ENGINE AND SPARE PARTS SECURITY AGREEMENT
This ENGINE AND SPARE PARTS SECURITY AGREEMENT (as amended, restated,
supplemented, or otherwise modified from time to time, this "Agreement") is
entered into as of June 2, 2005, by and between HAWAIIAN AIRLINES, INC., a
Delaware corporation ("Grantor") and XXXXX FARGO FOOTHILL, INC., a California
corporation, in its capacity as arranger and administrative agent for the
below-defined Lender Group (in such capacity, together with its successors, if
any, in such capacity, "Agent"), with reference to the following:
WHEREAS, Hawaiian Holdings, Inc., a Delaware corporation, and Grantor are
parties to that certain Credit Agreement, dated contemporaneously herewith (as
amended, restated, supplemented or otherwise modified from time to time, the
"Credit Agreement"), with the Lender Group, pursuant to which the Lender Group
has agreed to make certain financial accommodations to Grantor;
WHEREAS, Grantor is a party to that certain Security Agreement, dated
contemporaneously herewith (as amended, restated, supplemented or otherwise
modified from time to time, the "Security Agreement"), with Agent, pursuant to
which Grantor has granted to Agent, for the benefit of the Lender Group, a
security interest in substantially all of its assets; and
WHEREAS, to induce the Lender Group to make the financial accommodations
provided to Grantor pursuant to the Credit Agreement, Grantor desires to pledge,
grant, transfer, and assign to Agent, for the benefit of the Lender Group, a
security interest in the below-defined Collateral to secure the payment and
performance of the Secured Obligations, as provided herein.
NOW THEREFORE, in consideration of the premises set forth above, the terms
and conditions contained herein and other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, and each intending to
be bound hereby, Agent and Grantor agree as follows:
1. DEFINITIONS AND CONSTRUCTION.
1.1. DEFINITIONS. Each initially capitalized term used herein and not
defined herein shall have the meaning ascribed to such term in the Credit
Agreement. As used in this Agreement, the following terms shall have the
following definitions:
"Agent" has the meaning specified therefor in the preamble hereto.
"Agreement" has the meaning specified therefor in the preamble hereto.
"Bankruptcy Code" means title 11 of the United States Code, as in
effect from time to time.
"Code" means the New York Uniform Commercial Code, as in effect from
time to time; provided, however, that in the event that, by reason of mandatory
provisions of law, any or all of the attachment, perfection, priority, or
remedies with respect to Agent's Liens on any Collateral is governed by the
Uniform Commercial Code as enacted and in effect in a jurisdiction other than
the State of New York, the term "Code" shall mean the Uniform Commercial Code as
enacted and in effect in such other jurisdiction solely for purposes of the
provisions thereof relating to such attachment, perfection, priority, or
remedies.
"Collateral" means and includes each and all of the following (subject
to Section 2.1(b)):
(i) the Engines;
(ii) the Spare Parts;
(iii) all right, title and interest of Grantor (in its capacity as a
lessor or in a similar capacity) in and to any lease, rental agreement, charter
agreement, or other agreement now or hereafter executed with respect to any
Engine or Spare Part, including, but not limited to, Grantor's right to receive,
either directly or indirectly, from any party or person, any rents or other
payments due under each such agreement;
(iv) all purchase agreements, support agreements, and bills of sale
with respect to any Engine or Spare Part;
(v) all warranties, indemnities or agreements, express or implied,
regarding title, materials, workmanship, design, specifications, performance,
maintenance or patent infringement or otherwise in respect of any Engine or
Spare Part;
(vi) all repair, maintenance and inventory records, logs, manuals and
all other documents and materials similar thereto (including any such records,
logs, manuals, documents and materials that are in electronic format or are
computer print-outs or storage) at any time maintained, created or used by
Grantor in respect of any Engine or Spare Part (including all records, logs,
documents, airworthiness releases, serviceability tags and other materials
required at any time to be maintained by Grantor pursuant to the Grantor's
Maintenance Program); and
(vii) all of the proceeds and products, whether tangible or
intangible, of, and any general intangibles (including payment intangibles)
related to, any of the foregoing, including proceeds of insurance (exclusive of
liability insurance) or commercial tort claims covering or relating to any or
all of the foregoing, and any and all accounts, books, chattel paper, deposit
accounts, equipment, general and payment intangibles, inventory, investment
related property, negotiable collateral, supporting obligations, money, or other
tangible or intangible property, in each case resulting from the sale, lease,
license, exchange, collection, or other disposition of any of the foregoing, the
proceeds of any award in condemnation with respect to any of the property of
Grantor, any rebates or refunds, whether for taxes or otherwise, and all
proceeds of any such proceeds, or any portion thereof or interest therein, and
the proceeds thereof, and all proceeds of any loss of, damage to, or destruction
of the above, whether insured or not insured, and, to the extent not otherwise
included, any indemnity, warranty, or guaranty
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payable by reason of loss or damage to, or otherwise with respect to any of the
foregoing Collateral.
"Credit Agreement" has the meaning specified therefor in the recitals
hereto.
"Engines" means and includes each and all of the aircraft engines (as
defined in Section 40102 of the Federal Aviation Act) whether now owned or
hereafter acquired by Grantor, including those Engines identified on Schedule
1.1(E) annexed hereto, as such Schedule may be supplemented from time to time by
a Supplemental Schedule thereto.
"Event of Default" has the meaning specified therefor in Section 5 of
this Agreement.
"Event of Loss" means (a) the actual, constructive, compromised,
arranged or agreed total loss of any Engines or Spare Parts, (b) the destruction
or damage beyond economic repair of any Engine or Spare Part or any Engine or
Spare Part being rendered unfit for normal use by Grantor for any reason
whatsoever and beyond economic repair, (c) any Engine or Spare Part being
condemned, confiscated or requisitioned for use by any Governmental Authority
for more than 30 days, or title thereto being requisitioned or otherwise
compulsorily acquired by any Governmental Authority, (d) any Engine or Spare
Part being stolen, seized or lost for more than 30 days, or (e) the use of any
Engine or Spare Part by Grantor in its normal operations shall have been
prohibited by any Governmental Authority for more than 6 months as a result of
any rule, regulation, order or other action thereof.
"Expendables" means those spare parts for which no FAA and original
equipment manufacturer authorized refurbishment procedure exists or for which
cost of repair or refurbishment would normally exceed that of replacement.
"FAA" means and refers to the Federal Aviation Administration of the
United States Department of Transportation, or any successor or replacement
administration or governmental agency having the same or similar authority and
responsibilities.
"FAA Release" has the meaning specified therefore in Section 2.5.
"FARs" means the rules and regulations of the FAA, including as set
forth in Title 14 of the Code of Federal Regulations.
"Federal Aviation Act" shall mean Title 49 of the United States Code,
as amended from time to time, together with all rules, regulations, procedures,
orders, handbooks, guidelines and interpretations thereunder or related thereto.
"Governmental Authority" means any federal, state, local, or other
governmental or administrative body, instrumentality, board, department, or
agency or any court, tribunal, administrative hearing body, arbitration panel,
commission, or other similar dispute-resolving panel or body.
"Grantor" has the meaning specified therefor in the preamble hereto.
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"Insolvency Proceeding" means any proceeding commenced by or against
any Person under any provision of the Bankruptcy Code or under any other state
or federal bankruptcy or insolvency law, assignments for the benefit of
creditors, formal or informal moratoria, compositions, extensions generally with
creditors, or proceedings seeking reorganization, arrangement, or other similar
relief.
"Lender Group" means, individually and collectively, each of the
Lenders and Agent.
"Lenders" means, individually and collectively, each of the Lenders
from time to time party to the Credit Agreement.
"Maintenance Program" means an FAA approved maintenance program for
Grantor's Engines and Spare Parts in accordance with the applicable
manufacturer's maintenance planning document and maintenance manuals.
