF PROCESS.
ALL JUDICIAL PROCEEDINGS BROUGHT AGAINST ANY PARTY HERETO ARISING OUT OF OR
RELATING TO THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT OR ANY OBLIGATION MAY BE
BROUGHT IN ANY STATE OR FEDERAL COURT OF COMPETENT JURISDICTION IN THE STATE OF
NEW YORK, AND BY EXECUTION AND DELIVERY OF THIS AGREEMENT EACH SUCH PARTY
ACCEPTS FOR ITSELF AND IN CONNECTION WITH ITS PROPERTIES, GENERALLY AND
UNCONDITIONALLY, THE NONEXCLUSIVE JURISDICTION OF THE AFORESAID COURTS AND
WAIVES ANY DEFENSE OF FORUM NON CONVENIENS AND IRREVOCABLY AGREES TO BE BOUND BY
ANY JUDGMENT RENDERED THEREBY IN CONNECTION WITH THIS AGREEMENT, SUCH OTHER LOAN
DOCUMENT OR SUCH OBLIGATION (SUBJECT TO ANY RIGHT OF APPEAL BY A
HIGHER COURT). The Company hereby agrees that service of all process in any such
proceeding in any such court may be made by registered or certified mail, return
receipt requested, to the Company at its address provided in subsection 9.8,
such service being hereby acknowledged by the Company to be sufficient for
personal jurisdiction in any action against the Company in any such court and to
be otherwise effective and binding service in every respect. The Company hereby
appoints CT Corporation System, 0000 Xxxxxxxx, Xxx Xxxx, Xxx Xxxx 00000, as its
agent for service of process and agrees that service of process upon such agent
shall be deemed to be service of process upon the Company with respect to any
proceeding related to the Loan Documents. Nothing herein shall affect the right
to serve process in any other manner permitted by law or shall limit the right
of any Lender or the Agent to bring proceedings against the Company in the
courts of any other jurisdiction.
9.18 WAIVER OF JURY TRIAL.
EACH OF THE PARTIES TO THIS AGREEMENT HEREBY AGREES TO WAIVE ITS
RESPECTIVE RIGHTS TO A JURY TRIAL OF ANY CLAIM OR CAUSE OF ACTION BASED UPON OR
ARISING OUT OF THIS AGREEMENT OR ANY OF THE OTHER LOAN DOCUMENTS OR ANY DEALINGS
BETWEEN THEM RELATING TO THE SUBJECT MATTER OF THIS LOAN TRANSACTION OR THE
LENDER/BORROWER RELATIONSHIP THAT IS BEING ESTABLISHED. The scope of this waiver
is intended to be all-encompassing of any and all disputes that may be filed in
any court and that relate to the subject matter of this transaction, including
without limitation contract claims, tort claims, breach 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
-102-
110
in entering into this Agreement, and that each will continue to rely on this
waiver in their related future dealings. Each party hereto further warrants and
represents that it has reviewed this waiver with its legal counsel and that it
knowingly and voluntarily waives its jury trial rights following consultation
with legal counsel. THIS WAIVER SHALL APPLY TO ANY SUBSEQUENT AMENDMENTS,
RENEWALS, SUPPLEMENTS OR MODIFICATIONS TO THIS AGREEMENT OR ANY OF THE OTHER
LOAN DOCUMENTS OR TO ANY OTHER DOCUMENTS OR AGREEMENTS OR TO ANY OTHER DOCUMENTS
OR AGREEMENTS RELATING TO THE LOANS MADE HEREUNDER. In the event of litigation,
this Agreement may be filed as written consent to a trial by the court.
9.19 CONFIDENTIALITY.
None of the Agent, the Issuing Bank and the Lenders shall disclose any
Confidential Information to any Person without the consent of the Company, such
consent not to be unreasonably withheld or delayed, other than (a) to the
Agent's, Issuing Bank's or Lender's Affiliates and their respective officers,
directors, employees, agents and advisors involved in the administration,
monitoring or enforcement of the Loans hereunder (in such Person's reasonable
judgment) and to actual or prospective Eligible Assignees and participants, and
then only in each case on a confidential basis, (b) as required by any law, rule
or regulation or judicial process and (c) as requested or required by any state,
federal or foreign authority or examiner regulating banks or banking.
9.20 COUNTERPARTS; EFFECTIVENESS.
This Agreement and any amendments, waivers, consents or supplements hereto
or in connection herewith may be executed in any number of counterparts and by
different parties hereto in separate counterparts, each of which when so
executed and delivered shall be deemed an original, but all such counterparts
together shall constitute but one and the same instrument; signature pages may
be detached from multiple separate counterparts and attached to a single
counterpart so that all signature pages are physically attached to the same
document.
9.21 INTEGRATION.
This Agreement, the Security Agreements, and the other agreements executed
in connection therewith constitute the entire understanding among the parties
hereto with respect to the matters covered thereby, and shall supersede any
prior agreements covering such matters.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed and delivered by their respective officers thereunto duly
authorized as of the date first written above.
COMPANY: AMERICA WEST AIRLINES, INC.
-103-
111
By: /s/ W. Xxxxxxx Xxxxxx
-------------------------------
Name: W. Xxxxxxx Xxxxxx
Title: Executive Vice President
Notice Address:
000 Xxxx Xxx Xxxxxx Xxxxxxx
Xxxxx, Xxxxxxx 00000
Attention: W. Xxxxxxx Xxxxxx
--------------------
Fax: (000) 000-0000
--------------------------
INITIAL ISSUING BANK, AGENT AND LENDER:
THE INDUSTRIAL BANK OF JAPAN, LIMITED, as
Initial Issuing Bank, Agent and Lender
By: /s/ X. Xxxxxxxx
-------------------------------
Name: Xxxxxxx X. Xxxxxxxx
Title: Joint General Manager
Notice Address:
0000 Xxxxxx xx xxx Xxxxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxxx Xxxxxxxxxxx
Fax: (000) 000-0000
with a copy to:
000 Xxxxx Xxxxx Xxxxxx
Xxxxx 0000
Xxx Xxxxxxx, XX 00000
Attention: Xxxxx Xxxxxx
Fax: (000) 000-0000
-104-
112
LENDERS: CITICORP USA, INC.
By: /s/ Xxxxxx X. Xxxxxx
-------------------------------
Name: Xxxxxx X. Xxxxxx
Title: Managing Director
Address:
Fax:
THE FUJI BANK, LIMITED
By: /s/ X. Xxxxxx
-------------------------------
Name: Xxxxxxxx Xxxxxx
Title: Senior Vice President
Address: 000 X. Xxxx Xxxxxx, 00xx Xxxxx
Xxx Xxxxxxx, Xxxxxxxxxx 00000
Fax: (000) 000-0000
THE MITSUBISHI TRUST AND BANKING
CORPORATION
By: /s/ Xxxxx X. Xxxxx
-------------------------------
Name: Xxxxx X. Xxxxx
Title: Senior Vice President
Head of Special Finance
Address: 000 Xxxxxxx Xxxxxx
Xxx Xxxx, XX 00000
Fax: (000) 000-0000
-105-
113
BANKERS TRUST COMPANY
By: /s/ Xxxx Xxx Xxxxx
-------------------------------
Name: Xxxx Xxx Xxxxx
Title: Managing Director
Address: 000 Xxxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Fax: (000) 000-0000
BANK ONE, ARIZONA, NA
By: /s/ Xxxx X. Xxxxxxx
-------------------------------
Name: Xxxx X. Xxxxxxx
Title: Vice President
Address: 000 Xxxxx Xxxxxxx Xxxxxx, 00xx Xxxxx
Xxxxxxx, Xxxxxxx 00000
Fax: (000) 000-0000
BANK OF SCOTLAND
By: /s/ Xxxxx Xxxxx
-------------------------------
Name: Xxxxx Xxxxx
Title: Senior Vice President
Address: 000 Xxxxx Xxxxxx, Xxxxx Xxxxx
Xxx Xxxx, XX 00000
Fax: (000) 000-0000
-106-
114
EXHIBIT A
FORM OF AIRCRAFT SECURITY AGREEMENT
dated as of
----------------------
made by
AMERICA WEST AIRLINES, INC.
Company
in favor of
THE INDUSTRIAL BANK OF JAPAN, LIMITED,
as Agent
115
TABLE OF CONTENTS
Page
ARTICLE I
............................................................... 1
DEFINITIONS AND INTERPRETATION; GRANTING CLAUSES; SUBSEQUENTLY
MORTGAGED ENGINE; REPRESENTATIONS AND WARRANTIES
............................................................... 1
SECTION 1.01. Definitions and Interpretation................... 1
SECTION 1.02. Grant of Security Interest....................... 5
SECTION 1.03. Subsequently Mortgaged Engine.................... 6
SECTION 1.04. Representations and Warranties of the Company.... 7
ARTICLE II
COVENANTS
............................................................... 7
SECTION 2.01. Registration; Maintenance and Operation.......... 7
SECTION 2.02. Liens............................................ 11
SECTION 2.03. Parts............................................ 11
SECTION 2.04. Insurance........................................ 13
SECTION 2.05. Inspection....................................... 19
SECTION 2.06. Further Assurances............................... 19
SECTION 2.07. Recording and Filing; Opinions of Counsel........ 20
ARTICLE III
EVENTS OF DEFAULT AND REMEDIES
............................................................... 22
SECTION 3.01. Remedies; Obtaining the Aircraft Upon Default.... 22
SECTION 3.02. Remedies; Disposition of the Aircraft............ 23
SECTION 3.03. Application of Proceeds.......................... 25
SECTION 3.04. Remedies Cumulative.............................. 25
ARTICLE IV
AGENT
............................................................... 25
SECTION 4.01. Agent............................................ 25
ARTICLE V
116
MISCELLANEOUS PROVISIONS
.............................................................. 26
SECTION 5.01. Notices........................................... 26
SECTION 5.02. Waiver............................................ 26
SECTION 5.03. Expenses Etc...................................... 26
SECTION 5.04. Amendments, Etc................................... 26
SECTION 5.05. Successors and Assigns............................ 26
SECTION 5.06. Survival.......................................... 27
SECTION 5.07. Severability...................................... 27
SECTION 5.08. Captions.......................................... 27
SECTION 5.09. Counterparts...................................... 27
SECTION 5.10. GOVERNING LAW..................................... 27
117
EXHIBIT A
AIRCRAFT SECURITY AGREEMENT (the "Security Agreement"), dated
as of _________ ___, _____ from AMERICA WEST AIRLINES, INC., a Delaware
corporation (the "Company"), whose mailing address is 000 Xxxx Xxx Xxxxxx
Xxxxxxx, Xxxxx, Xxxxxxx 00000, to The Industrial Bank of Japan, Limited, as
Agent under the Amended and Restated Revolving Credit Agreement referred to
below (together with its successors and assigns in such capacity, the "Agent")
for the benefit and on behalf of itself as such Agent and the lenders (the
"Lenders", such term to include the Issuing Bank as defined in the Credit
Agreement) from time to time party to that certain Amended and Restated
Revolving Credit Agreement dated as of December 10, 1999 (as the same may be
amended or waived from time to time the "Credit Agreement") among the Company,
the Lenders and the Agent.
W H E R E A S:
A. The Lenders have agreed to extend certain financial
accommodations to the Company on the terms and subject to the conditions set
forth in the Credit Agreement.
B. Pursuant to the terms of the Credit Agreement, the Agent
has been appointed as the agent of the Lenders to hold and enforce on their
behalf the rights granted to the Agent herein with respect to the Subject
Collateral.
C. Pursuant to the Credit Agreement the Company has agreed to
deliver this Security Agreement for the purposes of, among other things,
securing all payment and performance obligations of every nature of the Company
from time to time owed to the Agent, the Lenders or any of them under the Loan
Documents, whether for principal, interest, fees, expenses, indemnification or
otherwise (collectively, the "Obligations"), and subjecting the properties and
assets hereinafter described to the lien of this Security Agreement as security
for the performance of the Obligations.
NOW, THEREFORE, in consideration of the benefits accruing to
the Company, the receipt and sufficiency of which are hereby acknowledged, the
PARTIES HERETO AGREE:
ARTICLE I
DEFINITIONS AND INTERPRETATION; GRANTING CLAUSES; SUBSEQUENTLY
MORTGAGED ENGINE; REPRESENTATIONS AND WARRANTIES
SECTION 1.01. Definitions and Interpretation. Unless otherwise
defined herein, all capitalized terms used in this Security Agreement that are
defined in the Credit Agreement (including those terms incorporated by
reference) shall have the respective meanings assigned to them in the Credit
Agreement. The rules of interpretation set forth in Section 1 of the Credit
Agreement shall apply to this Security Agreement. In addition, the following
terms shall have the meanings assigned as follows:
"Act" or "Federal Aviation Act" shall mean Subtitle VII of
Title 49 of the United States Code, and the rules and regulations promulgated
thereunder, as in effect on the date of this
118
Security Agreement, and as modified or amended hereafter, or any subsequent
legislation that supplements or supersedes such Subtitle.
"Agreed Value" shall mean the value of the Aircraft as
determined from time to time pursuant to an Approved Appraisal.
"Air carrier", "aircraft", "aircraft engines", "appliances"
and "spare parts" shall have the respective meanings given to these terms in the
Act, as in effect on the date of this Security Agreement.
"Airframe" has the meaning given in Section 1.02(a) hereof.
"Approved Appraisal" has the meaning specified in Section 2.10
of the Credit Agreement.
"Commitments" means the commitments of the Lenders to make and
convert Loans as set forth in subsection 2.1A of the Credit Agreement and to
issue Letters of Credit set forth in subsection 2.9 of the Credit Agreement.
"Engine" has the meaning given in Section 1.02(a) hereof.
"Event of Default" means each of the events set forth in
Section 7 of the Credit Agreement.
"Event of Loss" shall mean any of the following events with
respect to the Aircraft, any Airframe or any Engine:
(i) the loss of such property or of the use thereof for
45 days due to the destruction of or damage to such property which renders
repair uneconomic or which renders such property permanently unfit for normal
use by the Company;
(ii) any damage to such property which results in the
receipt of insurance proceeds with respect to such property on the basis of a
total loss, or a constructive or compromised total loss;
(iii) the theft or disappearance of such property for a
period in excess of 30 days;
(iv) the confiscation, condemnation, or seizure of, or
requisition of title to, or use of, such property by any government or
governmental authority which results in the loss of title or possession of such
property by the Company for a period in excess of 30 consecutive days;
(v) as a result of any law, rule, regulation, order or
other action by the FAA or other government body having jurisdiction, use of
such property in the normal course of the business of air transportation is
prohibited for a period longer than one (1) month; and
119
(vi) the Aircraft is removed from operational service
and placed in short term storage for a period of more than 90 consecutive days
or the Aircraft is placed in long term storage.
"Federal Aviation Administration" or "FAA" shall mean the
United States Federal Aviation Administration or any successor thereto
administering the functions of the Federal Aviation Administration under the
Act.
"Joint Venture" means a joint venture, partnership or other
similar arrangement, whether in corporate, partnership or other legal form;
provided that in no event shall any corporate Subsidiary of any Person be
considered to be a Joint Venture to which such Person is a party.
"Letters of Credit" means each letter of credit that may be
issued by the Issuing Bank under the terms of subsection 2.9 of the Credit
Agreement.
"Lien" shall mean any lien, mortgage, pledge, assignment,
security interest, charge, hypothecation, preference, priority, privilege, lease
or encumbrance of any kind (including any conditional sale or other title
retention agreement, any lease in the nature thereof, and any agreement to give
any security interest); provided that neither negative pledges nor covenants to
abstain from granting liens on or security interests in assets of the Company or
its Subsidiaries shall constitute Liens.
"Loan" or "Loans" has the meaning given such term in the
Credit Agreement.
"Officer's Certificate" shall mean a certificate signed by a
Responsible Officer and delivered to the Agent.
"Parts" shall mean all appliances, components, parts,
instruments, appurtenances, accessories, furnishings, and other equipment of
whatever nature which may from time to time be incorporated or installed in or
attached to the Airframe or any Engine so long as ownership thereof (subject to
Permitted Liens) shall remain vested in the Company in accordance with the terms
of Section 2.03C hereof and any replacement Part incorporated or installed in or
attached to the Airframe or any Engine in accordance with the terms of Section
2.03C.
"Permitted Lessee" shall mean any United States "air carrier"
(within the meaning of the Act) that is not subject to a proceeding under Title
7 or 11 of the United States Bankruptcy Code (as now and hereafter in effect or
any successor statute), holds a certificate under Section 41102(a)(1) of the Act
and operates under Federal Aviation Regulation Part 121.
