EXHIBIT 10.1
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FOIA CONFIDENTIAL
TREATMENT REQUESTED
[PUBLISHED CUSIP NUMBER: ______________]
CREDIT AGREEMENT
Dated as of March 25, 2005
among
ALASKA AIRLINES, INC.,
as Borrower,
BANK OF AMERICA, N.A.,
as Administrative Agent,
CITICORP USA, INC.,
as Syndication Agent,
U.S. BANK NATIONAL ASSOCIATION
as Documentation Agent,
and
The Other Lenders Party Hereto
BANC OF AMERICA SECURITIES LLC,
CITIGROUP GLOBAL MARKETS INC.
as Joint-Lead Arrangers and Joint-Book Managers
[BANK OF AMERICA LOGO] [CITIGROUP LOGO]
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TABLE OF CONTENTS
Section Page
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ARTICLE I. DEFINITIONS AND ACCOUNTING TERMS................................... 1
1.01 Defined Terms..................................................... 1
1.02 Other Interpretive Provisions..................................... 21
1.03 Accounting Terms.................................................. 22
1.04 Rounding.......................................................... 22
1.05 Times of Day...................................................... 23
ARTICLE II. THE COMMITMENTS AND CREDIT EXTENSIONS............................. 23
2.01 Loans............................................................. 23
2.02 Borrowings, Conversions and Continuations of Loans................ 23
2.03 Prepayments....................................................... 24
2.04 Termination or Reduction of Commitments........................... 25
2.05 Repayment of Loans................................................ 25
2.06 Interest.......................................................... 25
2.07 Fees.............................................................. 26
2.08 Computation of Interest and Fees.................................. 27
2.09 Evidence of Debt.................................................. 27
2.10 Payments Generally; Agent's Clawback.............................. 27
2.11 Sharing of Payments............................................... 29
2.12 Security.......................................................... 30
ARTICLE III. TAXES, YIELD PROTECTION AND ILLEGALITY........................... 30
3.01 Taxes............................................................. 30
3.02 Illegality........................................................ 32
3.03 Inability to Determine Rates...................................... 32
3.04 Increased Costs................................................... 32
3.05 Compensation for Losses........................................... 33
3.06 Mitigation of Obligations; Replacement of Lenders................. 34
3.07 Survival.......................................................... 34
ARTICLE IV. CONDITIONS PRECEDENT TO CREDIT EXTENSIONS......................... 35
4.01 Conditions of Initial Borrowing................................... 35
4.02 Conditions to all Borrowings...................................... 37
ARTICLE V. REPRESENTATIONS AND WARRANTIES..................................... 37
5.01 Existence, Qualification and Power; Compliance with Laws.......... 37
5.02 Authorization; No Contravention................................... 38
5.03 Governmental Authorization; Other Consents........................ 38
5.04 Binding Effect.................................................... 38
5.05 Financial Statements; No Material Adverse Effect.................. 38
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5.06 Litigation and Judgments.......................................... 39
5.07 No Default........................................................ 39
5.08 Ownership of Property; Liens...................................... 39
5.09 Environmental Compliance.......................................... 39
5.10 Insurance......................................................... 40
5.11 Taxes............................................................. 40
5.12 ERISA Compliance.................................................. 40
5.13 Subsidiaries...................................................... 41
5.14 Margin Regulations; Investment Company Act; Public Utility
Holding Company Act............................................... 41
5.15 Disclosure........................................................ 41
5.16 Compliance with Laws.............................................. 41
5.17 Intellectual Property; Licenses, Etc.............................. 41
5.18 Solvency.......................................................... 42
5.19 Collateral and Security Documents................................. 42
5.20 Burdensome Agreements............................................. 43
5.21 Compliance with OFAC Rules and Regulations........................ 43
ARTICLE VI. AFFIRMATIVE COVENANTS............................................. 44
6.01 Financial Statements.............................................. 44
6.02 Certificates; Other Information................................... 44
6.03 Notices........................................................... 46
6.04 Payment of Obligations............................................ 46
6.05 Preservation of Existence, Etc.................................... 46
6.06 Maintenance of Properties......................................... 47
6.07 Maintenance of Insurance.......................................... 47
6.08 Compliance with Laws.............................................. 48
6.09 Books and Records................................................. 48
6.10 Inspection Rights................................................. 48
6.11 Use of Proceeds................................................... 48
6.12 Financial Covenants............................................... 48
6.13 Collateral Records................................................ 49
6.14 Security Interests................................................ 49
6.15 Collateral........................................................ 49
6.16 State of Incorporation............................................ 54
6.17 Further Assurances................................................ 54
ARTICLE VII. NEGATIVE COVENANTS............................................... 54
7.01 Liens............................................................. 54
7.02 Fundamental Changes............................................... 55
7.03 Dispositions...................................................... 56
7.04 Restricted Expenditures........................................... 57
7.05 Dividends......................................................... 57
7.06 ERISA............................................................. 57
7.07 Air Carrier....................................................... 57
7.08 Change in Nature of Business...................................... 57
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7.09 Transactions with Affiliates...................................... 57
7.10 Burdensome Agreements............................................. 57
7.11 Loans............................................................. 58
7.12 Use of Proceeds................................................... 58
ARTICLE VIII. EVENTS OF DEFAULT AND REMEDIES.................................. 58
8.01 Events of Default................................................. 58
8.02 Remedies Upon Event of Default, Change of Control,
Invalidity Event or Material Failure of Security.................. 60
8.03 Application of Funds.............................................. 60
ARTICLE IX. ADMINISTRATIVE AGENT.............................................. 61
9.01 Appointment and Authorization of Administrative Agent............. 61
9.02 Rights as a Lender................................................ 61
9.03 Exculpatory Provisions............................................ 61
9.04 Reliance by Administrative Agent.................................. 62
9.05 Delegation of Duties.............................................. 62
9.06 Resignation of Agent.............................................. 63
9.07 Non-Reliance on Agent and Other Lenders........................... 63
9.08 No Other Duties, Etc.............................................. 63
9.09 Administrative Agent May File Proofs of Claim..................... 64
9.10 Collateral Matters................................................ 64
9.11 Other Agents; Arrangers and Managers.............................. 66
ARTICLE X. MISCELLANEOUS...................................................... 66
10.01 Amendments, Etc................................................... 66
10.02 Notices; Effectiveness; Electronic Communications................. 67
10.03 No Waiver; Cumulative Remedies.................................... 69
10.04 Expenses; Indemnity; Damage Waiver................................ 69
10.05 Payments Set Aside................................................ 71
10.06 Successors and Assigns............................................ 71
10.07 Treatment of Certain Information; Confidentiality................. 74
10.08 Right of Setoff................................................... 75
10.09 Interest Rate Limitation.......................................... 75
10.10 Counterparts; Integration; Effectiveness.......................... 76
10.11 Survival of Representations and Warranties........................ 76
10.12 Severability...................................................... 76
10.13 Replacement of Lenders............................................ 76
10.14 Governing Law; Jurisdiction; Etc.................................. 77
10.15 Waiver of Right to Trial by Jury.................................. 78
10.16 USA Patriot Act Notice............................................ 78
10.17 Time of the Essence............................................... 78
10.18 Oral Agreements Not Enforceable................................... 78
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SCHEDULES
1.01 Approved Appraisers
2.01 Commitments and Pro Rata Shares
5.06 Litigation
5.09 Environmental Matters
5.13 Equity Investments
7.01 Existing Liens
10.02 Administrative Agent's Office, Certain Addresses for Notices
10.06 Processing and Recordation Fees
EXHIBITS
A Form of Loan Notice
B Form of Note
C Form of Compliance Certificate
D Form of Assignment and Assumption
E-1 Form of Legal Opinion of Borrower's Counsel
E-2 Form of Legal Opinion of FAA Counsel
F Form of Amended and Restated Security Agreement
G Form of Cash Pledge Agreement
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CREDIT AGREEMENT
This CREDIT AGREEMENT (this "Agreement") is entered into as of March 25,
2005 among ALASKA AIRLINES, INC., an Alaska corporation ("Borrower"), each
lender from time to time party hereto (collectively, "Lenders" and individually,
a "Lender"), CITICORP USA, INC., as Syndication Agent, USBANKCORP as
Documentation Agent, and BANK OF AMERICA, N.A., as Administrative Agent.
RECITALS
A. Borrower, certain lenders identified therein (the "Existing Lenders"),
and Bank of America, N.A., as administrative agent, are parties to that certain
Credit Agreement dated as of December 23, 1999 (as amended, the "Existing Credit
Agreement"), providing for the Existing Lenders to make revolving loans to
Borrower.
B. All obligations of Borrower pursuant to the Existing Credit Agreement
and related documents are secured by that certain Aircraft Chattel Mortgage
Security Agreement dated as of March 4, 2003 and effective as of December 31,
2002, between Borrower and Bank of America, N.A. (the "Existing Security
Agreement").
C. Borrower has requested that Lenders provide a revolving credit facility
to replace the revolving credit facility established pursuant to the Existing
Credit Agreement, and Lenders are willing to do so on the condition that the
Existing Security Agreement is amended and restated to secure the Obligations
(as defined herein) and on the other terms and conditions set forth herein.
D. In consideration of the mutual covenants and agreements herein
contained, the parties hereto covenant and agree as follows:
ARTICLE I.
DEFINITIONS AND ACCOUNTING TERMS
1.01 DEFINED TERMS. As used in this Agreement, the following terms shall
have the meanings set forth below:
"Added Aircraft" has the meaning set forth in Section 6.15(d) hereof.
"Added Engine" has the meaning set forth in Section 6.15(c) hereof.
"Administrative Agent" or "Agent" means Bank of America in its capacity as
administrative agent under any of the Loan Documents, or any successor
administrative agent.
"Administrative Agent's Office" means Agent's address and, as appropriate,
account as set forth on Schedule 10.02, or such other address or account as
Agent may from time to time notify Borrower and Lenders.
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"Administrative Questionnaire" means an Administrative Questionnaire in a
form supplied by Agent.
"Affiliate" means, with respect to any Person, another Person that
directly, or indirectly through one or more intermediaries, Controls or is
Controlled by or is under common Control with the Person specified.
"Aircraft" means (a) each of the Airframes together with the Engines,
whether or not such Engines are installed on the Airframes or any other
airframes; (b) except for Excluded Equipment, all appliances, equipment,
instruments, and accessories (including radio and radar) from time to time
belonging to, installed in, or appurtenant to such Airframes and Engines; and
(c) any and all logs, manuals and other records relating thereto.
"Aircraft Collateral" means all of the Aircraft in which the Security
Agreement creates, or purports to create, a security interest.
"Airframe" means (a) any aircraft as specified by United States
Registration Number and manufacturer's serial number in the Security Agreement;
(b) any replacement airframe which may from time to time be substituted for such
airframe; and (c) in either case, any and all parts which are from time to time
incorporated or installed in or attached to such airframe or, so long as such
parts are subject to the Security Agreement covering such airframe, after
removal from such airframe.
"Agent Fee Letter" has the meaning specified in Section 2.07(b).
"Aggregate Commitments" means the Commitments of all Lenders.
"Agreed Value Amount" means, with respect to any Event of Loss of any
Pledged Aircraft, the amount (which shall be no less than the Current Market
Value of such Pledged Aircraft), reflected on the then current insurance
certificate as the amount that the insurers have agreed with Borrower to pay to
the Administrative Agent for the benefit of the Lenders in the event that the
Aircraft suffering an Event of Loss suffered such Event of Loss.
"Agreement" means this Credit Agreement.
"Applicable Percentage" means with respect to any Lender at any time, the
percentage (carried out to the ninth decimal place) of the Aggregate Commitments
represented by such Lender's Commitment at such time. If the commitment of each
Lender to make Loans has been terminated pursuant to Section 8.02 or if the
Aggregate Commitments have expired, then the Applicable Percentage of each
Lender shall be determined based on the Applicable Percentage of such Lender
most recently in effect, giving effect to any subsequent assignments. The
initial Applicable Percentage of each Lender is set forth opposite the name of
such Lender on Schedule 2.01 or in the Assignment and Assumption pursuant to
which such Lender becomes a party hereto, as applicable.
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"Applicable Rate" means, from time to time, the following percentages per
annum, based upon the Fixed Charge Coverage Ratio (the "Financial Covenant") as
set forth in the most recent Compliance Certificate received by Agent pursuant
to Section 6.02:
APPLICABLE RATE
Pricing Fixed Charge Commitment Eurodollar Rate Base Rate
Level Coverage Ratio Fee** + +
- ------- -------------- ---------- --------------- ---------
[***] [***] [***] [***] [***]
[***] [***] [***] [***] [***]
[***] [***] [***] [***] [***]
[***] [***] [***] [***] [***]
[***] [***] [***] [***] [***]
** The Applicable Rate for the commitment fee shall reduce by [***] at all
levels at all times during which the Outstanding Amount exceed [***] of the
Aggregate Commitments.
Any increase or decrease in the Applicable Rate resulting from a change in the
Financial Covenant shall become effective as of the first Business Day
immediately following the date a Compliance Certificate is delivered pursuant to
Section 6.02; provided, however, that if a Compliance Certificate is not
delivered when due in accordance with such Section, then [***] shall apply
commencing on the first Business Day following the date such Compliance
Certificate was required to have been delivered until such Certificate is
delivered. The Applicable Rate in effect from the Closing Date through June 29,
2005 shall be determined based upon [***]. Beginning with the quarter ended June
30, 2005, the Applicable Rate shall be determined pursuant to this section.
"Approved Appraiser" means any independent appraisal firm set forth on
Schedule 1.01 hereto.
"Approved Fund" means any Fund that is administered or managed by (a) a
Lender, (b) an Affiliate of a Lender or (c) an entity or an Affiliate of an
entity that administers or manages a Lender.
"Assignee Group" means two or more Eligible Assignees that are Affiliates
of one another or two or more Approved Funds managed by the same investment
advisor.
"Arrangement/Upfront Fee Letter" has the meaning specified in Section
2.07(c).
"Assignee Group" means two or more Eligible Assignees that are Affiliates
of one another or two or more Approved Funds managed by the same investment
advisor.
"Assignment and Assumption" means an assignment and assumption entered
into by a Lender and an Eligible Assignee (with the consent of any party whose
consent is required by
* Indicates that certain information contained herein has been omitted and
filed separately with the Securities and Exchange Commission. Confidential
treatment has been requested with respect to the omitted portions.
3
Section 10.06(b)), and accepted by Agent, in substantially the form of Exhibit D
or any other form approved by Agent.
"Attributable Indebtedness" means, on any date, (a) in respect of any
Capital Lease of any Person, the capitalized amount thereof that would appear on
a balance sheet of such Person prepared as of such date in accordance with GAAP,
and (b) in respect of any Synthetic Lease Obligation, the capitalized amount of
the remaining lease payments under the relevant lease that would appear on a
balance sheet of such Person prepared as of such date in accordance with GAAP if
such lease were accounted for as a Capital Lease.
"Audited Financial Statements" means the audited consolidated balance
sheet of Borrower and its Subsidiaries for the fiscal year ended December 31,
2004, and the related consolidated statements of income or operations,
shareholders' equity and cash flows for such fiscal year of Borrower and its
Subsidiaries, including the notes thereto.
"Availability Period" means the period from and including the Closing Date
to the earliest of (a) the Maturity Date, (b) the date of termination of the
Aggregate Commitments pursuant to Section 2.04, and (c) the date of termination
of the commitment of each Lender to make Loans pursuant to Section 8.02.
"Bank of America" means Bank of America, N.A. and its successors.
"Bank of America Cash Collateral" means cash deposits with Bank of
America, N.A., in its capacity as Administrative Agent.
"Base Rate" means for any day a fluctuating rate per annum equal to the
higher of (a) the Federal Funds Rate plus 1/2 of 1% and (b) the rate of interest
in effect for such day as publicly announced from time to time by Bank of
America as its "prime rate." The "prime rate" is a rate set by Bank of America
based upon various factors including Bank of America's costs and desired return,
general economic conditions and other factors, and is used as a reference point
for pricing some loans, which may be priced at, above, or below such announced
rate. Any change in such rate announced by Bank of America shall take effect at
the opening of business on the day specified in the public announcement of such
change.
"Base Rate Loan" means a Loan that bears interest based on the Base Rate.
"Borrower" has the meaning specified in the introductory paragraph hereto.
"Borrower Materials" means has the meaning specified in Section 6.02.
"Borrowing" means a borrowing consisting of simultaneous Loans of the same
Type and, in the case of Eurodollar Rate Loans, having the same Interest Period
made by each of the Lenders pursuant to Section 2.01.
"Borrowing Base" means, as applicable, (a) [***] of the Current Market
Value of the Aircraft Collateral; (b) one hundred percent (100%) of the Bank of
America Cash Collateral; and (c) a Designated Percentage of Other Cash
Collateral.
* Indicates that certain information contained herein has been omitted and
filed separately with the Securities and Exchange Commission. Confidential
treatment has been requested with respect to the omitted portions.
4
"Business Day" means (i) any day other than a Saturday, Sunday or other
day on which commercial banks are authorized to close under the Laws of, or are
in fact closed in, the state of Washington or the state where Administrative
Agent's Office is located; and (ii) if such day relates to any Eurodollar Rate
Loan, any such day on which dealings in Dollar deposits are conducted by and
between banks in the London interbank eurodollar market.
"Capital Lease" means, with respect to any Person, a lease (or leases) for
real or personal property required to be capitalized under GAAP or which is
treated as an operating lease under regulations applicable to such Person but
which otherwise would be required to be capitalized under GAAP.
"Cash Collateral" means the Bank of America Cash Collateral and the Other
Cash Collateral.
"Cash Pledge Agreement" means a Cash Pledge Agreement made by the Borrower
in favor of the Administrative Agent in substantially the form of Exhibit G.
"Change in Law" means the occurrence, after the date of this Agreement, of
any of the following: (a) the adoption or taking effect of any law, rule,
regulation or treaty, (b) any change in any law, rule, regulation or treaty or
in the administration, interpretation or application thereof by any Governmental
Authority or (c) the making or issuance of any request, guideline or directive
(whether or not having the force of law) by any Governmental Authority.
"Change of Control" means, with respect to Borrower, an event or series of
events by which:
(a) Parent shall cease to own, directly or indirectly, 100% of the equity
securities of Borrower entitled to vote for members of the board of directors or
equivalent governing body of Borrower on a fully-diluted basis (and taking into
account all such securities that such person or group has the right to acquire
pursuant to any option right);
(b) during any period of 18 consecutive months, a majority of the members
of the board of directors or other equivalent governing body of Borrower cease
to be composed of individuals (i) who were members of that board or equivalent
governing body on the first day of such period, (ii) whose election or
nomination to that board or equivalent governing body was approved by
individuals referred to in clause (i) above constituting at the time of such
election or nomination at least a majority of that board or equivalent governing
body or (iii) whose election or nomination to that board or other equivalent
governing body was approved by individuals referred to in clauses (i) and (ii)
above constituting at the time of such election or nomination at least a
majority of that board or equivalent governing body (excluding, in the case of
both clause (ii) and clause (iii), any individual whose initial nomination for,
or assumption of office as, a member of that board or equivalent governing body
occurs as a result of an actual or threatened solicitation of proxies or
consents for the election or removal of one or more directors by any person or
group other than a solicitation for the election of one or more directors by or
on behalf of the board of directors); or
5
(c) other than Parent, any individual(s) or entity(s) acting in concert
shall have acquired by contract or otherwise, or shall have entered into a
contract or arrangement that, upon consummation thereof, will result in its or
their acquisition of the power to exercise, directly or indirectly, a
controlling influence over the management or policies of Borrower, or control
over the equity securities of Borrower entitled to vote for members of the board
of directors or equivalent governing body of Borrower on a fully-diluted basis
(and taking into account all such securities that such individual(s) or
entity(s) or group has the right to acquire pursuant to any option right)
representing 49% or more of the combined voting power of such securities.
"Claim Collateral Period" means, with respect to any Event of Loss of any
Pledged Aircraft, the period beginning on the date when such Event of Loss
occurs and continuing until the earliest of the date when (a) any proceeds from
any insurance claim arising from such Event of Loss have been paid to the
Administrative Agent for the benefit of Lenders; (b) any underwriter of the
insurance policy covering such Aircraft has denied coverage for such Event of
Loss; (c) 60 days have elapsed after the Event of Loss and the Administrative
Agent has not received insurance proceeds in respect of such Event of Loss in at
least the Agreed Value Amount; (d) the lead insurance underwriter under such
policy has become insolvent; or (e) the lead insurance underwriter under such
policy has commenced, has had commenced against it, or has otherwise become
subject to, a bankruptcy, receivership or other insolvency proceeding.
"Closing Date" means the first date all the conditions precedent in
Section 4.01 are satisfied or waived in accordance with Section 10.01.
"Code" means the Internal Revenue Code of 1986.
"Collateral" shall mean any and all assets and rights and interests in or
to property of Borrower, whether real or personal, tangible or intangible, in
which a Lien is granted or purported to be granted pursuant to the Collateral
Documents.
"Collateral Documents" means the Security Agreement, any Cash Pledge
Agreement and any other agreements, instruments and documents now or hereafter
executed and delivered in connection with this Agreement, pursuant to which
Liens are granted or purported to be granted to Agent to secure all or part of
the Obligations, each in form and substance satisfactory to Agent.
"Collateral Review Date" has the meaning set forth in Section 6.15(a).
"Collateral Shortfall" means any time when the amount of the Borrowing
Base is less than [***].
"Commitment" means, as to each Lender, its obligation to make Loans to
Borrower pursuant to Section 2.01, in an aggregate principal amount at any one
time outstanding not to exceed the amount set forth opposite such Lender's name
on Schedule 2.01 or in the Assignment and Assumption pursuant to which such
Lender becomes a party hereto, as applicable, as such amount may be adjusted
from time to time in accordance with this Agreement.
"Compliance Certificate" means a certificate substantially in the form of
Exhibit C.
* Indicates that certain information contained herein has been omitted and
filed separately with the Securities and Exchange Commission. Confidential
treatment has been requested with respect to the omitted portions.
6
"Consolidated Funded Debt and Leases" means all Funded Debt of Borrower
and its Subsidiaries calculated in accordance with GAAP (other than debt
outstanding between Borrower and its Affiliates) (i) which by its terms matures
more than one year from the date created or which is renewable or extendible at
the option of the obligor to a date beyond one year from such date, including
all payments due within 12 months of the date of such determination, (ii) any
short-term debt evidenced by a promissory note or similar agreement (including
the Loans), plus (iii) an amount equal to seven times Borrower's Consolidated
Lease Expense.
"Consolidated Lease Expense" means the aggregate Aircraft rental expense
incurred during the period indicated under leases for Aircraft (net of income
received during such period (if no default), from subleases thereof, but
including taxes, insurance, maintenance and similar expenses which the lessee
paid to the lessor under the terms of such leases during such period), excluding
however, Capital Leases.
"Consolidated Net Liquidity" means, at any date of determination, for the
Borrower and its Subsidiaries on a consolidated basis, the total of unrestricted
cash and marketable securities less the Outstanding Amount.
"Consolidated Tangible Net Worth" means, at any date of determination, for
the Borrower and its Subsidiaries on a consolidated basis, the total of
shareholder's equity (including capital stock, additional paid-in capital and
retained earnings) of the Borrower and its Subsidiaries on that date, less the
Intangible Assets of the Borrower and its Subsidiaries on that date which are
acquired or incurred after the date of this Agreement and excluding (a)
Permitted Asset Adjustments, (b) non-cash asset impairment charges incurred
prior to December 31, 2004 related to the 737-200 fleet, (c) the
marked-to-market Swap Termination Value for Swap Contracts that have not been
closed out, and (d) unusual, non-cash special charges and credits (excluding
Permitted Asset Adjustments), each without duplication and determined in
accordance with GAAP.
"Contractual Obligation" means, as to any Person, any provision of any
security issued by such Person or of any agreement, instrument or other
undertaking to which such Person is a party or by which it or any of its
property is bound.
"Control" means the possession, directly or indirectly, of the power to
direct or cause the direction of the management or policies of a Person, whether
through the ability to exercise voting power, by contract or otherwise.
"Controlling" and "Controlled" have meanings correlative thereto.
"Current Market Value" means the current market value of an Aircraft, as
set forth in the applicable Qualified Appraisal; provided that the current
market value shall be deemed to be $0 for [***] each Pledged Aircraft with
respect to which there has been a Failure of Security that has not been cured.
"Debtor Relief Laws" means the Bankruptcy Code of the United States, and
all other liquidation, conservatorship, bankruptcy, assignment for the benefit
of creditors, moratorium, rearrangement, receivership, insolvency,
reorganization, or similar debtor relief Laws of the
* Indicates that certain information contained herein has been omitted and
filed separately with the Securities and Exchange Commission. Confidential
treatment has been requested with respect to the omitted portions.
7
United States or other applicable jurisdictions from time to time in effect and
affecting the rights of creditors generally.
"Default" means any event or condition that constitutes an Event of
Default or that, with the giving of any notice, the passage of time, or both,
would be an Event of Default.
"Default Rate" means an interest rate equal to (i) the Base Rate plus (ii)
the Applicable Rate, if any, applicable to Base Rate Loans plus (iii) [***] per
annum; provided, however, that with respect to a Eurodollar Rate Loan, the
Default Rate shall be an interest rate equal to the interest rate (including any
Applicable Rate) otherwise applicable to such Loan plus [***] per annum.
"Defaulting Lender" means any Lender that (a) has failed to fund any
portion of the Loans required to be funded by it hereunder within one Business
Day of the date required to be funded by it hereunder, (b) has otherwise failed
to pay over to Agent or any other Lender any other amount required to be paid by
it hereunder within one Business Day of the date when due, unless the subject of
a good faith dispute, or (c) has been deemed insolvent or become the subject of
a bankruptcy or insolvency proceeding.
"Designated Percentage" means the percentage of the value of Other Cash
Collateral designated by Lenders for inclusion in the Borrowing Base.
"Disposition" or "Dispose" means the sale, transfer, license, lease or
other disposition (including any sale and leaseback transaction) of any property
by any Person, including any sale, assignment, transfer or other disposal, with
or without recourse, of any notes or accounts receivable or any rights and
claims associated therewith.
"Dollar" and "$" mean lawful money of the United States.
"Eligible Assignee" means (a) a Lender; (b) an Affiliate of a Lender; (c)
an Approved Fund; and (d) any other Person (other than a natural person)
approved by (i) Agent, and (ii) unless an Event of Default has occurred and is
continuing, Borrower (each such approval not to be unreasonably withheld or
delayed); provided that notwithstanding the foregoing, "Eligible Assignee" shall
not include Borrower or any of Borrower's Affiliates or Subsidiaries.
"Engine" means: (a) any engine listed by manufacturer's serial numbers in
the Security Agreement, whether or not from time to time installed on an
Airframe or any other airframe; (b) any replacement engine which from time to
time may be substituted for any Engine in accordance with this Agreement; and
(c) in either case, any and all parts which are from time to time incorporated
or installed in or attached to any such engine or, so long as such parts are
subject to the Security Agreement, after removal from any such engine.
"Environmental Laws" means any and all Federal, state, local, and foreign
statutes, laws, regulations, ordinances, rules, judgments, orders, decrees,
permits, concessions, grants, franchises, licenses, agreements or governmental
restrictions relating to pollution and the protection of the environment or the
release of any materials into the environment, including
* Indicates that certain information contained herein has been omitted and
filed separately with the Securities and Exchange Commission. Confidential
treatment has been requested with respect to the omitted portions.
8
those related to hazardous substances or wastes, air emissions and discharges to
waste or public systems.
"Environmental Liability" means any liability, contingent or otherwise
(including any liability for damages, costs of environmental remediation, fines,
penalties or indemnities), of Borrower or any of its Subsidiaries directly or
indirectly resulting from or based upon (a) violation of any Environmental Law,
(b) the generation, use, handling, transportation, storage, treatment or
disposal of any Hazardous Materials, (c) exposure to any Hazardous Materials,
(d) the release or threatened release of any Hazardous Materials into the
environment or (e) any contract, agreement or other consensual arrangement
pursuant to which liability is assumed or imposed with respect to any of the
foregoing.
"Equity Interests" means, with respect to any Person, all of the shares of
capital stock of (or other ownership or profit interests in) such Person, all of
the warrants, options or other rights for the purchase or acquisition from such
Person of shares of capital stock of (or other ownership or profit interests in)
such Person, all of the securities convertible into or exchangeable for shares
of capital stock of (or other ownership or profit interests in) such Person or
warrants, rights or options for the purchase or acquisition from such Person of
such shares (or such other interests), and all of the other ownership or profit
interests in such Person (including partnership, member or trust interests
therein), whether voting or nonvoting, and whether or not such shares, warrants,
options, rights or other interests are outstanding on any date of determination.
"ERISA" means the Employee Retirement Income Security Act of 1974.
"ERISA Affiliate" means any trade or business (whether or not
incorporated) under common control with Borrower within the meaning of Section
414(b) or (c) of the Code (and Sections 414(m) and (o) of the Code for purposes
of provisions relating to Section 412 of the Code).
"ERISA Event" means (a) a Reportable Event with respect to a Pension Plan;
(b) a withdrawal by Borrower or any ERISA Affiliate from a Pension Plan subject
to Section 4063 of ERISA during a plan year in which it was a substantial
employer (as defined in Section 4001(a)(2) of ERISA) or a cessation of
operations that is treated as such a withdrawal under Section 4062(e) of ERISA;
(c) a complete or partial withdrawal by Borrower or any ERISA Affiliate from a
Multiemployer Plan or notification that a Multiemployer Plan is in
reorganization; (d) the filing of a notice of intent to terminate, the treatment
of a Plan amendment as a termination under Sections 4041 or 4041A of ERISA, or
the commencement of proceedings by the PBGC to terminate a Pension Plan or
Multiemployer Plan; (e) an event or condition which constitutes grounds under
Section 4042 of ERISA for the termination of, or the appointment of a trustee to
administer, any Pension Plan or Multiemployer Plan; or (f) the imposition of any
liability under Title IV of ERISA, other than for PBGC premiums due but not
delinquent under Section 4007 of ERISA, upon Borrower or any ERISA Affiliate.
"Eurodollar Base Rate" has the meaning specified in the definition of
Eurodollar Rate.
"Eurodollar Rate" means for any Interest Period with respect to a
Eurodollar Rate Loan, a rate per annum determined by Agent pursuant to the
following formula:
9
Eurodollar Rate = Eurodollar Base Rate
------------------------------------------
1.00 - Eurodollar Reserve Percentage
Where,
"Eurodollar Base Rate" means, for such Interest Period the rate per
annum equal to the British Bankers Association LIBOR Rate ("BBA
LIBOR"), as published by Reuters (or other commercially available
source providing quotations of BBA LIBOR as designated by Agent from
time to time) at approximately 11:00 a.m., London time, two Business
Days prior to the commencement of such Interest Period, for Dollar
deposits (for delivery on the first day of such Interest Period)
with a term equivalent to such Interest Period. If such rate is not
available at such time for any reason, then the "Eurodollar Base
Rate" for such Interest Period shall be the rate per annum
determined by Agent to be the rate at which deposits in Dollars for
delivery on the first day of such Interest Period in same day funds
in the approximate amount of the Eurodollar Rate Loan being made,
continued or converted by Bank of America and with a term equivalent
to such Interest Period would be offered by Bank of America's London
Branch to major banks in the London interbank eurodollar market at
their request at approximately 11:00 a.m. (London time) two Business
Days prior to the commencement of such Interest Period.
"Eurodollar Reserve Percentage" means, for any day during any
Interest Period, the reserve percentage (expressed as a decimal,
carried out to five decimal places) in effect on such day, whether
or not applicable to any Lender, under regulations issued from time
to time by the Board of Governors of the Federal Reserve System of
the United States for determining the maximum reserve requirement
(including any emergency, supplemental or other marginal reserve
requirement) with respect to Eurocurrency funding (currently
referred to as "Eurocurrency liabilities"). The Eurodollar Rate for
each outstanding Eurodollar Rate Loan shall be adjusted
automatically as of the effective date of any change in the
Eurodollar Reserve Percentage.
"Eurodollar Rate Loan" means a Loan that bears interest at a rate based on
the Eurodollar Rate.
"Event of Default" has the meaning specified in Section 8.01.
"Event of Loss" has the meaning set forth in the Security Agreement.
"Excluded Equipment" means all appliances, equipment, instruments, and
accessories the values of which are not included in the determination of Current
Market Value in any Qualified Appraisal.
"Excluded Taxes" means, with respect to Agent, any Lender or any other
recipient of any payment to be made by or on account of any obligation of
Borrower hereunder, (a) Taxes imposed on or measured by its overall net income
(however denominated and whether imposed
10
by withholding or otherwise) or its gross receipts, and doing business, value
added and franchise taxes that are imposed in lieu of a net income tax), by the
United States government or any jurisdiction (or any political subdivision
thereof) under the laws of which such recipient is organized or in which its
principal office is located or in which it conducts or is deemed to conduct
business (other than solely as a result of the transactions contemplated herein)
or, in the case of any Lender, in which its applicable Lending Office is
located; (b) any Taxes caused by activities of such Person unrelated to the
transactions contemplated herein; (c) any Taxes caused by such Person's gross
negligence or willful misconduct or any breach of such Person's obligations
contained herein; (d) any branch profits taxes imposed by the United States or
any similar tax imposed by any other jurisdiction in which Borrower is located;
and (e) in the case of a Foreign Lender (other than an assignee pursuant to a
request by the Borrower under Section 10.13), any withholding tax that is
imposed on amounts payable to such Foreign Lender at the time such Foreign
Lender becomes a party hereto (or designates a new Lending Office) or is
attributable to such Foreign Lender's failure or inability (other than as a
result of a Change in Law) to comply with Section 3.01(e), except to the extent
that such Foreign Lender is organized in and a resident of the same country as
the Assignor and the Assignor was entitled, at the time of designation of a new
Lending Office (or assignment), to receive additional amounts from the Borrower
with respect to such withholding tax pursuant to Section 3.01(a).
"Existing Credit Agreement" has the meaning specified in Recital A hereto.
"Existing Lenders" has the meaning specified in Recital A hereto.
"Existing Security Agreement" has the meaning specified in Recital B
hereto.
"FAA Registry" has the meaning set forth in Section 6.15(b)(ii)(B) hereof.
"Failure of Security" means the occurrence of either of the following: any
Collateral Document ceases to be in full force and effect, or is declared by a
court of competent jurisdiction to be null and void, invalid or unenforceable in
any respect; or the Agent shall not have or shall cease to have a valid and
perfected Lien of first priority (other than Liens expressly permitted to be
prior to such Lien pursuant to Section 7.01) in the Collateral purported to be
covered thereby, in each case for any reason other than (i) as provided in such
Collateral Document, or (ii) the agreement of all the Lenders or satisfaction in
full of all the Obligations secured by such Collateral Document.
"Federal Funds Rate" means, for any day, the rate per annum equal to the
weighted average of the rates on overnight Federal funds transactions with
members of the Federal Reserve System arranged by Federal funds brokers on such
day, as published by the Federal Reserve Bank of New York on the Business Day
next succeeding such day; provided that (a) if such day is not a Business Day,
the Federal Funds Rate for such day shall be such rate on such transactions on
the next preceding Business Day as so published on the next succeeding Business
Day, and (b) if no such rate is so published on such next succeeding Business
Day, the Federal Funds Rate for such day shall be the average rate (rounded
upward, if necessary, to a whole multiple of 1/100 of 1%) charged to Bank of
America on such day on such transactions as determined by Agent.
11
"Fixed Charge Coverage Ratio" means, for the four quarters preceding the
applicable date of calculation, the ratio of (a) to (b) where (a) equals the sum
of (i) Borrower's and its Subsidiaries' consolidated earnings before interest
expense (net of capitalized interest) and taxes during such period, plus, to the
extent such amounts are deducted when determining consolidated earnings, (ii)
consolidated depreciation and amortization expense (other than airframe and
engine overhaul amortization) during such period, plus (iii) Consolidated Lease
Expense during such period, plus (iv) amounts related to Permitted Asset
Adjustments, plus (v) non-cash asset impairment charges incurred prior to
December 31, 2004 related to the 737-200 fleet, plus (vi) 100% of Government
Compensation in the quarter in which it was received with such amount decreasing
by 25% per quarter in subsequent calculation periods until decreased to 0%,
excluding (x) unusual, non-cash special charges and credits, (excluding
Permitted Asset Adjustments) and (y) the marked-to-market Swap Termination value
for Swap Contracts that have not been closed out, and (b) equals the sum of (1)
Consolidated Lease Expense during such period, plus (2) consolidated interest
expense (net of capitalized interest) during such period in respect of
Consolidated Funded Debt and Leases, plus (3) the principal amount of the
scheduled current portion of all Consolidated Funded Debt and Leases, but
excluding any Loans, or short-term borrowings or debt outstanding between
Borrower and its Affiliates each without duplication and determined in
accordance with GAAP.
"Foreign Lender" means any Lender that is organized under the laws of a
jurisdiction other than that in which the Borrower is resident for tax purposes.
For purposes of this definition, the United States, each State thereof and the
District of Columbia shall be deemed to constitute a single jurisdiction.
"FRB" means the Board of Governors of the Federal Reserve System of the
United States.
"Fund" means any Person (other than a natural person) that is (or will be)
engaged in making, purchasing, holding or otherwise investing in commercial
loans and similar extensions of credit in the ordinary course of its business.
"Funded Debt" means all Indebtedness that appears on the liability side of
Borrower's balance sheet in accordance with GAAP.
"GAAP" means generally accepted accounting principles in the United States
set forth in the opinions and pronouncements of the Accounting Principles Board
and the American Institute of Certified Public Accountants and statements and
pronouncements of the Financial Accounting Standards Board or such other
principles as may be approved by a significant segment of the accounting
profession in the United States, that are applicable to the circumstances as of
the date of determination, consistently applied.
"Governmental Authority" means the government of the United States or any
other nation, or of any political subdivision thereof, whether state or local,
and any agency, authority, instrumentality, regulatory body, court, central bank
or other entity exercising executive, legislative, judicial, taxing, regulatory
or administrative powers or functions of or pertaining to government (including
any supra-national bodies such as the European Union or the European Central
Bank).
12
"Government Compensation" means non-refundable cash received by Borrower
and/or its Subsidiaries and other commercial air carriers from the U.S. federal
government and recognized as extraordinary non-operating income in conformity
with GAAP.
"Granting Lender" has the meaning specified in Section 10.06(h).
"Guarantee" means, as to any Person, any (a) any obligation, contingent or
otherwise, of such Person guaranteeing or having the economic effect of
guaranteeing any Indebtedness or other obligation payable or performable by
another Person (the "primary obligor") in any manner, whether directly or
indirectly, and including any obligation of such Person, direct or indirect, (i)
to purchase or pay (or advance or supply funds for the purchase or payment of)
such Indebtedness or other obligation, (ii) to purchase or lease property,
securities or services for the purpose of assuring the obligee in respect of
such Indebtedness or other obligation of the payment or performance of such
Indebtedness or other obligation, (iii) to maintain working capital, equity
capital or any other financial statement condition or liquidity or level of
income or cash flow of the primary obligor so as to enable the primary obligor
to pay such Indebtedness or other obligation, or (iv) entered into for the
purpose of assuring in any other manner the obligee in respect of such
Indebtedness or other obligation of the payment or performance thereof or to
protect such obligee against loss in respect thereof (in whole or in part), or
(b) any Lien on any assets of such Person securing any Indebtedness or other
obligation of any other Person, whether or not such Indebtedness or other
obligation is assumed by such Person (or any right, contingent or otherwise, of
any holder of such Indebtedness to obtain any such Lien). The amount of any
Guarantee shall be deemed to be an amount equal to the stated or determinable
amount of the related primary obligation, or portion thereof, in respect of
which such Guarantee is made or, if not stated or determinable, the maximum
reasonably anticipated liability in respect thereof as determined by the
guaranteeing Person in good faith, except that, in the case of Liens referred to
in clause (b), the amount of such Guarantee shall not exceed the greater of the
book value or the fair market value of the property subject to such Lien unless
such Person has assumed or is otherwise liable for the secured obligation. The
term "Guarantee" as a verb has a corresponding meaning.
"Hazardous Materials" means all explosive or radioactive substances or
wastes and all hazardous or toxic substances, wastes or other pollutants,
including petroleum or petroleum distillates, asbestos or asbestos-containing
materials, polychlorinated biphenyls, radon gas, infectious or medical wastes
and all other similar substances or wastes of any nature regulated pursuant to
any Environmental Law.
"Horizon" means Horizon Air Industries, Inc., a Washington corporation.
"Indebtedness" means, as to any Person at a particular time, without
duplication, all of the following:
(a) all obligations of such Person for borrowed money, and all obligations
of such Person evidenced by bonds, debentures, notes, loan agreements or other
similar instruments;
13
(b) all direct or contingent obligations of such Person arising under
letters of credit (including standby and commercial), bankers' acceptances, bank
guaranties, surety bonds and similar instruments;
(c) net obligations of such Person under any Swap Contract;
(d) all obligations of such Person to pay the deferred purchase price of
property or services (other than trade accounts payable in the ordinary course
of business and, in each case, not past due for more than 60 days after the date
on which such trade account payable was created);
(e) indebtedness (excluding prepaid interest thereon) secured by a Lien on
property owned or being purchased by such Person (including indebtedness arising
under conditional sales or other title retention agreements), whether or not
such indebtedness shall have been assumed by such Person or is limited in
recourse;
(f) Capital Leases and Synthetic Lease Obligations;
(g) all obligations of such Person to purchase, redeem, retire, defease or
otherwise make any payment in respect of any Equity Interest in such Person or
any other Person, valued, in the case of a redeemable preferred interest, at the
greater of its voluntary or involuntary liquidation preference plus accrued and
unpaid dividends; and
(h) all Guarantees of such Person in respect of any of the foregoing.
For all purposes hereof, the Indebtedness of any Person shall include the
Indebtedness of any partnership or joint venture (other than a joint venture
that is itself a corporation or limited liability company) in which such Person
is a general partner or a joint venturer, unless such Indebtedness is expressly
made non-recourse to such Person. The amount of any net obligation under any
Swap Contract on any date shall be deemed to be the Swap Termination Value
thereof as of such date. If the Swap Termination Value with respect to a Swap
Contract represents an amount owing to such Person, such amount shall not
constitute a reduction in the amount of "Indebtedness" for purposes of this
definition but, in accordance with GAAP, may constitute an asset of such Person.