"Rotables" means those Spare Parts that, in accordance with the FARs
and the original equipment manufacturer's recommendations, can be repeatedly and
economically restored to a serviceable condition over a period approximating or
exceeding the life of the flight equipment to which they are related.
"Secured Obligations" means (a) all obligations of Grantor arising
from this Agreement, the Credit Agreement, or any of the other Loan Documents,
and (b) all Obligations (as defined in the Credit Agreement).
"Security Interest" has the meaning specified therefor in Section
2.1(a).
"Spare Parts" means all appliances and all Rotables, Expendables and
other spare parts of whatever nature, whether now owned or hereafter acquired by
Grantor, including any replacements, substitutions or renewals therefore, and
accessions thereto, including those Spare Parts of the general type described on
and located at the designated locations described on Schedule 1.1(S) attached
hereto, as such Schedule may be supplemented from time to time by a Supplemental
Schedule thereto.
"Supplemental Schedule" means and includes any supplemental schedule
now or hereafter executed substantially in the form attached hereto as (i)
Exhibit A for the purpose of supplementing Schedule 1.1(S) hereto to include
additional types of spare parts acquired by Grantor or designated locations of
Spare Parts, and (ii) Exhibit B for the purpose of supplementing Schedule 1.1(E)
hereto to include any additional aircraft engine acquired by Grantor.
"United States" means United States of America.
"Warranties" means the rights of Grantor under any existing or
hereinafter acquired warranty or indemnity, express or implied, regarding title,
materials, workmanship, design, or patent infringement or related matters in
respect of the Spare Parts.
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1.2. TERMS DEFINED IN THE FEDERAL AVIATION ACT AND THE CODE. Any terms
used in this Agreement that are defined in Section 40102 of the Federal Aviation
Act shall be construed and defined as set forth in the Federal Aviation Act
unless otherwise defined herein. Any terms used in this Agreement that are
defined in the Code shall be construed and defined as set forth in the Code
unless otherwise defined herein; provided, however, that to the extent that the
Code is used to define any term herein and such term is defined differently in
different Articles of the Code, the definition of such term contained in Article
9 of the Code shall govern. In the event of an apparent conflict between Section
40102 of the Federal Aviation Act and the Code, it is the intention of the
parties hereto that such provisions be read together and construed, to the
fullest extent possible, to be in concert with each other. In the event of any
actual, irreconcilable conflict that cannot be resolved as aforesaid, the terms
and provisions of Section 40102 of the Federal Aviation Act shall control and
govern.
1.3. CONSTRUCTION. Unless the context of this Agreement or any other
Loan Document clearly requires otherwise, references to the plural include the
singular, references to the singular include the plural, the terms "includes"
and "including" are not limiting, and the term "or" has, except where otherwise
indicated, the inclusive meaning represented by the phrase "and/or." The words
"hereof," "herein," "hereby," "hereunder," and similar terms in this Agreement
or any other Loan Document refer to this Agreement or such other Loan Document,
as the case may be, as a whole and not to any particular provision of this
Agreement or such other Loan Document, as the case may be. Section, subsection,
clause, schedule, and exhibit references herein are to this Agreement unless
otherwise specified. Any reference in this Agreement or in any other Loan
Document to any agreement, instrument, or document shall include all
alterations, amendments, changes, extensions, modifications, renewals,
replacements, substitutions, joinders, and supplements, thereto and thereof, as
applicable (subject to any restrictions on such alterations, amendments,
changes, extensions, modifications, renewals, replacements, substitutions,
joinders, and supplements set forth herein). Any reference herein or in any
other Loan Document to the satisfaction or repayment in full of the Obligations
shall mean the repayment in full in cash (or cash collateralization in
accordance with the terms hereof) of all Obligations other than unasserted
contingent indemnification Obligations. Any reference herein to any Person shall
be construed to include such Person's successors and assigns. Any requirement of
a writing contained herein or in any other Loan Document shall be satisfied by
the transmission of a Record and any Record so transmitted shall constitute a
representation and warranty as to the accuracy and completeness of the
information contained therein.
1.4. SCHEDULES AND EXHIBITS. All of the schedules and exhibits
attached to this Agreement shall be deemed incorporated herein by reference.
2. CREATION OF SECURITY INTERESTS.
2.1. GRANT OF SECURITY INTERESTS.
(a) Grantor hereby unconditionally grants, assigns, and pledges to
Agent, for the benefit of the Lender Group, a continuing security interest in
and Lien upon (hereinafter referred to as the "Security Interest") all of
Grantor's right, title, and interest in and to any and all currently existing
and hereafter acquired or arising Collateral, in order to secure the payment and
performance when due of all of the Secured Obligations. Without limiting the
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generality of the foregoing, this Agreement secures the payment of all amounts
which constitute part of the Secured Obligations and would be owed by Grantor to
Agent, the other members of the Lender Group, or any of them, but for the fact
that they are unenforceable or not allowable due to the existence of an
Insolvency Proceeding involving Grantor.
(b) Anything contained in this Agreement to the contrary
notwithstanding, the term "Collateral", as used in this Agreement, shall not
include:
(i) any rights or interest in any contract, lease, permit,
license, charter, or license agreement covering real or personal property of
Grantor if (A) under the terms of such contract, lease, permit, license,
charter, or license agreement, or applicable law with respect thereto, the grant
of a security interest or Lien therein or collateral assignment of rights,
warranties or interests therein, requires the consent of the other party to such
contract, lease, permit, license, charter or license agreement or is prohibited
as a matter of law or under the terms of such contract, lease, permit, license,
charter, or license agreement, and (B) such prohibition has not been waived or
the consent thereto of the other party to such contract, lease, permit, license,
charter, or license agreement has not been obtained; provided, that the
foregoing exclusion (1) shall not apply if any described prohibition is
unenforceable under Section 9-406, 9-407, or 9-408 of the Code or other
applicable law, (2) shall not apply when such prohibition is no longer in
effect, and (3) shall not limit, impair, or otherwise affect the Agent's
continuing security interests in and Liens upon any rights or interests of
Grantor in or to (a) monies due or to become due under any described contract,
lease, permit, license, charter, or license agreement (including any Accounts),
or (b) any proceeds from the sale, license, lease, or other dispositions of any
such contract, lease, permit, license, charter, or license agreement; or
(ii) any aircraft engines or spare parts (and any accessions,
fixtures, and attachments thereto) that are purchased or acquired with proceeds
of, and subject to a Lien in favor of the provider of, Permitted Purchase Money
Indebtedness to the extent that (A) the contract for such Permitted Purchase
Money Indebtedness expressly prohibits the valid grant of a security interest or
Lien (other than the security interest or Lien securing such Permitted Purchase
Money Indebtedness) on such aircraft engines or spare parts (and any accessions,
fixtures, and attachments thereto) and (B) such prohibition has not been waived
or the consent of the provider of such Permitted Purchase Money Indebtedness has
not been obtained; provided, that the foregoing exclusion (1) shall not apply
when such prohibition is no longer in effect, and (2) shall not limit, impair,
or otherwise affect the Agent's continuing security interests in and Liens upon
any rights or interests of Grantor in or to any proceeds, substitutions, or
replacements of such aircraft engines or spare parts (and any accessions,
fixtures, and attachments thereto), to the extent not covered, or to the extent
permitted if covered, by the Lien securing such Permitted Purchase Money
Indebtedness.
(c) The Security Interest in the Collateral granted herein shall
attach to all Collateral without further act on the part of Agent, any Lender,
or Grantor. Except as expressly set forth in this Agreement, the Credit
Agreement, or any other Loan Document, Grantor does not have any authority,
express or implied, to assign, transfer, lease, exchange, pool or otherwise
dispose of any item or portion of the Collateral or interest therein.
