Exhibit 10.2
EXECUTION COPY
AMENDMENT NO. 2 TO LOAN AGREEMENT
AMENDMENT NO. 2 TO LOAN AGREEMENT (THIS "AMENDMENT"), dated as of March 12,
2004, among US Airways, Inc., a Delaware corporation (the "Borrower"), US
Airways Group, Inc., a Delaware corporation ("Group"), the Subsidiary Guarantors
party hereto (the "Subsidiary Guarantors"), the several lenders party hereto
(the "Lenders"), Bank of America, N.A., as Agent for the Lenders (in such
capacity, together with its successors and permitted assigns, the "Agent"), Bank
of America, N.A., as KHFC Administrative Agent (in such capacity, together with
its successors and permitted assigns, the "KHFC Administrative Agent"), Bank of
America, N.A., as Collateral Agent (in such capacity, together with its
successors and permitted assigns, the "Collateral Agent," and collectively with
the Agent and the KHFC Administrative Agent, the "Agents") and Air
Transportation Stabilization Board (the "Board") created pursuant to the Air
Transportation Safety and System Stabilization Act, P.L. 107-42 (2001), as the
same may be amended from time to time.
W I T N E S S E T H:
WHEREAS, the parties hereto, together with Phoenix American Financial
Services, Inc., as Loan Administrator, have entered into a Loan Agreement dated
as of March 31, 2003 (as amended, restated, supplemented, or otherwise modified
from time to time prior to the date hereof, the "Loan Agreement"). Capitalized
terms not otherwise defined in this Amendment have the same meanings as
specified therefor in the Loan Agreement;
WHEREAS, the Borrower and Group have requested that the Board, the
Agents, and the Lenders agree to amend the Loan Agreement as hereinafter
provided; and
WHEREAS, the Board, the Agents, and the Lenders are willing to amend
the Loan Agreement on the terms and conditions set forth herein.
NOW, THEREFORE, in consideration of the premises and the covenants and
agreements contained herein, the parties hereto hereby agree as follows:
Section 1. Initial Optional Prepayment. On the Second Amendment
Effective Date (as defined below), the Borrower shall make an optional
prepayment of the Loan in an amount equal to $250,000,000.00 (the "Initial
Optional Prepayment"), together with accrued and unpaid interest to the Second
Amendment Effective Date on the amount so repaid. Each of the Agents, the Board
and the Lenders (a) hereby waives the fifteen (15) days' prior revocable notice
requirement for optional prepayments set forth in Section 2.5(a) of the Loan
Agreement and agrees that such prepayment may be made on the Second Amendment
Effective Date regardless of whether such notice has been given, and (b) hereby
waives any requirement pursuant to Section 2.9 of the Loan Agreement that the
Borrower make the Initial Optional Prepayment not later than 12:00 noon (New
York City time) on the Second Amendment Effective Date and agrees that,
notwithstanding the provisions of such Section 2.9, the Initial Optional
Prepayment shall
be deemed to be received on the Second Amendment Effective Date regardless of
what time such payment is received on such date. Notwithstanding the provisions
of Section 2.5(c) of the Loan Agreement, the Initial Optional Prepayment shall
be applied to the then remaining installments of the outstanding principal
amount of the Loan ratably as to Tranche A and Tranche B and pro rata against
the originally scheduled principal payments on the Loan (and not in the inverse
order of maturity as otherwise provided in Section 2.5(c) of the Loan
Agreement).
Section 2. Amendments to Loan Agreement. As of the Second Amendment
Effective Date (as defined below), the Loan Agreement is hereby amended as
follows:
(a) Amended Definitions.
(i) The definition of "Cash Equivalents" contained
in Section 1.1 of the Loan Agreement is hereby amended by deleting the
words ", to the extent owned by any Obligor free and clear of all Liens
(other than Liens created under the Collateral Documents)" therefrom.
(ii) The definition of "Excluded Property" contained
in Section 1.1 of the Loan Agreement is hereby amended by deleting the
words ", but which consent the Obligors are unable to obtain after
compliance with the first sentence of Section 5.8(g) hereof" from clause
(i)(B) thereof.
(b) New Definitions. Section 1.1 of the Loan Agreement is
hereby amended by adding the following new definitions in proper alphabetical
order:
(i) "85% Test" has the meaning specified in Section
6.13.
(ii) "Adjusted Applicable Loan Rating" has the
meaning specified in clause (I) of Section 6.13(ii).
(iii) "Applicable Loan Rating" has the meaning
specified in clause (I) of Section 6.13(ii).
(iv) "Covenant Relief Period" means each of the
fiscal quarters of Group ending on or before December 31, 2005.
(v) "Determination Date" has the meaning specified
in clause (I) of Section 6.13(ii).
