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EXHIBIT 10.62
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LEASE AGREEMENT
(N507MC)
Dated as of May 29, 1997
Between
ATLAS FREIGHTER LEASING, INC.,
Lessor
and
ATLAS AIR, INC.,
Lessee
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One Boeing B747-200 Aircraft
U.S. Registration No. N507MC
Manufacturer's Serial No. 21380
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LESSOR HAS ASSIGNED TO THE AGENT CERTAIN OF ITS RIGHT, TITLE AND INTEREST IN AND
TO THIS LEASE. TO THE EXTENT, IF ANY, THAT THIS LEASE CONSTITUTES CHATTEL PAPER
(AS SUCH TERM IS DEFINED IN THE UNIFORM COMMERCIAL CODE AS IN EFFECT IN ANY
APPLICABLE JURISDICTION), NO SECURITY INTEREST IN THIS LEASE MAY BE CREATED
THROUGH THE TRANSFER OR POSSESSION OF ANY COUNTERPART OTHER THAN THE ORIGINAL
EXECUTED COUNTERPART CONTAINING THE RECEIPT THEREFOR EXECUTED BY THE AGENT ON
THE SIGNATURE PAGE HEREOF.
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TABLE OF CONTENTS
Page
SECTION 1. Definitions...............................................................................1
SECTION 2. Acceptance and Lease.....................................................................22
SECTION 3. Term and Rent............................................................................22
(a) Term and Basic Rent.............................................................22
(b) Adjustments to Basic Rent.......................................................23
(c) Supplemental Rent...............................................................23
(d) Payments in General.............................................................23
(e) Minimum Rent....................................................................24
(f) Prepayment of Rent Payments.....................................................24
SECTION 4. Certain Representations and Warranties...................................................25
SECTION 5. Lessee's Representations and Warranties..................................................26
SECTION 6. Lessee's Affirmative Covenants...........................................................32
SECTION 7. Lessee's Negative Covenants..............................................................39
SECTION 8. Return of the Aircraft...................................................................48
(a) Condition Upon Return...........................................................48
(b) Overhaul and Repair.............................................................49
(c) Repairs.........................................................................49
(d) Modifications...................................................................49
(e) Airworthiness Directives........................................................49
(f) Return of the Engines...........................................................49
(g) Deferred Maintenance............................................................49
(h) Corrosion Treatment.............................................................49
(i) Manuals.........................................................................50
(j) Storage Upon Return.............................................................50
(k) Severable Parts.................................................................50
(l) Survival........................................................................50
SECTION 9. Liens....................................................................................50
SECTION 10. Registration, Maintenance and Operation; Possession and Subleases; Insignia..............51
(a) Maintenance and Operation.......................................................51
(b) Possession......................................................................52
(c) Insignia........................................................................54
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(d) Holding Out.....................................................................55
(e) No Pledging of Credit...........................................................55
SECTION 11. Replacement and Pooling of Parts; Alterations, Modifications and Additions...............55
SECTION 12. Indemnities..............................................................................58
SECTION 13. Event of Loss............................................................................59
SECTION 14. Insurance................................................................................60
SECTION 15. Assignment...............................................................................63
SECTION 16. Events of Default........................................................................64
SECTION 17. Remedies.................................................................................67
SECTION 18. Lessee's Cooperation Concerning Certain Matters..........................................69
SECTION 19. Notices..................................................................................70
SECTION 20. Net Lease, True Lease, etc...............................................................70
SECTION 21. Purchase Option..........................................................................72
(a) Purchase Option.................................................................72
(b) Notice of Purchase..............................................................72
SECTION 22. Lessor's Right to Perform for Lessee.....................................................72
SECTION 23. Miscellaneous............................................................................73
SECTION 24. Security for Lessor's Obligations........................................................74
SCHEDULE 5(a)(iii) Subsidiaries
SCHEDULE 7(a)(4) Indebtedness
SCHEDULE 7(b) Existing Liens
SCHEDULE 7(c)(v) Investments
SCHEDULE 7(d)(4) Contingent Obligations
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EXHIBITS
EXHIBIT A Form of Lease Supplement
EXHIBIT B Basic Rent Schedule
EXHIBIT C Stipulated Loss Value Schedule
EXHIBIT D Compliance Certificate
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LEASE AGREEMENT
LEASE AGREEMENT dated as of May 29, 1997 between ATLAS FREIGHTER LEASING,
INC., a Delaware corporation ("Lessor"), and ATLAS AIR, INC., a Delaware
corporation ("Lessee").
W I T N E S S E T H :
WHEREAS, Lessee desires to lease from Lessor and Lessor is willing to lease
to Lessee the Aircraft upon the terms and subject to the conditions of this
Lease;
WHEREAS, Lessor and Lessee desire that this be of a net lease;
WHEREAS, Lessor has incurred certain Loans under the Credit Agreement in
connection with the Aircraft to be leased pursuant to the terms of this Lease
and other similar aircraft to be leased pursuant to the other Leases:
WHEREAS, Lessor and Lessee desire that this Lease be, and be treated as, a
Lease for federal income tax purposes.
NOW, THEREFORE, in consideration of the mutual covenants herein contained
and other good and valuable consideration, Lessor and Lessee hereby agree as
follows:
SECTION 1. Definitions. All capitalized terms used herein shall have the
respective meanings set forth in this section.
"Acceptable Alternate Airframe" means a Boeing 747-200 which is in a cargo
configuration capable of immediate operation in the business of Lessee and has a
maximum gross takeoff weight of at least 800,000 pounds and is of the equivalent
or greater residual value, condition, utility, airworthiness, and remaining
useful life and which shall have been maintained, serviced, repaired and
overhauled in substantially the same manner as Lessee maintains, services,
repairs and overhauls similar airframes utilized by Lessee and without in any
way discriminating against such airframe.
"Acceptable Alternate Engine" means a Xxxxx & Xxxxxxx JT90-7A engine for
the aircraft bearing U.S. registration number N808MC and a General Electric
CF6-50E2 engine for the aircraft bearing U.S. registration numbers N505MC,
N507MC, N508MC, N509MC and N516MC or an engine of the same or another
manufacturer of equivalent or greater residual value, condition, utility,
airworthiness, and remaining useful life and suit-
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able for installation and use on the Airframe; provided that such engine shall
be of the same make, model and manufacturer as the other engines installed on
the Airframe, shall be an engine of a type then being utilized by Lessee on
other Boeing 747-200 aircraft operated by Lessee, and shall have been
maintained, serviced, repaired and overhauled in substantially the same manner
as Lessee maintains, services, repairs and overhauls similar engines utilized by
Lessee and without in any way discriminating against such engine.
"ACMI Contract" means (i) any contract entered into by Lessee pursuant to
which Lessee furnishes the aircraft, crew, maintenance and insurance and
customers bear all other operating expenses and (ii) any similar contract in
which the customer provides the flight crew, all substantially in accordance
with Lessee's historical practices.
"ACMI Contracted Aircraft" means an aircraft acquired by Lessee or its
Subsidiaries and intended to be used in connection with an ACMI Contract entered
into at the time of the acquisition of such aircraft (which ACMI Contract shall
not represent a renewal or replacement of a prior ACMI Contract unless the
aircraft used pursuant to such prior ACMI Contract was operated under an
operating lease and returned to the lessor) which is in effect on the date of
calculation and has a remaining term of one year or more on the date such
aircraft was intended to be used in connection with such ACMI Contract (subject
to cancellation terms, which may include the right to cancel on six months
notice). When making any calculation on a Pro Forma Basis effect shall be given
to the acquisition of an ACMI Contracted Aircraft by adding to the appropriate
components of Consolidated Adjusted EBITDA (i) the net projected annualized
revenues from the operation of the ACMI Contracted Aircraft under such ACMI
Contract for that portion of the period for which Consolidated Adjusted EBITDA
is being calculated prior to the acquisition of such aircraft, assuming
operation for the minimum guaranteed number of block hours (less any block hours
subject to cancellation) at the minimum guaranteed rate under such ACMI Contract
less (ii) the projected annualized cash operating expenses from such operation
for the same period for which the related projected revenues are determined in
clause (i) above; provided that such projected cash operating expenses shall not
be less on a per block hour basis than the average historical per block hour
operating expenses of Lessee for the four full fiscal quarters immediately
preceding the date of calculation, and provided, further, that if such aircraft
is of a model other than a Boeing 747 freighter, such projected cash operating
expenses shall include maintenance costs which shall not be less than the
average for such aircraft type disclosed on the most recently available DOT
Forms 41 with respect to such aircraft type or any summary of such data as
reported in a nationally recognized industry publication. For purposes of this
definition, "ACMI Contract" shall include contracts pursuant to which Lessee
does not pay any crew costs, in which event pro forma effect shall be given as
described above but excluding from the projected annualized cash operating
expenses all crew costs. Cash operating expenses means for purposes of this
definition consolidated operating expenses, less consolidated depreciation and
amortization and Xxxxxxx-
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dated Rental Payments, to the extent included in computing consolidated
operating expenses.
"Affiliate" means, as applied to any Person, any other Person directly or
indirectly controlling, controlled by, or under common control with, that
Person. For the purposes of this definition, "control" (including, with
correlative meanings, the terms "controlling", "controlled by" and "under common
control with"), as applied to any Person, means the possession, directly or
indirectly, of the power to direct or cause the direction of the management and
policies of that Person, whether through the ownership of voting securities or
by contract or otherwise.
"Agent" shall mean the Agent under the Credit Agreement.
"Aircraft" means the Airframe together with the four Engines, whether or
not such Engines are installed on the Airframe or any other airframe.
"Aircraft Chattel Mortgage" means each Aircraft Chattel Mortgage entered
into in connection with the Credit Agreement.
"Airframe" means (i) the Boeing aircraft Model 747-200 (excluding Engines
or engines from time to time installed thereon) specified by the United States
Registration Number and manufacturer's serial number in the Lease Supplement and
(ii) any and all Parts which are from time to time incorporated or installed in
or attached thereto or which have been removed therefrom, but where title to
which remains vested in Lessor in accordance with this Lease.
"Approved Appraiser" means B.K. Associates, Inc., Simat, Helliesen &
Xxxxxxx, Inc. or any other nationally recognized firm of aircraft appraisers
reasonably satisfactory to Agent.
"Asset Sale" means the sale (including any sale-leaseback transaction) by
Lessee or any of its Subsidiaries to any other Person of (i) any of the stock of
any of Lessee's Subsidiaries, (ii) substantially all of the assets of any
division or line of business of Lessee or any of its Subsidiaries, or (iii) any
other assets (whether tangible or intangible) of Lessee or any of its
Subsidiaries outside of the ordinary course of business excluding (A) any such
other assets to the extent that the aggregate value of such assets sold in any
single transaction or related series of transactions is equal to $1,000,000 or
less, (B) transactions related to aircraft engines, components, parts or spare
parts pursuant to customary pooling, exchange or similar arrangements, (C) asset
swaps involving aircraft engines, components, parts or spare parts; provided
that the assets received by the Lessee or any Subsidiary have a fair market
value at least equal to the assets transferred (provided that with respect to
any
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asset swap or series of related asset swaps involving assets of Lessee or any
Subsidiary with a fair market value exceeding $3,000,000, such determination
shall be made by the Board of Directors of Lessee)) and (D) asset sales
involving obsolete, worn-out, excess or redundant equipment as long as the
proceeds therefrom are used to replace or to upgrade the aircraft or the
equipment installed thereon.
"Atlas One" means Atlas One, Inc., a Delaware corporation.
"Atlas One Leases" means those leases existing prior to the Initial
Borrowing Date with Atlas One as lessor and Lessee as lessee.
"Bankruptcy Code" means Title 11 of the United States Code entitled
"Bankruptcy", as now and hereafter in effect, or any successor statute.
"Basic Rent" means, for the Term, the rent payable for the Aircraft
pursuant to Section 3(a) of this Lease adjusted as provided in Section 3(b) of
this Lease.
"Basic Rent Payment Date" means each date set forth on Exhibit B.
"Business Day" means any day excluding Saturday, Sunday and any day which
is a legal holiday under the laws of the States of New York or Colorado or is a
day on which banking institutions located in either such state are authorized or
required by law or other governmental action to close.
"Capital Lease", as applied to any Person, means any lease of any property
(whether real, personal or mixed) by that Person as lessee that, in conformity
with GAAP, is accounted for as a capital lease on the balance sheet of that
Person.
"Cash" means money, currency or a credit balance in a Deposit Account.