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(d) Concurrently with the acquisition of any aircraft engine or spare
part (other than any aircraft engine or spare part excluded from the definition
of "Collateral" pursuant to Section 2.1(b)(ii)), Grantor shall execute and
deliver, in form for recordation, all applicable Supplemental Schedules with
respect to such Collateral.
2.2. SECURITY INSTRUMENTS; FURTHER ASSURANCES. Grantor shall perform,
or shall cause to be performed, at its sole expense, upon the request of Agent,
each and all of the following:
(a) record, register and file this Agreement and any Supplemental
Schedule, as well as such notices, financing statements, or other documents or
instruments as may, from time to time, be requested by Agent to fully carry out
the intent of this Agreement, with: (i) the FAA Registry in Oklahoma City,
Oklahoma, United States; and (ii) the location of Grantor as the term "location"
is defined in Section 9-307 of the Code; and (iii) such other Governmental
Authorities as may be determined by Agent to be necessary or advisable in order
to establish, confirm, maintain or perfect the Security Interest and Lien
created hereunder, as a legal, valid, and binding first priority security
interest and Lien upon the Collateral in favor of Agent, including if applicable
in connection with the Cape Town Convention;
(b) furnish to Agent evidence of every such recordation, registration
and filing; and
(c) execute and deliver or perform, or cause to be executed and
delivered or performed, such further and other instruments or acts as Agent
determines are necessary or required to fully carry out the intent and purpose
of this Agreement or to subject the Collateral to the Security Interest and Lien
created hereunder, including: (i) any and all acts and things which may be
reasonably requested by Agent with respect to complying with or remaining
subject to the FARs, or the laws and regulations of any of the various states or
countries in which any Engines or the Spare Parts are or may fly over, operate
in, or become located in; and (ii) defending the title of Grantor to and the
Security Interest of Agent on the Collateral by means of negotiation and, if
necessary, appropriate legal proceedings, against each and every party claiming
an interest therein contrary or adverse to Grantor's title to and the Security
Interest of Agent on same.
2.3. OPINION OF COUNSEL. Promptly following the execution and delivery
of this Agreement (and, thereafter, promptly following the execution and
delivery of a Supplemental Schedule), Grantor shall furnish an opinion of
Daugherty, Fowler, Peregrin and Xxxxxx Professional Corporation or other
qualified counsel in Oklahoma City, Oklahoma reasonably acceptable to Agent, in
form and substance reasonably satisfactory to Agent, that this Agreement (or,
promptly following the execution and delivery of a Supplemental Schedule, that
this Agreement as supplemented by such Supplemental Schedule) is in recordable
form and has been filed for recordation with the FAA in accordance with the
Federal Aviation Act and creates a duly perfected first priority security
interest in favor of the Agent in the portion of the Collateral for which a
security interest can be perfected by such filing with the FAA in favor of Agent
and no other Liens are of record with the FAA with respect to the Collateral.
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2.4. AGENT APPOINTED POWER OF ATTORNEY. Grantor hereby irrevocably
appoints Agent its attorney-in-fact, with full authority in the place and stead
of Grantor and in the name of Grantor or otherwise, at such time as an Event of
Default has occurred and is continuing under the Credit Agreement, to take any
action and to execute any instrument which Agent may reasonably deem necessary
or advisable to accomplish the purposes of this Agreement, including: (a) to
ask, demand, collect, xxx for, recover, compromise, receive and give acquittance
and receipts for moneys due and to become due under or in connection with any
Collateral of Grantor; (b) to receive and open all mail addressed to Grantor and
to notify postal authorities to change the address for the delivery of mail to
Grantor to that of Agent; (c) to receive, indorse, and collect any drafts or
other instruments, documents, negotiable collateral or chattel paper; (d) to
file any claims or take any action or institute any proceedings which Agent may
deem necessary or desirable to enforce the rights of Agent with respect to any
of the Collateral; (e) to repair, alter, or supply goods, if any, necessary to
fulfill in whole or in part the purchase order of any Person obligated to
Grantor; (f) to use any labels, patents, trademarks, trade names, domain names,
industrial designs, copyrights, advertising matter or other industrial or
intellectual property rights, in advertising for sale and selling Collateral and
(g) to make recordations, registrations and other filings and take other actions
with or in respect of the FAA or any other Governmental Authority. To the extent
permitted by law, Grantor hereby ratifies all that such attorney-in-fact shall
lawfully do or cause to be done by virtue hereof. This power of attorney is
coupled with an interest and shall be irrevocable until this Agreement is
terminated.
2.5. RELEASE OF FAA MORTGAGE RECORDATIONS. So long as no Overadvance
is outstanding or would result therefrom, upon written notice by Grantor to
Agent of a sale by Grantor of an Engine or a Spare Part that constitutes
Collateral that is expressly permitted under the Credit Agreement, at Grantor's
expense, Agent will execute and deliver a release of Agent's Lien and Security
Interest on such Engine or such Spare Part, as applicable, suitable for
recordation with the FAA (an "FAA Release"), in form and substance satisfactory
to Agent, provided that such sale is expressly permitted by the Credit Agreement
or otherwise expressly consented to in writing by Agent in accordance with the
Credit Agreement. Nothing contained in this Section 2.5 shall relieve Grantor in
any respect of Grantor's obligation under this Agreement or the Credit Agreement
to remit to Agent proceeds from the sale of Collateral as required by this
Agreement or the Credit Agreement.
2.6. INSTALLATION OF SPARE PARTS ON AND REMOVAL OF SPARE PARTS FROM AN
AIRCRAFT OR ENGINE. So long as no Overadvance is outstanding or would result
therefrom, Grantor may, at any time and at its own cost and expense, incorporate
or install in or attach to an aircraft, an aircraft engine or a flight
simulator, any Spare Part that constitutes Collateral to replace any Spare Part
removed from such aircraft, aircraft engine or flight simulator for any reason
whatsoever. So long as no Overadvance is outstanding or would result therefrom,
Grantor may also from time to time and in accordance with normal practices in
the commercial airline industry, add any Spare Part that constitutes Collateral
to an aircraft, an aircraft engine or a flight simulator for the purposes of
making an addition or modification thereto without removing a Spare Part from
such aircraft, aircraft engine or flight simulator or may remove a Spare Part
from an aircraft, an engine or a flight simulator without replacing such Spare
Part with another Spare Part. Immediately upon a Spare Part that constitutes
Collateral becoming incorporated or installed in or attached to such aircraft,
aircraft engine or flight simulator, such Spare Part (including all warranties,
insurances, leases, proceeds, manuals, technical records and
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other intangible rights with respect thereto) so incorporated or installed in or
attached to such aircraft, aircraft engine or flight simulator shall, without
further act, cease to be part of the Collateral and shall not be subject to this
Agreement, shall be released from and no longer be subject to the Security
Interest hereof and the Security Interest hereof shall cease to be attached to
such Spare Part (including all warranties, insurances, leases, proceeds,
manuals, technical records and other intangible rights with respect thereto).
Any Spare Part removed from an aircraft, an aircraft engine or a flight
simulator shall without further act, immediately become a Spare Part and subject
to this Agreement and the Security Interest hereof shall, and shall be deemed
to, attach to such removed Spare Part unless such Spare Part is excluded from
the Collateral pursuant to Section 2.1(b)(ii); provided that such Spare Part
shall not be deemed an Eligible Spare Part unless and until such Spare Part
satisfies all criteria of the definition of "Eligible Spare Parts" set forth in
the Credit Agreement.