(vi) "Eligible Assets" means those assets of Group
and its Subsidiaries other than the Mainline Assets. Eligible Assets shall
include, without limitation, the following assets: (i) all regional jets
(the "Eligible Regional Jets") owned or operated by or for the benefit of
the Borrower or by or for the benefit of, Piedmont Airlines, Inc., PSA
Airlines, Inc., Allegheny Airlines, Inc., or the MidAtlantic Airways
division of the Borrower (collectively, the "Express Carriers"),
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together with all purchase and financing agreements relating to Eligible
Regional Jets or aircraft to become Eligible Regional Jets upon purchase;
(ii) the Capital Stock of the Express Carriers (including the MidAtlantic
Airways division of the Borrower if spun off into a wholly-owned
Subsidiary); (iii) any and all assets of the Express Carriers; (iv) any and
all transferable Slots and Gate Leases at New York's LaGuardia Airport,
Boston's Xxxxx Airport and Washington D.C.'s Xxxxxx National Airport
(collectively, the "Point-to-Point Focus Airports"); (v) all Gate Leases
and Aircraft Related Facilities owned or used by any Obligor that are
designed for or typically used for regional jet operations at airports
other than Point-to-Point Focus Airports (collectively, the "Hub-and-Spoke
Airports"); and (vi) all other Aircraft Related Equipment, regardless of
whether such equipment is located at Point-to-Point Focus Airports or
Hub-and-Spoke Airports, except to the extent that, as of the relevant
Determination Date, the retention thereof is necessary for the Borrower to
continue to operate its Mainline Jet Aircraft in its Mainline Business.
(vii) "Initial Loan Rating" has the meaning specified
in clause (I) of Section 6.13(ii).
(viii) "Initial Optional Prepayment" has the meaning
specified in Section 1 of the Second Amendment.
(ix) "Instrument Documentation" has the meaning
specified in clause (J) of Section 6.13(ii).
(x) "Mainline Assets" means those assets of the
Borrower that, as of the relevant Determination Date, are necessary for the
Borrower to continue to operate its core business as a hub-and-spoke
network carrier operating Airbus and Boeing jet aircraft (the "Mainline
Business") and shall be limited to (i) a minimum of 279 such jet aircraft
owned or operated by the Borrower (the "Mainline Jet Aircraft"); and (ii)
all airport facilities, ground equipment, maintenance equipment, aircraft
parts and engines (including spare engines) and other Aircraft Related
Facilities and other Aircraft Related Equipment, in each case to the extent
necessary as of the relevant Determination Date to support the continued
operation of the Mainline Jet Aircraft in the Mainline Business.
(xi) "Mainline Jet Aircraft" has the meaning
specified in the definition of "Mainline Assets."
(xii) "Non-Cash Instrument" means any senior secured
note or the equivalent in the form of a conditional or installment sales
agreement, title retention agreement or lease which meets each of the
applicable requirements of Section 6.13.
(xiii) "Related Transactions" has the meaning specified
in clause (I) of Section 6.13(ii).
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(xiv) "Second Amendment" means that certain Amendment
No. 2 to Loan Agreement, dated as of March 12, 2004, among the Borrower,
Group, the Subsidiary Guarantors party thereto, the Lenders, the Agent, the
KHFC Agent, the Collateral Agent, and the Board.
(xv) "Second Amendment Effective Date" has the
meaning specified in Section 4 of the Second Amendment.
(xvi) "Specified Asset Sale" has the meaning specified
in Section 6.13.
(xvii) "Unrestricted Cash" means, as of any time of
determination, the reserve of unrestricted cash and Cash Equivalents of the
Obligors taken as a whole which is free from all Liens other than the Liens
created under the Collateral Documents and Permitted Encumbrances of the
type described in clause (vii) of the definition of Permitted Encumbrances.
(c) Amendment to Section 2.6 of the Loan Agreement. Section
2.6(b) of the Loan Agreement is hereby amended by adding the following sentence
after the first sentence of such section:
"Notwithstanding the foregoing provisions of this Section 2.6(b), the
Borrower shall only be required to prepay the Loan in an aggregate amount
equal to seventy-five percent (75%) of Net Cash Proceeds from any Asset
Sale the definitive documentation setting forth the terms of which is
executed and delivered during the period commencing on the Second Amendment
Effective Date and ending on February 28, 2005, provided, however, that:
(X) the aggregate amount of Net Cash Proceeds retained by the Borrower
pursuant to the application of this sentence shall not exceed $125,000,000;
and (Y) to the extent, if any, that as of the end of any month in which the
Obligors receive any such Net Cash Proceeds in respect of Asset Sales,
Unrestricted Cash exceeds $1,350,000,000, then (1) the Borrower shall
prepay the Loan on the third Business Day of the following month in an
aggregate amount equal to the lesser of (A) the remaining twenty-five
percent (25%) of Net Cash Proceeds received during such month in respect of
such Asset Sales and not otherwise used to prepay the Loan and (B) the
amount of Unrestricted Cash in excess of $1,350,000,000 as of the end of
such month, and (2) the amount of Net Cash Proceeds paid pursuant to this
subclause (Y) shall not count toward the $125,000,000 limit on the
retention of Net Cash Proceeds by the Borrower pursuant to subclause (X) of
this proviso."