The amount of any Capital Lease or Synthetic Lease Obligation as of any date
shall be deemed to be the amount of Attributable Indebtedness in respect thereof
as of such date.
"Indemnified Taxes" means Taxes other than Excluded Taxes.
"Indemnitees" has the meaning specified in Section 10.04(b).
"Invalidity Event" means: (i) any Loan Document or any provision thereof,
at any time after its execution and delivery and for any reason other than as
expressly permitted hereunder or thereunder or satisfaction in full of all the
Obligations, ceases to be in full force and effect; or (ii) Borrower or any
other Person contests in any manner the validity or enforceability of any Loan
Document or any provision thereof; or (iii) Borrower denies that it has any or
further liability or
14
obligation under any Loan Document, or purports to revoke, terminate or rescind
any Loan Document or any provision thereof.
"Intangible Assets" means assets that are considered to be intangible
assets as determined in accordance with GAAP, including customer lists,
goodwill, computer software, copyrights, trade names, trademarks, patents,
franchises, licenses, unamortized deferred charges, unamortized debt discount
and capitalized research and development costs less noncontributory and defined
benefit pension amounts included as intangible assets incurred after December
31, 2004.
"Interest Payment Date" means, (a) as to any Loan other than a Base Rate
Loan, the last day of each Interest Period applicable to such Loan and the
Maturity Date; provided, however, that if any Interest Period for a Eurodollar
Rate Loan exceeds three months, the respective dates that fall every three
months after the beginning of such Interest Period shall also be Interest
Payment Dates; and (b) as to any Base Rate Loan, the last Business Day of each
month and the Maturity Date.
"Interest Period" means, as to each Eurodollar Rate Loan, the period
commencing on the date such Eurodollar Rate Loan is disbursed or converted to or
continued as a Eurodollar Rate Loan and ending on the date one, two, three or
six months thereafter, as selected by Borrower in its Loan Notice; provided
that:
(i) any Interest Period that would otherwise end on a day that is
not a Business Day shall be extended to the next succeeding Business Day
unless such Business Day falls in another calendar month, in which case
such Interest Period shall end on the next preceding Business Day;
(ii) any Interest Period that begins on the last Business Day of a
calendar month (or on a day for which there is no numerically
corresponding day in the calendar month at the end of such Interest
Period) shall end on the last Business Day of the calendar month at the
end of such Interest Period; and
(iii) no Interest Period shall extend beyond the Maturity Date.
"Internal Control Event" means a material weakness in, or fraud that
involves management or other employees who have a significant role in, the
Borrower's internal controls over financial reporting, in each case as described
in the Securities Laws.
"Investment" means, as to any Person, any direct or indirect acquisition
or investment by such Person, whether by means of (a) the purchase or other
acquisition of capital stock or other securities of another Person, (b) a loan,
advance or capital contribution to, Guarantee or assumption of debt of, or
purchase or other acquisition of any other debt or equity participation or
interest in, another Person, including any partnership or joint venture interest
in such other Person and any arrangement pursuant to which the investor
Guarantees Indebtedness of such other Person, or (c) the purchase or other
acquisition (in one transaction or a series of transactions) of assets of
another Person that constitute a business unit. For purposes of covenant
15
compliance, the amount of any Investment shall be the amount actually invested,
without adjustment for subsequent increases or decreases in the value of such
Investment.
"IP Rights" has the meaning specified in Section 5.17.
"IRS" means the United States Internal Revenue Service.
"Laws" means, collectively, all international, foreign, Federal, state and
local statutes, treaties, rules, guidelines, regulations, ordinances, codes and
administrative or judicial precedents or authorities, including the
interpretation or administration thereof by any Governmental Authority charged
with the enforcement, interpretation or administration thereof, and all
applicable administrative orders, directed duties, requests, licenses,
authorizations and permits of, and agreements with, any Governmental Authority,
in each case whether or not having the force of law.
"Lender" has the meaning specified in the introductory paragraph hereto.
"Lending Office" means, as to any Lender, the office or offices of such
Lender described as such in such Lender's Administrative Questionnaire, or such
other office or offices as a Lender may from time to time notify Borrower and
Agent.
"Lien" means any mortgage, pledge, hypothecation, assignment, deposit
arrangement, encumbrance, lien (statutory or other), charge, or preference,
priority or other security interest or preferential arrangement in the nature of
a security interest of any kind or nature whatsoever (including any conditional
sale, equipment trust agreement, or other title retention agreement, any
easement, right of way or other encumbrance on title to real property, and any
financing lease having substantially the same economic effect as any of the
foregoing).
"Loan" means an extension of credit by a Lender to Borrower under Article
II.
"Loan Documents" means this Agreement, each Note, the Agent Fee Letter,
Arrangement/Upfront Fee Letter, and each Collateral Document.
"Loan Notice" means a notice of (a) a Borrowing, (b) a conversion of Loans
from one Type to the other, or (c) a continuation of Eurodollar Rate Loans,
pursuant to Section 2.02(a), which, if in writing, shall be substantially in the
form of Exhibit A.
"Material Adverse Effect" means (a) a material adverse change in, or a
material adverse effect upon, the business, assets, properties, liabilities
(actual and contingent), operations or financial condition of Borrower and its
Subsidiaries, taken as a whole, (b) a material impairment of the ability of
Borrower to perform its obligations under any Loan Document or (c) a material
adverse effect on the rights and remedies of the Administrative Agent or the
Lenders under any Loan Document.
"Material Failure of Security" means a Failure of Security with respect to
Collateral whose removal from the Borrowing Base, individually or in the
aggregate, causes the Borrowing Base to be less than [***].
* Indicates that certain information contained herein has been omitted and
filed separately with the Securities and Exchange Commission. Confidential
treatment has been requested with respect to the omitted portions.
16
"Maturity Date" means March __, 2008.
"Multiemployer Plan" means any employee benefit plan of the type described
in Section 4001(a)(3) of ERISA, to which Borrower or any ERISA Affiliate makes
or is obligated to make contributions, or during the preceding five plan years,
has made or been obligated to make contributions.
"Note" means a promissory note made by Borrower in favor of a Lender
evidencing Loans made by such Lender, substantially in the form of Exhibit B.
"Obligations" means all advances to, and debts, liabilities, obligations,
covenants and duties of, Borrower arising under any Loan Document or otherwise
with respect to any Loan, whether direct or indirect (including those acquired
by assumption), absolute or contingent, due or to become due, now existing or
hereafter arising and including interest and fees that accrue after the
commencement by or against Borrower or any Subsidiary thereof of any proceeding
under any Debtor Relief Laws naming such Person as the debtor in such
proceeding, regardless of whether such interest and fees are allowed claims in
such proceeding.
"Organization Documents" means, (a) with respect to any corporation, the
certificate or articles of incorporation and the bylaws (or equivalent or
comparable constitutive documents with respect to any non-U.S. jurisdiction);
(b) with respect to any limited liability company, the certificate or articles
of formation or organization and operating agreement; and (c) with respect to
any partnership, joint venture, trust or other form of business entity, the
partnership, joint venture or other applicable agreement of formation or
organization and any agreement, instrument, filing or notice with respect
thereto filed in connection with its formation or organization with the
applicable Governmental Authority in the jurisdiction of its formation or
organization and, if applicable, any certificate or articles of formation or
organization of such entity.
"Other Cash Collateral" means U.S. government securities and other cash
equivalents (other than Bank of America Cash Collateral) reasonably acceptable
to Lenders.
"Other Taxes" means all present or future stamp, intangible or documentary
taxes or any other excise or property taxes, charges or similar levies arising
from any payment made hereunder or under any other Loan Document or from the
execution, delivery or enforcement of, or otherwise with respect to, this
Agreement or any other Loan Document; provided, however, that "Other Taxes"
shall not include and Excluded Taxes.
"Outstanding Amount" means with respect to Loans on any date, the
aggregate outstanding principal amount thereof after giving effect to any
borrowings and prepayments or repayments of Loans occurring on such date.
"Over Advance" has the meaning specified in Section 2.03(b).
"Parent" means Alaska Air Group, Inc., a Delaware corporation.
"Participant" has the meaning specified in Section 10.06(d).
17
"PBGC" means the Pension Benefit Guaranty Corporation.
"Pension Plan" means any "employee pension benefit plan" (as such term is
defined in Section 3(2) of ERISA), other than a Multiemployer Plan, that is
subject to Title IV of ERISA and is sponsored or maintained by Borrower or any
ERISA Affiliate or to which Borrower or any ERISA Affiliate contributes or has
an obligation to contribute, or in the case of a multiple employer or other plan
described in Section 4064(a) of ERISA, has made contributions at any time during
the immediately preceding five plan years.
"Permitted Asset Adjustments" means the write-down in the book value of
any flight and non-flight equipment assets owned by Borrower or its Subsidiaries
of up to [***] in the aggregate occurring after January 1, 2005; provided,
however, that the maximum amount of the write-down for non-flight assets
included in calculating Permitted Asset Adjustments will be [***], all
determined in accordance with GAAP.
"Person" means any natural person, corporation, limited liability company,
trust, joint venture, association, company, partnership, Governmental Authority
or other entity.
"Plan" means any "employee benefit plan" (as such term is defined in
Section 3(3) of ERISA) established by Borrower or, with respect to any such plan
that is subject to Section 412 of the Code or Title IV of ERISA, any ERISA
Affiliate.
"Platform" has the meaning specified in Section 6.02.
"Pledged Aircraft" means each Aircraft in which the Security Agreement
creates, or purports to create, a security interest.
"Qualified Appraisal" means a desk-top appraisal of the Aircraft
Collateral addressed to the Administrative Agent, Lenders and Borrower by an
Approved Appraiser. Each such appraisal shall be in a form that is reasonably
acceptable to the Administrative Agent and shall be accompanied by a letter
stating that the purpose of the appraisal is to provide a report, upon which the
Administrative Agent and Lenders may rely, of the value of the Pledged Aircraft
as Aircraft Collateral under the Security Agreement. Each such appraisal shall
set forth the current market value of each Pledged Aircraft (including any
Aircraft being added to the Aircraft Collateral and excluding any Aircraft being
removed from the Aircraft Collateral) determined in accordance with the
definition of "current market value" promulgated by the International Society of
Transport Aircraft Trading, as of the date of such appraisal.
"Register" has the meaning specified in Section 10.06(c).
"Registered Public Accounting Firm" has the meaning specified in the
Securities Laws and shall be independent of the Borrower as prescribed by the
Securities Laws.
"Related Parties" means, with respect to any Person, such Person's
Affiliates and the partners, directors, officers, employees, agents and advisors
of such Person and of such Person's Affiliates.
* Indicates that certain information contained herein has been omitted and
filed separately with the Securities and Exchange Commission. Confidential
treatment has been requested with respect to the omitted portions.
18
"Removed Aircraft" has the meaning set forth in Section 6.15(d) hereof.
"Reportable Event" means any of the events set forth in Section 4043(c) of
ERISA, other than events for which the 30-day notice period has been waived.
"Required Lenders" means, as of any date of determination, Lenders having
more than 50% of the Aggregate Commitments or, if the commitment of each Lender
to make Loans has been terminated pursuant to Section 8.02, Lenders holding in
the aggregate more than 50% of the Outstanding Amount; provided that the
Commitment of, and the portion of the Outstanding Amount held or deemed held by,
any Defaulting Lender shall be excluded for purposes of making a determination
of Required Lenders.
"Responsible Officer" means the chief executive officer, president, chief
financial officer, vice president of finance, treasurer, assistant treasurer or
director of treasury of Borrower. Any document delivered hereunder that is
signed by a Responsible Officer of Borrower shall be conclusively presumed to
have been authorized by all necessary corporate and/or other action on the part
of Borrower and such Responsible Officer shall be conclusively presumed to have
acted on behalf of Borrower.
"Restricted Expenditure" means any Restricted Payment, Investment or
capital expenditure.
"Restricted Payment" means any cash dividend or distribution with respect
to any capital stock or other Equity Interest of Borrower or any Subsidiary, or
any payment (whether in cash, securities or other property), including any
sinking fund or similar deposit, on account of the purchase, redemption,
retirement, acquisition, cancellation or termination of any such capital stock
or other Equity Interest or on account of any return of capital to Borrower's
stockholders, partners or members (or the equivalent Person thereof).
"Sarbanes-Oxley" means the Sarbanes-Oxley Act of 2002.
"SEC" means the Securities and Exchange Commission, or any Governmental
Authority succeeding to any of its principal functions.
"Securities Laws" means the Securities Act of 1933, the Securities
Exchange Act of 1934, Sarbanes-Oxley and the applicable accounting and auditing
principles, rules, standards and practices promulgated, approved or incorporated
by the SEC or the Public Company Accounting Oversight Board, as each of the
foregoing may be amended and in effect on any applicable date hereunder.
"Security Agreement" means that certain Amended and Restated Aircraft
Chattel Mortgage Security Agreement dated as of the date hereof made by Borrower
in favor of the Administrative Agent in substantially the form of Exhibit F,
including any Security Agreement Supplements.
"Security Agreement Supplement" has the meaning specified in Section
6.15(b)(ii).
19
"Stage 3 Aircraft" means "Stage 3 Airframes" with "Stage 3 Engines"
installed owned by Borrower and qualifying as Stage 3 airplanes, as set forth in
Federal Aviation Regulation 36.1(f)(6), 14 C.F.R. Section 6.1(f)(6) or any
successor regulation, as amended; and "Stage 3 Engines" also include spare
engines which are suitable for use on Stage 3 Airframes and are being maintained
according to Borrower's normal and customary standards.
"Subordinated Liabilities" means liabilities subordinated to the
Obligations in a manner acceptable to Agent in its reasonable discretion.
"SPC" has the meaning specified in Section 10.06(h).
"Subsidiary" of a Person means a corporation, partnership, joint venture,
limited liability company or other business entity of which a majority of the
shares of securities or other interests having ordinary voting power for the
election of directors or other governing body (other than securities or
interests having such power only by reason of the happening of a contingency)
are at the time beneficially owned, or the management of which is otherwise
controlled, directly, or indirectly through one or more intermediaries, or both,
by such Person. Unless otherwise specified, all references herein to a
"Subsidiary" or to "Subsidiaries" shall refer to a Subsidiary or Subsidiaries of
Borrower.
"Swap Contract" means (a) any and all rate swap transactions, basis swaps,
credit derivative transactions, forward rate transactions, commodity swaps,
commodity options, forward commodity contracts, equity or equity index swaps or
options, bond or bond price or bond index swaps or options or forward bond or
forward bond price or forward bond index transactions, interest rate options,
forward foreign exchange transactions, cap transactions, floor transactions,
collar transactions, currency swap transactions, cross-currency rate swap
transactions, currency options, spot contracts, or any other similar
transactions or any combination of any of the foregoing (including any options
to enter into any of the foregoing), whether or not any such transaction is
governed by or subject to any master agreement, and (b) any and all transactions
of any kind, and the related confirmations, which are subject to the terms and
conditions of, or governed by, any form of master agreement published by the
International Swaps and Derivatives Association, Inc., any International Foreign
Exchange Master Agreement, or any other master agreement (any such master
agreement, together with any related schedules, a "Master Agreement"), including
any such obligations or liabilities under any Master Agreement.
"Swap Termination Value" means, in respect of any one or more Swap
Contracts, after taking into account the effect of any legally enforceable
netting agreement relating to such Swap Contracts, (a) for any date on or after
the date such Swap Contracts have been closed out and termination value(s)
determined in accordance therewith, such termination value(s), and (b) for any
date prior to the date referenced in clause (a), the amount(s) determined as the
mark-to-market value(s) for such Swap Contracts, as determined based upon one or
more mid-market or other readily available quotations provided by any recognized
dealer in such Swap Contracts (which may include a Lender or any Affiliate of a
Lender).
"Synthetic Lease Obligation" means the monetary obligation of a Person
under (a) a so-called synthetic, off-balance sheet or tax retention lease, or
(b) an agreement for the use or
20
possession of property creating obligations that do not appear on the balance
sheet of such Person but which, upon the insolvency or bankruptcy of such
Person, would be characterized as the indebtedness of such Person (without
regard to accounting treatment).
"Taxes" means all present or future taxes, levies, imposts, duties,
deductions, withholdings, assessments, fees or other charges imposed by any
Governmental Authority, including any interest, additions to tax or penalties
applicable thereto.
"Threshold Amount" means [***].
"Total Liabilities" means the sum of current liabilities plus long term
liabilities.
"Type" means, with respect to a Loan, its character as a Base Rate Loan or
a Eurodollar Rate Loan.
"Unfunded Pension Liability" means the excess of a Pension Plan's benefit
liabilities under Section 4001(a)(16) of ERISA, over the current value of that
Pension Plan's assets, determined in accordance with the assumptions used for
funding the Pension Plan pursuant to Section 412 of the Code for the applicable
plan year.
"United States" and "U.S." mean the United States of America.
"U.S. Air Carrier" means any United States air carrier engaged in
scheduled air transportation and in all material respects duly qualified and
licensed under all applicable Laws to carry on its business as a scheduled
airline currently subject to regulation by the Federal Aviation Administration
and the Department of Transportation as to which there is in force a certificate
issued pursuant to Section 401 of the Federal Aviation Act, 49 U.S.C. Section
41101 et seq., and as to which there is in force an air carrier operating
certificate issued under Part 121 of the Federal Aviation Regulations, or which
may operate as an air carrier by certificate or otherwise under any successor or
substitute provisions therefor or in the absence thereof.
"Valuation Date" means, with respect to any Qualified Appraisal, the date
as of which the Current Market Value of the Aircraft Collateral is determined
according to such appraisal.
1.02 OTHER INTERPRETIVE PROVISIONS. With reference to this Agreement and
each other Loan Document, unless otherwise specified herein or in such other
Loan Document:
(a) The definitions of terms herein shall apply equally to the singular
and plural forms of the terms defined. Whenever the context may require, any
pronoun shall include the corresponding masculine, feminine and neuter forms.
The words "include," "includes" and "including" shall be deemed to be followed
by the phrase "without limitation." The word "will" shall be construed to have
the same meaning and effect as the word "shall." Unless the context requires
otherwise, (i) any definition of or reference to any agreement, instrument or
other document (including any Organization Document) shall be construed as
referring to such agreement, instrument or other document as from time to time
amended, supplemented or otherwise modified (subject to any restrictions on such
amendments, supplements or modifications set forth herein or in any other Loan
Document), (ii) any reference herein to any
* Indicates that certain information contained herein has been omitted and
filed separately with the Securities and Exchange Commission. Confidential
treatment has been requested with respect to the omitted portions.
21
Person shall be construed to include such Person's successors and assigns, (iii)
the words "herein," "hereof" and "hereunder," and words of similar import when
used in any Loan Document, shall be construed to refer to such Loan Document in
its entirety and not to any particular provision thereof, (iv) all references in
a Loan Document to Articles, Sections, Exhibits and Schedules shall be construed
to refer to Articles and Sections of, and Exhibits and Schedules to, the Loan
Document in which such references appear, (v) any reference to any law shall
include all statutory and regulatory provisions consolidating, amending,
replacing or interpreting such law and any reference to any law or regulation
shall, unless otherwise specified, refer to such law or regulation as amended,
modified or supplemented from time to time, and (vi) the words "asset" and
"property" shall be construed to have the same meaning and effect and to refer
to any and all tangible and intangible assets and properties, including cash,
securities, accounts and contract rights.
(b) In the computation of periods of time from a specified date to a later
specified date, the word "from" means "from and including;" the words "to" and
"until" each mean "to but excluding;" and the word "through" means "to and
including."
(c) Section headings herein and in the other Loan Documents are included
for convenience of reference only and shall not affect the interpretation of
this Agreement or any other Loan Document.
1.03 ACCOUNTING TERMS.
(a) Generally. All accounting terms not specifically or completely defined
herein shall be construed in conformity with, and all financial data (including
financial ratios and other financial calculations) required to be submitted
pursuant to this Agreement shall be prepared in conformity with, GAAP applied on
a consistent basis, as in effect from time to time, applied in a manner
consistent with that used in preparing the Audited Financial Statements, except
as otherwise specifically prescribed herein.
(b) Changes in GAAP. If, at any time, any change in GAAP or in practices
or estimates which are in accordance with GAAP (each, a "Change") would affect
the computation of any financial ratio or requirement set forth in any Loan
Document, and either Borrower or the Required Lenders shall so request, then
Agent, Lenders and Borrower shall negotiate in good faith to amend such ratio or
requirement to preserve the original intent thereof in light of such Change
(subject to the approval of the Required Lenders); provided that, until so
amended, (i) such ratio or requirement shall continue to be computed in
accordance with GAAP and such practices and estimates prior to such Change and
(ii) Borrower shall provide to Agent and Lenders financial statements and other
documents required under this Agreement or as reasonably requested hereunder
setting forth a reconciliation between calculations of such ratio or requirement
made before and after giving effect to such Change.
1.04 ROUNDING. Any financial ratios required to be maintained by Borrower
pursuant to this Agreement shall be calculated by dividing the appropriate
component by the other component, carrying the result to one place more than the
number of places by which such ratio is expressed herein and rounding the result
up or down to the nearest number (with a rounding-up if there is no nearest
number).
22
1.05 TIMES OF DAY. Unless otherwise specified, all references herein to
times of day shall be references to Pacific time (daylight or standard, as
applicable).
ARTICLE II.
THE COMMITMENTS AND CREDIT EXTENSIONS
2.01 LOANS. Subject to the terms and conditions and relying upon the
representations and warranties set forth herein, each Lender, severally and not
jointly, agrees to make loans (each such loan, a "Loan") to Borrower from time
to time, on any Business Day during the Availability Period, in an aggregate
amount not to exceed at any time outstanding the amount of such Lender's
Commitment; provided, however, that after giving effect to any Borrowing, (i)
the Outstanding Amount shall not exceed the Aggregate Commitments, (ii) the
Outstanding Amount of the Loans of any Lender shall not exceed such Lender's
Commitment, and (iii) the Outstanding Amount shall not exceed the Borrowing
Base. Within the limits of each Lender's Commitment, and subject to the other
terms and conditions hereof, Borrower may borrow under this Section 2.01, prepay
under Section 2.03, and reborrow under this Section 2.01. Loans may be Base Rate
Loans or Eurodollar Rate Loans, as further provided herein.
2.02 BORROWINGS, CONVERSIONS AND CONTINUATIONS OF LOANS.
(a) Each Borrowing, each conversion of Loans from one Type to the other,
and each continuation of Eurodollar Rate Loans shall be made upon Borrower's
irrevocable notice to Agent, which may be given by telephone. Each such notice
must be received by Agent not later than 11:00 a.m. (i) three Business Days
prior to the requested date of any Borrowing of, conversion to or continuation
of Eurodollar Rate Loans or of any conversion of Eurodollar Rate Loans to Base
Rate Loans, and (ii) on the requested date of any Borrowing of Base Rate Loans.
Each telephonic notice by Borrower pursuant to this Section 2.02(a) must be
confirmed promptly by delivery to Agent of a written Loan Notice, appropriately
completed and signed by a Responsible Officer of Borrower. Each Borrowing of,
conversion to or continuation of Eurodollar Rate Loans shall be in a principal
amount of $5,000,000 or a whole multiple of $1,000,000 in excess thereof. Each
Borrowing of or conversion to Base Rate Loans shall be in a principal amount of
$1,000,000 or a whole multiple of $500,000 in excess thereof. Each Loan Notice
(whether telephonic or written) shall specify (i) whether Borrower is requesting
a Borrowing, a conversion of Loans from one Type to the other, or a continuation
of Eurodollar Rate Loans, (ii) the requested date of the Borrowing, conversion
or continuation, as the case may be (which shall be a Business Day), (iii) the
principal amount of Loans to be borrowed, converted or continued, (iv) the Type
of Loans to be borrowed or to which existing Loans are to be converted, and (v)
if applicable, the duration of the Interest Period with respect thereto. If
Borrower fails to specify a Type of Loan in a Loan Notice or if Borrower fails
to give a timely notice requesting a conversion or continuation, then the
applicable Loans shall be made as, or converted to, Base Rate Loans. Any such
automatic conversion to Base Rate Loans shall be effective as of the last day of
the Interest Period then in effect with respect to the applicable Eurodollar
Rate Loans. If Borrower requests a Borrowing of, conversion to, or continuation
of Eurodollar Rate Loans in any such Loan Notice, but fails to specify an
Interest Period, it will be deemed to have specified an Interest Period of one
month.
23
(b) Each Loan Notice submitted by Borrower shall be deemed to be a
representation and warranty that (i) since the Closing Date no event or
circumstance has had or could be reasonably expected to have, either
individually or in the aggregate, a Material Adverse Effect; (ii) no Default or
Collateral Shortfall exists or will exist upon giving effect to the requested
Borrowing, conversion or continuation, and (iii) the conditions specified in
Section 4.02(a) have been satisfied, on and as of the date of the applicable
Borrowing, conversion of Loans from one Type to the other, or continuation of
Eurodollar Rate Loans.
(c) Following receipt of a Loan Notice, Agent shall promptly notify each
Lender of the amount of its Applicable Percentage of the applicable Loans, and
if no timely notice of a conversion or continuation is provided by Borrower,
Agent shall notify each Lender of the details of any automatic conversion to
Base Rate Loans described in the preceding subsection. In the case of a
Borrowing, each Lender shall make the amount of its Loan available to Agent in
immediately available funds at Administrative Agent's Office not later than 1:00
p.m. on the Business Day specified in the applicable Loan Notice. Upon
satisfaction of the applicable conditions set forth in Section 4.02 (and, if
such Borrowing is the initial Borrowing, Section 4.01), Agent shall make all
funds so received available to Borrower in like funds as received by Agent
either by (i) crediting the account of Borrower on the books of Bank of America
with the amount of such funds or (ii) wire transfer of such funds, in each case
in accordance with instructions provided to (and reasonably acceptable to) Agent
by Borrower.
(d) Except as otherwise provided herein, a Eurodollar Rate Loan may be
continued or converted only on the last day of an Interest Period for such
Eurodollar Rate Loan. During the existence of a Default, no Loans may be
requested as, converted to or continued as Eurodollar Rate Loans without the
consent of the Required Lenders. During the existence of an Event of Default, if
Agent declares all amounts owing under this Agreement to be immediately due and
payable pursuant to Section 8.02, then the Required Lenders may also demand that
any or all of the then outstanding Eurodollar Rate Loans be converted
immediately to Base Rate Loans and Borrower agrees to pay all amounts due under
Section 3.05 in accordance with the terms thereof due to any such conversion.
(e) Agent shall promptly notify Borrower and Lenders of the interest rate
applicable to any Interest Period for Eurodollar Rate Loans upon determination
of such interest rate. At any time that Base Rate Loans are outstanding, the
Administrative Agent shall notify the Borrower and the Lenders of any change in
Bank of America's prime rate used in determining the Base Rate promptly
following the public announcement of such change.
(f) After giving effect to all Borrowings, all conversions of Loans from
one Type to the other, and all continuations of Loans as the same Type, there
shall not be more than 5 Interest Periods in effect at any one time with respect
to Loans.
2.03 PREPAYMENTS.
(a) Borrower may, upon notice to Agent, at any time or from time to time
voluntarily prepay Loans in whole or in part without premium or penalty;
provided that (i) such notice must be received by Agent not later than 11:00
a.m. (A) three Business Days prior to any date of prepayment of Eurodollar Rate
Loans and (B) on the date of prepayment of Base Rate Loans;
24
(ii) any prepayment of Eurodollar Rate Loans shall be in a principal amount of
$5,000,000 or a whole multiple of $1,000,000 in excess thereof; and (iii) any
prepayment of Base Rate Loans shall be in a principal amount of $1,000,000 or a
whole multiple of $500,000 in excess thereof or, in each case, if less, the
entire principal amount thereof then outstanding. Each such notice shall specify
the date and amount of such prepayment and the Type(s) of Loans to be prepaid.
Agent will promptly notify each Lender of its receipt of each such notice, and
of the amount of such Lender's Applicable Percentage of such prepayment. If such
notice is given by Borrower, Borrower shall make such prepayment and the payment
amount specified in such notice shall be due and payable on the date specified
therein. Any prepayment of a Eurodollar Rate Loan shall be accompanied by all
accrued interest on the amount prepaid, together with any additional amounts
required pursuant to Section 3.05. Each such prepayment shall be applied to the
Loans of Lenders in accordance with their respective Applicable Percentages.
(b) If for any reason the Outstanding Amount at any time exceeds the
Aggregate Commitments then in effect, Borrower shall immediately prepay Loans in
an aggregate amount equal to such excess. If for any reason the Outstanding
Amount at any time exceeds the Borrowing Base (an "Over Advance") then in
effect, Borrower shall either: (i) immediately prepay Loans in an aggregate
amount equal to such Over Advance or (ii) cure such Over Advance by pledging
additional Collateral in accordance with Section 6.15(b) within five Business
Days.
2.04 TERMINATION OR REDUCTION OF COMMITMENTS. Borrower may, upon notice to
Agent, terminate the Aggregate Commitments, or from time to time permanently
reduce the Aggregate Commitments; provided that (i) any such notice shall be
received by Agent not later than 11:00 a.m. five Business Days prior to the date
of termination or reduction, (ii) any such partial reduction shall be in an
aggregate amount of $5,000,000 or any whole multiple of $1,000,000 in excess
thereof, and (iii) Borrower shall not terminate or reduce the Aggregate
Commitments if, after giving effect thereto and to any concurrent prepayments
hereunder, the Outstanding Amount would exceed the Aggregate Commitments. Agent
will promptly notify the Lenders of any such notice of termination or reduction
of the Aggregate Commitments. Any reduction of the Aggregate Commitments shall
be applied to the Commitment of each Lender according to its Applicable
Percentage. All fees accrued until the effective date of any termination of the
Aggregate Commitments shall be paid on the effective date of such termination.
2.05 REPAYMENT OF LOANS. Borrower shall repay to Lenders on the Maturity
Date the aggregate principal amount of Loans outstanding on such date.
2.06 INTEREST.
(a) Subject to the provisions of subsection (b) below, (i) each Eurodollar
Rate Loan shall bear interest on the outstanding principal amount thereof for
each Interest Period at a rate per annum equal to the Eurodollar Rate for such
Interest Period plus the Applicable Rate; and (ii) each Base Rate Loan shall
bear interest on the outstanding principal amount thereof from the applicable
borrowing date at a rate per annum equal to the Base Rate plus the Applicable
Rate.
25
(b) (i) If any amount of principal of any Loan is not paid when due
(without regard to any applicable grace periods), whether at stated maturity, by
acceleration or otherwise, such amount shall thereafter bear interest at a
fluctuating interest rate per annum at all times equal to the Default Rate to
the fullest extent permitted by applicable Laws.
(ii) If any amount (other than principal of any Loan) payable by
Borrower under any Loan Document is not paid when due (without regard to
any applicable grace periods), whether at stated maturity, by acceleration
or otherwise, then upon the request of the Required Lenders, such amount
shall thereafter bear interest at a fluctuating interest rate per annum at
all times equal to the Default Rate to the fullest extent permitted by
applicable Laws.
(iii) Upon the request of the Required Lenders, while any Event of
Default exists, Borrower shall pay interest on the principal amount of all
outstanding Obligations hereunder at a fluctuating interest rate per annum
at all times equal to the Default Rate to the fullest extent permitted by
applicable Laws.
(iv) Accrued and unpaid interest on past due amounts (including
interest on past due interest) shall be due and payable upon demand.
(c) Interest on each Loan shall be due and payable in arrears on each
Interest Payment Date applicable thereto and at such other times as may be
specified herein. Interest hereunder shall be due and payable in accordance with
the terms hereof before and after judgment, and before and after the
commencement of any proceeding under any Debtor Relief Law.
2.07 FEES.
(a) Commitment Fee. Borrower shall pay to Agent for the account of each
Lender in accordance with its Applicable Percentage, a commitment fee equal to
the Applicable Rate times the actual daily amount by which the Aggregate
Commitments exceed the Outstanding Amount. The commitment fee shall accrue at
all times during the Availability Period, including at any time during which one
or more of the conditions in Article IV is not met, and shall be due and payable
quarterly in arrears on the last Business Day of each March, June, September and
December, commencing with the first such date to occur after the Closing Date,
and on the Maturity Date. The commitment fee shall be calculated quarterly in
arrears, and if there is any change in the Applicable Rate during any quarter,
the actual daily amount shall be computed and multiplied by the Applicable Rate
separately for each period during such quarter that such Applicable Rate was in
effect.
(b) Agent's Fees. Borrower shall pay to Agent for Agent's own account,
fees in the amounts and at the times specified in the letter agreement, dated
November 30, 2004 (the "Agent Fee Letter"), between Borrower and Agent. Such
fees shall be fully earned when paid and shall be nonrefundable for any reason
whatsoever.
(c) Arrangement and Upfront Fee. Immediately upon the execution and
delivery of this Agreement, Borrower shall pay the arrangement fees and the
upfront fees set forth in, and in
26
accordance with, the letter agreement, dated November 30, 2004 (the
"Arrangement/Upfront Fee Letter"), among Borrower, the Joint Lead Arrangers and
certain Lenders. Such fees shall be fully earned when paid and shall be
nonrefundable for any reason whatsoever. The upfront fee shall be in an amount
equal to: (i) for each Lender having a Commitment of [***] or less, [***] basis
points times such Lender's Commitment, and (ii) for each Lender having a
Commitment of more than [***], [***] basis points times such Lender's
Commitment.
2.08 COMPUTATION OF INTEREST AND FEES. All computations of interest for
Base Rate Loans when the Base Rate is determined by Bank of America's "prime
rate" shall be made on the basis of a year of 365 or 366 days, as the case may
be, and actual days elapsed. All other computations of fees and interest shall
be made on the basis of a 360-day year and actual days elapsed (which results in
more fees or interest, as applicable, being paid than if computed on the basis
of a 365-day year). Interest shall accrue on each Loan for the day on which the
Loan is made, and shall not accrue on a Loan, or any portion thereof, for the
day on which the Loan or such portion is paid, provided that any Loan that is
repaid on the same day on which it is made shall, subject to Section 2.10(a),
bear interest for one day. Each determination by Agent of an interest rate or
fee hereunder shall be conclusive and binding for all purposes, absent manifest
error.
2.09 EVIDENCE OF DEBT. The Borrowings made by each Lender shall be
evidenced by one or more accounts or records maintained by such Lender and by
Agent in the ordinary course of business. The accounts or records maintained by
Agent and each Lender shall be conclusive absent manifest error of the amount of
the Borrowings made by Lenders to Borrower and the interest and payments
thereon. Any failure to so record or any error in doing so shall not, however,
limit or otherwise affect the obligation of Borrower hereunder to pay any amount
owing with respect to the Obligations. In the event of any conflict between the
accounts and records maintained by any Lender and the accounts and records of
Agent in respect of such matters, the accounts and records of Agent shall
control in the absence of manifest error. Upon the request of any Lender made
through Agent, Borrower shall execute and deliver to such Lender (through Agent)
a Note, which shall evidence such Lender's Loans in addition to such accounts or
records. Each Lender may attach schedules to its Note and endorse thereon the
date, Type (if applicable), amount and maturity of its Loans and payments with
respect thereto.
2.10 PAYMENTS GENERALLY; AGENT'S CLAWBACK.
(a) (i) General. All payments to be made by Borrower shall be made
without condition or deduction for any counterclaim, defense, recoupment or
setoff. Except as otherwise expressly provided herein, all payments by Borrower
hereunder shall be made to Agent, for the account of the respective Lenders to
which such payment is owed, at the Administrative Agent's Office in Dollars and
in immediately available funds not later than 12:00 noon on the date specified
herein. Agent will promptly distribute to each Lender its Applicable Percentage
(or other applicable share as provided herein) of such payment in like funds as
received by wire transfer to such Lender's Lending Office. All payments received
by Agent after 12:00 noon shall be deemed received on the next succeeding
Business Day and any applicable interest or fee shall continue to accrue. If any
payment to be made by Borrower shall come due on a day other than a Business
Day, payment shall be made on the next following Business Day, and such
extension of time shall be reflected in computing interest or fees, as the case
may be.
* Indicates that certain information contained herein has been omitted and
filed separately with the Securities and Exchange Commission. Confidential
treatment has been requested with respect to the omitted portions.
27
(ii) On each date when the payment of any principal, interest or
fees are due hereunder or under any Note, if Agent gives Borrower one Business
Day's prior notice of the amount of such payment, Borrower agrees to maintain on
deposit in an ordinary checking account maintained by Borrower with Agent (as
such account shall be designated by Borrower in a written notice to Agent from
time to time, the "Borrower Account") an amount sufficient to pay such
principal, interest or fees in full on such date. Borrower hereby authorizes
Agent (A) to deduct automatically all principal, interest or fees when due
hereunder or under any Note from the Borrower Account, and (B) if and to the
extent any payment of principal, interest or fees under this Agreement or any
Note is not made when due to deduct any such amount from any or all of the
accounts of Borrower maintained at Agent. Agent agrees to provide written notice
to Borrower of any automatic deduction made pursuant to this Section 2.10(a)(ii)
showing in reasonable detail the amounts of such deduction. Lenders agree to
reimburse Borrower based on their Applicable Percentage for any amounts deducted
from such accounts in excess of amount due hereunder and under any other Loan
Documents.
(b) (i) Funding by Lenders; Presumption by Agent. Unless Agent shall
have received notice from a Lender prior to the proposed date of any Borrowing
that such Lender will not make available to Agent such Lender's share of such
Borrowing, Agent may assume that such Lender has made such share available on
such date in accordance with Section 2.02 and may, in reliance upon such
assumption, make available to Borrower a corresponding amount. In such event, if
a Lender has not in fact made its share of the applicable Borrowing available to
Agent, then the applicable Lender and Borrower severally agree to pay to Agent
forthwith on demand such corresponding amount in immediately available funds
with interest thereon, for each day from and including the date such amount is
made available to Borrower to but excluding the date of payment to Agent, at (A)
in the case of a payment to be made by such Lender, the greater of the Federal
Funds Rate and a rate determined by Agent in accordance with banking industry
rules on interbank compensation, plus any administrative, processing or similar
fees customarily charged by Agent in connection with the foregoing and (B) in
the case of a payment to be made by Borrower, the interest rate applicable to
Base Rate Loans. If Borrower and such Lender shall pay such interest to Agent
for the same or an overlapping period, Agent shall promptly remit to Borrower
the amount of such interest paid by Borrower for such period. If such Lender
pays its share of the applicable Borrowing to Agent, then the amount so paid
shall constitute such Lender's Loan included in such Borrowing. Any payment by
Borrower shall be without prejudice to any claim Borrower may have against a
Lender that shall have failed to make such payment to Agent.
(ii) Payments by Borrower; Presumptions by Agent. Unless Agent shall
have received notice from Borrower prior to the date on which any payment is due
to Agent for the account of the Lenders that Borrower will not make such
payment, Agent may assume that Borrower has made such payment on such date in
accordance herewith and may, in reliance upon such assumption, distribute to
Lenders the amount due. In such event, if Borrower has not in fact made such
payment, then each of Lenders severally agrees to repay to Agent forthwith on
demand the amount so distributed to such Lender, in immediately available funds
with interest thereon, for each day from and including the date such amount is
distributed to it but excluding the date of payment to Agent, at the greater of
the Federal Funds Rate and a rate determined by Agent in accordance with banking
industry rules on interbank compensation. A notice of Agent
28
to any Lender or Borrower with respect to any amount owing under this subsection
(b) shall be conclusive, absent manifest error.
(c) Failure to Satisfy Conditions Precedent. If any Lender makes available
to Agent funds for any Loan to be made by such Lender as provided in the
foregoing provisions of this Article II, and such funds are not made available
to Borrower by Agent because the conditions to the applicable Borrowing set
forth in Article IV are not satisfied or waived in accordance with the terms
hereof, Agent shall return such funds (in like funds as received from such
Lender) to such Lender, without interest.
(d) Obligations of Lenders Several. The obligations of Lenders hereunder
to make Loans and to make payments under Section 10.04(c) are several and not
joint. The failure of any Lender to make any Loan, to fund any such
participation or to make any payment under Section 10.04(c) on any date required
hereunder shall not relieve any other Lender of its corresponding obligation to
do so on such date, and no Lender shall be responsible for the failure of any
other Lender to so make its Loan, purchase its participation or to make its
payment under Section 10.04(c):
(e) Funding Source. Nothing herein shall be deemed to obligate any Lender
to obtain the funds for any Loan in any particular place or manner or to
constitute a representation by any Lender that it has obtained or will obtain
the funds for any Loan in any particular place or manner.
2.11 SHARING OF PAYMENTS. If any Lender shall, by exercising any right of
setoff or counterclaim or otherwise, obtain payment in respect of any principal
of or interest on any of the Loans made by it resulting in such Lender's
receiving payment of a proportion of the aggregate amount of such Loans or
participations and accrued interest thereon greater than its pro rata share
thereof as provided herein, then the Lender receiving such greater proportion
shall (a) notify Agent of such fact, and (b) purchase (for cash at face value)
participations in the Loans of the other Lenders, or make such other adjustments
as shall be equitable, so that the benefit of all such payments shall be shared
by the Lenders ratably in accordance with the aggregate amount of principal of
and accrued interest on their respective Loans and other amounts owing them,
provided that:
(i) if any such participations or subparticipations are purchased
and all or any portion of the payment giving rise thereto is recovered,
such participations or subparticipations shall be rescinded and the
purchase price restored to the extent of such recovery, without interest;
and
(ii) the provisions of this Section shall not be construed to apply
to (x) any payment made by Borrower pursuant to and in accordance with the
express terms of this Agreement or (y) any payment obtained by a Lender as
consideration for the assignment of or sale of a participation in any of
its Loans to any assignee or participant, other than to Borrower or any
Subsidiary thereof (as to which the provisions of this Section shall
apply).
29
Borrower consents to the foregoing and agrees, to the extent it may
effectively do so under applicable law, that any Lender acquiring a
participation pursuant to the foregoing arrangements may exercise against
Borrower rights of setoff and counterclaim with respect to such participation as
fully as if such Lender were a direct creditor of Borrower in the amount of such
participation.
2.12 SECURITY. All obligations of Borrower under this Agreement, the Notes
and the other Loan Documents shall be secured in accordance with the Collateral
Documents.
ARTICLE III.