"Cash Equivalents" means, as at any date of determination, (i) marketable
securities (a) issued or directly and unconditionally guaranteed as to interest
and principal by the United States Government or (b) issued by any agency of the
United States the obligations of which are backed by the full faith and credit
of the United States, in each case maturing within one year after such date;
(ii) marketable direct obligations issued by any state of the United States of
America or any political subdivision of any such state or any public
instrumentality thereof, in each case maturing within one year after such date
and having, at the time of the acquisition thereof, the highest rating
obtainable from either S&P or Xxxxx'x; (iii) commercial paper maturing no more
than one year from the date of creation thereof and having, at the time of the
acquisition thereof, a rating of at least A-1 from S&P or at least P-I from
Xxxxx'x; (iv) certificates of deposit or bankers' acceptances maturing within
one year after such date and issued or accepted by any commercial bank organized
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under the laws of the United States of America or any state thereof or the
District of Columbia that (a) is at least "adequately capitalized" (as defined
in the regulations of its primary Federal banking regulator) and (b) has Tier I
capital (as defined in such regulations) of not less than $100,000,000; and (v)
shares of any money market mutual fund that (a) has at least 95% of its assets
invested continuously in the types of investments referred to in clauses (i) and
(ii) above, (b) has net assets of not less than $500,000,000, and (c) has the
highest rating obtainable from either S&P or Xxxxx'x.
"Certificated Air Carrier" means a United States "air carrier" within the
meaning of the Federal Aviation Act, operating pursuant to a certificate issued
under Section 401 of such Act, or a carrier of comparable status under any
successor law or provision.
"Compliance Certificate" means a certificate substantially in the form of
Exhibit D annexed hereto delivered to Lessor, Agent and Lenders by Lessee
pursuant to subsection 6(a)(4) hereunder.
"Consolidated Adjusted EBITDA" means, for any period, the sum of the
amounts for such period of (i) Consolidated Net Income, (ii) Consolidated
Interest Expense, (iii) provisions for taxes based on income, (iv) total
depreciation expense, (v) total amortization expense, and (vi) other non-cash
items reducing Consolidated Net Income less other non-cash items increasing
Consolidated Net Income, all of the foregoing as determined on a consolidated
basis for Lessee and its Subsidiaries in conformity with GAAP.
"Consolidated Capital Expenditures" means, for any period, the sum of (i)
the aggregate of all expenditures (whether paid in cash or other consideration
or accrued as a liability and including that portion of Capital Leases which is
capitalized on the consolidated balance sheet of Lessee and its Subsidiaries) by
Lessee and its Subsidiaries during that period that, in conformity with GAAP,
are included in "additions to property, plant or equipment" or comparable items
reflected in the consolidated statement of cash flows of Lessee and its
Subsidiaries plus (ii) to the extent not covered by clause (i) of this
definition, the aggregate of all expenditures by Lessee and its Subsidiaries
during that period to acquire (by purchase or otherwise) the business, property
or fixed assets of any Person, or the stock or other evidence of beneficial
ownership of any Person that, as a result of such acquisition, becomes a
Subsidiary of Lessee.
"Consolidated Fixed Charges" means, for any period, the sum of the amounts
for such period of (i) Consolidated Interest Expense, (ii) provisions for taxes
based on income, (iii) one third of Consolidated Rental Payments and (iv)
scheduled repayments of principal of Indebtedness, all of the foregoing as
determined on a consolidated basis for Lessee and its Subsidiaries in conformity
with GAAP.
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"Consolidated Interest Expense" means, for any period, total net interest
expense (to be computed by reducing interest expense by the amount of interest
income) (including that portion attributable to Capital Leases in accordance
with GAAP and capitalized interest) of Lessee and its Subsidiaries on a
consolidated basis with respect to all outstanding Indebtedness of Lessee and
its Subsidiaries, including, without limitation, all commissions, discounts and
other fees and charges owed with respect to letters of credit and bankers'
acceptance financing and net costs under Interest Rate Agreements.
"Consolidated Net Income" means, for any period, the net income (or loss)
of Lessee and its Subsidiaries on a consolidated basis for such period taken as
a single accounting period determined in conformity with GAAP; provided that
there shall be excluded (i) the income (or loss) of any Person (other than a
Subsidiary of Lessee) in which any other Person (other than Lessee or any of its
Subsidiaries) has a joint interest, except to the extent of the amount of
dividends or other distributions actually paid to Lessee or any of its
Subsidiaries by such Person during such period, (ii) the income (or loss) of any
Person accrued prior to the date it becomes a Subsidiary of Lessee or is merged
into or consolidated with Lessee or any of its Subsidiaries or that Person's
assets are acquired by Lessee or any of its Subsidiaries, (iii) the income of
any Subsidiary of Lessee to the extent that the declaration or payment of
dividends or similar distributions by that Subsidiary of that income is not at
the time permitted by operation of the terms of its charter or any agreement,
instrument, judgment, decree, order, statute, rule or governmental regulation
applicable to that Subsidiary, (iv) any after-tax gains or losses attributable
to Asset Sales or returned surplus assets of any pension plan, and (v) (to the
extent not included in clauses (i) through (iv) above) any net extraordinary
gains or net non-cash extraordinary losses.
"Consolidated Net Worth" means, as at any date of determination, the sum of
the capital stock and additional paid-in capital plus retained earnings (or
minus accumulated deficits) of Lessee and its Subsidiaries on a consolidated
basis determined in conformity with GAAP.
"Consolidated Rental Payments" means, for any period, the aggregate amount
of all rents paid or payable by Lessee and its Subsidiaries on a consolidated
basis (excluding rent paid pursuant to the Leases) during that period under all
Capital Leases and Operating Leases to which Lessee or any of its Subsidiaries
is a party as lessee (net of sublease income other than income from ACMI
Contracts).
"Consolidated Total Debt" means, as at any date of determination, the
aggregate stated balance sheet amount of all Indebtedness of Lessee and its
Subsidiaries, determined on a consolidated basis in accordance with GAAP.
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"Contingent Obligation" means, as applied to any Person, any direct or
indirect liability, contingent or otherwise, of that Person (i) with respect to
any Indebtedness, lease, dividend or other obligation of another if the primary
purpose or intent thereof by the Person incurring the Contingent Obligation is
to provide assurance to the obligee of such obligation of another that such
obligation of another will be paid or discharged, or that any agreements
relating thereto will be complied with, or that the holders of such obligation
will be protected (in whole or in part) against loss in respect thereof, (ii)
with respect to any letter of credit issued for the account of that Person or as
to which that Person is otherwise liable for reimbursement of drawings, or (iii)
under Interest Rate Agreements and Currency Agreements. Contingent Obligations
shall include, without limitation, (a) the direct or indirect guaranty,
endorsement (otherwise than for collection or deposit in the ordinary course of
business), co-making, discounting with recourse or sale with recourse by such
Person of the obligation of another, (b) the obligation to make take-or-pay or
similar payments if required regardless of non-performance by any other party or
parties to an agreement, and (c) any liability of such Person for the obligation
of another through any agreement (contingent or otherwise) (X) to purchase,
repurchase or otherwise acquire such obligation or any security therefor, or to
provide funds for the payment or discharge of such obligation (whether in the
form of loans, advances, stock purchases, capital contributions or otherwise) or
(Y) to maintain the solvency or any balance sheet item, level of income or
financial condition of another if, in the case of any agreement described under
subclauses (X) or (Y) of this sentence, the primary purpose or intent thereof is
as described in the preceding sentence. The amount of any Contingent Obligation
shall be equal to the amount of the obligation so guaranteed or otherwise
supported or, if less, the amount to which such Contingent Obligation is
specifically limited.
"Continuing Directors" shall mean the directors of a Person on the Initial
Borrowing Date and each other director, if such other director's nomination for
election to the Board of Directors of such Person is recommended by a majority
of the then Continuing Directors.
"Contractual Obligation", as applied to any Person, means any provision of
any Security issued by that Person or of any material indenture, mortgage, deed
of trust, contract, undertaking, agreement or other instrument to which that
Person is a party or by which it or any of its properties is bound or to which
it or any of its properties is subject.
"Contribution" means the contribution by Lessee to Lessor of the Aircraft
subject to this Lease and the other aircraft to be leased pursuant to the
Leases, subject to the Existing Indebtedness, and approximately $10,400,000 in
cash.
"Credit Agreement" shall mean the Credit Agreement, dated as of May 29,
1997, by and among Lessor, as borrower, the Lenders listed therein from time to
time and Bank-
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ers Trust Company, as Agent as such agreement may be amended, modified, waived,
or supplemented from time to time.
"Currency Agreement" means any foreign exchange contract, currency swap
agreement, futures contract, option contract, synthetic cap or other similar
agreement or arrangement designed to protect Lessee or any of its Subsidiaries
against fluctuations in currency values.
"Default" means any event which with the giving of notice or the lapse of
time or both would become a Lease Event of Default.
"Deposit Account" means a demand, time, savings, passbook or like account
with a bank, savings and loan association, credit union or like organization,
other than an account evidenced by a negotiable certificate of deposit.
"Designated Indebtedness" means Indebtedness incurred pursuant to the
FINOVA Agreement, the Pass Through Trust Documents, the Unsecured Revolving
Credit Facility, the Nationsbank Agreement, any Permitted Extension Indebtedness
and any Other Permitted Indebtedness.
"Determination Date" has the meaning assigned to that term in subsection
7(a)(6).
"Dividend" means the distribution by Atlas One to Lessee of the Aircraft
and the other aircraft to be leased pursuant to the Leases to Lessee subject to
the Existing Indebtedness.
"Domestic Air Carrier" means any United States "domestic air carrier", as
defined in Part 121 of the Federal Aviation Regulations, that is operating in
accordance with the operating certificate and appropriate operations
specifications issued under Part 121 or any successor regulation.
"Eligible Aircraft" means a Boeing 747-200, 747-300 or 747-400 or MD-11
aircraft, including any engines installed thereon and any spare engines of the
same type and model, which (i) is in a cargo configuration capable of immediate
operation in the business of Lessee or is eligible for delivery under a
modification agreement with a delivery slot available within a six month period
(or is leased for a period of longer than six months until a delivery slot is
available), and (ii) has a maximum gross take-off weight ("MTOW") of at least
800,000 pounds, in the case of any 747-200, 747-300, or 747-400 aircraft and
630,000 pounds in the case of any MD-11 aircraft.
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"Employee Benefit Plan" means any "employee benefit plan" as defined in
Section 3(3) of ERISA which is, or was at any time, maintained or contributed to
by Lessee or any of its ERISA Affiliates.
"Engine" means: (i) each of the four Xxxxx & Xxxxxxx JT9D-2A aircraft
engines for the aircraft bearing U.S. registration number N808MC and each of the
General Electric CF6-50E2 aircraft engines for the aircraft bearing U.S.
registration numbers N505MC, N507MC, N508MC, N509MC and N516MC listed by
manufacturer's serial numbers in the initial Lease Supplement and installed on
the Airframe at the time of the delivery to Lessee of such Airframe, whether or
not from time to time thereafter installed on such Airframe or any other
airframe; (ii) any Acceptable Alternate Engine which may from time to time be
substituted for any of such four engines pursuant to the terms of the Lease; and
(iii) in any case, any and all Parts which are from time to time incorporated or
installed in or attached to any such engine and any and all parts removed
therefrom so long as title thereto remains vested in Lessor in accordance
herewith. The term "Engines" means, as of any date of determination, all Engines
then leased under this Lease.
"Environmental Claim" means any investigation, notice, claim. suit or
order, by any governmental authority or any Person arising in connection with
any alleged or actual violation of Environmental Laws or with any Hazardous
Material, or any actual or alleged damage, or harm to health, safety or the
environment.
"Environmental Laws" means any and all current or future statutes,
ordinances, orders, rules, regulations, guidance documents, judgments,
governmental authorizations, or any other requirement of governmental
authorities relating to environmental matters, including, without limitation,
those relating to any Hazardous Materials Activity.
"Equity Proceeds" means the cash proceeds (net of underwriting discounts
and commissions and other reasonable costs associated therewith) from the
issuance of any equity Securities of Lessee.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended from time to time, and any successor statute.
"ERISA Affiliate" means, as applied to any Person, (i) any corporation
which is, or was at any time, a member of a controlled group of corporations
within the meaning of Section 414(b) of the Internal Revenue Code of which that
Person is, or was at any time, a member; (ii) any trade or business (whether or
not incorporated) which is, or was at any time, a member of a group of trades or
businesses under common control within the meaning of Section 414(c) of the
Internal Revenue Code of which that Person is, or was at any time, a member; and
(iii) any member of an affiliated service group within the meaning of
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Section 414(m) or (o) of the Internal Revenue Code of which that Person, any
corporation described in clause (i) above or any trade or business described in
clause (ii) above is, or was at any time, a member.
"Event of Default" means an Event of Default under and as defined in the
Credit Agreement.