(d) Amendment to Section 5.1 of the Loan Agreement. Clause
(C)(2) of Section 5.1(b)(iii) of the Loan Agreement is hereby amended and
restated in its entirety as follows:
"(2) (x) for each Fiscal Year commencing with the Fiscal Year ending
December 31, 2004, shall not contain a going concern qualification, and
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(y) for each Fiscal Year commencing with the Fiscal Year ending December
31, 2003, shall state (or shall be accompanied by a separate letter
stating) that in making its examination no knowledge of any Default or
Event of Default was obtained (to the extent such statement is not
prohibited by, or inconsistent with, applicable accounting literature),
and"
(e) Amendment to Section 5.8 of the Loan Agreement. Section
5.8(g) of the Loan Agreement is hereby amended and restated in its entirety as
follows: "intentionally omitted."
(f) Amendment to Section 6.1 of the Loan Agreement. Section
6.1(a)(iv) of the Loan Agreement is hereby amended and restated in its entirety
as follows:
"(iv) Liens on assets in favor of the purchasers of such assets pursuant to
installment or conditional sale agreements entered into in accordance with
Section 6.13 and, to the extent, if any, that any of the following
constitutes a Lien, the interest of any purchaser or its assignees in any
purchase agreement, escrowed funds, hold-backs or similar arrangements in
connection with any Asset Sale permitted by Section 6.13;".
(g) Amendments to Section 6.2 of the Loan Agreement. Section
6.2 of the Loan Agreement is hereby amended by deleting the word "and"
immediately before clause (x) thereof and adding the following text immediately
following such clause (x):
"; (xi) Investments by the Borrower consisting of US Airways Pass Through
Trust, Series 2000-1C, Trust Certificates in an aggregate outstanding
amount not exceeding $34,500,000 at any time, provided that such
certificates are pledged to the Collateral Agent in accordance with the
Collateral Documents; (xii) Investments by any Obligor consisting of
Non-Cash Instruments or other consideration received in connection with
Asset Sales permitted by Section 6.13; and (xiii) to the extent
constituting Investments, interests in escrow and hold-back arrangements
entered into in connection with Asset Sales permitted by Section 6.13."
(h) Amendments to Section 6.4 of the Loan Agreement.
(i) Section 6.4(a) of the Loan Agreement is hereby
amended and restated in its entirety as follows:
"(a) (i) subject to clause (iii) of this Section 6.4(a) to the extent its
application would require a greater amount of Unrestricted Cash, at no time
during the Covenant Relief Period shall Group permit Unrestricted Cash to
be less than the lesser of (x) $500,000,000 plus the outstanding pool
balance of US Airways Pass Through Trust, Series 2000-1C, Trust
Certificates held by the Borrower from time to time pursuant to Section
6.2(xi) and (y) the outstanding balance of the Loan (excluding accrued and
unpaid interest thereon); (ii) subject to clause (iii) of this Section
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6.4(a) to the extent its application would require a greater amount of
Unrestricted Cash, at no time after the Covenant Relief Period shall Group
permit Unrestricted Cash to be less than $375,787,687; and (iii) until such
time as the Borrower delivers to the Agent, the Lenders, the Loan
Administrator and the Board an accountant's report accompanying annual
financial statements of Group and the Borrower for the Fiscal Year ended
December 31, 2003 or any subsequent fiscal year that does not contain a
going concern qualification, Group shall not permit Unrestricted Cash to be
less than (x) on the last day of each calendar month, the lesser of (A) the
aggregate principal amount of the Loan outstanding on such day and (B)
$700,000,000, and (y) as of the end of each day, the lesser of (A) the
aggregate principal amount of the Loan outstanding on such day and (B)
$575,000,000. Group and the Borrower may at any time request relief from
the requirements of the foregoing clause (iii) on grounds that the facts
and circumstances on which the qualification was based are no longer
applicable, and the Board may consider granting such relief in its sole
discretion."
(ii) Section 6.4(b) of the Loan Agreement is hereby amended by
amending and restating the table contained in such section as follows:
---------------------------------------------------------------------------
Applicable Consolidated
Consolidated EBITDAR Period: Indebtedness Ratio
---------------------------------------------------------------------------
Two consecutive fiscal quarters ending
June 30, 2004 10.90:1.00
---------------------------------------------------------------------------
Three consecutive fiscal quarters ending
September 30, 2004 9.19:1.00
---------------------------------------------------------------------------
Four consecutive fiscal quarters ending
December 31, 2004 8.76:1.00
---------------------------------------------------------------------------
Four consecutive fiscal quarters ending
March 31, 2005 7.50:1.00
---------------------------------------------------------------------------
Four consecutive fiscal quarters ending
June 30, 2005 6.50:1.00
---------------------------------------------------------------------------
Four consecutive fiscal quarters ending
September 30, 2005 6.25:1.00
---------------------------------------------------------------------------
Four consecutive fiscal quarters ending
December 31, 2005 6.10:1.00
---------------------------------------------------------------------------
Each period of four consecutive fiscal
quarters ending on or after March 31, 2006 5.50:1.00
---------------------------------------------------------------------------
(iii) Section 6.4(c) of the Loan Agreement is hereby amended by
amending and restating the table contained in such section as follows:
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---------------------------------------------------------------------------
Applicable
Consolidated EBITDAR
Consolidated EBITDAR and to Consolidated Fixed
Consolidated Fixed Charges Period: Charges Ratio
---------------------------------------------------------------------------
Two consecutive fiscal quarters ending
June 30, 2004 0.75:1.00
---------------------------------------------------------------------------
Three consecutive fiscal quarters ending
September 30, 2004 0.92:1.00
---------------------------------------------------------------------------
Four consecutive fiscal quarters ending
December 31, 2004 0.99:1.00
---------------------------------------------------------------------------