3. REPRESENTATIONS AND WARRANTIES.
By executing and delivering this Agreement, and continually thereafter
(except to the extent any of the following representations or warranties by
their terms relate only to a particular prior date) until each and all of the
Secured Obligations have been fully paid and performed, Grantor hereby
represents and warrants to Agent as follows:
3.1. TITLE TO COLLATERAL. As of the date hereof, Schedule 1.1(S) lists
all spare parts in which Grantor has an interest as to which a "conveyance" (as
defined in 14 C.F.R. ss. 49.17 or any successor or similar regulation) is
eligible for recording with the FAA pursuant to 14 C.F.R. xx.xx. 49.51 and 49.52
or any successor or similar regulation. Grantor owns and will own legally and
beneficially all right, title and interest in and to the Collateral, and holds
and will hold good and marketable title to, the Engines and Spare Parts free of
all Liens (other than (x) Agent's Lien, in the case of Collateral at any time
designated as Eligible Spare Parts or (y) Permitted Liens, in the case of other
Collateral, Engines, or Spare Parts).
3.2. PERFECTED FIRST PRIORITY SECURITY INTEREST. Upon the filing and
recordation of this Agreement (and, if applicable, any Supplemental Schedule)
with the FAA, Agent shall have a first priority perfected security interest in
that portion of the Collateral in which perfection is governed by the Federal
Aviation Act and the FARs (other than Permitted Liens in the case of Collateral
that is not designated as Eligible Spare Parts). Grantor further represents and
warrants that, other than the filing of a financing statement in the State of
organization of Grantor and the recordation of this Agreement (and, if
applicable, any Supplemental Schedule) with the FAA, the execution, delivery,
and performance by Grantor of this Agreement, and the creation and perfection of
the Security Interest in favor of Agent hereunder against Grantor and all other
Persons, do not and will not require any registration, recordation or other
filing with, or consent, or approval of, or notice to, or other action with or
by, any Governmental Authority.
3.3. COMPLIANCE. With respect to Spare Parts, Grantor makes the
representations and warranties which are set forth in Section 4.3 of the Credit
Agreement. With respect to Engines, Grantor hereby represents and warrants that
(a) each Engine is of good and merchantable quality, free from material defects
(except for repairable damage that will be repaired in the ordinary course of
Grantor's business), serviceable in accordance with Grantor's
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Maintenance Program in good operating condition and ready for immediate use or
operation in accordance with Grantor's Maintenance Program and has all
serviceability tags applicable thereto and all related applicable back to birth
records and all other documents required by Grantor's Maintenance Program; (b)
Grantor possesses all necessary certificates, permits, rights, authorizations,
concessions, and consents which are material to the maintenance, installation,
operation, use or sale of each Engine, and (c) Grantor maintains all Engines,
and the books and records with respect thereto, in compliance with the
requirements of applicable law.
3.4. SPARE PARTS. Except as otherwise permitted by the Credit
Agreement, all Spare Parts that constitute Collateral are and will be maintained
by the Grantor only at the locations listed on Schedule 1.1(S).
3.5. SECTION 1110 OF THE BANKRUPTCY CODE. With respect to the Engines
and Spare Parts that constitute Collateral first placed into service after
October 22, 1994, Agent is entitled to the benefits of Section 1110 of the
Bankruptcy Code in connection with the exercise of its remedies under this
Agreement in respect of all such Engines with Spare Parts constituting an
"aircraft engine," "propeller," "appliance" or "spare part" as such terms are
defined in Section 40102 of the Federal Aviation Act. Except as specifically
designated in Schedule 1.1(E) or Schedule 1.1(S) hereto, all Engines and Spare
Parts that constitute Collateral were first placed in service after October 22,
1994.
4. COVENANTS.
Until each and all of the Secured Obligations have been fully paid and
performed, Grantor hereby covenants and agrees as follows:
4.1. COMPLIANCE WITH LAWS. Grantor shall neither use the Collateral,
nor permit the Collateral to be used, for any unlawful purpose or contrary to
any applicable statute, law, ordinance or regulation relating to the
registration, use, operation or control of the Collateral. Grantor shall comply
with the requirements of Section 5.10 of the Credit Agreement.
4.2. MAINTENANCE AND REPAIR.
(a) During the effectiveness of this Agreement, Grantor shall, at its
sole expense, do or cause to be done each and all of the following:
(i) maintain and keep the Engines and Spare Parts in as good
operating condition and repair as such Engines and Spare Parts are on the date
of this Agreement (ordinary wear and tear excepted and, other than with respect
to Eligible Spare Parts, ordinary course damage and economic obsolescence
excepted); and
(ii) maintain and keep the Engines and any Spare Parts in good
order and repair and airworthy and serviceable condition in accordance with the
requirements of each of the manufacturers' manuals, mandatory service bulletins,
each of the manufacturers' nonmandatory service bulletins which relate to
airworthiness, Grantor's Maintenance Program, and otherwise as necessary, so as
to keep such Engines and Spare Parts in such condition as they were when
subjected to this Agreement (ordinary wear and tear excepted and, other than
with
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respect to Eligible Spare Parts, ordinary course damage and economic
obsolescence excepted); and
(iii) without limiting the foregoing, cause to be performed, in
respect of all Engines and Spare Parts, all applicable mandatory airworthiness
directives, FARs, and manufacturers' service bulletins relating to
airworthiness, the compliance date of which shall occur during the term of this
Agreement.
(b) Grantor shall be responsible for all required inspections of all
Engines and all Spare Parts in accordance with all applicable FAA and other
governmental requirements.
(c) All inspections, maintenance, modifications, repairs and overhauls
of the Engines and the Spare Parts shall be performed by personnel authorized by
the FAA to perform such services, and in conformance with 14 C.F.R. ss. 49.43 or
any successor or similar regulation.
(d) If any aircraft component, appliance, accessory, instrument,
equipment or part of any Engine or any Spare Part that constitutes Collateral
shall reach such a condition as to require overhaul, repair or replacement, for
any cause whatever, in order to comply with the standards or maintenance and
other provisions set forth in this Agreement, Grantor shall:
(i) install on such Engine or Spare Part, as applicable, such
items of the same type in temporary replacement of those then installed on the
Engine or such Spare Part, pending overhaul or repair of the unsatisfactory
item; provided, however, that (A) such replacement items must be in such a
condition as to be permissible for use upon the Engine or such Spare Part in
accordance with the standards for maintenance and other provisions set forth in
this Agreement, and (B) Grantor must, at all times, retain unencumbered title to
any and all items temporarily removed except for the Security Interest of Agent
and Permitted Liens; or
(ii) install on such Engine or Spare Part such items of the same
type in permanent replacement of those then installed on such Engine or Spare
Part; provided, however, that (A) such replacement items, if the item itself, or
if the Engine or Spare Part to which it relates, is described in any Borrowing
Base Certificate, must be new or be fully overhauled in accordance with the
requirements of the Loan Documents with "zero time" of operation since the
completion of such overhaul, and, in all cases, in such condition as to be
permissible for use upon such Engine or Spare Part in accordance with the
standards for maintenance and other provisions set forth in this Agreement, and
(B) Grantor must first comply with each of the requirements of Section 4.2(e)
hereof.
(e) In the event that during the effectiveness of this Agreement,
Grantor shall be required or permitted to install upon any Collateral
constituting an Engine or Spare Part any components, appliances, accessories,
instruments, aircraft engines, equipment or spare parts, in permanent
replacement of those then installed on such Collateral constituting an Engine or
Spare Part, Grantor may do so provided that, in addition to any other
requirements provided for in this Agreement:
(i) Agent is not divested of its first priority Security Interest
in any item removed from the Collateral constituting an Engine or Spare Part as
a result thereof and
11
(other than Permitted Liens) no such removed item shall be or become subject to
the Lien, security interest or claim of any person except Agent; and
(ii) Every installed item shall continue to be subject to the
Security Interest and Lien of Agent, and each of the provisions of this
Agreement, and each such item shall remain so encumbered and so subject.