"Permitted Liens" shall mean (i) the Lien of this Security
Agreement, (ii) Liens for taxes, assessments or governmental charges payable by
the Company either not delinquent for a period of more than thirty (30) days or
being contested in good faith by appropriate proceedings so long as during such
thirty (30) day period there is not any material risk of the sale, forfeiture or
loss of the Airframe or any Engine or any interest therein or during such
proceeding there is not any material risk of the sale, forfeiture or loss of the
Airframe or any Engine or any interest therein due to an effective stay or
otherwise, (iii) any lien for the fees or charges of any airport or air
navigation
120
authority or any materialmen's, repairmen's, landlord's, workmen's, supplier's
and other like Liens arising in the ordinary course of business, for amounts the
payment of which is not overdue for a period of more than thirty (30) days or is
being contested in good faith by appropriate proceedings so long as during such
thirty (30) day period there is not any material risk of the sale, forfeiture or
loss of the Airframe or any Engine or any interest therein or during such
proceeding there is not any material risk of the sale, forfeiture or loss of the
Airframe or any Engine or any interest therein due to an effective stay or
otherwise, (iv) Liens which the Agent has specifically permitted in writing, (v)
Liens (other than Liens for taxes) arising out of judgments or awards against
the Company which are being appealed so long as there is not any material risk
of the sale, forfeiture or loss of the Airframe, any Engine or any interest
therein or during such proceeding there is not any material risk of the sale,
forfeiture or loss of the Airframe, any Engine or any interest therein due to an
effective stay or otherwise, (vi) rights of third parties under arrangements
permitted pursuant to Section 2.01D and salvage rights of insurers expressly
permitted by this Security Agreement and (vii) other rights of the Company and
the Agent provided in this Security Agreement.
"Person" means and includes natural persons, corporations,
limited partnerships, general partnerships, joint stock companies, limited
liability companies, Joint Ventures, associations, companies, trusts, banks,
trust companies, land trusts, business trusts or other organizations, whether or
not legal entities, and governments and agencies and political subdivisions
thereof.
"Potential Event of Default" means a condition or event that,
after notice or the passage of time or both, would constitute an Event of
Default.
"Replacement Engine" shall mean any aircraft engine described
in any Security Agreement Supplement from and after the date on which the same
became subject to the Lien of this Security Agreement, unless and until the same
shall be released from the Lien of this Security Agreement pursuant to the terms
hereof.
"Security Agreement" shall mean this instrument as originally
executed as of the date hereof and as it thereafter may from time to time be
supplemented through one or more Security Agreement Supplements or amended by
one or more instruments supplementary or amendatory thereto and which are
executed by the Company and the Agent.
"Supplement" or "Security Agreement Supplement" shall mean a
security agreement supplement in substantially the form of Appendix A hereto,
subjecting any additional aircraft engine to the Lien of this Security
Agreement.
The following capitalized terms are defined in the applicable
Recital or Granting Clause:
Company First Paragraph
Lenders First Paragraph
121
Credit Agreement First Clause
Subject Collateral Granting Clause
Agent First Paragraph
Obligations Recital "C"
SECTION 1.02. Grant of Security Interest. The Company hereby
grants to and charges in favor of the Agent a security interest in the following
property (collectively the "Subject Collateral") as security for the due and
prompt payment and performance by the Company of the Obligations:
(a) the Airframe and Engines (each term as defined in and
described in Schedule I hereto);
(b) any Replacement Engine described in Schedule I to any
Supplement from time to time hereafter executed and delivered by the
Company pursuant to Section 1.02 hereof;
(c) all proceeds receivable or received when any Airframe or
Engine is sold, exchanged, collected, leased or otherwise disposed of,
including, without limitation, all amounts payable or paid under
insurance, requisition or other payments as the result of any loss
(including an Event of Loss (as hereinafter defined) and Event of
Damage) or Repairable Damage to such Airframe or Engine but (for
avoidance of doubt) shall exclude amounts payable to the Company for
operating a charter or wet lease permitted without the consent of the
Agent pursuant to Section 2.01(D) hereof (collectively, "Proceeds");
(d) all issues from and income and interest on Proceeds,
products, title, interest and claims whatsoever, at law, as well as in
equity, now or hereafter existing, in or to any of the foregoing;
[(e) the Aircraft Sale and Purchase Agreement, dated
________________, between the Company and ____________________ (the
"Purchase Agreement") and any bills of sale for the Aircraft delivered
thereunder;]*/ and
(f) to the extent not included in the foregoing, all and any
proceeds (not expressly excluded in the definition of Proceeds) of any
and all of the foregoing Subject Collateral.
[It is expressly agreed that, anything herein contained to the contrary
notwithstanding, the Company shall remain liable under the Purchase Agreement
and the bills of sale delivered thereunder to perform all of its obligations
thereunder in accordance with and pursuant to the terms and provisions thereof
and the Agent and the Lenders shall have no obligation or liability under the
Purchase Agreement or such bills of sale by reason of or arising out of the
assignments hereunder
--------
*/Subject to negotiation on a case by case basis.
122
nor shall the Agent or the Lenders be required or obligated in any manner to
perform or fulfill any obligations of the Company under the Purchase Agreement
or such bills of sale.]*/
Any lease of the Airframe together with the Engines, whether or not
such Engines are installed on the Airframe or any other airframe and any and all
logs, manuals and other records relating thereto (collectively, the "Aircraft")
shall be subject and subordinate to all of the provisions of the Credit
Agreement and this Security Agreement. Except with the prior written consent of
the Agent or as permitted pursuant to Sections 2.01B, 2.01D, 2.02 and 2.03, the
Company shall not sell or otherwise dispose of any part of, or any interest in,
the Aircraft prior to payment and performance in full of the Obligations and
expiration of the Commitments of the Lenders unless the same shall be released
from the Lien hereof in accordance with Section 2.10(B)(ii)(1) of the Credit
Agreement. If the Company complies with such provisions of Section 2.10B(ii)(1)
of the Credit Agreement with respect to the Aircraft, the Agent shall, at the
Company's written request and expense, promptly upon receipt thereof from the
Company, execute and deliver to the Company a release of the Lien of this
Security Agreement with respect to such Aircraft in such form as the Company
shall reasonably request.
SECTION 1.03. Subsequently Mortgaged Engine.
A. Replacement Engine. The Company may at any time or from time to time
subject to the Lien of this Security Agreement one or more Replacement Engines,
in substitution for one or more of the Engines then constituting part of the
Aircraft and subject to such Lien, provided that each Replacement Engine so
subjected to the Lien of this Security Agreement shall be appropriate for
installation on the Airframe.
B. Supplements. Whenever the Company shall subject any Replacement
Engine to the Lien of this Security Agreement, the Company will on or prior
thereto:
(i) execute and deliver to the Agent a Supplement properly
describing such Replacement Engine;
(ii) deliver to the Agent an Officer's Certificate confirming
(x) that the representations and warranties contained in Section 1.04
hereof are true and accurate on and as of the date of such Supplement
with respect to such Replacement Engine and the Company as though made
on and as of such date and (y) that the Company has complied with the
conditions contained in Section 2.10B(ii)(1) of the Credit Agreement;
(iii) deliver an Approved Appraisal (which may be a desktop
appraisal) with respect to the Airframe including the Replacement
Engine; and
(iv) if such Replacement Engine is Section 1110 Property (as
hereinafter defined), furnish the Agent with an opinion of counsel
reasonably satisfactory to the Agent in form
--------
*/ Subject to negotiation on a case by case basis.
123
and substance reasonably satisfactory to the Agent that the Agent will
have the benefit of Section 1110 under this Security Agreement with
respect to such Replacement Engine.
Promptly upon the recordation of such Supplement with the FAA,
the Company will cause to be delivered to the Agent an opinion of counsel
acceptable to the Agent as to the due recording of such Supplement against such
Replacement Engine in accordance with the Act. Upon satisfaction of the
conditions of this Section 1.03B, the Replacement Engine shall become an
"Engine" for all purposes hereof and the engine being substituted for shall
cease to be an "Engine" and shall be released from the Lien of this Security
Agreement. Upon written request and at the Company's expense, the Agent shall
execute and deliver to the Company such releases as the Company may reasonably
request to effectuate the release contemplated in the previous sentence.
SECTION 1.04. Representations and Warranties of the Company.
The Company represents and warrants that, in the case of the Airframe and each
Engine mortgaged hereunder, on the date such Airframe or Engine is mortgaged
hereunder:
(i) the execution, delivery and performance by the Company of
this Security Agreement are within the Company's corporate power, have
been duly authorized by all necessary corporate action, and do not
contravene (1) the Company's articles of incorporation or by-laws or
(2) any law, rule, regulation, order, writ, judgment, injunction,
decree, determination or award or any contractual restriction binding
on the Company or any of its properties and do not result in or require
the creation of any Lien (other than pursuant to the Loan Documents)
upon or with respect to any of its properties other than that created
hereunder;
(ii) no authorization or approval or other action by, and no
notice to or filing with, any governmental authority is required for
the due execution and delivery by the Company of this Security
Agreement, other than as have been duly obtained, taken, given or made;
and
(iii) the Company shall have good and marketable title to such
Airframe or Engine, free and clear of all Liens created or incurred by
it or permitted to exist by it other than the Lien of this Security
Agreement and Permitted Liens.
ARTICLE II
COVENANTS
SECTION 2.01. Registration; Maintenance and Operation.
A. Registration. The Company, at its own expense, shall [upon delivery
of the Aircraft under the Purchase Agreement,]*/ cause the Aircraft to be duly
registered in the name of the Company, and to remain duly registered in the name
of the Company, with the FAA.
--------
*/ Subject to negotiation on a case by case basis.
124
B. Maintenance.
1. General. The Company, at its own cost and expense shall (i)
service, repair, maintain and overhaul or cause the same to be done to the
Airframe and each Engine under the Company's FAA-approved Maintenance Program
(the "Approved Maintenance Program") in the same manner and with the same care
as used by the Company with similar aircraft and engines operated by the Company
(except for care required pursuant to return conditions of lease agreements with
respect to aircraft and engines leased by the Company) and so as to keep the
Airframe and each Engine in good operating condition and in passenger
configuration, (ii) maintain the manuals and technical records in an orderly
manner in the English language in accordance with the Approved Maintenance
Program and (iii) cause all heavy maintenance to be performed at a nationally
recognized maintenance facility holding a valid FAA repair facility certificate
and all other maintenance to be performed by FAA approved maintenance providers.
2. Specific Items of Maintenance. The Company agrees that
maintenance and repairs shall include, but shall not be limited to, the
following specific items:
a. to perform or have performed in accordance with the
Approved Maintenance Program all routine maintenance work, including on-line
maintenance on the Aircraft, and to ensure that all such maintenance shall be in
accordance with the regulations and directives of the FAA. The Company shall
cause all maintenance and repairs to the Aircraft to be performed at repair
facilities approved by the FAA, including, with respect to any lease permitted
hereunder, any lessee's FAA approved maintenance facilities;
b. to correct diligently deficiencies revealed at any
time by any inspection by the Company which under the Approved Maintenance
Program reasonably require repair, replacement, overhaul and adjustment;
c. to maintain or cause to be maintained at all times
in an orderly manner and in accordance with all applicable requirements of the
FAA and any other governmental authority having jurisdiction with respect
thereto, all Aircraft documentation, including, without limitation, all records
relating to the location, service, inspection, maintenance, modification, repair
and overhaul of the Airframe, Engines and all Parts installed therein and the
manuals and technical records, and in accurate, current, up-to-date and complete
status (if necessary, through manufacturers' revision service);
d. if required by FAA regulations, to notify the
manufacturer promptly of any modifications or configuration changes to the
Airframe which would have a material effect on or be a material change to the
detail specification and/or the manuals relating to the Airframe (such as
flight, operations and maintenance);
e. to maintain the Engines at all times in accordance
with the Approved Maintenance Program; and
125
f. to make all structural repairs in accordance with
the Approved Maintenance Program.
3. Airworthiness Directives. The Company agrees to carry out
or cause to be carried out at its expense on the Aircraft, in accordance with
the terms thereof, any airworthiness directive or any other mandatory F.A.R. or
other regulation, directive or instruction (each, an "Airworthiness Directive")
which the FAA may from time to time issue. All Airworthiness Directives shall be
timely accomplished in accordance with the Approved Maintenance Program and the
terms and conditions of such Airworthiness Directives (including by means of
alternate compliance under the Airworthiness Directive and the Approved
Maintenance Program).
4. Corrosion Control. The Company shall carry out at its
expense such work as may be required for the control of corrosion in accordance
with the Approved Maintenance Program.
5. Repairs. Any repair to the Aircraft shall be accomplished
pursuant to the appropriate manufacturer's repair manual instructions, the
Approved Maintenance Program, or other FAA-approved data.
6. Warranties. Any warranties, express or implied, of
manufacturers, suppliers or subcontractors relating to the Aircraft or any of
the Engines shall inure to the benefit of the Company and be exercised or
enforced by the Company at the Company's sole expense. So long as the Loans have
not been accelerated the Company shall have the right to exercise, enforce,
compromise or release the same, and may apply the proceeds thereof in any manner
it deems appropriate. The Company shall maintain the Aircraft in such a manner
so as not to knowingly void any available warranties. Upon acceleration of the
Loans, all warranties and all rights with respect to warranties shall revert to
the Agent or its designee and, upon request of the Agent, the Company shall
execute such documents and take such action as may be requested or required to
enable the Agent or its designee to enforce or in any other way receive the
benefit of such warranties.
C. Operation.
1. The Company will not maintain, use, service, repair,
overhaul or operate the Aircraft in violation of any law, rule, regulation,
treaty or order of any government or governmental authority (domestic or
foreign) having jurisdiction, or in violation of any airworthiness certificate,
license or registration relating to the Aircraft issued by any such authority or
for a purpose for which the Aircraft is not designed or reasonably suitable or
in any configuration other than passenger configuration.
2. The Company will not operate the Aircraft: (i) in or to any
area excluded from coverage by any insurance required to be maintained by the
terms of this Agreement; or (ii) any areas of actual or threatened armed
hostilities unless such operation is covered by and complies with the insurance
required hereunder.
D. Possession and Leases. The Company will not lease or otherwise in
any manner deliver, transfer or relinquish possession of the Airframe or any
Engine or install or permit any Engine to be
126
installed on any airframe other than the Airframe without the prior written
consent of the Agent; provided that, so long as no Event of Default exists at
the time of such lease, delivery, transfer or relinquishment of possession or
installation and the Company shall continue to maintain insurance in compliance
with this Security Agreement, the Company may, without the prior written consent
of the Agent:
1. deliver possession of the Airframe or any Engine to the
manufacturer thereof or to any person for testing, service, repair,
maintenance or overhaul work on the Airframe or any Engine or any part
thereof or for alterations or modifications in or additions to the
Airframe or Engine(s);
2. install an Engine on an airframe owned by the Company,
leased to the Company or owned or purchased by the Company subject to a
conditional sale or other security agreement, provided that (a) such
airframe is free and clear of all Liens, except: (i) the rights of the
parties to the lease or conditional sale or other security agreement
covering such airframe, or their assignees, (ii) liens of the type
described in the definition hereunder of "Permitted Liens", and (iii)
the rights of other air carriers under normal interchange agreements
which are customary in the airline industry and do not contemplate,
permit or require the transfer of title to the airframe or engines
installed thereon, and (b) any such lease, conditional sale or other
security agreement provides that engines such as the Engine shall not
become subject to the lien of such lease, conditional sale or other
security agreement, notwithstanding the installation thereof on such
airframe; and
3. lease the Aircraft to any Permitted Lessee provided that
(A) such lease shall not have a term of more that six (6) months (or
eighteen (18) months if at the time such lease is executed such
Permitted Lessee has a long term unsecured credit rating of at least BB
by Standard & Poor's Ratings Group), (B) the terms of such lease
expressly provide that the lease is subject and subordinate to this
Security Agreement and all rights of the Agent hereunder, including,
but not limited to, the right of the Agent to repossess the Aircraft
following the acceleration of the Loans, (C) the maintenance, insurance
and other terms of the lease are consistent with the requirements of
this Security Agreement, (D) the lease (1) requires that the Aircraft
remain a U.S. registered aircraft and (2) prohibits further leasing by
the Permitted Lessee and (E) concurrently with entering into such
lease, the Company provides the Agent with a copy thereof together with
insurance certificates and evidence complying with Section 2.04 (which
insurance may be provided by the Permitted Lessee if it otherwise
complies in all respects with Section 2.04 hereof).
The Agent agrees for the benefit of a lessor or secured party
under a lease, conditional sale or other security agreement containing an
agreement complying with Section 2.01(D)(2)(b) which lease, conditional sale or
security agreement also covers an engine or engines owned by the lessor under
such lease or subject to a security interest in favor of the secured party under
such conditional sale or other security agreement that the Agent will not
acquire or claim, as against such lessor or secured party, any right, title or
interest in any such engine or engines as the result of such engine or engines
being installed on the Airframe at any time while such engine or engines is
subject
127
to such lease, conditional sale or other security agreement and owned by such
lessor or subject to a security interest in favor of such secured party.
The rights of any lessee or other transferee who receives
possession by reason of a transfer permitted by this Section 2.01(D) shall be
subject and subordinate to all the terms of this Security Agreement, including,
without limitation, the covenants contained in Sections 2.01 (A), (B) and (C) of
this Security Agreement and the Agent's rights, powers and remedies under this
Security Agreement, including the right to repossession pursuant thereto and to
avoid such lease upon such repossession and the Company shall remain primarily
liable under this Security Agreement for the performance of all of the terms
thereof to the same extent as if such lease or transfer had not occurred. The
terms of any such lease shall not permit any lessee to take any action not
permitted to be taken by the Company under this Security Agreement with respect
to the Aircraft.