Four consecutive fiscal quarters ending
March 31, 2005 1.10:1.00
---------------------------------------------------------------------------
Each period of four consecutive fiscal
quarters ending on or after June 30, 2005 1.20:1.00
---------------------------------------------------------------------------
(iv) Section 6.4 of the Loan Agreement is hereby further amended by
inserting the following new subsection immediately following Section
6.4(c):
"(d) Group shall not permit its ratio of consolidated Indebtedness as of
the last day of the periods specified below to Consolidated EBITDAR for the
periods consisting of the applicable number of consecutive fiscal
quarter(s) specified below that end on such day, to be greater than the
applicable ratio set forth below:
---------------------------------------------------------------------------
Applicable Consolidated
Consolidated EBITDAR Period: Indebtedness Ratio
---------------------------------------------------------------------------
Two consecutive fiscal quarters ending
June 30, 2004 9.30:1.00
---------------------------------------------------------------------------
Three consecutive fiscal quarters ending
September 30, 2004 8.20:1.00
---------------------------------------------------------------------------
Four consecutive fiscal quarters ending
December 31, 2004 8.10:1.00
---------------------------------------------------------------------------
Four consecutive fiscal quarters ending
March 31, 2005 7.10:1.00
---------------------------------------------------------------------------
Four consecutive fiscal quarters ending
June 30, 2005 6.30:1.00
---------------------------------------------------------------------------
Four consecutive fiscal quarters ending
September 30, 2005 6.20:1.00
---------------------------------------------------------------------------
Four consecutive fiscal quarters ending
December 31, 2005 6.00:1.00
---------------------------------------------------------------------------
provided, that for purposes of this Section 6.4(d), Consolidated EBITDAR of
Group shall be calculated using an assumed cost of jet fuel consumed in both
mainline and express operations for the relevant period rather than the actual
cost of such jet fuel for the relevant period. For avoidance of doubt any actual
gains or losses from fuel cost hedging activities (including any related to
accounting ineffectiveness adjustments) will not be included in the calculation
of Consolidated EBTIDAR of Group when using assumed cost of jet fuel. Such
assumed cost referred to for any period shall be the product of the amount set
forth opposite such period in the table below multiplied by the actual gallons
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consumed in both mainline and express operations in such period, and all such
amounts shall be deemed to include taxes payable in connection with the
purchase, sale or consumption of fuel:
------------------------------------------------
Assumed Fuel Cost
Period: (per gallon)
------------------------------------------------
January 2004 $0.924
------------------------------------------------
February 2004 $0.924
------------------------------------------------
March 2004 $0.856
------------------------------------------------
April 2004 $0.856
------------------------------------------------
May 2004 $0.856
------------------------------------------------
June 2004 $0.856
------------------------------------------------
July 2004 $0.857
------------------------------------------------
August 2004 $0.857
------------------------------------------------
September 2004 $0.857
------------------------------------------------
October 2004 $0.857
------------------------------------------------
November 2004 through
December 2005 $0.858
------------------------------------------------
(v) Section 6.4 of the Loan Agreement is hereby further amended by
inserting the following new subsection immediately following the newly
added Section 6.4(d):
"(e) The parties hereto acknowledge that the Borrower's business plan as of
the Second Amendment Effective Date provides for the delivery of 25
Bombardier CRJ 701 aircraft (the "701 Aircraft") in Fiscal Year 2004 and
Fiscal Year 2005 (of which 20 are expected to be delivered in Fiscal Year
2004). Under such current business plan, the 701 Aircraft are to be
operated by one or more third party carriers under capacity purchase
agreements. If and to the extent any one or more of the 701 Aircraft shall
be operated by Group or its wholly-owned Subsidiaries (as opposed to a
third party carrier), the Borrower, the Board and the Lenders agree to
negotiate in good faith to adjust the ratios set forth in this Section 6.4
to the extent necessary to maintain the intended economics of the
covenants."
(i) Amendment to Section 6.5 of the Loan Agreement. Section 6.5(a) of
the Loan Agreement is hereby amended by inserting the following text immediately
prior to the period at the end of such section:
"; and provided further that nothing contained in this Section 6.5(a) shall
prohibit any Obligor from receiving consideration otherwise permitted to be
received under the terms of this Agreement in respect of Asset Sales"
(j) Amendment to Section 6.13 of the Loan Agreement. Section 6.13 of
the Loan Agreement is hereby amended and restated in its entirety as follows:
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"Section 6.13 Asset Sales. Neither Group nor the Borrower will, and
they will not permit any other Obligor to, directly or indirectly,
consummate any Asset Sale unless (a) the consideration received in
respect of such Asset Sale is at least equal to the Fair Market Value
of the assets subject to such Asset Sale, and (b) either (i) at least
85% of the value of the consideration received by Group or such other
Obligor in respect of such Asset Sale is in the form of any combination
of the following: (A) cash or Cash Equivalents, (B) Aircraft Related
Equipment or other assets to be owned by and used in the business of
Group or any other Obligor, and (C) the assumption by the Person
acquiring the assets in such Asset Sale of Indebtedness or Trade
Payables of Group or any other Obligor with the effect that the
Obligors will no longer have any obligation with respect to such
Indebtedness or Trade Payables or (ii) each of the following conditions
is satisfied:
(A) At least 85% of the value of the consideration
received by Group or such other Obligor in respect of such
Asset Sale consists of any combination of cash, Cash
Equivalents, and Non-Cash Instruments (the "85% Test", and any
Asset Sale the consideration for which includes a Non-Cash
Instrument, a "Specified Asset Sale").