TAXES, YIELD PROTECTION AND ILLEGALITY
3.01 TAXES.
(a) Payments Free of Taxes. Any and all payments by Borrower to or on
account of any obligation of Borrower hereunder or under any other Loan Document
shall be made free and clear of and without reduction or withholding for any
Indemnified Taxes, provided that if Borrower shall be required by any applicable
law to deduct any Indemnified Taxes from such payments, then, (i) the sum
payable shall be increased as necessary so that after making all required
deductions (including deductions applicable to additional sums payable under
this Section), Agent or Lender, as the case may be, receives an amount equal to
the sum it would have received had no such deductions been made, (ii) Borrower
shall make such deductions, and (iii) Borrower shall timely pay the full amount
deducted to the relevant Governmental Authority in accordance with applicable
law.
(b) Payment of Other Taxes by Borrower. Without limiting the provisions of
subsection (a) above, Borrower shall timely pay any Other Taxes to the relevant
Governmental Authority in accordance with applicable law.
(c) Indemnification by Borrower. Borrower shall indemnify Agent and each
Lender, within 30 days after demand therefor, for the full amount of any
Indemnified Taxes (including Indemnified Taxes imposed or asserted on or
attributable to amounts payable under this Section) paid or incurred by Agent or
such Lender, as the case may be, and any penalties, interest and reasonable
expenses arising therefrom or with respect thereto, whether or not such
Indemnified Taxes were correctly or legally imposed or asserted by the relevant
Governmental Authority. A certificate as to the amount of such payment or
liability delivered to Borrower by a Lender (with a copy to Agent), or by Agent
on its own behalf or on behalf of a Lender, shall be conclusive absent manifest
error.
(d) Evidence of Payments. As soon as practicable after any payment of
Indemnified Taxes by Borrower to a Governmental Authority, Borrower shall
deliver to Agent the original or a certified copy of a receipt issued by such
Governmental Authority evidencing such payment, a copy of the return reporting
such payment or other evidence of such payment reasonably satisfactory to Agent.
(e) Status of Lenders. Any Foreign Lender that is entitled to an exemption
from or reduction of withholding tax under the law of the jurisdiction in which
the Borrower is resident
30
for tax purposes, or any treaty to which such jurisdiction is a party, with
respect to payments hereunder or under any other Loan Document shall deliver to
the Borrower (with a copy to the Administrative Agent), at the time or times
prescribed by applicable law or reasonably requested by the Borrower or the
Administrative Agent, such properly completed and executed documentation
prescribed by applicable law as will permit such payments to be made without
withholding or at a reduced rate of withholding. In addition, any Lender, if
requested by the Borrower or the Administrative Agent, shall deliver such other
documentation prescribed by applicable law or reasonably requested by the
Borrower or the Administrative Agent as will enable the Borrower or the
Administrative Agent to determine whether or not such Lender is subject to
backup withholding or information reporting requirements.
Without limiting the generality of the foregoing, in the event that the Borrower
is resident for tax purposes in the United States, any Foreign Lender shall
deliver to the Borrower and the Administrative Agent (in such number of copies
as shall be requested by the recipient) on or prior to the date on which such
Foreign Lender becomes a Lender under this Agreement (and from time to time
thereafter upon the request of the Borrower or the Administrative Agent, but
only if such Foreign Lender is legally entitled to do so), whichever of the
following is applicable:
(i) duly completed copies of Internal Revenue Service Form W-8BEN claiming
eligibility for benefits of an income tax treaty to which the United
States is a party,
(ii) duly completed copies of Internal Revenue Service Form W-8ECI,
(iii) in the case of a Foreign Lender claiming the benefits of the
exemption for portfolio interest under section 881(c) of the Code, (x) a
certificate to the effect that such Foreign Lender is not (A) a "bank"
within the meaning of section 881(c)(3)(A) of the Code, (B) a "10 percent
shareholder" of the Borrower within the meaning of section 881(c)(3)(B) of
the Code, or (C) a "controlled foreign corporation" described in section
881(c)(3)(C) of the Code or (D) is otherwise entitled to an exemption from
U.S. tax under Section 88(c) on the date it acquires its interest herein,
and (y) duly completed copies of Internal Revenue Service Form W-8BEN, or
(iv) any other form prescribed by applicable law as a basis for claiming
exemption from or a reduction in United States Federal withholding tax
duly completed together with such supplementary documentation as may be
prescribed by applicable law to permit the Borrower to determine the
withholding or deduction required to be made.
(f) Treatment of Certain Refunds. If Agent or any Lender determines, in
its sole discretion, that it has received a refund of any Taxes as to which it
has been indemnified by Borrower or with respect to which Borrower has paid
additional amounts pursuant to this Section, it shall pay to Borrower an amount
equal to such refund (but only to the extent of indemnity payments made, or
additional amounts paid, by Borrower under this Section with respect to the
Taxes giving rise to such refund), net of all out-of-pocket expenses of Agent or
such Lender, as the case may be, and without interest (other than any interest
paid by the relevant Governmental Authority with respect to such refund),
provided that Borrower, upon the request of Agent, such Lender agrees to repay
the amount paid over to Borrower (plus any penalties,
31
interest or other charges imposed by the relevant Governmental Authority) to
Agent or such Lender in the event Agent or such Lender is required to repay such
refund to such Governmental Authority. This subsection shall not be construed to
require Agent or any Lender to make available its tax returns (or any other
information relating to its taxes that it deems confidential) to the Borrower or
any other Person.
3.02 ILLEGALITY. If any Lender determines that any Law has made it
unlawful, or that any Governmental Authority has asserted that it is unlawful,
for any Lender or its applicable Lending Office to make, maintain or fund
Eurodollar Rate Loans, or to determine or charge interest rates based upon the
Eurodollar Rate, or any Governmental Authority has imposed material restrictions
on the authority of such Lender to purchase or sell, or to take deposits of,
Dollars in the London interbank market, then, on notice thereof by such Lender
to Borrower through Agent, any obligation of such Lender to make or continue
Eurodollar Rate Loans or to convert Base Rate Loans to Eurodollar Rate Loans
shall be suspended until such Lender notifies Agent and Borrower that the
circumstances giving rise to such determination no longer exist. Upon receipt of
such notice, Borrower shall, upon demand from such Lender (with a copy to
Agent), prepay or, if applicable, convert all Eurodollar Rate Loans of such
Lender to Base Rate Loans, either on the last day of the Interest Period
therefor, if such Lender may lawfully continue to maintain such Eurodollar Rate
Loans to such day, or immediately, if such Lender may not lawfully continue to
maintain such Eurodollar Rate Loans. Upon any such prepayment or conversion,
Borrower shall also pay accrued interest on the amount so prepaid or converted
and all amounts due under Section 3.05 in accordance with the terms thereof due
to such prepayment or conversion.
3.03 INABILITY TO DETERMINE RATES. If the Required Lenders determine, in
connection with any request for a Eurodollar Rate Loan or a conversion to or
continuation thereof, that (a) Dollar deposits are not being offered to banks in
the London interbank eurodollar market for the applicable amount and Interest
Period of such Eurodollar Rate Loan, (b) adequate and reasonable means do not
exist for determining the Eurodollar Base Rate for any requested Interest Period
with respect to a proposed Eurodollar Rate Loan, or (c) an unusual or
extraordinary event or circumstance occurs or exists affecting the applicable
offshore Dollar market such that the Eurodollar Base Rate for any requested
Interest Period with respect to a proposed Eurodollar Rate Loan does not
adequately and fairly reflect the cost to such Lenders of funding such Loan,
Agent will promptly so notify Borrower and each Lender. Thereafter, the
obligation of Lenders to make or maintain Eurodollar Rate Loans shall be
suspended until Agent (upon the instruction of the Required Lenders) revokes
such notice. Upon receipt of such notice, Borrower may revoke any pending
request for a Borrowing of, conversion to or continuation of Eurodollar Rate
Loans or, failing that, will be deemed to have converted such request into a
request for a Borrowing of Base Rate Loans in the amount specified therein.
3.04 INCREASED COSTS.
(a) Increased Costs Generally. If any Change in Law shall:
(i) impose, modify or deem applicable any reserve, special deposit,
compulsory loan, insurance charge or similar requirement against assets
of, deposits with
32
or for the account of, or credit extended or participated in by, any
Lender (except any reserve requirement reflected in the Eurodollar Rate);
or
(ii) impose on any Lender or the London interbank market any other
condition, cost or expense affecting this Agreement or Eurodollar Loans
made by such Lender or participation therein;
and the result of any of the foregoing shall be to increase the cost to such
Lender of making or maintaining any Eurodollar Loan (or of maintaining its
obligation to make any such Loan), or to reduce the amount of any sum received
or receivable by such Lender (whether of principal, interest or any other
amount) then, upon request of such Lender, Borrower will pay to such Lender such
additional amount or amounts as will compensate such Lender for such additional
costs incurred or reduction suffered.
(b) Capital Requirements. If any Lender reasonably determines that any
Change in Law affecting such Lender or any Lending Office of such Lender or such
Lender's holding company, if any, regarding capital requirements has or would
have the effect of reducing the rate of return on such Lender's capital or on
the capital of such Lender's holding company, if any, as a consequence of this
Agreement, the Commitment of such Lender or the Loans made by such Lender to a
level below that which such Lender or such Lender's holding company could have
achieved but for such Change in Law (taking into consideration such Lender's
policies and the policies of such Lender's holding company with respect to
capital adequacy), then from time to time Borrower will pay to such Lender such
additional amount or amounts as will compensate such Lender or such Lender's
holding company for any such reduction suffered.
(c) Certificates for Reimbursement. A certificate of a Lender setting
forth the amount or amounts necessary to compensate such Lender or its holding
company, as the case may be, as specified in subsection (a) or (b) of this
Section and, in reasonable detail, the basis for such calculation and delivered
to Borrower shall be conclusive absent manifest error. Borrower shall pay such
Lender the amount shown as due on any such certificate within 10 days after
receipt thereof. Such certificate shall also include a statement to the effect
that such compensation for additional costs incurred or reduction suffered
reflects a good faith and non-discriminatory allocation to this Agreement.
(d) Delay in Requests. Failure or delay on the part of any Lender to
demand compensation pursuant to the foregoing provisions of this Section shall
not constitute a waiver of such Lender's right to demand such compensation,
provided that Borrower shall not be required to compensate a Lender pursuant to
the foregoing provisions of this Section for any increased costs incurred or
reductions suffered more than 30 days prior to the date that such Lender
notifies Borrower of the Change in Law giving rise to such increased costs or
reductions and of such Lender's intention to claim compensation therefor (except
that, if the Change in Law giving rise to such increased costs or reductions is
retroactive, then the 30-day period referred to above shall be extended to
include the period of retroactive effect thereof).
3.05 COMPENSATION FOR LOSSES. Upon demand of any Lender (with a copy to
Agent) from time to time, Borrower shall promptly compensate such Lender for and
hold such Lender harmless from any loss, cost or expense incurred by it as a
result of:
33
(a) any continuation, conversion, payment or prepayment of any Loan other
than a Base Rate Loan on a day other than the last day of the Interest Period
for such Loan (whether voluntary, mandatory, automatic, by reason of
acceleration, or otherwise);
(b) any failure by Borrower (for a reason other than the failure of such
Lender to make a Loan) to prepay, borrow, continue or convert any Loan other
than a Base Rate Loan on the date or in the amount notified by Borrower; or
(c) any assignment of a Eurodollar Rate Loan on a day other than the last
day of the Interest Period thereof as a result of a request by the Borrower
pursuant to Section 10.13.
Borrower's compensation to any Lender under this Section 3.05 is intended to put
such Lender in the same financial position it would have been in had the event
referred to in clauses (a), (b) or (c) not occurred, including any loss of
anticipated profits. Borrower's compensation to any such Lender will include any
loss or expense arising from the liquidation or reemployment of funds obtained
by it to maintain such Loan or from fees payable to terminate the deposits from
which such funds were obtained. Borrower shall also pay any customary
administrative fees charged by such Lender in connection with the foregoing. For
purposes of calculating amounts payable by Borrower to Lenders under this
Section 3.05, each Lender shall be deemed to have funded each Eurodollar Rate
Loan made by it at the Eurodollar Base Rate used in determining the Eurodollar
Rate for such Loan by a matching deposit or other borrowing in the London
interbank eurodollar market for a comparable amount and for a comparable period,
whether or not such Eurodollar Rate Loan was in fact so funded.
3.06 MITIGATION OF OBLIGATIONS; REPLACEMENT OF LENDERS.
(a) Designation of Different Lending Office. If any Lender requests
compensation under Section 3.04, or Borrower is required to pay any additional
amount to any Lender or any Governmental Authority for the account of any Lender
pursuant to Section 3.01, or if any Lender gives a notice pursuant to Section
3.02, then such Lender shall use reasonable efforts to designate a different
Lending Office for funding or booking its Loans hereunder or to assign its
rights and obligations hereunder to another of its offices, branches or
affiliates, if, in the judgment of such Lender, such designation or assignment
(i) would eliminate or reduce amounts payable pursuant to Section 3.01 or 3.04,
as the case may be, in the future, or eliminate the need for the notice pursuant
to Section 3.02, as applicable, and (ii) in each case, would not subject such
Lender to any unreimbursed cost or expense and would not otherwise be
disadvantageous to such Lender. Borrower hereby agrees to pay all reasonable
costs and expenses incurred by any Lender in connection with any such
designation or assignment.
(b) Replacement of Lenders. If any Lender requests compensation under
Section 3.04, or if the Borrower is required to pay any additional amount to any
Lender or any Governmental Authority for the account of any Lender pursuant to
Section 3.01, the Borrower may replace such Lender in accordance with Section
10.13.
3.07 SURVIVAL. All of Borrower's obligations under this Article III shall
survive termination of the Aggregate Commitments and repayment of all other
Obligations hereunder.
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ARTICLE IV.
CONDITIONS PRECEDENT TO CREDIT EXTENSIONS
4.01 CONDITIONS OF INITIAL BORROWING. The obligation of each Lender to
make its initial Borrowing hereunder is subject to satisfaction of the following
conditions precedent:
(a) Agent's receipt of the following, each of which shall be originals or
telecopies (followed promptly by originals) unless otherwise specified, each
properly executed by a Responsible Officer of the Borrower, each dated the
Closing Date (or, in the case of certificates of governmental officials, a
recent date before the Closing Date) and each in form and substance satisfactory
to Agent and each of the Lenders:
(i) executed counterparts of this Agreement and all Collateral
Documents, sufficient in number for distribution to Agent, each Lender and
Borrower;
(ii) a Note executed by Borrower in favor of each Lender requesting
a Note;
(iii) such certificates of resolutions or other action, incumbency
certificates and/or other certificates of Responsible Officers of Borrower
as Agent may require evidencing the identity, authority and capacity of
each Responsible Officer thereof authorized to act as a Responsible
Officer in connection with this Agreement and the other Loan Documents;
(iv) such documents and certifications as Agent may reasonably
require to evidence that Borrower is duly organized or formed, and that
Borrower is validly existing, in good standing and qualified to engage in
business in each jurisdiction where its ownership, lease or operation of
properties or the conduct of its business requires such qualification,
except to the extent that failure to do so would not reasonably be
expected to have a Material Adverse Effect;
(v) a favorable opinion(s) of counsel to Borrower acceptable to
Agent addressed to Agent and each Lender, as to the matters set forth
concerning Borrower, the Loan Documents and the Collateral in form and
substance satisfactory to Agent, including an opinion from FAA counsel
acceptable to Agent as to the perfection and priority of the security
interest created by the Security Agreement;
(vi) a certificate of a Responsible Officer of Borrower either (A)
attaching copies of all consents, licenses and approvals required in
connection with the execution, delivery and performance by Borrower and
the validity against Borrower of the Loan Documents (other than
certificates, consents and licenses related to operating individual
aircraft or its business as a common carrier), and such consents, licenses
and approvals shall be in full force and effect, or (B) stating that no
such consents, licenses or approvals are so required;
(vii) a certificate signed by a Responsible Officer of Borrower
certifying (A) that the conditions specified in Sections 4.02(a) and (b)
have been satisfied, and (B) that there has been no event or circumstance
since the date of the Audited Financial
35
Statements that has had or would be reasonably expected to have, either
individually or in the aggregate, a Material Adverse Effect;
(viii) evidence that all insurance required to be maintained
pursuant to the Loan Documents has been obtained and is in effect;
(ix) a duly completed Compliance Certificate as of the last day of
the fiscal quarter of Borrower most recently ended prior to the Closing
Date, signed by a Responsible Officer of Borrower;
(x) evidence that (i) the Security Agreement has created a valid and
effective security interest in the Aircraft Collateral, (ii) such security
interests have been duly perfected, and (iii) the Aircraft Collateral is
free and clear of Liens or options other than such security interests and
any Liens permitted pursuant to Section 7.01. Without limiting the
generality of the foregoing, the Administrative Agent shall have received
evidence that the Security Agreement has been duly filed for record with
the Aircraft Registry of United States Department of Transportation,
Federal Aviation Administration in Oklahoma City and the UCC Financing
Statement has been duly filed in the appropriate UCC filing office in
Alaska;
(xi) Qualified Appraisals showing that the Current Market Value of
the Aircraft Collateral as of the date no earlier than December 31, 2004
is such that the Borrowing Base is not less than [***];
(xii) evidence that (i) any Collateral Documents (other than the
Security Agreement) have created a valid and effective security interest
in any Collateral (other than the Aircraft Collateral), (ii) such security
interests have been duly perfected, and (iii) any Collateral (other
Aircraft Collateral is free and clear of Liens or options other than such
security interests and any Liens permitted pursuant to Section 7.01;
(xiii) the Agent Fee Letter and Arrangement/Upfront Fee Letter; and
(xiv) such other assurances, certificates, documents, consents or
opinions as Agent or the Required Lenders reasonably may require.
(b) Any fees required to be paid on or before the Closing Date shall have
been paid.
(c) Unless waived by Agent, Borrower shall have paid all fees, charges and
disbursements of counsel to Agent to the extent invoiced prior to or on the
Closing Date.
(d) The commitments under the Existing Credit Agreement shall have expired
or been terminated and all amounts owing thereunder shall have been paid in
full. Each party hereto that is also a party to the Existing Credit Agreement
hereby waives any requirement under the Existing Credit Agreement of advance
notice for any such termination or payment.
Without limiting the generality of the provisions of Section 9.04, for purposes
of determining compliance with the conditions specified in this Section 4.01,
each Lender that has signed this
* Indicates that certain information contained herein has been omitted and
filed separately with the Securities and Exchange Commission. Confidential
treatment has been requested with respect to the omitted portions.
36
Agreement shall be deemed to have consented to, approved or accepted or to be
satisfied with, each document or other matter required thereunder to be
consented to or approved by or acceptable or satisfactory to a Lender unless
Agent shall have received notice from such Lender prior to the proposed Closing
Date specifying its objection thereto.
4.02 CONDITIONS TO ALL BORROWINGS. The obligation of each Lender to honor
any Loan Notice is subject to the following conditions precedent:
(a) The representations and warranties of Borrower contained in Article V
or any other Loan Document, or which are contained in any document furnished at
any time under or in connection herewith or therewith, shall be true and correct
on and as of the date of such Borrowing, except to the extent that such
representations and warranties specifically refer to an earlier date, in which
case they shall be true and correct as of such earlier date, and except that for
purposes of this Section 4.02, the representations and warranties contained in
subsections (a) and (b) of Section 5.05 shall be deemed to refer to the most
recent statements furnished pursuant to clauses (a) and (b), respectively, of
Section 6.01.
(b) No Change of Control, Invalidity Event or Material Failure of Security
shall have occurred and no Default, Collateral Shortfall or Over Advance shall
exist or would result from such proposed Borrowing or from the application of
the proceeds thereof.
(c) Agent shall have received a Loan Notice in accordance with the
requirements hereof.
(d) Neither the Administrative Agent nor any Lender shall have received
from any Person any notice that any Collateral Document will no longer secure on
a first priority basis (subject to Liens permitted under the applicable
Collateral Document) future Borrowings under this Agreement.
(e) Agent shall have received, in form and substance satisfactory to it:
(i) such other assurances, certificates, documents or consents related to the
foregoing as Agent or the Required Lenders reasonably may require; and (ii) any
information requested more than five Business Days prior to such Loan Notice by
the Agent or any Lender in accordance with Section 6.02(d).
Each Loan Notice submitted by Borrower shall be deemed to be a representation
and warranty that the conditions specified in Sections 4.02(a) and (b) have been
satisfied on and as of the date of the applicable Borrowing.
ARTICLE V.
REPRESENTATIONS AND WARRANTIES
Borrower represents and warrants to Agent and the Lenders that:
5.01 EXISTENCE, QUALIFICATION AND POWER; COMPLIANCE WITH LAWS. Borrower
and each Subsidiary thereof (a) is duly organized or formed, validly existing
and in good standing under the Laws of the jurisdiction of its incorporation or
organization, (b) has all requisite power and authority and all requisite
governmental licenses, authorizations, consents and approvals to
37
(i) own its assets and carry on its business and (ii) execute, deliver and
perform its obligations under the Loan Documents, (c) is duly qualified and is
licensed and in good standing under the Laws of each jurisdiction where its
ownership, lease or operation of properties or the conduct of its business
requires such qualification or license, and (d) is in compliance with all Laws;
except in each case referred to in clause (b)(i), (c) or (d), to the extent that
failure to do so would not reasonably be expected to have a Material Adverse
Effect.
5.02 AUTHORIZATION; NO CONTRAVENTION. The execution, delivery and
performance by Borrower of each Loan Document, have been duly authorized by all
necessary corporate or other organizational action, and do not and will not (a)
contravene the terms of Borrower's Organization Documents; (b) conflict with or
result in any breach or contravention of, or the creation of any Lien under, or
require any payment to be made under (i) any Contractual Obligation (other than
the Loan Documents) to which Borrower is a party or affecting Borrower or the
properties of Borrower or any of its Subsidiaries or (ii) any order, injunction,
writ or decree of any Governmental Authority or any arbitral award to which
Borrower or its property is subject; or (c) violate any Law. Borrower and each
Subsidiary thereof is in compliance with all Contractual Obligations referred to
in clause (b)(i), except to the extent that failure to do so would not
reasonably be expected to have a Material Adverse Effect.
5.03 GOVERNMENTAL AUTHORIZATION; OTHER CONSENTS. No approval, consent,
exemption, authorization, or other action by, or notice to, or filing with, any
Governmental Authority or any other Person is necessary or required in
connection with the execution, delivery or performance by, or enforcement
against, Borrower of this Agreement or any other Loan Document, except for
recordings or filings in connection with the Liens granted to the Agent under
the Collateral Documents or filing of a redacted copy of the Loan Documents with
the SEC.
5.04 BINDING EFFECT. This Agreement has been, and each other Loan
Document, when delivered hereunder, will have been, duly executed and delivered
by Borrower. This Agreement constitutes, and each other Loan Document when so
delivered will constitute, a legal, valid and binding obligation of Borrower,
enforceable against Borrower in accordance with its terms.
5.05 FINANCIAL STATEMENTS; NO MATERIAL ADVERSE EFFECT.
(a) The Audited Financial Statements (i) were prepared in accordance with
GAAP consistently applied throughout the period covered thereby, except as
otherwise expressly noted therein; (ii) fairly present the financial condition
of Borrower and its Subsidiaries as of the date thereof and their results of
operations for the period covered thereby in accordance with GAAP consistently
applied throughout the period covered thereby, except as otherwise expressly
noted therein; and (iii) show all material indebtedness and other liabilities,
direct or contingent, of Borrower and its Subsidiaries as of the date thereof,
including liabilities for taxes and material commitments.
(b) The unaudited consolidated balance sheet of Borrower and its
Subsidiaries dated September 30, 2004, and the related consolidated statements
of income or operations, shareholders' equity and cash flows for the fiscal
quarter ended on that date (i) were prepared in accordance with GAAP
consistently applied throughout the period covered thereby, except as
38
otherwise expressly noted therein, and (ii) fairly present the financial
condition of Borrower and its Subsidiaries as of the date thereof and their
results of operations for the period covered thereby, subject, in the case of
clauses (i) and (ii), to the absence of footnotes and to normal year-end audit
adjustments.
(c) Since the Closing Date and since the date of the Audited Financial
Statements, there has been no event or circumstance, either individually or in
the aggregate, that has had or could reasonably be expected to have a Material
Adverse Effect.
(d) Since the date of the Audited Financial Statements, no material
Internal Control Event has occurred to the knowledge of Borrower's Chief
Executive Officer, Chief Financial Officer, Vice President-Finance, Treasurer or
Controller.
5.06 LITIGATION AND JUDGMENTS. There are no actions, suits, proceedings,
claims or disputes pending or, to the knowledge of Borrower after due and
diligent investigation, threatened or contemplated, at law, in equity, in
arbitration or before any Governmental Authority, by or against Borrower or any
of its Subsidiaries or against any of their properties or revenues that (a)
purport to affect or pertain to this Agreement or any other Loan Document, or
any of the transactions contemplated hereby, or (b) are reasonably likely to
have a Material Adverse Effect. To the knowledge of Borrower after due and
diligent investigation, there is no outstanding unsatisfied money judgment
against Borrower or any of its Subsidiaries in an amount in excess of the
Threshold Amount, and there are no outstanding unsatisfied money judgments
against Borrower or any of its Subsidiaries which individually or in the
aggregate have or would have a Material Adverse Effect.
5.07 NO DEFAULT. Neither Borrower nor any Subsidiary is in default under
or with respect to any Contractual Obligation that would, either individually or
in the aggregate, reasonably be expected to have a Material Adverse Effect. No
Default has occurred and is continuing or would result from the consummation of
the transactions contemplated by this Agreement or any other Loan Document.
5.08 OWNERSHIP OF PROPERTY; LIENS. Each of Borrower and each Subsidiary
has good record and marketable title in fee simple to, or valid leasehold
interests in, all real property necessary or used in the ordinary conduct of its
business, except for such defects in title as would not, individually or in the
aggregate, reasonably be expected to have a Material Adverse Effect. The
property of Borrower and its Subsidiaries is subject to no Liens, other than
Liens permitted by Section 7.01.
5.09 ENVIRONMENTAL COMPLIANCE. Borrower and its Subsidiaries conduct in
the ordinary course of business a review of the effect of existing Environmental
Laws and claims alleging potential liability or responsibility for violation of
any Environmental Law on their respective businesses, operations and properties,
and as a result thereof Borrower has reasonably concluded that, except as
specifically disclosed in Schedule 5.09, such Environmental Laws and claims
would not, individually or in the aggregate, reasonably be expected to have a
Material Adverse Effect.
39
5.10 INSURANCE. The properties and businesses of Borrower and its
Subsidiaries are insured with financially sound and reputable insurance
companies (including Lloyds of London syndicates) not Affiliates of Borrower, in
such amounts (after giving effect to any self-insurance compatible with the
following standards), with such deductibles and covering such risks as are
customarily carried by companies engaged in similar businesses and owning
similar properties in localities where Borrower or the applicable Subsidiary
operates.
5.11 TAXES. Borrower and its Subsidiaries have filed all Federal, state
and other material tax returns and reports required to be filed, and have paid
all Federal, state and other material taxes, assessments, fees and other
governmental charges levied or imposed upon them or their properties, income or
assets otherwise due and payable, except those which are being contested in good
faith by appropriate proceedings diligently conducted and for which adequate
reserves have been provided in accordance with GAAP. To Borrower's knowledge,
there is no proposed tax assessment against Borrower or any Subsidiary that
would, if made, have a Material Adverse Effect.
5.12 ERISA COMPLIANCE.
(a) Each Plan is in compliance in all material respects with the
applicable provisions of ERISA, the Code and other Federal or state Laws. Each
Plan that is intended to qualify under Section 401(a) of the Code has received a
favorable determination letter from the IRS or an application for such a letter
is currently being processed by the IRS with respect thereto and, to the best
knowledge of Borrower, nothing has occurred which would prevent, or cause the
loss of, such qualification. Borrower and each ERISA Affiliate have made all
required contributions to each Plan subject to Section 412 of the Code, and no
application for a funding waiver or an extension of any amortization period
pursuant to Section 412 of the Code has been made with respect to any Plan.
(b) There are no pending or, to the best knowledge of Borrower, threatened
claims, actions or lawsuits, or action by any Governmental Authority, with
respect to any Plan that would be reasonably be expected to have a Material
Adverse Effect. There has been no prohibited transaction or violation of the
fiduciary responsibility rules with respect to any Plan that has resulted or
would reasonably be expected to result in a Material Adverse Effect.
(c) No ERISA Event has occurred or is reasonably expected to occur; (ii)
no Pension Plan has any Unfunded Pension Liability in excess [***] of such
Pension Plan's benefit liabilities under Section 4001(a)(16); (iii) neither
Borrower nor any ERISA Affiliate has incurred, or reasonably expects to incur,
any liability under Title IV of ERISA with respect to any Pension Plan (other
than premiums due and not delinquent under Section 4007 of ERISA), which would
reasonably be expected to have a Material Adverse Effect; (iv) neither Borrower
nor any ERISA Affiliate has incurred, or reasonably expects to incur, any
liability (and no event has occurred which, with the giving of notice under
Section 4219 of ERISA, would result in such liability) under Sections 4201 or
4243 of ERISA with respect to a Multiemployer Plan; and (v) neither Borrower nor
any ERISA Affiliate has engaged in a transaction that could be subject to
Sections 4069 or 4212(c) of ERISA.
* Indicates that certain information contained herein has been omitted and
filed separately with the Securities and Exchange Commission. Confidential
treatment has been requested with respect to the omitted portions.
40
5.13 SUBSIDIARIES. As of the Closing Date, Borrower has no Subsidiaries.
As of the Closing Date, Parent has no operating Subsidiaries other than Borrower
and Horizon. All of the outstanding Equity Interests in Borrower have been
validly issued and are fully paid and nonassessable and are owned by Parent free
and clear of all Liens.
5.14 MARGIN REGULATIONS; INVESTMENT COMPANY ACT; PUBLIC UTILITY HOLDING
COMPANY ACT.
(a) Borrower is not engaged and will not engage, principally or as one of
its important activities, in the business of purchasing or carrying margin stock
(within the meaning of Regulation U issued by the FRB), or extending credit for
the purpose of purchasing or carrying margin stock.
(b) None of Borrower, any Person Controlling Borrower, or any Subsidiary
(i) is a "holding company," or a "subsidiary company" of a "holding company," or
an "affiliate" of a "holding company" or of a "subsidiary company" of a "holding
company," within the meaning of the Public Utility Holding Company Act of 1935,
or (ii) is or is required to be registered as an "investment company" under the
Investment Company Act of 1940.
5.15 DISCLOSURE. Borrower has disclosed to Agent and Lenders all
agreements, instruments and corporate or other restrictions to which it or any
of its Subsidiaries is subject, and all other matters known to it, that,
individually or in the aggregate, would reasonably be expected to result in a
Material Adverse Effect. No report, financial statement, certificate or other
information furnished (whether in writing or orally) by or on behalf of Borrower
to Agent or any Lender in connection with the transactions contemplated hereby
and the negotiation of this Agreement or delivered hereunder or under any other
Loan Document (in each case, as modified or supplemented by other information so
furnished) contains any material misstatement of fact or omits to state any
material fact necessary to make the statements therein, in the light of the
circumstances under which they were made, not misleading; provided that, with
respect to projected financial information, Borrower represents only that such
information was prepared in good faith based upon assumptions believed to be
reasonable at the time.
5.16 COMPLIANCE WITH LAWS. Each of Borrower and each Subsidiary is in
compliance in all material respects with the requirements of all Laws and all
orders, writs, injunctions and decrees applicable to it or to its properties,
except in such instances in which (a) such requirement of Law or order, writ,
injunction or decree is being contested in good faith by appropriate proceedings
diligently conducted or (b) the failure to comply therewith, either individually
or in the aggregate, would not reasonably be expected to have a Material Adverse
Effect.
5.17 INTELLECTUAL PROPERTY; LICENSES, ETC. Borrower and its Subsidiaries
own, or possess the right to use, all of the trademarks, service marks, trade
names, copyrights, patents, patent rights, franchises, licenses and other
intellectual property rights ("IP Rights") that are reasonably necessary for the
operation of their respective businesses, without conflict with the rights of
any other Person. To the best knowledge of Borrower, no slogan or other
advertising device, product, process, method, substance, part or other material
now employed, or now contemplated to be employed, by Borrower or any Subsidiary
infringes upon any rights held by
41
any other Person. No claim or litigation regarding any of the foregoing is
pending or, to the best knowledge of Borrower, threatened, which, either
individually or in the aggregate, would reasonably be expected to have a
Material Adverse Effect.
5.18 SOLVENCY. The Borrower is Solvent and shall be Solvent immediately
after the consummation of the transactions contemplated by this Agreement. As
used herein, a Person is "Solvent" on a particular date, if, on such date both
(a) (i) the then fair saleable value of the property of such Person on a going
concern basis is (A) greater than the total amount of liabilities (including
contingent liabilities) of such Person as they mature in the ordinary course and
(B) 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 debts
and liabilities of a Person, contingent or otherwise, shall include the amount
of all debts and liabilities that are relevant under Section 548 of Title 11 of
the United States Code or any applicable provisions of comparable state law
(collectively, the "Fraudulent Transfer Laws"), and the assets of a Person shall
give effect to the value (as determined under the applicable provisions of the
Fraudulent Transfer Laws) of any rights to subrogation, reimbursement,
indemnification or contribution of such Person pursuant to applicable Law or
pursuant to the terms of any agreement.
5.19 COLLATERAL AND SECURITY DOCUMENTS.
(a) Borrower owns all right, title and interest in and to the Aircraft
Collateral (and any other Collateral) free and clear of all Liens other than (i)
the security interests in favor of the Administrative Agent securing the
Obligations, or (ii) Liens permitted by Section 7.01 that are junior and
subordinate to the security interests created by the Collateral Documents, or
(iii) Liens on the Aircraft Collateral permitted under subsections (e) and (f)
of Section 7.01.
(b) The Security Agreement (and any of other Collateral Documents) create,
in favor of the Administrative Agent for the benefit of itself and the Lenders,
a legal, valid and enforceable security interest in all of Borrower's right,
title and interest in all of the Aircraft Collateral (and any other Collateral),
which security interest has been duly perfected and has priority over any other
Liens on the Collateral (other than Liens on the Aircraft Collateral described
in subsections (e) and (f) of Section 7.01).
(c) Each of the Pledged Aircraft is a U.S. registered Stage 3 Aircraft,
and Borrower is a citizen of the United States for purposes of the U.S. Federal
Aviation Act.
(d) Borrower is, and continuously during the five years immediately
preceding the date of this Agreement has been, an Alaska corporation. Borrower's
chief executive office is, and continuously during the five years immediately
preceding the date of this Agreement has been, located in Seattle, Washington.
42
(e) No Aircraft, at the time Agent's security interest in such Aircraft
attaches, will be subject to any interest, other than an interest held by
Borrower, that is recorded in the FAA Registry.
(f) The Engines pledged pursuant to the Security Agreement are of the same
series, model and make and the Engines, taken as a group, have approximately the
same aggregate value as the engines upon which the determination of Current
Market Value in each Qualified Appraisal was based.
(g) The representations and warranties in this Section 5.19 (other than
Section 5.19(e)) are made on and as of the date of this Agreement and, with
respect to the representations and warranties in subsections (a), (b) and (c)
hereof, on and as of each date thereafter.
5.20 BURDENSOME AGREEMENTS. Neither Borrower nor any Subsidiary has any
Contractual Obligation (other than this Agreement or any other Loan Document)
that (a) limits the ability (i) of any Subsidiary to make Restricted Payments to
Borrower or to otherwise transfer property to Borrower, (ii) of any Subsidiary
to Guarantee any obligations of Borrower under any of the Loan Documents or
(iii) of Borrower or any Subsidiary to create, incur, assume or suffer to exist
Liens on property of such Person; provided, however, that this clause (iii)
shall not prohibit any negative pledge incurred or provided in favor of any
holder of Indebtedness permitted under this Agreement solely to the extent any
such negative pledge relates to the property financed by or the subject of such
Indebtedness; or (b) requires the grant of a Lien to secure an obligation of
such Person if a Lien is granted to secure another obligation of such Person.
5.21 COMPLIANCE WITH OFAC RULES AND REGULATIONS. None of Borrower, any
Subsidiary of Borrower or any Affiliate of Borrower (a) is a Sanctioned Person,
(b) has more than 15% of its assets in Sanctioned Countries, or (c) derives more
than 15% of its operating income from investments in, or transactions with,
Sanctioned Persons or Sanctioned Countries. No part of the proceeds of any
extension of credit hereunder will be used directly or indirectly to fund any
operations in, finance any investments or activities in or make any payments to,
a Sanctioned Person or a Sanctioned Country. "OFAC" means the U.S. Department of
the Treasury's Office of Foreign Asset Control. "Sanctioned Countries" means a
country subject to a sanctions program identified on the list maintained by OFAC
and available at
http://www.treas.gov/offices/enforcement/ofac/sanctions/index.html, or otherwise
published from time to time. "Sanctioned Person" means (a) a Person named on the
list of "Specially Designated Nationals and Blocked Persons" maintained by OFAC
available at http://www.treas.gov/offices/enforcement/ofac/sanctions/index.html
or otherwise published from time to time, or (b)(i) an agency of the government
of a Sanctioned Country, (ii) an organization controlled by a Sanctioned
Country, to the extent subject to a sanctions program administered by OFAC.
43
ARTICLE VI.
AFFIRMATIVE COVENANTS
So long as any Lender shall have any Commitment hereunder, any Loan or
other Obligation hereunder shall remain unpaid or unsatisfied, Borrower shall,
and shall (except in the case of the covenants set forth in Sections 6.01, 6.02
and 6.03) cause each Subsidiary to:
6.01 FINANCIAL STATEMENTS. Deliver to Agent a sufficient number of copies
for delivery by Agent to each Lender, in form and detail satisfactory to Agent
and the Required Lenders:
(a) as soon as available, but in any event no later than the earlier of
five days after the deadline for filing imposed by the SEC or 95 days after the
end of each fiscal year of Borrower, a consolidated balance sheet of Borrower
and its Subsidiaries as at the end of such fiscal year, and the related
consolidated statements of income or operations, shareholders' equity and cash
flows for such fiscal year, setting forth in each case in comparative form the
figures for the previous fiscal year, all in reasonable detail and prepared in
accordance with GAAP, audited and accompanied by: (i) a report and opinion of a
Registered Public Accounting Firm of nationally recognized standing not
reasonably objected to by the Required Lenders, which report and opinion shall
be prepared in accordance with generally accepted auditing standards and
applicable Securities Laws and shall not be subject to any "going concern" or
like qualification or exception or any qualification or exception as to the
scope of such audit and (ii) beginning with the report for December 31, 2005, a
report of such Registered Public Accounting Firm as to the Borrower's internal
controls pursuant to Section 404 of Sarbanes-Oxley that: (A) expresses a
conclusion that would not reasonably be expected to have a Material Adverse
Effect and (B) identifies no issues related to Borrower's or its Subsidiaries'
internal controls that would reasonably be expected to have a Material Adverse
Effect; and
(b) as soon as available, but in any event within 50 days after the end of
each of the first three fiscal quarters of each fiscal year of Borrower, a
consolidated balance sheet of Borrower and its Subsidiaries as at the end of
such fiscal quarter, and the related consolidated statements of income or
operations, shareholders' equity and cash flows for such fiscal quarter and for
the portion of Borrower's fiscal year then ended, setting forth in each case in
comparative form the figures for the corresponding fiscal quarter of the
previous fiscal year and the corresponding portion of the previous fiscal year,
all in reasonable detail, certified by a Responsible Officer of Borrower as
fairly presenting the financial condition, results of operations, shareholders'
equity and cash flows of Borrower and its Subsidiaries in accordance with GAAP,
subject only to normal year-end audit adjustments and the absence of footnotes.
6.02 CERTIFICATES; OTHER INFORMATION. Deliver to Agent a sufficient number
of copies for delivery by Agent to each Lender, in form and detail satisfactory
to Agent and the Required Lenders:
(a) concurrently with the delivery of the financial statements referred to
in Section 6.01(a), a certificate of its independent certified public
accountants certifying such financial statements;
44
(b) concurrently with the delivery of the financial statements referred to
in Sections 6.01(a) and (b), a duly completed Compliance Certificate signed by a
Responsible Officer of Borrower;
(c) within five Business Days after the same are available, copies of each
annual report, proxy or financial statement or other report or communication
sent to the stockholders of Parent, and copies of all annual, regular, periodic
and special reports and registration statements which Parent may file or be
required to file with the Securities and Exchange Commission under Section 13 or
15(d) of the Securities Exchange Act of 1934, and not otherwise required to be
delivered to Agent pursuant hereto; and
(d) promptly, such additional information regarding the business,
financial or corporate affairs of Borrower or any Subsidiary, or compliance with
the terms of the Loan Documents, as Agent or any Lender may from time to time
reasonably request.
Documents required to be delivered pursuant to Section 6.01(a) or (b) or Section
6.02(c) (to the extent any such documents are included in materials otherwise
filed with the SEC) may be delivered electronically and if so delivered, shall
be deemed to have been delivered on the date (i) on which the Borrower posts
such documents, or provides a link thereto on the Borrower's website on the
Internet at the website address listed on Schedule 10.02; or (ii) on which such
documents are posted on the Borrower's behalf on an Internet or intranet
website, if any, (or website maintained by the SEC) to which each Lender and the
Administrative Agent have access (whether a commercial, third-party website or
whether sponsored by the Administrative Agent); provided that: (i) the Borrower
shall deliver paper copies of such documents to the Administrative Agent or any
Lender that specifically requests the Borrower to deliver such paper copies and
(ii) the Borrower shall notify the Administrative Agent and each Lender (by
telecopier or electronic mail) of the posting of any such documents and provide
to the Administrative Agent by electronic mail electronic versions (i.e., soft
copies) of such documents. Notwithstanding anything contained herein, in every
instance the Borrower shall be required to provide paper copies of the
Compliance Certificates required by Section 6.02(b) to the Administrative Agent.
Except for such Compliance Certificates, the Administrative Agent shall have no
obligation to request the delivery or to maintain copies of the documents
referred to above, and in any event shall have no responsibility to monitor
compliance by the Borrower with any such request for delivery, and each Lender
shall be solely responsible for requesting delivery to it or maintaining its
copies of such documents.