(f) In the event that any component, appliance, accessory, instrument,
equipment or part installed upon the Engines or the Spare Part, is not in
substitution for or in replacement of an existing item, such additional item
shall be considered as an accession to such Engines or Spare Part, as the case
may be.
(g) All Engines and Spare Parts shall (i) have been manufactured in
accordance with 14 C.F.R. ss. 21.305 or any successor or similar regulation, and
(ii) be new (except for Rotables which have been overhauled as provided in the
Loan Documents with full traceability or are in the process of overhaul). All
Engines and Eligible Spare Parts, at all times have all serviceability tags with
full traceability (including back-to-back records if not new) applicable thereto
and all other related documents required by Grantor's Maintenance Program.
4.3. INSURANCE.
(a) Grantor shall comply with all insurance requirements set forth in
the Credit Agreement and, upon the acquisition of any Engines after the date
hereof that constitute Collateral, those additional insurance requirements
deemed appropriate by Agent.
(b) Grantor shall not use or permit the Collateral to be used in any
manner or for any purpose excepted from or contrary to the requirements of any
insurance policy or policies required to be carried and maintained under the
Credit Agreement or other Loan Documents or for any purpose excepted or exempted
from or contrary to such insurance policies, nor do any other act or permit
anything to be done which could reasonably be expected to invalidate or limit
any such insurance policy or policies.
4.4. TAXES. Cause all assessments and taxes (other than assessments or
taxes in de minimis amounts) due or payable by, or imposed, levied, or assessed
against any of the Collateral to be paid in full, before delinquency or before
the expiration of any extension period, except to the extent that the validity
of such assessment or tax shall be the subject of a Permitted Protest.
4.5. REGISTRATION. Grantor is and shall continue to be an air carrier
certificated under Section 44705 of the Federal Aviation Act and has and shall
maintain in full force and effect an air carrier operating certificate issued
pursuant to Chapter 447 of the Federal Aviation Act to operate aircraft capable
of carrying 10 or more individuals or 6,000 pounds or more of cargo and an air
carrier operating certificate under Part 121 of the FARS.
4.6. [INTENTIONALLY OMITTED]
4.7. EVENT OF LOSS. Grantor hereby assumes and shall bear the entire
risk of any Event of Loss or other loss, theft, destruction of or damage to all
or any part of any Engine
12
or Spare Part. Grantor shall promptly notify Agent in writing of any Event of
Loss or of any damage to or loss, theft or destruction of any Collateral which
does not constitute such an Event of Loss but having a cost of repair or
replacement of in excess of $1,000,000 which notice shall include the cost of
repair in the event of damage such Collateral. Grantor shall promptly cause any
such damage or destruction to be repaired in accordance with the FARs and the
manufacturer recommendations.
4.8. INDEMNIFICATION.
(a) Grantor agrees to be liable for, pay for and indemnify, defend and
hold harmless, on demand, Agent and each of the Lenders and each of their
successors and assigns and each of any of their officers, directors,
shareholders, partners, members, employees, agents and other representatives
(each an "indemnitee") from and against any and all claims, proceedings,
lawsuits, losses, liabilities, obligations, damages judgments, fees, penalties
or fines (whether criminal or civil), reasonable costs and expenses (including
reasonable attorneys fees and including reasonable attorneys fees incurred to
enforce this Agreement, including this indemnity) of any kind or nature
whatsoever, including if arising or resulting from strict liability or any
negligence on the part of any indemnitee, incurred or suffered by any indemnitee
and arising out of or resulting from Agent's rights herein or in the Collateral
or the manufacture, ownership, repair, maintenance, overhaul, refurbishment,
modification, leasing, storage, condition, design, infringement, use, purchase,
sale, leasing, pooling, exchange, operation or possession by Grantor or any
other Person of any Collateral or any aircraft or aircraft engine in which any
Collateral is installed or used, except claims, losses or liabilities resulting
from the gross negligence or willful misconduct of the party seeking
indemnification as determined by a final non-appealable order of a court of
competent jurisdiction. This provision shall survive the termination of this
Agreement and the Credit Agreement and the repayment of the Secured Obligations.
(b) Grantor shall, upon demand, pay to Agent (or Agent, may charge to
the Loan Account) all the Lender Group Expenses which Agent may incur in
connection with (i) the custody, preservation, use or operation of, or, upon an
Event of Default, the sale of, collection from, or other realization upon, any
of the Collateral in accordance with this Agreement and the other Loan
Documents, (ii) the exercise or enforcement of any of the rights of Agent
hereunder or (iii) the failure by Grantor to perform or observe any of the
provisions hereof.
4.9. LOCATION OF THE SPARE PARTS; RECORDS; DISPOSITIONS. Except as
otherwise permitted by the Credit Agreement, Grantor shall maintain all Spare
Parts at only the locations specified in Schedule 1.1(S) hereto, and shall
otherwise comply with Section 5.17 of the Credit Agreement as if such Grantor
were a party thereto.
4.10. SECTION 1110. With respect to Engines and Spare Parts that
constitute Collateral first placed into service after October 22, 1994, Grantor
acknowledges and agrees that the Security Interest created in favor of Agent
under this Agreement entitles Agent, for the benefit of the Lender Group, to all
of the benefits of Section 1110 of the Bankruptcy Code with respect to all such
Engines and Spare Parts constituting an "aircraft engine," "propeller,"
"appliance" or "spare engine," as such terms are defined in Section 40102 of the
Federal Aviation Act. Grantor will take such further actions, including the
execution and delivery of
13
such additional agreements and other documents as may, in the reasonable opinion
of Agent, be advisable to provide Agent with the benefits of Section 1110 of the
Bankruptcy Code. Grantor shall ensure that except as otherwise disclosed on
Schedule 1.1 hereto, all Spare Parts that constitute Collateral shall have been
first placed in service after October 22, 1994.
4.11. RECOGNITION OF RIGHTS AGREEMENT.
Grantor shall obtain from each owner, lessor, mortgagee, conditional
vendor, secured party or other holder of an interest in any airframe on which an
Engine that constitutes Collateral is installed a "Recognition of Rights
Agreement" in a form and substance reasonably acceptable to Agent, or the
applicable lease, mortgage, conditional sale agreement, security agreement or
other instrument shall contain an effective agreement in favor of Agent with
respect to each such Engine, reasonably acceptable to Agent, to the effect of
such Recognition of Rights Agreement.
5. EVENTS OF DEFAULT.
The occurrence of an Event of Default (as defined in the Credit
Agreement) shall each constitute an "Event of Default" under this Agreement.
6. AGENT'S RIGHTS AND REMEDIES. Upon the occurrence, and during the
continuation, of an Event of Default:
6.1. RIGHTS AND REMEDIES.
(a) Agent may exercise in respect of the Collateral, in addition to
other rights and remedies provided for herein, in the other Loan Documents, or
otherwise available to it, all the rights and remedies of a secured party on
default under the Code or any other applicable law. Without limiting the
generality of the foregoing, Grantor expressly agrees that, in any such event,
Agent without demand of performance or other demand, advertisement or notice of
any kind (except a notice specified below of time and place of public or private
sale) to or upon Grantor or any other Person (all and each of which demands,
advertisements and notices are hereby expressly waived to the maximum extent
permitted by the Code or any other applicable law), may enter onto any premises
of Grantor and take immediate possession of all or any portion of the Collateral
and (i) require Grantor to, and Grantor hereby agrees that it will at its own
expense and upon request of Agent forthwith, assemble all or part of the
Collateral as directed by Agent and make it available to Agent at one or more
locations where Grantor regularly maintains such Collateral, and (ii) without
notice except as specified below, sell the Collateral or any part thereof in one
or more parcels at public or private sale, at any of Agent's offices or
elsewhere, for cash, on credit, and upon such other terms as Agent may deem
commercially reasonable. Grantor agrees that, to the extent notice of sale shall
be required by law, at least 10 days notice to Grantor of the time and place of
any public sale or the time after which any private sale is to be made shall
constitute reasonable notification and specifically such notice shall constitute
a reasonable "authenticated notification of disposition" within the meaning of
Section 9-611 of the Code. Agent shall not be obligated to make any sale of
Collateral regardless of notice of sale having been given. Agent may adjourn any
public or private sale from time to time by announcement at the time and place
fixed therefor, and such sale may,
14
without further notice (except as may be required by law), be made at the time
and place to which it was so adjourned.