"Event of Loss" shall mean any of the following events with respect to the
Aircraft (whether the Airframe or an Engine of such Aircraft or both): (A) loss
of such Aircraft or the use thereof due to theft or disappearance of the
Aircraft which shall result in the loss of possession thereof for a period of
120 days (or for a shorter period ending on the date on which there is an
insurance settlement for a total loss on the basis of the theft or disappearance
of such Aircraft); (B) the destruction, damage beyond repair or rendition of
such Aircraft permanently unfit for normal use for any reason whatsoever; (C)
the condemnation, confiscation or seizure of, or requisition of title to, or use
or possession (other than use by the United States Government if Lessee obtains
adequate compensation from the United States Government) of such Aircraft; (D)
as a result of any rule, regulation, order or other action by the FAA or other
governmental body having jurisdiction, the use of such Aircraft in the normal
course of interstate air transportation of persons or cargo shall have been
prohibited for a period of more than nine consecutive months unless Lessee,
prior to the expiration of such nine month period, shall have undertaken and
shall be diligently carrying forward all steps which are necessary or desirable
to permit the normal use of such property by Lessee or, in any event, if such
use shall have been prohibited for a period of twelve consecutive months; (E)
the operation or location of such Aircraft, while under requisition for use by
the United States or any instrumentality or agency thereof, in any area excluded
from coverage by any insurance policy in effect with respect to such Aircraft,
if Lessee shall be unable to obtain indemnity or "war-risk" insurance in lieu
thereof from the United States; (F) any damage which results in an insurance
settlement with respect to such Aircraft on the basis of an actual or
constructive total loss or (G) a divestiture of such Airframe as described in
Section 4(d)(iii) or Section 4(d)(vi) of any Aircraft Chattel Mortgage under the
Credit Agreement. An Event of Loss with respect to the Aircraft shall be deemed
to have occurred if an Event of Loss occurs with respect to the Airframe of the
Aircraft.
"Exchange Act" means the Securities Exchange Act of 1934, as amended from
time to time, and any successor statute.
"Existing Indebtedness" means the ING Obligations and the Lufthansa
Obligations.
"Fair Market Sales Value" of the Airframe or any Engine shall mean the
value which would be obtained in an arm's-length transaction between an informed
and willing lessee-user or buyer-user (other than a lessee currently in
possession or a used equipment
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dealer) under no compulsion to lease or buy, as the case may be, and an informed
and willing lessor or seller, as the case may be, under no compulsion to lease
or sell, as the same shall be specified by agreement between Lessor and Lessee
or, if not agreed to by Lessor and Lessee within a period of 15 days after
either party requests a determination, then as specified in an appraisal
prepared and delivered in New York City by a recognized independent aircraft
appraiser, mutually agreed to by the Agent and Lessee, or, if such appraiser
cannot be agreed to within 20 days, then either party may apply to the American
Arbitration Association (or any successor organization thereto) in New York City
for the appointment of an appraiser, whose determinations shall be final and
binding upon the parties hereto. In determining Fair Market Sales Value by
appraisal or otherwise, it will be assumed that the Aircraft, Airframe or Engine
is in the condition, location and overhaul status in which it is required to be
returned to Lessor pursuant to Section 8 of this Lease, that all modifications
and improvements shall be taken into account, that Lessee has removed all Parts
which it is entitled to remove pursuant to Section 11 of this Lease and that the
Aircraft is not encumbered by this Lease. Except as otherwise expressly provided
in the Lease, all appraisal costs will be shared equally by Lessor and Lessee.
"Federal Aviation Act" means the Federal Aviation Act of 1958, as amended
and as recodified in Xxxxx 00, Xxxxxx Xxxxxx Code, or any similar legislation of
the United States enacted to supersede, amend or supplement such Act and the
rules and regulations promulgated thereunder.
"Federal Aviation Administration" or "FAA" means the United States Federal
Aviation Administration or any successor thereto administering the functions of
the Federal Aviation Administration under the Federal Aviation Act.
"Financed Aircraft" means all Financed Aircraft under and as defined in the
Second Amended and Restated Credit Agreement.
"FINOVA Agreement" means that certain Secured Loan Agreement dated as of
April 11, 1996 between FINOVA and Lessee, as amended, restated, supplemented or
otherwise modified from time to time in accordance with this Agreement.
"Foreign Air Carrier" means any "foreign air carrier" as defined in the
Act, as to which there is in force a permit issued pursuant to Section 402 of
said Act or operators of aircraft operating under or governed by the provisions
of Parts 121, 123 or 129 of the Federal Aviation Regulations, in each case that
are certificated in a country that is a signatory to the Convention on
International Civil Aviation and are operating in conformity with the Annexes
thereunder and that fly routes into the United States on a regularly scheduled
basis.
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"Funding and Payment Office" means the office of Agent located at 000
Xxxxxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000, Attention: Xxxx Xxxxxxxx.
"GAAP" means, subject to the limitations on the application thereof set
forth in subsection 1 hereunder, generally accepted accounting principles set
forth in opinions and pronouncements of the Accounting Principles Board of the
American Institute of Certified Public Accountants and statements and
pronouncements of the Financial Accounting Standards Board or in such other
statements by such other entity as may be approved by a significant segment of
the accounting profession. Financial statements and other information required
to be delivered by Lessee to Lessor, Agent and Lenders pursuant to clauses (1),
(2), (3) and (12) of subsection 6(a) hereunder shall be prepared in accordance
with GAAP as in effect as of the date of such preparation. Calculations in
connection with the definitions, covenants and other provisions of this Lease
shall utilize accounting principles and policies in conformity GAAP as in effect
as of the date of this Lease.
"Governmental Authorization" means any permit, license, authorization,
plan, directive, consent order or consent decree of or from any federal, state
or local governmental authority, agency or court.
"Hazardous Materials" means any chemical or other material or substance,
exposure to which is now or hereafter prohibited, limited or regulated under any
law.
"Hazardous Materials Activity" means any past, current, proposed, or
threatened use, storage, release, generation, treatment, remediation or
transportation of any Hazardous Material (i) from, under, in, into or on the
facilities or surrounding property; and (ii) caused by, or undertaken by or on
behalf of, Lessee.
"Indebtedness" means, as applied to any Person, (i) all indebtedness for
borrowed money, (ii) that portion of obligations with respect to Capital Leases
that is properly classified as a liability on a balance sheet in conformity with
GAAP, (iii) notes payable and drafts accepted representing extensions of credit
whether or not representing obligations for borrowed money, (iv) any obligation
owed for all or any part of the deferred purchase price of property or services
(excluding any such obligations incurred under ERISA), which purchase price is
(a) due more than six months from the date of incurrence of the obligation in
respect thereof or (b) evidenced by a note or similar written instrument, and
(v) all indebtedness secured by any Lien on any property or asset owned or held
by that Person regardless of whether the indebtedness secured thereby shall have
been assumed by that Person or is nonrecourse to the credit of that Person.
Obligations under Interest Rate Agreements and Currency Agreements constitute
Contingent Obligations and not Indebtedness.
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"Indemnified Liabilities" has the meaning assigned to that term in
subsection 12(b) hereunder.
"Indemnitee" has the meaning assigned to that term in subsection 12(b)
hereunder.
"ING Financing Agreement" means that certain Secured Loan Agreement dated
as of December 30, 1994 between Lessee, Atlas One and Internationale Nederlanden
Aviation Lease B.V., as amended by Amendment No. 1 thereto and as further
amended, restated, supplemented and otherwise modified from time to time.
"ING Obligations" means all amounts owing by Lessee or any of its
Subsidiaries pursuant to the ING Financing Agreement and related documents.
"Initial Borrowing Date" means the date on which Lessor effects its
borrowing of Loans pursuant to the Credit Agreement.
"Interest Rate Agreement" means any interest rate swap agreement, interest
rate cap agreement, interest rate collar agreement or other similar agreement or
arrangement designed to protect Lessee or any of its Subsidiaries against
fluctuations in interest rates.
"Internal Revenue Code" means the Internal Revenue Code of 1986, as amended
to the date hereof and from time to time hereafter.
"Investment" means (i) any direct or indirect purchase or other acquisition
by Lessee or any of its Subsidiaries of, or of a beneficial interest in, any
Securities of any other Person, (ii) any direct or indirect redemption,
retirement, purchase or other acquisition for value, by any Subsidiary of Lessee
from any Person other than Lessee or any of its Subsidiaries, of any equity
Securities of such Subsidiary, or (iii) any direct or indirect loan, advance
(other than advances to employees for moving, entertainment and travel expenses,
drawing accounts and similar expenditures in the ordinary course of business) or
capital contribution by Lessee or any of its Subsidiaries to any other Person
(other than a wholly-owned Subsidiary of Lessee), including all indebtedness and
accounts receivable from that other Person that are not current assets or did
not arise from sales to that other Person in the ordinary course of business.
The amount of any Investment shall be the original cost of such Investment plus
the cost of all additions thereto, without any adjustments for increases or
decreases in value, or write-ups, write-downs or write-offs with respect to such
Investment.
"Joint Venture" means a joint venture, partnership or other similar
arrangement, whether in corporate, partnership or other legal form; provided
that in no event shall any corporate Subsidiary of any Person be considered to
be a Joint Venture to which such Person is a party.
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"Leases" means the Lease Agreements dated as of May 29, 1997 between the
Lessor and the Lessee, as the same may be amended, modified or supplemented from
time to time (including this Lease). The term "Lease" shall include any Lease
Supplement entered into pursuant to the respective Lease.
"Lease Event of Default" has the meaning specified in Section 16 of this
Lease.
"Lease Supplement" means a Lease Supplement, substantially in the form of
Exhibit A to this Lease, to be entered into between Lessor and Lessee for the
purpose of leasing the Aircraft under and pursuant to the terms of the Lease,
and any subsequent Lease Supplement entered into in accordance with the terms of
the Lease.
"Lender" or "Lenders" means the persons identified as "Lenders" and listed
on the signature pages of the Credit Agreement, together with their successors
and permitted assigns.
"Lessee" means Atlas Air, Inc., as lessee under the Lease, and its
permitted successors and assigns.
"Lessor" means Atlas Freighter Leasing, Inc., as Lessor under the Lease,
and its permitted successors and assigns.
"Lessor Tax" means (where the Lessor is the indemnitee) any Tax that is:
(a) imposed solely as the result of activities of Lessor in the
jurisdiction imposing the Tax that is unrelated to Lessor's dealings
with Lessee or the transactions contemplated by this Lease or the
operation of the Aircraft by Lessee; or
(b) imposed on the net income, profits or gains of Lessor by the United
States of America or the state or political subdivision thereof, but
excluding any Tax imposed by any such government or taxing authority
of any jurisdiction if and to the extent that such Tax results from
(i) the use (or to and/or from) operation, presence or registration of
the Aircraft, the Airframe, any Engine or any Part in the jurisdiction
imposing the Tax, or (ii) the situs of organization, any place of
business or any activity of Lessee or any other Person having use,
possession or custody of the Aircraft, the Airframe, any Engine or any
Part in the jurisdiction imposing the Tax; or
(c) imposed solely as the result of an event that occurs after the
expiration or other termination of this Lease and that is unrelated to
Lessor's dealings with Lessee or to the transactions contemplated by
this Lease.
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"Lien" means any lien, mortgage, pledge, assignment, security interest,
charge, hypothecation, preference, priority, privilege, lease or encumbrance of
any kind (including any conditional sale or other title retention agreement, any
lease in the nature thereof, and any agreement to give any security interest)
and any option, trust or other preferential arrangement having the practical
effect of any of the foregoing.
"Loan" or "Loans" means the term loans made under the Credit Agreement.
"Loan Documents" means the Credit Agreement, the promissory notes
thereunder, the Leases, the Aircraft Chattel Mortgages and any other security
agreement entered into in connection with the Credit Agreement.
"Lufthansa Agreement" means the two Conditional Sales Agreements and two
Sales Agreements between Lessee and Deutsche Lufthansa Aktiengesellschaft each
dated September 22, 1994.
"Lufthansa Obligations" means all amounts owing by Lessee or any of its
Subsidiaries pursuant to the Lufthansa Agreement and related documents.
"Margin Stock" has the meaning assigned to that term in Regulation U of the
Board of Governors of the Federal Reserve System as in effect from time to time.
"Material Adverse Effect" means a material adverse effect upon the
business, operations, properties, assets, condition (financial or otherwise) or
prospects of Lessee and its Subsidiaries on a consolidated basis.
"Material Agreement" means any or all of the Second Amended and Restated
Credit Agreement, the Pass Through Trust Documents, the FINOVA Agreement, the
Nationsbank Agreement, the Unsecured Revolving Credit Facility, the Philippine
Leases and agreements in respect of Permitted Extension Indebtedness and Other
Permitted Indebtedness.
"Moody's" means Xxxxx'x Investors Service, Inc.
"Nationsbank Agreement" means the Loan Agreement, dated as of March 28,
1997, between Atlas Air, Inc., as Borrower, and Nationsbank Leasing Corporation,
as Lender, and as further amended, supplemented and modified in accordance with
this Lease and all other related documents.
"Obligations" means all obligations of Lessor to pay all amounts due from
time to time under the Credit Agreement and the other Loan Documents to Agent,
Lenders or any of them, whether for principal, interest, fees, expenses,
indemnification or otherwise.