(B) The assets sold are limited to Eligible Assets.
(C) On or before June 30, 2005, the applicable
Obligor has either (x) entered into definitive agreements for
the Specified Asset Sale (with the only material conditions to
closing being regulatory and airport authority approval and
other third party consents and authorizations typically
obtained during the period between signing and closing in sale
transactions involving property of the type to be sold in the
Specified Asset Sale) or (y) has entered into a non-binding
letter of intent with the proposed purchaser obligating the
parties to proceed diligently and in good faith toward
concluding binding agreements with respect to such proposed
Specified Asset Sale and the parties enter into definitive
agreements with respect to such proposed Specified Asset Sale
(with the only material conditions to closing being regulatory
and airport authority approval and other third party consents
and authorizations typically obtained during the period
between signing and closing in sale transactions involving
property of the type to be sold in the Specified Asset Sale)
on or before September 30, 2005.
(D) The Boards of Directors of the Borrower and Group
shall have received from a nationally recognized investment
bank or firm of valuation experts selected by them and
reasonably acceptable to the Board an opinion, in form and
substance reasonably acceptable to the Board, to the effect
that Group (or its applicable Subsidiary) is receiving fair
consideration for the assets being sold, such opinion to be
9
subject to customary limitations and qualification for
opinions of this type.
(E) Any Non-Cash Instrument received by Group or its
Subsidiaries in connection with a Specified Asset Sale and
necessary to satisfy the 85% Test shall have an amortization,
installment, rent or similar schedule requiring the issuer
thereof to make payments to Group or its Subsidiaries at a
rate no slower on a percentage basis than the original
amortization schedule for the Loan.
(F) Any provisions of Section 2.6(b) to the contrary
notwithstanding, the Borrower shall prepay the Loan in an
aggregate amount equal to one hundred percent (100%) of the
cash payments (including interest payments) received by Group
or its Subsidiaries in respect of such Non-Cash Instruments.
Any such prepayment shall be applied ratably against the
Tranche A and Tranche B portions of the Loan. Within each
tranche, such payments shall be applied pro rata against the
remaining scheduled principal payments on the Loan (as such
scheduled payments have been adjusted as a result of previous
payments and prepayments), including, if such payment is
received on a date that the Borrower is obligated to make a
principal payment on the Loan in accordance with Section 2.3,
against the payment due on such date.
(G) Any Non-Cash Instrument (including the proceeds
therefrom), any other non-cash consideration (and proceeds),
and any cash consideration to the extent not used to prepay
the Loan which is received by Group or its Subsidiaries in
connection with any such Specified Asset Sale shall be pledged
on a first priority basis to the Collateral Agent to secure
the Obligations in accordance with the terms of the Loan
Agreement and such pledge shall be perfected.
(H) Any Non-Cash Instruments applied toward the 85%
Test shall be secured by a perfected first priority security
interest in all of the Eligible Assets sold.
(I) Immediately prior to (or, at the Borrower's
option, shortly after and in any event within 30 days after)
the time of execution and delivery of definitive documentation
(the "Determination Date") relating to a Specified Asset Sale,
the Borrower shall cause Fitch to provide (i) a pro forma
rating on the Loan (the "Applicable Loan Rating"), such pro
forma rating to be made after giving effect to the
consummation of such Specified Asset Sale and voluntary
prepayments of the Loan made prior to, in connection with or
relating to such Specified Asset Sale and any other
modifications of the Loan Agreement made prior to, in
connection with or relating to, such Specified Asset Sale
(collectively with such Specified Asset Sale, the
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"Related Transactions") and (ii) the Adjusted Applicable Loan
Rating (as defined below). Any Specified Asset Sale shall be
permitted if the Applicable Loan Rating as of the
Determination Date with respect to such Specified Asset sale
is at least equal to or better than each of (i) the Initial
Loan Rating and (ii) the Adjusted Applicable Loan Rating. As
used herein, (x) "Initial Loan Rating" means the pro forma
rating of the Loan provided by Fitch and measured as
the date immediately prior to the Second Amendment Effective
Date, such rating to be determined assuming that the Initial
Optional Prepayment had not been and is not required to be
made and therefore that the Loan amortization schedule would
be identical to the Loan amortization schedule as of January
31, 2004, but that the Second Amendment had otherwise become
effective, or, if lower, the Fitch rating of the ATSB Loan as
of December 19, 2003, and (y) "Adjusted Applicable Loan
Rating" means the pro forma rating of the Loan provided by
Fitch as of the Determination Date, such rating to be
determined (1) without giving effect to the consummation of
the Related Transactions and (2) assuming that neither the
Initial Optional Prepayment nor any other prepayment after
January 31, 2004 and on or prior to the applicable
Determination Date had been made and therefore that the Loan
amortization schedule would be identical to the Loan
amortization schedule as of January 31, 2004.