(b) Agent may, in its sole discretion, from time to time, at the
expense of Grantor make all such expenditures for the payment of taxes,
insurance, storage and other expenses related to the Collateral and for
remarketing, maintenance, modifications, refurbishments, repairs, replacements,
alterations, additions and improvements to and of the Collateral, as it may deem
proper. In each such case, Agent shall have the right to maintain, use, operate,
store, lease, control or manage the Collateral and to exercise all rights and
powers of Grantor relating to the Collateral in connection therewith, as Agent
shall deem appropriate, including the right to enter into any and all such
agreements with respect to the maintenance, modification, refurbishment,
insurance, use, operation, storage, leasing, control, management or disposition
of the Collateral or any part thereof as Agent may determine; and Agent shall be
entitled to collect and receive directly all tolls, rents, revenues, issues,
income, products and profits of the Collateral and every part thereof. Grantor
shall pay on demand, and any such tolls, rents, revenues, issues, income,
products and profits may be applied to pay, all expenses incurred by Agent in
connection with the foregoing and any and all other expenses of possession, use,
operation, storage, leasing, control, management or disposition of the
Collateral, and of all maintenance, modification, refurbishment, repairs,
replacements, alterations, additions and improvements, and all payments which
Agent may be required or may elect, to make, if any, for Taxes, insurance,
storage or other charges assessed against or otherwise imposed upon the exercise
of any rights under any of the Loan Documents or the Collateral or any part
thereof (including the employment of agents for the remarketing of the Aircraft
for sale or lease, and appraisers, technicians, engineers and accountants to
examine, inspect and make reports upon the properties and books and records of
Grantor), and all other payments which Agent or any Lender may be required or
authorized to make under any provision of this Agreement, as well as just and
reasonable compensation for the services of Agent, and of all Persons engaged or
employed by Agent.
(c) Agent is hereby granted a license or other right to use, without
liability for royalties or any other charge, Grantor's labels, patents,
copyrights, rights of use of any name, trade secrets, trade names, trademarks,
service marks and advertising matter, domain names, industrial designs, other
industrial or intellectual property or any property of a similar nature, whether
owned by Grantor or with respect to which Grantor has rights under license,
sublicense, or other agreements, as it pertains to the Collateral, in preparing
for sale, advertising for sale and selling any Collateral, and Grantor's rights
under all licenses and all franchise agreements shall inure to the benefit of
Agent.
(d) Any cash held by Agent as Collateral and all cash proceeds
received by Agent in respect of any sale of, collection from, or other
realization upon all or any part of the Collateral shall be applied against the
Secured Obligations in the order set forth in the Credit Agreement. In the event
the proceeds of Collateral are insufficient to satisfy all of the Secured
Obligations in full, Grantor shall remain liable for any such deficiency.
(e) Grantor hereby acknowledges that the Secured Obligations arose out
of a commercial transaction and agrees that if an Event of Default shall occur
Agent shall have the right to an immediate writ of possession without notice of
a hearing. Agent shall have
15
the right to the appointment of a receiver for the properties and assets of
Grantor, and Grantor hereby consents to such rights and such appointment and
hereby waives any objection Grantor may have thereto or the right to have a bond
or other security posted by Agent.
6.2. REMEDIES CUMULATIVE. Each right, power, and remedy of Agent as
provided for in this Agreement or in the other Loan Documents or now or
hereafter existing at law or in equity or by statute or otherwise shall be
cumulative and concurrent and shall be in addition to every other right, power,
or remedy provided for in this Agreement or in the other Loan Documents or now
or hereafter existing at law or in equity or by statute or otherwise, and the
exercise or beginning of the exercise by Agent, of any one or more of such
rights, powers, or remedies shall not preclude the simultaneous or later
exercise by Agent of any or all such other rights, powers, or remedies.
6.3. MARSHALING. Agent shall not be required to marshal any present or
future collateral security (including but not limited to the Collateral) for, or
other assurances of payment of, the Secured Obligations or any of them or to
resort to such collateral security or other assurances of payment in any
particular order, and all of its rights and remedies hereunder and in respect of
such collateral security and other assurances of payment shall be cumulative and
in addition to all other rights and remedies, however existing or arising. To
the extent that it lawfully may, Grantor hereby agrees that it will not invoke
any law relating to the marshaling of collateral which might cause delay in or
impede the enforcement of Agent's rights and remedies under this Agreement or
under any other instrument creating or evidencing any of the Secured Obligations
or under which any of the Secured Obligations is outstanding or by which any of
the Secured Obligations is secured or payment thereof is otherwise assured, and,
to the extent that it lawfully may, Grantor hereby irrevocably waives the
benefits of all such laws.
7. WAIVERS; LIABILITY.
7.1. DEMAND; PROTEST; ETC. To the extent permitted by law, Grantor
waives demand, protest, notice of protest, notice of default or dishonor, notice
of payment and nonpayment, notice of any default, nonpayment at maturity,
release, compromise, settlement, extension, or renewal of accounts, documents,
instruments, chattel paper, and guarantees at any time held by Agent on which
Grantor may in any way be liable.
7.2. AGENT'S LIABILITY FOR COLLATERAL. So long as Agent complies with
its obligations, if any, under the Code, Agent shall not in any way or manner be
liable or responsible for: (a) the safekeeping of the Collateral; (b) any loss
or damage thereto occurring or arising in any manner or fashion from any cause;
(c) any diminution in the value thereof; or (d) any act or default of any
carrier, warehouseman, bailee, forwarding agency, or other Person, except in the
case of each of clauses (a), (b), (c) and (d) above, for any liability resulting
from the gross negligence or willful misconduct of Agent as finally determined
by a court of competent jurisdiction. All risk of loss, damage, or destruction
of the Collateral shall be borne by Grantor. The powers conferred on Agent
hereunder are solely to protect its interests in the Collateral and shall not
impose on it any duty to exercise such powers. Except as provided in the Code,
Agent shall not have any duty with respect to the Collateral or any
responsibility for taking any necessary steps to preserve rights against prior
parties or any other Persons with respect to any Collateral.
16
8. NOTICES.
All notices and other communications hereunder to Agent shall be in
writing and shall be mailed, sent or delivered in accordance with the Credit
Agreement and all notices and other communications hereunder to Grantor shall be
in writing and shall be mailed, sent or delivered in care of Parent in
accordance with the Credit Agreement.
9. GOVERNING LAW.
THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH,
THE LAW OF THE STATE OF NEW YORK APPLICABLE TO CONTRACTS MADE AND TO BE
PERFORMED IN THE STATE OF NEW YORK EXCEPT TO THE EXTENT THAT THE VALIDITY OR
PERFECTION OF THE SECURITY INTERESTS HEREUNDER IN RESPECT OF ANY COPYRIGHT
COLLATERAL ARE GOVERNED BY FEDERAL LAW, IN WHICH CASE SUCH CHOICE OF NEW YORK
LAW SHALL NOT BE DEEMED TO DEPRIVE AGENT OF SUCH RIGHTS AND REMEDIES AS MAY BE
AVAILABLE UNDER FEDERAL LAW.