Any wet lease or similar arrangement under which the Company
provides the crew and maintains operational control of the Aircraft shall not
constitute a delivery, transfer or relinquishment of possession for purposes of
this Section 2.1(D).
E. Plates. On or before the date hereof, or as soon thereafter as
practicable, the Company agrees to affix and maintain in the cockpit of the
Airframe and on each Engine a nameplate bearing the inscription:
SUBJECT TO A SECURITY INTEREST IN FAVOR OF THE INDUSTRIAL BANK OF
JAPAN, LIMITED, AS AGENT, SECURED CREDITOR
F. Insignia. Nothing contained in the Credit Agreement or this Security
Agreement shall prohibit the Company from placing its customary colors and
insignia on the Airframe or any Engine or from otherwise operating the Aircraft
in its livery.
SECTION 2.02. Liens. The Company will not directly or
indirectly create, incur, assume or suffer to exist any Lien on or with respect
to the Aircraft, title thereto or any interest therein or part thereof other
than Permitted Liens. The Company will promptly, at its own expense, take (or
cause to be taken) such actions as may be necessary duly to discharge any Lien
not constituting a Permitted Lien if the same arise at any time.
SECTION 2.03. Parts.
A. Replacement of Parts. The Company, at its own cost and expense, will
promptly replace or cause to be replaced all Parts which may from time to time
become worn out, lost, stolen, destroyed, seized, confiscated, damaged beyond
repair or permanently rendered unfit for use for any reason whatsoever, except
as otherwise provided in this Section 2.03(A) or Section 2.03(D) of this
Security Agreement. All replacement parts (other than replacement parts
temporarily installed as provided in Section 2.03(B) of this Security Agreement
shall be free and clear of all Liens (except Permitted Liens), and shall be in
as good an operating condition, and shall have a value and utility substantially
equal to or greater than, the Parts replaced assuming such replaced Parts were
in the condition and repair required to be maintained by the terms of this
Security Agreement. All Parts
128
at any time removed from the Airframe or any Engine shall remain the property of
the Company, no matter where located, until such time as such Parts shall be
replaced by parts which meet the requirements for replacement Parts specified
above. Upon any replacement part becoming incorporated or installed in or
attached to the Airframe or any Engine, without further act (subject only to
Permitted Liens and any arrangement permitted by Section 2.03(B) of this
Security Agreement), (i) such replacement part shall become the property of the
Company and shall become subject to the Lien of this Security Agreement and be
deemed a Part for all purposes of this Security Agreement to the same extent as
the Parts originally incorporated or installed in or attached to the Airframe or
such Engine and (ii) the replaced Part shall no longer be deemed a Part under
this Security Agreement. Upon written request and at the Company's expense, the
Agent shall execute and deliver to the Company such releases as the Company may
reasonably request to effectuate the release contemplated in clause (ii) of the
previous sentence.
The Company may remove Parts which the Company determines in
its reasonable judgment to be obsolete or no longer suitable or appropriate for
use on the Airframe or any Engine (each, an "Obsolete Part"), provided that (i)
such removal is being applied by the Company on a fleet-wide basis and does not
discriminate against the Aircraft to the extent applicable having regard to the
fleet and equipment type and the age of the Aircraft and (ii) removal of any
such Obsolete Parts shall not diminish the value, utility or remaining useful
life of the Airframe or such Engine, or materially impair the condition or
impair the airworthiness thereof, below the value, utility, condition,
airworthiness or remaining useful life thereof immediately prior to such removal
assuming the Airframe or such Engine was then of the value and utility and in
the condition and airworthiness required to be maintained by the terms of this
Security Agreement.
B. Pooling of Parts; Temporary Replacement Parts. Any Part removed from
the Airframe or any Engine as provided in Section 2.03(A) of this Security
Agreement may be subjected by the Company to a normal pooling or similar
arrangement customary in the airline industry and entered into by the Company in
the ordinary course of its business; provided, that a Part replacing such
removed Part shall be incorporated or installed in or attached to such Airframe
or Engine in accordance with Section 2.03(A) of this Security Agreement as
promptly as practicable after the removal of such removed Part. In addition, the
Company may use temporary parts or pooled parts on the Aircraft as temporary
replacements for Parts, provided that the Company, at its expense as promptly
thereafter as practicable, either (1) causes such pooled or replacement part to
become the property of the Company free and clear of all Liens other than
Permitted Liens or (2) replaces such replacement part with a further replacement
part owned by the Company which meets the requirements of Section 2.03(A) of
this Security Agreement and which shall become the property of the Company, free
and clear of all Liens other than Permitted Liens.
C. Modifications.
1. Except as provided in Section 2.01B(3) hereof, the Company
shall at its expense make such alterations and modifications in and additions to
the Airframe or any Engine as may be required to be made from time to time by
applicable law ("Required Modifications").
129
2. The Company shall not make any modifications, alterations
or additions (collectively, "Modifications") to the Aircraft, (other than
Required Modifications) which will result in adverse changes to the Aircraft
structure or performance or which will either (a) materially decrease the
utility, value or remaining useful life of the Aircraft or (b) adversely affect
the Aircraft's airworthiness or use for transporting passengers or cargo in
commercial service.
3. All Modifications shall be FAA-approved or in accordance
with the Approved Maintenance Program.
D. Additional Parts. All parts incorporated or installed in or attached
or added to the Airframe or an Engine (other than passenger service items leased
to or owned by the Company including, without limitation, telephone or video
equipment, which such passenger service items shall not be considered "Parts")
as the result of a Modification (the "Additional Part" or "Additional Parts")
shall, without further act, become the property of the Company and subject to
this Security Agreement. Notwithstanding the foregoing, the Company may, at any
time, so long as no Event of Default shall have occurred and be continuing,
remove or suffer to be removed any Additional Part, provided that such
Additional Part (x) (i) is in addition to, and not in replacement of or
substitution for, any Part originally incorporated or installed in or attached
to the Airframe or any Engine at the time of delivery thereof hereunder or any
Part in replacement of or substitution for any such Part and (ii) can be removed
from the Airframe or such Engine without impairing the airworthiness of the
Airframe or such Engine or diminishing the value, utility or remaining useful
life of the Airframe or such Engine which the Airframe or such Engine would have
had at such time had such alteration, modification or addition not occurred or
(y) such Part is an Obsolete Part. Upon the removal thereof as provided above,
such Additional Parts shall no longer be deemed part of the Airframe or the
Engine from which it was removed.
SECTION 2.04. Insurance.
(a) Public Liability and Property Damage Liability Insurance.
(i) The Company, at its own cost and expense, will
maintain or cause to be maintained with respect to the Airframes and
Engines, comprehensive aircraft liability insurance including, without
limitation, bodily injury and/or property damage, inclusive of
liability to third parties and/or passengers, passenger legal liability
and property damage liability insurance and cargo legal liability in
such amounts, against such risks (including, without limitation,
contractual liability and war risk liability), with such retentions as
the Company customarily maintains with respect to similar airframes and
engines owned or operated by the Company (provided, however, that any
self-insured retention and/or deductible shall not exceed [$1,000,000]
per occurrence) (in the event that with the prior consent of the Agent
such insurance contains the War, Hijacking, and Other Perils Exclusion
Clause (AVN 48B), then there must be in place the Extended Coverage
Endorsement protection offered by AVN 52 to include "Buy Back" of
paragraphs C, D, E and G of AVN 48B (or coverage equal thereto under a
separate policy)) and with such insurers or reinsurers (which shall be
insurers or reinsurers of recognized responsibility), and insurance
against such other risks as is usually carried by similar corporations
engaged in the same or similar
130
business and similarly situated as the Company and owning or operating
airframes and engines similar to the Airframe and Engines; provided
that such insurance shall not be in amounts less than $500,000,000 per
occurrence.
(ii) Notwithstanding Section 2.04(a)(i), in the event
of the requisition for use by the United States government of any
Airframe or Engine, the Company shall maintain throughout the period of
such requisition such insurance as would otherwise be required under
this Section 2.04, provided that the Agent shall accept, in lieu of
such insurance coverage, indemnification or insurance from the United
States government which is substantially the same as otherwise required
under this Section 2.04.
(iii) Any policy of insurance carried and maintained
in accordance with this Section 2.04(a), and any policy taken out in
substitution or replacement for any such policy subject to the terms,
conditions and limitations thereof, shall:
(A) name the initial Lenders and the Agent
and their respective successors and permitted assigns as
additional insureds (each an "Additional Insured");
(B) provide that, in respect of the interest
of any such Additional Insured in such policies, the insurance
shall not be invalidated by any action or inaction of the
Company or any Additional Insured as defined under the policy
of insurance required under this Section 2.04(a) (other than
such Additional Insured) and shall insure each such Additional
Insured regardless of any breach or violation of any warranty,
declaration or condition contained in such policies by the
Company or any other Additional Insured as defined under the
policy of insurance required under this Section 2.04(a) (other
than such Additional Insured);
(C) provide that if such insurance is
canceled for any reason, or any substantial change is made in
the policies which adversely affect the coverage required
herein, or if such insurance is allowed to lapse for
nonpayment of premium, such cancellation, change or lapse
shall not be effective as to any Additional Insured for 30
days (except in the case of war risk coverage in which event
the applicable period shall be seven days or such other period
as may be customary) after receipt by each such Additional
Insured of written notice from such insurers of such
cancellation, change or lapse;
(D) provide that no such Additional Insured
shall have any obligation or liability for premiums or other
payments, if any, in connection with such insurance;
(E) provide that the insurers shall waive
any rights of subrogation against each such Additional Insured
except to the extent that any insured event arises solely from
the gross negligence or willful misconduct of such Additional
Insured as determined by a final judgment of a court of
competent jurisdiction;
131
(F) provide that such insurer shall waive
the right of such insurer to any set-off or counterclaim or
any other deduction, whether by attachment or otherwise, in
respect of any liability of any such Additional Insured;
(G) provide that all of the provisions of
such policy shall operate in the same manner as if there were
a separate policy covering each such Additional Insured;
provided that such policies shall not operate to increase any
insurer's limit of liability; and
(H) be primary, without right of
contribution from any other insurance which is carried by any
Additional Insured with respect to its interest in the Subject
Collateral.
(b) Insurance Against Loss or Damage to Subject Collateral.
The Company, at its own cost and expense, shall maintain or cause to be
maintained in effect, with insurers or reinsurers of recognized responsibility,
all-risk coverage, including ground and flight insurance on the Aircraft (with
flight, taxiing and ingestion coverages) with respect to any Aircraft, Engines
and Parts temporarily removed from the Airframe pending installation of the same
or similar Engines, engines, or Parts on the Airframe, including, war-risk and
allied perils insurance on the Aircraft in an amount not less than the Agreed
Value covering the perils of:
1. war, invasion, acts of foreign enemies, hostilities
(whether war be declared or not), civil war, rebellion, revolution,
insurrection, martial law, military or usurped power, or attempts at usurpation
of power;
2. strikes, riots, civil commotions or labor disturbances;
3. any act of one or more persons, whether or not agents of a
sovereign power, for political or terrorist purposes and whether the loss or
damage therefrom is accidental or intentional;
4. any malicious act or act of sabotage;
5. confiscation, nationalization, seizure, restraint,
detention, appropriation, requisition of title or use by or under the order of
any government (whether civil, military or de facto) or public or local
authority other than the government or any public or local authority of the
country of registration; and
6. hijacking or any unlawful seizure or wrongful seizure or
wrongful exercise of control of the Aircraft or crew in flight (including any
attempt at such seizure or control) made by any person or persons on board this
Aircraft acting without the consent of the Company.
Such insurance shall be in such form and amounts and with such
retentions as the Company customarily maintains with respect to similar
airframes and engines owned or operated by the Company, provided, however, that
(1) such retentions shall consist only of industry standard deductibles
(determined by the deductible applicable to the aircraft type) and with no self
insurance,
132
(2) each Airframe and Engine shall be insured in an amount not less than its
Agreed Value and (3) any reinsurance shall be on the same terms as the primary
insurance.
Any policies carried and maintained in accordance with this
Section 3.04(b) and any policies taken out in substitution or replacement for
any such policies subject to the terms, conditions and limitations thereof
shall:
(i) name or be amended to name the then Lenders and
the Agent and their respective successors and assigns as additional
insureds and to name the Agent as loss payee (the "Loss Payee");
(ii) provide with respect to coverage provided under
this Section 3.04(b), that (A) in the event of a loss or damage
involving proceeds in excess of $1,000,000, the proceeds in respect of
such loss or damage shall be payable to the Agent and (B) the entire
amount of any loss or damage involving proceeds in the aggregate of
$1,000,000 or less shall be paid to the Company or its order unless an
Event of Default or Potential Event of Default then exists and the
insurers have been notified thereof by the Agent (in which case such
payment shall be made to the Agent);
(iii) provide that if such insurance is canceled for
any reason or any substantial change is made in the policies which
adversely affects the coverage required herein, or if such insurance is
allowed to lapse for nonpayment of premium, such cancellation, change
or lapse shall not be effective as to any such Additional Insured or
the Loss Payee for 30 days (except in the case of war-risk coverage in
which event the applicable period shall be seven days or such other
period as may be customary) after receipt by each such Additional
Insured or the Loss Payee of written notice from such insurer of such
cancellation, change or lapse;
(iv) provide that, in respect of the interest of any
such Additional Insured or the Loss Payee in such policies the
insurance shall not be invalidated by any action or inaction of the
Company, the Loss Payee or any additional insured as defined under the
policy of insurance required by this Section 2.04(b) (other than any
action or inaction of the Loss Payee or such Additional Insured, as the
case may be) and shall insure the Additional Insured and the Loss Payee
regardless of any breach or violation of any warranty, declaration or
condition in such policies by the Company or any other Additional
Insured as defined under the policy of insurance required under this
Section 2.04(b);
(v) provide that the insurers shall waive any rights
of subrogation against the Loss Payee and such Additional Insureds
except to the extent that any insured event arises solely from the
gross negligence or willful misconduct of such Additional Insured as
determined by a final judgment of a court of competent jurisdiction;
(vi) provide that such insurer shall waive any right
of such insurer to any set-off or counterclaim or any other deduction,
whether by attachment or otherwise, in respect of any liability of any
such Additional Insured or Loss Payee;
133
(vii) be primary and without rights of contribution
from any other insurance which is carried by any such Additional
Insured or the Loss Payee with respect to its interest in the Subject
Collateral;
(viii) provide that no such Additional Insured or
Loss Payee shall have any obligation or liability for premiums or other
payments, if any, in connection with such insurance; and
(ix) the reinsurer shall agree that in the event of
any valid claim arising under such reinsurance policy the reinsurers
shall in lieu of payment to the reinsured, its successors in interest
and assigns will pay to the Persons named as Additional Insureds under
the original insurance affected by the Company that portion of any loss
for which the reinsurers would otherwise be liable to pay the reinsured
(subject to proof of loss) it being understood and agreed that any such
payment shall fully discharge and release the reinsurer from any and
all further liability in connection with such claims.
(c) Application of Insurance Proceeds.
(i) Except as expressly provided in Section
2.04(c)(ii) or (iii) below, all insurance proceeds (other than proceeds
from policies carried by the Agent or the Lenders) received under
policies described in Section 2.04(b) will be paid to the Agent except
as otherwise provided in Section 2.04(b)(ii) and paid by the Agent to
the Company unless an Event of Default or Potential Event of Default
exists, in which event such proceeds shall be retained by the Agent. If
the Agent retains any such insurance proceeds pursuant to this Section
2.04(c), such proceeds shall, until applied by the Agent as provided in
this Section 2.04(c)(i), Section 2.04(c)(ii) or Section 2.04(c)(iii)
hereof, be maintained by the Agent in a segregated account and shall,
at the Company's request therefor, be invested in Permitted Cash
Equivalents.
(ii) Insurance proceeds in respect of any Repairable
Damage with respect to any Aircraft which is not required by subsection
2.4B(iii)(1) of the Credit Agreement to be excluded from the Borrowing
Base shall be retained by the Agent pending repair thereof, and shall
be applied by the Agent in payment (or to reimburse the Company) for
repairs to the affected Aircraft upon receipt from the Company of an
Officer's Certificate annexing copies of invoices relating to such
repairs, provided, however, that the Agent shall not so apply any such
proceeds during the occurrence and continuance of any Potential Event
of Default or Event of Default. Any such insurance proceeds in excess
of the total amount required to pay for repair of the affected Aircraft
shall, upon certification by the Company to the Agent in an Officer's
Certificate that such repair has been completed, be paid by the Agent
to the Company provided, however, that the Agent shall not so pay any
such insurance proceeds during the occurrence and continuance of any
Potential Event of Default or Event of Default.
(iii) If an Event of Default shall have occurred and
be continuing, the Agent shall apply all insurance proceeds (including
proceeds of any earnings on any
134
Permitted Cash Equivalents in which such insurance proceeds have been
invested) then on deposit with it pursuant to Section 2.04(c)(i) or
Section 2.04(c)(ii) hereof (all such insurance and other proceeds and
earnings being herein collectively called "Section 2.04(c) Proceeds")
to payment of the Obligations then due. At such time as no Potential
Event of Default or Event of Default shall be continuing, any Section
2.04(c) Proceeds remaining on deposit with the Agent shall be (x)
applied as provided in Section 2.04(c)(ii), if then applicable, or (y)
if Section 2.04(c)(ii) is not then applicable, shall be paid by the
Agent to the Company.