Borrower hereby acknowledges that (a) Agent will make available to Lenders
materials and/or information provided by or on behalf of Borrower hereunder
(collectively, "Borrower Materials") by posting Borrower Materials on IntraLinks
or another similar electronic system (the "Platform") and (b) certain of the
Lenders may be "public-side" Lenders (i.e., Lenders that do not wish to receive
material non-public information with respect to Borrower or its securities)
(each, a "Public Lender"). Borrower hereby agrees that (w) all Borrower
Materials that are to be made available to Public Lenders shall be clearly and
conspicuously marked "PUBLIC" which, at a minimum, shall mean that the word
"PUBLIC" shall appear prominently on the first page thereof, provided, however,
that no document available on the website of the SEC need contain any legend;
(x) by marking Borrower Materials "PUBLIC," Borrower shall be
45
deemed to have authorized Agent and the Lenders to treat such Borrower Materials
as either publicly available information or not material information (although
it may be sensitive and proprietary) with respect to Borrower or its securities
for purposes of United States Federal and state securities laws; (y) all
Borrower Materials marked "PUBLIC" are permitted to be made available through a
portion of the Platform designated "Public Investor;" and (z) Agent shall be
entitled to treat any Borrower Materials that are not marked "PUBLIC" (other
than documents available on the SEC website) as being suitable only for posting
on a portion of the Platform not designated "Public Investor."
6.03 NOTICES. Not later than five Business Days after Borrower obtains
knowledge thereof, notify Agent and each Lender:
(a) of the occurrence of any Default to the knowledge of Borrower's chief
financial officer or any other officer, employee or agent of Borrower who is
responsible for administering the applicable provisions hereof or who is
responsible for communicating with Administrative Agent or Lenders regarding
this Agreement or any of the matters contemplated by this Agreement;
(b) of any matter that has resulted or would reasonably be expected to
result in a Material Adverse Effect, including (i) breach or non-performance of,
or any default under, a Contractual Obligation of Borrower or any Subsidiary;
(ii) any dispute, litigation, investigation, proceeding or suspension between
Borrower or any Subsidiary and any Governmental Authority; or (iii) the
commencement of, or any material development in, any litigation or proceeding
affecting Borrower or any Subsidiary, including pursuant to any applicable
Environmental Laws;
(c) of the occurrence of any ERISA Event; and
(d) of any material change in accounting policies or financial reporting
practices by Borrower or any Subsidiary.
Each notice pursuant to this Section shall be accompanied by a statement of a
Responsible Officer of Borrower setting forth details of the occurrence referred
to therein and stating what action Borrower has taken and proposes to take with
respect thereto. Each notice pursuant to Section 6.03(a) shall describe with
particularity any and all provisions of this Agreement and any other Loan
Document that have been breached.
6.04 PAYMENT OF OBLIGATIONS. Pay and discharge as the same shall become
due and payable, all its obligations and liabilities, including (a) all tax
liabilities, assessments and governmental charges or levies upon it or its
properties or assets, unless the same are being contested in good faith by
appropriate proceedings diligently conducted and adequate reserves in accordance
with GAAP are being maintained by Borrower or such Subsidiary; (b) all lawful
claims which, if unpaid, would by law become a Lien upon its property; and (c)
all Indebtedness, as and when due and payable, but subject to any subordination
provisions contained in any instrument or agreement evidencing such
Indebtedness.
6.05 PRESERVATION OF EXISTENCE, ETC. (a) Preserve, renew and maintain in
full force and effect its legal existence and good standing under the Laws of
the jurisdiction of its
46
organization except in a transaction permitted by Section 7.02; (b) take all
reasonable action to maintain all rights, privileges, permits, licenses and
franchises necessary or desirable in the normal conduct of its business, except
to the extent that failure to do so would not reasonably be expected to have a
Material Adverse Effect; and (c) preserve or renew all of its registered
patents, trademarks, trade names and service marks, the non-preservation of
which would reasonably be expected to have a Material Adverse Effect.
6.06 MAINTENANCE OF PROPERTIES. (a) Maintain, preserve and protect or
replace all of its material properties and equipment necessary in the operation
of its business in good working order and condition, ordinary wear and tear
excepted; (b) make all necessary repairs thereto and renewals and replacements
thereof except where the failure to do so would not reasonably be expected to
have a Material Adverse Effect; and (c) use not less than the standard of care
typical in the industry in the operation and maintenance of its facilities.
6.07 MAINTENANCE OF INSURANCE.
(a) In addition to insurance requirements set forth in the Collateral
Documents, maintain with financially sound and reputable insurance companies
(including Lloyds of London syndicates) not Affiliates of Borrower, insurance
with respect to its properties and business against loss or damage of the kinds
customarily insured against by Persons engaged in the same or similar business
(operating similar aircraft in similar markets), of such types and in such
amounts (after giving effect to any self-insurance and/or deductible compatible
with the following standards) as are customarily carried under similar
circumstances by such other Persons and providing for not less than 30 days'
prior notice to Agent of termination or cancellation of such insurance. Without
limiting the generality of the foregoing, except as provided in paragraph (b) of
this Section 6.07, Borrower will at all times carry or cause to be carried at
its expense (or at the expense of the lessee of such Aircraft), aircraft
liability insurance including passenger legal liability, property damage
liability and contractual liability (exclusive of manufacturer's product
liability insurance) with respect to each Aircraft owned by Borrower, (A) in an
amount not less than the greater of (x) the amounts of public liability and
property damage insurance from time to time determined by Borrower to be prudent
and (y) $300,000,000 per occurrence, (B) of the type and covering the risks as
from time to time determined by Borrower to be prudent and (C) which is
maintained in effect with insurers of recognized responsibility and reputation.
(b) During any period that an Aircraft is on the ground and not in
operation, Borrower may carry or cause to be carried, in lieu of the insurance
required by Section 6.07(a) above, insurance with respect to such Aircraft
otherwise conforming with the provisions of such Section 6.07(a) except that (A)
the amounts of coverage shall not be required to exceed the amounts of public
liability and property damage insurance from time to time applicable to Aircraft
owned or leased by Borrower of the same type as the Aircraft which comprise
Borrower's fleet and which are on the same ground and not in operation; and (B)
the scope of the risks covered and the type of insurance shall be the same as
from time to time shall be applicable to Aircraft owned or leased by Borrower of
the same type which comprise Borrower's fleet and which are on the ground and
not in operation; provided that if Borrower then has no other similarly situated
Aircraft, the terms of such insurance during such period shall conform to
prudent industry standards.
47
6.08 COMPLIANCE WITH LAWS. Comply in all material respects with the
requirements of all Laws and all orders, writs, injunctions and decrees
applicable to it or to its business or property, except in such instances in
which (a) such requirement of Law or order, write, injunction or decree is being
contested in good faith by appropriate proceedings diligently conducted; or (b)
the failure to comply therewith would not reasonably be expected to have a
Material Adverse Effect.
6.09 BOOKS AND RECORDS. (a) Maintain proper books of record and account,
in which full, true and correct entries in conformity with GAAP consistently
applied shall be made of all financial transactions and matters involving the
assets and business of Borrower or such Subsidiary, as the case may be; and (b)
maintain such books of record and account in material conformity with all
applicable requirements of any Governmental Authority having regulatory
jurisdiction over Borrower or such Subsidiary, as the case may be.
6.10 INSPECTION RIGHTS. Permit representatives and independent contractors
of Agent and each Lender to visit and inspect any of its properties, to examine
its corporate, financial and operating records, and to discuss its affairs,
finances and accounts with its directors, officers, and independent public
accountants, at such reasonable times during normal business hours and as often
as may be reasonably desired, upon reasonable advance notice to Borrower;
provided, however, that when an Event of Default exists Agent or any Lender (or
any of their respective representatives or independent contractors) may do any
of the foregoing at the expense of Borrower at any time during normal business
hours.
6.11 USE OF PROCEEDS. Use the proceeds of the Borrowings for capital
expenditures, working capital and other general corporate purposes not in
contravention of any Law or of any Loan Document.
6.12 FINANCIAL COVENANTS.
(a) Consolidated Tangible Net Worth. Maintain Consolidated Tangible Net
Worth equal to or greater than the sum of (i) [***], plus (ii) the sum of the
following for Borrower and its Subsidiaries on a consolidated basis: (A) as of
the end of the fiscal quarter ended June 30, 2005, [***] of net income after
income taxes (without subtracting losses) earned in the such fiscal quarter plus
(B) as of the end of the fiscal year ended December 31, 2005, [***] of net
income after income taxes (without subtracting losses) earned in such full
fiscal year plus (C) as of the end of each fiscal year thereafter, [***] of net
income after income taxes (without subtracting losses) earned in such full
fiscal year, in each case with net income determined by excluding (x) unusual,
non-cash special charges and credits, (y) Permitted Asset Adjustments and (z)
the marked-to-market Swap Termination value for Swap Contracts that have not
been closed out. This amount will be calculated at the end of each reporting
period for which this Agreement requires Borrower to deliver financial
statements, using the results of the twelve-month period ending with that
reporting period.
(b) Leverage Ratio. Maintain a ratio of Consolidated Funded Debt and
Leases to Consolidated Tangible Net Worth of not more than [***]. This ratio
will be calculated at the end of each reporting period for which this Agreement
requires Borrower to deliver financial statements, using the results of the
twelve-month period ending with that reporting period. The
* Indicates that certain information contained herein has been omitted and
filed separately with the Securities and Exchange Commission. Confidential
treatment has been requested with respect to the omitted portions.
48
scheduled current portion of long-term liabilities will be measured as of the
last day of the calculation period.
(c) Fixed Charge Coverage Ratio. Maintain on a consolidated basis a Fixed
Charge Coverage Ratio of at least [***] from the Closing Date through [***] and
at least [***] and thereafter. This ratio will be calculated at the end of each
reporting period for which this Agreement requires Borrower to deliver financial
statements, using the results of the twelve-month period ending with that
reporting period. The scheduled current portion of long-term liabilities will be
measured as of the last day of the calculation period.
6.13 COLLATERAL RECORDS. To execute and deliver promptly to Agent, from
time to time, solely for Agent's convenience in maintaining a record of the
Collateral, such written statements and schedules as Agent may reasonably
require designating, identifying or describing the Collateral. The failure by
Borrower, however, to promptly give Agent such statements or schedules shall not
affect, diminish, modify or otherwise limit the Liens on the Collateral granted
pursuant to the Collateral Documents.
6.14 SECURITY INTERESTS. To (a) defend the Collateral against all claims
and demands of all Persons at any time claiming the same or any interest
therein, (b) comply with the requirements of all state and federal laws in order
to grant to Agent and Lenders valid and perfected first priority security
interests in the Collateral, with perfection, in the case of any investment
property, deposit account or letter of credit, being effected by giving Agent
control of such investment property or deposit account or letter of credit,
rather than by the filing of a Uniform Commercial Code ("UCC") financing
statement with respect to such investment property, and (c) do whatever Agent
may reasonably request, from time to time, to effect the purposes of this
Agreement and the other Loan Documents, including filing notices of liens, UCC
financing statements, and amendments, renewals and continuations thereof;
cooperating with Agent's representatives; keeping stock records; obtaining
waivers from landlords and mortgagees and from warehousemen and their landlords
and mortgages; and, paying claims which might, if unpaid, become a Lien on the
Collateral. Agent is hereby authorized by Borrower to file any UCC financing
statements covering the Collateral whether or not Borrower's signatures appear
thereon.
6.15 COLLATERAL.
(a) Collateral Review Date. On or before the last Business Day of each
June and December (each a "Collateral Review Date") beginning on June 30, 2005,
Borrower shall provide to the Administrative Agent (which shall provide to each
Lender) a Qualified Appraisal showing the Current Market Value of each Pledged
Aircraft as of a Valuation Date that is no earlier than 30 days prior to the
applicable Collateral Review Date.
(b) Cure of Collateral Shortfall or Over Advance. If a Collateral
Shortfall exists or Borrower elects to cure an Over Advance pursuant to Section
2.03(b) in whole or in part by pledging addition Collateral, then Borrower shall
cure such Collateral Shortfall or Over Advance by, at Borrower's option, either
or any combination of the following:
* Indicates that certain information contained herein has been omitted and
filed separately with the Securities and Exchange Commission. Confidential
treatment has been requested with respect to the omitted portions.
49
(i) within 15 Business Days after the date of such Collateral
Shortfall or five Business Days after the date of an Over Advance,
executing and delivering to the Administrative Agent a supplement to the
Security Agreement in substantially the form of Schedule I to the Security
Agreement (a "Security Agreement Supplement") and providing the
Administrative Agent with evidence satisfactory to it that:
(A) the Security Agreement, as supplemented by such Security
Agreement Supplement, has granted a security interest to the
Administrative Agent in one or more Stage 3 Aircraft owned by
Borrower (the "Added Pledged Aircraft") that was not or were not
already Pledged Aircraft as security for the Obligations;
(B) such security interest is a perfected first-priority
security interest and each Added Pledged Aircraft is free and clear
of: (i) any Liens other than Liens permitted by Section 7.01; and
(ii) any other interest that has been recorded in the records the
Aircraft Registry of United States Department of Transportation,
Federal Aviation Administration (the "FAA Registry");
(C) the Current Market Value of the Added Pledged Aircraft is
sufficient, in combination with any Cash Collateral pledged in
accordance with Section 6.15(b)(ii), to cure the Collateral
Shortfall or the Over Advance, as applicable;
(D) all insurance policies required by this Agreement or the
Security Agreement with respect to the Added Pledged Aircraft have
been duly issued and remain in force in accordance therewith and
that Administrative Agent and Lenders have been named as loss payees
to the extent of their interest (the lower of (x) the Current Market
Value as reflected on the last Qualified Appraisal or (y) the
Obligations outstanding at the time of payment of insurance
proceeds) and additional insured under all policies of casualty
insurance and as additional insured under all policies of liability
insurance; and
(E) the execution, delivery and performance of the Security
Agreement Supplement have been duly authorized by all necessary
corporate action of Borrower and the Security Agreement, as amended
by such supplement, constitutes the legal, valid and binding
obligation of Borrower; or
(ii) within 15 Business Days after such Collateral Shortfall or or
five Business Days after the date of Over Advance, executing and
delivering to the Administrative Agent, a Cash Pledge Agreement or an
amendment thereto pledging Cash Collateral that qualifies in all respects
for inclusion in the Borrowing Base. Such additional Cash Collateral shall
be in an amount sufficient, in combination with any Aircraft Collateral
pledged in accordance with Section 6.15(b)(i), to cure the Collateral
Shortfall or the Over Advance, as applicable.
If Borrower elects to cure an Collateral Shortfall or an Over Advance pursuant
to clause (i) above, the Administrative Agent may also require that Borrower
provide a legal opinion
50
issued by FAA counsel for Borrower acceptable to the Administrative Agent
covering some or all of the matters covered by the legal opinion attached hereto
as Exhibit E-2.
(c) Substitution of Engines. Provided that no Event of Default has
occurred and is continuing, Borrower may, from time to time, send the
Administrative Agent a written request to substitute an Engine that is not
covered by the Security Agreement (an "Added Engine") for an Engine that is
covered by the Security Agreement which may include an Engine that has been
subject to an Event of Loss (a "Removed Engine"). The Administrative Agent shall
release its security interest in the Removed Engine within five Business Days
after the date when Borrower has executed and delivered to the Administrative
Agent a Security Agreement Supplement covering the Added Engine and provided the
Administrative Agent with evidence satisfactory to it that:
(i) the Security Agreement, as supplemented by such Security
Agreement Supplement, has granted a security interest to the
Administrative Agent in the Added Engine as security for the Obligations;
(ii) such security interest is a perfected first-priority security
interest and the Added Engine is free and clear of: (A) any Liens other
than Liens permitted by Section 7.01; and (B) any other interest that has
been recorded in the FAA Registry;
(iii) the Added Engine is a Stage 3 Engine of the same or improved
make and model as the Removed Engine;
(iv) all insurance policies and/or endorsements required by this
Agreement or the Security Agreement with respect to the Added Engine have
been duly issued and remain in force in accordance therewith and that
Administrative Agent and Lenders have been named as additional insured and
under all policies of casualty insurance and as additional insured under
all policies of liability insurance;
(v) if requested by the Administrative Agent, the execution,
delivery and performance of the Security Agreement Supplement has been
duly authorized by all necessary corporate action of Borrower and the
Security Agreement, as amended by such supplement, constitutes the legal,
valid and binding obligation of Borrower; and
(vi) if requested by the Administrative Agent, a legal opinion
issued by counsel for Borrower acceptable to the Administrative Agent
covering some or all of the matters covered by the legal opinion attached
hereto as Exhibit E as they apply to the Added Engine.
(d) Substitution of Aircraft. Provided that no Event of Default has
occurred and is continuing, Borrower may, from time to time, send the
Administrative Agent a written request to substitute an Aircraft that is not
covered by the Security Agreement (an "Added Aircraft") for an Aircraft that is
covered by the Security Agreement which may include an Aircraft that has been
subject to an Event of Loss (a "Removed Aircraft"). The Administrative Agent
shall release its security interest in the Removed Aircraft within five Business
Days after the Aircraft Substitution Request Date. "Aircraft Substitution
Request Date" means the date when Borrower
51
has executed and delivered to the Administrative Agent a Security Agreement
Supplement covering the Added Aircraft and provided the Administrative Agent
with evidence satisfactory to it of each of the following:
(i) the Security Agreement, as supplemented by such Security
Agreement Supplement, has granted a security interest to the
Administrative Agent in the Added Aircraft as security for the
Obligations;
(ii) such security interest is a perfected first-priority security
interest and the Added Aircraft is free and clear of any Liens or option
other than Liens permitted by Section 7.01;
(iii) the Current Market Value of the Added Aircraft is equal to or
greater than the Current Market Value of the Removed Aircraft, each as set
forth in a Qualified Appraisal with a Valuation Date no earlier than 30
days prior to the Aircraft Substitution Request Date;
(iv) all insurance policies and/or endorsements required by this
Agreement or the Security Agreement with respect to the Added Engine have
been duly issued and remain in force in accordance therewith and that
Administrative Agent and Lenders have been named as loss payees to the
extent of their interest (the lower of (x) the Current Market Value as
reflected on the last Qualified Appraisal or (y) the Obligations
outstanding at the time of payment of insurance proceeds) and additional
insured under all policies of casualty insurance and as additional insured
under all policies of liability insurance;
(v) if requested by the Administrative Agent, the execution,
delivery and performance of the Security Agreement Supplement has been
duly authorized by all necessary corporate action of Borrower and the
Security Agreement, as amended by such supplement, constitutes the legal,
valid and binding obligation of Borrower; and
(vi) if requested by the Administrative Agent, a legal opinion
issued by counsel for Borrower acceptable to the Administrative Agent
covering some or all of the matters covered by the legal opinion attached
hereto as Exhibit E as they apply to the Added Aircraft.
(e) Release of Collateral. If (i) Borrower reduces the Aggregate
Commitments in accordance with Section 2.04 or has, through Qualified
Appraisals, demonstrated that an Aircraft can be removed from the Aircraft
Collateral and still leave the Aircraft Collateral equal to or greater than
[***] of the Aggregate Commitments, (ii) Borrower provides to the Administrative
Agent a Qualified Appraisal with a Valuation Date no earlier than 30 days prior
to Borrower's Release Request, and (iii) no Default under Sections 8.01(a) or
8.01(f) and no Event of Default has occurred and is continuing, then Borrower
may send the Administrative Agent a written request (a "Release Request") to
release one or more Aircraft from the security interest created by the Security
Agreement. Each such Release Request shall identify the specific Aircraft to be
released and shall state the Current Market Value of each Aircraft to be
released and of the Aircraft Collateral after giving effect to such release. If
the Qualified Appraisal confirms that,
* Indicates that certain information contained herein has been omitted and
filed separately with the Securities and Exchange Commission. Confidential
treatment has been requested with respect to the omitted portions.
52
after giving effect to such release, the Current Market Value of the Aircraft
Collateral would be greater than or equal to [***] of the Aggregate Commitments
as so reduced, then the Administrative Agent will, within five Business Days
after its receipt of the Release Request, release the security interest in such
Aircraft and/or Engines.
(f) Substitution of Cash Collateral. Borrower may request the release of
the Administrative Agent's security interest in the Aircraft Collateral in
exchange for a security interest in Cash Collateral acceptable to the
Administrative Agent and Requisite Lenders or a release of Cash Collateral in
exchange for a security interest in Aircraft Collateral. Borrower's right to
obtain such release, in the case of Aircraft Collateral, shall be subject to
Borrower executing and delivering to Administrative Agent a Cash Pledge
Agreement covering the Cash Collateral and Borrower, the Administrative Agent
and Requisite Lenders reaching agreement regarding (i) the perfection, priority
and valuation of the Cash Collateral; and (iii) the amendments to this Agreement
necessary or appropriate in light of such substitution of collateral. Borrower's
right to obtain such release of Cash Collateral shall be subject to Borrower
executing and delivering to Administrative Agent a Security Agreement Supplement
covering additional Aircraft Collateral that meets all the requirements of (b)
above for curing any Collateral Shortfall (assuming that the Agent has released
the Cash Collateral that Borrower has requested be released).
(g) Duration of Valuation. Except as otherwise provided in Section
6.15(h), the Current Market Value of a Pledged Aircraft as set forth in the
Qualified Appraisal associated with a Collateral Review Date or a substitution
of Pledged Aircraft shall remain in effect until the Qualified Appraisal
associated with the earlier of the next Collateral Review Date or the next
request for a substitution of Pledged Aircraft.
(h) Event of Loss. Within ten (10) days after the occurrence of an Event
of Loss with respect to a Pledged Aircraft, Borrower shall notify the
Administrative Agent and Lenders in writing of such Event of Loss, which notice
shall state the Current Market Value of the affected Pledged Aircraft and
certify that Borrower has filed a casualty insurance claim with respect to such
Event of Loss. Immediately upon the occurrence of an Event of Loss with respect
to any Pledged Aircraft, the Current Market Value of the Aircraft Collateral
shall immediately be reduced by the Current Market Value of the Pledged Aircraft
that was subject to such Event of Loss. During the Claim Collateral Period, the
Current Market Value of the Aircraft Collateral shall be increased by the Agreed
Value Amount less the amount, if any, attributable to any underwriter of such
insurance that has become insolvent or that has commenced, had commenced against
it, or has otherwise become subject to, a bankruptcy, receivership or other
insolvency proceeding. Immediately at the end of such Claim Collateral Period,
the Current Market Value of the Aircraft Collateral shall no longer include such
Agreed Value Amount and any proceeds that exceed the Current Market Value of the
Aircraft received by the Agent shall either be used to reduce the Outstanding
Amount or remitted to Borrower (a) at the option of Borrower if, at such time,
no Default or Event of Default has occurred and is continuing or would occur if
such proceeds were remitted to Borrower and Borrower would otherwise be entitled
to re-borrow the amount of such proceeds in accordance with the terms of this
Agreement; and (b) otherwise, at the option of the Agent.
* Indicates that certain information contained herein has been omitted and
filed separately with the Securities and Exchange Commission. Confidential
treatment has been requested with respect to the omitted portions.
53
6.16 STATE OF INCORPORATION. Borrower shall give the Administrative Agent
at least 30 days' prior written notice thereof before changing its state of
corporation or otherwise ceasing to be an Alaska corporation.
6.17 FURTHER ASSURANCES. Promptly upon request by the Administrative Agent
or the Required Lenders, do, execute, acknowledge, authorize, deliver, record,
re-record, file, re-file, register and re-register, any and all such further
acts, deeds, conveyances, security agreements, aircraft mortgages, assignments,
estoppel certificates, financing statements and continuations thereof,
termination statements, notices of assignment, transfers, certificates,
assurances and other instruments the Administrative Agent or such Lenders, as
the case may be, may reasonably require from time to time in order (i) to carry
out more effectively the purposes of any Collateral Document, (ii) to subject to
the Liens created by any of the Collateral Documents any of the properties,
rights or interests covered by any of the Collateral Documents, (iii) to perfect
and maintain the validity, effectiveness and priority of any of the Collateral
Documents and the Liens intended to be created thereby, and (iv) to better
assure, convey, grant, assign, transfer, preserve, protect and confirm to the
Agent and the Lenders the rights granted or now or hereafter intended to be
granted to the Agent and/or the Lenders under the Collateral Documents or under
any other document, instrument or agreement from time to time executed by
Borrower in connection therewith.
ARTICLE VII.
NEGATIVE COVENANTS
So long as any Lender shall have any Commitment hereunder, any Loan or
other Obligation hereunder shall remain unpaid or unsatisfied, Borrower shall
not, nor shall it permit any Subsidiary to, directly or indirectly:
7.01 LIENS. Create, incur, assume or suffer to exist any Lien upon any of
its property, assets or revenues, whether now owned or hereafter acquired, other
than the following:
(a) Liens pursuant to any Collateral Document or any other Loan Document,
if any;
(b) Liens on Collateral purported to be covered by a Collateral Document
if and to the extent permitted under such Collateral Document;
(c) Liens on (i) aircraft and aircraft equipment, including airframes,
engines, appliances, equipment, instruments, and accessories from time to time
belonging to, installed in, or appurtenant to such airframes and engines; (ii)
aircraft spare parts; and (iii) logs, manuals and other records relating to
aircraft, but not including Liens on any Aircraft Collateral;
(d) Liens (other than (x) those covered by Section 7.01(c) and (y) any
Liens on other property of Borrower or any Subsidiary that secure Indebtedness
not exceeding [***] in the aggregate) existing on the date hereof and listed on
Schedule 7.01 and any renewals or extensions thereof, provided that (i) the
property covered thereby is not changed, (ii) the amount secured or benefited
thereby is not increased, (iii) the direct or any contingent obligor with
respect thereto is not changed, and (iv) any renewal or extension of the
obligations secured or benefited thereby is permitted by this Agreement, but not
including Liens on any Collateral;
* Indicates that certain information contained herein has been omitted and
filed separately with the Securities and Exchange Commission. Confidential
treatment has been requested with respect to the omitted portions.
54
(e) Liens for taxes not yet due or which are being contested in good faith
and by appropriate proceedings diligently conducted, if (i) adequate reserves
with respect thereto are maintained on the books of the applicable Person in
accordance with GAAP, and (ii) in the case of a Lien against any of the
Collateral, such contest proceedings operate to stay the sale of any portion of
the Collateral to satisfy such Taxes;
(f) carriers', warehousemen's, mechanics', material supplier's, repairer's
or other like Liens arising in the ordinary course of business for services or
supplies, the payment for which is not overdue for a period of more than 30 days
or which are being contested in good faith and by appropriate proceedings
diligently conducted, (i) if adequate reserves with respect thereto are
maintained on the books of the applicable Person in accordance with GAAP, and
(ii) in the case of a Lien against any of the Collateral, such contest
proceedings operate to stay the sale of any portion of the Collateral to satisfy
such Taxes;
(g) pledges or deposits in the ordinary course of business in connection
with workers' compensation, unemployment insurance and other social security
legislation, other than any Lien imposed by ERISA;
(h) deposits to secure the performance of bids, trade contracts and leases
(other than Indebtedness), statutory obligations, surety bonds (other than bonds
related to judgments or litigation), performance bonds, payment bonds, standby
letters of credit, Swap Contracts and other obligations of a like nature, in
each case, incurred in the ordinary course of business, but not including Liens
on any Collateral;
(i) newly created easements, rights-of-way, restrictions and other similar
encumbrances affecting real property which, in the aggregate, are not
substantial in amount, and which do not in any case materially detract from the
value of the property subject thereto or materially interfere with the ordinary
conduct of the business of the applicable Person, or now existing easements,
rights-of-way, restrictions or other encumbrances;
(j) Liens securing judgments for the payment of money not constituting an
Event of Default under Section 8.01(h) or securing appeal or other surety bonds
related to such judgments, but not including Liens on any Collateral; and
(k) Liens, other than Liens permitted under clauses (a)-(j) of this
Section 7.01, so long as the aggregate amount of all Funded Debt or other
obligations or liabilities secured by such Liens does not exceed [***] times the
total of (A) [***] times Consolidated Tangible Net Worth less (B) Consolidated
Funded Debt and Leases.
7.02 FUNDAMENTAL CHANGES. Merge, dissolve, liquidate, consolidate with or
into another Person, or Dispose of (whether in one transaction or in a series of
transactions) all or substantially all of its assets (whether now owned or
hereafter acquired) to or in favor of any Person, except that, so long as no
Default exists or would result therefrom:
(a) any Subsidiary may merge with (i) Borrower, provided that Borrower
shall be the continuing or surviving Person, or (ii) any one or more other
Subsidiaries, provided that when
* Indicates that certain information contained herein has been omitted and
filed separately with the Securities and Exchange Commission. Confidential
treatment has been requested with respect to the omitted portions.
55
any wholly-owned Subsidiary is merging with another Subsidiary, the wholly-owned
Subsidiary shall be the continuing or surviving Person; and
(b) any Subsidiary may Dispose of all or substantially all of its assets
(upon voluntary liquidation or otherwise) to Borrower or to another Subsidiary;
provided that if the transferor in such a transaction is a wholly-owned
Subsidiary, then the transferee must either be Borrower or a wholly-owned
Subsidiary.
7.03 DISPOSITIONS. Make any Disposition or enter into any agreement to
make any Disposition, except:
(a) Dispositions of obsolete, no longer useful or worn out property,
whether now owned or hereafter acquired, in the ordinary course of business;
(b) Dispositions of inventory in the ordinary course of business;
(c) Dispositions of equipment or real property to the extent that (i) such
property is exchanged for credit against the purchase price of similar
replacement property, or (ii) the proceeds of such Disposition are reasonably
promptly applied to the purchase price of such replacement property;
(d) Disposition of equipment (other than Collateral) in an arms' length
transaction for fair market value provided that: (i) such equipment is no longer
necessary for the successful operation of Borrower's business or the generation
of revenue sufficient to service Borrower's Obligations, and (ii) the aggregate
amount of Dispositions under this clause (d) from the date of this Agreement
through the Maturity Date does not exceed ten percent (10%) of the book value
net of depreciation of all Borrower's equipment (other than Collateral) on the
date of this Agreement;
(e) Dispositions of property by any Subsidiary to Borrower or to a
wholly-owned Subsidiary; and
(f) Non-exclusive licenses of IP Rights in the ordinary course of business
and substantially consistent with past practice for terms not exceeding five
years;
(g) Dispositions permitted by Section 7.02;
(h) Dispositions of Collateral expressly permitted under the Security
Agreement;
(i) Dispositions of aircraft and aircraft equipment that is not Collateral
if such Dispositions are of a type expressly permitted under the Security
Agreement with respect to Aircraft Collateral; and
(j) Dispositions of aircraft or aircraft equipment that is not Collateral
in sale-and-lease-back transactions under which Borrower remains in possession
and control of such aircraft or aircraft equipment as the lessee thereof, but
only if such transaction is effected within six months after Borrower first
acquires such aircraft or aircraft equipment.
56
provided, however, that any Disposition pursuant to clauses (a) through (e) and
clauses (h) through (j) shall be for fair market value.
7.04 RESTRICTED EXPENDITURES. From and after any date when Consolidated
Net Liquidity is less than or equal to $300,000,000 (the "Liquidity Event
Date"), permit the aggregate Restricted Expenditures by Borrower and its
Subsidiaries to exceed $200,000,000 in any year, which year shall be measured
from the Liquidity Event Date and each anniversary thereof.
7.05 DIVIDENDS(a) . In the case of Borrower, declare and make dividend
payments or other distributions payable in the assets of Borrower or in the
common stock or other common Equity Interests of Borrower.
7.06 ERISA. At any time (a) engage in a transaction which could be subject
to Sections 4069 or 4212(c) of ERISA and would have a Material Adverse Effect,
(b) permit any Pension Plan to (i) engage in any non-exempt "prohibited
transaction" (as defined in Section 4975 of the Code); (ii) fail to comply with
ERISA or any other applicable Laws; or (iii) incur any material "accumulated
funding deficiency" (as defined in Section 302 of ERISA), which, with respect to
each event listed above, has a Material Adverse Effect; (c) permit an ERISA
Event to occur with respect to a Pension Plan or Multiemployer Plan which has
resulted or could reasonably be expected to result in liability of Borrower
under Title IV of ERISA to the Pension Plan, Multiemployer Plan or the PBGC in
an aggregate amount in excess of [***]; (d) permit the aggregate amount of
Unfunded Pension Liability for any Pension Plan at any time to exceed [***] of
such Pension Plan's benefit liabilities under Section 4001(a)(16); or (e) fails
to pay, or permit any ERISA Affiliate to fail to pay, when due, after the
expiration of any applicable grace period, any installment payment with respect
to its withdrawal liability under Section 4201 of ERISA under a Multiemployer
Plan in an aggregate amount in excess of $10,000,000.
7.07 AIR CARRIER. Cease to be a U.S. Air Carrier or receive notice that it
will lose or have revoked any license, certificate, qualification or other
requirement to be a U.S. Air Carrier.
7.08 CHANGE IN NATURE OF BUSINESS. Engage in any material line of business
substantially different from, and not in support of, those lines of business
conducted by Borrower and its Subsidiaries on the date hereof or any business
substantially related or incidental thereto.
7.09 TRANSACTIONS WITH AFFILIATES. Enter into transactions of any kind
with Affiliates of Borrower unless such transactions, taken as a whole, are
substantially as favorable to Borrower and its Subsidiaries as would be
obtainable by Borrower or its Subsidiaries in a comparable arm's length
transaction with a Person other than an Affiliate.
7.10 BURDENSOME AGREEMENTS. Enter into any material Contractual Obligation
(other than this Agreement or any other Loan Document) that (a) limits the
ability (i) of any Subsidiary to make Restricted Payments to Borrower or to
otherwise transfer property to Borrower, (ii) of any Subsidiary to Guarantee any
of Borrower's obligations under any of the Loan Documents or (iii) of Borrower
or any Subsidiary to create, incur, assume or suffer to exist Liens on property
of such Person; provided, however, that this clause (iii) shall not prohibit any
negative pledge incurred or provided in favor of any holder of Indebtedness
permitted under this
* Indicates that certain information contained herein has been omitted and
filed separately with the Securities and Exchange Commission. Confidential
treatment has been requested with respect to the omitted portions.
57
Agreement solely to the extent any such negative pledge relates to the property
financed by or the subject of such Indebtedness; or (b) requires the grant of a
Lien to secure an obligation of such Person if a Lien is granted to secure
another obligation of such Person.
7.11 LOANS. In the case of Borrower, make any loans to its Subsidiaries or
Affiliates in an aggregate amount exceeding [***] or incur any obligations to
Parent for borrowed money that are not Subordinated Liabilities, and in the case
of Borrower's Subsidiaries or Affiliates, make any loans to Borrower that are
not Subordinated Liabilities.
7.12 USE OF PROCEEDS. Use the proceeds of any Borrowing, whether directly
or indirectly, and whether immediately, incidentally or ultimately, to purchase
or carry margin stock (within the meaning of Regulation U of the FRB) or to
extend credit to others for the purpose of purchasing or carrying margin stock
or to refund indebtedness originally incurred for such purpose.
ARTICLE VIII.
EVENTS OF DEFAULT AND REMEDIES
8.01 EVENTS OF DEFAULT. Any of the following shall constitute an Event of
Default:
(a) Non-Payment. Borrower fails to pay (i) [***] any amount of principal
of any Loan, or (ii) within [***] after the same becomes due, any interest on
any Loan, or any fee due hereunder, or (iii) within [***] after the same becomes
due, any other amount payable hereunder or under any other Loan Document; or
(b) Specific Covenants. Borrower fails to perform or observe any term,
covenant or agreement contained in this Agreement (other than those covered by
Section 8.01(a)) and such failure continues for fifteen (15) Business Days after
the occurrence of the applicable event; or
(c) Other Defaults. Borrower fails to perform or observe any other
covenant or agreement (not specified in subsection (a) or (b) above) contained
in any Loan Document on its part to be performed or observed and such failure
continues for 30 days or any default or Event of Default occurs under any other
Loan Document; or
(d) Representations and Warranties. Any representation, warranty,
certification or statement of fact made or deemed made by or on behalf of
Borrower herein, in any other Loan Document, or in any document delivered in
connection herewith or therewith shall be incorrect or misleading when made or
deemed made and, in the case of a misrepresentation that is capable of being
cured, such misrepresentation shall not have been cured within 30 days after
Borrower either has knowledge thereof or has received written notice thereof
from the Administrative Agent; or
(e) Cross-Default. (i) Borrower or any Subsidiary: (A) fails to make any
payment when due (whether by scheduled maturity, required prepayment,
acceleration, demand, or otherwise) in respect of any Indebtedness or Guarantee
(other than Indebtedness hereunder and Indebtedness under Swap Contracts) having
an aggregate principal amount (including undrawn committed or available amounts
and including amounts owing to all creditors under any
* Indicates that certain information contained herein has been omitted and
filed separately with the Securities and Exchange Commission. Confidential
treatment has been requested with respect to the omitted portions.
58
combined or syndicated credit arrangement) of more than the Threshold Amount for
any such individual agreement or [***] for any combination of such agreements,
or (B) fails to observe or perform any other agreement or condition relating to
any such Indebtedness or Guarantee or contained in any instrument or agreement
evidencing, securing or relating thereto, or any other event occurs, the effect
of which default or other event is to cause, or to permit the holder or holders
of such Indebtedness or the beneficiary or beneficiaries of such Guarantee (or a
trustee or agent on behalf of such holder or holders or beneficiary or
beneficiaries) to cause, with the giving of notice if required, such
Indebtedness to be demanded or to become due or to be repurchased, prepaid,
defeased or redeemed (automatically or otherwise), or an offer to repurchase,
prepay, defease or redeem such Indebtedness to be made, prior to its stated
maturity, or such Guarantee to become payable or cash collateral in respect
thereof to be demanded; or (ii) there occurs under any Swap Contract an Early
Termination Date (as defined in such Swap Contract) resulting from (A) any event
of default under such Swap Contract as to which Borrower or any Subsidiary is
the Defaulting Party (as defined in such Swap Contract) or (B) any Termination
Event (as so defined) under such Swap Contract as to which Borrower or any
Subsidiary is an Affected Party (as so defined) and, in either event, the Swap
Termination Value owed by Borrower or such Subsidiary as a result thereof is
greater than the Threshold Amount for any such individual agreement or [***] for
any combination of such agreements; or
(f) Insolvency Proceedings, Etc. Borrower, any Subsidiary or Parent
institutes or consents to the institution of any proceeding under any Debtor
Relief Law, or makes an assignment for the benefit of creditors; or applies for
or consents to the appointment of any receiver, trustee, custodian, conservator,
liquidator, rehabilitator or similar officer for it or for all or any material
part of its property; or any receiver, trustee, custodian, conservator,
liquidator, rehabilitator or similar officer is appointed without the
application or consent of such Person and the appointment continues undischarged
or unstayed for 60 calendar days; or any proceeding under any Debtor Relief Law
relating to any such Person or to all or any material part of its property is
instituted without the consent of such Person and continues undismissed or
unstayed for 60 calendar days, or an order for relief is entered in any such
proceeding; or
(g) Inability to Pay Debts; Attachment. (i) Borrower, any Subsidiary or
Parent becomes unable or admits in writing its inability or fails generally to
pay its debts as they become due, or (ii) any writ or warrant of attachment or
execution or similar process is issued or levied against all or any material
part of the property having a value, in the aggregate, in excess of [***] of any
such Person and is not released, vacated or fully bonded within 30 days after
its issue or levy; or
(h) Judgments. There is entered against Borrower or any Subsidiary: (i) a
final judgment or order for the payment of money in an aggregate amount
exceeding the Threshold Amount (to the extent not covered by independent
third-party insurance as to which the insurer does not dispute coverage), or
(ii) any one or more non-monetary final judgments that have, or would reasonably
be expected to have, individually or in the aggregate, a Material Adverse Effect
and, in either case, (A) enforcement proceedings are commenced by any creditor
upon such judgment or order, or (B) there is a period of 10 consecutive days
during which a stay of enforcement of such judgment, by reason of a pending
appeal or otherwise, is not in effect; or
* Indicates that certain information contained herein has been omitted and
filed separately with the Securities and Exchange Commission. Confidential
treatment has been requested with respect to the omitted portions.
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(i) ERISA. (i) An ERISA Event occurs with respect to a Pension Plan or
Multiemployer Plan which has resulted or could reasonably be expected to result
in liability of Borrower under Title IV of ERISA to the Pension Plan,
Multiemployer Plan or the PBGC in an aggregate amount in excess of the Threshold
Amount, or (ii) Borrower or any ERISA Affiliate fails to pay when due, after the
expiration of any applicable grace period, any installment payment with respect
to its withdrawal liability under Section 4201 of ERISA under a Multiemployer
Plan in an aggregate amount in excess of the Threshold Amount; and, in either
case, such ERISA Event or failure to pay would reasonably be expected to have a
Material Adverse Effect.
(j) Material Failure of Security. A Material Failure of Security occurs
and is not cured within five (5) Business Days after its occurrence. Without
limiting other possible cure methods, Borrower may cure a Material Failure of
Security by pledging Cash Collateral so long as such cash collateral qualifies
in all respects to be included in the Borrowing Base and results in the
Borrowing Base being returned to the amount thereof immediately prior to the
occurrence of such Material Failure of Security.
8.02 REMEDIES UPON EVENT OF DEFAULT, CHANGE OF CONTROL, INVALIDITY EVENT
OR MATERIAL FAILURE OF SECURITY. If any Event of Default, a Change of Control or
an Invalidity Event occurs and is continuing, Agent shall, at the request of, or
may, with the consent of, the Required Lenders, take any or all of the following
actions:
(a) declare the commitment of each Lender to make Loans to be terminated,
whereupon such commitments and obligation shall be terminated;
(b) declare the unpaid principal amount of all outstanding Loans, all
interest accrued and unpaid thereon, and all other amounts owing or payable
hereunder or under any other Loan Document to be immediately due and payable,
without presentment, demand, protest or other notice of any kind, all of which
are hereby expressly waived by Borrower; and
(c) exercise on behalf of itself and the Lenders all rights and remedies
available to it and the Lenders under the Loan Documents;
provided, however, that upon the occurrence of an actual or deemed entry of an
order for relief with respect to Borrower under the Bankruptcy Code of the
United States, the obligation of each Lender to make Loans shall automatically
terminate, and the unpaid principal amount of all outstanding Loans and all
interest and other amounts as aforesaid shall automatically become due and
payable, in each case without further act of Agent or any Lender.