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"Officers' Certificate" means, as applied to any corporation, a certificate
executed on behalf of such corporation by its chairman of the board (if an
officer) or its president or one of its vice presidents and by its chief
financial officer or its treasurer.
"Operating Lease" means, as applied to any Person, any lease (including,
without limitation, leases that may be terminated by the lessee at any time) of
any property (whether real, personal or mixed) that is not a Capital Lease other
than any such lease under which that Person is the lessor.
"Other Permitted Indebtedness" means Indebtedness incurred for the purpose
of financing the acquisition of aircraft so long as (i) any such Indebtedness
bears interest at a rate which does not exceed 15% per annum, (ii) such
Indebtedness has a final stated maturity later than the end of the Term and
(iii) the amortization and the other terms, provisions, conditions, covenants
and events of default thereof taken as a whole shall be no more onerous or
restrictive from the perspective of Lessee and its Subsidiaries or any less
favorable, from the perspective of Lessor or Lenders, than any other Designated
Indebtedness.
"Part" means all appliances, parts, instruments, appurtenances,
accessories, furnishings and other equipment of whatever nature other than
complete Engines or engines, which are from time to time incorporated or
installed in or attached to the Airframe or any Engine and all such items which
are subsequently removed therefrom so long as title thereto shall vest in Lessor
in accordance with this Lease.
"Pass Through Trust Documents" means that certain Pass Through Trust
Agreement dated as of November 30, 1995 between Atlas Air, Inc. and First
Fidelity Bank, National Association, as Trustee (the "Pass Through Trust
Agreement") and any trust indenture and security agreements including any
related trust indenture and security agreement supplements related to the
equipment notes to be held in trust pursuant to the Pass Through Trust Agreement
and all related agreements, as the same may be amended, restated, supplemented
or otherwise modified from time to time in accordance with this Lease.
"Past Due Rate" shall mean the default rate of interest as determined from
time to time in accordance with subsection 2.2D of the Credit Agreement.
"Permitted Encumbrances" means the following types of Liens (other than any
such Lien imposed pursuant to Section 401(a)(29) or 412(n) of the Internal
Revenue Code or by ERISA):
(i) Liens for taxes, assessments or governmental charges or claims the
payment of which is not, at the time, required by subsection 6(c)
hereunder;
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(ii) statutory Liens of mechanics and materialmen imposed by law
incurred in the ordinary course of business for sums not yet delinquent or
being contested in good faith by appropriate proceedings that do not
involve any danger of the sale, forfeiture or loss of any assets, if such
reserve or other appropriate provision, if any, as shall be required by
GAAP shall have been made therefor;
(iii) Liens incurred or deposits made in the ordinary course of
business in connection with workers' compensation, unemployment insurance
and other types of social security, or to secure the performance of
tenders, statutory obligations, surety and appeal bonds, bids, leases,
government contracts, trade contracts, performance and return-of-money
bonds and other similar obligations (exclusive of obligations for the
payment of borrowed money);
(iv) easements, rights-of-way, restrictions, minor defects,
encroachments or irregularities in title and other similar charges or
encumbrances not interfering in any material respect with the ordinary
conduct of the business of Lessee or any of its Subsidiaries;
(v) any (a) interest or title of a lessor or sublessor under any lease
permitted by subsection 7.(i), (b) restriction or encumbrances that the
interest or title of such lessor or sublessor may be subject to, or (c)
subordination of the interest of the lessee or sublessee under such lease
to any restriction or encumbrance referred to in the preceding clause (b);
(vi) Liens arising from filing UCC financing statements relating
solely to leases permitted by this Agreement;
(vii) Liens in favor of customs and revenue authorities arising as a
matter of law to secure payment of customs duties in connection with the
importation of goods;
(viii) the rights of others under agreements or arrangements to the
extent expressly permitted by the terms of Sections 4(d) and 4(e) of the
Aircraft Chattel Mortgages;
(ix) Liens described in Schedule 7(b) annexed hereto;
(x) Liens granted pursuant to the Transaction Documents;
(xi) Liens arising pursuant to the Second Amended and Restated Credit
Agreement; and
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(xii) extensions, modifications, replacements and refinancings of any
of the foregoing.
"Permitted Extension Indebtedness" means renewals, extensions,
substitutions, refinancings or replacements (each an "extension") by Lessee of
any Indebtedness of Lessee, including any such successive transactions by
Lessee, so long as (i) any such Indebtedness bears interest at a rate which does
not exceed 15% per annum, (ii) any such Permitted Extension Indebtedness shall
be in a principal amount that does not exceed the principal amount immediately
prior to such extension, plus the amount of any premium required to be paid in
connection with such extension pursuant to the terms of such Indebtedness, plus
the amount of expenses of Lessee incurred in connection with such extension,
(iii) in the case of any extension of subordinated Indebtedness, such Permitted
Extension Indebtedness is made subordinate to the obligations of Lessee
hereunder at least to the same extent as the Indebtedness immediately prior to
such extension, (iv) such Permitted Extension Indebtedness has a final stated
maturity later than the end of the stated maturity of the Indebtedness being
extended immediately prior to such extension and (v) the amortization and the
other terms, provisions, conditions, covenants and events of default thereof
taken as a whole shall be no more onerous or restrictive from the perspective of
Lessee and its Subsidiaries or any less favorable, from the perspective of
Lessor and Lenders than those contained in the Indebtedness immediately prior to
such extension.
"Person" means and includes natural persons, corporations, limited
partnerships, general partnerships, joint stock companies, Joint Ventures,
associations, companies, trusts, banks, trust companies, land trusts, business
trusts or other organizations, whether or not legal entities, and governments
and agencies and political subdivisions thereof.
"Philippine Leases" means, (i) that certain Lease Agreement dated as of
February 23, 1995 by and between First Security Bank of Utah, National
Association and Philippine Airlines, Inc. as amended by an Amendment dated March
31, 1995, as modified pursuant to an acknowledgement dated December 31, 1996 by
and between Philippine Airlines and Lessee, and as assigned to Atlas Air, Inc.
pursuant to an Assignment and Acceptance of Lease dated December 31, 1996 as the
Lease Agreement may be further amended, restated, supplemented or otherwise
modified from time to time in accordance with this Agreement and (ii) that
certain Lease Agreement dated as of January 1, 1995 by and between Bankers Trust
Company and Philippine Airlines, Inc., as the Lease Agreement may be further
amended, restated, supplemented or otherwise modified from time to time in
accordance with this Agreement, as modified pursuant to an acknowledgement dated
May 12, 1997 by and between Philippine Airlines and Lessee, and as assigned to
Lessee pursuant to an Assignment and Acceptance of Lease dated May 12, 1997 as
the Lease Agreement may be further amended, restated, supplemented or otherwise
modified from time to time in accordance with this Agreement.
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"Potential Event of Default" means a condition or event that, after notice
or the expiration of any grace period or both, would constitute an Event of
Default under the Credit Agreement.
"Pro Forma Basis" means, with respect to compliance with any covenant
hereunder, compliance with such covenant after giving effect to any proposed
incurrence of Indebtedness by Lessee or any of its Subsidiaries and the
application of the proceeds thereof, the acquisition (whether by purchase,
merger or otherwise) or disposition (whether by sale, merger or otherwise) of
any company, entity or business or any asset (including any ACMI Contracted
Aircraft) by Lessee or any of its Subsidiaries or any other related action which
requires compliance on a Pro Forma Basis. In making any determination of
compliance on a Pro Forma Basis, such determination shall be performed after
good faith consultation with Lessor and Agent using the consolidated financial
statements of Lessee and its Subsidiaries which shall be reformulated as if any
such incurrence of Indebtedness and the application of proceeds, acquisition,
disposition or other related action had been consummated at the beginning of the
period specified in the covenant with respect to which Pro Forma Basis
compliance is required.
"Proceedings" has the meaning assigned to that term in subsection 6(a)(10).
"Release" means any release, spill, emission, leaking, pumping, pouring,
injection, escaping, deposit, disposal, discharge, dispersal, dumping, leaching
or migration of Hazardous Materials into the indoor or outdoor environment
(including, without limitation, the abandonment or disposal of any barrels,
containers or other closed receptacles containing any Hazardous Materials), or
into or out of any Facility, including the movement of any Hazardous Material
through the air, soil, surface water, groundwater or property.
"Rent" means Basic Rent and Supplemental Rent, collectively.
"Restricted Junior Payment" means (i) any dividend or other distribution,
direct or indirect, on account of any shares of any class of stock of Lessee now
or hereafter outstanding, except a dividend payable solely in shares of that
class of stock to the holders of that class, (ii) any redemption, retirement,
sinking fund or similar payment, purchase or other acquisition for value, direct
or indirect, of any shares of any class of stock of Lessee now or hereafter
outstanding, (iii) any payment made to retire, or to obtain the surrender of,
any outstanding warrants, options or other rights to acquire shares of any class
of stock of Lessee now or hereafter outstanding, and (iv) any payment or
prepayment of principal of, premium, if any, or interest on, or redemption,
purchase, retirement, defeasance (including in-substance or legal defeasance),
sinking fund or similar payment with respect to, any Designated Indebtedness.
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"S&P" means Standard & Poor's Corporation.
"Second Amended and Restated Credit Agreement" means the Second Amended and
Restated Credit Agreement, dated as of February 28, 1997, among Lessee, as
Borrower, the lenders listed therein, Xxxxxxx Xxxxx Credit Partners L.P., as
Syndication Agent, and Bankers Trust Company, as Agent, as amended by the First
Amendment thereto, dated as of April 25, 1997, and by the Second Amendment
thereto, dated as of May 29, 1997, but without giving effect to any further
amendments, modifications, supplements or waivers thereof.
"Securities" means any stock, shares, partnership interests, voting trust
certificates, certificates of interest or participation in any profit-sharing
agreement or arrangement, options, warrants, bonds, debentures, notes, or other
evidences of indebtedness, secured or unsecured, convertible, subordinated or
otherwise, or in general any instruments commonly known as "securities" or any
certificates of interest, shares or participations in temporary or interim
certificates for the purchase or acquisition of, or any right to subscribe to,
purchase or acquire, any of the foregoing.
"Services Agreement" means a Services Agreement between Lessor and Lessee
dated as of May 29, 1997.
"Solvent" means, with respect to any Person, that as of the date of
determination both (A) (i) the then fair saleable value of the property of such
Person is (y) greater than the total amount of liabilities (including contingent
liabilities) of such Person and (z) not less than the amount that will be
required to pay the probable liabilities on such Person's then existing debts as
they become absolute and matured considering all financing alternatives and
potential asset sales reasonably available to such Person; (ii) such Person's
capital is not unreasonably small in relation to its business or any
contemplated or undertaken transaction; and (iii) such Person does not intend to
incur, or believe (nor should it reasonably believe) that it will incur, debts
beyond its ability to pay such debts as they become due; and (B) such Person is
"solvent" within the meaning given that term and similar terms under applicable
laws relating to fraudulent transfers and conveyances. For purposes of this
definition, the amount of any contingent liability at any time shall be computed
as the amount that, in light of all of the facts and circumstances existing at
such time, represents the amount that can reasonably be expected to become an
actual or matured liability.
"Special Purpose Subsidiary" means a Subsidiary of Lessee formed solely for
the purpose of refinancing Indebtedness associated with a Financed Aircraft or
acquiring or refinancing other aircraft with Permitted Extension Indebtedness or
Other Permitted Indebtedness the only assets of which are such financed
aircraft, leases of such aircraft and contracts related to the modification of
such aircraft and contributions to capital of such Sub-
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sidiary, which together with all other contributions to capital made to other
such Subsidiaries, are not in excess of 15% of the consolidated book value of
the assets of the Lessee and its Subsidiaries, and the only liability of which
is the Permitted Extension Indebtedness or Other Permitted Indebtedness incurred
to refinance such Indebtedness; provided that Lessee beneficially owns and
controls at least 95% of the issued and outstanding capital stock of such
Subsidiary.
"Stipulated Loss Determination Date" shall mean each date referenced on the
schedule of Stipulated Loss Values set forth in Exhibit C to this Lease.
"Stipulated Loss Value" with respect to the Aircraft shall mean as of any
date, the amount set forth on Exhibit C opposite the Stipulated Loss
Determination Date immediately prior to such date, as such amount may be reduced
in accordance with Section 3(f) plus all accrued and unpaid interest on the
Loans relating to the Aircraft on the date of determination.
"Supplemental Rent" means all amounts, liabilities and obligations (other
than Basic Rent) which Lessee assumes or agrees to pay to Lessor or others under
any of the Transaction Documents, including payments of Stipulated Loss Value
and other amounts referred to in Section 3(c) of this Lease.