(iv) If any of the Lenders or the Agent becomes
subject to any claim covered by any insurance policy maintained
pursuant to this Section 2.04, the Company shall make available any
information reasonably required by such Lender or the Agent in
connection with such claim.
(d) Reports. On or before the date hereof and thereafter
annually on or before the scheduled expiration date for such policy, the
Company's aviation insurance broker will furnish to the Agent a certificate and
letter of undertaking, signed by the Company's independent aviation insurance
broker, stating the types of coverage and limits carried and maintained on the
Aircraft and certifying that such insurance complies with the terms and
conditions of this Section 2.04. The Company will cause its aviation insurance
broker to advise the Agent in writing promptly of any default in the payment of
any premium and of any other act or omission on the part of the Company in any
such case of which it has knowledge and which is likely to cause cancellation of
all or any part of any insurance carried by the Company with respect to the
Aircraft. The Company will cause such insurance broker to agree to advise the
Agent in writing if and when it becomes evident to such broker that any
insurance policy carried and maintained on the Aircraft pursuant to this Section
2.04 will not be renewed at the expiration date. The Company will also cause
such insurance broker to deliver to the Agent, on or prior to the date of
expiration of any insurance policy referenced in a previously delivered
certificate of insurance, a new certificate of insurance, confirming to such
parties that such insurance as certified on the date thereof continues in full
force and effect. If the Company shall fail to maintain insurance as required
hereby, the Agent may, at its option, provide such insurance, and in such event,
the Company shall, upon demand, reimburse the Agent for the cost of such
insurance; provided, however, that no exercise of said option shall affect the
provisions of this Security Agreement, including the provisions that failure by
the Company to maintain the prescribed insurance shall constitute an Event of
Default, or otherwise constitute a waiver of any other rights the Agent may have
against the Company.
(e) Notice of Proceeds. The Company shall promptly notify the
Agent upon a Responsible Officer of the Company obtaining actual knowledge
thereof of the occurrence of an event of loss or damage to any Aircraft which is
reasonably expected to result in the receipt of insurance proceeds reasonably
estimated by the Company to exceed $1,000,000.
SECTION 2.05. Inspection. At reasonable times and upon
reasonable notice, the Agent or its authorized representative may, at their own
expense (unless an Event of Default then exists or a Potential Event of Default
arising under the maintenance requirements of this Security Agreement, in which
case the reasonable expenses of such inspection shall be paid by the Company or
unless subsection 2.10 of the Credit Agreement provides that such inspection
shall be at the
135
expense of the Company), inspect the Aircraft and inspect of the books and
records and FAA-required books and records of the Company in each case relating
to the maintenance of the Aircraft. Any such inspection of the Aircraft shall be
a visual, walk-around inspection (including on-board inspection) and may include
inspection of areas exposed by any open panels, bays or the like, but shall not
include opening any panels, bays or the like without the express written consent
of the Company; provided that no exercise of such inspection right shall
interfere with the normal operation of the Aircraft by, or the business of, the
Company. The Agent shall have no duty to make any such inspection nor shall it
incur any liability or obligation by reason of not making any such inspection.
SECTION 2.06. Further Assurances. (a) The Company agrees from
time to time, at its sole expense, to promptly execute and deliver all further
instruments and documents, and take all further action, that the Agent may
request, in order to perfect and protect any security interest granted or
purported to be granted hereby or to enable the Agent to exercise and enforce
its rights and remedies hereunder with respect to any of the Subject Collateral.
Without limiting the generality of the foregoing, such further actions shall
include executing and delivering such amendments or supplements to the schedules
to this Security Agreement, executing and filing such financing or continuation
statements, or amendments thereto, executing, filing and recording such
documents or instruments with the Federal Aviation Administration, and executing
and filing such other instruments or notices, in each case as the Agent on
behalf of the Lenders may reasonably request, in order to perfect and preserve
the security interest granted or purported to be granted hereby.
(b) The Company hereby authorizes the Agent to file
one or more financing or continuation statements or similar instruments or
documents, and amendments thereto, relative to all or any part of the Subject
Collateral without the signature of the Company where permitted by law.
SECTION 2.07. Recording and Filing; Opinions of Counsel. The
Company will bear the expense of and be responsible for recording and
re-recording, registering and re-registering and filing and re-filing this
Security Agreement and each and every Security Agreement Supplement and such
other instruments from time to time as may be reasonably requested by the Agent
in all such jurisdictions and offices as the Agent shall from time to time
require in order that (a) the Lien hereof be and continues to be a first
priority Lien on all of the Subject Collateral to the fullest extent permitted
under applicable law, subject to Permitted Liens, (b) all of the Subject
Collateral is and remains security for the Obligations, and (c) the rights and
remedies of the Agent may be established, confirmed, maintained and protected;
and the Company will furnish to the Agent evidence satisfactory to the Agent of
every such recording, registering and filing which is not filed, recorded or
registered by the Agent. The foregoing includes, without limitation, the
execution and delivery by the Company of all documents, financing statements and
continuation statements deemed reasonably necessary by the Agent to perfect the
Agent's rights as secured party. The Company, at its own cost and expense, shall
on the date of this Security Agreement cause this Security Agreement to be duly
filed for recordation with the FAA and shall make such other filings to perfect
the Lien of this Security Agreement against the Subject Collateral as shall be
reasonably requested by the Agent. The Company will furnish to the Agent an
opinion of counsel reasonably satisfactory to the Agent or other evidence
reasonably satisfactory to the Agent to the effect that such filings or
refilings and such recordations or re-recordations have been duly accomplished
and as to
136
any Liens of record against the Aircraft or any Engine in the office where such
filings or refilings or recordations or re-recordations have been accomplished.
[SECTION 2.08. Section 1110. TO THE EXTENT PROVIDED THEREBY
(OR TO THE FULLEST EXTENT IT MAY LAWFULLY SO AGREE, WHETHER OR NOT PROVIDED
THEREBY), THE COMPANY HEREBY AGREES THAT ANY RIGHT OF THE AGENT TO TAKE
POSSESSION OF THE SECTION 1110 PROPERTY IN COMPLIANCE WITH THE PROVISIONS OF
THIS SECURITY AGREEMENT AND IN ACCORDANCE WITH SECTION 0000 XX XXXXX 00 XX XXX
XXXXXX XXXXXX CODE OR ANY SIMILAR PROVISION OF ANY SUPERSEDING STATUTE, AS
AMENDED FROM TIME TO TIME, SHALL NOT BE AFFECTED BY THE PROVISIONS OF SECTIONS
362, 363 OR 1129 OF SAID TITLE, OR OTHER ANALOGOUS PART OF ANY SUPERSEDING
STATUTE, AS AMENDED FROM TIME TO TIME, AND ACCORDINGLY, IT IS THE INTENTION OF
THE PARTIES HERETO THAT WITH RESPECT TO THE SECTION 1110 PROPERTY, THIS SECURITY
AGREEMENT BE AFFORDED THE BENEFITS OF SAID SECTION 1110.]**/
[SECTION 2.09. First Placed in Service. Schedule I hereto
specifically identifies, to the extent known to the Company with respect to
Aircraft not first placed in service by the Company, if the Aircraft was first
placed in service after October 22, 1994 or was acquired by the Company with the
proceeds of the Credit Agreement ("Section 1110 Property"). Each Security
Agreement Supplement adding a Replacement Engine to be subject to the Lien of
this Security Agreement shall also identify to the extent known to the Company
whether such Engine was first placed in service after October 22, 1994.]**/
SECTION 2.10. Power of Attorney. The Company hereby
irrevocably appoints the Agent as the Company's attorney-in-fact and agent to
the extent permitted by law, effective on or after the acceleration of the
Loans, but prior to the Agent obtaining physical possession of the Subject
Collateral, in the Company's name and without any action on the part of the
Company to do, at the Agent's option, any act the Agent reasonably believes
necessary to protect the interests of the Agent in the Subject Collateral. The
appointment of the Agent and the rights and powers in connection therewith,
being coupled with an interest and with full power of substitution and
resubstitution for the Company, are and shall remain irrevocable until all of
the Obligations have been fully paid and performed and the Commitments of the
Lenders under the Credit Agreement have expired or been terminated.
SECTION 2.11. Indemnification. The Company shall assume
liability for and will indemnify, protect, save, and keep harmless the Agent and
each of the Lenders, and their respective agents, employees, successors and
permitted assigns (collectively, the "Indemnified Parties") from and against any
and all liabilities, losses, damages, taxes, claims, actions, suits, costs,
demands
--------
**/The Company agrees that this Security Agreement will grant to the Agent the
benefits of Section 1110 if such Section applies to the Airframe, any Engine or
any Replacement Engine.
**/The Company agrees that this Security Agreement will grant to the Agent the
benefits of Section 1110 if such Section applies to the Airframe, any Engine or
any Replacement Engine.
137
and/or expenses of whatsoever kind, including, without limitation, legal
expenses, imposed on, incurred by, or asserted against the Agent, the Company,
the Subject Collateral (or any part thereof or interest therein), arising out of
the [purchase]***/, ownership, delivery, possession, use, operation, condition,
performance, quality, suitability, airworthiness, maintenance, modification,
registration, loss, confiscation, seizure, requisition, or lease of the Aircraft
(collectively, the "Indemnified Events"). Notwithstanding the foregoing, the
Company shall not indemnify an Indemnified Party in respect of (i) any
Indemnified Events suffered or incurred after the release of the Lien of this
Security Agreement pursuant to the terms hereof, (ii) Indemnified Events that
consist of fees, costs or expenses which such Indemnified Party has expressly
agreed to pay in any provision of this Security Agreement or constitute ordinary
and usual operating or overhead expenses of an Indemnified Party (excluding,
without limitation, costs and expenses of any outside counsel, consultant or
agent), (iii) Indemnified Events arising from the gross negligence or willful
misconduct of such Indemnified Party, (iv) any Indemnified Events arising out of
any breach by the Agent of Section 2.12 hereof, (v) any tax arising as a result
of a voluntary transfer of any Indemnified Party's interest pursuant to Section
9.1 of the Credit Agreement provided that no Event of Default exists at the time
of such transfer, (vi) taxes, withholdings, imposts or duties imposed on, based
on or measured by the gross or net income, receipts, maximum tax, profits,
gains, capital, franchise, excess profits or net worth of an Indemnified Party
other than, in each case, resulting from the activities or presence of the
Company in the taxing jurisdiction or the use, location or registration of the
Aircraft (or any part thereof) in such taxing jurisdiction, (vii) taxes on items
of tax preference or any minimum tax imposed by the federal government of the
United States, (viii) interest, penalties, fines or additions to taxes that
would not have been imposed but for any failure to file any tax return or
information return in a timely and proper manner after timely notice by the
Company of such filing requirement and provision by the Company (at the
Company's expense) of all properly completed forms necessary in connection
therewith and (ix) any tax imposed as a result of a connection between an
Indemnified Party and the jurisdiction imposing such taxes, including, without
limitation, engaging or having engaged in business in, having or having had an
office, branch or permanent establishment in, or being or having been a citizen
or resident of, or present in, or incorporated or created in or under the laws
of such jurisdiction other than as a result of a connection arising from this
transaction. Each Indemnified Party shall file its tax returns and deal with
taxing authorities in good faith, and will honor all reasonable requests from
the Company to file, or provide the Company with, such information (but
excluding information such Indemnified Party considers confidential) as is
necessary to complete forms or other documentation (in each case, prepared by
the Company at its sole expense) as shall enable such Indemnified Party or the
Company to claim a reduced rate of tax or exemption from tax with respect to any
taxes subject to payment or indemnification by the Company hereunder to which it
may be entitled. If the Company is or may be required to make any payment under
this Section 2.11, any relevant Indemnified Party shall, at the reasonable
request of the Company, consult with the Company in good faith to consider what
action may be taken to resist payment of the amount claimed. Each indemnity
pursuant to this Section 2.11 shall be in the amount which, after taking into
account all taxes required to be paid by the Agent as a result of the receipt or
accrual of such amount, shall be equal to the amount of the indemnity then due.
The Company's obligations under this Section 2.11 shall survive the expiration
or termination of this Security Agreement and the release of the Lien hereof
from any or all of the Subject Collateral.
----------
***/ Subject to negotiation on a case by case basis.
138
SECTION 2.12. Use and Possession. Notwithstanding the terms of
any provision contained in this Security Agreement or the Credit Agreement,
except as provided in Section 3.01(e) of this Security Agreement, the Company
shall have the exclusive right to use and possess the Aircraft, to collect,
retain, use and enjoy all rents and accounts and to exercise its right, title
and interest in contracts, leases, licenses, permits and governmental approvals
subject at all times to (a) the right of the Agent to receive insurance proceeds
pursuant to Section 2.04(c) hereof, (b) the applicable restrictions and
limitations contained in Section 5.4 of the Credit Agreement and (c) such use,
possession, retaining, enjoyment or exercise not otherwise constituting an Event
of Default.
ARTICLE III
EVENTS OF DEFAULT AND REMEDIES
SECTION 3.01. Remedies; Obtaining the Aircraft Upon Default.
The Company agrees that, if the Loans have been accelerated, then, subject to
any mandatory requirements of applicable law then in effect, the Agent, in
addition to any rights now or hereafter existing under applicable law, shall
have all rights as a secured creditor under the UCC in all relevant
jurisdictions and may:
(a) to the extent permitted by law, personally, or by agents
or attorneys, immediately take possession of the Aircraft or any part
thereof, from the Company with or without notice or process of law, and
for that purpose may enter upon the Company's premises where all or any
part of the Aircraft is located and remove the same; and
(b) instruct the obligor or obligors on any agreement,
instrument or other obligation relating to the Aircraft to make any
payment included in the Subject Collateral required by the terms of
such instrument or agreement directly to the Agent; and
(c) sell or assign, or direct the Company to sell or assign,
the Aircraft or any part thereof, and take possession of the proceeds
of any such sale or assignment; and
(d) take possession of the Aircraft or any part thereof, by
directing the Company in writing to deliver the same to the Agent at
any place or places designated by the Agent, in which event the Company
shall at its own expense forthwith fly or cause to be flown all or any
part of the Aircraft to such airport or airports in the United States
so designated by the Agent and there delivered to the Agent, and the
Company shall pay all reasonable and necessary expenses to (i) store
and keep all or any part of the Aircraft so delivered to the Agent at
such place or places pending further action by the Agent as provided in
Section 4.02, and (ii) while all or any part of the Aircraft shall be
so stored and kept, provide guards and maintenance services as shall be
necessary to protect the same and to preserve and maintain them in good
condition; and
139
(e) revoke all or any of the rights of the Company provided
for pursuant to Section 2.12 of this Security Agreement by written
notice to the Company indicating which rights are revoked;
it being understood that the Company's obligation so to deliver the Aircraft or
any part thereof is of the essence of this Security Agreement and that,
accordingly, upon application to a court of equity having jurisdiction, the
Agent shall be entitled to a decree requiring specific performance by the
Company of said obligation.
SECTION 3.02. Remedies; Disposition of the Aircraft. (a) The
Aircraft, or any part thereof repossessed by the Agent under or pursuant to
Section 4.01, whether or not so repossessed by the Agent, may be sold, assigned,
leased or otherwise disposed of under one or more contracts or as an entirety,
and without the necessity of gathering at the place of sale the property to be
sold, and in general in such manner, at such time or times, at such place or
places and on such terms as the Agent may, in compliance with any mandatory
requirements of applicable law, determine to be commercially reasonable. The
Aircraft or any part thereof may be sold, leased or otherwise disposed of, in
the condition in which the same existed when taken by the Agent or after any
overhaul or repair which the Agent shall determine to be commercially
reasonable. Any such disposition which shall be a private sale or other private
proceedings permitted by such requirements shall be made upon not less than 10
days' written notice to the Company specifying the time at which such
disposition is to be made and the intended sale price or other consideration
therefor. Any such disposition which shall be a public sale permitted by such
requirements shall be made upon not less than 10 days' written notice to the
Company specifying the time and place of such sale. To the extent permitted by
any such requirement of law, the Agent and the Lenders may bid for and become
the purchaser of the Aircraft or any part thereof, offered for sale in
accordance with this Section without accountability to the Company (except to
the extent of surplus money received as provided in Section 3.03) and may bid
the amount of the Obligations to be applied as credits against such purchase.
If, under mandatory requirements of applicable law, the Agent shall be required
to make disposition of the Aircraft or any part thereof within a period of time
which does not permit the giving of notice to the Company as hereinabove
specified, the Agent need give the Company only such notice of disposition as
shall be required by such mandatory requirements of applicable law. Any sale of,
or the grant of options to purchase, or any other realization upon, the Aircraft
or any part thereof shall operate to divest all right, title, interest, claim
and demand, either at law or in equity, of the Company therein and thereto, and
shall be a perpetual bar both at law and in equity against the Company and
against any and all Persons claiming or attempting to claim the Aircraft so
sold, optioned or realized upon, or any part thereof, from, through and under
the Company but without limitation of the Company's rights under Section 3.03
third hereof. At the request of the Agent, the Company shall deliver such
instruments of title or other instruments to ratify or document such sale but
such instruments shall not be necessary to make such sale final or binding.