(J) All documentation, including customary legal
opinions for transactions of the type, related to the
applicable Non-Cash Instrument, the security therefor and the
pledge thereof to the Collateral Agent (the "Instrument
Documentation") shall be reasonably satisfactory to the
Collateral Agent and the Board and in any event shall contain
the Mandatory Document Provisions set forth on Schedule 6.13.
(K) There exists no Default or Event of Default and
none would result from the consummation of the Specified Asset
Sale.
(L) The Board shall have the right, without the
consent of the Borrower or the issuer of any Non-Cash
Instrument, to effectuate a sale of such Non-Cash Instrument,
together with all related Instrument Documentation, and apply
the Net Cash Proceeds received from such sale to prepay the
Loan; provided that (a) the consideration received in such
sale shall consist solely of cash and shall be in an amount at
least equal to (i) the par value (or, with respect to a
zero-coupon or similar instrument, the accreted value) of such
Non-Cash Instrument plus (ii) accrued and unpaid interest
thereon, (b) every aspect of such sale, including the method,
manner, time, place, and other terms, shall be commercially
reasonable, (c) such sale shall be consummated pursuant to a
written purchase-and-sale agreement providing for at least
ninety (90) days
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between the execution of such agreement and the closing of the
transaction, (d) the Board shall deliver a copy of any such purchase-
and-sale agreement to the Borrower promptly, but in any event within
two (2) Business Days, following execution thereof, (e) any such
purchase-and-sale agreement shall be expressly subject to the
Borrower's right to procure, within ninety (90) days after execution of
such purchase-and-sale agreement, an equal or higher cash offer for the
Non-Cash Instrument and to sell the Non-Cash Instrument to the Person
that made such equal or higher cash offer, and (f) in no event shall a
Non-Cash Instrument be sold to an airline, a commercial aircraft
operator, an air freight forwarder, an entity engaged in the business
of parcel transport by air, or other similar Person, or any Affiliate
of any of the foregoing. No breakage costs or other charges which would
otherwise be payable as a result of the application of Section 2.10(e)
shall be payable in connection with any prepayment made pursuant to
this clause (L)."
(k) Schedule 6.13 to Loan Agreement. Schedule 6.13 to this
Amendment is hereby attached in its entirety as Schedule 6.13 to the Loan
Agreement.
Section 3. Initial Loan Rating. As soon as practicable, but in any
event within sixty (60) days after the Second Amendment Effective Date, the
Borrower shall cause Fitch to provide the Initial Loan Rating.
Section 4. Release of Aircraft Engine. The Collateral Agent is hereby
authorized and instructed to, and hereby does, release all of its right, title
and interest in and to the following described collateral (the "Released
Collateral") from the Lien of the Borrower Aircraft Mortgage: Engine
Manufacturer: CFM International; Engine Model: CFM56-3B; Serial Number: 722111.
The Collateral Agent is hereby authorized and instructed to, and shall from time
to time, at the Borrower's expense, provide such instruments and documents as
the Borrower reasonably requests in order to effectuate or evidence the release
of the Released Collateral from the Lien of the Borrower Aircraft Mortgage. The
Collateral Agent, the Board and the Lenders acknowledge that, notwithstanding
any provision of any Loan Document to the contrary, the Borrower may transfer or
assign all of its right, title and interest in the Released Collateral to an
aircraft lessor to the Borrower in connection with the performance by the
Borrower of certain of its obligations under a Contractual Obligation with such
aircraft lessor.
Section 5. Conditions to Effectiveness. This Amendment shall become
effective on March 12, 2004 (the "Second Amendment Effective Date") upon the
satisfaction of the condition precedent that each of the parties hereto shall
have received counterparts of this Amendment duly executed and delivered by each
of the other parties hereto.
Section 6. Consent to Execution. By their respective signatures hereto,
each of the parties hereto hereby consents to the execution of this Amendment.
Section 7. Representations and Warranties. Each of Group and the
Borrower represents and warrants to each other party hereto (excluding any other
12
Obligors) that: (a) it has all requisite corporate power and authority to enter
into this Amendment and to carry out the transactions contemplated hereby, (b)
it has duly authorized by all necessary corporate action the execution, delivery
and performance of this Amendment, (c) this Amendment and the Loan Agreement as
amended hereby are the valid and binding obligations of each of Group and the
Borrower, enforceable against it 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), and (d)
after giving effect to this Second Amendment, no Default or Event of Default has
occurred and is continuing. Each of the Obligors hereby acknowledges the
continuing effectiveness of Section 11.19 of the Loan Agreement and its
potential application in the context of any Specified Asset Sale.
Section 8. Reference to and Effect on the Loan Documents.