"Subsidiary" means, with respect to any Person, any corporation,
partnership, association, joint venture or other business entity of which more
than 50% of the total voting power of shares of stock or other ownership
interests entitled (without regard to the occurrence of any contingency) to vote
in the election of the Person or Persons (whether directors, managers, trustees
or other Persons performing similar functions) having the power to direct or
cause the direction of the management and policies thereof is at the time owned
or controlled, directly or indirectly, by that Person or one or more of the
other Subsidiaries of that Person or a combination thereof. For all purposes of
this Agreement other than the financial covenants set forth in subsection 7(f)
and the definitions related thereto, Lessor shall not be considered a Subsidiary
of Lessee.
"Tax" or "Taxes" shall have the meaning assigned to the term in Section
12(a) hereunder.
"Term" means the term for which the Aircraft is leased hereunder pursuant
to Section 3(a) of the Lease, beginning on the Initial Borrowing Date and ending
on the seventh anniversary of the Initial Borrowing Date, or such earlier date
as the Lease may be terminated in accordance with the terms thereof.
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"Transaction" means collectively (i) the termination by Atlas One of the
Atlas One Leases, (ii) the Dividend, (iii) the Contribution, (iv) the leasing by
Lessor to Lessee of the Aircraft and certain other aircraft pursuant to the
Leases, (v) the repayment of the Existing Indebtedness and (vi) the release and
termination of all security interests and Liens encumbering the Aircraft or any
part thereof or any other assets of Lessor.
"Transaction Documents" shall mean the Amendment to the Second Amended and
Restated Credit Agreement, any bills of sale or certificates of transfer for
each Aircraft (including bills of sale on AC Form 8050-2), the Leases, the
releases of the Atlas One Leases, all documents relating to the repayment of the
ING Obligations and the Lufthansa Obligations, the Loan Documents and all other
agreements and documentation executed and delivered in connection with the
Transaction, including, without limitation, in connection with the Dividend and
the Contribution.
"United States Citizen" means a "citizen of the United States" within the
meaning of the Federal Aviation Act.
"Unsecured Revolving Credit Facility" means that certain credit facility to
be entered into between Atlas Air, Inc. and Bank One, Colorado, N.A., which
provides for a $25,000,000 revolving working capital line of credit and a
$1,000,000 term real estate loan, as amended, restated, supplemented or
otherwise modified from time to time in accordance with the terms of this Lease.
SECTION 2. Acceptance and Lease. Subject to the satisfaction or waiver of
the conditions precedent contained in the Credit Agreement and the occurrence of
the Initial Borrowing Date, Lessor hereby agrees to lease to Lessee hereunder,
and Lessee hereby agrees to accept on the Initial Borrowing Date from Lessor
hereunder, the Aircraft as evidenced by the execution by Lessor and Lessee of a
Lease Supplement leasing the Aircraft hereunder. Lessee agrees to appoint in
writing one or more of its employees as its authorized representative to accept
delivery of the Aircraft pursuant to the terms hereof. Lessee hereby agrees that
acceptance of delivery by such employee or employees shall, without further act,
irrevocably constitute acceptance by Lessee of the Aircraft for all purposes of
this Lease Agreement.
SECTION 3. Term and Rent. (a) Term and Basic Rent. The Term shall commence
on the Initial Borrowing Date and end on the seventh anniversary of the Initial
Borrowing Date or such earlier date as this Lease may be terminated in
accordance with the provisions hereof. Basic Rent shall accrue during the Term
in accordance with Exhibit B hereto. Lessee shall pay to Lessor on each Basic
Rent Payment Date an amount of Basic Rent specified opposite each Basic Rent
Payment Date on Exhibit B hereto as such amounts
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may be adjusted pursuant to Section 3 plus accrued interest on Basic Rent
previously accrued but unpaid as specified on Exhibit B.
(b) Adjustments to Basic Rent. The Basic Rent shall be adjusted upwards on
each Basic Rent Payment Date by an amount, determined by Agent and notified to
Lessor and Lessee prior to the Basic Rent Payment Date, which represents the
amount of interest due and payable on the Loans relating to the Aircraft on such
Basic Rent Payment Date and determined in accordance with the Credit Agreement.
(c) Supplemental Rent. Lessee shall pay (or cause to be paid) to Lessor, or
to whomsoever shall be entitled thereto, any and all Supplemental Rent
constituting Stipulated Loss Value as the same shall become due and owing and
all other amounts of Supplemental Rent within 10 days after demand, and in the
event of any failure on the part of Lessee to pay any Supplemental Rent when
due, Lessor shall have all rights, powers and remedies provided for herein or by
law or equity or otherwise in the case of nonpayment of Basic Rent. Lessee also
will pay to Lessor, or to whomsoever shall be entitled thereto, as assignee of
Lessor, on demand, as Supplemental Rent, (i) interest at the Past Due Rate with
respect to any part of any installment of Basic Rent not paid when due for any
period for which the same shall be overdue and on any payment of Supplemental
Rent not paid when due for the period and, to the extent permitted by law, on
interest accrued on Basic Rent which itself was accrued and not paid to the
extent such accrued interest was not paid when due until the same shall be paid
and on any other amounts payable hereunder which are not paid when due and (ii)
all amounts payable by Lessor pursuant to subsections 2.6D, 2.7, 9.2 and 9.3 of
the Credit Agreement; provided, however, to the extent any Supplemental Rent
required to be paid pursuant to this clause (ii) of subsection 2(c) has been
paid by Lessee pursuant to the terms of another Lease, then Lessee's obligations
hereunder shall be deemed to be satisfied by the payments made pursuant to such
other Lease.
(d) Payments in General. All payments of Rent shall be made directly by
Lessee prior to 12:00 p.m. (New York time), to Lessor at its office at 000
Xxxxxxx Xxxxx, Xxxxxx, XX 00000, Attention: Xxxxxxx X. Xxxxxxx (or such other
office of Lessor in the continental United States or such other account as
Lessor shall direct in a notice to Lessee at least 10 Business Days prior to the
date such payment of Rent is due); provided that so long as any Obligations
remain outstanding, all Rent shall be paid directly to the Agent at the Funding
and Payment Office; provided, further, that to the extent the amount of Rent
paid directly to the Agent is in excess of the amount of principal and interest
on the Loans relating to the Aircraft and other unpaid Obligations (other than
principal and interest on other Loans relating to other aircraft leased pursuant
to the other Leases and after taking into account all other payments of rent
pursuant to the other Leases on such date), then such excess amounts shall be
paid by the Agent to Lessor at its above-referenced office.
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Notwithstanding anything to the contrary contained herein, if any date on
which a payment of Rent becomes due and payable is not a Business Day then such
payment shall be made on the next succeeding Business Day; provided, however, if
any date on which a payment of Rent becomes due is not a Business Day and is a
day of the month after which no further Business Day occurs in such month, the
payment of Rent shall be made on the next preceding Business Day. No interest
shall accrue on the amount of any payment made on the Business Day next
succeeding the regularly scheduled Basic Rent Payment Date, if such payment is
made on such next succeeding Business Day because the original date of payment
was not a Business Day (it being understood that the amount of Basic Rent
includes Rent for such day).
(e) Minimum Rent. Anything herein to the contrary notwithstanding,
(i) each installment of Basic Rent, whether or not such installment
has been adjusted pursuant to Section 3(b), together with all prior Basic
Rent due and payable on such date and all accrued interest thereon shall
be, under all circumstances and in any event, in an amount at least
sufficient for Lessor to pay in full principal and interest on the Loans
relating to the Aircraft required to be paid by Lessor on or within five
Business Days of the due date of such installment of Basic Rent; and
(ii) payments of Stipulated Loss Value shall be, under any
circumstances and in any event, in an amount which (when taken together
with any other Basic Rent due and payable in connection therewith) is at
least equal to, as of the date of payment, the sum of the aggregate unpaid
principal of and accrued interest on the Loans relating to the Aircraft and
all other unpaid Obligations of Lessor (other than principal and interest
on Loans relating to other Aircraft and after taking into account all other
payments of Stipulated Loss Value pursuant to the other Leases on such
date).
(f) Prepayment of Rent Payments:
(i) In the event that Lessor is at any time required to repay Loans
relating to the Aircraft pursuant to Section 2.4C(ii) of the Credit
Agreement, Lessor shall notify Lessee of such required prepayment and
Lessee shall immediately prepay an amount of Basic Rent equal to the amount
of such required prepayment less any required payments of the Loans
relating to the Aircraft actually made by the Lessor from Insurance
Proceeds or Condemnation Proceeds (as each such term is defined in the
Credit Agreement) received directly by the Lessor.
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(ii) The Lessee shall also be permitted to voluntarily prepay Basic
Rent at any time and from time to time, without premium or penalty upon not
less than three Business Days prior to written or telephonic notice to
Lessor and Agent.
(iii) In the event of any prepayment pursuant to this Section
3(f)(ii), the schedules of Basic Rent and Stipulated Loss Value, shall be
adjusted so as to preserve the after tax yield and after tax cash flows of
the Lessor and, to the extent consistent therewith, to minimize the net
present value of Basic Rent payments. All such computations shall be made
on the basis of the same assumptions and the method of computations
employed in the original calculations of Basic Rent and Stipulated Loss
Values (except to the extent such assumptions have been changed as a result
of such prepayment or any prior such adjustment). At the Lessee's written
request, independent public accountants mutually selected by the Lessor and
the Lessee shall confirm the required adjustments. The final determination
of any adjustment hereunder shall be set forth in amendments to this Lease,
executed and delivered by the Lessor, the Lessee and consented to by the
Agent. The reasonable fees, cost and expenses of the verifying accounting
firm shall be paid by the Lessee.
Anything contained in the foregoing to the contrary notwithstanding,
after giving effect to the foregoing such adjustments the revised Basic
Rent and Stipulated Loss Values shall permit to the Lessee to comply with
Section 3(e) hereof.
SECTION 4. Certain Representations and Warranties. LESSEE ACKNOWLEDGES AND
AGREES THAT AS BETWEEN LESSOR AND LESSEE (A) THE AIRFRAME AND EACH ENGINE ARE OF
A SIZE, DESIGN, CAPACITY AND MANUFACTURE SELECTED BY AND ACCEPTABLE TO LESSEE
AND LESSEE TAKES THE SAME "AS IS", (B) LESSEE IS SATISFIED THAT THE AIRFRAME AND
EACH ENGINE ARE SUITABLE FOR ITS PURPOSES, (C) LESSOR IS NOT A MANUFACTURER OR A
DEALER IN PROPERTY OF SUCH KIND, AND (D) NEITHER LESSOR NOR THE AGENT NOR ANY
LENDER MAKES, HAS MADE OR SHALL BE DEEMED TO HAVE MADE, AND EACH WILL BE DEEMED
TO HAVE EXPRESSLY DISCLAIMED, ANY REPRESENTATION OR WARRANTY, EXPRESS OR
IMPLIED, AS TO THE TITLE, AIRWORTHINESS, VALUE, CONDITION, DESIGN, OPERATION,
MERCHANTABILITY OR FITNESS FOR USE FOR A PARTICULAR PURPOSE OF THE AIRCRAFT OR
ANY PART THEREOF, AS TO THE ABSENCE OF LATENT OR OTHER DEFECTS, WHETHER OR NOT
DISCOVERABLE, AS TO THE ABSENCE OF ANY INFRINGEMENT OF ANY PATENT, TRADEMARK OR
COPYRIGHT, AS TO THE ABSENCE OF OBLIGATIONS BASED ON STRICT LIABILITY IN TORT,
OR ANY OTHER REPRESENTATION OR WARRANTY WHATSOEVER, EXPRESS OR IMPLIED, WITH
RESPECT TO THE AIRCRAFT OR ANY PART THEREOF, except that Lessor covenants that
it will not, through its own actions or
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inactions, in such capacity, interfere in Lessee's quiet enjoyment of the
Aircraft unless this Lease shall have been declared or deemed to have been
declared in default pursuant to Section 17 hereof. None of the provisions of
this Section 4 or any other provision of this Lease shall be deemed to amend,
modify or otherwise affect the representations, warranties or other obligations
(express or implied) of any manufacturer, any affiliate thereof, any
subcontractor or supplier of any manufacturer or any affiliate thereof, with
respect to the Airframe, Engines, or any Parts, or to release the manufacturer,
any affiliate thereof, or any such subcontractor or supplier from any such
representation, warranty or obligation. Unless a Default or Lease Event of
Default shall have occurred and be continuing, Lessor agrees to make available
to Lessee such rights as Lessor may have under any warranty with respect to the
Aircraft made by the manufacturer or any affiliate thereof or any of its
subcontractors or suppliers and any other claims against the manufacturer or any
affiliate thereof, or any such subcontractor or supplier with respect to the
Aircraft, all pursuant to and in accordance with the terms of any applicable
purchase agreements or warranty agreements.
SECTION 5. Lessee's Representations and Warranties. In order to induce
Lessor to enter into this Lease and Agent and the Lenders to make the Loans
under the Credit Agreement, Lessee represents and warrants to the Lessor, Agent
and each Lender on the date of this Lease that the following statements are
true, correct and complete:
(a) Organization, Powers, Qualification, Good Standing, Business and
Subsidiaries.