(b) The Company covenants (to the extent that it may lawfully do so)
that it will not at any time insist upon, or plead, or in any manner whatsoever
claim or take the benefit or advantage of, any appraisement, valuation, stay,
extension or redemption law wherever enacted, nor at any time hereafter in force
in any locality where any property subject to the Lien hereof may be situated,
in order to prevent, hinder or delay the enforcement or foreclosure of this
Security Agreement or the
140
execution of any power granted herein to the Agent, or the absolute sale of the
Aircraft, or any part thereof, or the final and absolute putting into possession
thereof, immediately after such sale, by any purchaser at any sale under this
Section 3.02 but without limitation of the Company's rights under Section 3.03
third hereof; and the Company, so far as it now or thereafter lawfully may,
hereby waives the benefit of all such laws. The Company waives, to the extent
that it lawfully may, all right to have the property in the Subject Collateral
marshalled upon any foreclosure hereof, and agrees that any court having
jurisdiction to foreclose this Security Agreement may order the sale of the
Subject Collateral as an entirety. If the Agent seeks to take possession of any
or all of the Subject Collateral or avail itself of any provisional remedy by
court process, the Company hereby irrevocably waives (to the extent it may
lawfully do so) any bonds and any surety or security required by any statute,
court rule or otherwise as an incident to such possession, or remedy, and waives
any demand for possession prior to the commencement of any suit or action to
recover.
(c) If the Loans are accelerated, at the request of the Agent, the
Company shall promptly execute and deliver to the Agent such instruments of
title and other documents as the Agent may deem necessary or advisable to enable
the Agent or an agent or representative designated by the Agent, at such time or
times and place or places as the Agent may specify, to obtain possession or
control of all or any part of the Subject Collateral. To the extent permitted by
law, if the Company shall for any reason fail to execute and deliver such
instruments and documents after such request by the Agent, the Agent may (x)
obtain a judgment conferring on the Agent the right to immediate possession
and/or control and requiring the Company to deliver such instruments of title
and other documents as the Agent may deem necessary or advisable to enable the
Agent or an agent or representative designated by the Agent, at such time or
times and place or places as the Agent may specify, to obtain possession and/or
control of all or any part of the Subject Collateral, to the entry of which
judgment the Company hereby specifically consents.
SECTION 3.03. Application of Proceeds. Except as may otherwise
be required by law, any moneys or property actually received by the Agent
pursuant to the exercise of any rights or remedies referred to in Article III
shall (subject to the determination of the Agent as to the incurrence of costs
and expenses appropriate and the use of such moneys and property in connection
with the exercise of such rights or remedies and as to the manner of such
exercise) be applied in the following order:
first, to the payment of costs and expenses incurred in the
enforcement of rights and remedies under this Security Agreement;
second, to the payment of all of the Obligations (except for
such Obligations that shall have been paid pursuant to first item of
this Section 3.03), ratably according to the then unpaid amounts
thereof, without preference or priority of any kind among such various
Obligations; and
third, the remainder, if any, to the Company, its successors
or assigns, to such Person as the Agent may be legally required to be
paid to or as a court of competent jurisdiction may direct.
141
SECTION 3.04. Remedies Cumulative. Each and every right, power
and remedy hereby specifically given to the Agent shall be in addition to every
other right, power and remedy specifically given under this Security Agreement
or the Credit Agreement and other Loan Documents or now or hereafter existing at
law or in equity, or by statute and each and every right, power and remedy
whether specifically herein given or otherwise existing may be exercised from
time to time or simultaneously and as often and in such order as may be deemed
expedient by the Agent. All such rights, powers and remedies shall be cumulative
and the exercise or the beginning of exercise of one shall not be deemed a
waiver of the right to exercise of any other or others. No delay or omission of
the Agent in the exercise of any such right, power or remedy shall impair any
such right, power or remedy or shall be construed to be a waiver of any Event of
Default or an acquiescence therein.
ARTICLE IV
AGENT
SECTION 4.01. Agent. As provided in Section 8 of the Credit
Agreement, each Lender has appointed The Industrial Bank of Japan, Limited, as
its Agent for purposes of this Security Agreement. In such capacity, The
Industrial Bank of Japan, Limited, shall be entitled to all of the rights and
benefits accorded the Agent by Section 8 of the Credit Agreement. Following the
payment in full of all Obligations and the termination or expiration of the Loan
Documents, the provisions of Section 8 of the Credit Agreement shall be deemed
to continue in full force and effect for the benefit of the Agent under this
Security Agreement. For the avoidance of doubt, nothing in this Section 4.01 is
intended to create any liability or obligation on the Company.
ARTICLE V
MISCELLANEOUS PROVISIONS
SECTION 5.01. Notices. All notices and communications to be
given under this Security Agreement shall be given in the manner provided in the
Credit Agreement.
SECTION 5.02. Waiver. To the extent permitted by applicable
law, no failure on the part of the Agent or any Lender to exercise and no delay
in exercising, and no course of dealing with respect to, any right, remedy,
power or privilege under this Security Agreement shall operate as a waiver of
such right, remedy, power or privilege, nor shall any single or partial exercise
of any right, remedy, power or privilege under this Security Agreement preclude
any other or further exercise of any such right, remedy, power or privilege or
the exercise of any other right, remedy, power or privilege. The rights,
remedies, powers and privileges provided in this Security Agreement are
cumulative and not exclusive of any rights, remedies, powers and privileges
provided by law.
SECTION 5.03. Expenses Etc. The Company agrees to pay or to
reimburse the Agent and the Lenders for all reasonable costs and expenses
(including reasonable attorney's fees and expenses) that may be incurred by the
Agent or the Lenders for any expense or loss incurred in connection with any
Event of Default, including, but not limited to, any effort to enforce any of
the
142
provisions of, or any of the obligations of the Company in respect of, this
Security Agreement and the other Loan Documents (including in any bankruptcy,
workout or similar proceeding).
SECTION 5.04. Amendments, Etc. To the extent permitted by
applicable law, any provision of this Security Agreement may be modified,
supplemented or waived only by an instrument in writing duly executed by the
Company and the Agent (after such consent as may be required, if any, by the
Lenders pursuant to the Credit Agreement). Any such modification, supplement or
waiver shall be for such period and subject to such conditions as shall be
specified in the instrument effecting the same and shall be binding upon the
Agent, the Lenders and the Company, and any such waiver shall be effective only
in the specific instance and for the purposes for which given.
SECTION 5.05. Successors and Assigns. This Security Agreement
shall be binding upon and inure to the benefit of the Company, the Agent, the
other Lenders and their respective successors and permitted assigns. Except as
provided in subsections 6.6(v), 6.10 and 6.12 of the Credit Agreement, the
Company shall not assign or transfer its rights under this Security Agreement
without the prior written consent of the Agent.
SECTION 5.06. Survival. All representations and warranties
made in this Security Agreement or in any certificate or other document
delivered pursuant to or in connection with this Security Agreement shall
survive the execution and delivery of this Security Agreement or such
certificate or other document (as the case may be) or any deemed repetition of
any such representation or warranty.
SECTION 5.07. Severability. To the extent permitted by
applicable law, any provision of this Security Agreement that is prohibited or
unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective
to the extent of such prohibition or unenforceability without invalidating the
remaining provisions of this Security Agreement, and any such prohibition or
unenforceability in any jurisdiction shall not invalidate or render
unenforceable such provision in any other jurisdiction.
SECTION 5.08. Captions. The captions and section headings
appearing in this Security Agreement are included solely for convenience of
reference and are not intended to affect the interpretation of any provision of
this Security Agreement.
SECTION 5.09. Counterparts. This Security Agreement may be
executed in any number of counterparts, all of which taken together shall
constitute one and the same instrument and any of the parties to this Security
Agreement may execute this Security Agreement by signing any such counterpart.
SECTION 5.10. GOVERNING LAW. THIS SECURITY AGREEMENT SHALL BE
DELIVERED IN THE STATE OF NEW YORK AND GOVERNED BY, AND CONSTRUED AND ENFORCED
IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK.
143
IN WITNESS WHEREOF, the Company and the Agent have caused this
instrument to be duly executed as of the day and year first above written.
AMERICA WEST AIRLINES, INC.,
a Delaware corporation
By:
----------------------------------
Name:
Title:
THE INDUSTRIAL BANK OF JAPAN,
LIMITED, as Agent
By:
---------------------------------
Name:
Title:
144
SCHEDULE I
to
Aircraft Security Agreement
The following aircraft and the aircraft engines listed below, which
aircraft, together with the engines listed therewith below, shall constitute a
single "Aircraft" as said term is defined in the Security Agreement to which
this Schedule I is attached and made a part thereof:
Airframe
[Description]
UNITED STATES REGISTRATION NUMBER: _____________
MANUFACTURER'S SERIAL NO.: _____________
Engines
______________________ ENGINES
ENGINE SERIAL NOS.: ______________________
(each of which engines has 750 or more rated
takeoff horsepower or the equivalent thereof)
145
APPENDIX A
to
Aircraft Security Agreement
SUPPLEMENTAL AIRCRAFT SECURITY AGREEMENT
SUPPLEMENTAL AIRCRAFT SECURITY AGREEMENT dated as of
______________, 19__ from AMERICA WEST AIRLINES, INC., a Delaware corporation
(the "Company"), whose mailing address is 000 Xxxx Xxx Xxxxxx Xxxxxxx, Xxxxx,
Xxxxxxx 00000, to The Industrial Bank of Japan, Limited, as Agent under the
Amended and Restated Revolving Credit Agreement referred to below (together with
its successors and assigns in such capacity, the "Agent") for the benefit and on
behalf of itself as such Agent and the lenders (the "Lenders", such term to
include the Issuing Bank as defined in the Credit Agreement) from time to time
party to that certain Amended and Restated Revolving Credit Agreement dated as
of December __, 1999 (as the same may be amended or waived from time to time the
"Credit Agreement") among the Company, the Lenders and the Agent.
WHEREAS, the Company has heretofore executed and delivered to
the Agent an Aircraft Security Agreement dated as of _______________ (the
"Security Agreement"), covering an aircraft of the Company (terms used in this
instrument having the meanings assigned thereto in the Security Agreement);
WHEREAS, the Security Agreement has been duly recorded with
the FAA on _______________ and assigned Conveyance No. ____________ pursuant to
the Act;
WHEREAS, this Supplemental Security Agreement relates to the
aircraft engine described in Schedule I hereto; and
WHEREAS, the Security Agreement provides for the execution and
delivery from time to time of Supplemental Security Agreements, each
substantially in the form hereof, for the purpose of subjecting a Replacement
Engine to the Lien of the Security Agreement.
NOW, THEREFORE, as contemplated by the Security Agreement, the
Company hereby grants to the Agent for its benefit and the benefit of the
Lenders a security interest in the property described in Schedule I hereto as
security for the due and prompt payment of the Obligations.
This Supplemental Security Agreement shall be construed as
supplemental to the Security Agreement and shall form a part thereof; and the
Security Agreement is hereby incorporated by reference herein to the same extent
as if fully set forth herein and is hereby ratified, approved and confirmed in
all respects.
146
IN WITNESS WHEREOF, the parties hereto have caused this
Supplemental Security Agreement to be duly executed, as of the day and year
first above written.
AMERICA WEST AIRLINES, INC.,
a Delaware corporation
By:
---------------------------------
Name:
Title:
THE INDUSTRIAL BANK OF JAPAN,
LIMITED, as Agent
By:
---------------------------------
Name:
Title:
147
SCHEDULE I
to
Supplemental Security Agreement
The following aircraft and the aircraft engines listed below, which
aircraft, together with the engines listed therewith below, shall constitute a
single "Aircraft" as said term is defined in the Supplemental Security Agreement
to which this Schedule I is attached and made a part thereof:
Airframe
[Description]
UNITED STATES REGISTRATION NUMBER: _____________
MANUFACTURER'S SERIAL NO.: _____________
Engines
______________________ ENGINES
ENGINE SERIAL NOS.: ______________________
(each of which engines has 750 or more rated
takeoff horsepower or the equivalent thereof)
148
EXHIBIT I
[Date]
The Industrial Bank of Japan,
as Agent
0000 Xxxxxx xx xxx Xxxxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxxx Xxxxxxxxxxx
Re: Request for Revolving Loan/Letter of Credit Under Amended and
Restated Revolving Credit Agreement dated as of December 10,
1999
Ladies and Gentlemen:
We refer you to the Amended and Restated Revolving Credit Agreement as of
December 10, 1999 by and among America West Airlines, Inc. (the "Company"); The
Industrial Bank of Japan, Limited, as agent for itself and the other lending
institutions named therein (as amended, supplemented or otherwise modified from
time to time, the "Credit Agreement"). Capitalized terms used herein without
definition have the meanings specified in the Credit Agreement.
Pursuant to Section 2.1B of the Credit Agreement, the Company hereby
irrevocably requests the following Revolving Loan.
(a) Principal Amount: $__________________.
(b) Funding Date:
(c) Type:
We understand that this request obligates us to accept the requested
Revolving Loan on such date.
The Company hereby represents and warrants that all of the conditions
(other than matters subject to the satisfaction of the Agent) set forth in 3.1A
and 3.2A of the Credit Agreement have been satisfied on the date of this
request.
149
No Potential Event of Default or Event of Default has occurred and is
continuing and no Potential Event of Default or Event of Default would occur
after giving effect to the requested Revolving Loan.
AMERICA WEST AIRLINES, INC.
By:____________________________
Name:
Title:
-2-
150
EXHIBIT II
[Date]
The Industrial Bank of Japan,
as Agent
0000 Xxxxxx xx xxx Xxxxxxxx
Xxx Xxxx, XX 00000
Attention: Xxxxxx Xxxxxxxxxxx
Re: Form of Notice of Conversion/Continuation Under the Amended
and Restated Revolving Credit Agreement dated as of December
10, 1999
Ladies and Gentlemen:
We refer you to the Amended and Restated Revolving Credit Agreement as
of December __, 1999 by and among America West Airlines, Inc. (the "Company"),
the lending institutions named therein and The Industrial Bank of Japan,
Limited, as agent for itself and such other lending institutions (as amended,
supplemented or otherwise modified from time to time, the "Credit Agreement").
Capitalized terms used herein without definition have the meanings specified in
the Credit Agreement.
Pursuant to Section 2.2D of the Credit Agreement, the Company hereby
notifies you of the following Conversion/Continuation:
(a) Proposed Conversion/Continuation Date 1/:
(b) Amount of Loan to be Loan to be Converted/Continued:
(c) Type of Loan to be Converted/Continued (Base Rate Loan or
Eurodollar Rate Loan):
(d) Nature of the proposed Conversion/Continuation (Base Rate Loan
or Eurodollar Rate Loan):
--------
1/The Company shall deliver a Notice of Conversion/Continuation to the Agent no
later than 12:00 noon (New York time) on the proposed Conversion Date with
respect to a Base Rate Loan and three Business Days in advance of the proposed
Conversion/Continuation date with respect to a Eurodollar Rate Loan.
151
(e) Interest Period 2/:
(f) No Potential Event of Default or Event of Default has occurred
and is continuing and no Potential Event of Default or Event
of Default would occur after giving effect to the proposed
conversion/continuation 3/:
AMERICA WEST AIRLINES, INC.
By:____________________________
Name:
Title:
--------
2/To be included only with respect to Eurodollar Rate Loans
3/ To be included only with respect to Eurodollar Rate Loans.
152
EXHIBIT III
FORM OF REVOLVING NOTE
$[_____________] December __, 1999
FOR VALUE RECEIVED, the undersigned AMERICA WEST AIRLINES, INC., a
Delaware corporation (the "Company"), hereby promises to pay to the order of
[___________________] (the "Lender"):
(a) from time to time at the times and in the amounts provided
in the Amended and Restated Credit Agreement (as hereinafter defined)
and prior to or on the Termination Date (as defined in the Credit
Agreement) the principal amount of [$_____________ ] ($______) or, if
less, the aggregate unpaid principal amount of Revolving Loans (as
defined in the Credit Agreement) advanced by the Lender to the Company
pursuant to the Amended and Restated Revolving Credit Agreement dated
as of December 10, 1999 (as amended and in effect from time to time,
the "Credit Agreement"), among the Company, the Lender, the Agent and
the other parties thereto; and
(b) interest on the principal balance hereof from time to time
outstanding from the Closing Date (as defined in the Credit Agreement)
under the Credit Agreement through and including the maturity date
hereof at the times and at the rates provided in the Credit Agreement.
All capitalized terms used in this Revolving Note and not otherwise
defined herein shall have the same meanings herein as in the Credit Agreement.
This Revolving Note evidences borrowings under and has been issued by the
Company in accordance with the terms of the Credit Agreement. The Lender and any
Eligible Assignee of the Lender under Section 9.1 of the Credit Agreement is
entitled to the benefits of the Credit Agreement, the Security Agreements and
the other Loan Documents.
The Company has the right in certain circumstances and the obligation
under certain other circumstances to prepay the whole or part of the principal
of this Revolving Note on the terms and conditions specified in the Credit
Agreement.
If any one or more of the Events of Default shall occur, the entire
unpaid principal amount of this Revolving Note and all of the unpaid interest
accrued thereon may become or be declared due and payable in the manner and with
the effect provided in the Credit Agreement.