10. CONSENT TO JURISDICTION, SERVICE OF PROCESS AND VENUE.
ANY LEGAL ACTION OR PROCEEDING WITH RESPECT TO THIS AGREEMENT MAY BE
BROUGHT IN XXX XXXXXX XX XXX XXXXX XX XXX XXXX IN THE COUNTY OF NEW YORK OR OF
THE UNITED STATES DISTRICT COURT FOR THE SOUTHERN DISTRICT OF NEW YORK, AND, BY
EXECUTION AND DELIVERY OF THIS AGREEMENT, GRANTOR HEREBY IRREVOCABLY ACCEPTS IN
RESPECT OF ITS PROPERTY, GENERALLY AND UNCONDITIONALLY, THE JURISDICTION OF THE
AFORESAID COURTS. GRANTOR HEREBY IRREVOCABLY CONSENTS TO THE SERVICE OF ANY AND
ALL LEGAL PROCESS, SUMMONS, NOTICES, AND DOCUMENTS IN ANY SUIT, ACTION, OR
PROCEEDING BROUGHT IN THE UNITED STATES ARISING OUT OF OR IN CONNECTION WITH
THIS AGREEMENT BY THE MAILING (BY REGISTERED MAIL OR CERTIFIED MAIL, POSTAGE
PREPAID) OR DELIVERING OF A COPY OF SUCH PROCESS TO GRANTOR, C/O PARENT, AT THE
PARENT'S ADDRESS FOR NOTICES AS SET FORTH IN SECTION 11 OF THE CREDIT AGREEMENT.
GRANTOR AGREES THAT A FINAL NONAPPEALABLE JUDGMENT IN ANY SUCH ACTION OR
PROCEEDING SHALL BE CONCLUSIVE AND MAY BE ENFORCED IN OTHER JURISDICTIONS BY
SUIT ON THE JUDGMENT OR IN ANY OTHER MANNER PROVIDED BY LAW. NOTHING HEREIN
SHALL AFFECT THE RIGHT OF AGENT AND THE LENDERS TO SERVE PROCESS IN ANY OTHER
MANNER PERMITTED BY LAW OR TO COMMENCE LEGAL PROCEEDINGS OR OTHERWISE PROCEED
AGAINST GRANTOR IN ANY OTHER JURISDICTION. GRANTOR HEREBY EXPRESSLY AND
IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY LAW, ANY OBJECTION WHICH
IT MAY NOW OR HEREAFTER HAVE TO THE JURISDICTION OR LAYING OF VENUE OF ANY SUCH
LITIGATION BROUGHT IN ANY SUCH COURT REFERRED TO ABOVE AND ANY CLAIM THAT ANY
SUCH LITIGATION HAS BEEN BROUGHT IN AN INCONVENIENT FORUM. TO THE EXTENT THAT
GRANTOR HAS OR
17
HEREAFTER MAY ACQUIRE ANY IMMUNITY FROM JURISDICTION OF ANY COURT OR FROM ANY
LEGAL PROCESS (WHETHER THROUGH SERVICE OR NOTICE, ATTACHMENT PRIOR TO JUDGMENT,
ATTACHMENT IN AID OF EXECUTION OR OTHERWISE) WITH RESPECT TO ITSELF OR ITS
PROPERTY, GRANTOR HEREBY IRREVOCABLY WAIVES SUCH IMMUNITY IN RESPECT OF ITS
OBLIGATIONS UNDER THIS AGREEMENT.
11. WAIVER OF JURY TRIAL, ETC.
GRANTOR AND AGENT HEREBY WAIVE ANY RIGHT TO A TRIAL BY JURY IN ANY
ACTION, PROCEEDING OR COUNTERCLAIM CONCERNING ANY RIGHTS UNDER THIS AGREEMENT,
OR UNDER ANY AMENDMENT, WAIVER, CONSENT, INSTRUMENT, DOCUMENT OR OTHER AGREEMENT
DELIVERED OR WHICH IN THE FUTURE MAY BE DELIVERED IN CONNECTION HEREWITH, OR
ARISING FROM ANY FINANCING RELATIONSHIP EXISTING IN CONNECTION WITH THIS
AGREEMENT, AND AGREES THAT ANY SUCH ACTION, PROCEEDINGS OR COUNTERCLAIM SHALL BE
TRIED BEFORE A COURT AND NOT BEFORE A JURY. GRANTOR CERTIFIES THAT NO OFFICER,
REPRESENTATIVE, AGENT OR ATTORNEY OF AGENT, OR ANY LENDER HAS REPRESENTED,
EXPRESSLY OR OTHERWISE, THAT AGENT OR ANY LENDER WOULD NOT, IN THE EVENT OF ANY
ACTION, PROCEEDING OR COUNTERCLAIM, SEEK TO ENFORCE THE FOREGOING WAIVERS.
GRANTOR HEREBY ACKNOWLEDGES THAT THIS PROVISION IS A MATERIAL INDUCEMENT FOR
AGENT AND THE LENDERS ENTERING INTO THIS AGREEMENT.
12. GENERAL PROVISIONS.
12.1. EFFECTIVENESS. This Agreement shall be binding and deemed
effective when executed by Grantor and accepted and executed by Agent.
12.2. SUCCESSORS AND ASSIGNS. This Agreement shall bind and inure to
the benefit of the parties hereto and their respective successors and assigns;
provided, however, that Grantor may not assign this Agreement or any rights or
duties hereunder without prior written consent of Agent and Lenders and any
prohibited assignment shall be absolutely void. No consent to an assignment by
Agent and Lenders shall release Grantor from its Secured Obligations. On behalf
of Agent and Lenders, Agent may assign this Agreement and its rights and duties
hereunder in accordance with the Credit Agreement and no consent or approval by
Grantor is required in connection with any such assignment.
12.3. INTERPRETATION. Neither this Agreement nor any uncertainty or
ambiguity herein shall be construed or resolved against Agent, Lenders, or
Grantor, whether under any rule of construction or otherwise. On the contrary,
this Agreement has been reviewed by all parties and shall be construed and
interpreted according to the ordinary meaning of the words used so as to fairly
accomplish the purposes and intentions of all parties hereto.
18
12.4. SEVERABILITY OF PROVISIONS. Any provision of this Agreement
which is prohibited or unenforceable in any jurisdiction shall, as to such
jurisdiction, be ineffective to the extent of such prohibition or
unenforceability without invalidating the remaining portions hereof or affecting
the validity or enforceability of such provision in any other jurisdiction.
12.5. ENTIRE AGREEMENT; AMENDMENTS. This Agreement, together with the
other Loan Documents, reflects the entire understanding of the parties with
respect to the transactions contemplated hereby and shall not be contradicted or
qualified by any other agreement, oral or written, before the date hereof.
Neither this Agreement nor any provision hereof may be modified, amended or
waived except by the written agreement of the parties to this Agreement. The
foregoing notwithstanding, Agent may re-execute this Agreement, modify, amend or
supplement the Schedules hereto or execute a supplemental Security Agreement, as
provided herein, and the terms of any such modification, amendment, supplement
or supplemental Security Agreement shall be deemed to be incorporated herein by
this reference.
12.6. SECURITY INTEREST ABSOLUTE. To the maximum extent permitted by
law, all rights of Agent, all Security Interests hereunder, and all obligations
of Grantor hereunder, shall be absolute and unconditional, irrespective of:
(a) any lack of validity or enforceability of any of the Secured
Obligations or any other agreement or instrument relating thereto, including any
of the Loan Documents, any change in the time, manner or place of payment of, or
in any other term of, all or any of the Secured Obligations or any other
amendment or waiver of or any consent to any departure from any of the Loan
Documents or any other agreement or instrument relating thereto;
(b) any exchange, release, or non-perfection of any other collateral,
or any release or amendment or waiver of or consent to departure from any Loan
Document; or
(c) any other circumstances that might otherwise constitute a defense
available to, or a discharge of, Grantor.