(i) Organization and Powers. Lessee is a corporation duly organized,
validly existing and in good standing under the laws of the State of Delaware.
Lessee has all requisite corporate power and authority to own and operate its
properties, to carry on its business as now conducted and as proposed to be
conducted, to enter into this Lease and the other Transaction Documents and to
carry out the transactions contemplated hereby and thereby.
(ii) Qualification and Good Standing. Lessee is qualified to do business
and in good standing in every jurisdiction where its assets are located and
wherever necessary to carry out its business and operations, except in
jurisdictions where the failure to be so qualified or in good standing has not
had and will not have a Material Adverse Effect.
(iii) Subsidiaries. All of the Subsidiaries of Lessee as of the Initial
Borrowing Date are identified on Schedule 5(a)(iii) annexed hereto. The capital
stock of each of the Subsidiaries of Lessee identified in Schedule 5(a)(iii)
annexed hereto (as so supplemented) is duly authorized, validly issued, fully
paid and nonassessable and none of such capital stock constitutes Margin Stock.
Each of the Subsidiaries of Lessee identified in Schedule 5(a)(iii) annexed
hereto is a corporation duly organized, validly existing and in good stand-
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ing under the laws of its respective jurisdiction of incorporation set forth
therein, has all requisite corporate power and authority to own and operate its
properties and to carry on its business as now conducted and as proposed to be
conducted, and is qualified to do business and in good standing in every
jurisdiction where its assets are located and wherever necessary to carry out
its business and operations, in each case except where failure to be so
qualified or in good standing or a lack of such corporate power and authority
has not had and will not have a Material Adverse Effect. Schedule 5(a)(iii)
annexed hereto correctly sets forth the ownership interest of Lessee and each of
its Subsidiaries in each of the Subsidiaries of Lessee identified therein.
(b) Authorization of Transaction Documents, etc.
(i) Authorization of Transaction Documents. The execution, delivery and
performance of this Lease and the other Transaction Documents have been duly
authorized by all necessary corporate action on the part of Lessee or its
Subsidiaries, as the case may be.
(ii) No Conflict. The execution, delivery and performance by Lessee or its
Subsidiaries, as the case may be, of this Lease and the other Transaction
Documents and the consummation of the transactions contemplated by the
Transaction Documents do not and will not (i) violate any provision of any law
or any governmental rule or regulation applicable to Lessee or any of its
Subsidiaries, the Certificate or Articles of Incorporation or Bylaws of Lessee
or any of its Subsidiaries or any order, judgment or decree of any court or
other agency of government binding on Lessee or any of its Subsidiaries, (ii)
conflict with in any material respect, result in a material breach of or
constitute (with due notice or lapse of time or both) a material default under
any material Contractual Obligation of Lessee or any of its Subsidiaries, (iii)
result in or require the creation or imposition of any Lien upon any of the
properties or assets of Lessee or any of its Subsidiaries (other than any Liens
created under this Lease or any of the other Transaction Documents in favor of
the Agent on behalf of the Lenders), or (iv) require any approval of
stockholders or any approval or consent of any Person under any Contractual
Obligation of Lessee or any of its Subsidiaries, except for such approvals or
consents which will be obtained on or before the Initial Borrowing Date and
disclosed in writing to Lessor and Lenders.
(iii) Governmental Consents. The execution, delivery and performance by the
Lessee and its Subsidiaries, as the case may be, of this Lease and the other
Transaction Documents and the consummation of the transactions contemplated by
this Lease and the other Transaction Documents do not and will not require any
registration with, consent or approval of, or notice to, or other action to,
with or by, any federal, state or other governmental authority or regulatory
body which has not been obtained or made on or prior to the date required to be
obtained or made.
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(iv) Binding Obligation. This Lease and each of the other Transaction
Documents has been duly executed and delivered by Lessee and its Subsidiaries,
as the case may be, to the extent it is a party thereto, and is the legally
valid and binding obligation of each such Person, enforceable against each such
Person in accordance with its respective terms, except as may be limited by
bankruptcy, insolvency, reorganization, moratorium or similar laws relating to
or limiting creditors' rights generally or by equitable principles relating to
enforceability.
(c) Financial Condition.
(A) Lessee has heretofore delivered to Lessor, Agent and Lenders, the
following financial statements and information: (i) the audited consolidated and
consolidating balance sheets of Lessee and its Subsidiaries as at December 31,
1996, and the related consolidated and consolidating statements of income,
stockholders' equity and cash flows of Lessee and its Subsidiaries for the
fiscal year then ended, (ii) the unaudited consolidated and consolidating
balance sheets of Lessee and its Subsidiaries as at March 31, 1997 and the
related unaudited consolidated and consolidating statements of income,
stockholders' equity and cash flows of Lessee and its Subsidiaries for the three
months then ended. All such statements were prepared in conformity with GAAP and
fairly present the financial position (on a consolidated and, where applicable,
consolidating basis) of the entities described in such financial statements as
at the respective dates thereof and the results of operations and cash flows (on
a consolidated and, where applicable, consolidating basis) of the entities
described therein for each of the periods then ended, subject, in the case of
any such unaudited financial statements, to changes resulting from audit and
normal year-end adjustments. Neither Lessee nor any of its Subsidiaries has (and
will not following the Initial Borrowing Date) have any Contingent Obligation,
contingent liability or liability for taxes, long-term lease or unusual forward
or long-term commitment that is not reflected in the foregoing financial
statements or the notes thereto and which in any such case is material in
relation to the business, operations, properties, assets, condition (financial
or otherwise) or prospects of Lessee or any of its Subsidiaries.
(B) Except as fully disclosed in the financial statements delivered
pursuant to Section 5(c)(A), there were as of the Initial Borrowing Date no
liabilities or obligations with respect to Lessee and its Subsidiaries of any
nature whatsoever (whether absolute, accrued, contingent or otherwise and
whether or not due) which, either individually or in aggregate, could reasonably
be expected to be material to Lessee and its Subsidiaries taken as a whole. As
of the Initial Borrowing Date, Lessee does not know of any basis for the
assertion against it of any liability or obligation of any nature whatsoever
that is not fully disclosed in the financial statements delivered pursuant to
Section 5(c)(A) which, either individually or in the aggregate, could reasonably
be expected to be material to Lessee and its Subsidiaries taken as a whole.
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(d) No Material Adverse Change; No Restricted Junior Payments.
Since March 31, 1997, no event or change has occurred that has caused or
evidences, either in any case or in the aggregate, a Material Adverse Effect.
Since March 31, 1997, neither Lessee nor any of its Subsidiaries has directly or
indirectly declared, ordered, paid or made, or set apart any sum or property
for, any Restricted Junior Payment or agreed to do so, except as permitted by
subsection 7(e) hereunder.
(e) Title to Properties, Liens.
Lessee and its Subsidiaries have (i) good, sufficient and legal title to
(in the case of fee interests in real property), (ii) valid leasehold interests
in (in the case of leasehold interests in real or personal property), or (iii)
good title to (in the case of all other personal property), all of the
properties and assets reflected in the financial statements referred to in
subsection 5(c) or in the most recent financial statements delivered pursuant to
subsection 6(a), in each case except for assets disposed of since the date of
such financial statements in the ordinary course of business or as otherwise
permitted under subsection 7(g). Except as permitted by this Lease, all such
properties and assets are free and clear of Liens.
(f) Litigation, Adverse Facts.
There are no actions, suits, proceedings, arbitrations or governmental
investigations (whether or not purportedly on behalf of Lessee or any of its
Subsidiaries) at law or in equity or before or by any federal, state, municipal
or other governmental department, commission, board, bureau, agency or
instrumentality, domestic or foreign, pending or, to the knowledge of Lessee,
threatened against or affecting Lessee or any of its Subsidiaries or any
property of Lessee or any of its Subsidiaries that, individually or in the
aggregate, could reasonably be expected to result in a Material Adverse Effect.
Neither Lessee nor any of its Subsidiaries is (i) in violation of any applicable
laws that, individually or in the aggregate, could reasonably be expected to
result in a Material Adverse Effect or (ii) subject to or in default with
respect to any final judgments, writs, injunctions, decrees, rules or
regulations of any court or any federal, state, municipal or other governmental
department, commission, board, bureau, agency or instrumentality, domestic or
foreign, that, individually or in the aggregate, could reasonably be expected to
result in a Material Adverse Effect.
(g) Payment of Taxes.
Except to the extent permitted by subsection 6(c), all tax returns and
reports of Lessee and its Subsidiaries required to be filed by any of them have
been timely filed, and all taxes, assessments, fees and other governmental
charges upon Lessee and its Subsidiaries
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and upon their respective properties, assets, income, businesses and franchises
which are due and payable have been paid when due and payable. Lessee does not
know of any proposed tax assessment against Lessee or any of its Subsidiaries
which is not being actively contested by Lessee or such Subsidiary in good faith
and by appropriate proceedings; provided that such reserves or other appropriate
provisions, if any, for liabilities for taxes as shall be required in conformity
with GAAP shall have been made or provided in the financial statements of
Lessee. There are no agreements with respect to taxes between Lessee and any tax
agency or authority.
(h) Performance of Agreements.
Neither Lessee nor any of its Subsidiaries is in default in the
performance, observance or fulfillment of any of the obligations, covenants or
conditions contained in any of its Contractual Obligations, and no condition
exists that, with the giving of notice or the lapse of time or both, would
constitute such a default, except where the consequences, direct or indirect, of
such default or defaults, if any, would not have a Material Adverse Effect.
(i) Governmental Regulation.
Neither Lessee nor any of its Subsidiaries is subject to regulation under
the Public Utility Holding Company Act of 1935, the Federal Power Act, the
Interstate Commerce Act or the Investment Company Act of 1940 or under any other
federal or state statute or regulation which may limit its ability to incur
Indebtedness or which may otherwise render all or any portion of its obligations
under the Transaction Documents unenforceable.
(j) Employee Benefit Plans.
Lessee maintains a qualified retirement plan under Section 401(k) of the
Internal Revenue Code and a medical benefit plan. Lessee's 401(k) Plan has no
unfunded liabilities in excess of $10,000,000, and Lessee is in compliance with
all applicable provisions and requirements of ERISA and the regulations and
published interpretations thereunder with respect to each Employee Benefit Plan
and has performed all its obligations under such Employee Benefit Plan in all
material respects. Lessee has no Employee Benefit Plans, other than its 401(k)
Plan and the medical benefit plan. The Lessee has no ERISA Affiliates that
sponsor, maintain, contribute to or are liable with respect to any Employee
Benefit Plans.
(k) Certain Fees.
No broker's or finder's fee or commission will be payable with respect to
this Lease or other Transaction Documents or any of the transactions
contemplated hereby.
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(l) Environmental Protection.
(i) All facilities and operations of the Lessee and its Subsidiaries are,
and have been to the best of Lessee's knowledge, in compliance in all material
respects with all applicable Environmental Laws.
(ii) There are no, and have been no, conditions, occurrences, or Hazardous
Materials Activity, (a) arising at any facilities owned or operated by Lessee or
(b) arising in connection with the operations of Lessee or any of its
Subsidiaries (including the transportation of Hazardous Materials), which
conditions, occurrences or Hazardous Materials Activity could reasonably be
expected to form the basis of an Environmental Claim against Lessee and which,
individually or in the aggregate, could reasonably be expected to have a
Material Adverse Effect.
(iii) To the best of Lessee's knowledge, there are no pending or threatened
Environmental Claims against Lessee or any of its Subsidiaries, and neither
Lessee nor any of its Subsidiaries has received no written notices, inquiries,
or requests for information with respect to any Environmental Claims.
(m) Employee Matters.
There is no strike or work stoppage in existence or threatened involving
Lessee or any of its Subsidiaries that could reasonably be expected to have a
Material Adverse Effect.
(n) Solvency.
Lessee and each of its Subsidiaries is and, upon the incurrence of any
obligations by Lessee under the Leases, will be, after giving effect to the
transactions contemplated hereby, Solvent.
(o) Disclosure.
No representation or warranty of Lessee or any of its Subsidiaries
contained in this Lease or any other Transaction Document or in any other
document, certificate or written statement furnished to Lessor, Agent or Lenders
by or on behalf of Lessee or any of its Subsidiaries for use in connection with
the transactions contemplated by this Lease and the other Transaction Documents
contains any untrue statement of a material fact or omits to state a material
fact (known to Lessee, in the case of any document not furnished by it)
necessary in order to make the statements contained herein or therein not
misleading in light of the circumstances in which the same were made. Any
projections and pro forma financial information contained in such materials are
based upon good faith estimates and assumptions believed by Lessee to be
reasonable at the time made, it being recognized by Lessor,
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Agent and Lenders that such projections as to future events are not to be viewed
as facts and that actual results during the period or periods covered by any
such projections may differ from the projected results. There are no facts known
(or which should upon the reasonable exercise of diligence be known) to Lessee
(other than matters of a general economic nature) that, individually or in the
aggregate, could reasonably be expected to result in a Material Adverse Effect
and that have not been disclosed herein or in such other documents, certificates
and statements furnished to Lessor, Agent and Lenders for use in connection with
the transactions contemplated hereby.