(a) On and after the effectiveness of this Amendment, each reference
in the Loan Agreement to "this Agreement", "hereunder", "hereof" or words of
like import referring to the Loan Agreement, and each reference in the other
like Documents to "the Loan Agreement", "thereunder", "thereof" or words of like
import referring to the Loan Agreement, shall mean and be a reference to the
Loan Agreement as amended by this Amendment.
(b) Notwithstanding anything contained in this Amendment, the terms of
this Amendment are not intended to and do not serve to effect a novation as to
the Loan Agreement. The parties to this Amendment expressly do not intend to
extinguish the Loan Agreement. Instead, it is the express intention of the
parties to this Amendment to reaffirm the obligations created under the Loan
Agreement. Each of the Loan Agreement, as amended hereby, the Slot Security
Agreement, as amended hereby, the other Loan Documents, and the Board Guaranty
remains in full force and effect and the terms and provisions of the Loan
Agreement, as amended hereby, the Slot Security Agreement, as amended hereby,
the other Loan Documents, and the Board Guaranty are hereby ratified and
confirmed.
Section 9. Consent of Guarantor; Confirmation of Guaranty. Each of
Group and the Subsidiary Guarantors hereby consents to this Amendment and hereby
confirms and agrees that (a) notwithstanding the effectiveness of this
Amendment, the Guaranty is, and shall continue to be, in full force and effect
and is hereby ratified and confirmed in all respects, except that, on and after
the effectiveness of this Amendment, each reference in the Guaranty to the
"Agreement", "thereunder", "thereof" or words of like import referring to the
Loan Agreement shall mean and be a reference to the Loan Agreement as amended by
this Amendment, and (b) the Collateral Documents to which it is a party and all
of the Collateral described therein do, and shall continue to, secure the
payment of all of the Secured Obligations (in each case, as defined therein).
Section 10. Costs; Expenses. The Borrower agrees to pay on demand all
reasonable costs and expenses of the Board, the Agents, and the Lenders in
connection with the preparation, execution, delivery and administration,
modification and amendment of this Amendment and the other instruments and
documents to be delivered hereunder (including, without limitation, the
reasonable fees and expenses of counsel for
13
the Board, the Agents, and the Lenders) in accordance with the terms of Section
11.3 of the Loan Agreement.
Section 11. Execution in Counterparts. This Amendment may be executed
in any number of counterparts and by different parties hereto in separate
counterparts, each of which when so executed shall be deemed to be an original
and all of which taken together shall constitute one and the same agreement.
Delivery of an executed counterpart of a signature page to this Amendment by
telecopier shall be effective as delivery of a manually executed counterpart of
this Amendment.
Section 12. Governing Law. THIS AGREEMENT AND THE RIGHTS AND
OBLIGATIONS OF THE PARTIES HERETO SHALL BE GOVERNED BY, AND CONSTRUED IN
ACCORDANCE WITH, THE LAW OF THE STATE OF NEW YORK; PROVIDED, THAT IN THE EVENT
THE BOARD BECOMES A LENDER PURSUANT TO THE BOARD GUARANTY, THE RIGHTS AND
OBLIGATIONS OF THE BOARD HEREUNDER SHALL BE GOVERNED BY, AND CONSTRUED IN
ACCORDANCE WITH, THE FEDERAL LAW OF THE UNITED STATES OF AMERICA, IF AND TO THE
EXTENT SUCH FEDERAL LAW IS APPLICABLE, AND OTHERWISE IN ACCORDANCE WITH THE LAW
OF THE STATE OF NEW YORK.
Section 13. Release. The Obligors further acknowledge and agree that
they have no claims, counterclaims, offsets, or defenses to the Loan Documents
or any transaction related thereto or the performance of the Obligors'
obligations thereunder. To the extent the Obligors have any such claims,
counterclaims, offsets, or defenses to the Loan Documents or any transaction
related thereto or the performance of the Obligors' obligations thereunder, the
same are hereby waived, relinquished and released in consideration of the
Board's, the Lenders' and the Agents' execution and delivery of this Amendment.
[Signature Pages Follow]
14
IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be
executed by their respective officers thereunto duly authorized, as of the date
first above written.
US AIRWAYS, INC.
By: /s/ Xxxx X. Xxxxx
-----------------------------------
Name: Xxxx X. Xxxxx
Title: Executive Vice President -
Finance and Chief Financial
Officer
US AIRWAYS GROUP, INC.
By: /s/ Xxxx X. Xxxxx
-----------------------------------
Name: Xxxx X. Xxxxx
Title: Executive Vice President -
Finance and Chief Financial
Officer
MIDATLANTIC AIRWAYS, INC.
By: /s/ Xxxxx Xxxxx-Xxxxxxx
-------------------------------------
Name: Xxxxx Xxxxx-Xxxxxxx
Title: Treasurer
ALLEGHENY AIRLINES, INC.
By: /s/ Xxxxx X. Xxxx
-------------------------------------
Name: Xxxxx X. Xxxx
Title: President
US AIRWAYS LEASING AND SALES, INC.
By: /s/ Xxxxx Xxxxx-Xxxxxxx
-------------------------------------
Name: Xxxxx Xxxxx-Xxxxxxx
Title: Treasurer
MATERIAL SERVICES COMPANY, INC.