No delay or omission on the part of the Lender or any holder hereof in
exercising any right hereunder shall operate as a waiver of such right or of any
other rights of the Lender or such holder,
153
nor shall any delay, omission or waiver on any one occasion be deemed a bar or
waiver of the same or any other right on any further occasion.
The Company and every endorser and guarantor of this Revolving Note or
the obligation represented hereby waives to the extent permitted by law,
presentment, demand, notice, protest and all other demands and notices in
connection with the delivery, acceptance, performance, default or enforcement of
this Revolving Note, and assents to any extension or postponement of the time of
payment or any other indulgence, to any release of collateral and to the
addition or release of any other party or person primarily or secondarily
liable.
THIS REVOLVING NOTE AND THE OBLIGATIONS OF THE COMPANY HEREUNDER SHALL
BE GOVERNED BY, AND SHALL BE CONSTRUED AND ENFORCED IN ACCORDANCE WITH, THE LAWS
OF THE STATE OF NEW YORK.
IN WITNESS WHEREOF, the undersigned has caused this Revolving Note to
be signed in its corporate name by its duly authorized officer as of the day and
year first above written.
AMERICA WEST AIRLINES, INC.
By: _____________________________
Name:
Title:
-2-
154
Amount of Balance of
Amount of Principal Principal Notation Made
Date Revolving Loan Paid or Prepaid Unpaid By:
--------------------------------------------------------------------------------------------------------------------
-3-
155
EXHIBIT IV
AMERICA WEST AIRLINES, INC.
COMPLIANCE CERTIFICATE
Reference is made to the Amended and Restated Revolving Credit
Agreement dated as of December 10, 1999 (as it may be amended, restated or
supplemented or otherwise modified from time to time, the "Credit Agreement")
among America West Airlines, Inc. (the "Company"), the lenders from time to time
party thereto (the "Banks"), and The Industrial Bank of Japan Limited, as
initial issuing bank and as agent for the Banks (in such last capacity, the
"Agent").
The undersigned, the Vice President & Treasurer of the Company, and
acting on behalf of the Company, hereby certifies as of the date hereof that he
is the officer named above of the Company, and is duly authorized to execute and
deliver this Certificate to the Banks and the Agent on behalf of the Company,
and that:
1. The undersigned has reviewed and is familiar with the terms of the
Credit Agreement and has made, or has caused to be made under his supervision, a
review of the provisions of the Credit Agreement and related definitions and the
transactions and conditions (financial or otherwise) of the Company and their
Subsidiaries, if any, during the period covered by this Certificate sufficient
in his opinion to be able to provide this certification.
2. To the best knowledge of the undersigned, no Potential Event of
Default or Event of Default exists.
3. The financial covenant analyses and information set forth on
Schedule 1 attached hereto are true and accurate on and as of the date of this
Certificate.
IN WITNESS WHEREOF, the undersigned has executed this Certificate on
behalf of the Company as of ________________ ____, _______.
AMERICA WEST AIRLINES, INC.
By: ________________________________
Title:
156
EXHIBIT V-A
[Form of opinion of Xxxxxx Godward LLP
regarding Section 1110 of the Bankruptcy Code]
December 10, 1999
To Lenders Party to the Credit Agreement referred
to below and to The Industrial Bank of
Japan, Limited, as Agent
Re: America West Airlines, Inc. -
Bankruptcy Code Section 1110
Ladies and Gentlemen:
We have acted as special counsel to America West Airlines, Inc., in
connection with the financing transaction contemplated by the Amended and
Restated Revolving Credit Agreement dated as of December 10, 1999 (the "Credit
Agreement", all capitalized terms defined in the Credit Agreement being used
with the same meanings, unless otherwise defined, in this opinion letter) by and
among the Company, the several Lenders parties thereto (the "Lenders") and The
Industrial Bank of Japan, Limited, as the Issuing Bank and as Agent for the
Lenders thereunder (in such last capacity, the "Agent"). Section 3.1D of the
Credit Agreement contemplates our delivery of a favorable written opinion
regarding Section 1110 of the Bankruptcy Code; specifically, you have requested
us to advise as to whether, in the event that the Company were to become a
debtor under the Bankruptcy Code, the Agent would be afforded the protection of
Bankruptcy Code Section 1110(a) with respect to the right to take possession of
certain equipment constituting collateral security for the Company's
Obligations. The opinions expressed below are furnished to you pursuant to said
Section 3.1D of the Credit Agreement at the request, and with the approval, of
the Company.
In rendering the opinions expressed below, we have examined
counterparts of (i) the Credit Agreement and the Notes issued to the Lenders
today pursuant thereto (collectively, the "Notes"), and (ii) the Spare Engine
Security Agreement (as amended by Amendment No. 1 and Supplement No. 3 of even
date herewith) and the Spare Parts Security Agreement (as amended by Amendment
No. 1 and Supplement No. 1 of even date herewith), each dated as of December
12, 1997 and executed and delivered by the Company in favor of the Agent for
the benefit of the Lenders (collectively, the "Security Agreements").
157
In our examination, we have assumed the legal capacity of all natural
persons, the genuineness of all signatures, the authenticity of all documents
submitted to us as originals, the conformity with authentic original documents
of all documents submitted to us as copies, and compliance on the part of all
parties to the Loan Documents with their covenants and agreements contained
therein. We have also assumed the legality, validity and enforceability of the
Security Agreements according to their terms with regard to certain equipment
constituting collateral security for the Company's Obligations. When relevant
facts were not independently established, we have relied upon such opinions of
the Company's other counsel as described in section 3.1D, E and G of the Credit
Agreement, statements of governmental officials, representations made in or
pursuant to the Loan Documents, certificates of appropriate representatives of
the Company, and other documents, as we have deemed necessary or appropriate for
the purposes of this opinion. All assumptions and statements of reliance herein
have been made without any independent investigation or verification on our part
except to the extent otherwise expressly stated, and we express no opinion with
respect to the subject matter or accuracy of such assumptions or items relied
upon, except to the extent otherwise expressly stated. Without limitation of the
generality of the foregoing, we have in particular relied upon and assumed, and
express no opinion with respect to, the accuracy as a matter of fact and law, as
of the date on which made and at all other relevant times, of the
representations of the Company contained in Section 4.1B of the Credit
Agreement.
Based upon and subject to the foregoing, and subject also to the
qualifications, limitations, exceptions and further assumptions hereinbelow set
forth or referred to, we are of the opinion that, in a case for reorganization
of the Company under Chapter 11 of the Bankruptcy Code, assuming that the
conditions of Sections 1110(a)(1)(A) and (B) of the Bankruptcy Code were not
timely satisfied, the Agent would be afforded the benefits of Section
1110(a)(1) of the Bankruptcy Code with respect to the right to take possession
of any "aircraft engine" and any "spare parts" (each as defined in 00 Xxxxxx
Xxxxxx Code Section 40102) from time to time subject to the security interest
granted by the Spare Engine Security Agreement or the Spare Parts Security
Agreement, as the case may be, provided that such aircraft engine was, or such
spare parts were, "first placed in service" (as said term is used in Section
1110(c) of the Bankruptcy Code) after October 22, 1994, and, in the case of such
spare parts, that the same are maintained at locations designated in the Spare
Parts Security Agreement. (We express no view as to when any Spare Engine (as
defined in the Spare Engine Security Agreement) or Rotables (as defined in the
Spare Parts Security Agreement) constituting such an aircraft engine or such
spare parts, as the case may be, now or hereafter subject to the security
interest of the applicable Security Agreement was first so placed in service.)
Pursuant to Section 3.1D of the Credit Agreement, Xxxxxxx & Sterling
("New York Counsel") are delivering to you their opinion regarding the
enforceability of the Credit Agreement and certain other matters (the
"Enforceability Opinion"); pursuant to Section 3.1E of the Credit Agreement,
Xxxxxxx X. Xxxxxxx, Esq., Senior Vice President and Chief Administrative Officer
of the Company ("Company Counsel") is delivering to you his opinion regarding
certain
158
matters relating to the financing transactions contemplated in the Credit
Agreement (the "Company Counsel Opinion"), and pursuant to Section 3.1G of the
Credit Agreement, Daugherty, Fowler, Peregrin & Xxxxxx ("FAA Counsel") are
delivering to you their opinions regarding certain matters relating to or
arising from the filing for recording with the FAA of the Security
Agreements (the "FAA Counsel Opinions"). To the extent that our legal
conclusions hereinabove expressed are based upon or otherwise involve legal
conclusions expressed in the Enforceability Opinion, the Company Counsel
Opinion or the FAA Counsel Opinions, including, without limitation, (i) New
York Counsel's conclusions in the Enforceability Opinion regarding the
enforceability of the Credit Agreement and the Notes and other matters, (ii)
Company Counsel's conclusions in the Company Counsel Opinion regarding the
financing transactions contemplated by the Credit Agreement, and (iii) FAA
Counsel's conclusions in the FAA Counsel Opinions regarding the validity of the
Security Agreements and the perfection of the security interests of the Agent
granted thereby in the Engines and the Spare Parts (each as defined in the FAA
Counsel Opinions), our conclusions herein are subject to the same
qualifications, limitations, exceptions and assumptions set forth in the
Enforceability Opinion, the Company Counsel Opinion or the FAA Counsel
Opinions, as the case may be, and to the extent that our legal conclusions
hereinabove expressed are based upon or otherwise involve legal conclusions
expressed in the Enforceability Opinion, the Company Counsel Opinion or the FAA
Counsel Opinions, we have, in expressing our legal conclusions herein, relied
upon the Enforceability Opinion, the Company Counsel Opinion or the FAA Counsel
Opinions.
This opinion letter is provided to you by us in our capacity as special
counsel to the Company and may not be relied upon (i) by any Person other than
you and other Persons who shall become Lenders under the Credit Agreement, or
(ii) by any Person for any purpose other than in connection with the
transactions contemplated by the Credit Agreement without, in each instance,
our prior written consent. This opinion letter speaks as of its date and we
undertake no, and hereby disclaim any, duty to advise you or any other Person
entitled to rely hereon as to changes of law or fact coming to our attention
after the delivery hereof on such date.
This opinion letter relates solely to the Bankruptcy Code and should be
interpreted in accordance with the Special Report by the TriBar Opinion
Committee, Opinions in the Bankruptcy Context; Rating Agency, Structured
Financing and Chapter 11 Transactions, 46 Bus. Law. 717 (1991).
Sincerely,
XXXXXX GODWARD LLP
159
Exhibit V-B
[Form of opinion of special New York
counsel to the Company]
December 10, 1999
To the Lenders party to the
Credit Agreement referred
to below and to The Industrial
Bank of Japan, Limited, as Agent
America West Airlines, Inc.
Ladies and Gentlemen:
We have acted as special New York counsel to America West Airlines, Inc.,
a Delaware corporation (the "Borrower"), in connection with the preparation,
execution and delivery of the Amended and Restated Revolving Credit Agreement
dated as of December 10, 1999 (the "Credit Agreement"), among the Borrower and
each of you (each a "Lender Party"). Unless otherwise defined herein, terms
defined in the Credit Agreement are used herein as therein defined.
In that connection, we have examined a counterpart of the Credit Agreement
executed by the Borrower, the Notes executed by the Borrower and delivered on
the date hereof (for purposes of this opinion letter, the "Notes") and, to the
extent relevant to our opinion expressed below, the other documents delivered
by the Borrower pursuant to Section 3.1 of the Credit Agreement.
In our examination of the Credit Agreement, the Notes and such other
documents, we have assumed, without independent investigation (a) the due
execution and delivery of the Credit Agreement by all parties thereto and of
the Notes by the Borrower, (b) the genuineness of all signatures, (c) the
authenticity of the originals of the documents submitted to us and (d) the
conformity to originals of any documents submitted to us as copies.
In addition, we have assumed, without independent investigation, that (i)
the Borrower is duly organized and validly existing under the laws of the
jurisdiction of its organization and has full power and authority (corporate
and otherwise) to execute, deliver and perform the Credit
160
2
Agreement and the Notes and (ii) the execution, delivery and performance by the
Borrower of the Credit Agreement and the Notes have been duly authorized by all
necessary action (corporate or otherwise) and do not (A) contravene the
certificate of incorporation, bylaws or other constituent documents of the
Borrower, (B) conflict with or result in the breach of any document or
instrument binding on the Borrower or (C) violate or require any governmental
or regulatory authorization or other action under any law, rule or regulation
applicable to the Borrower other than New York law or United States federal law
applicable to borrowers generally or, assuming the correctness of the
Borrower's statements made as representations and warranties in Section 4.2C. of
the Credit Agreement, applicable to the Borrower. With respect to any consents,
approvals or authorizations of, or registrations, declarations or filings with
any governmental authority in connection with the execution, delivery or
performance by the Borrower of the Security Agreements, as to which we express
no opinion, we refer you to the opinions of Xxxxx and Xxxx LLP, local Arizona
counsel, and of Daugherty, Fowler, Peregrin & Xxxxxx, FAA counsel. We have also
assumed that the Credit Agreement is the legal, valid and binding obligation of
each Lender Party, enforceable against such Lender Party in accordance with its
terms.
Based upon the foregoing examination and assumptions and upon such other
investigation as we have deemed necessary and subject to the qualifications set
forth below, we are of the opinion that:
1. The Credit Agreement and each of the Notes are the legal, valid and
binding obligations of the Borrower, enforceable against the Borrower in
accordance with their respective terms.
2. No consent, approval or authorization of, or registration, declaration
or filing with, any United States federal or New York State governmental
authority is required to be obtained for the execution, delivery or performance
by the Borrower of the Credit Agreement or any Note or the validity or
enforceability thereof, except for any thereof as may be required in connection
with the execution, delivery or performance by the Borrower of any of the
Security Documents.
3. The execution, delivery and performance by the Borrower of the Credit
Agreement and the Notes will not violate any applicable law or statute of the
State of New York or of the United States applicable to borrowers generally,
such that the ability of the Borrower to perform its obligations under the
Credit Agreement or the Notes is materially and adversely affected.
Our opinion above is subject to the following qualifications:
(i) Our opinion above is subject to the effect of any applicable
bankruptcy, insolvency (including, without limitation, all laws relating to
fraudulent transfers), reorganization, moratorium or similar law affecting
creditors' rights generally.
161
3
(ii) Our opinion above is also subject to the effect of general
principles of equity, including (without limitation) concepts of
materiality, reasonableness, good faith and fair dealing (regardless of
whether considered in a proceeding in equity or at law).
(iii) We express no opinion as to the enforceability of the
indemnification provisions set forth in Section 2.9H. and Section 9.3 of
the Credit Agreement to the extent enforcement thereof is contrary to
public policy regarding the exculpation of criminal violations, intentional
harm and acts of gross negligence or recklessness.
(iv) Our opinion above is limited to the law of the State of New York
and the federal law of the United States of America and we do not express
any opinion herein concerning any other law. Without limiting the
generality of the foregoing, we express no opinion as to the effect of the
law of a jurisdiction other than the State of New York wherein any Lender
may be located or wherein enforcement of the Credit Agreement or any of the
Notes may be sought that limits the rates of interest legally chargeable or
collectible.
A copy of this opinion letter may be delivered by any of you to any
Person that becomes a Lender in accordance with the provisions of the Credit
Agreement. Any such Lender may rely on the opinions expressed above as if this
opinion letter were addressed and delivered to such Lender on the date hereof.
In addition, Xxxxxx Godward LLP may rely on the opinions expressed above as if
this opinion were addressed and delivered to them.
This opinion letter speaks only as of the date hereof. We expressly
disclaim any responsibility to advise you or any other Lender who is permitted
to rely on the opinion expressed herein as specified in the next preceding
paragraph of any development or circumstance of any kind including any change of
law or fact that may occur after the date of this opinion letter even though
such development, circumstance or change may affect the legal analysis, a legal
conclusion or any other matter set forth in or relating to this opinion letter.
Accordingly, any Lender relying on this opinion letter at any time should seek
advice of its counsel as to the proper application of this opinion letter at
such time.
Very truly yours,
DLB:bbi
162
Form of Company's in-house counsel legal opinion
[AMERICA WEST AIRLINES LOGO]
0000 X. Xxx Xxxxxx Xxxx. Xxxxxxx, XX 00000 - (000) 000-0000 FAX (000) 000-0000
XXXXXXX X. XXXXXXX
Senior Vice President and Chief Administrative Officer
December 10, 1999
The Several Lenders, the Issuing Bank
and the Agent Parties to the Credit
Agreement Hereinbelow Referred to
c/o The Industrial Bank of Japan, Limited, as Agent
0000 Xxxxxx xx xxx Xxxxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Ladies and Gentlemen:
I am Senior Vice President and Chief Administrative Officer and the chief
legal officer of America West Airlines, Inc. (the "Company") and in that
capacity I am familiar with the financing transactions contemplated by the
Amended and Restated Revolving Credit Agreement dated as of even date herewith
(the "Credit Agreement") by and among the Company, the several Lenders parties
thereto (the "Lenders") and The Industrial Bank of Japan, Limited, as the
Issuing Bank and as the Agent for the Lenders thereunder (in such last capacity,
the "Agent"). All capitalized terms defined in the Credit Agreement are used
with the same meanings, unless otherwise defined, in this opinion letter.