8.03 APPLICATION OF FUNDS. After the exercise of remedies provided for in
Section 8.02 (or after the Loans have automatically become immediately due and
payable as set forth in the proviso to Section 8.02, any amounts received on
account of the Obligations shall be applied by Agent in the following order:
First, to payment of that portion of the Obligations constituting fees,
indemnities, expenses and other amounts (including fees, charges and
disbursements of counsel to Agent and amounts payable under Article III) payable
to Agent in its capacity as such;
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Second, to payment of that portion of the Obligations constituting fees,
indemnities and other amounts (other than principal and interest) payable to
Lenders (including fees, charges and disbursements of counsel to the respective
Lenders and amounts payable under Article III), ratably among them in proportion
to the amounts described in this clause Second payable to them;
Third, to payment of that portion of the Obligations constituting accrued
and unpaid interest on the Loans and other Obligations, ratably among Lenders in
proportion to the respective amounts described in this clause Third payable to
them;
Fourth, to payment of that portion of the Obligations constituting unpaid
principal of the Loans, ratably among Lenders in proportion to the respective
amounts described in this clause Fourth held by them; and
Last, the balance, if any, after all of the Obligations have been
indefeasibly paid in full, to Borrower or as otherwise required by Law.
ARTICLE IX.
ADMINISTRATIVE AGENT
9.01 APPOINTMENT AND AUTHORIZATION OF ADMINISTRATIVE AGENT. Each of the
Lenders hereby irrevocably appoints Bank of America to act on its behalf as
Administrative Agent hereunder and under the other Loan Documents and authorizes
Agent to take such actions on its behalf and to exercise such powers as are
delegated to Agent by the terms hereof and thereof, together with such actions
and powers as are reasonably incidental thereto. The provisions of this Article
are solely for the benefit of Agent and the Lenders, and Borrower shall not have
rights as a third party beneficiary of any of such provisions.
9.02 RIGHTS AS A LENDER. The Person serving as Agent hereunder shall have
the same rights and powers in its capacity as a Lender as any other Lender and
may exercise the same as though it were not Agent and the term "Lender" or
"Lenders" shall, unless otherwise expressly indicated or unless the context
otherwise requires, include the Person serving as Agent hereunder in its
individual capacity. Such Person and its Affiliates may accept deposits from,
lend money to, act as the financial advisor or in any other advisory capacity
for and generally engage in any kind of business with the Borrower or any
Subsidiary or other Affiliate thereof as if such Person were not Agent hereunder
and without any duty to account therefor to Lenders.
9.03 EXCULPATORY PROVISIONS. Agent shall not have any duties or
obligations except those expressly set forth herein and in the other Loan
Documents. Without limiting the generality of the foregoing, Agent:
(a) shall not be subject to any fiduciary or other implied duties,
regardless of whether a Default has occurred and is continuing;
(b) shall not have any duty to take any discretionary action or exercise
any discretionary powers, except discretionary rights and powers expressly
contemplated hereby or by the other Loan Documents that Agent is required to
exercise as directed in writing by the
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Required Lenders (or such other number or percentage of the Lenders as shall be
expressly provided for herein or in the other Loan Documents), provided that
Agent shall not be required to take any action that, in its opinion or the
opinion of its counsel, may expose Agent to liability or that is contrary to any
Loan Document or applicable Law; and
(c) shall not, except as expressly set forth herein and in the other Loan
Documents, have any duty to disclose, and shall not be liable for the failure to
disclose, any information relating to Borrower or any of its Affiliates that is
communicated to or obtained by the Person serving as Agent or any of its
Affiliates in any capacity.
(d) Agent shall not be liable for any action taken or not taken by it (i)
with the consent or at the request of the Required Lenders (or such other number
or percentage of the Lenders as shall be necessary, or as Agent shall believe in
good faith shall be necessary, under the circumstances as provided in Sections
8.02 and 10.01 or (ii) in the absence of its own gross negligence or willful
misconduct. Agent shall be deemed not to have knowledge of any Default unless
and until written notice describing such Default is given to Agent by Borrower
or a Lender. Agent shall not be responsible for or have any duty to ascertain or
inquire into (i) any statement, warranty or representation made in or in
connection with this Agreement or any other Loan Document, (ii) the contents of
any certificate, report or other document delivered hereunder or thereunder or
in connection herewith or therewith, (iii) the performance or observance of any
of the covenants, agreements or other terms or conditions set forth herein or
therein or the occurrence of any Default, (iv) the validity, enforceability,
effectiveness or genuineness of this Agreement, any other Loan Document or any
other agreement, instrument or document or (v) the satisfaction of any condition
set forth in Article IV or elsewhere herein, other than to confirm receipt of
items expressly required to be delivered to Agent. Notwithstanding the
foregoing, in making appropriate distributions of all funds that it receives and
is required to distribute hereunder, Agent's standard of care shall be ordinary
negligence.
9.04 RELIANCE BY ADMINISTRATIVE AGENT. Agent shall be entitled to rely
upon, and shall not incur any liability for relying upon, any notice, request,
certificate, consent, statement, instrument, document or other writing
(including any electronic message, Internet or intranet website posting or other
distribution) believed by it to be genuine and to have been signed, sent or
otherwise authenticated by the proper Person. Agent also may rely upon any
statement made to it orally or by telephone and believed by it to have been made
by the proper Person, and shall not incur any liability for relying thereon. In
determining compliance with any condition hereunder to the making of a Loan that
by its terms must be fulfilled to the satisfaction of a Lender, Agent may
presume that such condition is satisfactory to such Lender unless Agent shall
have received notice to the contrary from such Lender prior to the making of
such Loan. Agent may consult with legal counsel (who may be counsel for
Borrower), independent accountants and other experts selected by it, and shall
not be liable for any action taken or not taken by it in accordance with the
advice of any such counsel, accountants or experts.
9.05 DELEGATION OF DUTIES. Agent may perform any and all of its duties and
exercise its rights and powers hereunder or under any other Loan Document by or
through any one or more sub agents appointed by Agent. Agent and any such sub
agent may perform any and all of its duties and exercise its rights and powers
by or through their respective Related Parties. The exculpatory provisions of
this Article shall apply to any such sub agent and to the Related Parties
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of Agent and any such sub agent, and shall apply to their respective activities
in connection with the syndication of the credit facilities provided for herein
as well as activities as Agent.
9.06 RESIGNATION OF AGENT. Agent may at any time give notice of its
resignation to Lenders and Borrower. Upon receipt of any such notice of
resignation, the Required Lenders shall have the right, in consultation with
Borrower, to appoint a successor, which shall be a bank with an office in the
United States, or an Affiliate of any such bank with an office in the United
States. If no such successor shall have been so appointed by the Required
Lenders and shall have accepted such appointment within 30 days after the
retiring Agent gives notice of its resignation, then the retiring Agent may on
behalf of Lenders, appoint a successor Agent meeting the qualifications set
forth above; provided that if Agent shall notify the Borrower and the Lenders
that no qualifying Person has accepted such appointment, then such resignation
shall nonetheless become effective in accordance with such notice and (1) the
retiring Agent shall be discharged from its duties and obligations hereunder and
under the other Loan Documents (except that in the case of any collateral
security held by Agent on behalf of the Lenders under any of the Loan Documents,
the retiring Agent shall continue to hold such collateral security until such
time as a successor Agent is appointed) and (2) all payments, communications and
determinations provided to be made by, to or through Agent shall instead be made
by or to each Lender directly, until such time as the Required Lenders appoint a
successor Agent as provided for above in this Section. Upon the acceptance of a
successor's appointment as Agent hereunder, such successor shall succeed to and
become vested with all of the rights, powers, privileges and duties of the
retiring (or retired) Agent, and the retiring Agent shall be discharged from all
of its duties and obligations hereunder or under the other Loan Documents (if
not already discharged therefrom as provided above in this Section). The fees
payable by Borrower to a successor Agent shall be the same as those payable to
its predecessor unless otherwise agreed between Borrower and such successor.
After the retiring Agent's resignation hereunder and under the other Loan
Documents, the provisions of this Article and Section 10.04 shall continue in
effect for the benefit of such retiring Agent, its sub agents and their
respective Related Parties in respect of any actions taken or omitted to be
taken by any of them while the retiring Administrative Agent was acting as
Administrative Agent.
9.07 NON-RELIANCE ON AGENT AND OTHER LENDERS. Each Lender acknowledges
that it has, independently and without reliance upon Agent or any other Lender
or any of their Related Parties and based on such documents and information as
it has deemed appropriate, made its own credit analysis and decision to enter
into this Agreement. Each Lender also acknowledges that it will, independently
and without reliance upon Agent or any other Lender or any of their Related
Parties and based on such documents and information as it shall from time to
time deem appropriate, continue to make its own decisions in taking or not
taking action under or based upon this Agreement, any other Loan Document or any
related agreement or any document furnished hereunder or thereunder.
9.08 NO OTHER DUTIES, ETC. Anything herein to the contrary
notwithstanding, no Lender holding a title listed on the cover page hereof shall
have any powers, duties or responsibilities under this Agreement or any of the
other Loan Documents, except in its capacity, as applicable, as Agent or a
Lender hereunder.
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9.09 ADMINISTRATIVE AGENT MAY FILE PROOFS OF CLAIM. In case of the
pendency of any receivership, insolvency, liquidation, bankruptcy,
reorganization, arrangement, adjustment, composition or other judicial
proceeding relative to Borrower, Agent (irrespective of whether the principal of
any Loan shall then be due and payable as herein expressed or by declaration or
otherwise and irrespective of whether Agent shall have made any demand on
Borrower) shall be entitled and empowered, by intervention in such proceeding or
otherwise:
(a) to file and prove a claim for the whole amount of the principal and
interest owing and unpaid in respect of the Loans and all other Obligations that
are owing and unpaid and to file such other documents as may be necessary or
advisable in order to have the claims of Lenders and Agent (including any claim
for the reasonable compensation, expenses, disbursements and advances of Lenders
and Agent and their respective agents and counsel and all other amounts due
Lenders and Agent under Sections 2.03(i) and 2.07 and 10.04 allowed in such
judicial proceeding; and
(b) to collect and receive any monies or other property payable or
deliverable on any such claims and to distribute the same;
and any custodian, receiver, assignee, trustee, liquidator, sequestrator or
other similar official in any such judicial proceeding is hereby authorized by
each Lender to make such payments to Agent and, in the event that Agent shall
consent to the making of such payments directly to Lenders, to pay to Agent any
amount due for the reasonable compensation, expenses, disbursements and advances
of Agent and its agents and counsel, and any other amounts due Agent under
Sections 2.07 and 10.04. Nothing contained herein shall be deemed to authorize
Agent to authorize or consent to or accept or adopt on behalf of any Lender any
plan of reorganization, arrangement, adjustment or composition affecting the
Obligations or the rights of any Lender or to authorize Agent to vote in respect
of the claim of any Lender in any such proceeding.
9.10 COLLATERAL MATTERS.
(a) Each Lender hereby irrevocably authorizes and directs Agent to enter
into the Collateral Documents for the benefit of such Lender. Each Lender hereby
agrees, and each holder of any Note by the acceptance thereof will be deemed to
agree, that, except as otherwise set forth in Section 10.01, any action taken by
the Required Lenders, in accordance with the provisions of this Agreement or the
Collateral Documents, and the exercise by the Required Lenders of the powers set
forth herein or therein, together with such other powers as are reasonably
incidental thereto, shall be authorized and binding upon all of Lenders. Agent
is hereby authorized (but not obligated) on behalf of all of Lenders, without
the necessity of any notice to or further consent from any Lender from time to
time prior to, an Event of Default, to take any action with respect to any
Collateral or Collateral Documents which may be necessary to perfect and
maintain perfected the Liens upon the Collateral granted pursuant to the
Collateral Documents.
(b) Each Lender hereby irrevocably authorize Agent, at its option and in
its discretion,
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(i) to release any Lien on any property granted to or held by Agent
under any Loan Document (A) upon termination of the Aggregate Commitments
and payment in full of all Obligations (other than contingent
indemnification obligations), (B) that is sold or to be sold as part of or
in connection with any sale permitted hereunder or under any other Loan
Document, (C) subject to Section 10.01, if approved, authorized or
ratified in writing by the Required Lenders, or (D) in connection with any
foreclosure sale or other disposition of Collateral after the occurrence
of an Event of Default; and
(ii) to subordinate any Lien on any property granted to or held by
Agent under any Loan Document to the holder of any Lien on such property
that is permitted by this Agreement or any other Loan Document.
Upon request by Agent at any time, each Lender will confirm in writing Agent's
authority to release or subordinate its interest in particular types or items of
Collateral pursuant to this Section 9.10.
(c) Subject to (b) above, Agent shall (and is hereby irrevocably
authorized by each Lender, to execute such documents as may be necessary to
evidence the release or subordination of the Liens granted to Agent for the
benefit of Agent and Lenders herein or pursuant hereto upon the applicable
Collateral; provided that (i) Agent shall not be required to execute any such
document on terms which, in Agent's opinion, would expose Agent to or create any
liability or entail any consequence other than the release or subordination of
such Liens without recourse or warranty and (ii) such release or subordination
shall not in any manner discharge, affect or impair the Obligations or any Liens
upon (or obligations of Borrower in respect of) all interests retained by
Borrower, including the proceeds of the sale, all of which shall continue to
constitute part of the Collateral. In the event of any sale or transfer of
Collateral, or any foreclosure with respect to any of the Collateral, Agent
shall be authorized to deduct all expenses reasonably incurred by Agent from the
proceeds of any such sale, transfer or foreclosure.
(d) Agent shall have no obligation whatsoever to any Lender or any other
Person to assure that the Collateral exists or is owned by Borrower or is cared
for, protected or insured or that the Liens granted to Agent herein or in any of
the Collateral Documents or pursuant hereto or thereto have been properly or
sufficiently or lawfully created, perfected, protected or enforced or are
entitled to any particular priority, or to exercise or to continue exercising at
all or in any manner or under any duty of care, disclosure or fidelity any of
the rights, authorities and powers granted or available to Agent in this Section
9.10 or in any of the Collateral Documents, it being understood and agreed that
in respect of the Collateral, or any act, omission or event related thereto,
Agent may act in any manner it may deem appropriate, in its sole discretion,
given Agent's own interest in the Collateral as one of the Lenders and that
Agent shall have no duty or liability whatsoever to Lenders.
(e) Each Lender hereby appoints each other Lender as agent for the purpose
of perfecting Lenders' security interest in assets which, in accordance with
Article 9 of the UCC can be perfected only by possession. Should any Lender
(other than Agent) obtain possession of any such Collateral, such Lender shall
notify Agent thereof, and, promptly upon Agent's request therefor shall deliver
such Collateral to Agent or in accordance with Agent's instructions.
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9.11 OTHER AGENTS; ARRANGERS AND MANAGERS. None of the Lenders or other
Persons identified on the facing page or signature pages of this Agreement as a
"syndication agent," "documentation agent," "co-agent," "book manager," "lead
manager," "arranger," "lead arranger" or "co-arranger" shall have any right,
power, obligation, liability, responsibility or duty under this Agreement other
than, in the case of such Lenders, those applicable to all Lenders as such.
Without limiting the foregoing, none of the Lenders or other Persons so
identified shall have or be deemed to have any fiduciary relationship with any
Lender. Each Lender acknowledges that it has not relied, and will not rely, on
any of the Lenders or other Persons so identified in deciding to enter into this
Agreement or in taking or not taking action hereunder.
ARTICLE X.
MISCELLANEOUS
10.01 AMENDMENTS, ETC. No amendment or waiver of any provision of this
Agreement or any other Loan Document, and no consent to any departure by
Borrower therefrom, shall be effective unless in writing signed by the Required
Lenders and Borrower and acknowledged by Agent, and each such waiver or consent
shall be effective only in the specific instance and for the specific purpose
for which given; provided, however, that no such amendment, waiver or consent
shall:
(a) waive any condition set forth in Section 4.01(a) without the written
consent of each Lender; provided, however, in the sole discretion of Agent, only
a waiver by Agent shall be required with respect to immaterial matters or items
specified in Section 4.01(a)(iii) or (iv) with respect to which Borrower has
given assurances satisfactory to Agent that such items shall be delivered
promptly following the Closing Date;
(b) extend or increase the Commitment of any Lender (or reinstate any
Commitment terminated pursuant to Section 8.02) without the written consent of
such Lender;
(c) postpone any date fixed by this Agreement or any other Loan Document
for any payment (excluding mandatory prepayments) of principal, interest, fees
or other amounts due to Lenders (or any of them) hereunder or under any other
Loan Document without the written consent of each Lender directly affected
thereby;
(d) reduce the principal of, or the rate of interest specified herein on,
any Loan, or (subject to clause (ii) of the second proviso to this Section
10.01) any fees or other amounts payable hereunder or under any other Loan
Document, without the written consent of each Lender directly affected thereby;
provided, however, that only the consent of the Required Lenders shall be
necessary (i) to amend the definition of "Default Rate" or to waive any
obligation of Borrower to pay interest at the Default Rate or (ii) to amend any
financial covenant hereunder (or any defined term used therein) even if the
effect of such amendment would be to reduce the rate of interest on any Loan or
to reduce any fee payable hereunder;
(e) change Section 2.11 or Section 8.03 in a manner that would alter the
pro rata sharing of payments required thereby without the written consent of
each Lender; or
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(f) change any provision of this Section or the definition of "Required
Lenders" or any other provision hereof specifying the number or percentage of
Lenders required to amend, waive or otherwise modify any rights hereunder or
make any determination or grant any consent hereunder, without the written
consent of each Lender; or
(g) release or subordinate the Agent's security interest in all or
substantially all of the Collateral, without the written consent of each Lender;
or
(h) reduce the frequency with which Borrower must provide Qualified
Appraisals, without the written consent of each Lender; or
(i) change to definition of "Borrowing Base" or of the components thereof,
without the written consent of each Lender.
and, provided further, that (i) no amendment, waiver or consent shall, unless in
writing and signed by Agent in addition to the Lenders required above, affect
the rights or duties of Agent under this Agreement or any other Loan Document;
and (ii) Section 10.06(h) may not be amended, waived or otherwise modified
without the consent of each Granting Lender all or any part of whose Loans are
being funded by an SPC at the time of such amendment, waiver or other
modification; and (iii) the Agent Fee Letter may be amended, or rights or
privileges thereunder waived, in a writing executed only by the parties thereto.
Notwithstanding anything to the contrary herein, no Defaulting Lender shall have
any right to approve or disapprove any amendment, waiver or consent hereunder,
except that the Commitment of such Lender may not be increased or extended
without the consent of such Lender.
10.02 NOTICES; EFFECTIVENESS; ELECTRONIC COMMUNICATIONS.
(a) Notices Generally. Except in the case of notices and other
communications expressly permitted to be given by telephone (and except as
provided in subsection (b) below), all notices and other communications provided
for herein shall be in writing and shall be delivered by hand or overnight
courier service, mailed by certified or registered mail or sent by telecopier as
follows, and all notices and other communications expressly permitted hereunder
to be given by telephone shall be made to the applicable telephone number, as
follows:
(i) if to Borrower or Agent, to the address, telecopier number,
electronic mail address or telephone number specified for such Person on
Schedule 10.02; and
(ii) if to any other Lender, to the address, telecopier number,
electronic mail address or telephone number specified in its
Administrative Questionnaire.
Notices sent by hand or overnight courier service, or mailed by certified or
registered mail, shall be deemed to have been given when received; notices sent
by telecopier shall be deemed to have been given when sent (except that, if not
given during normal business hours for the recipient, shall be deemed to have
been given at the opening of business on the next business day for the
recipient). Notices delivered through electronic communications to the extent
provided in subsection (b) below, shall be effective as provided in such
subsection (b).
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(b) Electronic Communications. Notices and other communications to Lenders
hereunder may be delivered or furnished by electronic communication (including
e-mail and Internet or intranet websites) pursuant to procedures approved by
Agent, provided that the foregoing shall not apply to notices to any Lender
pursuant to Article II if such Lender has notified the Agent that it is
incapable of receiving notices under such Article by electronic communication.
Agent or Borrower may, in its discretion, agree to accept notices and other
communications to it hereunder by electronic communications pursuant to
procedures approved by it, provided that approval of such procedures may be
limited to particular notices or communications. Unless Agent otherwise
prescribes, (i) notices and other communications sent to an e-mail address shall
be deemed received upon the sender's receipt of an acknowledgement from the
intended recipient (such as by the "return receipt requested" function, as
available, return e-mail or other written acknowledgement), provided that if
such notice or other communication is not sent during the normal business hours
of the recipient, such notice or communication shall be deemed to have been sent
at the opening of business on the next business day for the recipient, and (ii)
notices or communications posted to an Internet or intranet website shall be
deemed received upon the deemed receipt by the intended recipient at its e-mail
address as described in the foregoing clause (i) of notification that such
notice or communication is available and identifying the website address
therefor.
(c) The Platform. THE PLATFORM IS PROVIDED "AS IS" AND "AS AVAILABLE." THE
AGENT PARTIES (AS DEFINED BELOW) DO NOT WARRANT THE ACCURACY OR COMPLETENESS OF
THE BORROWER MATERIALS OR THE ADEQUACY OF THE PLATFORM, AND EXPRESSLY DISCLAIM
LIABILITY FOR ERRORS IN OR OMISSIONS FROM THE BORROWER MATERIALS. NO WARRANTY OF
ANY KIND, EXPRESS, IMPLIED OR STATUTORY, INCLUDING ANY WARRANTY OF
MERCHANTABILITY, FITNESS FOR A PARTICULAR PURPOSE, NON-INFRINGEMENT OF THIRD
PARTY RIGHTS OR FREEDOM FROM VIRUSES OR OTHER CODE DEFECTS, IS MADE BY ANY AGENT
PARTY IN CONNECTION WITH THE BORROWER MATERIALS OR THE PLATFORM. In no event
shall the Administrative Agent or any of its Related Parties (collectively, the
"Agent Parties") have any liability to the Borrower, any Lender or any other
Person for losses, claims, damages, liabilities or expenses of any kind (whether
in tort, contract or otherwise) arising out of the Borrower's or the
Administrative Agent's transmission of Borrower Materials through the Internet,
except to the extent that such losses, claims, damages, liabilities or expenses
are determined by a court of competent jurisdiction by a final and nonappealable
judgment to have resulted from the gross negligence or willful misconduct of
such Agent Party; provided, however, that in no event shall any Agent Party have
any liability to the Borrower, any Lender or any other Person for indirect,
special, incidental, consequential or punitive damages (as opposed to direct or
actual damages).
(d) Change of Address, Etc. Each of the Borrower and Agent may change its
address, telecopier or telephone number for notices and other communications
hereunder by notice to the other parties hereto. Each other Lender may change
its address, telecopier or telephone number for notices and other communications
hereunder by notice to Borrower and Agent. In addition, each Lender agrees to
notify the Administrative Agent from time to time to ensure that the
Administrative Agent has on record (i) an effective address, contact name,
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telephone number, telecopier number and electronic mail address to which notices
and other communications may be sent and (ii) accurate wire instructions for
such Lender.
(e) Reliance by Agent and Lenders. Agent and Lenders shall be entitled to
rely and act upon any notices (including telephonic Loan Notices) purportedly
given by or on behalf of Borrower even if (i) such notices were not made in a
manner specified herein, were incomplete or were not preceded or followed by any
other form of notice specified herein, or (ii) the terms thereof, as understood
by the recipient, varied from any confirmation thereof. Borrower shall indemnify
Agent, each Lender and the Related Parties of each of them from all losses,
costs, expenses and liabilities resulting from the reliance by such Person on
each notice purportedly given by or on behalf of Borrower. All telephonic
notices to and other telephonic communications with Agent may be recorded by
Agent, and each of the parties hereto hereby consents to such recording.
10.03 NO WAIVER; CUMULATIVE REMEDIES. No failure by any Lender or Agent to
exercise, and no delay by any such Person in exercising, any right, remedy,
power or privilege under any Loan Documents shall operate as a waiver thereof;
nor shall any single or partial exercise of any right, remedy, power or
privilege hereunder preclude any other or further exercise thereof or the
exercise of any other right, remedy, power or privilege. The rights, remedies,
powers and privileges provided in any Loan Documents are cumulative and not
exclusive of any rights, remedies, powers and privileges provided by law.
10.04 EXPENSES; INDEMNITY; DAMAGE WAIVER.
(a) Costs and Expenses. Borrower shall pay (i) all reasonable out of
pocket expenses incurred by Agent and its Affiliates (including the reasonable
fees, charges and disbursements of counsel for Agent), in connection with the
syndication of the credit facilities provided for herein, the preparation,
negotiation, execution, delivery and administration of this Agreement and the
other Loan Documents or any amendments, modifications or waivers of the
provisions hereof or thereof (whether or not the transactions contemplated
hereby or thereby shall be consummated) and (ii) all out of pocket expenses
incurred by Agent or any Lender (including the fees, charges and disbursements
of any counsel for Agent or any Lender) in connection with the enforcement or
protection of its rights (A) in connection with this Agreement and the other
Loan Documents, including its rights under this Section, or (B) in connection
with the Loans made hereunder, including all such out of pocket expenses
incurred during any workout, restructuring or negotiations in respect of such
Loans.
(b) Indemnification by the Borrower. Borrower shall indemnify Agent (and
any sub-agent thereof), each Lender, and each Related Party of any of the
foregoing Persons (each such Person being called an "Indemnitee") against, and
hold each Indemnitee harmless from, any and all losses, claims, damages,
liabilities and related expenses (including the fees, charges and disbursements
of any counsel for any Indemnitee), incurred by any Indemnitee or asserted
against any Indemnitee by any third party or by Borrower arising out of, in
connection with, or as a result of (i) the execution or delivery of this
Agreement, any other Loan Document or any agreement or instrument contemplated
hereby or thereby, the performance by the parties hereto of their respective
obligations hereunder or thereunder or the consummation of the transactions
contemplated hereby or thereby, or, in the case of the Administrative Agent (and
any sub-agent
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thereof) and its Related Parties only, the administration of this Agreement and
the other Loan Documents, (ii) any Loan or the use or proposed use of the
proceeds therefrom, (iii) any actual or alleged presence or release of Hazardous
Materials on or from any property owned or operated by the Borrower or any of
its Subsidiaries, or any Environmental Liability related in any way to the
Borrower or any of its Subsidiaries, or (iv) any actual or prospective claim,
litigation, investigation or proceeding relating to any of the foregoing,
whether based on contract, tort or any other theory, whether brought by a third
party or by the Borrower, and regardless of whether any Indemnitee is a party
thereto, in all cases, whether or not caused by or arising, in whole or in part,
out of the comparative or contributory (but not sole) negligence of the
Indemnitee; provided that such indemnity shall not, as to any Indemnitee, be
available to the extent that such losses, claims, damages, liabilities or
related expenses (x) are determined by a court of competent jurisdiction by
final and nonappealable judgment to have resulted from the gross negligence or
willful misconduct of such Indemnitee or (y) result from a claim brought by
Borrower against an Indemnitee for breach in bad faith of such Indemnitee's
obligations hereunder or under any other Loan Document, if Borrower has obtained
a final and nonappealable judgment in its favor on such claim as determined by a
court of competent jurisdiction or (z) result from Agent's negligence in making
appropriate distributions of funds that Agent receives and is required to
distribute hereunder.
(c) Reimbursement by Lenders. To the extent that Borrower for any reason
fails to indefeasibly pay any amount required under subsection (a) or (b) of
this Section to be paid by it to Agent (or any sub-agent thereof) or any Related
Party of any of the foregoing, each Lender severally agrees to pay to Agent (or
any such sub-agent) or such Related Party, as the case may be, such Lender's
Applicable Percentage (determined as of the time that the applicable
unreimbursed expense or indemnity payment is sought) of such unpaid amount,
provided that the unreimbursed expense or indemnified loss, claim, damage,
liability or related expense, as the case may be, was incurred by or asserted
against Agent (or any such sub-agent) or against any Related Party of any of the
foregoing acting for Agent (or any such sub-agent). The obligations of the
Lenders under this subsection (c) are subject to the provisions of Section
2.10(d).
(d) Waiver of Consequential Damages, Etc. To the fullest extent permitted
by applicable law, Borrower shall not assert, and hereby waives, any claim
against any Indemnitee, on any theory of liability, for special, indirect,
consequential or punitive damages (as opposed to direct or actual damages)
arising out of, in connection with, or as a result of, this Agreement, any other
Loan Document or any agreement or instrument contemplated hereby, the
transactions contemplated hereby or thereby, any Loan or the use of the proceeds
thereof. No Indemnitee referred to in subsection (b) above shall be liable for
any damages arising from the use by unintended recipients of any information or
other materials distributed by it through telecommunications, electronic or
other information transmission systems in connection with this Agreement or the
other Loan Documents or the transactions contemplated hereby or thereby.
(e) Payments. All amounts due under this Section shall be payable not
later than 30 Business Days after demand therefor, provided that such demand is
supported by a statement showing. in reasonable detail, the basis for the amount
demanded including the method of calculating such amount, if applicable.
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(f) Survival. The agreements in this Section shall survive the resignation
of Agent, the replacement of any Lender, the termination of the Aggregate
Commitments and the repayment, satisfaction or discharge of all the other
Obligations.
10.05 PAYMENTS SET ASIDE. To the extent that any payment by or on behalf
of Borrower is made to Agent or any Lender, or Agent or any Lender exercises its
right of setoff, and such payment or the proceeds of such setoff or any part
thereof is subsequently invalidated, declared to be fraudulent or preferential,
set aside or required (including pursuant to any settlement entered into by
Agent or such Lender in its discretion) to be repaid to a trustee, receiver or
any other party, in connection with any proceeding under any Debtor Relief Law
or otherwise, then (a) to the extent of such recovery, the obligation or part
thereof originally intended to be satisfied shall be revived and continued in
full force and effect as if such payment had not been made or such setoff had
not occurred, and (b) each Lender severally agrees to pay to Agent upon demand
its applicable share (without duplication) of any amount so recovered from or
repaid by Agent, plus interest thereon from the date of such demand to the date
such payment is made at a rate per annum equal to the Federal Funds Rate from
time to time in effect. The obligations of the Lenders under clause (b) of the
preceding sentence shall survive the payment in full of the Obligations and the
termination of this Agreement.
10.06 SUCCESSORS AND ASSIGNS.
(a) Successors and Assigns Generally. The provisions of this Agreement and
each other Loan Document shall be binding upon and inure to the benefit of the
parties hereto and their respective successors and assigns permitted hereby,
except that Borrower may not assign or otherwise transfer any of its rights or
obligations hereunder without the prior written consent of Agent and each Lender
and no Lender may assign or otherwise transfer any of its rights or obligations
hereunder except (i) to an Eligible Assignee in accordance with the provisions
of subsection (b) of this Section, (ii) by way of participation in accordance
with the provisions of subsection (d) of this Section, or (iii) by way of pledge
or assignment of a security interest subject to the restrictions of subsection
(f) of this Section (and any other attempted assignment or transfer by any party
hereto shall be null and void); or (iv) to an SPC in accordance with the
provisions of subsection (h) of this Section. Nothing in this Agreement,
expressed or implied, shall be construed to confer upon any Person (other than
the parties hereto, their respective successors and assigns permitted hereby,
Participants to the extent provided in subsection (d) of this Section and, to
the extent expressly contemplated hereby, the Related Parties of each of Agent
and the Lenders) any legal or equitable right, remedy or claim under or by
reason of this Agreement.
(b) Assignments by Lenders. Any Lender may at any time assign to one or
more Eligible Assignees all or a portion of its rights and obligations under
this Agreement (including all or a portion of its Commitment and the Loans at
the time owing to it); provided that (i) except in the case of an assignment of
the entire remaining amount of the assigning Lender's Commitment and the Loans
at the time owing to it or in the case of an assignment to a Lender or an
Affiliate of a Lender or an Approved Fund with respect to a Lender, the
aggregate amount of the Commitment (which for this purpose includes Loans
outstanding thereunder) or, if the Commitment is not then in effect, the
principal outstanding balance of the Loans of the assigning Lender subject to
each such assignment, determined as of the date the Assignment and
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Assumption with respect to such assignment is delivered to Agent or, if "Trade
Date" is specified in the Assignment and Assumption, as of the Trade Date, shall
not be less than $1,000,000 unless each of Agent and, so long as no Event of
Default has occurred and is continuing, Borrower otherwise consents (each such
consent not to be unreasonably withheld or delayed); provided, however, that
concurrent assignments to members of an Assignee Group and concurrent
assignments from members of an Assignee Group to a single Eligible Assignee (or
to an Eligible Assignee and members of its Assignee Group) will be treated as a
single assignment for purposes of determining whether such minimum amount has
been met; (ii) each partial assignment shall be made as an assignment of a
proportionate part of all the assigning Lender's rights and obligations under
this Agreement with respect to the Loans or the Commitment assigned; (iii) any
assignment of a Commitment must be approved by Agent unless the Person that is
the proposed assignee is itself a Lender (whether or not the proposed assignee
would otherwise qualify as an Eligible Assignee); and (iv) the parties to each
assignment shall execute and deliver to Agent an Assignment and Assumption,
together with a processing and recordation fee in the amount, if any, required
as set forth in Schedule 10.06, payable by the assigning Lender and the Eligible
Assignee, if it shall not be a Lender, shall deliver to Agent an Administrative
Questionnaire. Subject to acceptance and recording thereof by Agent pursuant to
subsection (c) of this Section, from and after the effective date specified in
each Assignment and Assumption, the Eligible Assignee thereunder shall be a
party to this Agreement and, to the extent of the interest assigned by such
Assignment and Assumption, have the rights and obligations of a Lender under
this Agreement, and the assigning Lender thereunder shall, to the extent of the
interest assigned by such Assignment and Assumption, be released from its
obligations under this Agreement (and, in the case of an Assignment and
Assumption covering all of the assigning Lender's rights and obligations under
this Agreement, such Lender shall cease to be a party hereto) but shall continue
to be entitled to the benefits of Sections 3.01, 3.04, 3.05, and 10.04 with
respect to facts and circumstances occurring prior to the effective date of such
assignment. Upon request, Borrower (at its expense) shall execute and deliver a
Note to the assignee Lender. Any assignment or transfer by a Lender of rights or
obligations under this Agreement that does not comply with this subsection shall
be treated for purposes of this Agreement as a sale by such Lender of a
participation in such rights and obligations in accordance with subsection (d)
of this Section.
(c) Register. Agent, acting solely for this purpose as an agent of
Borrower, shall maintain at Administrative Agent's Office a copy of each
Assignment and Assumption delivered to it and a register for the recordation of
the names and addresses of the Lenders, and the Commitments of, and principal
amounts of the Loans owing to, each Lender pursuant to the terms hereof from
time to time (the "Register"). The entries in the Register shall be conclusive,
and Borrower, Agent and the Lenders may treat each Person whose name is recorded
in the Register pursuant to the terms hereof as a Lender hereunder for all
purposes of this Agreement, notwithstanding notice to the contrary. The Register
shall be available for inspection by each of Borrower at any reasonable time and
from time to time upon reasonable prior notice. In addition, at any time that a
request for a consent for a material or substantive change to the Loan Documents
is pending, any Lender wishing to consult with other Lenders in connection
therewith may request and receive from Agent a copy of the Register.
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(d) Participations. Any Lender may at any time, without the consent of, or
notice to, Borrower or Agent, sell participations to any Person (other than a
natural person or Borrower or any of Borrower's Affiliates or Subsidiaries)
(each, a "Participant") in all or a portion of such Lender's rights and/or
obligations under this Agreement (including all or a portion of its Commitment
and/or the Loans owing to it); provided that (i) such Lender's obligations under
this Agreement shall remain unchanged, (ii) such Lender shall remain solely
responsible to the other parties hereto for the performance of such obligations
and (iii) Borrower, Agent and the Lenders shall continue to deal solely and
directly with such Lender in connection with such Lender's rights and
obligations under this Agreement. Any agreement or instrument pursuant to which
a Lender sells such a participation shall provide that such Lender shall retain
the sole right to enforce this Agreement and to approve any amendment,
modification or waiver of any provision of this Agreement; provided that such
agreement or instrument may provide that such Lender will not, without the
consent of the Participant, agree to any amendment, waiver or other modification
described in the first proviso to Section 10.01 that affects such Participant.
Subject to subsection (e) of this Section, Borrower agrees that each Participant
shall be entitled to the benefits of Sections 3.01, 3.04 and 3.05 to the same
extent as if it were a Lender and had acquired its interest by assignment
pursuant to subsection (b) of this Section. To the extent permitted by law, each
Participant also shall be entitled to the benefits of Section 10.08 as though it
were a Lender, provided such Participant agrees to be subject to Section 2.11 as
though it were a Lender.
(e) Limitations upon Participant Rights. A Participant shall not be
entitled to receive any greater payment under Section 3.01 or 3.04 than the
applicable Lender would have been entitled to receive with respect to the
participation sold to such Participant, unless the sale of the participation to
such Participant is made with Borrower's prior written consent. A Participant
that would be a Foreign Lender if it were a Lender shall not be entitled to the
benefits of Section 3.01 unless the Borrower is notified of the participation
sold to such Participant and such Participant agrees, for the benefit of the
Borrower, to comply with Section 3.01(e) as though it were a Lender.
(f) Certain Pledges. Any Lender may at any time pledge or assign a
security interest in all or any portion of its rights under this Agreement
(including under its Note, if any) to secure obligations of such Lender,
including any pledge or assignment to secure obligations to a Federal Reserve
Bank; provided that no such pledge or assignment shall release such Lender from
any of its obligations hereunder or substitute any such pledgee or assignee for
such Lender as a party hereto.
(g) Electronic Execution of Assignments. The words "execution," "signed,"
"signature," and words of like import in any Assignment and Assumption shall be
deemed to include electronic signatures or the keeping of records in electronic
form, each of which shall be of the same legal effect, validity or
enforceability as a manually executed signature or the use of a paper-based
recordkeeping system, as the case may be, to the extent and as provided for in
any applicable law, including the Federal Electronic Signatures in Global and
National Commerce Act, the New York State Electronic Signatures and Records Act,
or any other similar state laws based on the Uniform Electronic Transactions
Act.
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(h) Deemed Consent of Borrower. If the consent of Borrower to an
assignment to an Eligible Assignee is required hereunder (including a consent to
an assignment which does not meet the minimum assignment threshold specified in
clause (i) of the proviso to the first sentence of Section 10.06(b)), Borrower
shall be deemed to have given its consent ten Business Days after the date
notice thereof has been delivered to Borrower by the assigning Lender (through
Agent) unless such consent is expressly refused by Borrower prior to such tenth
Business Day.
(i) Special Purpose Funding Vehicles. Notwithstanding anything to the
contrary contained herein, any Lender (a "Granting Lender") may grant to a
special purpose funding vehicle identified as such in writing from time to time
by the Granting Lender to the Administrative Agent and the Borrower (an "SPC")
the option to provide all or any part of any Committed Loan that such Granting
Lender would otherwise be obligated to make pursuant to this Agreement; provided
that (i) nothing herein shall constitute a commitment by any SPC to fund any
Committed Loan, and (ii) if an SPC elects not to exercise such option or
otherwise fails to make all or any part of such Committed Loan, the Granting
Lender shall be obligated to make such Committed Loan pursuant to the terms
hereof or, if it fails to do so, to make such payment to the Administrative
Agent as is required under Section 2.12(b)(ii). Each party hereto hereby agrees
that (i) neither the grant to any SPC nor the exercise by any SPC of such option
shall increase the costs or expenses or otherwise increase or change the
obligations of the Borrower under this Agreement (including its obligations
under Section 3.04), (ii) no SPC shall be liable for any indemnity or similar
payment obligation under this Agreement for which a Lender would be liable, and
(iii) the Granting Lender shall for all purposes, including the approval of any
amendment, waiver or other modification of any provision of any Loan Document,
remain the lender of record hereunder. The making of a Committed Loan by an SPC
hereunder shall utilize the Commitment of the Granting Lender to the same
extent, and as if, such Committed Loan were made by such Granting Lender. In
furtherance of the foregoing, each party hereto hereby agrees (which agreement
shall survive the termination of this Agreement) that, prior to the date that is
one year and one day after the payment in full of all outstanding commercial
paper or other senior debt of any SPC, it will not institute against, or join
any other Person in instituting against, such SPC any bankruptcy,
reorganization, arrangement, insolvency, or liquidation proceeding under the
laws of the United States or any State thereof. Notwithstanding anything to the
contrary contained herein, any SPC may (i) with notice to, but without prior
consent of the Borrower and the Administrative Agent and with the payment of a
processing fee in the amount of $2,500, assign all or any portion of its right
to receive payment with respect to any Committed Loan to the Granting Lender and
(ii) disclose on a confidential basis any non-public information relating to its
funding of Committed Loans to any rating agency, commercial paper dealer or
provider of any surety or guarantee or credit or liquidity enhancement to such
SPC.
10.07 TREATMENT OF CERTAIN INFORMATION; CONFIDENTIALITY. Each of Agent and
Lenders agrees to maintain the confidentiality of the Information (as defined
below), except that Information may be disclosed (a) to its Affiliates and to
its and its Affiliates' respective partners, directors, officers, employees,
agents, advisors and representatives (it being understood that the Persons to
whom such disclosure is made will be informed of the confidential nature of such
Information and instructed to keep such Information confidential), (b) to the
extent requested by any regulatory authority, purporting to have jurisdiction
over it (including any self-regulatory authority, such as the National
Association of Insurance Commissioners), (c) to the extent
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required by applicable laws or regulations or by any subpoena or similar legal
process (but in the case of a subpoena or similar legal process, only to the
extent responsive thereto), (d) to any other party hereto, (e) in connection
with the exercise of any remedies hereunder or under any other Loan Document or
any action or proceeding relating to this Agreement or any other Loan Document
or the enforcement of rights hereunder or thereunder, (f) subject to an
agreement containing provisions substantially the same as those of this Section,
to (i) any assignee of or Participant in, or any prospective assignee of or
Participant in, any of its rights or obligations under this Agreement or (ii)
any actual or prospective counterparty (or its advisors) to any swap or
derivative transaction relating to Borrower and its obligations, (g) with the
consent of Borrower or (h) to the extent such Information (x) becomes publicly
available other than as a result of a breach of this Section or (y) becomes
available to Agent or any Lender or any of their respective Affiliates on a
nonconfidential basis from a source other than Borrower. For purposes of this
Section, "Information" means all information received from Borrower or any
Subsidiary relating to Borrower or any Subsidiary or any of their respective
businesses, other than any such information that is available to Agent or any
Lender on a nonconfidential basis prior to disclosure by Borrower or any
Subsidiary, provided that, in the case of information received from Borrower or
any Subsidiary after the date hereof, such information is clearly identified at
the time of delivery as confidential. Any Person required to maintain the
confidentiality of Information as provided in this Section shall be considered
to have complied with its obligation to do so if such Person has exercised the
same degree of care to maintain the confidentiality of such Information as such
Person would accord to its own confidential information.