By: /s/ Xxxxx Xxxxxx
-------------------------------------
Name: Xxxxx Xxxxxx
Title: VP Finance
PSA AIRLINES, INC.
By: /s/ Xxxxxxx X Xxxxxxx
-------------------------------------
Name: Xxxxxxx X. Xxxxxxx
Title: President/CEO
PIEDMONT AIRLINES, INC.
By: /s/ Xxxx X. Xxxxxxx
-------------------------------------
Name: Xxxx X. Xxxxxxx
Title: President
XX XXXX TRUST,
as Primary Tranche A Lender
By: Bank of America, National Association,
as Administrative Trustee
By: /s/ Xxxxxxx Xxxxxxx
-------------------------------------
Name: Xxxxxxx Xxxxxxx
Title: Vice President
BANK OF AMERICA, N.A.,
as Alternate Tranche A Lender
By: /s/ Xxxxxxx Xxxxxxx
-------------------------------------
Name: Xxxxxxx Xxxxxxx
Title: Vice President
BANK OF AMERICA, N.A.,
as a Tranche B Lender
By: /s/ Xxxxxxx X. Xxxxxxx, Xx.
-------------------------------------
Name: Xxxxxxx X. Xxxxxxx, Xx., CFA
Title: Vice President
BANK OF AMERICA, N.A.,
as Agent and Collateral Agent
By: /s/ Xxxxxxx Xxxxx
-------------------------------------
Name: Xxxxxxx Xxxxx
Title: Vice President
BANK OF AMERICA, N.A.,
as KHFC Administrative Agent
By:______________________________________
Name:
Title:
RETIREMENT SYSTEMS OF
ALABAMA HOLDINGS LLC,
as a Tranche B Lender
By: /s/ Xxxxx X. Xxxxxxx
-------------------------------------
Name: Xxxxx X. Xxxxxxx
Title: Manager
AIR TRANSPORTATION
STABILIZATION BOARD
By: /s/ Xxxxxxx Xxxxxxxxxx
-------------------------------------
Name: Xxxxxxx Xxxxxxxxxx
Title: Executive Director
Schedule 6.13
Mandatory Document Terms
.. Secured Transaction Documentation. The Instrument Documentation shall serve
to collectively give the transferring Obligors a perfected first-priority
security interest in all of the Eligible Assets subject to the Asset Sale.
.. Lease Documentation. Each applicable Obligor shall retain title to the
Eligible Assets subject to lease throughout the term of the applicable
lease agreement. The Collateral Documents and the Collateral Agent's Lien
on the Eligible Assets subject to lease shall remain in full force and
effect.
.. Assignment of Rights under Instrument Documentation. The Instrument
Documentation and any and all security interests in favor of Obligors
created thereby shall be assigned to the Collateral Agent pursuant to the
Collateral Documents as security for all outstanding Obligations.
.. Collateral Agent Appointed Attorney-In-Fact. Each Obligor involved in the
Asset Sale will appoint the Collateral Agent as its attorney-in-fact with
full authority to ask for, require, demand and receive all monies due or to
become due under the Non-Cash Instrument or to take any action or institute
any proceedings to enforce such Non-Cash instrument as the Collateral Agent
deems necessary, subject always to the following:
. Unless an "Event of Default" (as defined in the Instrument
Documentation) has occurred and is continuing, the Collateral
Agent shall not interfere with the issuer's rights of quiet
enjoyment under the Instrument Documentation;
. so long as no Event of Default has occurred and is continuing (i)
the Collateral Agent shall have the exclusive right, after
consultation with the Borrower, to exercise any and all remedies
under the Instrument Documentation at any time an "Event of
Default" (as defined in the Instrument Documentation) has
occurred and is continuing thereunder as a result of the
bankruptcy or insolvency of the issuer or as the result of the
issuer's failure to make any payment of principal or interest
thereunder; and (ii) the Borrower shall have the exclusive right,
after consultation with the Collateral Agent, to exercise any and
all remedies under the Instrument Documentation at any time an
"Event of Default" (as defined in the Instrument Documentation)
other than those described in the preceding clause (i) has
occurred and is continuing thereunder; and
. at any time an Event of Default has occurred and is continuing,
the Collateral Agent shall have the right, to the exclusion of
the Obligors but subject to the issuer's right of quiet
enjoyment, if any, to exercise any and all remedies under the
Instrument Documentation.
.. No Waivers or Amendments. None of the Obligors shall, without the prior
written consent of the Board or, if the Board Guarantee is no longer in
effect, the Requisite Lenders, agree to any waiver or amendment of certain
material provisions of the Instrument Documentation to be agreed upon in
accordance with Section 6.13(ii)(J).
.. Payments to the Agent. The obligor under any Non-Cash Instrument shall be
irrevocably directed to make payments of all amounts required to be paid
thereunder directly to the Agent in the manner provided in Section 2.9.
.. Slot Covenants. Instrument Documentation in respect of any transfer of
Slots shall contain covenants not less stringent than the covenants
contained in Sections 5.1(xxi) and 5.16 of the Loan Agreement and Section
6(a) of the Slot Security Agreement in respect of any transferred Slots.