In rendering the opinions expressed below, I have examined (a)(i) the
Credit Agreement and the Notes issued to the Lenders today pursuant thereto,
(ii) the Spare Engine Security Agreement, the Spare Parts Security Agreement,
the Cash and Cash Equivalent Security Agreement and the Hangar Security
Agreement, each dated as of December 12, 1997, and the Amendment No. 1 and
Supplement No. 3 to Spare Engine and Simulator Security Agreement, the Amendment
No. 1 and Supplement No. 1 to Spare Parts Security Agreement, the Amendment No.
1 to the Cash and Cash Equivalent Security Agreement and the First Amendment to
Deed of Trust each dated as of even date herewith, in each case executed and
delivered by the Company in favor of the Agent for the benefit of the Lenders
(collectively, the "Initial Security Agreements"), (iii) the Amended and
Restated Environmental Indemnity Agreement, dated as of even date herewith and
executed by the Company and the Agent (said Agreement, together with the Credit
Agreement, the Notes and the Initial Security Agreements, the "Initial Loan
Documents"), and (iv) the forms of the Security Agreements that may be executed
and delivered by the Company in favor of the Agent for the benefit of the
Lenders after the date hereof, all as more fully provided in the Credit
Agreement (collectively, the "Other Security Agreements" and, together with the
Initial Loan Documents, the "Loan Documents"), and (b) such corporate records of
the Company and such other documents as I have deemed necessary as a basis for
the opinions expressed below. In my examination, I have assumed the
163
The Industrial Bank of Japan, Limited
December 10, 1999
Page 2
genuineness of all signatures, the authenticity of documents submitted to me as
originals and the conformity with authentic original documents of all documents
submitted to me as copies. When relevant facts were not independently
established, I have relied upon statements of governmental officials and upon
representations made in or pursuant to the Initial Loan Documents and
certificates of appropriate representatives of the Company.
In rendering the opinions expressed below, I have assumed (except, to the
extent set forth below, as to the Company) that all of the documents referred to
in this opinion have been duly authorized by, have been or will be duly executed
and delivered by, and constitute legal, valid, binding and enforceable
obligations of, all of the parties to such documents, that all signatories to
such documents have been duly authorized and that all such parties are duly
organized and validly existing and have the power and authority (corporate or
other) to execute, deliver and perform such documents. Further, I have assumed
that each of the Other Security Agreements will be executed and delivered by the
Company in the respective form thereof as set forth as an exhibit to the Credit
Agreement as initially executed and delivered, with the blanks appropriately
completed.
Based upon and subject to the foregoing and subject also to the comments
and qualifications set forth below, and having considered such questions of law
as I have deemed necessary as a basis for the opinions expressed below, I am
of the opinion that:
(i) The Company is (a) a corporation duly incorporated, validly existing
and in good standing under the laws of the State of Delaware and has
the corporate power to execute and deliver, and to borrow and
perform its obligations under, the Loan Documents and to conduct its
business as now conducted and (b) duly qualified to transact the
business in which it is engaged in the State of Arizona and in each
jurisdiction in which the failure to be so qualified would have a
materially adverse effect on the Company or on its ability to
perform its obligations under the Loan Documents.
(ii) The execution and delivery by the Company of the Initial Loan
Documents, the borrowing by the Company under the Credit Agreement,
and the performance by the Company of its obligations under the
Credit Agreement and the other Initial Loan Documents do not and
will not result in a breach of, constitute a default under, require
consent under, result in or require the creation of any Lien on any
property of the Company (other than the Liens of the Initial
Security Agreements in respect of the Collateral subject thereto) or
result in the acceleration or required prepayment of any
indebtedness pursuant to the terms of, any agreement, instrument or
order (including any arbitral award) to which the Company or any of
its assets is subject.
(iii) The execution and delivery by the Company of the Loan Documents, and
the performance of its obligations thereunder in accordance with the
terms thereof, have been duly authorized by all necessary corporate
action on the part of the
164
The Industrial Bank of Japan, Limited
December 10, 1999
Page 3
Company, and the Initial Loan Documents have been duly executed and
delivered by the Company.
I advise you that, to my knowledge, there are no pending or threatened
actions, suits, proceedings or investigations against the Company in any court
or by or before any arbitrator or governmental authority which, if determined
adversely, would have a material adverse effect on the Company's financial
condition.
The opinions set forth in paragraph (i)(a) above are limited to matters
involving the General Corporation Law of the State of Delaware; the opinions set
forth in paragraph (i)(b) above are based solely on certificates of appropriate
governmental officials in Arizona and in such other jurisdictions as I have
deemed necessary; and I have assumed for purposes of the opinion in paragraph
(ii) above that each agreement, instrument and order referred to therein is
legal, valid, binding and enforceable in accordance with its respective terms
under the laws of the jurisdiction by whose laws it is expressed to be, or is
otherwise, governed. I do not express any opinion as to the laws of any other
jurisdiction.
This opinion letter is provided to you and, as of its date, other Persons
who shall become Lenders under the Credit Agreement, by me as Senior Vice
President and Chief Administrative Officer and chief legal officer of the
Company pursuant to Section 3.1E of the Credit Agreement and may not be relied
upon by any other person other than Xxxxxx Godward LLP in connection with
rendering its opinion pursuant to the Credit Agreement, or for any purpose other
than in connection with the transactions contemplated by the Loan Documents
without my prior written consent in each instance. This opinion letter speaks as
of its date and I undertake no, and hereby disclaim any, duty to advise you or
any other Person entitled to rely hereon as to changes of law or fact coming to
my attention after the delivery hereof on such date.
Yours sincerely,
/s/ Xxxxxxx X. Xxxxxxx
Xxxxxxx X. Xxxxxxx
165
Exhibit V-D
Form of Company's Arizona counsel legal opinion
[XXXXX AND ROCA LLP LETTERHEAD]
December 10, 1999
Lenders, the Initial Issuing Bank
And the Agent, parties to the Credit Agreement
Hereinbelow Referred to
c/o The Industrial Bank of Japan, Limited, as Agent
0000 Xxxxxx xx xxx Xxxxxxxx
Xxx Xxxx, XX 00000
Attention Xxxxxx Xxxxxxxxxxx
Re: America West Airlines, Inc.
Ladies and Gentlemen:
We have acted as Arizona counsel to America West Airlines, Inc. (the
"Company") in connection with the refinancing transactions contemplated by the
Amended and Restated Revolving Credit Agreement dated as of December 10, 1999
(the "Credit Agreement"), among the Company, the several Lender parties thereto
(the "Lenders") and the Industrial Bank of Japan, Limited, as the Initial
Issuing Bank, a lender, and as the Agent for the Lenders thereunder (in such
last capacity, the "Agent"). The opinions expressed below are furnished to you
pursuant to Section 3.1F of the Credit Agreement at the request, and with the
approval, of the Company. All capitalized terms used herein and not otherwise
defined herein shall have the respective meanings given those terms in the
Credit Agreement.
We have examined originals, or copies certified to our satisfaction, of the
Credit Agreement, the Leasehold Deed of Trust, Security Agreement Assignment of
Rents, Financing Statement and Fixture Filing dated as of December 12, 1997 (the
"Deed of Trust"), and the Amendment No. 1 to the Leasehold Deed of Trust,
Security Agreement, Assignment of Rents, Financing Statement and Fixture Filing
dated as of December 10, 1999 (the "Amendment") (collectively, the "Operative
Agreements") We have also reviewed the form of UCC Financing Statement, as
amended, describing full flight simulators and related property (the "Flight
Simulators") owned by the Company (the "Flight Simulator UCC Financing
Statement"), and such other documents as we have deemed necessary to require as
a basis for the opinions hereinafter expressed.
166
December 10, 1999 Page 2
[XXXXX AND ROCA LLP LOGO]
In such examination we have assumed the genuineness of all signatures, the
authenticity of all documents submitted to us as originals, the conformity with
the original documents of all documents submitted to us as copies and the
authenticity of the originals of such latter documents. As to various questions
of fact material to such opinions we have, when relevant facts were not
independently established, relied upon certifications by directors, officers and
representatives of the parties to the Operative Agreements and other appropriate
persons.
In rendering the opinions expressed below, we have assumed that:
A. The Company is a corporation duly organized, validly existing and in
good standing under the laws of the State of Delaware; the Company has the
requisite corporate power and authority to (i) own and operate its properties
and assets, (ii) carry out its business as such business is currently being
conducted, and (iii) consummate the terms and conditions applicable to the
Company under the Operative Agreements; the execution, delivery and performance
of the Operative Agreements by the Company have been duly authorized by all
requisite corporate action on the part of the Company; and the Operative
Agreements have been duly executed and delivered by the Company.
B. The Operative Agreements accurately describe and contain the mutual
understandings of the parties, and there are no oral or written statements or
agreements that modify, amend or vary, or purport to modify, amend or vary, any
of the terms of the Operative Agreements.
C. Specifically with respect to the Flight Simulator UCC Financing
Statement we have assumed that it has been executed in connection with a legal,
valid and binding document duly executed by the Company creating a security
interest in the Flight Simulators, that the Flight Simulators are located in
Arizona and that the Flight Simulators are not fixtures.
Based upon and subject to the foregoing and subject also to the comments
and qualifications set forth herein, and having considered such questions of law
as we have deemed necessary as a basis for the opinions expressed below, we are
of the opinion that:
1. Based on a Certificate of Good Standing from the Arizona Corporation
Commission dated December 9, 1999, the Company is duly qualified as a foreign
corporation and is in good standing in the State of Arizona.
167
December 10, 1999 Page 3
[XXXXX AND XXXX LOGO]
2. The Amendment is in recordable form and is effective to amend in favor
of the Agent, as security for the Obligations, as defined therein, the Deed of
Trust only to the extent of the amendments found in the Amendment, and does not
adversely effect the lien on all right, title and interest of the Company in the
Real Property Collateral defined therein.
3. The Amendment continues the valid and perfected lien on and security
interest in all right, title and interest in the Real Property Collateral
defined therein.
4. Upon the filing of the Flight Simulator UCC Financing Statement with
the Arizona Secretary of State, the security interest in the Flight Simulators
shall be perfected.
The foregoing opinions are subject to the following comments and
qualifications:
A. The opinions expressed in paragraphs 2, 3 and 4 above are also
subject to the following:
(1) We express no opinion herein regarding the accuracy, completeness or
adequacy of any property descriptions contained in the Operative Agreements or
the property covered by the Flight Simulator UCC Financing Statement or
regarding the title to or the existence of any of the assets, tangible or
intangible, in which a security interest is granted by the Company.
(2) In rendering the foregoing opinions, we have assumed that the Company
has rights in the Collateral, in which a lien or security interest is granted
by it in the Deed of Trust, requisite for attachment of a security interest
therein.
(3) We have assumed that Amendment No. 1 will be filed and recorded in
the Office of the Maricopa County Recorder and that the Flight Simulator UCC
Financing Statement will be filed with the office of the Arizona Secretary of
State.
B. Our opinions in regard to the governing law provisions of the
Operative Agreements are based solely on Arizona Law, and no opinion is
expressed with respect to the enforceability of such provisions in any court
other than an Arizona
168
December 10, 1999 Page 4
[XXXXX AND ROCA LOGO]
State court or a United States Federal court sitting in Arizona and applying
New York choice of law principles.
C. The foregoing opinions are limited to matters involving the laws of
the State of Arizona and any applicable Federal laws of the United States.
We do not express any opinion as to any other laws. Moreover, we do not
express any opinion as to the various state and Federal laws regulating the
Agent, the Issuing Bank, or the Lenders in the conduct of their respective
businesses that may relate to the Operative Agreements.
D. We are expressing no opinion as to the title to any property
described in, or the priority of any lien or security interest created by,
the Operative Agreements.
E. OUR OPINIONS RELATING TO PERSONAL PROPERTY COLLATERAL ARE LIMITED TO
COLLATERAL IN WHICH A SECURITY INTEREST MAY BE GRANTED PURSUANT TO ARTICLE 9
OF THE UNIFORM COMMERCIAL CODE AS ADOPTED IN THE STATE OF ARIZONA.
We are qualified to practice law in the State of Arizona, and we do not
purport to be experts on, or to express any opinion concerning, any law
other than the law of the State of Arizona. The opinions expressed in this
letter are based upon the law in effect as of the date hereof, and we
assume no obligation to revise or supplement this opinion should such law
be changed by legislative action, judicial decision or otherwise.
The opinions expressed in this letter are solely for the use of the
parties to whom it is addressed (and any Eligible Assignee under the Credit
Agreement) for matters directly related to the Credit Agreement and the
transactions contemplated thereunder, and this opinion may not be relied on
by any other persons or for any other purpose without our prior written
approval. The opinions expressed in this letter are limited to the matters
set forth in this letter and no other opinions should be inferred beyond
the matters expressly stated.
Sincerely,
Xxxxx and Xxxx LLP
169
Exhibit V-E
[Form of opinion of special New York
counsel to the Company]
To the Lenders party to the
Credit Agreement referred
to below and to The Industrial
Bank of Japan, Limited, as Agent
America West Airlines, Inc.
Ladies and Gentlemen:
We have acted as special New York counsel to America West Airlines, Inc., a
Delaware corporation (the "Borrower"), in connection with the preparation,
execution and delivery of the Amended and Restated Revolving Credit Agreement
dated as of December 10, 1999 (the "Credit Agreement"), among the Borrower and
each of you (each a "Lender Party"). Unless otherwise defined herein, terms
defined in the Credit Agreement are used herein as therein defined.
In that connection, we have examined executed counterparts of (i) the Credit
Agreement, (ii) the Cash and Cash Equivalent Security Agreement, (iii) the
Environmental Indemnity Agreement, (iv) the Spare Engine Security Agreement, (v)
the Spare Parts Security Agreement, (vi) an Amendment No. 1 to the Cash and Cash
Equivalent Security Agreement dated as of December 10, 1999 (the "Cash and Cash
Equivalent Security Agreement Amendment"), (vii) an Amendment No. 1 and
Supplement No. 3 to the Spare Engine and Simulator Security Agreement dated as
of December 10, 1999 (the "Spare Engine and Simulator Security Agreement
Amendment"), (viii)[an Amendment No. 1 to the Spare Parts Security Agreement
dated as of December 10, 1999](the "Spare Parts Security Amendment"), and (ix)
to the extent relevant to our opinion expressed below, the other documents
delivered by the Borrower pursuant to Section 3.1 of the Credit Agreement. The
Cash and Cash Equivalent Security Agreement Amendment; the Cash and Cash
Equivalent Security Agreement, as amended by the Cash and Cash Equivalent
Security Agreement Amendment; the Environmental Indemnity Agreement; the Spare
Engine and Simulator Security Agreement Amendment; the Spare Engine and
Simulator Security Agreement, as amended
170
2
by the Spare Engine and Simulator Security Agreement Amendment; the Spare Parts
Security Agreement Amendment; and the Spare Parts Security Agreement, as amended
by the Spare Parts Security Agreement Amendment, are herein collectively
referred to as the "Documents".
In our examination of the Documents and such other documents, we have
assumed, without independent investigation (a) the due execution and delivery of
the Documents by the Borrower, (b) the genuineness of all signatures, (c) the
authenticity of the originals of the documents submitted to us and (d) the
conformity to originals of any documents submitted to us as copies.
In addition, we have assumed, without independent investigation, that (i)
the Borrower is duly organized and validly existing under the laws of the
jurisdiction of its organization and has full power and authority (corporate and
otherwise) to execute, deliver and perform the Credit Agreement and the
Documents and (ii) the execution, delivery and performance by the Borrower of
the Credit Agreement and the Documents have been duly authorized by all
necessary action (corporate or otherwise) and do not (A) contravene the
certificate of incorporation, bylaws or other constituent documents of the
Borrower, (B) conflict with or result in the breach of any document or
instrument binding on the Borrower or (C) violate or require any governmental or
regulatory authorization or other action under any law, rule or regulation
applicable to the Borrower other than New York law or United States federal law
applicable to borrowers generally or, assuming the correctness of the Borrower's
statements made as representations and warranties in Section 4.2C. of the Credit
Agreement, applicable to the Borrower. With respect to any consents, approvals
or authorizations of, or registrations, declarations or filings with any
governmental authority in connection with the attachment or perfection of the
Lien purported to be created by the Security Agreements in the Collateral
described therein, as to which we express no opinion, we refer you to the
opinions of Xxxxx and Roca LLP, local Arizona counsel, and of Daugherty, Fowler,
Feregrin & Xxxxxx, FAA counsel. We have also assumed that the Credit Agreement
and the Documents are the legal, valid and binding obligations of each Lender
Party, enforceable against such Lender Party in accordance with its terms.
Based upon the foregoing examination and assumptions and upon such other
investigation as we have deemed necessary and subject to the qualifications set
forth below, we are of the opinion that:
1. The Documents are the legal, valid and binding obligations of the
Borrower, enforceable against the Borrower in accordance with their respective
terms.
2. No consent, approval or authorization of, or registration, declaration
or filing with, any United States federal or New York State governmental
authority is required to be obtained for the execution, delivery or performance
by the Borrower of the Documents or the validity or enforceability thereof,
except for any thereof as may be required in connection with the attachment or
perfection of the Lien purported to be created thereby in the Collateral
described therein.