12.7. COUNTERPARTS; TELEFACSIMILE EXECUTION. This Agreement may be
executed in any number of counterparts and by different parties hereto in
separate counterparts, each of which, when executed and delivered, shall be
deemed to be an original, but all of which taken together shall constitute one
and the same agreement. Delivery of an executed counterpart of this Agreement by
telefacsimile shall be equally as effective as delivery of an original executed
counterpart of this Agreement. Any party delivering an executed counterpart of
this Agreement by telefacsimile also shall deliver an original executed
counterpart of this Agreement but the failure to deliver an original executed
counterpart shall not affect the validity, enforceability, and binding effect of
this Agreement.
12.8. TERMINATION; RELEASE. Subject to Section 12.9, when the Secured
Obligations have been indefeasibly paid and performed in full in immediately
available funds, including the cash collateralization, expiration, or
cancellation of all Secured Obligations, if any, consisting of the Commitments
shall have expired or been irrevocably terminated, this Agreement shall
terminate and all rights in the Collateral shall revert to Grantor. Agent, at
the request and sole expense of Grantor, will promptly execute and deliver to
Grantor the necessary
19
instruments (including Uniform Commercial Code termination statements)
acknowledging the termination of this Agreement, and will duly assign, transfer
and deliver to Grantor, without recourse, representation or warranty of any kind
whatsoever, such of the Collateral as may be in possession of Agent and has not
theretofore been disposed of, applied or released.
12.9. REINSTATEMENT; CERTAIN PAYMENTS. If any claim is ever made upon
Agent or any Lender for repayment or recovery of any amount or amounts received
by Agent or such Lender in payment or on account of any of the Secured
Obligations, Agent or such Lender shall give prompt notice of such claim to, as
applicable, Agent, Lender and Grantor, and if Agent or such Lender repays all or
part of such amount by reason of (i) any judgment, decree or order of any court
or administrative body having jurisdiction over Agent or such Lender or any of
its property, or (ii) any good faith settlement or compromise of any such claim
effected by Agent or such Lender with any such claimant, then and in such event
Grantor agrees that (A) any such judgment, decree, order, settlement or
compromise shall be binding upon it notwithstanding the cancellation of any
Indebtedness hereunder or under the other Loan Documents or the termination of
this Agreement or the other Loan Documents, and (B) it shall be and remain
liable to Agent or such Lender hereunder for the amount so repaid or recovered
to the same extent as if such amount had never originally been received by Agent
or such Lender.
12.10. SECURITY AGREEMENT. The provisions of this Agreement are
supplemental to the provisions of the Security Agreement. In the event of any
actual, irreconcilable conflict that cannot be resolved between the Engine and
Spare Parts provisions of the Security Agreement and this Agreement, the
provisions of this Agreement shall control and govern.
[Signature page follows.]
20
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be executed and delivered as of the date first above written.
GRANTOR:
--------
HAWAIIAN AIRLINES, INC.,
a Delaware corporation
By: /s/ Xxxxxxx Xxxxxxx
--------------------------------------
Name: W. Xxxxxxx Xxxxxxx
Title: Senior Vice President, Chief
Financial Officer and Treasurer
AGENT:
------
XXXXX FARGO FOOTHILL, INC.,
a California corporation
By: /s/ Xxxx X. Xxxxxx
--------------------------------------
Name: Xxxx X. Xxxxxx
Title: Vice President - Underwriting
S-1
SCHEDULE 1.1(S)
---------------
SPARE PARTS
Spare Part Types
----------------
Spare Part Locations
--------------------
SCHEDULE 1.1(E)
---------------
ENGINES
None.
EXHIBIT A
SUPPLEMENTAL SCHEDULE
SUPPLEMENTAL SCHEDULE NO. _____________, dated as of______________,
____, by ______________________________ ("Grantor") in favor of and XXXXX FARGO
FOOTHILL, INC., a California corporation, in its capacity as arranger and
administrative agent for the Lender Group defined in the Engine and Spare Parts
Security Agreement defined below (in such capacity, together with its
successors, if any, in such capacity, "Agent").
Grantor has heretofore executed that certain Engine and Spare Parts
Security Agreement in favor of Agent, dated as of June 2, 2005 (the "Engine and
Spare Parts Security Agreement"), recorded with the Federal Aviation
Administration on ______________________, 20__ with Conveyance No. ________. The
Engine and Spare Parts Security Agreement contemplates the execution and
delivery from time to time of Supplemental Schedules to Schedule 1.1(S) of the
Engine and Spare Parts Security Agreement by Grantor in favor of Agent thereto
for the purpose of subjecting to the Lien of the Engine and Spare Parts Security
Agreement additional Spare Parts.
Capitalized terms used herein and not otherwise defined shall have the
meanings ascribed thereto in the Engine and Spare Parts Security Agreement.
NOW, THEREFORE, in consideration of the premises and other good and
valuable consideration, the receipt and sufficiency of which is hereby
acknowledged, Grantor hereby agrees as follows:
(a) Grantor hereby grants to Agent a continuing, first priority
Security Interest in and Lien upon, and Schedule 1.1(S) of the Engine and Spare
Parts Security Agreement is hereby amended to add thereto, the following Spare
Parts:
Spare Part Types
----------------
Spare Part Locations
--------------------
(b) This Supplemental Schedule and its terms are hereby incorporated
by reference into the Engine and Spare Parts Security Agreement.
(c) This Supplemental Schedule is being delivered in the State of New
York and shall in all respects be governed by, and construed in accordance with,
the laws of the State of New York, including all matters of construction,
validity and performance.
[signature pages follow]
HAWAIIAN AIRLINES, INC.,
a Delaware corporation
By:
----------------------------
Name:
Title:
-2-
EXHIBIT B
SUPPLEMENTAL SCHEDULE
SUPPLEMENTAL SCHEDULE NO. _____________, dated as of______________,
____, by ______________________________ ("Grantor") in favor of and XXXXX FARGO
FOOTHILL, INC., a California corporation, in its capacity as arranger and
administrative agent for the Lender Group defined in the Engine and Spare Parts
Security Agreement defined below (in such capacity, together with its
successors, if any, in such capacity, "Agent").
Grantor has heretofore executed that certain Engine and Spare Parts
Security Agreement in favor of Agent, dated as of June 2, 2005 (the "Engine and
Spare Parts Security Agreement"), recorded with the Federal Aviation
Administration on ______________________, 20__ with Conveyance No. ________. The
Engine and Spare Parts Security Agreement contemplates the execution and
delivery from time to time of Supplemental Schedules to Schedule 1.1(E) of the
Engine and Spare Parts Security Agreement by Grantor in favor of Agent thereto
for the purpose of subjecting to the Lien of the Engine and Spare Parts Security
Agreement additional Engines.
Capitalized terms used herein and not otherwise defined shall have the
meanings ascribed thereto in the Engine and Spare Parts Security Agreement.
NOW, THEREFORE, in consideration of the premises and other good and
valuable consideration, the receipt and sufficiency of which is hereby
acknowledged, Grantor hereby agrees as follows:
(a) Grantor hereby grants to Agent a continuing, first priority
Security Interest in and Lien upon, and Schedule 1.1(E) of the Security
Agreement is hereby amended to add thereto, the following Engines:
--------------------------------------------------------------------------------
Engine
Manufacturer's Engine Engine
[Engine Manufacturer Serial No. Model No. Location]
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
(b) This Supplemental Schedule and its terms are hereby incorporated
by reference into the Security Agreement.
(c) This Supplemental Schedule is being delivered in the State of New
York and shall in all respects be governed by, and construed in accordance with,
the laws of the State of New York, including all matters of construction,
validity and performance.
[signature pages follow]
HAWAIIAN AIRLINES, INC.,
a Delaware corporation
By:
-----------------------------
Name:
Title:
-2-