10.08 RIGHT OF SETOFF. If an Event of Default shall have occurred and be
continuing, each Lender and each of their respective Affiliates is hereby
authorized at any time and from time to time, to the fullest extent permitted by
applicable law, to set off and apply any and all deposits (general or special,
time or demand, provisional or final, in whatever currency) at any time held and
other obligations (in whatever currency) at any time owing by such Lender or any
such Affiliate to or for the credit or the account of Borrower against any and
all of the obligations of Borrower now or hereafter existing under this
Agreement or any other Loan Document to such Lender or any such Affiliate,
irrespective of whether or not such Lender shall have made any demand under this
Agreement or any other Loan Document and although such obligations of Borrower
may be contingent or unmatured or are owed to a branch or office of such Lender
different from the branch or office holding such deposit or obligated on such
indebtedness. The rights of each Lender and their respective Affiliates under
this Section are in addition to other rights and remedies (including other
rights of setoff) that such Lender or their respective Affiliates may have. Each
Lender agrees to notify Borrower and Agent promptly after any such setoff and
application, provided that the failure to give such notice shall not affect the
validity of such setoff and application.
10.09 INTEREST RATE LIMITATION. Notwithstanding anything to the contrary
contained in any Loan Document, the interest paid or agreed to be paid under the
Loan Documents shall not exceed the maximum rate of non-usurious interest
permitted by applicable Law (the "Maximum Rate"). If Agent or any Lender shall
receive interest in an amount that exceeds the Maximum Rate, the excess interest
shall be applied to the principal of the Loans or, if it exceeds such unpaid
principal, refunded to Borrower. In determining whether the interest contracted
for, charged, or received by Agent or a Lender exceeds the Maximum Rate, such
Person may, to the
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extent permitted by applicable Law, (a) characterize any payment that is not
principal as an expense, fee, or premium rather than interest, (b) exclude
voluntary prepayments and the effects thereof, and (c) amortize, prorate,
allocate, and spread in equal or unequal parts the total amount of interest
throughout the contemplated term of the Obligations hereunder.
10.10 COUNTERPARTS; INTEGRATION; EFFECTIVENESS. This Agreement may be
executed in counterparts (and by different parties hereto in different
counterparts), each of which shall constitute an original, but all of which when
taken together shall constitute a single contract. This Agreement and the other
Loan Documents constitute the entire contract among the parties relating to the
subject matter hereof and supersede any and all previous agreements and
understandings, oral or written, relating to the subject matter hereof. Except
as provided in Section 4.01, this Agreement shall become effective when it shall
have been executed by Agent and when Agent shall have received counterparts
hereof that, when taken together, bear the signatures of each of the other
parties hereto. Delivery of an executed counterpart of a signature page of this
Agreement by telecopy shall be effective as delivery of a manually executed
counterpart of this Agreement.
10.11 SURVIVAL OF REPRESENTATIONS AND WARRANTIES. All representations and
warranties made hereunder and in any other Loan Document or other document
delivered pursuant hereto or thereto or in connection herewith or therewith
shall survive the execution and delivery hereof and thereof. Such
representations and warranties have been or will be relied upon by Agent and
each Lender, regardless of any investigation made by Agent or any Lender or on
their behalf and notwithstanding that Agent or any Lender may have had notice or
knowledge of any Default at the time of any Borrowing, and shall continue in
full force and effect as long as any Loan or any other Obligation hereunder
shall remain unpaid or unsatisfied.
10.12 SEVERABILITY. If any provision of this Agreement or the other Loan
Documents is held to be illegal, invalid or unenforceable, (a) the legality,
validity and enforceability of the remaining provisions of this Agreement and
the other Loan Documents shall not be affected or impaired thereby and (b) the
parties shall endeavor in good faith negotiations to replace the illegal,
invalid or unenforceable provisions with valid provisions the economic effect of
which comes as close as possible to that of the illegal, invalid or
unenforceable provisions. The invalidity of a provision in a particular
jurisdiction shall not invalidate or render unenforceable such provision in any
other jurisdiction.
10.13 REPLACEMENT OF LENDERS. If any Lender requests compensation under
Section 3.04, or if the Borrower is required to pay any additional amount to any
Lender or any Governmental Authority for the account of any Lender pursuant to
Section 3.01, or if any Lender is a Defaulting Lender, then the Borrower may, at
its sole expense and effort, upon notice to such Lender and the Administrative
Agent, require such Lender to assign and delegate, without recourse (in
accordance with and subject to the restrictions contained in, and consents
required by, Section 10.06), all of its interests, rights and obligations under
this Agreement and the related Loan Documents to an assignee that shall assume
such obligations (which assignee may be another Lender, if a Lender accepts such
assignment), provided that:
(a) the Borrower shall have paid to the Administrative Agent the
assignment fee specified in Section 10.06(b);
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(b) such Lender shall have received payment of an amount equal to the
outstanding principal of its Loans, accrued interest thereon, accrued fees and
all other amounts payable to it hereunder and under the other Loan Documents
(including any amounts under Section 3.05) from the assignee (to the extent of
such outstanding principal and accrued interest and fees) or the Borrower (in
the case of all other amounts);
(c) in the case of any such assignment resulting from a claim for
compensation under Section 3.04 or payments required to be made pursuant to
Section 3.01, such assignment will result in a reduction in such compensation or
payments thereafter; and
(d) such assignment does not conflict with applicable Laws.
A Lender shall not be required to make any such assignment or delegation if,
prior thereto, as a result of a waiver by such Lender or otherwise, the
circumstances entitling the Borrower to require such assignment and delegation
cease to apply.
10.14 GOVERNING LAW; JURISDICTION; ETC.
(a) GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED IN
ACCORDANCE WITH, THE LAW OF THE STATE OF WASHINGTON.
(b) SUBMISSION TO JURISDICTION. THE BORROWER IRREVOCABLY AND
UNCONDITIONALLY SUBMITS, FOR ITSELF AND ITS PROPERTY, TO THE NONEXCLUSIVE
JURISDICTION OF THE COURTS OF THE STATE OF WASHINGTON SITTING IN KING COUNTY AND
OF THE UNITED STATES DISTRICT COURT OF THE WESTERN DISTRICT OF WASHINGTON, AND
ANY APPELLATE COURT FROM ANY THEREOF, IN ANY ACTION OR PROCEEDING ARISING OUT OF
OR RELATING TO THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT, OR FOR RECOGNITION OR
ENFORCEMENT OF ANY JUDGMENT, AND EACH OF THE PARTIES HERETO IRREVOCABLY AND
UNCONDITIONALLY AGREES THAT ALL CLAIMS IN RESPECT OF ANY SUCH ACTION OR
PROCEEDING MAY BE HEARD AND DETERMINED IN SUCH WASHINGTON STATE COURT OR, TO THE
FULLEST EXTENT PERMITTED BY APPLICABLE LAW, IN SUCH FEDERAL COURT. EACH OF THE
PARTIES HERETO AGREES THAT A FINAL JUDGMENT IN ANY SUCH ACTION OR PROCEEDING
SHALL BE CONCLUSIVE AND MAY BE ENFORCED IN OTHER JURISDICTIONS BY SUIT ON THE
JUDGMENT OR IN ANY OTHER MANNER PROVIDED BY LAW. NOTHING IN THIS AGREEMENT OR IN
ANY OTHER LOAN DOCUMENT SHALL AFFECT ANY RIGHT THAT AGENT OR ANY LENDER MAY
OTHERWISE HAVE TO BRING ANY ACTION OR PROCEEDING RELATING TO THIS AGREEMENT OR
ANY OTHER LOAN DOCUMENT AGAINST THE BORROWER OR ITS PROPERTIES IN THE COURTS OF
ANY JURISDICTION.
(c) WAIVER OF VENUE. THE BORROWER IRREVOCABLY AND UNCONDITIONALLY WAIVES,
TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY OBJECTION THAT IT MAY NOW
OR HEREAFTER HAVE TO THE LAYING OF VENUE OF ANY ACTION OR PROCEEDING ARISING OUT
OF OR
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RELATING TO THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT IN ANY COURT REFERRED TO
IN PARAGRAPH (B) OF THIS SECTION. EACH OF THE PARTIES HERETO HEREBY IRREVOCABLY
WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, THE DEFENSE OF AN
INCONVENIENT FORUM TO THE MAINTENANCE OF SUCH ACTION OR PROCEEDING IN ANY SUCH
COURT.
(d) SERVICE OF PROCESS. EACH PARTY HERETO IRREVOCABLY CONSENTS TO SERVICE
OF PROCESS IN THE MANNER PROVIDED FOR NOTICES IN SECTION 10.02. NOTHING IN THIS
AGREEMENT WILL AFFECT THE RIGHT OF ANY PARTY HERETO TO SERVE PROCESS IN ANY
OTHER MANNER PERMITTED BY APPLICABLE LAW.
10.15 WAIVER OF RIGHT TO TRIAL BY JURY. EACH PARTY HERETO HEREBY
IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT
IT MAY HAVE TO A TRIAL BY JURY IN ANY LEGAL PROCEEDING DIRECTLY OR INDIRECTLY
ARISING OUT OF OR RELATING TO THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT OR THE
TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY (WHETHER BASED ON CONTRACT, TORT OR
ANY OTHER THEORY). EACH PARTY HERETO (A) CERTIFIES THAT NO REPRESENTATIVE, AGENT
OR ATTORNEY OF ANY OTHER PERSON HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT
SUCH OTHER PERSON WOULD NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE
FOREGOING WAIVER AND (B) ACKNOWLEDGES THAT IT AND THE OTHER PARTIES HERETO HAVE
BEEN INDUCED TO ENTER INTO THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS BY, AMONG
OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS SECTION.
10.16 USA PATRIOT ACT NOTICE. Each Lender that is subject to the Act (as
hereinafter defined) and Agent (for itself and not on behalf of any Lender)
hereby notifies Borrower that pursuant to the requirements of the USA Patriot
Act (Title III of Pub. L. 107-56 (signed into law October 26, 2001)) (the
"Act"), it is required to obtain, verify and record information that identifies
Borrower, which information includes the name and address of Borrower and other
information that will allow such Lender or Agent, as applicable, to identify
Borrower in accordance with the Act.
10.17 TIME OF THE ESSENCE. Time is of the essence of the Loan Documents.
10.18 ORAL AGREEMENTS NOT ENFORCEABLE. ORAL AGREEMENTS AND ORAL
COMMITMENTS TO LOAN MONEY, EXTEND CREDIT OR FORBEAR FROM COLLECTION OF A DEBT
ARE NOT ENFORCEABLE UNDER WASHINGTON LAW.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed as of the date first above written.
78
ALASKA AIRLINES, INC.
By: _____________________________________________
Name: Glenn Johnson
Title: Vice President - Finance
BANK OF AMERICA, N.A., as
Administrative Agent
By: _____________________________________________
Name: Dora A. Brown
Title: Vice President
BANK OF AMERICA, N.A., as a Lender
By: _____________________________________________
Name: Mark N. Crawford
Title: Senior Vice President
CITICORP USA, INC., as a Lender
By: _____________________________________________
Name: _________________
Title: ________________
U.S. BANK NATIONAL ASSOCIATION, as a Lender
By: _____________________________________________
Name: _________________
Title: ________________
HSH NORDBANK AG, NEW YORK BRANCH, as a Lender
By: _____________________________________________
Name: _________________
Title: ________________
By: _____________________________________________
Name: _________________
Title: ________________
79
MERRILL LYNCH CAPITAL CORPORATION, as a Lender
By: _____________________________________________
Name: _________________
Title: ________________
WACHOVIA BANK, NATIONAL ASSOCIATION, as a Lender
By: _____________________________________________
Name: _________________
Title: ________________
RZB FINANCE LLC, as a Lender
By: _____________________________________________
Name: _________________
Title: ________________
JPMORGAN CHASE BANK, as a Lender
By: _____________________________________________
Name: _________________
Title: ________________
80
SCHEDULE 1.01
APPROVED APPRAISERS
[***]
[***]
[***]
[***]
* Indicates that certain information contained herein has been omitted and
filed separately with the Securities and Exchange Commission. Confidential
treatment has been requested with respect to the omitted portions.
81
SCHEDULE 2.01
COMMITMENTS
AND APPLICABLE PERCENTAGES
LENDER COMMITMENT APPLICABLE PERCENTAGE
Bank of America, N.A. [***] [***]
Citicorp USA, Inc. [***] [***]
U.S. Bank National Association [***] [***]
HSH Nordbank AG, New York Branch [***] [***]
Merrill Lynch Capital Corporation [***] [***]
Wachovia Bank, National Association [***] [***]
RZB Finance LLC [***] [***]
JPMorgan Chase Bank [***] [***]
Total $160,000,000.00 100.000000000%
Schedule 2.01-1
* Indicates that certain information contained herein has been omitted and
filed separately with the Securities and Exchange Commission. Confidential
treatment has been requested with respect to the omitted portions.
SCHEDULE 5.09
ENVIRONMENTAL MATTERS
1. None
Schedule 7.01 - 1
SCHEDULE 7.01
EXISTING LIENS
[***]
* Indicates that certain information contained herein has been omitted and
filed separately with the Securities and Exchange Commission. Confidential
treatment has been requested with respect to the omitted portions.
2
SCHEDULE 10.02
ADMINISTRATIVE AGENT'S OFFICE,
CERTAIN ADDRESSES FOR NOTICES
ALASKA AIRLINES, INC.
19300 Pacific Highway South
Seattle, WA 98188
Attention: Treasurer
Telephone: [***]
Telecopier: [***]
Electronic Mail: [***]
Website Address: www.alaskaair.com
ADMINISTRATIVE AGENT:
(for payments and Requests for Borrowings):
Bank of America, N.A.
Mail Code: CA4-702-02-25
2001 Clayton Road, Floor 2
Concord CA 94520
Attention: [***]
Telephone:[***]
Telecopier: [***]
Electronic Mail: [***]
Account No.: [***]
Account Name: [***]
Ref: Alaska Airlines, Inc.
ABA# [***]
Other Notices as Administrative Agent:
Bank of America, N.A.
Agency Management
Mail Code: WA1-501-37-20
800 Fifth Avenue, Floor 37
Seattle WA 98104
Attention: [***]
Vice President
Telephone: [***]
Telecopier: [***]
Electronic Mail: [***]
Schedule 10.02 - 1
* Indicates that certain information contained herein has been omitted and
filed separately with the Securities and Exchange Commission. Confidential
treatment has been requested with respect to the omitted portions.
SCHEDULE 10.06
S
PROCESSING AND RECORDATION FEES
The Administrative Agent will charge a processing and recordation fee (an
"Assignment Fee") in the amount of [***] for each assignment; provided, however,
that in the event of two or more concurrent assignments to members of the same
Assignee Group (which may be effected by a suballocation of an assigned amount
among members of such Assignee Group) or two or more concurrent assignments by
members of the same Assignee Group to a single Eligible Assignee (or to an
Eligible Assignee and members of its Assignee Group), the Assignment Fee will be
[***] plus the amount set forth below:
TRANSACTION ASSIGNMENT FEE
First four concurrent assignments or suballocations to members of an [***]
Assignee Group (or from members of an Assignee Group, as applicable)
Each additional concurrent assignment or suballocation to a member of such [***]
Assignee Group (or from a member of such Assignee Group, as applicable)
* Indicates that certain information contained herein has been omitted and
filed separately with the Securities and Exchange Commission. Confidential
treatment has been requested with respect to the omitted portions.
2
EXHIBIT A
FORM OF LOAN NOTICE
Date: ___________, _____
To: Bank of America, N.A., as Agent
Ladies and Gentlemen:
Reference is made to that certain Credit Agreement, dated as of [___________,
_____] (as amended, restated, extended, supplemented or otherwise modified in
writing from time to time, the "Agreement;" the terms defined therein being used
herein as therein defined), among [____________________________, A
__________________] (the "Borrower"), the Lenders from time to time party
thereto, and Bank of America, N.A., as Administrative Agent.
The undersigned hereby requests (select one):
- - A Borrowing Loans - A conversion or continuation of Loans
1. On ___________________(a Business Day).
2. In the amount of $_______________________________________________________.
3. Comprised of_____________________________________________________________.
[Type of Loan requested]
4. For Eurodollar Rate Loans: with an Interest Period of months.
The Borrowing, if any, requested herein complies with the provisos to the first
sentence of Section 2.01 of the Agreement.
ALASKA AIRLINES, INC.
By: _____________________________
Name: ___________________________
Title: __________________________
EXHIBIT A - 1
EXHIBIT B
FORM OF NOTE
$____________________________________
FOR VALUE RECEIVED, the undersigned ("Borrower"), hereby promises to pay
to _____________________ or registered assigns ("Lender"), in accordance with
the provisions of the Agreement (as hereinafter defined), the principal amount
of each Loan from time to time made by the Lender to Borrower under that certain
Credit Agreement, dated as of [_________, _____] (as amended, restated,
extended, supplemented or otherwise modified in writing from time to time, the
"Agreement;" the terms defined therein being used herein as therein defined),
among Borrower, the Lenders from time to time party thereto, and Bank of
America, N.A., as Administrative Agent.
Borrower promises to pay interest on the unpaid principal amount of each
Loan from the date of such Loan until such principal amount is paid in full, at
such interest rates and at such times as provided in the Agreement. All payments
of principal and interest shall be made to Agent for the account of the Lender
in Dollars in immediately available funds at the Administrative Agent's Office.
If any amount is not paid in full when due hereunder, such unpaid amount shall
bear interest, to be paid upon demand, from the due date thereof until the date
of actual payment (and before as well as after judgment) computed at the per
annum rate set forth in the Agreement.
This Note is one of the Notes referred to in the Agreement, is entitled to
the benefits thereof and may be prepaid in whole or in part subject to the terms
and conditions provided therein. This Note is also secured by the Collateral.
Upon the occurrence and continuation of one or more of the Events of Default
specified in the Agreement, all amounts then remaining unpaid on this Note shall
become, or may be declared to be, immediately due and payable all as provided in
the Agreement. Loans made by the Lender shall be evidenced by one or more loan
accounts or records maintained by the Lender in the ordinary course of business.
The Lender may also attach schedules to this Note and endorse thereon the date,
amount and maturity of its Loans and payments with respect thereto.
Borrower, for itself, its successors and assigns, hereby waives diligence,
presentment, protest and demand and notice of protest, demand, dishonor and
non-payment of this Note.
THIS NOTE SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS
OF THE STATE OF WASHINGTON.
EXHIBIT B-1
ORAL AGREEMENTS OR ORAL COMMITMENTS TO LOAN MONEY, TO EXTEND CREDIT, OR TO
FORBEAR FROM ENFORCING REPAYMENT OF A DEBT ARE NOT ENFORCEABLE UNDER WASHINGTON
LAW.
ALASKA AIRLINES, INC.
By: _____________________________
Name: ___________________________
Title: __________________________
EXHIBIT B-2
LOANS AND PAYMENTS WITH RESPECT THERETO
AMOUNT OF
PRINCIPAL OUTSTANDING
TYPE OF AMOUNT OF END OF OR INTEREST PRINCIPAL
LOAN LOAN INTEREST PAID THIS BALANCE NOTATION
DATE MADE MADE PERIOD DATE THIS DATE MADE BY
- ----- ------- --------- -------- ----------- ----------- --------
- ----- ------- --------- -------- ----------- ----------- --------
- ----- ------- --------- -------- ----------- ----------- --------
- ----- ------- --------- -------- ----------- ----------- --------
- ----- ------- --------- -------- ----------- ----------- --------
- ----- ------- --------- -------- ----------- ----------- --------
- ----- ------- --------- -------- ----------- ----------- --------
- ----- ------- --------- -------- ----------- ----------- --------
- ----- ------- --------- -------- ----------- ----------- --------
- ----- ------- --------- -------- ----------- ----------- --------
- ----- ------- --------- -------- ----------- ----------- --------
- ----- ------- --------- -------- ----------- ----------- --------
- ----- ------- --------- -------- ----------- ----------- --------
EXHIBIT B-3
EXHIBIT C
FORM OF COMPLIANCE CERTIFICATE
FOR THE PERIOD ENDING _____________, 200__
To: Bank of America, N.A., as Administrative Agent
Ladies and Gentlemen:
Reference is made to that certain Credit Agreement dated as of March 25,
2005 between Alaska Airlines, Inc., an Alaska corporation ("Borrower"), Lenders
from time to time party thereto, Bank of America, N.A., as Administrative Agent
(as amended, restated, extended, supplemented or otherwise modified in writing
from time to time, the "Agreement;" the terms defined therein being used herein
as therein defined).
The undersigned Responsible Officer hereby certifies as of the date hereof
that he is the________________________________ of Borrower, and that, as such,
he is authorized to execute and deliver this Compliance Certificate to
Administrative Agent on the behalf of Borrower, and that:
(A) The attached (unaudited) financial statements of Alaska Airlines, Inc.
("Borrower") are complete and correct, and fairly present the financial
condition of Borrower as of_____________ , 200____, and the results of the
operations of Borrower for the period ended _____________, 200__, all in
accordance with generally accepted accounting principles applied on a consistent
basis; and
(B) That no event has occurred which constitutes an Event of Default as
defined in the Agreement or which, with giving of notice or lapse of time, or
both, would constitute an Event of Default.
IN WITNESS WHEREOF, the undersigned has executed this Compliance
Certificate as of__________________ , ________________.
ALASKA AIRLINES, INC.
By: _____________________________
Name: ___________________________
Title: __________________________
EXHIBIT E-1
Form of Assignment and Assumption
ALASKA AIRLINES, INC.
OFFICER'S CERTIFICATE ATTACHMENT
$160 MILLION CREDIT FACILITY AGREEMENT
DATED AS OF MARCH 25, 2005
PERIOD ENDING
__/__/20__
(i) Consolidated Tangible Net Worth - 6.12(a)
a) Shareholders' Equity ______
b) Intangible Assets (acquired/incurred after 03/__/05) ______
c) Excluding: Permitted Asset Adjustments ______
d) Excluding: 737-200 Impairment Charges (incurred prior to 12/31/04) ______
e) Excluding: Unsettled Swap Contracts - Termination Values ______
f) Excluding: Unusual, Non-Cash Special Charges & Credits ______
g) Consolidated Tangible Net Worth Sum (a - f) ______
h) Minimum Consolidated Tangible Net Worth ______
i) [***] Positive net Income after taxes between 04/01/05 and 06/30/05 ______
j) [***] Positive net Income after taxes on and after 12/31/05 ______
k) Excluding: Permitted Asset Adjustments ______
l) Excluding: Unusual, non-cash special charges & credits ______
m) Excluding: Unsettled Swap Contracts - Termination Value ______
n) Minimum Required Adjusted Consolidated Tangible Net Worth: sum (h -m) ______
(ii) Leverage Ratio - 6.12(b)
a) Current Portion of Long Term Debt & Capital Leases ______
b) Short Term Borrowings ______
c) Long Term Debt and Capital Leases ______
d) Consolidated Lease Expense at Seven-Times annual expense ______
e) Consolidated Funded Debt and Capital Leases (a + b + c + d) ______
f) Consolidated Tangible Net Worth (from (i)(g)) ______
g) Actual Ratio (e / f) ______
h) Maximum Ratio Permitted ______
(iii) Fixed Charge Coverage Ratio - 6.12(c)
a) Earnings before Interest Expense (net of capitalized interest) & Taxes ______
b) Depreciation and Amortization ______
c) Consolidated Lease Expense ______
d) Permitted Asset Adjustments ______
e) 737-200 Impairment Charges (incurred prior to 12/31/04) ______
f) Applicable percentage of Government Compensation ______
EXHIBIT D-2
Form of Assignment and Assumption
* Indicates that certain information contained herein has been omitted and
filed separately with the Securities and Exchange Commission. Confidential
treatment has been requested with respect to the omitted portions.
g) Excluding: Unusual, non-cash special charges & credits ______
h) Excluding: Unsettled Swap Contracts - Termination Value ______
i) Numerator: Sum (a - h) ______
j) Interest Expense (net of capitalized interest) ______
k) Current Portion of Long Term Debt ______
l) Denominator (c + j + k) ______
m) Coverage Ratio (i / l) ______
n) Coverage Ratio Required ______
(iv) Consolidated Net Liquidity - 7.04 ______
EXHIBIT D-3
Form of Assignment and Assumption
EXHIBIT D
FORM OF ASSIGNMENT AND ASSUMPTION
This Assignment and Assumption (this "Assignment and Assumption") is dated
as of the Effective Date set forth below and is entered into by and between
[INSERT NAME OF ASSIGNOR] (the "Assignor") and [INSERT NAME OF ASSIGNEE] (the
"Assignee"). Capitalized terms used but not defined herein shall have the
meanings given to them in the Credit Agreement identified below (the "Credit
Agreement"), receipt of a copy of which is hereby acknowledged by the Assignee.
The Standard Terms and Conditions set forth in Annex 1 attached hereto are
hereby agreed to and incorporated herein by reference and made a part of this
Assignment and Assumption as if set forth herein in full.
For an agreed consideration, the Assignor hereby irrevocably sells and
assigns to the Assignee, and the Assignee hereby irrevocably purchases and
assumes from the Assignor, subject to and in accordance with the Standard Terms
and Conditions and the Credit Agreement, as of the Effective Date inserted by
Agent as contemplated below (i) all of the Assignor's rights and obligations as
a Lender under the Credit Agreement and any other documents or instruments
delivered pursuant thereto to the extent related to the amount and percentage
interest identified below of all of such outstanding rights and obligations of
the Assignor under the respective facilities identified below and (ii) to the
extent permitted to be assigned under applicable law, all claims, suits, causes
of action and any other right of the Assignor (in its capacity as a Lender)
against any Person, whether known or unknown, arising under or in connection
with the Credit Agreement, any other documents or instruments delivered pursuant
thereto or the loan transactions governed thereby or in any way based on or
related to any of the foregoing, including, but not limited to, contract claims,
tort claims, malpractice claims, statutory claims and all other claims at law or
in equity related to the rights and obligations sold and assigned pursuant to
clause (i) above (the rights and obligations sold and assigned pursuant to
clauses (i) and (ii) above being referred to herein collectively as, the
"Assigned Interest"). Such sale and assignment is without recourse to the
Assignor and, except as expressly provided in this Assignment and Assumption,
without representation or warranty by the Assignor.
1. Assignor: ______________________________
2. Assignee: ______________________________ [AND IS AN AFFILIATE OF [IDENTIFY
LENDER]]
3. Borrower(s): ______________________________
4. Administrative Agent: Bank of America, N. A., as the administrative agent
under the Credit Agreement
EXHIBIT D-4
Form of Assignment and Assumption
5. Credit Agreement: Credit Agreement, dated as of ______, 2004, among Alaska
Airlines, Inc., the Lenders from time to time party thereto, Bank of America,
N.A., as Administrative Agent]
6. Assigned Interest:
Aggregate Amount of Amount of Percentage Assigned
Commitment/Loans for all Commitment/ of Commitment/
Facility Assigned Lenders Loans Assigned Loans CUSIP No.
- ----------------- ------------------------ -------------- ------------------- ---------
_________________ $_________________ $___________ ___________________ _________
_________________ $_________________ $___________ ___________________ _________
_________________ $_________________ $___________ ___________________ _________
Effective Date: __________________, 20__ [TO BE INSERTED BY ADMINISTRATIVE AGENT
AND WHICH SHALL BE THE EFFECTIVE DATE OF RECORDATION OF TRANSFER IN THE REGISTER
THEREFOR.]
The terms set forth in this Assignment and Assumption are hereby agreed
to:
ASSIGNOR
[NAME OF ASSIGNOR]
By: _____________________________
Title :
ASSIGNEE
[NAME OF ASSIGNEE]
By: _____________________________
Title :
[CONSENTED TO AND] Accepted:
Bank of America, N. A., as
Administrative Agent
By: _________________________________
Title :
[CONSENTED TO:]
By: _________________________________
Title :
EXHIBIT D-5
Form of Assignment and Assumption
ANNEX 1 TO ASSIGNMENT AND ASSUMPTION
STANDARD TERMS AND CONDITIONS FOR
ASSIGNMENT AND ASSUMPTION
1. Representations and Warranties.
1.1. Assignor. The Assignor (a) represents and warrants that (i) it
is the legal and beneficial owner of the Assigned Interest, (ii) the Assigned
Interest is free and clear of any lien, encumbrance or other adverse claim and
(iii) it has full power and authority, and has taken all action necessary, to
execute and deliver this Assignment and Assumption and to consummate the
transactions contemplated hereby; and (b) assumes no responsibility with respect
to (i) any statements, warranties or representations made in or in connection
with the Credit Agreement or any other Loan Document, (ii) the execution,
legality, validity, enforceability, genuineness, sufficiency or value of the
Loan Documents or any collateral thereunder, (iii) the financial condition of
Borrower, any of its Subsidiaries or Affiliates or any other Person obligated in
respect of any Loan Document or (iv) the performance or observance by Borrower,
any of its Subsidiaries or Affiliates or any other Person of any of their
respective obligations under any Loan Document.
1.2. Assignee. The Assignee (a) represents and warrants that (i) it
has full power and authority, and has taken all action necessary, to execute and
deliver this Assignment and Assumption and to consummate the transactions
contemplated hereby and to become a Lender under the Credit Agreement, (ii) it
meets all requirements of an Eligible Assignee under the Credit Agreement
(subject to receipt of such consents as may be required under the Credit
Agreement), (iii) from and after the Effective Date, it shall be bound by the
provisions of the Credit Agreement as a Lender thereunder and, to the extent of
the Assigned Interest, shall have the obligations of a Lender thereunder, and
(iv) it has received a copy of the Credit Agreement, together with copies of the
most recent financial statements delivered pursuant to Section [__] thereof, as
applicable, and such other documents and information as it has deemed
appropriate to make its own credit analysis and decision to enter into this
Assignment and Assumption and to purchase the Assigned Interest on the basis of
which it has made such analysis and decision independently and without reliance
on Agent or any other Lender; and (b) agrees that (i) it will, independently and
without reliance on Agent, the Assignor or any other Lender, and based on such
documents and information as it shall deem appropriate at the time, continue to
make its own credit decisions in taking or not taking action under the Loan
Documents, and (ii) it will perform in accordance with their terms all of the
obligations which by the terms of the Loan Documents are required to be
performed by it as a Lender.
2. Payments. From and after the Effective Date, Agent shall make all
payments in respect of the Assigned Interest (including payments of principal,
interest, fees and other amounts) to the Assignor for amounts which have accrued
to but excluding the Effective Date and to the Assignee for amounts which have
accrued from and after the Effective Date.
3. General Provisions. This Assignment and Assumption shall be binding
upon, and inure to the benefit of, the parties hereto and their respective
successors and assigns. This Assignment and Assumption may be executed in any
number of counterparts, which together shall constitute one instrument. Delivery
of an executed counterpart of a signature page of this
EXHIBIT E-6
Form of Assignment and Assumption
Assignment and Assumption by telecopy shall be effective as delivery of a
manually executed counterpart of this Assignment and Assumption. This Assignment
and Assumption shall be governed by, and construed in accordance with, the law
of the State of Washington.
EXHIBIT E-7
Form of Assignment and Assumption
ANNEX 1 TO ASSIGNMENT AND ASSUMPTION
EXHIBIT E-1
FORM OF LEGAL OPINION OF BORROWER'S COUNSEL
Exhibit F
Form of Amended and Restated Security Agreement
EXHIBIT E-2
FORM OF LEGAL OPINION OF FAA COUNSEL
EXHIBIT G
Form of Cash Pledge Agreement
EXHIBIT F
FORM OF AMENDED AND RESTATED SECURITY AGREEMENT
EXHIBIT G
Form of Cash Pledge Agreement
AMENDED AND RESTATED AIRCRAFT CHATTEL MORTGAGE AND
SECURITY AGREEMENT
Dated as of March 25, 2005
Between
ALASKA AIRLINES, INC.
Mortgagor
And
BANK OF AMERICA, N.A., as Administrative Agent
Mortgagee
Concerning
Certain B737 and MD-80 series aircraft
AMENDED AND RESTATED AIRCRAFT CHATTEL
MORTGAGE AND SECURITY AGREEMENT
This AMENDED AND RESTATED AIRCRAFT CHATTEL MORTGAGE AND SECURITY AGREEMENT
is entered into on March 25, 2005 (this "Security Agreement"), between, ALASKA
AIRLINES, INC., a corporation organized and existing under the laws of the state
of Alaska, having the address 19300 International Blvd., Seattle, WA 98188 (the
"Mortgagor"), and BANK OF AMERICA, N.A, a national banking association with an
office in the state of Washington, having the address of Agency Management,
WA1-501-37-20, 800 Fifth Avenue, Floor 37, Seattle, WA 98104-3185, as
Administrative Agent (the "Mortgagee"). Capitalized terms used herein and not
otherwise defined shall have the meaning given in the Credit Agreement and shall
be construed in accordance with the rules of construction set forth therein.
RECITALS
(1) Mortgagor, certain financial institutions (collectively, the "Prior
Existing Lenders"), and Mortgagee, as administrative agent, are parties to that
certain Credit Agreement dated as of December 23, 1999 (as amended, the
"Existing Credit Agreement") providing for the Existing Lenders to make
revolving loans to Borrower.
(2) In connection with the Existing Credit Agreement, Mortgagor and
Mortgagee entered into that certain Aircraft Chattel Mortgage Security Agreement
dated as of March 4, 2003 and effective as of December 31, 2002 (the "Original
Security Agreement") securing all of Mortgagor's obligations under the Existing
Credit Agreement.
(3) The Original Security Agreement covered the flight equipment
identified in Schedule I-Supplemental Chattel Mortgage dated March 4, 2001. The
Original Security Agreement, with Schedule I attached, was recorded by the FAA
on April 18, 2003 and assigned Conveyance Number C002518.
(4) The Original Security Agreement was supplemented and amended by: (i)
Supplemental Chattel Mortgage dated August 19, 2003, recorded by the FAA on
October 23, 2003 and assigned Conveyance Number W003588; (ii) Supplemental
Chattel Mortgage No. 2 dated January 15, 2004, recorded by the FAA on March 11,
2004 and assigned Conveyance Number R064278, and (iii) Supplemental Chattel
Mortgage No. 3, dated July 30, 2004, recorded by the FAA on February 15, 2005
and assigned Conveyance Number J008859. The Original Security Agreement, as so
supplemented and amended, is referred to herein as the "Existing Security
Agreement."
(5) Concurrently with this Security Agreement, Mortgagor, certain
financial institutions (collectively, the "Lenders"), and Mortgagee, as
Administrative Agent, are entering into that certain Credit Agreement of even
date herewith (as amended, the "Credit Agreement") providing for the Lenders to
make revolving extensions of credit to Borrower. The Credit Agreement replaces
the Existing Credit Agreement, and this Security Agreement amends and restates
the Existing Security Agreement to secure amounts owing under the Credit
Agreement.
(4) The Lien of this Security Agreement shall continue to attach to the
Mortgage Property without release or interruption notwithstanding the
replacement of the Existing Credit Agreement with the Credit Agreement or the
modification of the Obligations secured by this Security Agreement. The parties
intend that the priority of the Lien of this Security Agreement be based on the
filing and recordation dates of the Original Security Agreement.
NOW, THEREFORE, in consideration of the premises and for other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, and intending to be legally bound and to secure the performance of
the Obligations and the performance of the covenants contained in this Security
Agreement, the Mortgagor does hereby grant, convey and mortgage unto the
Mortgagee, its successors and assigns, and gives to the Mortgagee a first
priority security interest in the Flight Equipment and in all of the other
following described property (collectively, the "Mortgaged Property").
GRANTING CLAUSE I
Each Aircraft, consisting of an airframe listed by type, U.S. Registration
Mark and serial number (each, an "Airframe"), and two engines listed by type and
manufacturer's serial number (each, an "Engine"), together with all Parts
thereto installed in or attached to such airframe or engine, listed in Schedule
I hereto (the "Flight Equipment"), as such Schedule I may be changed from time
to time by the addition of further Schedules in the form of Schedule II hereto.
GRANTING CLAUSE II
All property which shall from time to time be subjected to the Lien of
this Security Agreement by a Security Agreement Supplement or by delivery or by
a writing of any kind.
GRANTING CLAUSE III
All right, title and interest of the Mortgagor in, to and under all
warranties, service contracts and product agreements, if any, of any
manufacturer of the light Equipment, all maintenance and overhaul agency
agreements relating to the Flight Equipment, and all agreements of any
subcontractor, supplier or vendor of any part of the Flight Equipment, to the
extent assignable or enforceable, and any and all other warranties, service
contracts and product agreements in respect of any of the Flight Equipment,
whether now existing or hereafter acquired.
GRANTING CLAUSE IV
All substitutions, replacements and renewals of all property subjected or
required to be subjected to the Lien of this Security Agreement and all property
that hereafter becomes physically attached to or incorporated in all property
subjected or required to be subjected to the Lien of this Security Agreement, in
each case to the extent the same is now owned by the Mortgagor or shall
hereafter be owned by it.
GRANTING CLAUSE V
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All monies deposited from time to time with the Mortgagee pursuant to
Section 2.1 until released from the Lien of this Security Agreement.
GRANTING CLAUSE VI
All certificates, registrations, records, manuals, books, logs and
technical information relating to the Flight Equipment now or hereafter in the
control or possession of the Mortgagor (the "Aircraft Documentation").
GRANTING CLAUSE VII
All Proceeds.
GRANTING CLAUSE VIII
All right, title and interest of the Mortgagor in, to and under any lease
or arrangement for the operation of all or any part of the Flight Equipment, and
the chattel paper of the lease or other arrangement, including the Mortgagor's
right, title and interest in and to all monies due and to become due to
Mortgagor under any lease or other arrangement, the Mortgagor's right to compel
performance of all of the lessee's obligations under any lease and all of the
Mortgagor's rights as lessor but excluding all of Mortgagor's obligations under
any lease or other arrangement, and together with all general intangibles and
contract right, (including all rents, issues, insurance proceeds, other
proceeds, awards, revenues and other income) of the Flight Equipment and all the
estate, right, title and interest of every nature whatsoever of the Mortgagor,
at law or in equity, in and to such Flight Equipment and every part and parcel
thereof.
All property mortgaged or intended to be mortgaged by these granting
clauses and which is hereafter acquired by the Mortgagor or to which it may at
any time hereafter be, in any manner, entitled, at law or in equity, and
required to be subjected hereto or intended so to be, shall vest in the
Mortgagee, under the terms and conditions of this Security Agreement, forthwith
upon acquisition thereof by the Mortgagor, and such property shall be as fully
embraced within the provisions of this Security Agreement and subject to the
Lien of this Security Agreement as if such property were now owned by the
Mortgagor and were specifically described in and mortgaged by this Security
Agreement.
TO HAVE AND TO HOLD, all and singular said property unto the Mortgagee,
its successors and assigns, as security as aforesaid.
All of the Mortgaged Property shall secure all of the Obligations.
Notwithstanding anything to the contrary in the Granting Clauses or the
other preceding paragraphs, the Mortgagee hereby acknowledges and confirms that
unless an Event of Default shall have occurred and then be continuing, the
Mortgagor shall be entitled to use and enjoy the Mortgaged Property, subject to
the provisions of this Security Agreement and the other Loan Documents.
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IT IS HEREBY COVENANTED AND DECLARED by and between the parties to this
Security Agreement and their respective successors and assigns that the terms
upon which the Mortgaged Property shall be held, used and operated are as
follows:
SECTION 1. DEFINITIONS; INTERPRETATION
1.1 Definitions. The following words and expressions shall have the
following meanings:
"Aircraft" means the Airframe and Engines.
"Aircraft Documentation" means all certificates, registrations, records,
manuals, books, logs and technical information relating to the Flight Equipment
now or hereafter in the control or possession of the Mortgagor.
"Airframe" means each Boeing 737 series or MD-82 series airframe bearing
the manufacturer's serial number and United States registration mark specified
in a Schedule hereto.
"Authorized Maintenance Performer" means Mortgagor or any authorized
mechanic or any authorized repair station having the authority pursuant to the
Maintenance Program to perform maintenance and repairs to aircraft of the same
type as the Aircraft or engines of the same type as the Engines that are
authorized under the Maintenance Program.
"CRAF" or "Civil Reserve Air Fleet Program" means the Civil Reserve Air
Fleet Program administered by the United States Government or any substantially
similar program.
"Engine" means each of the Pratt and Whitney JT8D or CFM International,
Inc. CFM56 engines, bearing the manufacturer's serial numbers specified in a
Schedule hereto, whether or not installed upon the applicable Airframe and any
substitutions or replacements for each such Engine in accordance with this
Security Agreement.
"Event of Default" means any event listed as an "Event of Default" as
provided in Section 4.1 of this Security Agreement.
"Event of Loss" with respect to an Airframe or any Engine shall mean any
of the following events (a) loss of the Airframe or Engine or loss of the use
thereof due to destruction or damage beyond repair or the rendering of the
Airframe or Engine permanently unfit for use in the normal course of the
Mortgagor's business for any reason whatsoever; (b) any damage to the Airframe
or Engine which results in an insurance settlement with respect to the Airframe
or Engine on the basis of an actual, constructive or compromised total loss; (c)
the theft or disappearance of the Airframe or Engine for a period in excess of
one hundred twenty (120) consecutive days; (d) any taking, seizure, confiscation
or requisition of the title to such property by condemnation or otherwise that
continues unstayed, undismissed or unvacated for a period of 30 consecutive days
or more (or such shorter period provided for in any insurance insuring such
risks and, in this regard, Mortgagor shall use its reasonable efforts to have
insurance proceeds payable in such event in less than 30 days); (e) any taking,
seizure, confiscation or requisition of the use of such property, by
condemnation or otherwise, by any governmental body (other than a
5
requisition of use by the government of the United States of America or any
agency or instrumentality thereof which bears the full faith and credit of the
government of the United States of America) for a period stated to be or in fact
continuing for a period of one hundred eighty (180) consecutive days (or such
shorter period provided for in any insurance insuring such risks and, in this
regard, Mortgagor shall use its reasonable efforts to have insurance proceeds
payable in such event in less than one hundred eighty (180) days); or (f) as a
result of any rule, regulation, order or other action by any governmental body
having jurisdiction or any court of competent jurisdiction, the prohibition of
the use of such property in the normal course of air transportation of
individuals for a period stated to be or in fact continuing for a period of
twelve months, unless Mortgagor, prior to the expiration of such twelve month
period, shall have undertaken and shall be diligently carrying forward all steps
which are necessary and desireable to permit the normal use of such property by
Mortgagor, but in any event if such use shall have been prohibited for a period
of eighteen months. An Event of Loss with respect to an Airframe shall be deemed
to constitute an Event of Loss with respect to the Aircraft of which the
Airframe was a part.