171
3
3. The execution, delivery and performance by the Borrower of the Documents
will not violate any applicable law or statute of the State of New York or of
the United States applicable to borrowers generally, such that the ability of
the Borrower to perform its obligations under the Credit Agreement or the Notes
is materially and adversely affected.
Our opinion above is subject to the following qualifications:
(i) Our opinion above is subject to the effect of any applicable
bankruptcy, insolvency (including, without limitation, all laws relating to
fraudulent transfers), reorganization, moratorium or similar law affecting
creditors' rights generally.
(ii) Our opinion above is also subject to the effect of general
principles of equity, including (without limitation) concepts of materiality,
reasonableness, good faith and fair dealing (regardless of whether considered
in a proceeding in equity or at law).
(iii) We express no opinion as to the enforceability of the
indemnification provisions set forth in , , and , of
the Documents to the extent enforcement thereof is contrary to public policy
regarding the exculpation of criminal violations, intentional harm and acts of
gross negligence or recklessness.
(iv) Our opinion above is limited to the law of the State of New York and
the federal law of the United States of America and we do not express any
opinion herein concerning any other law. Without limiting the generality of
the foregoing, we express no opinion as to the effect of the law of a
jurisdiction other than the State of New York wherein any Lender may be
located or wherein enforcement of the Credit Agreement or any of the Documents
may be sought that limits the rates of interest legally chargeable or
collectible.
(v) We express no opinion herein regarding the accuracy, completeness or
adequacy of any Collateral descriptions contained in the Documents, or
regarding the title to or the existence of any of the Collateral. We express
no opinion as to the attachment, perfection or priority of any Lien purported
to be created by the Security Agreements.
A copy of this opinion letter may be delivered by any of you to any Person
that becomes a Lender in accordance with the provisions of the Credit Agreement.
Any such Lender may rely on the opinions expressed above as if this opinion
letter were addressed and delivered to such Lender on the date hereof. In
addition, Xxxxxx Godward LLP may rely on the opinions expressed above as if this
opinion were addressed and delivered to them.
This opinion letter speaks only as of the date hereof. We expressly disclaim
any responsibility to advise you or any other Lender who is permitted to rely on
the opinion expressed herein as specified in the next preceding paragraph of any
development or circumstance of any kind
172
4
including any change of law or fact that may occur after the date of this
opinion letter even though such development, circumstance or change may affect
the legal analysis, a legal conclusion or any other matter set forth in or
relating to this opinion letter. Accordingly, any Lender relying on this opinion
letter at any time should seek advice of its counsel as to the proper
application of this opinion letter at such time.
Very truly yours,
DLB:bbi
173
EXHIBIT VI
FORM OF ASSIGNMENT AGREEMENT
Dated as of _______________________
Reference is made to the Amended and Restated Revolving Credit
Agreement, dated as of December 10, 1999 (as from time to time amended and in
effect, the "Credit Agreement"), by and among America West Airlines, Inc., a
Delaware corporation (the "Company"), The Industrial Bank of Japan, Limited and
the other banking institutions referred to therein as Lenders (collectively, the
"Lenders"), and The Industrial Bank of Japan, Limited, as agent (hereinafter, in
such capacity, the "Agent") for the Lenders. Capitalized terms used herein and
not otherwise defined shall have the meanings assigned to such terms in the
Credit Agreement.
__________________ (the "Assignor") and (the ______________________
(the "Assignee") hereby agree as follows:
1. ASSIGNMENT. Subject to the terms and conditions of this Assignment
and Acceptance, the Assignor hereby sells and assigns to the Assignee, and the
Assignee hereby purchases and assumes without recourse to the Assignor, a $
___________ interest in and to the rights, benefits, indemnities and obligations
of the Assignor under the Credit Agreement equal to _______% in respect of the
Assignor's Commitment as in effect immediately prior to the Effective Date (as
hereinafter defined).
2. ASSIGNOR'S REPRESENTATIONS. The Assignor (i) represents and warrants
that (A) it is legally authorized to enter into this Assignment Agreement, (B)
as of the date hereof, its Commitment is $____________ , its Pro Rata Share is
_______%, the aggregate outstanding principal balance of its Loans equals
$_________ (ii) makes no representation or warranty, express or implied, and
assumes no responsibility with respect to any statements, warranties or
representations made in or in connection with the Credit Agreement or any of the
other Loan Documents or the execution, legality, validity, enforceability,
genuineness, sufficiency or value of the Credit Agreement, the other Loan
Documents or any other instrument or document furnished pursuant thereto or the
attachment, perfection or priority of any security interest or mortgage, other
than that it is the legal and beneficial owner of the interest being assigned by
it hereunder free and clear of any claim or encumbrance; (iii) makes no
representation or warranty and assumes no responsibility with respect to the
financial condition of the Company or any of its Subsidiaries or any other
Person primarily or secondarily liable in respect of any of the Obligations, or
the performance or observance by the Company or any of its Subsidiaries or any
other Person primarily or secondarily liable in respect of any of the
Obligations of any of its obligations under the Credit Agreement or any of the
other Loan Documents or any other instrument or document delivered or executed
pursuant thereto; and (iv) attaches hereto the Revolving Note delivered to it
under the Credit Agreement.
174
The Assignor requests that the Company exchange the Assignor's
Revolving Note for a new Revolving Note payable to the Assignor and the Assignee
as follows:
Notes Payable to Amount of Revolving
the Order of: Note
--------------- --------------------
Assignor $
Assignee $
3. ASSIGNEE'S REPRESENTATIONS. The Assignee (i) represents and warrants
that (A) it is duly and legally authorized to enter into this Assignment
Agreement, (B) the execution, delivery and performance of this Assignment
Agreement do not conflict with any provision of law or of the charter or by-laws
of the Assignee, or of any agreement binding on the Assignee, (C) all acts,
conditions and things required to be done and performed and to have occurred
prior to the execution, delivery and performance of this Assignment Agreement,
and to render the same the legal, valid and binding obligation of the Assignee,
enforceable against it in accordance with its terms, have been done and
performed and have occurred in due and strict compliance with all applicable
laws; (ii) confirms that it has received a copy of the Credit Agreement,
together with copies of the most recent financial statements delivered pursuant
to Section 5.1(i) and (ii) thereof and such other documents and information as
it has deemed appropriate to make its own credit analysis and decision to enter
into this Assignment Agreement; (iii) agrees that it will, independently and
without reliance upon the Assignor, the Agent or any other Lender and based on
such documents and information as it shall deem appropriate at the time,
continue to make its own credit decisions in taking or not taking action under
the Credit Agreement; (iv) represents and warrants that it is an Eligible
Assignee; (v) appoints and authorizes the Agent to take such action as agent on
its behalf and to exercise such powers under the Credit Agreement and the other
Loan Documents as are delegated to the Agent by the terms thereof, together with
such powers as are reasonably incidental thereto; (vi) represents and warrants
that as of the date hereof, it is not entitled to any additional amounts payable
under Section 2.7 of the Credit Agreement and as of the date hereof, no Tax
would be imposed upon any amounts payable to it hereunder; (vii) agrees to be
bound by the provisions of Section 8 of the Credit Agreement; [and] (viii)
agrees that it will perform in accordance with their terms all the obligations
which by the terms of the Credit Agreement are required to be performed by it as
a Lender[; and (viii) acknowledges that it has made arrangements with the
Assignor satisfactory to the Assignee with respect to its pro rata share of
Letter of Credit Fees in respect of outstanding Letters of Credit].
4. EFFECTIVE DATE. The effective date for this Assignment Agreement
shall be _________ (the "Effective Date"). Following the execution of this
Assignment Agreement, each party hereto shall deliver its duly executed
counterpart hereof to the Agent for acceptance by the Agent and recording in the
Register by the Agent. Schedule 2.1 to the Credit Agreement shall thereupon be
replaced as of the Effective Date by the Schedule 2.1 annexed hereto.
-2-
175
5. RIGHTS UNDER CREDIT AGREEMENT. Upon such acceptance and recording,
from and after the Effective Date, (i) the Assignee shall be a party to the
Credit Agreement and, to the extent provided in this Assignment Agreement, have
the rights and obligations of a Lender thereunder, and (ii) the Assignor shall,
with respect to that portion of its interest under the Credit Agreement assigned
hereunder, relinquish its rights and be released from its obligations under the
Credit Agreement; provided, however, that the Assignor shall retain its rights
to be indemnified pursuant to Section 9.3 of the Credit Agreement with respect
to any claims or actions arising prior to the Effective Date.
6. PAYMENTS. Upon such acceptance of this Assignment Agreement by the
Agent and such recording, from and after the Effective Date, the Agent shall
make all payments in respect of the rights and interests assigned hereby
(including payments of principal, interest, fees and other amounts) to the
Assignee. The Assignor and the Assignee shall make any appropriate adjustments
in payments for periods prior to the Effective Date by the Agent or with respect
to the making of this assignment directly between themselves.
7. GOVERNING LAW. THIS ASSIGNMENT AGREEMENT SHALL BE GOVERNED BY, AND
SHALL BE CONSTRUED AND ENFORCED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW
YORK.
8. COUNTERPARTS. This Assignment Agreement may be executed in any
number of counterparts which shall together constitute but one and the same
agreement.
IN WITNESS WHEREOF, intending to be legally bound, each of the
undersigned has caused this Assignment and Acceptance to be executed on its
behalf by its officer thereunto duly authorized, as of the date first above
written.
[THE ASSIGNOR]
By: ___________________________
Name:
Title:
[THE ASSIGNEE]
By: ___________________________
Name:
Title:
-3-
176
CONSENTED TO:
THE INDUSTRIAL BANK OF
JAPAN, LIMITED, as Agent
By: ________________________________
Name:
Title:
[AMERICA WEST AIRLINES, INC.](1)
By: ________________________________
Name:
Title:
--------
(1) The Company's consent is required unless a Potential Event of Default or an
Event of Default has occurred and is continuing.
-4-
177
EXHIBIT VII
FORM OF CERTIFICATE RE: NON-BANK STATUS
Reference is made to the Note(s) held by the undersigned pursuant to
the Amended and Restated Revolving Credit Agreement dated as of December 10,
1999 among AMERICA WEST AIRLINES, INC., THE INDUSTRIAL BANK OF JAPAN LIMITED, as
Agent, and the Lenders (capitalized terms not otherwise defined herein having
the meanings given therein). The undersigned hereby declares under penalty of
perjury that:
(1) the undersigned is the beneficial owner of the Note(s) registered
in its name;
(2) the income from the Note(s) held by the undersigned is not
effectively connected with the conduct of a trade or business within the United
States;
(3) the undersigned is not a deposit-taking institution and is not
regulated as a "Bank" in its country of incorporation;
(4) to the best of its knowledge and belief, the undersigned is not a
controlled foreign corporation related (within the meaning of Section 864(d)(4)
of the Code) to the Company;
(5) to the best of its knowledge and belief, the undersigned is not a
10% shareholder (within the meaning of Section 871(h)(3)(B) of the Code) of the
Company;
(6) the undersigned is a Person other than (i) a citizen or resident of
the United States of America, its territories and possessions (including the
Commonwealth of Puerto Rico and all other areas subject to its jurisdiction)
(for purposes of this definition, the "United States"), (ii) a corporation, a
partnership or other entity created or organized under the laws of the United
States or any political subdivision thereof or therein or (iii) an estate or
trust that is subject to United States federal income taxation regardless of the
source of its income; and
(7) the undersigned is not a natural person.
[Lender]
By: _____________________
Name:
Date:
Dated: _______________________, ____
178
EXHIBIT VIII
Financial Condition Certificate
I, , hereby certify that I am the of America West
Airlines, Inc., a Delaware corporation (the "Company"), that I am familiar with
its properties, businesses, assets, finances and operations and that I am duly
authorized to execute this certificate on behalf of the Company, which is being
delivered pursuant to Section 3.1C of the Amended and Restated Revolving Credit
Agreement, dated as of December 10, 1999 (the "Credit Agreement") among the
Lenders named therein (the "Lenders") and The Industrial Bank of Japan, as Agent
for the Lenders (the "Agent"). Terms defined in the Credit Agreement are used
herein as therein defined unless otherwise defined herein.
For purposes of this certificate, the terms below shall have
the following definitions:
(a) "present fair saleable value"
The amount that could be obtained by an independent
willing seller from an independent willing buyer if
the assets of the Company and its Subsidiaries taken
as a whole are sold with reasonable promptness in an
arm's-length transaction under present conditions for
the sale of comparable business enterprises.
(b) "contingent liabilities"
The maximum estimated amount of liabilities
reasonably likely to result from pending litigation,
asserted claims and assessments, guaranties,
uninsured risks and other contingent liabilities of
the Company and its Subsidiaries taken as a whole
after giving effect to the borrowing under the Credit
Agreement.
(c) "would constitute an unreasonably small capital"
As of the date hereof, the Company and its
Subsidiaries taken as a whole is a going concern and
has sufficient capital to ensure that it will
continue to be a going concern in the business in
which it is engaged and proposes to be engaged.
I further certify that I have reviewed the Loan Documents and
the contents of this certificate and, in connection therewith, have made such
investigation and inquiries as I deem necessary and appropriate therefor.
I hereby further certify that:
179
1. On the date hereof, after giving effect to the transactions
contemplated by the Credit Agreement and the other Loan Documents, the present
fair saleable value of any and all property of the Company and its Subsidiaries
taken as a whole is greater than the total amount of liabilities, including
contingent liabilities, of the Company and its Subsidiaries taken as a whole.
2. On the date hereof, after giving effect to the transactions
contemplated by the Credit Agreement and the other Loan Documents, the present
fair saleable value of the assets of the Company and its Subsidiaries taken as a
whole exceeds the amount that will be required to pay the probable liability of
the Company and its Subsidiaries taken as a whole on its existing debts as they
become absolute and matured considering all financing alternatives and potential
asset sales reasonably available to the Company.
3. The Company and its Subsidiaries do not intend to or
believe that they will incur debts and liabilities that will be beyond their
ability to pay as such debts and liabilities mature.
4. On the date hereof, after giving effect to the transactions
contemplated by the Credit Agreement and the other Loan Documents, the Company
and its Subsidiaries are not engaged in a transaction, and are not about to
engage in business or a transaction, for which their property would constitute
an unreasonably small capital.
5. The Company and its Subsidiaries taken as a whole is
solvent within the meaning given that term and similar terms under applicable
laws relating to fraudulent transfers and conveyances.
This certificate is being delivered solely to satisfy the
Company's obligations pursuant to Section 3.C of the Credit Agreement and in
my capacity as of the Company (and not in my personal capacity).
All statements made herein are to the best of my knowledge after making such
inquiries and analyses as I have deemed necessary or appropriate for the
opinions herein stated.
IN WITNESS WHEREOF, the undersigned has executed this
certificate on behalf of the Company this ______ day of December, 1999.
AMERICA WEST AIRLINES, INC.
By:
-----------------------------
Title:
-2-
180
EXHIBIT IX
REVOLVING LOAN PERIOD Date:
BORROWING BASE CERTIFICATE
===============================================================================
Reference is made to the Amended and Restated Revolving Credit Agreement
dated as of December 10, 1999 (as may be amended, restated or supplemented or
otherwise modified from time to time, the "Credit Agreement") among America West
Airlines, Inc. (the "Company"), the lenders from time to time party thereto and
The Industrial Bank of Japan Limited, as arranger, initial issuing bank and as
agent for such lenders. Capitalized terms used herein and not otherwise defined
herein shall have the meanings assigned to such terms in the Credit Agreement.
The undersigned, being the of the Company, does hereby certify
for and on behalf of the Company, as of , the following:
BORROWING BASE COLLATERAL
A CASH AND PERMITTED CASH EQUIVALENTS A Collateral Balance:
Rate of Advance: 100%
Borrowing Base Value:
B STAGE III AIRCRAFT B Appraised Value:
Rate of Advance: 85%
Borrowing Base Value:
C ROTABLES C Book Value: $
Adjusted Fair Market Value: $
Lower of Book Value or Adjusted Fair Market Value: $
Rate of Advance: 60 %
Borrowing Base: $
D MAINTENANCE FACILITY D Appraised Value: $
Rate of Advance: 66%
Borrowing Base Value: $
E SIMULATORS E Appraised Value: $
Rate of Advance: 66%
Borrowing Base Value: $
F SPARE ENGINES F Appraised Value: $
Rate of Advance: 66%
Borrowing Base Value: $
181
TOTAL BORROWING BASE VALUE: $
Total Loans (as of _________) $
Letter of Credit Usage $
TOTAL OUTSTANDING AMOUNTS $
Availability $
Deficiency ($ )
In addition, the Company certifies that:
(1) None of the Borrowing Base Collateral included in the calculation of
the Borrowing Base is subject to an Event of Loss, Event of Damage,
Repairable Event or Adjustment Event;
(2) No reduction in the Borrowing Base is required pursuant to subsection
2.4B(iii)(1)(e) of the Credit Agreement; and
(3) The portion of the Borrowing Base attributable to Rotables stated above
does not exceed fifty percent (50%) of the aggregate Borrowing Base.
AMERICA WEST AIRLINES, INC.
By:
-----------------------------
Name:
Title:
-2-