SECTION 6. Lessee's Affirmative Covenants. Lessee covenants and agrees
that, so long as any amounts under this Lease remain unpaid, Lessee shall
perform, and will cause each of its Subsidiaries to perform, all covenants in
this Section 6.
(a) Financial Statements and Other Reports.
Lessee will maintain, and cause each of its Subsidiaries to maintain, a
system of accounting established and administered in accordance with sound
business practices to permit preparation of financial statements in conformity
with GAAP. Lessee will deliver to Lessor, Agent and Lenders:
(1) Monthly Financials: within 30 days after the end of each month
ending after the Initial Borrowing Date, financial statements prepared by
Lessee in the ordinary course of business certified by the chief financial
officer of Lessee that they fairly present the financial condition of
Lessee and its Subsidiaries for such month, subject to changes resulting
from audit and normal year-end adjustments; provided, however, such monthly
financial statements shall only be required to be delivered to Agent to the
extent such monthly financial statements are required to be delivered under
the Second Amended and Restated Credit Agreement as such agreement may be
amended, modified, supplemented, renewed or refinanced from time to time;
(2) Quarterly Financials: as soon as available and in any event within
45 days after the end of each fiscal quarter of each fiscal year, (a) the
consolidated and consolidating balance sheets of Lessee and its
Subsidiaries as at the end of such fiscal quarter and the related
consolidated and consolidating statements of income, stockholders' equity
and cash flows of Lessee and its Subsidiaries for such fiscal quarter and
for the period from the beginning of the then current fiscal year to the
end of such fiscal quarter, setting forth in each case in comparative form
the corresponding figures for the corresponding periods of the previous
fiscal year and the corresponding figures from the consolidated plan and
financial forecast for the current fiscal year delivered pursuant to
subsection 6(a)(12)), all in reasonable detail
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and certified by the chief financial officer of Lessee that they fairly
present the financial condition of Lessee and its Subsidiaries as at the
dates indicated and the results of their operations and their cash flows
for the periods indicated, subject to changes resulting from audit and
normal year-end adjustments, and (b) a narrative report describing the
operations of Lessee and its Subsidiaries in the form prepared for
presentation to senior management for such fiscal quarter and for the
period from the beginning of the then current fiscal year to the end of
such fiscal quarter; provided that delivery of Lessee's Form 10-Q for such
fiscal quarter shall be deemed to satisfy the requirements of this
subsection 6(a)(2);
(3) Year-End Financials: as soon as available and in any event within
90 days after the end of each fiscal year, (a) the consolidated and
consolidating balance sheets of Lessee and its Subsidiaries as at the end
of such fiscal year and the related consolidated and consolidating
statements of income, stockholders' equity and cash flows of Lessee and its
Subsidiaries for such fiscal year, setting forth in each case in
comparative form the corresponding figures for the previous fiscal year and
the corresponding figures from the consolidated plan and financial forecast
delivered pursuant to subsection 6(a)(12) for the fiscal year covered by
such financial statements, all in reasonable detail and certified by the
chief financial officer of Lessee that they fairly present the financial
condition of Lessee and its Subsidiaries as at the dates indicated and the
results of their operations and their cash flows for the periods indicated,
(b) a narrative report describing the operations of Lessee and its
Subsidiaries in the form prepared for presentation to senior management for
such fiscal year, and (c) in the case of such consolidated financial
statements, a report thereon of Xxxxxx Xxxxxxxx LLP or other independent
certified public accountants of recognized national standing selected by
Lessee and satisfactory to Lessor and Agent, which report shall be
unqualified, shall express no doubts about the ability of Lessee and its
Subsidiaries to continue as a going concern, and shall state that such
consolidated financial statements fairly present the consolidated financial
position of Lessee and its Subsidiaries as at the dates indicated and the
results of their operations and their cash flows for the periods indicated
in conformity with GAAP applied on a basis consistent with prior years
(except as otherwise disclosed in such financial statements) and that the
examination by such accountants in connection with such consolidated
financial statements has been made in accordance with generally accepted
auditing standards; provided that delivery of Lessee's Form 10-K for such
fiscal year shall be deemed to satisfy the requirements of clauses (a) and
(b) of this subsection 6(a)(3);
(4) Officers' and Compliance Certificates: together with each delivery
of financial statements of Lessee and its Subsidiaries pursuant to
subdivisions (2) and (3) above after the Initial Borrowing Date, (a) an
Officers' Certificate of Lessee
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stating that the signers have reviewed the terms of this Lease and have
made, or caused to be made under their supervision, a review in reasonable
detail of the transactions and condition of Lessee and its Subsidiaries
during the accounting period covered by such financial statements and that
such review has not disclosed the existence during or at the end of such
accounting period, and that the signers do not have knowledge of the
existence as at the date of such Officers' Certificate, of any condition or
event that constitutes a Default or Lease Event of Default, or, if any such
condition or event existed or exists, specifying the nature and period of
existence thereof and what action Lessee has taken, is taking and proposes
to take with respect thereto; and (b) a Compliance Certificate
demonstrating in reasonable detail compliance during and at the end of the
applicable quarterly and annual accounting periods with the restrictions
contained in Section 7;
(5) Pricing Certificates: On or after the third anniversary of the
Initial Borrowing Date, a certificate setting forth the credit rating on
Lessee's obligations under the Pass Through Trust Documents, (a) together
with each delivery of financial statements of Lessee pursuant to
subdivisions (2) and (3) above, (b) within one Business Day after any
public release by S&P or Xxxxx'x lowering its credit rating on Lessee's
obligations under the Pass Through Trust Documents and (c) at such
additional times as Lessee may elect;
(6) Accountants' Certification: together with each delivery of
consolidated financial statements of Lessee and its Subsidiaries pursuant
to subdivision (3) above, a written statement by the independent certified
public accountants giving the report thereon (a) stating that their audit
examination has included a review of the terms of this Lease and the other
Transaction Documents as they relate to accounting matters, (b) stating
whether, in connection with their audit examination, any condition or event
that constitutes a Default or Lease Event of Default has come to their
attention and, if such a condition or event has come to their attention,
specifying the nature and period of existence thereof; provided that such
accountants shall not be liable by reason of any failure to obtain
knowledge of any such Default or Lease Event of Default that would not be
disclosed in the course of their audit examination, and (c) stating that
based on their audit examination nothing has come to their attention that
causes them to believe either or both that the information contained in the
certificates delivered therewith pursuant to subdivision (4) above is not
correct or that the matters set forth in the Compliance Certificates
delivered therewith pursuant to clause (b) of subdivision (4) above for the
applicable fiscal year are not stated in accordance with the terms of this
Lease;
(7) Accountants' Reports: promptly upon receipt thereof (unless
restricted by applicable professional standards), copies of all reports
submitted to Les-
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see by independent certified public accountants in connection with each
annual, interim or special audit of the financial statements of Lessee and
its Subsidiaries made by such accountants, including, without limitation,
any comment letter submitted by such accountants to management in
connection with their annual audit;
(8) SEC Filings: promptly upon their becoming available, copies of (a)
all financial statements, reports, notices and proxy statements sent or
made available generally by Lessee to its security holders, (b) all regular
and periodic reports and all registration statements (other than on Form
S-8 or a similar form) and prospectuses, if any, filed by Lessee or any of
its Subsidiaries with any securities exchange or with the Securities and
Exchange Commission or any governmental or private regulatory authority;
(9) Lease Events of Default, etc.: promptly upon any officer of Lessee
obtaining knowledge (a) of any condition or event that constitutes a
Default or Lease Event of Default, (b) that any Person has given any notice
to Lessee or any of its Subsidiaries or taken any other action with respect
to a claimed default or event or condition of the type referred to in
subsection 16(1), (c) of any condition or event that would be required to
be disclosed in a current report filed by Lessee with the Securities and
Exchange Commission on Form 8-K (Items 1, 2, 4, 5 and 6 of such Form as in
effect on the date hereof) if Lessee were required to file such reports
under the Exchange Act, or (d) of the occurrence of any event or change
that has caused or evidences, either in any case or in the aggregate, a
Material Adverse Effect, an Officers' Certificate specifying the nature and
period of existence of such condition, event or change, or specifying the
notice given or action taken by any such Person and the nature of such
claimed Lease Event of Default, Default, default, event or condition, and
what action Lessee has taken, is taking and proposes to take with respect
thereto;
(10) Litigation or Other Proceedings: (a) promptly upon any officer of
Lessee obtaining knowledge of (X) the institution of, or non-frivolous
threat of, any action, suit, proceeding (whether administrative, judicial
or otherwise), governmental investigation or arbitration against or
affecting Lessee or any of its Subsidiaries or any property of Lessee or
any of its Subsidiaries (collectively, "Proceedings") not previously
disclosed in writing by Lessee to Lessor and Lenders or (Y) any material
development in any Proceeding that, in any case:
(I) if adversely determined, has a reasonable possibility of
giving rise to a Material Adverse Effect; or
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(II) seeks to enjoin or otherwise prevent the consummation of, or
to recover any damages or obtain relief as a result of, the
transactions contemplated hereby and under the other Transaction
Documents;
written notice thereof together with such other information as may be
reasonably available to Lessee to enable Lessor and Lenders and their
counsel to evaluate such matters; and (b) within twenty days after the end
of each fiscal quarter of Lessee, a schedule of all Proceedings involving
an alleged liability of, or claims against or affecting, Lessee or any of
its Subsidiaries equal to or greater than $1,000,000 and promptly after
request by Lessor and Agent such other information as may be reasonably
requested by Lessor and Agent to enable Agent and their counsel to evaluate
any of such Proceedings;
(11) ERISA Notices: with reasonable promptness, copies of (a) each
annual report (Form 5500 Series) filed by Lessee or any of its ERISA
Affiliates with the Internal Revenue Service with respect to each Employee
Benefit Plan, (b) any notices received by Lessee or any of its ERISA
Affiliates with respect to a "multiemployer plan," within the meaning of
Section 4001(a)(3) of ERISA, and (c) such other documents or governmental
reports or filings relating to any Employee Benefit Plan as Lessor or Agent
shall reasonably request;
(12) Financial Plans and Projections: as soon as practicable after
preparation thereof by Lessee in the normal course of business, Lessee
shall provide copies of its financial plans and projections and at the
reasonable request of Lessor and Agent an opportunity for Lessor and
Lenders to question and discuss such materials with the Chief Financial
Officer of Lessee; provided that, at the request of Lessee, all copies of
such financial plans and projections shall be returned to Lessee after
review thereof and the completion of such discussion;
(13) Environmental Audits and Reports: as soon as practicable
following receipt thereof, copies of all environmental audits and reports,
whether prepared by personnel of Lessee or any of its Subsidiaries or by
independent consultants, with respect to significant environmental matters
at any facility or which relate to an Environmental Claim which could
result in a Material Adverse Effect; and
(14) Other Information: with reasonable promptness, such other
information and data with respect to Lessee or any of its Subsidiaries as
from time to time may be reasonably requested by Lessor or Agent.
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(b) Corporate Existence.
Except as permitted under subsection 7(g) hereunder, Lessee will, and will
cause each of its Subsidiaries to, at all times preserve and keep in full force
and effect its corporate existence and all rights and franchises material to its
business; provided, however, that the corporate existence of any such Subsidiary
may be terminated if such termination is in the interests of Lessee and its
Subsidiaries and is not materially disadvantageous to Lessor or to any assignee
of the Lease. Lessee will at all times maintain its corporate existence as a
United States Citizen.
(c) Payment of Taxes and Claims; Tax Consolidation.
(i) Lessee will, and will cause its Subsidiaries to, pay all taxes,
assessments and other governmental charges imposed upon it or any of its
properties or assets or in respect of any of its income, businesses or
franchises before any penalty, fine or interest accrues thereon, and all claims
(including, without limitation, claims for labor, services, materials and
supplies) for sums that have become due and payable and that by law have or may
become a Lien upon any of its properties or assets, prior to the time when any
penalty fine or interest shall be incurred with respect thereto; provided that
no such charge or claim need be paid if being contested in good faith by
appropriate proceedings promptly instituted and diligently conducted and if such
reserve or other appropriate provision, if any, with respect to any liability
for taxes, as shall be required in conformity with GAAP shall have been made
therefor in the financial statements of the Lessee.
(ii) Lessee will not, and will not permit any of its Subsidiaries to, file
or consent to the filing of any consolidated income tax return with any Person
(other than any Subsidiary of Lessor or Lessee).
(d) Maintenance of Properties; Insurance.