"FAA" shall mean the Federal Aviation Administration provided for in the
Department of Transportation Act of 1966 or any successor or substituted
governmental authority that at the time has jurisdiction over the Mortgaged
Property.
"Federal Aviation Act" shall mean Subtitle VII of Title 49 of the United
States Code and the rules and regulations promulgated thereunder.
"Flight Equipment" means the Airframes and Engines as covered by Granting
Clause I and any replacement airframes and engines subjected to the lien of this
Security Agreement by a Security Agreement Supplement as provided in Granting
Clause II.
"Lease" shall mean any lease permitted by the terms of Section 3.10 of
this Security Agreement.
"Lessee" shall mean the lessee under a Lease. "Credit Agreement" has the
meaning described in the Recitals.
"Maintenance Program" means the FAA approved maintenance program of
Mortgagor for each type of Aircraft.
"Manufacturer" means either The Boeing Company, or McDonnell Douglas
Corporation, a wholly owned subsidiary of The Boeing Company, in its capacity as
manufacturer of the applicable Airframe, and its successors and assigns.
"Mortgagor Order" and "Mortgagor Request" mean, respectively, a written
order or request signed in the name of the Mortgagor and delivered to the
Mortgagee in accordance with the terms of this Security Agreement.
"Mortgagor's Certificate" means a certificate signed by the Mortgagor and
delivered to the Mortgagee.
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"Parts" means all appliances, parts, instruments, avionics, appurtenances,
accessories, furnishings and other equipment or components, of whatever nature
(excluding Engines or engines installed on an Airframe or any replacement
engines substituted therefore), which are, from time to time, incorporated in
the Airframe or any Engine.
"Permitted Liens" means:
(i) the Lien of this Security Agreement; and
(ii) any other lien which is a "Permitted Lien" as defined in the
Credit Agreement.
"Person" shall mean and include any individual, corporation, partnership,
firm, joint venture, trust, unincorporated organization, association, or any
organization or association of which any of the foregoing is a member or
participant.
"Proceeds" shall mean whatever is receivable or received when the Airframe
or any Engine is sold, exchanged, collected, leased (except pursuant to a Lease
prior to an Event of Default) or otherwise disposed of, including, without
limitation, all amounts payable or paid under insurance, requisition or other
payments as the result of any loss or damage to the Airframe or Engine.
"Security Agreement Supplement" means a supplemental first priority
security agreement in substantially the form attached as Schedule II or such
other form as is reasonably acceptable to Mortgagee.
"UCC" means the Uniform Commercial Code as adopted and in effect in the
State of Washington and codified in the Revised Code of Washington as Title RCW
62A. Article 9 of the UCC accordingly means Article 9 of the UCC as adopted and
in effect in the State of Washington and codified in the Revised Code of
Washington as Chapter RCW 62A.9A.
1.2 Interpretation.
(a) All terms used in Article 9 of the UCC and not specifically
defined in this Security Agreement are used in this Security Agreement as
defined in Article 9 of the UCC.
(b) Unless otherwise indicated, any law, statute, treaty or
ordinance defined or referred to in this Security Agreement is intended to mean
or refer to such law, statute, treaty or ordinance as amended from time to time,
any successor or replacement law, statute, treaty or ordinance as amended from
time to time, and the rules and regulations promulgated from time to time under
such law, statute, treaty or ordinance.
(c) Unless otherwise indicated, any agreement defined or referred to
in this Security Agreement means or refers to such agreement as amended or
supplemented from time to time or as the terms of such agreement are waived or
modified, in each case in accordance with its terms.
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(d) Terms defined in this Security Agreement in the singular include
the plural of such terms, and terms defined in this Security Agreement in the
plural include the singular of such terms.
(e) The term "including", when used in this Security Agreement,
means "including without limitation" and "including but not limited to".
(f) Unless otherwise indicated, any reference to a specified
"article," "section" "subsection," "clause," "granting clause", "exhibit" or
"schedule" shall refer to such article, section, subsection, clause, exhibit or
schedule of this Security Agreement.
SECTION 2. CASH COLLATERAL
2.1 Cash Collateral. All monies received by the Mortgagee as proceeds of
insurance upon any part of the Mortgaged Property and all monies elsewhere
herein provided to be held and applied under this Section 2, so long as no Event
of Default shall have occurred and is continuing, and all monies, if any,
required to be paid to the Mortgagor hereunder, whose disposition is not
elsewhere herein otherwise specifically provided for (all such monies being
hereinafter called the "Cash Collateral"), shall be held by the Mortgagee and
applied by the Mortgagee from time to time as provided in Section 4.2.6 hereof;
provided, however, that any proceeds of insurance on the Mortgaged Property not
constituting an Event of Loss of the Aircraft shall be applied as provided in
Section 2.2. All such sums shall be invested for the benefit of the Mortgagor in
investments selected by the Mortgagor.
2.2 Insurance Proceeds Used for Repair. (a) Provided that an Event of
Default shall not have occurred and be continuing, to the extent that any Cash
Collateral is the proceeds of insurance upon any part of the Mortgaged Property,
the same may be withdrawn by the Mortgagor and shall be paid by the Mortgagee,
upon Mortgagor Order, to reimburse the Mortgagor for, and up to an amount not
exceeding, expenditures made to repair or restore the property damaged as
required hereunder, and with respect to an Event of Loss of any Engine
expenditures made to replace such Engine, but only upon receipt by the Mortgagee
of (1) a Mortgagor Request for the withdrawal and payment of specified proceeds
of insurance then included in the Cash Collateral, and (2) a Mortgagor's
Certificate, dated not more than five (5) days prior to the application for such
withdrawal, stating that expenditures have been made by the Mortgagor in a
specified amount for one or more of the purposes aforesaid, which shall be
briefly described, and also stating that no part of such expenditures has been
or is then being used in any other previous or then pending application, as the
basis for the withdrawal of any Cash Collateral from the Mortgagee hereunder.
Each such Mortgagor's Certificate shall have attached thereto photocopies of any
work-sheets, invoices, vouchers and/or receipts with respect to the repair,
restoration or replacement in question. Notwithstanding the foregoing and
provided that an Event of Default shall not have occurred and be continuing, if
Mortgagor provides Mortgagee with a written estimate (together with a
Mortgagor's Certificate certifying such estimate is genuine and complete) of any
repairs or restoration to be made with respect to such property damaged,
Mortgagor may direct that the Cash Collateral be withdrawn and paid directly to
the entity performing the repairs and be applied towards payment for such
repairs or restoration.
8
(b) Provided an Event of Default shall not have occurred and be
continuing, Mortgagee shall, promptly upon request of the Mortgagor, repay to
the Mortgagor any insurance proceeds previously paid to Mortgagee which shall
exceed the amount actually spent by the Mortgagor to effect repairs or to
replace an Engine as required under Section 2.2(a), or, in the case of an Event
of Loss of an Aircraft, such insurance proceeds which shall exceed the Current
Market Value of the Aircraft that suffered an Event of Loss, provided that in
the case of an Event of Loss with respect to any Engine, Mortgagor shall have
performed all obligations required of it under Section 3.4(c) hereof.
SECTION 3. REPRESENTATIONS, WARRANTIES AND COVENANTS
The Mortgagor covenants, agrees, represents and warrants in particular as
follows:
3.1 Warranty of Title.
(a) At the time of the execution and delivery of this Security
Agreement, the Mortgagor owns and has the right to possess the Flight Equipment
subject to no Lien except Permitted Liens, and has full power and authority to
grant, bargain, sell, transfer, convey and mortgage, and give a security
interest in, the Flight Equipment in the manner and form as set forth in this
Security Agreement.
(b) The Mortgagor is and shall remain the legal and beneficial owner
of the Flight Equipment, free and clear of all Liens except for Permitted Liens.
(c) The Mortgagor hereby does and will forever warrant and defend
the title to and possession of the Mortgaged Property against the claims and
demands of all persons whomsoever except claims and demands under the Permitted
Liens, and at all times keep the Lien granted herein with respect to the
Mortgaged Property, at the Mortgagor's expense, a first priority Lien upon the
Flight Equipment and on all of the other Mortgaged Property as constituted from
time to time, superior to the rights of all third parties to the extent
permitted by applicable law, and shall obtain any authorization, approval,
license, or consent of any competent governmental or judicial authority
(including registration of the Aircraft with the FAA Registry) which may be or
become necessary in order to obtain the full benefits of this Security Agreement
and all rights and powers granted or to be granted in this Security Agreement.
3.2 Recording. The Mortgagor will bear all out-of-pocket expenses of the
Mortgagee for, and be responsible for, recording and re-recording, registering
and re-registering and filing and re-filing this Security Agreement and each and
every Security Agreement Supplement and such other instruments from time to time
as may be reasonably requested by the Mortgagee in all such jurisdictions and
offices as the Mortgagee shall from time to time reasonably require, in order
that (i) the Lien hereof as a first priority Lien on the Flight Equipment and on
all of the Mortgaged Property, (ii) the security for all of the Obligations, and
(iii) the rights and remedies of the Mortgagee, may be established, confirmed,
maintained and protected. The Mortgagor will furnish to the Mortgagee evidence
reasonably satisfactory to the Mortgagee of every such recording, registering
and filing which is not recorded, registered and filed by Mortgagee.
9
3.3 Maintain Priority of Lien; Pay Taxes. This Security Agreement will be
kept always a first priority Lien upon the Flight Equipment and on all the other
Mortgaged Property as from time to time constituted and the Mortgagor will
obtain and maintain in full force and effect any authorization, approval,
license, or consent of any governmental or judicial authority, (including
registration of the Aircraft with the FAA Registry) that may be or become
necessary in order to obtain the full benefits of this Security Agreement and
all rights and remedies granted or to be granted in this Security Agreement and
will not create or suffer to exist any Lien upon the Mortgaged Property or any
part thereof or upon the income therefrom, other than Permitted Liens. The
Mortgagor shall from time to time pay or cause to be paid as they become due and
payable, all taxes, assessments and governmental charges lawfully levied or
assessed or imposed upon the Lien of the Mortgagee so that the Lien created by
this Security Agreement shall at all times be wholly preserved at the cost of
the Mortgagor and without expense to the Mortgagee, and the Mortgagor will not
suffer any other matter or thing whatsoever whereby the Lien created by this
Security Agreement will be impaired.
3.4 Maintain Flight Equipment.
(a) The Mortgagor shall, at all such times, maintain, preserve and
keep, at its own cost and expense, the Flight Equipment in good order and repair
in accordance with the Maintenance Program or cause the Flight Equipment to be
so maintained, preserved and kept without cost or expense under this Security
Agreement to the Mortgagee, except when (i) the Flight Equipment is being
temporarily stored in accordance with the Maintenance Program, (ii) the Flight
Equipment is being serviced, repaired, maintained, overhauled, tested or
modified as permitted or required by the terms of this Security Agreement or the
Credit Agreement, (iii) all similar aircraft of comparable vintage and/or
configuration have been grounded by the FAA or under the applicable laws of any
other jurisdiction in which an Aircraft is registered, or (iv) laws or
regulations affecting airworthiness are being contested in good faith and by
appropriate proceedings so long as such proceedings could not adversely affect
the Mortgagee or its interest in the affected Aircraft. Subject to the forgoing
exceptions, Mortgagor shall:
(i) service, repair, maintain, overhaul, test, or cause the
same to be done to the Aircraft so as to keep the Aircraft in as good operating
condition as when this Security Agreement was executed, ordinary wear and tear
excepted, in accordance with the Maintenance Program and as may be necessary to
enable the United States airworthiness certification of the Aircraft to be
maintained in good standing at all times under FAA regulations and the
applicable laws of the United States Government;
(ii) perform all routine and non-routine services, checks,
inspections, including any structural inspection required by the Maintenance
Program or the FAA;
(iii) maintain all records, logs, and other materials required
by applicable law of any governmental entity to be maintained in respect to the
Aircraft, including, but not limited to, serviceable component tags required by
the FAA;
(iv) upon request, for so long as any part of the Flight
Equipment is subject to the Lien of this Security Agreement, provide Mortgagee
with such information as it
10
shall reasonably request with respect to the scheduled commencement date of each
annual check (or the equivalent) to be performed on the Aircraft and the
location where such checks will be performed;
(v) incorporate in the Aircraft prior to the terminating or
compliance date all applicable airworthiness directives issued by the FAA;
(vii) incorporate in the Aircraft corrosion prevention and
control and correct any discrepancies in accordance with the Maintenance
Program;
(vi) properly document all repairs, modifications and
alterations and the addition, removal or replacement of equipment, systems or
components in accordance with the rules and regulations of the FAA and reflect
such items in the Aircraft Documentation.
All maintenance of the Aircraft and Engines shall be performed by an
Authorized Maintenance Performer.
(b) For so long as any part of the Flight Equipment is subject to
the Lien of this Security Agreement, the Mortgager shall maintain or cause the
Flight Equipment to be maintained in accordance with the Maintenance Program.
(c) The Mortgagor shall promptly notify the Mortgagee or cause the
Mortgagee to be notified of any Engine becoming expropriated, worn out, lost,
destroyed or rendered unfit for use or of any other maintenance or repair of the
Flight Equipment having a projected replacement or repair cost of more than Five
Million Dollars ($5,000,000), and the Mortgagor shall furnish or cause to be
furnished to the Mortgagee a report describing in reasonable detail such items
and the items replaced by such work. In the case of an Event of Loss to an
Engine not involving an Event of Loss to the Aircraft, the Mortgagor shall,
within ninety (90) days following the occurrence of the Event of Loss to such
Engine, cause the Engine to be replaced and subjected to the Lien of this
Security Agreement. Any such replacement Engine shall be owned by the Mortgagor
free and clear of any liens and shall be of the same make and model and have the
same value and utility as the replaced Engine, assuming that such replaced
Engine was maintained in the condition required by this Security Agreement.
(d) All Parts at any time removed from the Aircraft, Airframe or any
Engine shall remain subject to the Lien hereof, no matter where located, until
such time as such Parts shall be replaced by Parts which have been incorporated
in the Aircraft, Airframe or Engine which are owned by Mortgagor. All
replacement Parts shall be free and clear of all Liens (except for Permitted
Liens) and shall have a value and utility at least equal to the Parts replaced,
assuming such replaced Parts were in the condition and repair required to be
maintained by the terms hereof. Notwithstanding the foregoing, the Mortgagor or
any Lessee may use temporary parts or pooled parts on the Aircraft as temporary
replacements for Parts, provided that the Mortgagor or Lessee, at its expense,
as promptly thereafter as practicable, either (1) causes such pooled or
replacement part to become the property of the Mortgagor free and clear of all
Liens other than Permitted Liens, or (2) replaces such replacement part with a
further replacement part owned by the Mortgagor or Lessee which meets the
requirements of this Section 3.4, free and
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clear of all Liens other than Permitted Liens. Immediately upon any replacement
Part becoming incorporated in the Aircraft, Airframe or such Engine as above
provided, without further act, (i) such replacement Part shall become subject to
the Lien hereof, and the replaced Part shall no longer be subject to the Lien
hereof, and (ii) such replacement Part shall be deemed part of the Aircraft,
Airframe or such Engine for all purposes hereof to the same extent as the Parts
originally incorporated in such Aircraft, Airframe or Engine. The Mortgagor (or
any Lessee), at its own expense, may from time to time make such alterations'
and modifications in and additions to the Airframe or any Engine as the
Mortgagor (or any Lessee) may deem desirable in the proper conduct of its
business, including removal of Parts which the Mortgagor (or any Lessee) deems
to be obsolete or no longer suitable or appropriate for use on the Airframe or
Engine (such removed Parts are hereinafter referred to as "Obsolete Parts");
provided that no such alteration, modification, removal or addition impairs the
condition or airworthiness of the Airframe or Engine, or diminishes the value
and utility of the Airframe or Engine below the value or utility thereof
immediately prior to such alteration, modification, removal or addition,
assuming the Airframe or Engine was then in the condition required to be
maintained by the terms of this Security Agreement absent such alteration,
modification, removal or addition, except that the value (but not the utility)
of the Airframe or any Engine may be reduced by the value of Obsolete Parts
which shall have been removed so long as the aggregate original value of all
Obsolete Parts which shall have been removed and not replaced shall not exceed
$400,000; provided further that no such removal shall be permitted if an Event
of Default shall have occurred and be continuing.
(e) Notwithstanding any other provision of this Security Agreement, the
Mortgagor may install or permit to be installed in any Aircraft audio-visual,
entertainment, telephonic or other equipment owned by third parties (or owned
jointly by the Mortgagor and others) and leased or otherwise furnished to the
Mortgagor in the ordinary course of business, and the Lien of this Security
Agreement shall not attach thereto and the rights of the owners therein shall
not constitute a default hereunder or under the Credit Agreement.
(f) In the case of an Event of Loss of an Airframe, the rights and
obligations of the parties hereto shall be governed by Section 6.15 of the
Credit Agreement. Following Mortgagee's release of a Removed Aircraft pursuant
to Section 6.15(d) of the Credit Agreement, and provided that no Default or
Event of Default has occurred and is continuing, Mortgagee shall promptly
transfer to Mortgagor all proceeds which the Mortgagee had received from the
Mortgagor's insurers pursuant to Section 3.5 herein and any investment earnings
thereon.
(g) The Mortgagor shall not, when in possession of any portion of the
Flight Equipment, use or permit such portion of the Flight Equipment to be
operated except by pilots currently certified by the FAA to use and operate the
Flight Equipment.
(h) Any part or item of property may be removed from the Flight Equipment
in order that the same may be inspected, repaired, reconditioned or otherwise
serviced without affecting or impairing the lien hereof with respect to such
part or item of property, provided that, whenever any such part or item is in
the possession of the Mortgagor, any such part or item shall be at all such
times covered by insurance against such risks and in such amounts as is
reasonably satisfactory to Mortgagor and provided that, other than in the case
of Obsolete parts, any such
12
part or item shall be replaced promptly after its removal by that same or an
equivalent part in as good working order as the part or item removed, assuming
such part or item was maintained and used as required by the provisions hereof
and shall be subject to the lien and security interest created pursuant to this
Security Agreement.
3.5 Insurance.
(a) The Mortgagor shall carry and maintain in effect, at its own
expense, with financially sound and reputable insurers, the following insurance
which will name as an additional insured party the Mortgagee:
(i) Comprehensive Airline Liability Insurance. Comprehensive
airline liability insurance (including, without limitation, contractual
liability, passenger legal liability and liability for property damage), in
amounts per occurrence of not less than Three Hundred Fifty Million Dollars
($350,000,000.00), or such greater amounts as the Mortgagor may carry. Each and
any policy of insurance carried in accordance with this subclause (i), and each
and any policy obtained in substitution or replacement for any of such policies,
(1) shall designate the Mortgagee (or any other holder from time to time of a
Note) as an additional insured (but without any obligation imposed upon the
additional insured, including, without limitation, the liability to pay any
premiums for any such policies, but the Mortgagee (or any other holder from time
to time of a Note) shall have the right to pay such premiums if it shall so
elect), (2) shall expressly provide that, in respect of the interest of the
Mortgagee (or any holder from time to time of a Note) in such policies, the
insurance shall not be invalidated by any action or inaction of any Person
(other than the Mortgagee (or any other holder from time to time of a Note) for
their respective interests), and shall insure, regardless of any breach or
violation by Mortgagor or any other Person (other than the Mortgagee (or any
other holder from time to time of a Note)) of any warranty, declaration or
condition contained in such policies, (3) shall provide that if such insurance
is canceled for any reason whatsoever, or is adversely changed in any way with
respect to the interest of the Mortgagee (or any holder from time to time of a
Note) or if such insurance is allowed to lapse for nonpayment of premium, such
cancellation, change or lapse shall not be effective as to the Mortgagee (or any
holder from time to time of a Note) for thirty (30) days (or such lesser time
which may be standard in the insurance industry and ten (10) days in the event
of nonpayment of premium), in each instance after receipt by the Mortgagee (or
any holder from time to time of a Note) of written notice by such insurer or
insurers sent to the Mortgagee (or any holder from time to time of a Note) of
such prospective cancellation, change or lapse, (4) shall include coverage for
any country in which the Flight Equipment is located, and (5) shall provide
that, as against the Mortgagee (or any holder from time to time of a Note), the
insurer shall waive any rights of set-off, counterclaim or any other deduction,
whether by attachment or otherwise, and waives any rights it may have to be
subrogated to any right of any insured against the Mortgagee (or any holder from
time to time of a Note) with respect to the Flight Equipment. Each liability
policy shall be primary without right of contribution from any other insurance
which may be carried by the Mortgagee (or any holder from time to time of a
Note) and shall expressly provide that all of the provisions thereof (except the
limits of liability) shall operate in the same manner as if there were a
separate policy covering each insured. No liability policy shall permit any
deductible or self-insurance provision in excess of Five Million
13
Dollars ($5,000,000). Such policy may be subject to the standard terms and
conditions contained in comprehensive airline liability policies.
(ii) Aircraft Hull War Risks and Allied Perils Insurance. Hull
war risk and allied perils insurance on the Flight Equipment (which shall
include, but not be limited to, coverage for hijacking, declared or undeclared
war, insurrections, strikes, riots, civil commotions or labor disturbances,
malicious acts or acts of sabotage, unlawful seizure or wrongful exercise of
control of the Flight Equipment in flight by a person on board such Flight
Equipment acting without the consent of the Mortgagor) in an amount not less
than the Current Market Value of the Aircraft in question, or such greater
amounts as the Mortgagor may carry.
(iii) All Risks Hull Insurance. "All risks" ground and flight
aircraft hull insurance covering the Flight Equipment, and fire, transit,
extended coverage, spares and all risks insurance with respect to the Engines
and Parts while not installed on the Aircraft. At all times while any part of
the Flight Equipment is subject to the Lien of Security Agreement, such
insurance shall be for an amount not less than the Current Market Value of the
Aircraft in question.
Notwithstanding anything above, each and any policy of insurance obtained
and maintained pursuant to subclause (ii) and this subclause (iii), and each and
any policy obtained in substitution or replacement for any such policies, (1)
shall designate the Mortgagee as additional insured and as sole loss payee up to
the Current Market Value of the Aircraft in question (but without imposing upon
the Mortgagee any obligation imposed upon the insured, including, without
limitation, the liability to pay any premiums for any such policies, but the
Mortgagee shall have the right to pay such premiums if it shall so elect), (2)
shall expressly provide that, in respect of the interests of the Mortgagee in
such policies, the insurance shall not be invalidated by any action or inaction
of the Mortgagor or any other Person (other than the Mortgagee for its
interest), shall insure the Mortgagee, regardless of any breach or violation of
any warranty, declaration of condition contained in such policies by the
Mortgagor or any other Person (other than the Mortgagee for its interest), (3)
shall provide that if such insurance is canceled for any reason whatsoever, or
is adversely changed in any way with respect to the interest of the Mortgagee,
or if such insurance is allowed to lapse for nonpayment of premium, such
cancellation change or lapse shall not be effective as to the Mortgagee, for
thirty (30) days (or such lesser time which may be standard in the insurance
industry and ten (10) days in the event of nonpayment of premium) after receipt
by the Mortgagee of written notice (or in the case of War Risk insurance, seven
(7) days or such lesser time which may be standard in the war risk insurance
market after delivery of written notice) by such insurer or insurers to the
Mortgagee, as the case may be, of such prospective cancellation, change or
lapse, (4) shall include coverage for the territorial limits or any country in
which the Flight Equipment may at any time be located, but may include
geographic exclusions, (5) shall provide that, as against the Mortgagee, the
insurer shall waive any rights of set-off, counterclaim or any other deduction,
whether by attachment or otherwise, and waive any rights it may have to be
subrogated to any right of any insured against the Mortgagee, with respect to
the Flight Equipment, (6) shall provide that in the event of any damage or loss
which is an Event of Loss hereunder and which results in a payment, such payment
of up to the Current Market Value of the Flight Equipment suffering the Event of
Loss shall be payable solely and directly to the Mortgagee for the account of
all interests, (7)
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shall provide that in the event of any damage or loss which is not an Event of
Loss hereunder and which results in a payment for any one occurrence in excess
of Five Million Dollars ($5,000,000), such payment shall be payable solely and
directly to the Mortgagee for the account of all interests, and (8) shall
provide that payments for any one occurrence not in excess of Five Million
Dollars ($5,000,000) shall be payable directly to the Mortgagor provided there
exists no Event of Default. Except during a period when an Event of Default has
occurred and is continuing, all losses will be adjusted with the insurers by the
Mortgagor (giving due regard to the interests of the Mortgagee and the Lenders).
The Mortgagor shall have the right to carry insurance in excess of the
amounts required hereunder and the proceeds of such excess insurance shall be
payable to the Mortgagor. Similarly, the Mortgagee shall have the right to carry
additional and separate insurance for its own benefit at its own expense,
without, however, thereby limiting the Mortgagor's obligations under this
Section 3.5.
The Mortgagor shall at all times maintain a deductible amount in its "all
risks" hull insurance policies which is no more than Five Million Dollars
($5,000,000).
(b) The Mortgagor shall promptly notify the Mortgagee of, to the
knowledge of the Mortgagor, any material adverse change in the insurance
coverage required by this Section 3.5; and
(c) Prior to the date of this Security Agreement, the Mortgagor
shall furnish, or cause to be furnished, to the Mortgagee from nationally
recognized independent aviation insurance brokers, certificates of insurance
certifying to such insurance coverage.
All proceeds of insurance paid to the Mortgagee in accordance with this
Section 3.5 shall be held and paid over or applied by the Mortgagee as provided
in Section 2.1 or 2.2.
3.6 Inspection by Mortgagee; Information.
The Mortgagor shall, at all such times, maintain and store, or cause to be
maintained and stored, records in accordance with the FAA regulations and
adequate to identify such Flight Equipment and to disclose its location, use and
maintenance, and upon reasonable notice and request of the Mortgagee, permit the
Mortgagee, its representatives and agents (or cause the Mortgagee, its
representatives and agents to be permitted if the following items are not in the
possession or control of Mortgagor) to inspect such Flight Equipment (including
all logs, maintenance cards, manuals and records with respect thereto) and, at
the expense of Mortgagee, to take copies and extracts therefrom, and shall
afford and procure a reasonable opportunity to make any such inspection, and the
Mortgagor shall furnish or cause to be furnished to the Mortgagee any and all
such other information and, at the expense of Mortgagee, copies of documents and
print-outs of data stored on any electronic or data processing medium, as are
reasonably available to the Mortgagor and the Mortgagee may reasonably request,
with respect to any Mortgaged Property, provided that any such inspection shall
be upon reasonable notice, shall be limited, in the absence of the continuation
of an Event of Default, to once a year at a mutually agreed time, and by a group
consisting of no more than two individuals.
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3.7 Registration. For so long as any part of the Flight Equipment is
subject to the Lien of this Security Agreement, the Mortgagor shall cause the
Aircraft to be registered at all times with the FAA in its name as owner
thereof.
3.8 Insignia. The Mortgagor will plainly, distinctly and conspicuously
place or cause to be placed and leave in the cockpit of the Aircraft and upon
such other places as may reasonably be designated by the Mortgagee from time to
time, an insignia or other identification bearing words which indicate
Mortgagee's interest in the Aircraft, in letters of a size reasonable under the
circumstances and acceptable to the Mortgagee.
3.9 Operation and Location. Mortgagor agrees that (a) it will not fly the
Aircraft or suffer the Aircraft to be flown in violation of any provision of any
insurance policy in effect with respect to the Aircraft or in violation of any
law, rule, regulation or order of the United States or any agency,
instrumentality or state or political subdivision thereof (including agencies
and instrumentalities of such state or political subdivision) or of any other
nation having jurisdiction over the use and operation of the Aircraft, except
(1) unanticipated minor violations not involving any material risk of the sale,
forfeiture or loss of an Aircraft, an Airframe, any Engine, or the Mortgagee's
interest therein, if such violation ceases promptly after discovery thereof by
the Mortgagor, or only requires the Mortgagor's payment of a fine levied only
against the Mortgagor, and (2) the Mortgagor or any Lessee may contest in good
faith the validity or application of any such law, rule, regulation, treaty,
order, certificate, license or registration, so long as there is no material
risk of the sale, forfeiture or loss of an Aircraft, an Airframe or any Engine,
or the Mortgagee's interest therein, (b) it shall not knowingly use or allow the
Aircraft to be used for the carriage of drugs or other illegal goods or any
other goods for which the Mortgagor or operator of the Aircraft is not licensed
to transport; and (c) it will not operate the Aircraft, or permit any Lessee to
operate the Aircraft: (i) in or to any area excluded from coverage by any
insurance required to be maintained by the terms of Section 3.5 hereof; (ii) in
countries with which the United States does not maintain full diplomatic
relations other than the Republic of China (Taiwan); and (iii) in or to any
areas of actual or threatened armed hostilities, provided, that the failure of
Mortgagor to comply with the provisions of this sentence shall not give rise to
an Event of Default where such failure is an isolated extraordinary occurrence
attributable to a hijacking, medical emergency, equipment malfunction, weather
condition, or navigational error. The Mortgagor shall also have the right to
operate any Aircraft without having on board the original registration
certificate or airworthiness certificate in the event that either or both such
certificates disappear from the Aircraft, but only to the extent permitted by
Exemption No. 5318 of the Federal Aviation Act or other similar exemption.
3.10 Possession and Leases. The Mortgagor will not, without the prior
written consent of the Mortgagee, lease or otherwise in any manner deliver,
transfer or relinquish possession of the Airframe or any Engine or install or
permit any Engine to be installed on any airframe other than the Airframe;
provided that so long as no Event of Default shall have occurred and be
continuing at the time of such Lease, delivery, transfer or relinquishment of
possession or installation and the Mortgagor and/or any Lessee shall continue to
comply with the provisions of Section 3.3 and Section 3.4, the Mortgagor may,
without the prior written consent of the Mortgagee:
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(a) subject the Engine(s) or engines to normal interchange
agreements or any Engine to normal pooling or similar arrangements, in each case
customary in the airline industry and entered into by the Mortgagor (or any
Lessee) in the ordinary course of its business with a U.S. Air Carrier or any
other air carrier approved in writing by the Mortgagee (which approval will not
be unreasonably withheld or delayed); provided that (i) no such agreement or
arrangement contemplates or requires the transfer of title to any Engine and
(ii) if the Mortgagor's title to any Engine shall be divested under any such
agreement or arrangement, such divestiture shall be deemed to be an Event of
Loss with respect to such Engine and the Mortgagor shall (or shall cause any
Lessee to) comply with Section 3.4 (c) hereof in respect thereof;
(b) deliver possession of the Airframe or any Engine to the Airframe
manufacturer or the Engine manufacturer, or to any Person for testing, service,
repair, maintenance or overhaul work on the Airframe or any Engine or for
alterations or modifications in or additions to the Airframe or Engine(s) to the
extent required or otherwise not prohibited by the terms hereof or of the Credit
Agreement;
(c) install an Engine on an airframe owned by the Mortgagor (or any
Lessee), leased to the Mortgagor (or any Lessee), or owned or purchased by the
Mortgagor (or any Lessee) subject to a conditional sale or other security
agreement, provided that (a) such airframe is free and clear of all Liens,
except (i) in the case of airframes leased to the Mortgagor (or any Lessee) or
owned or purchased by the Mortgagor (or any Lessee) subject to a conditional
sale or other security agreement, the rights of the parties to the Lease or
conditional sale agreement or other security agreement covering such airframe,
or their assignee, (ii) Permitted Liens, and (iii) the rights of other air
carriers under normal interchange agreements which are customary in the airline
industry and do not contemplate, permit or require the transfer of title to the
airframe or engines installed thereon, and (b) any such lease, conditional sale
or other security agreement provides that such Engine shall not become subject
to the lien of such lease, conditional sale or other security agreement,
notwithstanding the installation thereof on such airframe, and the inclusion in
such agreement of a provision similar to the last paragraph of this Section 3.4
(c) shall satisfy such requirement;
(d) install an Engine on an airframe owned by the Mortgagor (or any
Lessee), leased to the Mortgagor (or any Lessee) or purchased by the Mortgagor
(or any Lessee) subject to a conditional sale or other security agreement under
circumstances where paragraph 3.10 (c) above is inapplicable, provided that such
installation shall be deemed an Event of Loss with respect to such Engine and
the Mortgagor shall (or shall cause any Lessee to) comply with Section 3.4 (c)
hereof in respect thereof, the Mortgagee not intending hereby to waive any right
or interest it may have to or in such Engine under applicable law until
compliance by the Mortgagor with such Section 3.4 (c);
(e) transfer (or permit any Lessee to transfer) possession of the
Airframe or any Engine to the United States of America or any instrumentality or
agency thereof pursuant to CRAF so long as the Mortgagor (or such Lessee) shall
promptly notify the Mortgagee upon transferring possession of the Airframe or
any Engine to the United States of America or any
17
agency or instrumentality thereof pursuant to such program and provide the
Mortgagee with the name and address of the Contracting Office Representative for
the Military Aircraft Command of the United States Air Force to whom notice must
be given in the event the Mortgagee desires to give notice as provided in
Section 4.2 hereof;
(f) provided that no Event of Default has occurred and is
continuing, enter into a lease with: (a) any certificated U.S. Air Carrier not
then subject to bankruptcy, reorganization or insolvency proceedings; (b) any
other non-U.S. air carrier if at the time of such lease the United States of
America maintains normal diplomatic relations with the country in which such air
carrier is based and the Mortgagee shall have received (A) evidence that: (1)
all necessary governmental approvals required for the leased equipment, the
Airframe or any Engine, as the case may be, to be imported and, if requested by
the Mortgagee (and such request is reasonable in light of the circumstances) and
if and to the extent obtainable with reasonable effort and if it is otherwise
customary to obtain the same in such jurisdiction, exported from the applicable
country of domicile upon repossession of such leased equipment by the Mortgagee
(and the Mortgagor as lessor) shall have been obtained prior to commencement of
any such lease; and (2) the insurance requirements of Section 3.5 are satisfied
and that War Risk Insurance shall be carried and maintained of such scope and
coverage, and subject to such exclusions and exceptions, as is standard for air
carriers flying similar equipment on routes comparable to those flown by the
Aircraft and (B) an opinion of counsel (which counsel and opinion are reasonably
satisfactory to the Mortgagee) that: (1) it is not necessary for the Mortgagee
to register or qualify to do business in such jurisdiction solely as a result of
the proposed lease, unless the only result of such registration or qualification
is a Tax or cost that the Mortgagor is indemnifying such party against; (2) that
the Mortgagee's Lien on the leased equipment will be recognized; (3) the laws of
such jurisdiction of domicile require fair compensation by the government of
such jurisdiction payable in a currency freely convertible into Dollars for the
loss of the title to the leased equipment in the event of the requisition by
such government of title (unless the Mortgagor shall provide insurance covering
the risk of requisition of title to the leased equipment by the government of
such jurisdiction so long as the leased equipment is subject to such lease); (4)
the required agreement of such non-U.S. air carrier that its rights under the
Lease are subject and subordinate to all of the terms of this Security Agreement
is enforceable against such non-U.S. air carrier under applicable law (subject
only to customary exceptions to enforceability); (5) there exist no possessory
rights in favor of such Lessee under the laws of such jurisdiction which would,
upon bankruptcy of the Mortgagor or other default by the Mortgagor or Lessee and
assuming that at such time such Lessee is not insolvent or bankrupt, prevent the
return of the Aircraft to the Mortgagor or the Mortgagee in accordance with and
when permitted by the terms of Section 4.2 hereof upon the exercise by the
Mortgagee of remedies under Section 4.2 hereof; and (6) the terms (including,
without limitation, the governing-law and jurisdictional-submission provisions
hereof) of this Security Agreement are legal, valid, binding and enforceable in
such jurisdiction against third parties to substantially the same extent as in
the United States; or (c) any Person approved in writing by the Mortgagee, which
approval shall not be unreasonably withheld. The currency of payments under such
Lease must be freely convertible into Dollars.
The rights of any Lessee or other transferee who receives possession by
reason of a transfer permitted by this Section 3.10 (other than the transfer of
an Engine deemed an Event of
18
Loss) shall be subject and subordinate to, and any Lease permitted by this
Section 3.10, shall expressly provide that it is subject and subordinate to, all
the terms of this Security Agreement; provided that in the case of the use of
the Aircraft in CRAF the subject and subordinate requirements herein shall be
subject to the notice specified in Section 4.2 and other requirements of the
CRAF program. In the case of any Lease, the Mortgagor shall remain primarily
liable hereunder for the performance of all of the terms of this Security
Agreement, and the terms of any such Lease shall not permit any Lessee to take
any action not permitted to be taken by the Mortgagor hereunder with respect to
the Aircraft and may permit the Mortgagor to cure any default by Lessee and to
terminate the Lease upon such default; provided, however, that the Mortgagor may
procure such performance from any Lessee pursuant to the relevant Lease, and the
Mortgagee hereby agrees to accept such performance by such Lessee in
satisfaction of the Mortgagor's obligations hereunder; and provided further that
all rights accruing hereunder to the Mortgagor shall likewise accrue to such
Lessee to the extent Mortgagor so permits. Subject to the Mortgagor's
obligations in paragraph (g) above, the Mortgagor shall promptly notify the
Mortgagee after entering into any Lease.
Any Wet Lease or similar arrangement under which the Mortgagor maintains
operational control of the Aircraft shall not constitute a delivery, transfer or
relinquishment of possession for purposes of this Section 3.10. Any
consolidation or merger of the Mortgagor or conveyance, transfer or lease of all
or substantially all of the Mortgagor's assets permitted by the Credit Agreement
shall not be prohibited by this Section 3.10. As used herein, "Wet Lease" shall
mean any arrangement whereby the Mortgagor or a Lessee agrees to furnish the
Airframe and Engines or engines installed thereon to a third party pursuant to
which the Airframe and Engines or engines (i) shall be operated solely by
regular employees of the Mortgagor, or Lessee possessing all current
certificates and licenses required under the Federal Aviation Act, and (ii)
shall be maintained by the Mortgagor or Lessee in accordance with the
Maintenance Program or an FAA approved maintenance program.
The Mortgagee agrees, for the benefit of the Mortgagor (and any Lessee)
and for the benefit of any mortgagee or other holder of a security interest in
any engine owned by the Mortgagor (or any Lessee), any lessor of any engine
leased to the Mortgagor (or any Lessee) and any conditional vendor of any engine
purchased by the Mortgagor (or any Lessee) subject to a conditional sale
agreement or any other security agreement, that no interest shall be created
hereunder in any engine so owned, leased or purchased and that neither the
Mortgagee nor its successors or assigns will acquire or claim, as against the
Mortgagor (or any Lessee) or any such mortgagee, lessor or conditional vendor or
other holder of a security interest or interest in such engine as the result of
such engine being installed on the Airframe; provided, however, that such
agreement of the Mortgagee shall not be for the benefit of any lessor or secured
party of any airframe leased to the Mortgagor (or any Lessee) or purchased by
the Mortgagor (or any Lessee) subject to a conditional sale or other security
agreement or for the benefit of any mortgagee of or any other holder of a
security interest in an airframe owned by the Mortgagor (or any Lessee), unless
such lessor, conditional vendor, other secured party or mortgagee has agreed
(which agreement may be contained in such lease, conditional sale or other
security agreement or mortgage and may consist of a paragraph similar to this
paragraph) that neither it nor its
19
successors or assigns will acquire, as against the Mortgagee, any right, title
or interest in an Engine as a result of such Engine being installed on such
airframe.
3.11. Substitution of Engines. So long as no Event of Default shall have
occurred and be continuing, Mortgagor shall have the right at its option at any
time in accordance with Section 6.15(c) of the Credit Agreement, to terminate
the Lien of this Security Agreement with respect to any Engine. Subject to
Section 6.15(c) of the Credit Agreement, at the time of any such termination,
Mortgagor shall replace such engine hereunder by complying with the terms of
Section 3.4 (c) hereof to the same extent as if an Event of Loss had occurred
with respect to such Engine (other than the time periods allowed for such
replacement), and the Mortgagee shall release the replaced Engine from the Lien
of this Security Agreement as by entering into a Security Agreement Supplement
in the form of Schedule II.
SECTION 4. EVENTS OF DEFAULT and REMEDIES
4.1. Events of Default.
(a) Each Event of Default set forth in Section 8.01 of the Credit
Agreement is incorporated herein as if fully set forth as a separate Event of
Default in this Section 4.1.
(b) The Mortgagor shall fail to procure and maintain (or cause to be
procured and maintained), with respect to the Aircraft, insurance required to be
maintained in accordance with the provisions of Section 3.5 hereof or such
insurance shall lapse or be canceled, provided that no such lapse or
cancellation shall constitute an Event of Default until the earlier of thirty
(30) days (or if 30 days is unavailable pursuant to Section 3.5 hereof, such
shorter period as is available pursuant to such Section) after receipt by the
Mortgagor of written notice of such lapse or cancellation (or seven (7) days or
such shorter time as may be standard in the industry with respect to War Risk
Insurance provided that if the Aircraft is grounded or if War Risk Insurance or
indemnification is provided by the FAA, no such failure to carry War Risk
Insurance shall be an Event of Default) or the date that such lapse or
cancellation is effective as to Mortgagee; or
(c) The Mortgagor shall have failed to perform or observe, or caused to be
performed and observed, any other covenant or agreement contained in this
Security Agreement, and such failure shall continue unremedied for a period of
thirty (30) days after the Mortgagor's receipt of written notice thereof from
the Mortgagee; provided, however, that if such failure is curable, and if the
Mortgagor shall have undertaken to cure any such failure and, notwithstanding
the reasonable diligence of the Mortgagor in attempting to cure such failure,
such failure is not cured within said thirty (30) day period but is curable with
future due diligence, there shall exist no Event of Default under this Section
4.01 for such further time not to exceed 180 days as may reasonably be required
to effect such cure, so long as the Mortgagor is proceeding with due diligence
to cure such failure.
4.2. Remedies. Upon the occurrence of an Event of Default, the Mortgagee
may accelerate the entire balance then due and owing under the Credit Agreement
and this Security Agreement, whereupon all such sums shall become immediately
due and payable, and thereafter
20
the Mortgagee may, at its option, do one, several or all of the following as the
Mortgagee in its sole discretion shall then elect:
(a) exercise all the rights and remedies granted to secured parties
by the provisions of the UCC or under the provisions of any applicable law;
(b) personally, or by agents or attorneys, take possession of all or
any part of the Mortgaged Property, and demand, sue for, collect or receive any
money or property at any time payable or receivable on account of or in exchange
for, or make any compromise or settlement deemed desirable with respect to, any
of the Mortgaged Property or any sum payable in connection therewith;
(c) personally, or by agents or attorneys, take possession of any
part or all of the Mortgaged Property without being responsible for loss or
damage caused thereby, and sell or dispose of all or any part of the same, free
from any and all claims of the Mortgagor or of any other party claiming by,
through or under the Mortgagor, at law or in equity, at one or more public or
private sales on such commercially reasonable terms as the Mortgagee may in good
faith fix, with or without any previous demand or notice to the Mortgagor or
advertisement of any such sale or other disposal except as is commercially
reasonable under the circumstances, and any notice or demand and right of equity
or redemption otherwise required by or available to the Mortgagor under
applicable law is hereby waived by the Mortgagor to the fullest extent permitted
by applicable law;
(d) institute legal proceedings for the sale or otherwise for the
enforcement of any right, under the judgment of any court of competent
jurisdiction, of or concerning any of the Mortgaged Property;
(e) institute legal proceedings to foreclose upon and against the
security interest granted in and by this Security Agreement or to recover
judgment for the amounts then due from Mortgagee under this Security Agreement
or under the Credit Agreement.
(f) institute legal proceedings for the specific performance of any
covenant or agreement contained in this Security Agreement or in aid of the
execution of any power granted in this Security Agreement, and the Mortgagee
shall be entitled as of right to the appointment of a receiver of all or any
part of the Mortgaged Property; and
(g) exercise all of the rights and remedies of the Mortgagee against
the Mortgagor under the Credit Agreement.
provided that during any period the Aircraft is activated under CRAF in
accordance with the provisions of Section 3.10 hereof and in the possession of
the government of the United States of America or an instrumentality or agency
thereof, the Mortgagee shall not, on account of any Event of Default, be
entitled to do any of the foregoing or require Mortgagor to do anything as
permitted in Section 4 in such manner as to limit the Mortgagor's control under
this Security Agreement of any Airframe or any Engines installed thereon, unless
at least sixty (60) days' (or such lesser period as may then be applicable under
the Military Airlift Command program of the
21
government of the United States of America) prior written notice of default
hereunder shall have been given by the Mortgagee by registered or certified mail
to the Mortgagor with a copy addressed to the Contracting Office Representative
for the Military Airlift Command of the United States Air Force under the
contract with the Mortgagor relating to any Airframe.
4.2.1. Multiple Sales. The power of sale under this Security
Agreement shall not be exhausted by one or more sales, and the Mortgagee may
from time to time adjourn any sale to be made pursuant to this Security
Agreement. The Mortgaged Property need not be present at the time and place of
sale.
4.2.2. Delivery of Mortgaged Property. If the Mortgagee shall demand
possession of the Mortgaged Property or any part thereof pursuant to this
Security Agreement, the Mortgagor shall, at its own expense, forthwith cause
such Mortgaged Property or any part thereof designated by the Mortgagee to be
assembled and made available and delivered to the Mortgagee at any place
reasonably designated by the Mortgagee.
4.2.3. Mandatory Notices. In addition to any other notices required
by applicable law, the Mortgagee shall give to the Mortgagor at least 15 days
prior written notice of each public sale or any date after which a private sale
or other intended disposition hereunder shall occur, and the Mortgagor hereby
covenants and agrees that a notice which shall be given, in accordance with the
provisions of Section 6.1 below, at least 15 calendar days before the date of
any such act shall be deemed to be reasonable notice for such act and
specifically, reasonable notification of the time and place of any public sale
hereunder and of reasonable notification of the time after which any private
sale or other intended disposition of the Mortgaged Property (or any part
thereof) to be made hereunder is to be made.
4.2.4. Mortgagee Repairing Mortgaged Property. Upon every such
taking of possession until the Mortgaged Property is foreclosed upon, the
Mortgagee may, but shall have no obligation to, from time to time at the expense
of the Mortgagor, make all such repairs, replacements, alterations,
modifications, additions and improvements to and of the Mortgaged Property as
the Mortgagee may reasonably determine to be commercially reasonable. In each
such case, the Mortgagee shall have the right to manage and control the
Mortgaged Property and to exercise all rights and powers of the Mortgagor in
respect thereof as the Mortgagee shall deem best, including the right to enter
into any and all such agreements with respect to the leasing or operation of the
Mortgaged Property or any part thereof as the Mortgagee may see fit. The
Mortgagee shall be entitled to collect and receive all rents, issues, profits,
revenues and other income of the same and every part of the Mortgaged Property.
Such rents, issues, profits, revenues and other income shall be applied to pay
the expenses of holding and operating the Mortgaged Property, and of all
maintenance, repairs, replacements, alterations, additions and improvements, and
to make all payments which the Mortgagee may be required or may elect to make,
if any, for taxes, assessments, insurance and other charges upon the Mortgaged
Property or any part thereof, and all other payments which the Mortgagee may be
required or authorized to make under any provision of this Security Agreement.
The remainder of such rents, issues, profits, revenues and other income shall be
applied only in accordance with Section 4.2.6.
22
4.2.5. Delivery to Purchaser. Upon the completion of any sale under
this Section 4, the Mortgagor shall deliver or; cause to be delivered all of the
property, sold to the purchaser or purchasers at such sale on the date of sale,
or within a reasonable time thereafter if it shall be impractical to make
immediate delivery, but in any event full title and right of possession to such
property shall pass to such purchaser or purchasers forthwith upon the
completion of such sale. Nevertheless, if so requested by the Mortgagee or by
any purchaser, the Mortgagor shall confirm any such sale or transfer by
executing and delivering to such purchaser all proper instruments of conveyance
and transfer and releases as may be designated in any such request. Every such
sale shall operate to divest all right, title, interest, claim and demand
whatsoever of the Mortgagor in and to the property so sold, and shall be a
perpetual bar, both at law and in equity, against the Mortgagor and all persons
claiming the property sold, or any part thereof, through the Mortgagor and its
successors or assigns.
4.2.6. Application of Proceeds. The proceeds of any sale of the
Mortgaged Property, or any part thereof, under this Section 4, together with any
other sums then held by the Mortgagee as part of the Mortgaged Property, shall
be applied as follows:
(a) first, to the payment of the cost and expenses of such sale,
including brokers' fees or sales commissions, a reasonable compensation to the
Mortgagee's agents, attorneys and counsel, all charges, expenses, liabilities
and advances incurred or made by the Mortgagee, and the payment of all taxes,
assessments or liens, if any, prior to the lien of this Security Agreement,
except any taxes, assessments or liens subject to which such sale shall have
been made;
(b) second, to the payment of all amounts owing in respect of the
Obligations; and
(c) third, the surplus, if any, shall be paid to the Mortgagor or to
anyone entitled to payment thereof by operation of law or pursuant to an
order of a court of competent jurisdiction.
4.2.7. Mortgagee May Purchase. At any sale under this Section 4, to
the extent permitted by applicable law, the Mortgagee may bid for and purchase
the property offered for sale and, upon compliance with the terms of sale, may
bid, retain and dispose of such property without further accountability
therefor. The Mortgagee may apply against the purchase price for the Mortgaged
Property or any part thereof the amount then due under the Credit Agreement
secured hereby. The Mortgagee need not be present at such sale.
4.2.8. Right to Possession. In the event Mortgagor becomes subject
to the jurisdiction of any United States Bankruptcy Court in a proceeding for
the reorganization of Mortgagor, the Mortgagor hereby waives, to the fullest
extent permitted by applicable law, any right to contest any motion, petition or
application filed by the Mortgagee with such bankruptcy court having
jurisdiction over the Mortgagor, whereby Mortgagee seeks to enforce any of its
remedies under this Security Agreement or the Credit Agreement (including, in
connection with the enforcement of such remedies, any motion or application made
by Mortgagee for relief from any stay to which Mortgagee is subject).
23
4.2.9. Remedies Cumulative. Each right, power and remedy
specifically given to the Mortgagee in this Security Agreement or otherwise
existing shall be cumulative and shall be in addition to every other right,
power and remedy specifically given in this Security Agreement, in any other
Loan Documents, or now or hereafter existing at law, in equity or otherwise.
Each such right, power and remedy, whether specifically given in the Credit
Agreement or otherwise existing, may be exercised from time to time and as often
and in such order as may be deemed expedient by the Mortgagee. The exercise of
any such right, power or remedy shall not be construed to be a waiver of the
right to exercise at the same time or thereafter any other right, power or
remedy. No delay or omission by the Mortgagee in the exercise of any right or
power, or in the pursuance of any remedy, shall impair any such right, power or
remedy or be construed to be a waiver of any default on the part of the
Mortgagor or to be an a quiescence therein. No waiver by the Mortgagee of any
breach, Default or Event of Default by the Mortgagor shall be deemed a waiver of
any other previous breach, Default or Event of Default or any thereafter
occurring. The invalidity of any remedy in any jurisdiction shall not invalidate
such remedy in any other jurisdiction. The invalidity or unenforceability of any
of the remedies herein provided in any jurisdiction shall not in any way affect
the right to the enforcement in such jurisdiction or elsewhere of any of the
other remedies herein provided.
4.2.10. Except as otherwise provided in this Security Agreement, the
Mortgagor hereby waives, to the extent permitted by Applicable Law, notice and
judicial hearing in connection with the Mortgagee's taking possession or the
Mortgagee's disposition of the aircraft, including, without limitation any and
all prior notice and hearing for any prejudgment remedy or remedies and any such
right which the Mortgagor would otherwise have under the constitution or any
statute of the United States or of any state, and the Mortgagor hereby further
waives, to the extent permitted by Applicable Law:
(a) all damages occasioned by such taking of possession except any
damages which are the direct result of the Mortgagee's gross negligence or
willful misconduct;
(b) all other requirements as to the time, place and terms of sale
or other requirements with respect to the enforcement of the Mortgagee' s rights
hereunder; and
(c) all rights of redemption, appraisement, valuation, stay,
extension or moratorium now or hereafter in force under any Applicable Law in
order to prevent or delay the enforcement of this Security Agreement or the
absolute sale of the Aircraft or any part thereof, and the Mortgagor for itself
and all who may claim under it, insofar as it or they now or hereafter lawfully
may, hereby waives the benefit of all such laws.
Any sale of or the grant of options to purchase, or any other realization upon
the Aircraft or any part thereof shall operate to divest all right, title,
interest, claim and demand, either at law or in equity, of the Mortgagor therein
and thereto, and shall be a perpetual bar both at law and in equity against the
Mortgagor and against any and all Persons claiming or attempting to claim the
Aircraft so sold, optioned or realized upon, or any part thereof, from, through
and under the Mortgagor.
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4.2.11. Right to Perform and Incur Expenses.
(a) At any time and from time to time after an Event of Default, if
the Mortgagor fails to perform or fulfill any of its undertakings or obligations
contained herein, Mortgagee shall have the right, but shall not be obligated,
(i) to effect such performance or compliance, and (ii) to incur such reasonable
expenses relative to such performance or compliance, to the enforcement of
Mortgagee's rights or to the preservation, protection, reconditioning, storage
or sale of the Mortgaged Property, including such sums as are specified in
Section 4.2.4. and 4.2.6 (b). The amount of any such expenses and other
reasonable costs shall become payable by the Mortgagor to the Mortgagee as of
the date on which Mortgagee shall pay the same, together with interest thereon
from said date of payment up to and including the date of actual payment by the
Mortgagor at an interest rate equal, to the default rate of interest set forth
in the Credit Agreement (but in no event higher than the highest rate permitted
by applicable law).
(b) All such costs and expenses incurred shall become part of the
Mortgagor's Obligations and shall become part of the indebtedness secured by
this Security Agreement. The Mortgagee shall have the right (but shall not be
obligated) to use and apply any Cash Collateral at any time held by it for the
repayment of all such advances, costs or expenses. However, no such use of any
Cash Collateral, nor the making by Mortgagee of any advance in payment of any
such expense, shall relieve the Mortgagor from any Event of Default.
4.2.12. Power of Attorney.
THE MORTGAGOR HEREBY CONSTITUTES AND APPOINTS THE MORTGAGEE ITS TRUE
AND LAWFUL ATTORNEY, IRREVOCABLY, WITH FULL POWER AFTER THE OCCURRENCE OF AND
DURING THE CONTINUANCE OF AN EVENT OF DEFAULT (IN THE NAME OF THE MORTGAGOR OR
OTHERWISE) TO ACT, REQUIRE, DEMAND, RECEIVE, COMPOUND AND GIVE ACQUITTANCE FOR
ANY AND ALL MONIES AND CLAIMS FOR MONIES DUE OR TO BECOME DUE TO THE MORTGAGOR
UNDER OR ARISING OUT OF THE COLLATERAL, TO ENDORSE ANY CHECKS OR OTHER
INSTRUMENTS OR ORDERS IN CONNECTION THEREWITH AND TO FILE ANY CLAIMS OR TAKE ANY
ACTION OR INSTITUTE ANY PROCEEDINGS WITH THE MORTGAGEE MAY DEEM TO BE NECESSARY
OR ADVISABLE IN THE PREMISES, WHICH APPOINTMENT AS ATTORNEY IS COUPLED WITH AN
INTEREST.
SECTION 5. DEFEASANCE
If the Mortgagor shall pay and discharge all of its respective
Obligations, then upon Mortgagor Request this Security Agreement and the lien,
rights and interests granted by this Security Agreement shall cease, terminate
and become null and void and, at the expense of the Mortgagor, the Mortgagee
shall execute and deliver to the Mortgagor satisfaction and discharge of this
Security Agreement by such instruments of satisfaction as may be necessary, and
pay and deliver upon Mortgagor Order all monies and other personal property then
held by the Mortgagee under this Security Agreement.
25
SECTION 6. MISCELLANEOUS PROVISIONS
6.1. Notices. Except as otherwise specifically provided to the contrary in
this Security Agreement:
(a) Every notice or demand under this Security Agreement shall be in
writing and may be given or made by telefax or by nationally recognized
overnight courier service.
(b) Every notice or demand shall be sent, in the case of overnight
courier, to the Mortgagor or Mortgagee at their respective addresses and, in the
case of a telefax message, to their respective telefax numbers as follows:
(i) To Mortgagor:
Alaska Airlines, Inc.
19300 International Blvd.
Seattle, WA 98188
Attn: Vice President Finance & Treasurer
Telephone No.: (206) 392-5015
Telefax No.: (206) 392-5007
and
(ii) To Mortgagee:
Bank of America, N.A.
Agency Management
Mail Code: WA1-501-37-20
800 Fifth Avenue, Floor 37
Seattle WA 98104
Attention: Dora Brown, Vice President
Telephone No: 206-358-0101
Telefax No.: 206-358-0971
(c) Every notice or demand shall be deemed to have been received, in the
case of a notice sent by nationally recognized overnight courier, when actually
delivered to Mortgagee or the Mortgagor at their respective address as provided
in Section 6.1 (b) or on the date on which receipt of such notice is refused or
the courier advises that such notice is not deliverable at the address provided
in Section 6.1 (b) and, in the case of a telefax, at the time of actual receipt
thereof.
(d) Subject to the terms hereof, Mortgagee or the Mortgagor may change its
address or telefax number or the address or party to whom copies of notices
shall be sent by giving notice in accordance with this Section 6.1.
26
6.2. Counterparts. This Security Agreement may be executed in any number
of counterparts, and each of such counterparts shall for all purposes be deemed
to be an original, and all such counterparts shall together constitute one and
the same Security Agreement.
6.3. Governing Law. THIS SECURITY AGREEMENT SHALL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF WASHINGTON.
6.4. Waiver of Jury Trial. THE MORTGAGOR AND THE MORTGAGEE EACH
IRREVOCABLY WAIVE THE RIGHT TO A TRIAL BY JURY IN ANY ACTION OR PROCEEDING
BROUGHT TO ENFORCE ANY PROVISION OF THIS SECURITY AGREEMENT OR ANY OTHER LOAN
DOCUMENT IN WHICH THEY ARE PARTIES.
6.5. Expenses. The Mortgagor agrees to pay the reasonable ongoing fees and
expenses of the Mortgagee for the services rendered by it in capacity as
mortgagee hereunder.
6.6. Consent to Jurisdiction. Mortgagor and Mortgagee consent and submit
to the exclusive jurisdiction and venue shall be in the State of Washington in
the State courts for the county of King, or the United States District Court for
the Western District of Washington and agree that venue is proper in those
courts and waive any right to object based upon jurisdiction (either personal or
subject matter) or venue or inconvenient forum therein in connection with any
action arising out of, or connected in any way with, this Security Agreement.
Mortgagor further agrees that service of process or any other papers upon it by
registered air mail at its address set forth herein shall be deemed good, proper
and effective service upon it. Mortgagor further agrees that the service of
process or any other papers upon the agent designated by Mortgagor in the
immediately preceding sentence shall be deemed good, proper and effective
service upon it. Nothing set forth herein shall be deemed to preclude the
service of process or any other papers upon Mortgagor by any other method
permitted by applicable law.
6.7. Delivery. This Security Agreement is intended to and shall be deemed
to be delivered by the Mortgagor to the Mortgagee and accepted by the Mortgagee
in Washington State.
SECTION 7 THE MORTGAGEE
The Mortgagee may execute any of its duties or powers hereunder by or
through agents or employees, and shall be entitled to retain counsel and the
advice of such counsel concerning all matters pertaining to the performance of
its functions hereunder. The Mortgagor agrees to reimburse the Mortgagee for all
reasonable out-of-pocket expenses incurred by the Mortgagee and the counsel,
attorneys, agents and the employees of the Mortgagee in acting hereunder,
including any reasonable counsel fees and compensation paid for services
rendered to the Mortgagee in connection with the performance of its functions
hereunder if and to the extent reasonably engaged by Mortgagee. The Mortgagor
agrees to indemnify and save harmless the Mortgagee against and from any
liability or damages which the Mortgagee may incur or sustain in the exercise
and performance of any of the Mortgagee's powers and duties hereunder, not
including, however, the Mortgagee's gross negligence or willful misconduct. For
such
27
reimbursement and indemnity, the Mortgagee shall be secured under this Security
Agreement and, to effect such reimbursement and indemnity, the Mortgagee shall
have the right to use and apply any cash constituting Mortgaged Property at any
time held by it. The Mortgagee shall give notice to the Mortgagor of any actions
or claims to be brought against the Mortgagor under this Section 7; provided,
however, that any failure by the Mortgagee to provide such notice shall not
limit the obligations of the Mortgagor hereunder, except to the extent that the
Mortgagor is prejudiced by the Mortgagee's failure to deliver such notice.
Neither the Mortgagee nor any of its directors, officers, agents or employees
shall be liable for any action taken or omitted to be taken by it or them
hereunder except for its or their own gross negligence or willful misconduct.
IN WITNESS WHEREOF, Mortgagor and Mortgagee have caused this Aircraft
Chattel Mortgage and Security Agreement to be duly executed as of the day and
year first above written.
Mortgagor: Mortgagee:
Alaska Airlines, Inc Bank of America, N.A., as Administrative
Agent
By: _____________________________ By: __________________________
Vice President- Finance and Its: _________________________
Treasurer
28
SCHEDULE I -- SECURITY AGREEMENT SUPPLEMENT
This SUPPLEMENTAL FIRST PRIORITY SECURITY AGREEMENT, dated the 25th day of
March, 2005 (this "Supplement"), is from Alaska Airlines, Inc., a corporation
organized and existing under the laws of the state of Alaska, having the address
19300 International Blvd., Seattle, WA 98188 (the "Mortgagor"), and BANK OF
AMERICA N.A., a national banking association registered in the state of
Washington, having the address: Agency Management Mail Code: WA1-501-37-20, 800
Fifth Avenue, Floor 37, Seattle WA 98104, as Administrative Agent (the
"Mortgagee").
RECITALS
A. Mortgagor has heretofore executed and delivered an Amended and Restated
Aircraft Chattel Mortgage and Security Agreement, dated as of March 25, 2005 (as
heretofore supplemented or amended, the "Security Agreement"), to cover certain
Flight Equipment of the Mortgagor to secure Mortgagor's obligations to Mortgagee
under a Credit Agreement, dated as of March 25, 2005 (the "Credit Agreement").
B. Mortgagor is the legal and beneficial owner, free and clear of all
mortgages, security interests, liens, charges and encumbrances, other than liens
and encumbrances permitted by the Security Agreement, of the flight equipment
herein below described, and desires to execute and deliver this Security
Agreement Supplement to Mortgagee.
NOW, THEREFORE, THIS SUPPLEMENT WITNESSETH that to secure the payment of
all of the Obligations, as at any time amended or supplemented, and for the
purpose of specifically subjecting such property to and of confirming the lien
of the Security Agreement, the Mortgagor does hereby grant, bargain, sell,
transfer, convey and mortgage unto the Mortgagee, its successors and assigns,
and gives to the Mortgagee a security interest in, the property (the
"Collateral") described in sections 1 and 2 of Attachment 1 hereto. Attachment 1
consists of three parts. The first section lists the property currently subject
to the Aircraft Chattel Mortgage and Security Agreement dated March 4, 2003,
which is to remain Collateral subject to the Security Agreement. The second
section lists property not heretofore subject to the Security Agreement that is
added to the Collateral. The third section lists property that was Collateral
and is now being released and will no longer be subject to the Security
Agreement.
The Collateral listed in sections 1 and 2 of Attachment 1, together with
all substitutions, replacements and renewals of the Collateral and all property
that hereafter becomes physically attached to or incorporated in the Collateral,
whether the same are now owned by the Mortgagor or shall hereafter be acquired
by it.
Together with all rents, issues, profits, proceeds (including insurance
proceeds), revenues and other income of the Collateral and all of the estate,
right, title and interest of every nature whatsoever of the Mortgagor, at law or
in equity, in and to the Collateral and every part and parcel thereof.
29
TO HAVE AND TO HOLD all and singular the Collateral unto the Mortgagee,
its successors and assigns, as security as aforesaid and for the uses and
purposes and subject to the covenants, agreements, provisions and conditions set
forth in the Security Agreement.
This Supplement shall be construed as supplemental to the Security
Agreement and shall form a part thereof, and the Security Agreement and each
Security Agreement Supplement heretofore executed and delivered are, by this
reference, incorporated in this Supplement and ratified, approved and confirmed.
This Supplement may be simultaneously executed in several counterparts,
each of which shall be deemed to be an original, and all such counterparts shall
together constitute but one and the same agreement.
THIS SUPPLEMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE
LAWS OF THE STATE OF WASHINGTON APPLICABLE TO CONTRACTS ENTERED INTO IN AND BY
RESIDENTS OF THE STATE OF WASHINGTON AND TO BE PERFORMED ENTIRELY WITHIN THE
STATE OF WASHINGTON.
IN WITNESS WHEREOF, the Mortgagor and Mortgagee have caused this Security
Agreement Supplement to be duly executed as of the date first written above.
Mortgagor: Mortgagee:
Alaska Airlines, Inc Bank of America N.A., as Administrative
Agent
By: ________________________________ By: _____________________________________
Vice President Finance & Treasurer Its: ____________________________________
30
ATTACHMENT 1 TO SCHEDULE 1 -- SECURITY AGREEMENT SUPPLEMENT
Section 1. The following property consists of Collateral already pledged under
the Security Agreement that is to remain as Collateral.
1. McDonnell Douglas DC-9-82 Aircraft bearing U.S. Registration Mark
N931AS and manufacturer's serial number 49232, equipped with two Pratt & Whitney
JT8D-219 engines bearing manufacturer's serial numbers P716702D and P716718D,
which engines each have 750 or more rated take-off horsepower, or the equivalent
of such horsepower.
2. McDonnell Douglas DC-9-83 Aircraft bearing U.S. Registration Mark
N943AS and manufacturer's serial number 53018, equipped with two Pratt & Whitney
JT8D-219 engines bearing manufacturer's serial numbers P725684D and P725695D,
which engines each have 750 or more rated take-off horsepower, or the equivalent
of such horsepower.
3. McDonnell Douglas DC-9-83 Aircraft bearing U.S. Registration Mark
N944AS and manufacturer's serial number 53019, equipped with two Pratt & Whitney
JT8D-219 engines bearing manufacturer's serial numbers P725707D and P725708D,
which engines each have 750 or more rated take-off horsepower, or the equivalent
of such horsepower.
4. McDonnell Douglas DC-9-83 Aircraft bearing U.S. Registration Mark
N947AS and manufacturer's serial number 53020, equipped with two Pratt & Whitney
JT8D-219 engines bearing manufacturer's serial numbers P725731D and P725732D,
which engines each have 750 or more rated take-off horsepower, or the equivalent
of such horsepower.
5. McDonnell Douglas DC-9-83 Aircraft bearing U.S. Registration Mark
N948AS and manufacturer's serial number 53021, equipped with two Pratt & Whitney
JT8D-219 engines bearing manufacturer's serial numbers P718030D and P725750D,
which engines each have 750 or more rated take-off horsepower, or the equivalent
of such horsepower.
6. McDonnell Douglas DC-9-83 Aircraft bearing U.S. Registration Mark
N950AS and manufacturer's serial number 53023, equipped with two Pratt & Whitney
JT8D-219 engines bearing manufacturer's serial numbers P725776D and P725778D,
which engines each have 750 or more rated take-off horsepower, or the equivalent
of such horsepower.
7. McDonnell Douglas DC-9-83 Aircraft bearing U.S. Registration Mark
N958AS and manufacturer's serial number 53024, equipped with two Pratt & Whitney
JT8D-219 engines bearing manufacturer's serial numbers P725780D and P728008D,
which engines each have 750 or more rated take-off horsepower, or the equivalent
of such horsepower.
8. McDonnell Douglas DC-9-83 Aircraft bearing U.S. Registration Mark
N968AS and manufacturer's serial number 53016, equipped with two Pratt & Whitney
JT8D-219 engines bearing manufacturer's serial numbers P725845D and P725848D,
which engines each have 750 or more rated take-off horsepower, or the equivalent
of such horsepower.
9. McDonnell Douglas DC-9-83 Aircraft bearing U.S. Registration Mark
N969AS and manufacturer's serial number 53063, equipped with two Pratt & Whitney
JT8D-219 engines
31
bearing manufacturer's serial numbers P725850D and P725851D, which engines each
have 750 or more rated take-off horsepower, or the equivalent of such
horsepower.
10. McDonnell Douglas DC-9-83 Aircraft bearing U.S. Registration Mark
N973AS and manufacturer's serial number 53449, equipped with two Pratt & Whitney
JT8D-219 engines bearing manufacturer's serial numbers P728009D and P716745D,
which engines each have 750 or more rated take-off horsepower, or the equivalent
of such horsepower.
11. McDonnell Douglas DC-9-83 Aircraft bearing U.S. Registration Mark
N974AS and manufacturer's serial number 53450, equipped with one Pratt & Whitney
JT8D-219 engine bearing manufacturer's serial numbers P728010D, which engine has
750 or more rated take-off horsepower, or the equivalent of such horsepower.
12. McDonnell Douglas DC-9-83 Aircraft bearing U.S. Registration Mark
N975AS and manufacturer's serial number 53451, equipped with two Pratt & Whitney
JT8D-219 engines bearing manufacturer's serial numbers P728023D and P728005D,
which engines each have 750 or more rated take-off horsepower, or the equivalent
of such horsepower.
13. McDonnell Douglas DC-9-83 Aircraft bearing U.S. Registration Mark
N981AS and manufacturer's serial number 53472, equipped with two Pratt & Whitney
JT8D-217C engines bearing manufacturer's serial numbers P728127D and P728128D,
which engines each have 750 or more rated take-off horsepower, or the equivalent
of such horsepower.
14. McDonnell Douglas DC-9-82 Aircraft bearing U.S. Registration Mark
N982AS and manufacturer's serial number 53473, equipped with two Pratt & Whitney
JT8D-217C engines bearing manufacturer's serial numbers P728131D and P728132D,
which engines each have 750 or more rated take-off horsepower, or the equivalent
of such horsepower.
15. Boeing 737-4Q8 Aircraft bearing U.S. Registration Mark N763AS and
manufacturer's serial number 25100, equipped with two CFM International, Inc.
CFM56-3C engines bearing manufacturer's serial numbers 857280 and 857282, which
engines each have 750 or more rated take-off horsepower, or the equivalent of
such horsepower.
32
Section 2. The following property is hereby added as additional Collateral
(Mortgaged Property) and shall be subject to the Lien of the Security Agreement
for all purposes:
1. Pratt & Whitney JT8D-219 engine bearing manufacturer's serial number
P725387D, which engine has 750 or more rated take-off horsepower, or the
equivalent of such horsepower.
2. McDonnell Douglas DC-9-83 Aircraft bearing U.S. Registration Mark
N979AS and manufacturer's serial number 53471, equipped with two Pratt & Whitney
JT8D-217C engines bearing manufacturer's serial numbers P728100D and P728101D,
which engines each have 750 or more rated take-off horsepower, or the equivalent
of such horsepower.
3. Boeing 737-4Q8 Aircraft bearing U.S. Registration Mark N762AS and
manufacturer's serial number 25099, equipped with two CFM International, Inc.
CFM56-3C engines bearing manufacturer's serial numbers 856271 and 856288, which
engines each have 750 or more rated take-off horsepower, or the equivalent of
such horsepower.
4. Boeing 737-4Q8 Aircraft bearing U.S. Registration Mark N764AS and
manufacturer's serial number 25101, equipped with two CFM International, Inc.
CFM56-3C engines bearing manufacturer's serial numbers 856303 and 856304, which
engines each have 750 or more rated take-off horsepower, or the equivalent of
such horsepower.
5. Boeing 737-4Q8 Aircraft bearing U.S. Registration Mark N765AS and
manufacturer's serial number 25102, equipped with two CFM International, Inc.
CFM56-3C engines bearing manufacturer's serial numbers 857283 and 857308, which
engines each have 750 or more rated take-off horsepower, or the equivalent of
such horsepower.
6. Boeing 737-490 Aircraft bearing U.S. Registration Mark N767AS and
manufacturer's serial number 27081, equipped with two CFM International, Inc.
CFM56-3C engines bearing manufacturer's serial numbers 856337 and 856338, which
engines each have 750 or more rated take-off horsepower, or the equivalent of
such horsepower.
7. Boeing 737-490 Aircraft bearing U.S. Registration Mark N768AS and
manufacturer's serial number 27082, equipped with two CFM International, Inc.
CFM56-3C engines bearing manufacturer's serial numbers 856333 and 856336, which
engines each have 750 or more rated take-off horsepower, or the equivalent of
such horsepower.
8. Boeing 737-890 Aircraft bearing U.S. Registration Mark N546AS and
manufacturer's serial number 30022, equipped with two CFM International, Inc.
CFM56-7B engines bearing manufacturer's serial numbers 892251 and 852252, which
engines each have 750 or more rated take-off horsepower, or the equivalent of
such horsepower.
33
Section 3. The following property is hereby removed as Collateral released from
the Lien of the Security Agreement, and shall cease to be an Engine or an
Aircraft, as the case may be, thereunder:
1. Pratt & Whitney JT8D-219 engine bearing manufacturer's serial number
P728011D.
2. Boeing 737-2Q8C Aircraft bearing U.S. Registration Mark N741AS and
manufacturer's serial number 21959, equipped with two Pratt & Whitney JT8D-17
engines bearing manufacturer's serial numbers P688097B and P688114B, which
engines each have 750 or more rated take-off horsepower, or the equivalent of
such horsepower.
3. Boeing 737-298C Aircraft bearing U.S. Registration Mark N745AS and
manufacturer's serial number 20794, equipped with two Pratt & Whitney JT8D-17
engines bearing manufacturer's serial numbers P688119B and P702712B, which
engines each have 750 or more rated take-off horsepower, or the equivalent of
such horsepower.
34
SCHEDULE II -- SECURITY AGREEMENT SUPPLEMENT
This SUPPLEMENTAL FIRST PRIORITY SECURITY AGREEMENT, dated the _____ day
of____________, 200_ (this "Supplement"), is from Alaska Airlines, Inc., a
corporation organized and existing under the laws of the state of Alaska, having
the address 19300 International Blvd., Seattle, WA 98188 (the "Mortgagor"), and
BANK OF AMERICA N.A., a national banking association registered in the state of
Washington, having the address 10500 N.E. 8th St., Bellevue, WA 98004, as
Administrative Agent (the "Mortgagee").
RECITALS
A. Mortgagor has heretofore executed and delivered an Aircraft Chattel
Mortgage and Security Agreement, dated as of March 25, 2005 (as heretofore
supplemented or amended, the "Security Agreement"), to cover certain Flight
Equipment of the Mortgagor to secure Mortgagor's obligations to Mortgagee under
a Credit Agreement, dated as of March 25, 2005 (the "Credit Agreement"), which
Flight Equipment was identified in Schedule I -- Security Agreement Supplement,
dated as of March 25, 2005 ("Schedule I").
B. The Security Agreement, with Schedule I attached, was recorded by the
FAA on _____ and assigned Conveyance Number ________.
C. Mortgagor is the legal and beneficial owner, free and clear of all
mortgages, security interests, liens, charges and encumbrances, other than liens
and encumbrances permitted by the Security Agreement, of the flight equipment
herein below described which the parties intend to be added as additional
Collateral, and desires to execute and deliver this Security Agreement
Supplement to Mortgagee in return for which Mortgagee agrees to release from the
Lien of the Security Agreement the flight equipment listed below which is to be
released.
NOW, THEREFORE, in consideration of the premises, the parties agree that:
1. The ____________ engine bearing manufacturer's serial number ____ is
hereby removed and released from the Lien of the Security Agreement and such
engine shall cease to be an Engine thereunder.
2. The ____________ engine bearing manufacturer's serial number ____ is
hereby added as Additional Collateral to the Security Agreement and such engine
shall be subject to the Lien of the Security Agreement as an Engine for all
purposes.
3. This Supplement shall be construed as supplemental to the Security
Agreement and shall form a part thereof, and the Security Agreement and each
Security Agreement Supplement heretofore executed and delivered are, by this
reference, incorporated in this Supplement and ratified, approved and confirmed.
4. This Supplement may be simultaneously executed in several counterparts,
each of which shall be deemed to be an original, and all such counterparts shall
together constitute but one and the same agreement.
35
THIS SUPPLEMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE
LAWS OF THE STATE OF WASHINGTON APPLICABLE TO CONTRACTS ENTERED INTO IN AND BY
RESIDENTS OF THE STATE OF WASHINGTON AND TO BE PERFORMED ENTIRELY WITHIN THE
STATE OF WASHINGTON.
IN WITNESS WHEREOF, the Mortgagor and Mortgagee have caused this Security
Agreement Supplement to be duly executed as of the date first written above.
Mortgagor: Mortgagee:
Alaska Airlines, Inc Bank of America N.A., as Administrative
Agent
By: ________________________________ By: ________________________________
Its: _______________________________ Its: _______________________________
EXHIBIT G
FORM OF CASH PLEDGE AGREEMENT
EXHIBIT G
Form of Cash Pledge Agreement
CASH PLEDGE AGREEMENT
THIS CASH PLEDGE AGREEMENT ("Agreement") is made as of March 25, 2005 by
ALASKA AIRLINES, INC., an Alaska corporation, ("Debtor"), in favor of BANK OF
AMERICA, N.A., a national banking association (including its successors and
assigns, the "Administrative Agent" or "Agent") as agent for itself and the
Lenders under the Credit Agreement.
RECITALS
A. Debtor and Agent are parties to that certain Credit Agreement dated as
of March 25, 2005 (as amended or otherwise modified from time to time, the
"Credit Agreement").
B. It is contemplated in the Credit Agreement that, from time to time,
Debtor may request Agent to release its security interest in certain pledged
Collateral in exchange for the grant of a security interest in Cash Collateral
and/or Other Cash Collateral. It is a condition precedent to such release that
Debtor enter into this Agreement in favor of Agent.
NOW, THEREFORE, in consideration of the foregoing, Debtor agrees for the
benefit of Agent as follows:
AGREEMENT
1. DEFINED TERMS. Capitalized terms not otherwise defined herein shall
have the meanings given in the Credit Agreement.
2. GRANT OF SECURITY INTEREST. As security for the payment or performance,
as the case may be, in full of the Obligations (defined below), Debtor hereby
pledges and assigns and hereby grants to Agent a security interest in all of the
Debtor's right, title and interest in and to the following (collectively, the
"New Collateral"):
(a) Certificate of Deposit Account Number 57408106 and any
replacement or other account numbers (collectively, the "Account")
maintained by Debtor at Agent together with
(i) all interest now or hereafter accruing on the Account,
(ii) all additional deposits hereafter made to the Account,
(iii) any and all proceeds from the account,
(iv) all renewals, replacements and substitutions for any of
the foregoing, and
(v) any and all general intangibles and choses in action
arising from or related to any of the foregoing; and
(b) Other Cash Collateral (including any and all proceeds thereof)
as set forth on Schedule 2(b).
As used herein, "Obligations" means, collectively, all liabilities, obligations,
covenants and duties of Borrower arising under the Credit Agreement or any other
Loan Document, in each case whether direct or indirect (including those acquired
by assumption), absolute or contingent, due or to become due, now existing or
hereafter arising.
3. FINANCING STATEMENTS, ETC.
(a) Financing Statement. The Debtor hereby irrevocably authorizes
Agent at any time and from time to time to file in any relevant jurisdiction any
initial financing statements and amendments thereto that contain the information
required by Article 9 of the UCC of each applicable jurisdiction for the filing
of any financing statement or amendment in order to perfect and protect the
security interest of the Administrative Agent in the New Collateral.
(b) Continuing Security Interest. The Debtor acknowledges and agrees
that the security of Agent in the New Collateral constitutes continuing
collateral security for all of the Obligations which shall remain in effect
until all Obligations have been finally and indefeasibly paid in full, subject
to the Collateral release and substitution provisions in Section 6.15 of the
Credit Agreement.
4. REPRESENTATIONS AND WARRANTIES. Debtor represents and promises to Agent
and the Lenders that: (a) Debtor is the lawful owner of the New Collateral free
and clear of all loans, liens, encumbrances, and claims except as disclosed to
Agent in writing prior to the date hereof; (b) Debtor has not previously granted
a security interest in the New Collateral to any other person; (c) there are no
defaults relating to the New Collateral, and there are no offsets or
counterclaims to same; (d) Debtor has delivered or otherwise caused the transfer
to Agent, as applicable, all certificates, instruments and other writings
representing, evidencing or constituting the Other Cash Collateral as set forth
on Schedule 2(b); (e) the Other Cash Collateral identified on Schedule 2(b) is
not and shall not be represented or evidenced by any certificates, instruments
or other writing other than those delivered pursuant to this Agreement; and (f)
this Agreement creates a valid security interest in favor of the Agent in all of
the New Collateral, is binding upon Debtor and Debtor's successors and assigns
and is legally enforceable in accordance with its terms.
5. AGREEMENTS OF DEBTOR. Debtor agrees with Agent that: (a) Debtor shall
not sell, assign, encumber, or otherwise dispose of any of Debtor's rights in
the New Collateral; (b) Debtor shall not withdraw funds from the Account without
Agent's prior written consent; (c) Debtor shall strictly and promptly do
everything required of Debtor under the terms, conditions, promises, and
agreements contained in or relating to the New Collateral; (d) Debtor shall
deliver to Agent, upon Agent's request, all certificates, instruments or other
writings representing or evidencing the Other Cash Collateral as set forth on
Schedule 2(b); and (e) any and all replacement or renewal certificates,
instruments, or other benefits or proceeds related to the New Collateral that
are received by Debtor shall be held by Debtor in trust for Agent and
immediately shall be delivered by Debtor to Agent to be held as part of the New
Collateral. In addition, Debtor agrees, at its own expense, to execute,
acknowledge, deliver and cause to be duly filed all such further instruments and
documents and take all such actions as Agent may from time to time request to
better assure, preserve, protect and perfect the security interest of Agent in
the New Collateral and the rights and remedies of Agent hereunder.
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6. POSSESSION OF NEW COLLATERAL. While this Agreement is in effect, Agent
may retain the rights to possession of the New Collateral, together with any and
all evidence of the New Collateral, such as certificates and passbooks. Agent
shall use ordinary reasonable care in the physical preservation and custody of
any such evidence of the New Collateral but shall have no other obligation to
protect the New Collateral or its value.
7. EVENTS OF DEFAULT. Each of the following shall constitute an Event of
Default under this Agreement: (a) an Event of Default shall have occurred under
the Credit Agreement or any other Loan Document; (b) commencement of foreclosure
or forfeiture proceedings, whether by judicial proceeding, self-help,
repossession or any other method, by any creditor of Debtor or by any
governmental agency against the New Collateral, including without limitation a
garnishment of any of Debtor's accounts with Agent; or (c) any involuntary lien
of any kind or character attaches to any New Collateral.
8. REMEDIES; SET-OFF. If an Event of Default shall occur, or Debtor shall
otherwise default in the full and timely payment or performance any of the
Obligations secured hereby, Agent shall have and may exercise any or all the
rights and remedies of a secured creditor under the provisions of the Washington
Uniform Commercial Code (the "UCC"), at law, in equity, or otherwise. Agent
shall have all the rights of a secured party under the Washington Uniform
Commercial Code, even if, for example, the Account is not otherwise subject to
the UCC concerning security interests, and the parties to this Agreement agree
that the provisions of the UCC giving rights to a secured party shall
nonetheless be a part of this Agreement. Without limited the generality of the
foregoing, Debtor agrees that Agent may, subject to the requirements of Laws
including, without limitation, those affecting the offering and sale of
securities, sell, resell, assign, transfer or otherwise dispose of any or all of
the Other Cash Collateral set forth on Schedule 2(b). Debtor expressly
authorizes Agent at any time and from time to time, without prior notice to
Debtor, any such notice being waived by Debtor to the fullest extent permitted
by law, to set-off and apply any and all deposits (including, without
limitation, the Account) at any time held by Agent against the Obligations,
irrespective of whether or not Agent shall have made demand therefor.
9. RELEASE OF NEW COLLATERAL. Upon the payment in full in cash of all the
Obligations and termination of this Agreement, the Credit Agreement, and each
other Loan Document, Agent shall upon request of Debtor promptly release the
Account from the lien, pledge and security interest created under this
Agreement. Release of such lien, pledge and security interest shall also be
subject to the Collateral release and substitution provisions in Section 6.15 of
the Credit Agreement.
EXECUTED AND DELIVERED by the duly authorized officers of the parties as
of the date first above written.
DEBTOR:
ALASKA AIRLINES, INC.
By: _________________________________
Its: ____________________________
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SCHEDULE 2(B)
TO
CASH PLEDGE AGREEMENT
Other Cash Collateral
None
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