Lessee will, and will cause its Subsidiaries to, maintain or cause to be
maintained in good repair, working order and condition, ordinary wear and tear
excepted, all material properties used or useful in the business of Lessee and
its Subsidiaries and from time to time will make or cause to be made all
appropriate repairs, renewals and replacements thereof. Lessee will maintain or
cause to be maintained, with financially sound and reputable insurers, insurance
with respect to its properties and business and the properties and businesses of
its Subsidiaries against loss or damage (including, without limitation, flood
insurance, if necessary or advisable) of the kinds customarily carried or
maintained under similar circumstances by corporations of established reputation
engaged in similar businesses.
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(e) Inspection; Lender Meeting.
Lessee will, and will cause its Subsidiaries to, permit any authorized
representatives designated by Lessor, Agent or any Lender to visit and inspect
any of the properties of Lessee or any of its Subsidiaries, including the
Aircraft or any part thereof and any Engine, and its and their financial and
accounting records, and to make copies and take extracts therefrom, and to
discuss its and their affairs, finances and accounts with its and their officers
and independent public accountants (provided that Lessee may, if it so chooses,
be present at or participate in any such discussion), all upon reasonable notice
and at such reasonable times during normal business hours and as often as may be
reasonably requested; provided that so long as no Lease Event of Default shall
have occurred and be continuing, such inspection shall not be disruptive to
Lessee's business, as reasonably determined by Lessee. Without in any way
limiting the foregoing, Lessee will, upon the request of Lessor or Agent,
participate in a meeting of Agent and Lenders once during each fiscal year to be
held at Lessee's corporate offices (or such other location as may be agreed to
by Lessee, Lessor and Agent) at such time as may be agreed to by Lessee, Lessor
and Agent.
(f) Compliance with Laws, etc.
Lessee will, and will cause its Subsidiaries to, comply with the
requirements of all applicable laws, rules, regulations and orders of any
governmental authority (including, without limitation, Environmental Laws),
noncompliance with which could reasonably be expected to cause a Material
Adverse Effect. Lessee shall not conduct, and shall not permit the conduct of,
any Hazardous Materials Activity at any facility or at any other location which
could reasonably be expected to form the basis of an Environmental Claim against
Lessee and which could reasonably be expected to have a Material Adverse Effect.
(g) Lessee's Remedial Action Regarding Hazardous Materials.
Lessee will promptly take, and will cause each of its Subsidiaries promptly
to take, any and all necessary remedial action in connection with the presence,
storage, use, disposal, transportation or Release of any Hazardous Materials on,
under or about any facility in order to comply with all applicable Environmental
Laws and Governmental Authorizations. In the event Lessee or any of its
Subsidiaries undertakes any remedial action with respect to any Hazardous
Materials on, under or about any facility, Lessee or such Subsidiary will
conduct and complete such remedial action in compliance with all applicable
Environmental Laws, and in accordance with the policies, orders and directives
of all federal, state and local governmental authorities except when, and only
to the extent that, Lessee's or such Subsidiary's liability for such presence,
storage, use, disposal, transportation or discharge of any Hazardous Materials
is being contested in good faith by Lessee or such Subsidiary. Notwithstanding
anything to the contrary contained in this Lease, Lessee and
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its Subsidiaries may engage in the transportation of Hazardous Materials in the
ordinary course of business so long as such is conducted in compliance with all
applicable Environmental Laws, and all other applicable laws, policies, orders,
directives and regulations.
(h) Employee Benefit Plans.
Lessee will not establish or permit to be established any Employee Benefit
Plans for Lessee or any of its employees and will not permit any ERISA Affiliate
to establish any Employee Benefit Plan which, in either case, could reasonably
be expected to result in a liability for Lessee, under Title IV of ERISA or the
minimum funding standards of Part 3 of Subtitle B of Title I of ERISA, in excess
of $20 million.
SECTION 7. Lessee's Negative Covenants. Lessee covenants and agrees that,
so long as any amounts remain owing under this Lease, Lessee shall perform, and
shall cause each of its Subsidiaries to perform, all covenants in this Section
7.
(a) Indebtedness.
Lessee shall not, and shall not permit any of its Subsidiaries to, directly
or indirectly, create, incur, assume or guaranty, or otherwise become or remain
directly or indirectly liable with respect to, any Indebtedness, except:
(1) Lessee may become and remain liable with respect to the
obligations under the Second Amended and Restated Credit Agreement;
(2) Lessee and its Subsidiaries may become and remain liable with
respect to Contingent Obligations permitted by subsection 7(d) and, upon
any matured obligations actually arising pursuant thereto, the Indebtedness
corresponding to the Contingent Obligations so extinguished;
(3) Lessee and its Subsidiaries may become and remain liable with
respect to Indebtedness in respect of Capital Leases; provided that such
Capital Leases are permitted under the terms of subsection 7(i);
(4) Lessee and its Subsidiaries, as applicable, may remain liable with
respect to Indebtedness described in Schedule 7(a)(4) annexed hereto;
(5) Lessee may become and remain liable with respect to Permitted
Extension Indebtedness; provided that with respect to any transaction in
which Permitted Extension Indebtedness is incurred with respect to any
Financed Aircraft, the cash proceeds from such Permitted Extension
Indebtedness are sufficient to repay in full the Indebtedness associated
with such Financed Aircraft;
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(6) so long as no Default or Lease Event of Default shall have
occurred and be continuing or would result therefrom and Lessee delivers an
Officers' Certificate to Lessor, Agent and Lenders, in form and substance
reasonably satisfactory to Lessor and Agent, confirming that, on a Pro
Forma Basis after giving effect to such incurrence of Indebtedness, (i) the
ratio of Consolidated Total Debt (less Cash and Cash Equivalents held by
Lessee in excess of $25 million) as of the last day of the most recently
ended fiscal quarter (the "Determination Date") to Consolidated Adjusted
EBITDA for the four-fiscal quarter period ending on such Determination Date
did not exceed 4.5:1.0, (ii) the ratio of Consolidated Adjusted EBITDA for
such four-fiscal quarter period to Consolidated Interest Expense for such
four-fiscal quarter period was not less than 3.0:1.0; and (iii) Lessee will
be in compliance with all covenants set forth in subsection 7(f) hereof,
Lessee and its Subsidiaries may incur Other Permitted Indebtedness; and
(7) Lessee may become and remain liable with respect to Indebtedness
under the Unsecured Revolving Credit Facility in an aggregate principal
amount not to exceed $26 million at any time outstanding; and
(8) Lessee may become and remain liable with respect to other
Indebtedness in an aggregate principal amount not to exceed, without
duplication, when added to the maximum aggregate liability, contingent or
otherwise, of Lessee and its Subsidiaries outstanding in accordance with
Section 7(d)(5), 30 million at any time outstanding; and
(9) Lessee may become and remain liable with respect to Indebtedness
in respect of the Leases.
(b) Liens and Related Matters.
A. Prohibition on Liens. Lessee shall not, and shall not permit any of its
Subsidiaries to, directly or indirectly, create, incur, assume or permit to
exist any Lien on or with respect to any property or asset of any kind
(including any document or instrument in respect of goods or accounts
receivable) of Lessee or any of its Subsidiaries, whether now owned or hereafter
acquired, or any income or profits therefrom, or file or permit the filing of,
or permit to remain in effect, any financing statement or other similar notice
of any Lien with respect to any such property, asset, income or profits under
the Uniform Commercial Code of any state or under any similar recording or
notice statute, except:
(i) Permitted Encumbrances;
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(ii) Liens in respect of Permitted Extension Indebtedness and Other
Permitted Indebtedness; provided that such Liens encumber only assets
subject to purchase money Liens securing such Indebtedness and do not
encumber any assets subject to the Aircraft Chattel Mortgages; and
(iii) other Liens securing Indebtedness in an aggregate amount not to
exceed $10 million at any time outstanding which do not encumber any assets
subject to the Aircraft Chattel Mortgages.
Notwithstanding anything to the contrary contained above, in no event shall
Lessee create, incur, assume or permit to exist Liens on or with respect to any
assets subject to the Aircraft Chattel Mortgages except for Permitted
Encumbrances of the type described in clauses (i), (ii) or (viii) of the
definition thereof.
B. No Restrictions on Subsidiary Distributions to Lessee or Other
Subsidiaries. Except (i) as provided herein, (ii) as described on Schedule
7.(b)B annexed hereto and (iii) with respect to Special Purpose Subsidiaries,
Lessee will not, and will not permit any of its Subsidiaries to, create or
otherwise cause or suffer to exist or become effective any consensual
encumbrance or restriction of any kind on the ability of any such Subsidiary's
capital stock to (i) pay dividends or make any other distributions on any of
such Subsidiary's capital stock owned by Lessee or any other Subsidiary of
Lessee, (ii) repay or prepay any Indebtedness owed by such Subsidiary to Lessee
or any other Subsidiary of Lessee, or (iii) make loans or advances to Lessee or
any other Subsidiary of Lessee, or (iv) transfer any of its property or assets
to Lessee or any other Subsidiary of Lessee.
(c) Investments; Joint Ventures.
Lessee shall not, and shall not permit any of its Subsidiaries to, directly
or indirectly, make or own any Investment in any Person, including any Joint
Venture, except:
(i) Lessee may make and own Investments in Cash Equivalents;
(ii) Lessee and its Subsidiaries may continue to own the Investments
owned by them as of the Initial Borrowing Date in any Subsidiaries of
Lessee;
(iii) Lessee may make and own Investments in Special Purpose
Subsidiaries; provided that Lessee delivers to Lessor and Agent an
Officer's Certificate in form and substance satisfactory to Lessor and
Agent demonstrating that such Special Purpose Subsidiary meets the
requirements set forth in the definition thereof;
(iv) Lessee may make Investments in Joint Ventures in an aggregate
amount not to exceed in any fiscal year, (A) the lesser of 25% of
Consolidated Net
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Income for such fiscal year and $10 million less (B) the sum of (x) the
aggregate amount of dividends on the Common Stock of Lessee declared or
paid in such fiscal year and (y) the aggregate amount contributed to
capital of Special Purpose Subsidiaries in such fiscal year; provided that
Lessee shall not incur liabilities related to any such Joint Venture in
excess of Lessee's Investment therein;
(v) Lessee and its Subsidiaries may continue to own the Investments
owned by them and described in Schedule 7(c)(v) annexed hereto and
Investments made in compliance with subsection 7(c)(iv); and
(vi) Lessee and its Subsidiaries may make and own other Investments in
an aggregate amount not to exceed at any time 10.5 million.
(d) Contingent Obligations.
Lessee shall not, and shall not permit any of its Subsidiaries to, directly
or indirectly, create or become or remain liable with respect to any Contingent
Obligation, except:
(1) any Subsidiary, may become and remain liable with respect to
Contingent Obligations arising under their guaranties of the obligations
under any Material Agreement;
(2) Lessee may become and remain liable with respect to Contingent
Obligations under Interest Rate Agreements and Currency Agreements arising
under any Material Agreement;
(3) Lessee and its Subsidiaries may become and remain liable with
respect to Contingent Obligations in respect of customary indemnification
and purchase price adjustment obligations incurred in connection with Asset
Sales or other sales of assets or securities;
(4) Lessee and its Subsidiaries, as applicable, may remain liable with
respect to Contingent Obligations described in Schedule 7(d)(4) annexed
hereto; and
(5) Lessee and its Subsidiaries may become and remain liable with
respect to other Contingent Obligations; provided that the maximum
aggregate liability, contingent or otherwise, of Lessee and its
Subsidiaries in respect of all such Contingent Obligations when added,
without duplication, to the aggregate principal amount of Indebtedness
outstanding in accordance with Section 7(a)(8) shall at no time exceed $30
million.
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(e) Restricted Junior Payments.
Lessee shall not, and shall not permit any of its Subsidiaries to, directly
or indirectly, declare, order, pay, make or set apart any sum for any Restricted
Junior Payment; provided that Lessee may make scheduled payments of principal,
mandatory prepayments of principal (including through the exercise of remedies)
and payment of interest from time to time on Designated Indebtedness; and
provided further, that so long as no Default or Lease Event of Default has
occurred and is continuing, or would result therefrom:
(1) Lessee may prepay Designated Indebtedness from the proceeds of
Permitted Extension Indebtedness or Other Permitted Indebtedness;
(2) Lessee may declare and pay dividends on its Common Stock in an
amount not to exceed in any fiscal year, the lesser of 25% of Consolidated
Net Income for such fiscal year and $10 million; and
(3) Lessee may apply Equity Proceeds to prepay Designated
Indebtedness.
(f) Financial Covenants.
(i) Minimum Interest Coverage Ratio. Lessee shall not permit the ratio of
(i) Consolidated Adjusted EBITDA to (ii) Consolidated Interest Expense for any
four-fiscal quarter period ending as of the last day of any fiscal quarter of
Lessee occurring during any of the periods set forth below to be less than the
correlative ratio indicated:
